SaaS Interviews with CEOs, Startups, Founders
The Next Figma? KnapSack Hits $40k MRR in 6 Months For Design and Dev Module Tools
09 Dec 2021
Chapter 1: What is Knapsack and how did it achieve $40k MRR in 6 months?
That would mean you guys are doing what about 40,000 bucks a month right now in revenue? Yeah, right around there. And up from like 900 bucks a month a year ago. Yeah, exactly. 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.
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Chapter 2: What challenges are startups currently facing in the tech industry?
My guest today is Chris Straw. He's an entrepreneur and serial founder, startup CEO, and podcast host. He's excited to see how Knapsack, his current company, is going to change the way we think about building applications using a pattern-based approach. He lives in and loves the Pacific Northwest.
Formerly a river guide, professional dungeon master, and believer in always looking for your next adventure. Chris, you ready to take us to the top?
Yeah, sounds great.
All right. So what dragons are you battling right now at Knapsack then?
Yeah, I mean, everything comes back to D&D in the end. Let's see. Dragons. Well, I mean, there's a lot of pressures on startups right now, and a large part of it is is related, of course, to things like like runway and funding and finding the right people on your team. And so,
The place that we find ourselves is having some great early stage traction as a company and now looking at how we accelerate into that next step. How do we hire the right team? How do we find the right venture partner?
How do we keep making awesome software and growing the company in a way that's responsible in an environment of venture capital funding that has been completely bonkers for the last two years?
So my understanding of the product, right? You know, we just spent a small fortune with our design team. They have these beautiful layouts on Figma. They design these like one pages with all of our fonts and colors. And then we basically modulized all of the different chunks of the landing page design.
It looks like if we import all that to Knapsack, I can have someone that has no idea how to design or code, create their own new landing pages using old elements we've already done. Is that basically how it works?
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Chapter 3: How does Knapsack utilize a pattern-based approach in app development?
Right.
Yeah. A year. And then and then what we do is we have customers that get really big. I think we want one customer that's a little over 700 seats and they pay your biggest customer. Yeah. Our biggest customers is a little over 700 seats. They pay about two hundred thousand dollars a year. A year.
Yeah. That's great. Yeah. So that's nice. So what that tells me is I think you're pretty early stage in terms of age. You've found it, I think, in 2020. But you have a clear path to driving serious expansion revenue.
Yep, exactly. And so last year or last month was our one year anniversary, which is pretty exciting. That's awesome. And and yeah, you know, we we really focus on that expansion sort of go to market motion, right?
We want to land with that initial team, get them to really love our product, show the value of it because there's not like a million case studies about why design systems are valuable right now and then get them to to work with other teams inside of their their organizations to grow that and to make that something that makes them successful and makes us successful.
I don't usually ask this with a company that's under like two years old, but it sounds like you've got a good pulse on this. What's your guys' net dollar retention over the past 12 months?
Yeah, it's about 190%. Yeah, so super.
I figured it was going to be high.
Yeah, it's like we're pretty happy with that. That's the number that we need to really focus on for the next year to really continue to make this an awesome company.
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Chapter 4: What pricing strategies does Knapsack implement for its services?
We view this as a step change in the way that people think about building product. And that market opportunity window is pretty small. And so we could grow it organically, but it would take us four or five years to even get to the point that we're at today where, you know, we have a substantial base of large enterprise customers and a whole host of smaller customers.
How many total customers today?
So it varies a little bit because we have a self-serve offering in the enterprise offering. We have, you know, about 15 enterprise customers and then, you know, a couple dozen smaller customers. Got it.
So call it like under 100, maybe like 80, 80 customers all in something like that. Yeah, something like that. Yeah. Yeah. Yeah. Interesting. OK, cool. Yeah. And you already sort of painted the picture of what the enterprise $200,000 a year contract looks like. People can get started as cheap as 25 bucks a month, right? Exactly. And so you have full spectrum then.
Yeah. And the folks that like, you know, the rules of SaaS are essentially like, you know, remove as many barriers as possible from people touching and paying for your product. And so that's that's what we do with the $25 a month thing is like, hey, you want to try Knapsack, you want to have an account so that you actually get things like support and help to get yourself onboarded.
And so that's where that offering comes in. And that's largely about getting people interested in the product. There are tons of people, though, that just use it every month and they pay their twenty five dollars and are happy with it. And then, you know, that that ultimately is intended to lead to folks converting to enterprise where they say, like, my team has tried this for a couple of months.
We love it. We want to take the next step, get a bigger group of people on board, get another team on board. And that's when people move into that that enterprise space.
Makes sense. And I know averages are hard here because you have such a wide range, but you said earlier, call it $6,000 average ACV across 80 customers. That would mean you guys are doing what about 40,000 bucks a month right now in revenue? Yeah, right around there. Up from like 900 bucks a month a year ago. Yeah, exactly. Incredible growth. I mean, this is great growth.
So with that kind of growth, when you raise the 2.3, I mean, what valuation did you target?
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