SaaS Interviews with CEOs, Startups, Founders
How we bootstrapped to $2m ARR, $800k in Profits, and what we plan to do with extra cash
01 Nov 2022
Chapter 1: What insights were shared from the Founder 500 event?
Hey folks, hope your Q3 and Q4 is off to a good start. We just wrapped up Founder 500 in Austin, Texas. Hundreds of bootstrap founders showed up. It was an amazing time. I loved meeting so many of you.
This interview today is a recording from that session, which you're gonna love because now we have visuals, we have the founder teaching, and I made every single speaker include their revenue graphs and real artifacts in their presentations. Without further ado, let's jump in.
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 these podcast interviews. Check it out right now at getlatka.com. Welcome, Bo, to the stage with Contentino. You bet.
All right, Bo, take it away. Give everyone an overview. Let them know what you're working on. Thank you so much for inviting me here. As Nathan mentioned, my name is Bo. I'm the CEO of a social media management tool called Contentino. We've been helping agencies and brands, advertisers, for the past years to make their work more effective.
So if you think about all other social media tools out there in the space, they are more like single player solutions. We are the multiplayer solution. So we are like Hootsuite and Asana having a baby. But as you all might know, social media management, it was for the past 10 years and even more, it was all about organic content.
And what's been happening for the past year, year and a half, it's a huge market shift. The organic content, the organic reach is dead. Sometimes you can get nice reach on LinkedIn or maybe TikTok, but all other platforms, it's pretty hard to get a good reach.
So all advertisers are basically shifting their campaigns toward paid ads, paid social ads, not just boosting the content, not just promoting the organic content, but doing actual paid ads. And this is when Contentino comes very handy.
For the past year, we've been analyzing building the MVP of our new feature sets to help advertisers and tackle down those challenges when they are creating and approving on social ads. So the problems here. So, you have advertisers who need to have everything in one place. Like social media management tools, back in the days you want to see Facebook and Twitter in one calendar.
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Chapter 2: How does Contentino differentiate itself in the social media management space?
Basically, we were somewhere in the middle. You've got teamwork and approval solutions, And then you've got, nowadays, you've got solutions who are focused more on planning and maybe optimizations like Hootsuite. They acquired Ad Express a few years ago. I thought that they might focus more on the paid ads. Not really happening.
For the past year, they started to build quite an interesting solution for the paid ads. But again, it's still more integrated within their planning platform. They are not solving the collaboration problems and challenges. That's why we are comparing Hootsuite is the Adobe and we are trying to be the Figma in a space.
And then you've got the other tools like Smartly, Metricool, who are more for the e-commerce segment, less than what we do. We are more for brands and the B2C segment. So yeah, we are capital efficient bootstrap, 2 million ARR. We've got quite a nice NPS core. We've been the fastest growing tech company in Slovakia, two years in a row. Yeah, we've got a nice client base.
We're going to use this as a cross-sell opportunity because these tools, the core of Contentino and Ads Planner are very complimentary. It's part of the one product. And yeah, we don't want to basically be bootstrapped anymore. We want to play a different game because we don't want to play the college football. We want to win the Super Bowl.
That's why we decided to raise capital for the first time. This is the team all combined. We have over 50 years of experience. We have headcount of 45 employees. We actually grew the headcount from 18 to 45 within like 10 months. Now you might be asking like, how can we afford 45 employees with 2 million ARR? We are based in Central Europe, so we are quite capital efficient in this sense.
And yeah, we are asking to raise 2.5 million in exchange for 16.7%, which is basically $50 million post-money valuation. Very important, how we're going to use the investment. We want to inject the product development and really speed up the process. Currently, we have MVP with a couple of early testers.
We also have over 100 agencies on the waiting list waiting for this product to be ready to use. And we want to speed up the product development. But not only the product development, we're going to hire an expert who will help us to become successful. More PLG. We are having already a couple of growth loops working, but the product is going to be really the key revenue driver.
And then, of course, the marketing part. All right, guys. Give a round of applause. There's the pitch. So I'll grab this. You come over here. Yep. All right. So now we want to meet the investors here. By the way, you sure you don't want debt, right? It's always there. It's always an option.
If you don't get a deal you like, we can do a million against your two, 36-month payback period and pretty cheap interest rate, but we'll get to that later. All right. Um, um, so great, great pitch here. Let's, let's meet the sharks. Okay. So first up, you just heard from David. That's why we presented it this way. You heard exactly how he thinks about acquisitions.
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Chapter 3: What challenges are advertisers facing with social media management?
So a really good group of folks up here. Bo, do you understand the money behind the money? Any questions about sources of capital? No, not so far. Okay. Ooh, here we go. Setting the stage, which is dim the lights, change the purple to red and let's rock and roll. Um, so, so again, you see all the investors have the decks, right? Which are, um, all basically both finances.
