SaaS Interviews with CEOs, Startups, Founders
He just hit $12m in ARR. Took 7 years to hit $1m. Don't get discouraged!
28 Jul 2022
Chapter 1: How did the guest grow from 600 to 1,800 customers?
1800 customers paying on average seven grand a year. I mean, what that puts you at like 13 million in ARR, something like that?
Yeah, exactly. 13 million. Right around.
That's amazing. Thank you. You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Hey folks, my guest today is Daniel Wickberg.
He is leading a team called Upsales. I had the privilege to spend some time with him back in Barcelona at SaaS. He put on a great event, something special is happening at Upsales because they were totally packed. The rooftop was really crowded. Their tool is a niche CRM and sales development tool for SaaS companies, again, called upsales.com. Daniel, you ready to take us to the top?
Yeah, let's do it. All right. So I guess describe one of your customers today and what they're paying you for.
So, I mean, we started out as a typical CRM almost 20 years ago, and then we did a pivot a few years ago to start focusing more on recurring revenue businesses like ourselves. So today we're targeting SaaS companies and other companies that have some kind of recurring revenue to help them manage recurring revenue. It's a CRM with built-in subscription and ARR analytics and stuff like that.
Is it analytics? Those are more like SaaS optics where it's like RevRec and stuff like that too. Absolutely. So it's more like SaaS optics than like bare metrics.
Uh, I'm not too familiar with the differences between those, but I mean, we, we do revenue recognition. We do all kinds of ARR and MRR analytics, and we spend quite a lot of time to, to, to, you know, enable our customers to, to manage, uh, SAS specific, uh, KPIs and targets, which is kind of a hassle in most other CRMs.
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Chapter 2: What challenges did the guest face in the first seven years?
So that's kind of where I got the idea.
Now, that makes a lot of sense. Now, fast forward to today with 1,800 customers paying on average $7,000 a year. I mean, that puts you at like $13 million in ARR, something like that?
Yeah, exactly. $13 million.
Right around. That's amazing. And what do you guys think? I guess if you're at $13 million today, where were you exactly a year ago, run rate-wise?
Uh, okay. So one year ago we were at, uh, 9.8. Uh, so we're growing the ARR at around, you know, between 30 and 35%. Uh, and two or three years ago, that number was around 20. So we've kind of had a plan to accelerate the growth and it continues to accelerate. So it's exciting times for us.
That's very exciting. Do you remember what year you crossed a million dollar run rate?
Uh, a million dollar run rate. I mean, in MRR?
No, an ARR.
Oh, $1 million in ARR.
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Chapter 3: What strategies did the guest use to increase revenue growth?
Did your other partner sell all of his equity in that secondary?
Yeah, exactly.
So you were buying him out effectively?
Yeah, in a way. Yeah, exactly.
Is he still active today?
No, he isn't.
Okay, yeah. So you were buying, I mean, effectively, you were buying him out, cleaning up the, we'll call it cleaning up the cap table.
Yeah, yeah, exactly. Something like that.
Yeah, fair enough. Now, do you regret anything about that or was that the right move?
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Chapter 4: How did the guest manage to raise capital while remaining bootstrapped?
We have a couple of product owners and designers and so on, but the product team is around 30 people.
Now, this is great. So when you obviously you're an up sales, right? So your own sales should look really, I mean, the system should be very tight, right? So when you look at net dollar retention, what's your target? What is it today?
Yeah, so I mean, our target is to go to somewhere around 140 or 150. I think we are today at around 115, 120, somewhere around that. So, I mean, we're growing... I mean, it used to be like 50-50 of the new ARR, net new ARR came from new customers and expansion. Now, because of all the kind of the smaller customers we inherited a while back, now it's around 60-70% comes from expansions.
And we've also been working hard the last few years to try and bring churn down, which is also, yeah, it's easier to grow when the churn is coming down.
What is gross churn annually?
Yeah, we're listed. So that's one of the KPIs we don't report. Okay.
Fair enough. No worries. But you can take your gross plus your expansion to get to the 120 net, 115 to 120 net.
Yes. I mean, when we did the IPO, the churn was around 11 or 12. And it's been decreasing like every quarter since then. And I mean, Target, we believe we can go as low as maybe 4 or 5% gross churn.
Over time. Yeah. Well, we'll see what happens. That's great. As we sort of wrap up here, where's most of the growth coming today, right? You inherited a bunch of customers, but how are you adding new customers today?
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Chapter 5: What is the significance of the guest's IPO and its valuation?
Oh, yeah. What's the market have you valued at today? What's your market cap?
It's around $120 million. Is that cheap? Yeah, I think, I mean, you know, it used to be 200 in January before everything blew up. But I mean, I think we're net cash. We don't have any debt. So I think enterprise value ARR multiple is around 7.5 or 8, which is lower than a lot of our peers, I would say. Yeah. So, but we're still... you know, mark stock market wise, a small company.
So yeah, hopefully it's going to get bigger.
All right. We'll see what happens, Daniel. In the meantime, let's wrap up with the famous five. Number one, favorite business book.
I would say hard thing about hard things.
Number two, is there a CEO you're following or studying?
Yeah, I really like the Netflix CEO, his book. You know, they get a ton of shit now, but yeah, I like his thinkings.
Reed Hastings, number three, what's your favorite online tool for building up sales?
We're using a LinkedIn bot. It's called Waalaxy. It's a really small French company, but it's an awesome tool. Spell it. It's W-A-A-L-A-X-Y.
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Chapter 6: How does the guest's team structure support growth?
They're listed publicly on a small stock exchange in Sweden. And what's beautiful is they're paying out a dividend. They take about $250,000 a month to the bottom line in profits on 1.1 million bucks of MRR. They're serving 1,800 customers and adding 100, call it 100 per month as they continue to grow with their team of about 80 folks. Daniel, thanks for taking us to the top.
Thanks a lot.