Supermetricsrevenue, valuation & funding

Introduction hello everyone my guest today is mikhail tunenberg he's the super metrics founder and ceo mikhail are you ready to take us to the top yes so you come back on last year in 2019 and i'm just falling in love i'm going oh he starts in 2010 he bootstraps he has a great mousetrap with google sheets he's Bootstrapped passed 12 million in revenue this is great and then i get news this year it raises 40 million bucks what changed what where was the breaking point we said you know what i should go down the vc route for this thing let's go raise capital well our numbers have been pretty awesome lately as you know and and there was a lot of inbound interest from vcs you know top names from all over the world so i i just figured it's probably a good time to raise some money um so that's that was the kind of reason why i started thinking about that and and to be honest part of that was secondary so i also sold some shares so it's it's what what percent like was it like a 50 50 sort of thing what percent of the 40 million was secondary would you say oh we can't uh who led the round that was highland europe okay and for founders that don't understand what secondary means can you explain what that means for them so that is when i sell my shares so the money doesn't go to the company but it cost me so it was me and some early employees selling a small part of their likes of course we still have a major stake in the [Music] the reason i wanted to explain that as a lot of people don't realize this is an option to create a sort of exit without actually selling the whole company it's a great way to take chips off the table uh you know you've been doing this since 2010 correct correct yeah yeah and and let's go through some of the back history here for people that missed your last interview with me what did the product start out as back in 2010 it was a simple excel uh add-on to fetch google analytics data into excel to automate that data fetching which many people were doing manually back then so with my script you could get that data automatically into excel Got First 100 Customers in Google App Exchange and then when did you start playing in the google app exchange with google spreadsheets i did that in 2014. i had a pretty okay business with the excel product back then and then google reached out to me because i had some relationship with them already because google analytics was a data source for me so some some people from google reached out and they said that they are planning to launch this uh google sheets add-on gallery and asked if i would want to be one of the first add-ons to be featured in that gallery and and guess what actually i said no to them i said no i'm not not too interested in that so uh like people don't pay for google uh i don't think you can make money there and then i just didn't think that it's a good opportunity but then i was fortunate because then they a few weeks later they came back to me and said are you seriously not interested and then i i said oh okay i can i can do something and then i created this google sheets add-on and then they released that gallery in uh 2014 and then i was there among just a you know a couple of dozen different uh google sheets add-ons and other add-ons were not really competitive to mine so mine was pretty much there or it was the only one on the one that can get the cross-platform marketing data can you quantify how important it was for you to be one of those featured apps when they launched that in terms of maybe new users that year or what sort of spike did you see if any i don't have the numbers right now but it was really really important of course getting that first mover advantage in that marketplace which has since grown to be a big quite a big one so uh now there are hundreds of different add-ons for google seats and for any new entrant it's very difficult to get to the top anymore and gain traction there um but back then when i started there were maybe 20 so it was very different than and like i said other adults were not even competitive with mine so i was pretty much having that market for my cell phone for for a very long time when you look at historically what's driven the most growth for you would it be a fair statement to say that was your top growth driver over the past decade i i think that was like coming in turning point for the company where i went from this one man you know slowly growing excel business into a growth rocket but then there was another turning point but that's maybe even being more crucial which is when google released the google data studio uh connector gallery so you can bring your marketing data from non-google sources like facebook ads feeder ads and so on into google data studio and there we were also the first company that they asked to develop these connectors and we got a really good first mover advantage also in denmark what year was that 2017 2017. okay and can you quantify this when did when did you you said this was a one-man show for a while when did you hire what year did you hire your first employee 2015. oh wow so between 2010 and 2015 it was all you yeah and what before you made that first hire give me a sense of scale in 2015 what was revenue then i think it was around 300k okay so great life obviously you seem like a guy that is you know how to be scrappy you can live a good life off 300k what made you decide to make that first higher well the google sits i don't have taken off really well uh a lot of new customers and i was struggling to you know handle all of that like you know i was trying to develop the product but i also handled all of the customer service um you know you know the marketing sales that i needed to do i i didn't really spend too much time on the other of those but but still i was having my enhanced quite quite busy so i figured maybe it's it's good time to start hiring and of course the revenue had grown to the point where i could do that quite safely of course here in finland when you hire a person you're kind of tied to that person it's not