SaaS Interviews with CEOs, Startups, Founders
Rippling of Brazil Solides Hit $35m ARR up from $15m ARR and Raised $100m at a $800m Valuation
07 Apr 2023
Chapter 1: What is the main topic discussed in this episode?
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. Sola Days today is doing $2.6 million per month in revenue. That's a $31.2 million run rate up from a $15.6 million run rate a year ago. Alessandro believes they'll finish 2023 at a 60.
That's $60 million run rate, but it wasn't all easy. He launched in 2010, pivoted to a subscription model in 2015, and then it took him four years to hit his first million-dollar year. That was 2019. He just finished last year raising a Series B for about $100 million at around an $800 million valuation.
is looking at making additional acquisitions in hopes to IPO in a couple of years once he breaks $200 million in revenue. Hey, folks, my guest today is Alessandro Garcia. He's the founder of Solidez, the number one HR tech for small medium companies in Brazil.
The company provides a basic holistic talent management software where you can attract, develop and retain talent using people analytics, artificial intelligence, and behavioral management. Alessandro, you ready to take us to the top? Yes, thanks for having me here. Thank you very much. You bet. So just to be clear, you're not a traditional recruiter that takes 30% of first-year salary.
You're a fixed SaaS fee monthly, correct? Yes, yes. That's great. So tell us more about a customer that's using you today and how they use you. Sure. We have almost 20,000 companies as subscribers, and we they used to implement the HR process in the company. Regularly, the small and medium companies doesn't have the HR process already in the company. So we help
to introduce the process of hiring talents, developing and retaining and engaging talents to increase productivity and reduce turnover costs. And so Alessandro, just to be clear, so you've got 20,000 paying customers today? Yes, 20,000 paying customers, small and medium companies in Brazil. That's amazing. And how many employees do those 20,000 companies manage via your platform?
Close to 2 million. Wow, 2 million. Okay, so we could take 2 million employees divided by 20,000 customers. The average team size there is about 100.
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Chapter 2: What is the current revenue status of Solidez?
Is that right? Exactly. Okay. Tell us more about the backstory here. When did you launch the company? What year? Yeah, the company was launched in 2010. But we run a very traditional way of selling software at that time. It was a transactional sale. So in 2015, we dropped everything out and started the business again with a subscription, changed the way of doing marketing and sales.
And since that, we started to count customers from one in 2015 uh and with triple triple double double in almost double in the 50 year we run four years uh bootstrap via bootstrap in the fourth year we got the investment from dgf So how much did you, this would have been in 2019. How much did you raise in 2019? It was close to $4 million. It's a very small round.
Chapter 3: How did Solidez transition to a subscription model?
We were able to not have a great deletion at that time. And it was enough to continue to grow the company to this. to last year when we made Series B. And that Series B, I think, was for $103 million, right? Yes, from Waldo Picos, $100 million. $100 million. And most Series Bs last year, companies were selling around 10% of the company. Were you in that same range? A little more.
Chapter 4: What milestones did Solidez achieve in its funding journey?
Because we are planning to... The company is very close to the IPO phase, so it makes a lot of sense to us to go with this giant investor a little more far. So $100 million raised at a little under, or sorry, you sold a little more than 10% of the company. That would mean your post-money value. Yeah. On the first round, you'll say yes.
Yeah, so 100 million raised and your Series B last year, you sold a little more than 10% of the company, which would mean your post-money valuation was somewhere around like $800 million. Exactly. I see. Okay. And then take me back, because I think you did, did you do a Series A or like a $2 or $3 million round in 2019? Yes. It was $3 million to $4 million.
Okay, so the three million Series A in 2019, what valuation was that at? Do you remember? Maybe $15 million. I think something like that. Well, then you are quite the enterprise value creator going from a $15 million valuation to an $800 million valuation last year. Help us understand what drove the growth. What was your growth strategy in terms of getting new customers during those years?
