How Dixa CEO Mads Fosselius grew to $23.4M revenue and 1K customers in 2024.

hey folks special edition today we're excited for this entrepreneurs always wonder what is it like selling your company and then what's it like post acquisition well we have a unique experience today with mads from dixa and eric from solvemate uh dixa recently raised a new round of capital and a big tranche of that capital was dedicated towards m a he chose to match shows to index a team chose to go acquire eric at solvent which we also have here live so guys we're gonna have fun today thanks for taking us uh thanks for joining thank you so much nathan great to be here again so mads let's work backwards and eric well then loop and solve it as we work backwards uh mads you need to obviously fund this acquisition and i think last time we spoke uh in terms of focus you were really focused on call center support desk and tickets give us an updated view of dix's product say for folks are not familiar with the website yeah definitely so dixre is a next generation customer service platform just as you you said nathan and of course we have been um changing the way customer service works and brands typically consumer brands but also b2b uh the the the last two years and we are disrupting the way you do it on a typical ticketing base basis we are doing it in a conversational way in what we call customer friendship so all the conversations across all channels we are equally strong at all channels phone email live chat messaging facebook messenger whatsapp and the list continues um and then we we use the customer data and the channels to to basically build strong bonds across all these different experiences so that's kind of the core of dixa um and and and what we're going to talk about today is how we expanded uh what we call internally at dixa the effortless trinity so i'm looking forward to talk a little bit more about that the effortless trinity eric this seems like he's holding up to a very high standard effortless trinity seems like a big call to action uh we'll loop that in here in a second pre pre series what was it what was it a series c right pretty serious and pre the acquisition of both solve mate and i can't remember the other one what was the other company acquired olivio a ai knowledge base from melbourne australia yeah back in february last year so pre both of those deals what did you grow in the customer base you just number of businesses on the platform so just around a thousand customers including both the very small ones we had in the beginning we were starting out as an smb and then gradually into to more mid market where we where we played today and even enterprise to some extent and then let's sort of reverse engineer right so to fund these deals you raised a serious c how much was that for it was 105 million dollars seriously led by general atlantic but also with all the existing investors uh chipping in on their pro rata and also a significant round for us um and also with general atlantic being a partner that is used to of course a heavy hyper or organic growth but also sometimes with an m a agenda yeah so split the 105 million down for me how much was earmarked for mna so no no specific amount was actually earmarked for m a because general atlantic and existing investors actually are able to to to allocate extra funds uh to projects like the one we've been through the double acquisition here and the extinction of soul mate specifically so the good things there's no real boundaries but around what we can use but of course every company tries to preserve the cash for the organic growth for for opportunities coming ahead but we have had opportunities where we actually been able to preserve a lot of that cash and make other facilities for um for these acquisitions oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 interviews i've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when i hover over here right so the teal is what a vc would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on youtube all these datas are built from real-time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 percent of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of sas valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're gonna go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your valuation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform i hope to see you there all right let's jump back into the interview so i guess the only other place that 105 million could have gone if it didn't go to the balance sheet was you know you've been around since 2016 so you have early employees obviously they're going mads whenever we get some some equity here we believe in the vision but we want to go buy a house can we get someone did any of this go to secondary yes a small amount went to secondaries for as you just said uh founders some founders early employees some very the first business angels taking a little bit out for yeah for for house or apartment or for savings so a little would you under under 10 of the round fare to say yes that's fair to say okay now let's loop in product strategy m a strategy so when did you first realize you know what m a is a strategy we want to use to grow and then how did you go about finding companies like eric and sullivan i imagine you looked at a lot of them eric's obviously closed but how did what was the process like yes so so first of all the the first part of this strategy actually started one and a half years ago a little bit more discussing it with our existing board and investors and in the management teams so we know that we had some really really strong partners in the ecosystem so our approach is actually is a kind of a luxury approach because we know the companies very well of course we have several partners within knowledge base several partners within chat bot automation and so on so forth we quite early realized that we have to invest a lot into the core of our platform routing automations on the conversation side however there is some really really um core tech and talent um across the go to market angle we don't have to we we always have to remember which is difficult in an ecosystem that we um probably were able to be to to be able to build ourselves at some point maybe but it's a big maybe it's a lot of risk there's a lot of talent and leadership and we have to organically drive and time to market disrupting