SaaS Interviews with CEOs, Startups, Founders
Workplace Management SaaS Hits $4.7m in ARR, up 70% YoY, Price Increase Added $55k/mo last 20 days
14 Feb 2022
Chapter 1: What are the current revenue metrics for Agendrix?
And then in your bio, you said 4,150 paying customers, right? Yeah. Okay. So that puts your MRR about 381,000 a month? Pretty much in USD, yes. This is just increased because we had a price increase in January 2022, inflation, you know? But yeah. You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom.
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Hey folks, my guest today is Sebastian Charlin. He's a CRO and partner at Agendrix, a workforce management SaaS based in Sherbrooke, Canada, where he oversees the finance and CS teams with a customer base of over 44,150 customers. He holds an MBA and CPA and joined his childhood friends in the company back in 2016. Sebastian, you ready to take us to the top? Yes, thanks for having me. All right.
Why were you late to the party? How many months or years or weeks were your friends coding this before you joined? Approximately a year, year and a half, maybe. My friends basically had a web service company where they would develop apps for customers. And the initial founder of Agendrix was one. So it was a service company before and they eventually merged with Agendrix.
And following that and the first revenues, I jumped in, quit my job and joined them. When did, what year did the company launch? Official year is 2015. 2015. And did the agency shut down or is the agency still going today? No, they shut it down and they moved all the employees, a big total of five people with the new product at Gendrix.
Do you remember how much revenue the agency did the year before they shut it down? I believe like half a million dollars. Okay. So not hard to shut down. It's so small, but yeah. It was their first year and to their credit. Yeah. Shut down and moved to SAS. Interesting. And how were you friends with them?
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Chapter 2: How did the price increase impact monthly recurring revenue?
Did you work with them at the agency or high school or what? Elementary school and high school. So the CMO was my high school friend and a CEO today, but was back then one of our developers was at elementary school since I was like, I think five years old. Well, this is relevant.
A lot of people listening right now have a company they launched, then one of their friends joins a year later, and they're not sure how to do equity because they're a year late. So share what you can, but how much equity do you own? How do you think about that? Yeah. Right now, I own about, say, around 10% of the company. We are five partners.
And then the other half is basically financial institutions. who jumped with us to buy back the president, you know, the initial founder of a gender X who was older and who retired last year in 2021. And so they helped us buy him back. But back then the company, when I joined, uh, I had more like salary than the company had revenues. And so the valuation was just off the roof.
Uh, I think it was like a hundred times MR or something like that, whatever the number was. What was the actual valuation? What year? That was in 2016 when I joined. And I think the valuation was perhaps $3 million almost. And the company was doing $30,000 AR. So you see where I'm going. So I didn't get a lot of shares. Yeah. Yeah.
With the buyback, we had a split equity and a debt deal, which allowed us to buy back some shares and just sell some to the banks. But there was no growth capital inflow. It was just like to buy back the shares. So just to sum that up, back in 2016, valuation was about $3 million when you guys were doing $30,000 a month in revenue? Yeah. Yeah. Interesting. Okay.
And so, and so how much did you need to raise? Like what was the raise to go buy out the older guy? I cannot disclose the numbers to this day in 2021, but let's say it wasn't that far above that number. It was, Oh, actually that's, that's a, that's a public number, but in total we raised about $3 million to buy everything back.
Wait, so you raised $3 million out of $3 million valuation, so you sold 50% of the business to new investors? Yeah, sorry. So the split today is about, yeah, this is getting messy.
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Chapter 3: What challenges did Agendrix face during its early years?
So back in 2016, we didn't have financial institutions. It was almost only the five young guys, if you want, plus Andre was the founder. Now, fast forward in 2021, when he wants to retire, financial institutions came in and basically bought directly half his shares and gave us a loan to buy back his own shares and just buy them back and cancel the shares. But this was last year.
That was last year, yeah. Oh, I see. And so the end evaluation was $3 million four years prior, five years prior back in 2016. Exactly. I see. I see. Okay, very cool. Let's talk more about the product. It's a very cool product. Tell me who's buying it and how are they using it? Yeah, so we're a B2B mainly company. We're a workforce software.
So we basically sell to retail companies, restaurants, a lot in the care system right now, security companies, elderly residences, all that kind of stuff that we want to manage their workforce, the schedules, the time and attendance. communications, and we're going and moving into HR as well for onboarding, kudos, rerouting, and that kind of stuff.