The product itself is generating a lot of impact in the small and medium companies. So it makes it easy for us to get customers and And generate results on that. Just to have an idea, in average, we save close to 700,000 reais. Maybe 170,000.
thousand dollars a year in savings on uh turnover costs and the customers pay us close to eight thousand dollars a year so there's a lot of saving and the argument to to sell our software is very good and today we don't have other players uh providing agr software for small companies in brazil in u.s you have a
uh bamboo a jar and other players but here we are playing this this game alone so we have to to explore this opportunity and run fast as well as we can so alessandro did i hear you say the average customer today pays you eight thousand dollars per year yes So that would be $650 per month on average. If we multiply $650 times 20,000 customers, it puts you at about $13 million of ARR.
Is that accurate? It's less than that because there are two groups of software. And when we talk about this reduction of the turnover costs, we are talking about the whole platform. And we have a group of close to 10,000 customers using the scheduling point. It was from a company that we acquired last year called Tangerino. They deal with scheduling time and Punch clock, electronic punch clock.
It's like that. So there is two groups. In that group, we have the holistic platform. We save close to 700,000 reais and they pay us $8,000 a year. Well, I guess just to be clear, so monthly recurring revenue today across the entire company, you said it's about a million dollars a month or is it more? More. More. Okay, got it. Yes, yes.
So the average company that is not paying you $8,000 per year, they're paying you something much higher. Yes, they pay less. Just to be clear, half those customers use the whole platform and half of them use just a piece of the software. to take care of the scheduling times. No, I understand that, Alessandro.
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Chapter 5: How does Solidez help small and medium companies with HR processes?
But if you take, just to keep it simple, across your entire company, the average customer today pays you about how much per month? Oh, let me check it. Okay. It was, our ARPU is $130 a month. Okay. I'm doing some kind of math wrong. If you have 20,000 customers paying $130 per month, that means you're doing 2.6 million per month. Is that right? Yes. Oh, that is correct. Okay. Yes. Okay.
So if you're doing 2.6 million a month today, where were you exactly one year ago? So we can calculate growth rate. I have done that. We grew 100% last year. Oh, wow. How did you do that? Facebook ads, inside sales team, what was your go-to-market strategy there? Using inbound marketing and inside sales, the whole process.
And we have an HR portal where we can get a lot of HR professionals searching for content and how to deal with things. And we have also an academy where we provide courses in HR to help people in those small and medium companies to practice the HR in the companies and generate results.
Because the companies, the job professional doesn't have a lot of information, and they don't are very experienced in running So we can help them and teach them how to do the HR and we can introduce our software in this process. That makes a lot of sense. So going back to the early days, do you remember what year you hit a million dollars of ARR? No, but it was...
Two years ago or two years from now, I think it's that. So 2019? Yes. Wow. Okay. So 2019, a million. Last year, 15.6 million. Today, you're at a $31.2 million run rate. The one question I've got for you, because you're unique, obviously, you're not based in the US, but in the US, a lot of employees that had options valued at last year's valuations are now underwater, right?
Because valuations have come down. If you were doing 15.6 million last year, when you did a 800 million post-money valuation, that would put your multiple at a 51x, which today would seem very expensive. How do you manage employee morale if they feel like their options are underwater? Today, we don't have this problem, even with this lower of the multiples in valuations.
uh because we grew a lot since from them so uh we don't have to deal with this problem we have a lot of problems but that is are you thinking about an ipo yes uh maybe in three years we are trying to to build a solid business to to offer this in the public market and would you go public in brazil or in the us or somewhere else we we don't know we don't know yet
What do you think you have to hit from a revenue perspective in order to have a successful IPO? In terms of size of the revenue, we expect close to close to $200 million a year. Yep. Before you IPO. Yeah, so I think we have a business. If we open the company in Brazil, we can do that a little less, maybe 150 could make sense for us. Yep.
And if you're doing a $31.2 million run rate today, we're recording this March 22nd, 2023. What do you think you'll finish at this year in terms of revenue? Our expectation is to double again. So you want to finish this year at a $60 million run rate? Yes. 80% of death will come from organic growth. And we are looking to inorganic to the M&A, but close to 20% of the growth will come from an M&A.
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