one of the largest service software industries in the world like the customer service industry um it's a 300 billion if you include crm and some martic you have to move very very fast and you're going to have to get the best on board both from people and a product and hopefully one day a profit side so with the levio that was actually the first um there was the first corner of our effortless trinity the the the triangle so to speak where we added knowledge and data into the play we historically we've collected a lot of data we we want to help agents customers and customers in real time and we haven't been able to do that ourselves but then we've got to let you on board we started the journey in in our own effortless trinity to make customer service effortless for customers and consumers agents and admins and of course one of the very very big and important next steps in that is the automation chatbot intelligence piece of that trinity so it's actually not a an optimistic approach it's been it's been there for a long time of course we had to have the funds and the backing to to make such a big move um for a company of at that point 200 employees or so and and 200 employees then and and about how much revenue i mean you were north of what 10 11 12 13 an ar or something like that no we we we're north of 15 so um yeah at that point north of one five at that point uh what was the plan with funding or when we acquired the first company when you when you closed the series c you had about 15 million in ar no no no that was that was that was around the 10 11 as you mentioned there correct yes but today our own post acquisitions to 15. yes the next level is between 15 and 20 then you can yeah yeah yeah some numbers there right now so we're growing rapidly yes but we're also using the right amount of time for integrations especially on the people side and the product side and that will maybe for a quarter or to take a little bit momentum out of your hyper growth but it's very very big investment for for us as a product-led company so let's go let's go over to erickson real quick matt so so eric you know mads talks about talent saving time getting to market faster go to market arbitrage how how what was sort of i guess let's just start with team size how many folks were on solvemate before you started talking to mads 35 and and how many engineers half of that more than half of it okay okay so there's maybe a play there and then let's talk about go to market real quick did you feel like you had some arbitrage on your go to market strategy were you already upselling dixit to your customer base yeah um so maybe once one step back um you know matt's talked about the effortless trinity and it's very clear that automation goes together even better if integrated well into the crm or ccas system where the agent works so we have been working with more than 10 crm systems over the past years because if the bot cannot help it needs to be integrated and even if the bot can help an integration helps significantly to improve the body experience so we have known the dixa folks for quite some time and vice versa and of course um this is very helpful for all clients to be together with a pod vendor so um yes we helped each of ours we were doing joint marketing and um [Music] with dixa there was a really great fit when it comes to company vision which i think is very important they were very ambitious as salt is and there was an awesome tech fit um you know um basically working together is instantly we all kind of work the same main work tools and very importantly um a cultural fit is important to see when selling a company to another bigger tech company um because of course we were talking to many vendors out there and when you so when you look at your customer size before the acquisition how many customers did uh did solve mate have we had in a two digit range uh okay so like like ten to ten to ninety nine yeah okay so you these are this is like an enterprise motion then this wasn't like a low rpo high volume no we have a very high r so we we were typically charging more for our automation than the crm or ticketing or the secas vendor you know ticketing is of the past so we're talking about conversations um we were typically charging more than the system where the agent is working in every single day a competition is creating such a high value for the end customer and for the company and for the agent are we talking like ten thousand dollar a year sorts of contracts or a hundred thousand a year around thirty thousand um interesting so mads how did you evaluate that so you know someone like uh let me just find an example someone that uh like um like dialpad right might go acquire another company like uber conference because uber conference has a million users that pay a dollar each an uber conference can be cross sold into dialpad's user base that does not look like that was a strategy here it sounds like eric already had proven he built a piece of tech people are willing to pay 30k a year for was the motion more how do you upsell solvemate to dix's user base and drive arpu expansion very very good question nathan actually uh the it is a double thing we're doing here we're doing things in parallel we we are we want to keep the momentum of the great growth the saltmate has built with the great customers a number of customers that we are not the platform for yet today um and also respect there are many platforms out there they're they're doing a great job for different types of businesses um and and we really want to leverage that to to to stay um to stay in the game to be the best automation chatbot vendor but of course in parallel we are integrating uh the the the technology the know-how the product deeply into the platform but um if you use all your time and just merging things together from a good to market product perspective you will lose a lot of the great momentum that's created both in dixor and saltmate so we are doing both maybe we're not going to do that forever but today from a product perspective and of course you have to have priorities on on standalone roadmap versus the combined road map ways and integration for instance a very um down to earth but but but a very strategic move for us is that we just launched dixon messenger it's um with no disrespect we call it an intercom killer because it's taking basically live chat messaging and bringing it to to a whole