So Bo, I think the best way to do this for the, so the audience can sort of play along here. We've got your profit and loss up on the stage, sort of walk through, um, maybe this isn't big enough for everybody, but do your best to walk through revenue today and expenses. Maybe let's go to another slide because those numbers are a little bit... You drive.
But if you talk too long, I'll have to take it back to move it along, okay? Yeah, yeah, okay. So basically, I don't know if I mentioned that, but the story is that we are pretty capital efficient. We've got over 700,000K of profit in a bank account laying cash. Last year, we decided to put it back in a company, reinvest it.
and to speed up the growth, but what's been happening basically, we increased the headcount of course, we could see a beautiful growth in a net growth MRR in the Q4 and Q1, which I'm not sure if you can see in any of these slides, but No, but yeah, this is basically the snapshot of June 2022. June 2022 was not ideal.
I don't know why Nathan put this slide there, but maybe if I would show you the January, February, or March, those numbers were quite much better. But June is more recent. Why would you sell the company on old data? It's a summer season. Don't throw the slide guy under the bus. Come on. Yeah. I mean, during the summer, we've got always, it's everyone is going to holidays.
So the summer season is not the ideal. All right. Well, let's leave it here and let's just go down the line. First question from each investor. Justin, you want to kick us off? You got a question for Bo? Yeah, absolutely. I was just curious if there's any revenue concentration. And then secondly, where are geographically the majority of your customers?
Revenue concentration, you mean like if we have kind of a big clients like enterprise clients, we don't have like one client paying 20% of our MRR. No, actually 10% of our MRR comes from enterprise. The other are basically SMB mid-market. That's our sweet spot. Geographically, well, we are based in Central Europe.
So we are pretty strong in Europe, especially in Belgium, Netherlands, Central Europe area, Northern Europe. So we tackled down a lot of small markets. The reason why we are such a strong player in such small markets is because it was easier for us to create a word of mouth in those areas. So we never actually...
aspire to go like for Germany or France or UK because those markets with the capital we had were kind of big for us. So this was our strategy. That's where we are strong. We got like 10% clients from US. They all come organically. But again, it was never our focus for now until now to go for a big market. All right, Scott, take it away. Fire question.
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Chapter 4: How is Contentino adapting to changes in the advertising landscape?
It seems very low. Yeah, very good question. I mean, we call ourselves budget friendly, but we are cheap comparing to all other tools. So as a matter of fact, this year we are changing our pricing structure completely. One reason is that our ARPA is $130 a month, which is not ideal. We are planning to increase it up to $350 within a year and a half. Secondly, our net dollar retention is 99%.
We want to have at least 110% net dollar retention. That's why we are changing pricing so the accounts and agencies can upgrade much easily. Because right now they can upgrade only based on number of users, but we're going to flip it so they can upgrade based on the features they are actually paying for. So the pricing will be changed this year. Okay, great.
So we will do is see the 451 countdown, keep asking questions, product market after that countdown is done, we'll switch to like valuation questions, right? How you think about valuation, things like that. So get as much data you can on the business right now. Can you describe if you have several modules, or maybe what was the original product? What's the product you're selling today?
And what's the product you're kind of pitching in the future? Yeah, so basically the calendar and the approval process and the Kanban view, the workflow management was the core.
Then we added analytics and reporting, so we wanted to provide more data, but not just reporting, just here you go, there's your numbers, but we wanted to provide the data more in context, so it's quite unusual analytics we have. And then we've got community management. We kind of deprecated feature for now, but we might get back to that.
And then the ads planner may basically focus in on the ad sector. And that's coming soon. When is that coming? Currently we have MVP. We are expecting to have hundreds of active users this year but the minimal market of a product will be ready most likely January. So that's where we want to launch.
We are already generating leads and generating interest so we have a lot of users on the waiting list but we want to make sure that the launch is going to be spot-on so we don't do any So we just didn't have the... Even though the changes were coming, we knew about the trends changes. We didn't have the product ready for that. But this is one of the hypotheses. It might be also... Yeah.
We can talk about it maybe later in more details. All right, guys. Any other details you want on the business before I... Usually we have smaller accounts churning. So basically they're project based or they lost clients or they shift their focus. So it's rarely that we have clients with more than 200 in MRR churning.
And if they do, usually it's that there's a big fluctuation of people in the advertising agency. So someone leaves the company. And then someone else will replace them and they're already using some different tool. And basically if they are team leaders, they will say, we will use this. So that's very common, common reason. All right. Very cool.
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Chapter 5: What are the company’s growth metrics and financial goals?