very easy to get rid of a person so i also wanted to be sure that i had enough buffer there even if things don't go that well i can you know keep paying that person's salary yep that's that's that makes a lot of sense now did you go from 300 grand in 2015 did you break a million dollars in 2016 um i remember what year you broke a million i got can't check oh let me see he's got his dashboard he's cranking up the dashboards folks we can hear we can hear the server fans running so the total turnover was 1.6 million in 2016 and i think 2015 it was like maybe uh 600k um since you have the chart open what was it before 2015 and 2014 uh well this one always shows the last four years so okay what was 2017 then uh the official figure is 2.2 million but there we did some adjustment in bookkeeping uh methodology so it was really more like uh Monthly recurring revenue and what do you think you'll finish here with in 2020 uh well in arr we are now at uh 27 million euros and uh in turnover i think we'll get to 24 million maybe what do you mean by that 27 34. so the run rate is uh 27 so if you multiply uh you know september mrr by 12 then we are at 27 million run rate but of course uh if you look at the whole year's total revenue that's like maybe 24 million that's because you are obviously you are smaller in the earlier years if you're just adding up cash collected yeah okay so run rate wise again nice growth here where are you getting all this growth from is it still mainly the app exchanges yeah those are major factors for sure the google sheets add on the google data studio connectors they are still going really strong but of course we are diversifying as well or building on top of that that good foundation so we are putting a lot of effort into our enterprise products and that means uh data warehousing so you can set up a marketing data warehouse with our our system very easy to get all of your marketing data into a data warehouse like snowflake or google bigquery and then you can run over all of your reporting on top of that data warehouse and so mikhail how many customers are Currently serving 15,000 customers paying you today we have in total around 15 000 customers but then half of these are marketing agencies and if you look at the black end clients behind these agencies then we are approaching a million companies using our tools yep yep and can you just so we can understand growth if you think you'll break this year with about 27 a million in terms of euros in terms of run rate where were you at in terms of rate exactly a year ago i'll have to check that number for you sure sure yeah take your time so at the end of last year we were at 17.9 million okay so about 21 million united states dollars so you basic i mean correct me if i'm wrong here you went from essentially a 2.5 million run rate in 2017 to 10xing that to about a 27 million run rate in 2019 is it accurate can you repeat that sorry obviously sure yeah you know you went from about three million in terms of run rate in 2017 right or caught 20 sorry 2.5 million run rate in 2017. to 10xing that in 2019 when you broke about 25 million united states dollars in terms of run rate is that accurate yeah something like that yeah i mean can you try and decode that for us it can't all just be sort of accidental an app store placement in the google data studio app exchange this was intentional you're an engineer you plan this sort of thing you know i'm actually not an engineer but you're not an you're not an engineer no no i'm not no who coded the first version me i i myself uh thought uh well come on those are the best kinds of engine those are the best kinds of engineers mikhail you self-taught i actually i studied social sciences i have no clue what i was doing when i started coding that um i guess i know i could almost call myself an engineer i think i've learned something along this ten year journey i i would agree yeah but but so what robot growth i think a lot of things so so um obviously we've been uh uh very successful with our marketing efforts i think they're very well known we do a lot of content that is producing a lot of inbound uh leads for us all the time we have a very successful affiliate program uh tell me about the tell me if you tell me about the affiliate program how does it work what commission do you pay out the details i'm not the best person to to go into all of those i i think it's twenty percent uh Affiliate program drives sales for most affiliates and then they have some some tiers on on the best performing ones and those include all the marketing agencies that are signed up for you you pay an affiliate fee yeah some of those yes yeah yeah and is that 20 paid in perpetuity as long as the customer keeps paying or is it only for the first year it used to be in perpetuity but i think there's now a limit i don't remember exactly how long that is i think it's more than a year talking about your content strategy right now do you run this internally or have you hired an agency to do it for you we do it internally so we have a really good team uh to handle that of course we do use uh kind of uh outside riders to produce content but we coordinate all of that internally for the freelancers influencers in the field who write right content for us uh okay got it and how do you i mean how do you discover new keywords you want to go after and target that i can't answer i'm not that hands-on what year would you say you started investing aggressively in content marketing that would be 2016 when i hired the first marketing person in the company and how many people are on the team today full-time the marketing team i think is 15 about total team the total team yeah oh total is is five so so marketing team is 15 and the whole company is uh hundred and thirty or so one third i mean that's that's almost three times what you told me when you came on last which was about 18 months ago so obviously a lot a lot of growth there how many of 130 are engineers question let me look that up here what tool do you use to manage all your people what are you looking at right