And how much do these customers pay on average per month to use the technology?
Chapter 4: How did the company transition from a service to a SaaS model?
So in USD right now, our ACV is $1,100. So if you divide that by 12, it would give you roughly $92. That was of December, but Yeah. Now you're good. And then in your bio, you said 4,150 paying customers, right? Yeah. Okay. So that puts your MRR about 381,000 a month? Pretty much in USD, yes. This is just increased because we had a price increase in January 2022, inflation, you know? But yeah.
Roughly. I'll ask more about the price increase in a second because that's a big move in your CRO. So I think you're probably the right guy to ask that question. But talk to me about growth rate. If you're doing 381,000 today, what were you doing exactly a year ago? Roughly 2,065,000. Okay. So 2.65 million. Sorry. So that's about 46% year-over-year growth in AR. Yep. Yep.
So divide that by 12, right? So you're doing about 220,000 a month a year ago. Correct. 381. Yeah. Got it. Okay. Um, and what's driving, like, where are you getting, um, new customers from what's driving the growth?
Um, so geographically speaking, geographically speaking, uh, Canada, Quebec, so the French part and our second largest market is the European, um, in Europe, but it's the French speaking parts. So France, Belgium, and Switzerland, we voluntarily decided to focus on French markets. They were a bit less crowded than the US or English-speaking markets because of our largest world competitors.
And there are some work laws and labor laws which are very specific to different regions, especially the French-speaking ones, where we have less competitors and grow better. Mm-hmm. And then in terms of funding history, have you just raised the round you did last year to buy out the early founder and put operating capital in the business? Or do you have rounds before that?
We did actually only one round. And it was in 2016 when I joined the company. We raised about, in USD, it was $350,000 back in September of 2016. That's the only time we actually raised growth capital, if you'd like. In 2021, it was strictly to buy back shares, and the rest was actually a loan. So no money came into the company. How big was the loan? Or is that not public? Well, yeah, it is.
$2.1 million. Okay, so it was half and half. $2.1 was loan, $2.1 was equity. Equity, pretty much. And sorry, why did none of it go into the business? So all of that went out of the company to buy Andre out. Yeah, it's really, it's really tricky. So yeah. So the financial institutions basically bought half the shares, Andrea. Yep.
And then for the other half, they basically lent money to the company, but it was only for a second sign in a paper. And that money then went to Andre that would allow us, the company, the five guys to buy back the shares and then cancel them. So there will be less share remaining afterwards. So your equity proportion increases pro rata. I see. It's like the opposite.
It's like the opposite of a stock option pool. Exactly. It's a public inverse of that. Inverse of dilution. Yeah. Yeah. Interesting. So are you still making debt payments back off that or the investors cancel the debt as well? They did not cancel it. So we're being entrust on that. We have very good lenders. We have a pretty good package for this. Who do you go with for the lender?
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Chapter 5: What strategies are being used to drive customer growth?
Thank you so much for having me. But that takes people out of your experience, which you don't want to do. Try Paragon today at nathanlatka.com forward slash Paragon. That's nathanlatka.com forward slash P-A-R-A-G-O-N. That's market. It's market. You know, super clean terms these days. You're going to see anywhere between 10% and 20% interest rates.
If you get a lot of backfill terms of covenants, maybe you get down to 4%, 5%. It sounds like you guys did the former. You got it. But at the very least, we're in the very, very low end of that bracket. Yep, yep, yep. And how long do you have to pay it back? Is it a two-year term, four-year term? Actually, it's five years with no interest. Oh, great. Well, no, sorry. Five years with no capital.
And then in five years, we have to renegotiate. We'll see then. What do you mean no capital? So we basically are paying interest. Interest only, yeah, sorry. Ah, no principal. We're not paying back any capital. No principal, yeah. Yeah, you have a balloon principal payment in 2026. Yes. Principal. Lost in translation. No worries. Okay. That's an interesting model. Very cool. Okay. Your CRO.
Tell me about the price increase. Everyone's always scared to increase prices. How did you guys do it without pissing off users? That was so hard since it was our first time. And we had an increased price since 2016, first of all. And our costs were severely increasing, especially salaries, wages for developers. So initially, we wanted to do something like 10%.