So, you know, if you look at those that fund this, it would be kind of 2x range, roughly. 2x, cool. And then let's go down to Justin. Justin, how far do you think about valuations in general today? And then again, specific to Contantino and Bo. No worries. I mean, in terms of just valuations overall, I mean, it depends heavily on the type of business.
And a lot of it at this stage is based on the KPIs. And I think David hit a lot of good points just in terms of, you know, might not be at that stage yet. And I agree with a lot of the different valuation ranges that have already been shared. But I see this, you know, somewhere in that, you know, two to three range.
But I also think that David did hit on a lot of good points where I think this business has the potential. It's just a matter of getting to that stage and defining what market you're in. I'd also want to see it proven out against. You mentioned Hootsuite is kind of the dinosaur of the industry. You know, have you gone up against them yet? And have you won? Have you taken over their market share?
Have you displaced these dinosaurs? You know, I'd want to be able to see, I think, a little bit more of the business maturity in that sense before we kind of really dove into anything further. Yeah, makes sense, makes sense. And that's what I was saying at the beginning, like we made a lot of mistakes in the past.
I'm aware that the growth rate and the numbers are not ideal, but we are looking at it more as a future and the potential, what we can get out of this business, because we've been in this business for five years. There's a huge market shift happening and we want to just jump on the trade wave and just serve that.
And Bill, you've been very resourceful getting to 2 million without having to raise any capital versus some pre-seed deals where folks are raising with no revenue. So it's obviously, it's a balancing act. Here's what we're going to do.
We want to give you guys quiet time where you're not actually thinking on the spot, answering random questions to actually think about what does four or five X mean or two X or one X, you know, if that 2 million run rate, is that a, Is that a 5 million? Is that a 10 million? What's that offer potentially look like? So while you guys do that, Bo, do you want to respond at all?
And then we'll do two to three minutes of audience questions while you guys are thinking about, you want to basically make a statement that says, Bo, I would sort of value this business at Y. We could do X amount of money at that valuation and then we'll be in negotiation.
And if Bo says no or there's high, low, then it'll be out and investors will walk off the stage and it'll sort of go like that. Sound good? I mean, that's the way to do it, right? I mean, that's how it works. It's just, in real life, they just don't return your emails, right? So at least we can... By the way, response time at FounderPath, under 30 seconds. Just kidding. You see what I did here?
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Chapter 6: How does the team plan to utilize the funds raised?
Ads planner. All right, so two years, $50 million revenue. Audience questions for two or three minutes here. All right, take it away. If you reflect on the past few months, what's the biggest mistake you've made and how do you plan on fixing it or how have you fixed it?
That's definitely the focus of the whole company, trying to release three things in the same time and building three things in the same time. The estimations when we were planning to release them were completely off charts. And it's probably that we were unexperienced. We never decided that, okay, we're going to hire 45 people. We're going to be 45 people in 10 months.
So yeah, definitely focus on one thing. If we would focus on one thing at a time, the net gross MRI would look definitely different. Hey Bo, so can you help us understand how the recent privacy changes have not only affected MarTech and AdTech, but your product roadmap and the recent pivot?
Yeah, this actually plays in our favor because the attribution of the user journey is getting more and more difficult. So those optimization tools, what I just showed you on the slide, they will most likely have a problem. What brands are doing and how they are kind of tackling down these privacy policy challenges is that they're focusing on top level, on top of the funnel.
So instead of having ads only on Facebook, now they are splitting the budget that they want to have as many touch points as possible on top of the funnel. And that's where we come handy. Like you want to have ads on Reddit, Quora, even on platforms they never advertised before. So this is what's happening on the market right now. Hi, both.
Kudos to you to be standing there in front of this crowd and hats off to you. I raised my series A and I freaked out. So my question to you is, who are your competitors at the moment? And how, if Hootsuite, who has a lot of money, decided to do what you're doing and disrupt you, what would be your counteract? That's one of the reasons why we want to grow much faster and asking for investment.
We don't want just the money, we are looking for strategic partners who can help us to tackle down some of the usual growing challenges, who can connect us with people from the social side, social networks. I mean, yeah, we are low tech solution. We are easy to replicate. But with Contentino, it took them four to five years to actually add some of the features we had in the past.
So Hootsuite actually, they created some kind of approval, very clunky process in their platform five years or four years after we launched Contentino. So it took them a while for some reason. Yeah, I have a product question. Your biggest customers that are spending the most money in social, what are some of the funnel insights that you feel like they've come across?
And do you feel like they've come across those insights faster with your product? Or do you think that they would have just found the insights individually in the respective platforms? Thank you. If I understand the question correctly, if we are helping to find, if we are helping our customers to better understand their numbers and insights, right?
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