SaaS Interviews with CEOs, Startups, Founders
This SaaS makes sure your gas station doesnt' run out of chargers. You won't believe their revenue.
08 Jun 2022
Chapter 1: What is the main topic discussed in this episode?
After taking all of this, we have a contribution margin of 13%. 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 Guy Freire.
He's a co-founder and CEO of Dilato, investor at Norte Ventures, Kobe, Nomo, and B-Hub, in addition to being a board member of Quiko and B-Hub. He co-founded Levo Eyewear, co-founded Grow, and co-founded Wharton Angels, the Brazilian chapter. He holds a bachelor's of engineering degree in industrial engineering from PUC Rio and MBA from Wharton Business School, now building dilato.com.br, which is
playing in the, uh, enablement space for Aladdin and the Latin enablement space for e-commerce sites and financial services. All right. He, you ready to take us to the top. Yeah, Nathan. So super excited to be here. Thanks for the invitation. You bet. You've got a lot going on. So, I mean, are you really focused on the startup here or is this like a side thing?
No, I'm focused on the startup, focused on Dulado. But of course, there are many opportunities going on in the region. So I like to do side investments and help other entrepreneurs. But my focus and my time is more dedicated to building Dulado. So what is it? I mean, it looks like it's something that we can use to buy headphones, buy chargers, things like that.
But is there a SaaS play here that I'm not seeing? Yeah. So what you're seeing when you get into the website is... We focus on building a solution that helps small merchants buy better their inventory and also sell better online because most of the merchants, the small entrepreneurs in Brazil are 100% offline.
And we decided to focus initially on electronics because everybody's going after the low-hanging fruits, which is fashion and groceries. But Those segments are too competitive already. So we decided to focus on electronic. We are the only one on the B2B marketplace space online VC-backed. And that's where we saw the biggest opportunity.
And the SaaS play that we have here is the e-commerce play to help them sell online. And we're also about to launch a management tool to help them manage their business better. So we help them buy better, sell better, and manage better their business. So what does the average paying customer today pay monthly in terms of the SaaS part of the business?
The SaaS part of the business, we're giving it for free because it's a way for us to, it's a cack hack.
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Chapter 2: What is Dolado and how does it help small businesses in Latam?
Like we offer the e-commerce solution for them to sell to their final platform for free. But the moment they started using our solution and build the trust, we can make a lot of money by sell them their inventory. So right now, like, We operate like Amazon.
Amazon, they have a marketplace on the side that connects suppliers with final customers, but they also have their own line of products that they make a lot of margin on that. So we're doing this. on the B2B. So our SaaS today is free and we don't have to monetize on this front because it's a great way to have a low CAC and monetize on the other front.
So then on this, let's build up a marketplace for a second. So in the past 30 days, well, I guess let's just use the last full month, which is April. How many suppliers were on the platform? How many SKUs? So right now we have around 500 SKUs, 100% focused on the electronics. We have More than 30,000 merchants registered. Those are suppliers or buyers? Those are buyers.
And on the supplier side, now we are increasing on the B2B marketplace. We just have around five suppliers for now, but the idea is to increase more. So Guy, there's five suppliers with 500 SKUs? Yes. Okay. And there's 30,000 registered buyers. How many of those buyers spend at least a dollar the past 30 days? Last 30 days, around 1,500. They spend on average with us $120 on average.
And we've been growing 50% month over month. So this month we are increasing 50% is the number that I just told you. So 1,500 buyers spending $120 on average per checkout is about $200,000 of order volume. How do you make money on that $200,000 of order volume? Right now, that's the beauty of what we do is we have a lot of margin.
So right now, the gross margin, consider the price we sell and how much we pay in terms of COGS, it's 28%. So it's one of the highest in the B2B segment, the B2B marketplaces. So just to be clear, you're making $56,000 on $200,000 of volume. Yes. But besides this, we also have to take out logistics. We have to take out transaction costs.