new um level with typically brands that have many channels and many conversations back to the idea and of course building libya from a knowledge-based perspective self-serve knowledge guides and of course the chatbot that can warmly handle between an agent in dixa and back to the consumer and back and forth again is a very natural project that is very strategic to us that we have we are doing second half uh so that's that's coming already uh as a big outcome of the um of the integration between dixor and saltmate now aaron because market side will probably stay in dual mode for for the foreseeable future eric when you were going into this deal you know preserving optionality for founders is something i'm a big fan of you know for every one dixa that's raising a lot of capital going for the moon you know there's a thousand we never read about where the founders doing two three four million in revenue slow growth but profitable living a great life right how did you preserve your optionality up to that point or had you raised a bunch of uh vc raised i would say we were pre-series a so we raised a few million of professional seed capital um and the alternative to being acquired would have been to raise a eight-digit series a round and to grow the product organically yeah and it's always a question on the in german there is a saying called um the duff on the roof or the sparrow in the hand and i think as a founder you should have the product and the company in mind and the company is just on a very big acceleration when joining forces um with dixa and making our awesome product available to significantly more clients um over time so from a company perspective there's a very good fit and from a professional investment perspective that's always a question of do you want to sell early or go on building for a few more years that's a purely financial investor decision which my investors needed to take yep now mads in your announcement on the website you articulated you spend i believe 43 million it was for both solvemate and muros um what was the breakdown there can you share how much that was solved maybe neros unfortunately we cannot that's confidential um information um so if i get you both to agree to it we can share no now we think it was decided to not share the breakdown yeah and we have this and now we have the same board in the distance so yeah yeah well i guess let me i can still ask some sort of a question throughout here without having to know the exact amount right so obviously with deals like this you know erica if you believe in the growth of dixa you want dixa's stock but you've also been in building stallmate for many years you'd love to also cash out as well so how did you guys negotiate the total deal price and what you know there's a big difference between the deal value and the deal terms cash up front earn out you know consulting fees and kickbacks eric gets on the side for sticking around building the handcuffs all that stuff how did you guys negotiate that i think they both they both want to answer at the same time we should get eric first yeah probably i think pixar um is very experienced in doing m a um and not only because the uh chief revenue has been doing this for a living before but they were very smart in of course having a cash portion having a stop option there is investing and i think the most important thing it you shouldn't talk about cash and shares you should think about creating a joint vision and motivating the company so if there is fit between the companies you want to stay and you want to build something awesome again uh you eric obviously have employees too that maybe had equity early on i imagine if you're doing raises investors required a esop pool 5 10 whatever they're also you also have to manage their psyche around cash today versus you know future earn out and selling them on dicks of stock right so is this something i mean are you able to share maybe a ratio was 40 cash up front and 60 or whatever the deal value was in dickson stock are you able to share that breakdown leaving that tournament if you want to yeah that's that's that's i think they are so fine it it leviosol made it is of course different we respect the existing investors some investors want to join some investors want to go out of various reasons so we we have a very i would say balanced and holistic approach to this but in um as a starting point we want to balance them as 50 50 as possible because we believe it's important for the future value that we are creating together it's very important of course to to empower and retain talent and especially leaders and founders so as eric has talked about this this approach goes only works if we are aligning on the future vision and if we're seeing you know jurgen and eric for instance for soul mate as my new co-founders which they are and that is how that's the approach we do and we can do that because we are we are not 3 000 people we are now 300 great dignitarians all of us coming from from dixie libya's old maiden mirrors from the position we did in france as well at the same time and i think that is equally important but then yes we are in many ways on the same journey um and uh and and we we are quite strict on that so um of course we we had luxury of knowing many many companies in in in the in the ecosystem and and the one that we really wanted was also the one we joined uh joined forces with but if if for instance eric and and and vanessa said no we only want cash or we only want uh shares for the matter then we would have a challenge because that's also kind of the um the the go-to m a strategy we have from our board and investors which is we believe is the right thing and very important and as mentioned chief revenue officer christian dorman and myself um before have both sold our companies and acquired companies and seen what what what what can you do well here and and what have we really done bad and how fast you have mistakes so we've learned from that and then taking them into dixa and as you guys build customer value together one way to measure how much value you're getting to customers is to look at your own valuation increase mads you shared back when we had the sas stock interview the 36 million series b i think it was in february 2020. you think of an exact number what you said between 100 and 200 million valuation is it fair to say you sort of more than double that here on the