Uh, since it was so long, but at the same time, it didn't feel right because going through the hassle of communicating with everyone. Um, so last summer we decided to do something a little steeper. We wanted to create like an asymmetrical advantage to go with our pro plan. We have two plans. One is the scheduling only.
The other one is like a little more, you have scheduling plus time to attendance, uh, your businesses, uh, retention rates are better there because you're using it more. So what we did is we increased the base plan by 37%, and we increased the pro plan by 18%, creating an asymmetrical advantage to switch to the pro plan. So the average increase is about 26%.
Well, if you compound everything, depending on our customer split right now, So overall, we went for a big increase because it had been five years. It hasn't been so bad. We sent a communication. We first call our larger customers. We gave four months of advance notice. And we also said that anyone who would switch to an annual plan would lock up their price for one year.
So that would delay furthermore. the increase. And so over the past 30 days, you added a lot of revenue from upgrades. How much total new MRR did you get because of that? Did you say MRR? Yeah. Yeah. Okay. So actually it was effective starting Jan 1st and today we're at the 12th. So let me give you my fairest estimate for this month. So it's in CAD. I'm just going to convert it.
We're going to get about 55,000 MRR in January just from the price increase. And most likely another 20 when the annual contracts come due for renewal at the end of this year because they delayed the increase. Yeah. So it's almost an 18% increase in revenue in the first 20 days of the new year because you were smart about how you did the price increase. Yeah.
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Chapter 6: How does Agendrix manage customer churn and retention?
We're expanding into new HR modules, which will entice, we believe, a lot of customers to upgrade to new plants. So that will normally increase our... basically it will increase the amount of MR per customer. On the churn side, we're still trying to find more reasons why people drop the usage and stuff, but it's not really an issue at less than 1% per month right now.
So we're working more on the price increase, new modules, new markets. That makes sense. What's your total team size today? 35 people. How many engineers? I believe there are 14 right now. Oh, wow. Okay. And your CRO, do you manage the sales team and quotas? No, I don't. And we used to be, well, I have a partner who's doing sales now. He's got a new team since the last year.
We're trying to ramp up the outbound team. We used to be inbound only, mostly. So since the last year, he's got a team of four. Right now, we're trying to build quotas, but it's it's hard not being, you know, we haven't been like this since the start. So we're getting there. Do you know what your tack is to get a new customer that pays 1100 for the year? Yeah.
I've been anywhere between 500 and 600. So where are you spending that money? Usually, uh, Google AdWords, even being, um, we use a few years back to be on Facebook. It was, it was good, but it became, sorry to say, I don't, I don't want to say a wrong word, but shitty. Yeah. Yeah. No, you're, I've said way worse. All right.
But mainly, so what are you going to spend total this month on Google AdWords or just paid marketing? Uh, paid marketing. It should be about 20,000, 15 or 20,000. Okay. Interesting. Hey, it makes a lot of sense. And are you, what are you targeting? Is there a specific niche you're targeting? Uh, retail niches, pharmacies, drugstores, elderly residences.
We were trying, it's funny because before, you know, initially in 2015, 2016, most of our clienteles were restaurants. And in 2017, 2018, as I were coming up, not as a CRO, but VP of sales back then, and with my accountant background, I wanted us to diversify into recession-proof or recession-resistant industries. So we went into drugstores, retail,
sports goods, things that would pass through this. And we're keeping that effort, which has proven to be one of the best decisions ever, especially through COVID. Because restaurants basically went down while the other industries we were in kept going up. Sebastian, we're rooting for you. We love this story. Now, are you planning to raise more capital here this year?
Or can you go to profitability and stay bootstrapped moving forward? We're going to keep bootstrapping. Forever, I hope. I love that. All right, let's wrap up with the famous five. Number one, favorite book. Favorite book. Oh, that's a hard one. I would say I'm going to keep it with business because I watch your other podcasts. I'm going to say the hard thing about hard things.
Number two, is there a CEO you're following or studying? Yeah, the company is Expel. It's on a NASDAQ. And the CEO is Ryan Pape. He grew the business. It's a Windows film and protective paint for cars. He grew the business from almost bankruptcy back in 2021 to over a billion dollar market cap today. Wow. Number three, what's your favorite online tool for building a gender X?
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Chapter 7: What is the company's approach to funding and capital structure?
Sebastian, thanks for taking us to the top. Merci.