So after taking all of this, we have a contribution margin of 13%. Okay, got it. So just to be clear, there's $200,000 that these buyers are purchasing from five suppliers and 500 SKUs on your platform. As they put and spent $200,000 over the past 30 days, you have to spend about $150,000 of that to actually buy the physical good, the charger, the headphones, the whatever, the product.
So that's your 28% gross margin. Then after all your operating costs, your people, marketing, sales, whatever, you're taking about 13% to the bottom line. Is that about right? Yes, that's correct. I see. Okay. This makes a ton of sense. So that would mean... So 56 times 0.13. Yeah. So that means you're doing $8,000 per month right now in terms of margin you make on the marketplace.
Now, does that include the goods that you sell directly that you own and products you own and build yourself? Most of them, it's directly. The marketplace, the 3P play, it just started last month. So over 90% of what we are talking here is... We buy and sell to the clients, not just intermediating on the 3P marketplace. Oh, I see. I see. I see. Got it.
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Chapter 3: What unique challenges do small merchants face in Brazil?
So you're right now doing a run rate in terms of your gross margin, right? I guess, how do you calculate your revenue? You don't want to use just total transaction while I'm going through your platform, right? Yeah. So right now, That's the way we, because it's still marginal the way we do 3P. On the 3P, on the marketplace side, it should be take rate times GMV.
But the GMV, as I told you, it's still very small because we just started. So most all of our revenue comes from the 1P play, like a regular e-commerce. So the way we calculate revenue is in terms of ARR annualized. So right now, if you annualize the numbers that I told you, it's going to be something around $2 million in ARR annualized.
And in terms of gross revenue, it's gross revenue 28% and contribution margin after you take all the costs is 13%. Yeah, so it's about $500,000 of gross run rate after cost of goods sold. Yes, exactly. Yeah, that makes sense. Interesting. I guess I still don't understand. So name a company that's using Dilato to buy headphones and chargers.
Yeah, so we are talking here about not any kind of company. We're talking about very small retailers that has usually one store. And we're not going after the retailer, the low-hanging fruit, as I told you. The retailer that is located in Sao Paulo, in Mexico City. No, not this guy. I'm talking about the guy who is in a city with less than 100,000 people.
Chapter 4: How does Dolado differentiate itself in the e-commerce market?
So it's like a gas station that needs to put more headphones at checkout. Okay. Exactly. But usually, I'm talking about small electronic store, but gas station that has... convenience store, it's also part of the retailer that it's buying from.
But more on... I was going to say, everyone in my audience has probably been to a gas station on a road trip and seen at the checkout, they have like a station to buy your iPhone charger that you left at home. You are the one that is supplying the charger. Yes, exactly.
Especially the one in the middle of nowhere, when you're in the middle of the road in a city that have very few people and you stop there. Yes, that's the kind of retailer that we're talking here. Interesting. Okay, so will you ever move? So you're sort of using this marketplace and selling as good as a way to get these folks into your ecosystem, this gas station.
You're not charging for the software right now. I imagine at some point, though, you will want to do only software because the margin is way higher, right? Yes, yes. But the point is, it's a mistake if I go after the SaaS right now because now what I want is data. First of all, data. The moment I know how much they are buying from us, I have a very good idea of how much they are selling.
And this kind of merchant, this kind of small retailer, it's very hard for you to get the data on how much they sell. That's why giving credit for this segment is super hard because nobody has the actual data. But the moment I know how much he's selling online,
The moment I know how much he's buying, the moment I have all the data of the transactions that are going, the real data, then I can provide financial services, credits, payments, charge a SAS fee for the use of the platform. But everything needs to happen step by step. If I decided to do everything now, it's not going to work.
Folks, as you know, time and place is everything, especially in marketing. But in today's age of a million messages a minute and not enough hours in a day, how can you actually catch your target's attentions?
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Chapter 5: What is the pricing model for Dolado's SaaS services?
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That's linkedin.com forward slash sasinterviews. Yeah, that makes sense. That makes sense. I get the vision. I understand where you're going now. Have you bootstrapped this or did you decide to raise capital? We bootstrapped in the beginning, but like,
Right after we started, we were approached by some funds like GFC, Global Founders, and then Valor Capital, which is one of the top funds here from U.S. Investing Brazil. Now we have eight funds on the cap table, angels from all over the world, like partners from Lightspeed in India. So Gui, what was the last round? How much was it?