series c yeah that's definitely fair to say that more than double yes that's great so more than 400 million yeah amazing so this is interesting so you know we saw someone pursue a very aggressive strategy of m a in hoppin which is now sort of getting a lot of well johnny's in the news maybe for the wrong reasons but he did i would say he did a brilliant job at basically buying his way to 100 million bucks of ar mads it sounds like you've got a board that understands m a inside and out you're well oiled machine to be able to do this i mean do you see a path to going on raising another whatever quarter billion 500 million and effectively buying your way up to 100 million bucks of ar if it fits in this this trinity product strategy um that is not our strategy actually our strategy is definitely going for the people and product and if we get if that's an if um we get some some of course from growth momentum into a go to market engine standalone or combined and there is some error included of course that is great but it's a positive side effect um at this point we are acquiring companies from the people and the tech and the ip and the product that serves our big big goal and vision of creating our own category creating what we call value experience and basically getting to not evaluation metric but a value metric around custom friendship scores what is the trinity what are the three points on the triangle so it's livio and the soulmate and it's mirrors and then it takes a platform in the center oh gosh i thought that trinity was was product okay you're talking about three companies and then dick's a hub and spoke model effectively correct so olivia being the the knowledge platform solved maybe the automation platform mirrors being the customer intelligence or the intelligence platform and then dixa being the experienced platform in the center that's the uh yeah that's the uh it's not a it's not a launched uh idea but we are we're happy to share our our very or we're very proud of that strategy um and then we're seeing some great stuff coming out of it what is the products coming out of that when does a triangle turn into a square and a hexagon and there's eight or nine other points around maybe the best way to answer this is how many term sheets do you have out right now with other founders or you're looking to buy um that is confidential but i i think it's safe to say that we don't and i'm looking at eric because eric is taking care of this area with me and the leadership and christian our crow and so i can see he's he almost gets my official role is called vp strategy in m a without saying how many terms you i mean can you give me something i mean are you actively talking to 30 companies right now five companies a hundred how do you manage m a pipeline so first of all we have some areas that we want to look into in 23. so right now we are not we are talking we are always talking because either they are partners or they are they are they are new companies coming into the ecosystem either as integration partners to us or alliance partners or because they have a process running of course we all for for receiving um proposals and we consider them but we also have to say that in 22 we have enough to do on our organic engine and the very very important integration of soul mate and and mirrors so 23 um or when we're getting later in the year i think we have another talk where maybe we can we we can open up for some of the areas that we're looking into in the future we would love that guys anything else you want to touch on before we wrap up with the famous five all good love it all right matt it's famous five first one favorite book book is um is a play bigger which is a famous book of uh around category building it's uh it's a book of uh i read some years back uh recommended by notion capital um our dear investor and then also our vp product rob actually came with it uh some weeks ago and and i i had to go for it again so very close to what we're trying to do here in dixa number two mads is there a ceo you're following or studying yeah sachin nadella microsoft legend uh already i would say it's impressive what you've done with uh with with um yeah with with turning around i would say a license based company some years ago now implementing a growth mindset and a cognitive diversity i am i'm a huge fan um and microsoft i know that you know people love or hate microsoft but what they did after bulma there is very impressive i would say eric let's throw this one over to you favorite online tool for building solve mate and now dexa besides your own tools [Laughter] i'm a fan of notion in general for documentation it's an awesome tool and i think slack is a productivity killer if used right if confused right there you go all right and then matt's last couple here to you uh how many hours i sleep to eat every night sorry to say again how many hours of sleep do you get each night i'm getting seven um so i've gone from six to seven um and would love to get to 7.5 to be honest which is my number and what's your situation today mads married single kids i'm married to my my amazing wife heidi um and then i have three boys 5 11 and 13 so busy weekends with soccer and tennis and many other things this guy and how old are you i'm 42 42 last question something you wish you knew when you were 20 um yes that's a great question i i wish that um i i knew how long it took to actually um to actually build a global scale up and start off because then i would have started earlier guys there yeah start earlier guys there you have it dixa.com launched in 2015. uh 2016 they really got going 2017's they start scaling and selling in 2018 they broke their first million in revenue broke seven million in 2020 did uh 11 million uh last year when they raised their 105 million series c and started pursuing and closing uh two new acquisitions in eric at solvemade eric was working with already tend to call it a hundred enterprise customers paying average thirty thousand dollar acv is now part of the dixa family as they scale up between 15 and 20 million bucks of revenue this year and work on integrating these two new acquired companies the team the ip the customers all of it as they build what they call this trinity mads eric thanks for taking us to the top thank you thank you so much one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name 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