SaaS Interviews with CEOs, Startups, Founders
How this Hotel SaaS Hit $1.3m ARR and 1400 Customers
21 Sep 2023
Chapter 1: What is the main topic discussed in this episode?
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Chapter 2: How did the father-son team start their hotel SaaS business?
Guys, minihotel.io got going in Israel in 2006, 2007, father-son team. Today, they're doing $1.3 million in annualized revenue up from $1 million a year ago. They've done this all bootstrapped. They own 100% of the business, which they love. They just turned down a 6x multiple, so call it like a $6, $7 million offer. They want to stay focused, keep building.
They're focused on serving these 1,400 smaller hotel chains or folks managing vacation rentals. that each pay $85 per month. So very distributed customer base, which they love adding 40 new customers per month, mainly through $4,000 a month in paid ad spend and other sites like Capterra as they continue to scale. Hey folks, my guest today is Yuval Stockhammer.
He is a ITT and cloud admin, started a mini hotel SaaS with his dad in 2007, has been leading the company operations since 2020. It's a hospitality SaaS. You can find it at minihotel.io. Yuval, are you ready to take us to the top? Going on and back. All right, very cool. So what is Mini Hotel? Is it pure play SaaS?
Yeah, it's a pure SaaS, a classic SaaS for hospitality businesses, mainly low market. Okay. So when you say more than 1,400 hotels in 70 countries use you, that means 1,400 hostels, hotels, etc. use you to manage. It's mainly small hotels, guest houses, vacation rentals, hostels, guest houses, these kinds of businesses. A lot of the moms and pops of the world of hospitality use.
We have some four and five stars, but mostly it's not our expertise. Our expertise is like zero to two star hotels, mainly vacation rentals. And this is where we excel. And Yuval, what do these companies, these hotels pay you on average per month or per year to use the tech? Currently, it's around $85 per month. When we started back in 2007, it was higher.
You know, and the monthly average price per hotel dropped since then because we focused more on the low market as we went, you know, as we evolved, you know, more focused because we started in Israel mainly, in Israel, and later on in Argentina. And we worked with bigger hotels, you know, like the Three Stars or in Israel it was more boutiques,
But as time passed by, we decided to focus more on the low market and more like international, global markets. So we have clients in 70 countries today. And how many paying customers total? It's like on our site, it's around... Around 1400, something like that.
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Chapter 3: What revenue growth has Mini Hotel achieved recently?
Yeah. So Yuval, can I take the 1400 times 85 a month dollars? You're doing about 120,000 a month in revenue. It's around, we are almost 1.3 million ARR USD. Okay. Yeah. So that again, that'd be about 120,000 a month in revenue. Where were you exactly one year ago? So we can calculate growth rate. We were about 1 million. Okay. So about 83,000 a year ago.
And, um, have you, have you guys bootstrapped the business or did you decide to raise capital? Bootstrapped zero dollars since 2007. That's amazing. So you and your dad own a hundred percent of the company. Yeah. Yeah.
Chapter 4: What is the customer acquisition strategy for Mini Hotel?
That's right. That's awesome. So I guess how a lot of people go, Oh, well, you have all, he cheated. His dad started and like sort of, he jumped in. And what would you say to that? You mean about the bootstrap, referring to the bootstrap? Well, how much of the blood, sweat, and tears did you really put into it versus just sort of took it over from your dad? How do you think about that? No.
Firstly, my dad is still in the business. Firstly. And I'm not a kid myself. My father is like 65 and I'm 40 years old. So when I started, I was 24, you know, and I really like we started it, both of us. Before that, we were both like employees for hire. He was a CTO and I was working in the same company. We worked with the larger, the bigger hotels in Israel, like the four and five stars.
And actually, I was working in that company a little bit after him. He was working there like two decades, you know. And he was the CTO over there. And I'm an IT and cloud expert. And I used to code a little bit in high school, but my father is the real genius. How do you negotiate equity with your dad? How much equity do you own versus him?
Firstly, we started the business together, but he started it in 2006 when he was just making the MVP alone. So when we launched in 2007, I started partial time. And later on, I joined into full-time. But it basically was for the two of us together, you know, started the business. But because he was there like one or two years before me, he's like 60% right now and I'm 40%. I see. Which is fair.
We don't have fights about that. We fight about other stuff. Like what? What do you fight about? Like product, you know, and how to run the company, how to hire, you know, the daily stuff. How many folks are on the team today full-time? We have 25 people hired directly and full-time in three offices. And we have like four or five more always like in the partial time.
So it's almost like now 30 employees with us together. It's 30 employees. Many people argue right now what macro condition macro economic conditions are not favorable for startups. How are you sort of managing to make sure you're sustainable? Are you profitable today? Yeah, since we started the business, we were profitable all years since 2007 till now, except for 2022.
Because in 2022, we had a deliberate self-investment of our own funds and we opened up a new office in Serbia. Joining our two other offices, we have one office in Israel. We have only six people in Israel because it's expensive to hire here. It's almost like in the US. How much does a senior engineer cost in Israel today? It's around like most senior ones take
around between $15,000 and $20,000 per month. So it's stiff. It's stiff for us. It's stiff. My father is an engineer himself, but we have other foreign engineers in Argentina. They're directly hired because we have three companies. We have the company here in Israel, and we have another one in Argentina, and another one in Serbia. So it's three entities that we have locally.
They're all wholly-owned subsidiaries of Mini Hotel, right? Yeah, and all of them are directly hired and managed by us, all the employees. And it's quite nice because in Serbia and Argentina, we can afford ourselves to hire more. How much does Serbia office cost to build? You're talking about like not the people, the hiring of the place itself, the office itself.
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