The last round we just announced two months ago was a $10 million round. That was led by Vedder Capital, and we brought like six funds alongside. And was that your Series A, would you say? Yes, my Series A. Okay. And then what was before that? Did you close around last year in 2021? Yeah, yeah. We closed around last year, no, in 2020. That was a seed round of $2 million. Okay.
And anything before that or no? No. Okay. Okay. So you raised $12 million to date. Now, most people in their Series A are selling between 10% and 15% of the business. Were you in that same range? Yes. Yeah, definitely. Okay. So you were like $90 million pre-money valuation, something like that. No, less than that. I can disclose you the numbers, but we were diluted 15%, to be precise.
So we are alongside the lines of... More like a $60 million valuation. Still, that's a fairly high... Look, it depends on how you define revenue. If you're able to convince your investors to count your $2.4 million as your revenue versus your take rate of half a million run rate, the multiple looks a little more rational. But if you look at a half million run rate, it's 120x multiple.
Do you get nervous about growing into that valuation? No. The point is, the way in my market, in the B2B marketplace, you... the multiple is according to the ARR in terms of revenue. So if you look in terms of ARR, and the point is, as I told you, we- Yeah, but this is it. That's SaaS revenue. SaaS revenue will get 100X multiplier.
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Chapter 6: What are the growth metrics for Dolado in recent months?
Our C-level comes from the top marketplaces from the region. And keep going on average between 7 and 10x compared to the revenue that we had last year. So if we reach those goals, I think we are... Yeah, I think we were well positioned to do a Series B. But we don't need to do a Series B in the short term. So we're not actually considering doing this right now. Yep. Well, you're driving.
You'll obviously hire and drive burn up, right? So if you have 20 months of runway and this downturn lasts 24 months, then you have a timing issue, right? But you'll figure it out. It'll be interesting to watch. In the meantime, though, let's wrap up here with the famous five. Number one, favorite book. Favorite book in the context of what we're discussing, Pitch Anything by Oren Clef. Genius.
Number two, is there a CEO you're following or studying?
Chapter 7: How does Dolado generate revenue from its marketplace?
Yes, I think the CEO, there are many CEOs that I'm following, but the CEO of Tokopedia in Indonesia is a genius. I follow like all his interviews and I really like his vision the way he does. Number three, what's your favorite online tool for building a dilato? Shopify. 100%. Shopify is amazing. Number four, how many hours of sleep do you get every night?
I need to get hours of sleep because I train really hard and I need to get a good night's sleep. Otherwise, it doesn't work well. All right. Eight sounds good to me. And what's your situation? Married, single, kids? Married, no kids. All right. And how old are you? 37 next week. All right. Hey, happy early birthday, Guy. Last question. What's something you wish you knew when you were 20? Oh, man.
I wish I could. I'm a frustrated triathlete. I wish I could be dedicating more time to sports. But unfortunately, my life as an entrepreneur doesn't allow me to spend more time on this. So unfortunately, it's a dream that I have not made it yet. Guys, dolado.com.brasil, they help that gas station in the middle of nowhere, which you've seen on a road trip before.
Make sure they never run out of chargers that they sell at the checkout. You know what I'm talking about. They've got over 1,500 of those gas stations, is the analogy we're using, that spent about 120 bucks over the past 30 days. So monthly, they're processing almost 200,000 bucks of GMV. Annualized, it's 2.4 million. Their take rate's about 26%.
So their gross run rate right now is about 500,000 bucks. And they're also profitable. They take about 13% to the bottom line. Now that won't stay the case here because they just raised a 10 million series A at around a 50, 60 million valuation.
He's going to reinvest in growth with his team of 120, sorry, his team of 110 people as they look to scale up past 1500 customers and now develop and get additional suppliers on the platform. So they're not just selling their own products anymore, but they build a really healthy marketplace. We'll see what happens. Gee, thanks for taking us to the top. Thanks, Nathan.
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