now we have something called high bob hi bob creative name yeah i think it's a pretty new tool for this uh let's see where i can actually find that a range is fine too miguel uh it's engineering is around 40 people [Music] around 40. and do you have i mean your price point i believe is fairly low do you have quota carrying sales reps or no we do so we started building out the sales operation two years ago before that it was fully self-serve but we've been aggressively expanding the sales team as we are we have been pushing the enterprise product offering as well that i'll just describe to you and now we have in the sales team also around 40 people there's 40 are there how many people actually carry a quota about 40 almost yeah wow interesting how do you when you make that first mark that first sale tire back two three years ago what do you set their quota at how'd you decide um i can't actually remember i i i think i i was not familiar with you know sales uh compensation at all i'd say so i i think he he could uh you know maybe try drive that uh himself because i i was not very uh well uh educated that no problem hey before before we wrap up here just last few questions so obviously you raised 40 million bucks you didn't need to correct you were profitable for that are you burning are you burning cash now Profitable or not? today to invest are you still profitable even after the raise we are still profitable but we are looking for ways to invest that cash uh in a sensible way Companies Supermetrics will acquire of course yeah would you look at acquiring other companies that are in the app exchanges in data studio yes we are looking at various options of aquarium companies so data studio connectors competitors there of course it's one one area but there are many other kind of companies [Music] it's it's great to do great to do a raise like this where you're still profitable afterwards and there was a secondary option for all the early employees to get some liquidity including yourself now you didn't need the capital so i assume you had most the leverage when you were negotiating this what valuation were able to negotiate a range is fine if you can't be specific well i think it would have been super interesting to see what the valuation would have been without kobe because we were starting this from a real position of strength uh we started the process actually we could have started the process like late last year we had all the investors lined up or everyone was contacting us our numbers were super good but then i didn't have a cfo on board so i decided i need to wait for the cfo to join to drive the process that i can't i can't handle the process without so i waited till uh i think mid february for the cfo to come on on board and then we started the process and then of course like copied it like right in the middle of the process and then uh i don't think copied has it as that bad as as many other companies and many of our competitors but still of course there was hit and numbers were not that stellar anymore uh and that came at the first possible time when we were in the negotiating about the evaluation and i think we didn't get quite quite the best deal that we would have gotten and i actually i thought about maybe you know this would just you know cancel it and do it do it again a bit later when the situation has you know improved but then that would have been just so big a distraction for me from running the business so i decided maybe it's better to do it like this it's not the optimal deal but it's not a bad deal either so it's a decent deal Last Round Valuation um and it's uh the valuation is this uh you know let's say between 200 after 500 million and pre-covet what do you think the valuation could have been that you got i think we lost at least at least 50 million if it's not 100 million in valuation yeah so so i mean it's fair to say you were looking at something closer to like a 500 million dollar valuation pre-covered in kazakhova you had to come a little under that yeah i think that's fair to say so the investors that that were staying in the process they were like more hesitant to to uh you know promise a good valuation and then also a lot of investors just dropped out because they were having problems with other companies in their portfolio also they couldn't come to meet us physically and they said you know they never do deals without without a physical meeting um and there was just so much uncertainty that a lot of investors actually then dropped out well mikhail your story continues it's a lot of fun watching you i appreciate you making time let's wrap up with the famous five number one favorite business book i think i told you this already uh you did but i want to se i want to see if you say the same thing or not well i i can say more recent i think uh bad blood was real [Music] number two is there a ceo you're following or studying number three what's your favorite online tool for building super metrics beside your own i think i said except google sheets last time it still sounds like sounds like that's a good answer number four how many hours of sleep to eat every night usually and situation married single kids married with uh three kids three kids man you're busy and how old are you i'm 40. 40 years old last question what are you wishing you when you were 20 what's something you wish you knew when you were 20. what i wish i knew when you were 20. i guess that i i'll be successful in the end i was not stressing out if i can manage to do anything with my career guys supermetrics.com launched in 2010 it was a one-man show through 2015 grew to about caught three six hundred thousand dollars in sales before making his first hire in 2016 they integrated with a google sheets sort of exchange that drove extra growth they broke 1.6 million revenue today folks doing over 32 million dollars usd in terms of run rate now looking at enterprise products they just closed a 40 million round of financing a portion of that was secondary evaluation between 200 and 500 million scaling the team 130 people as they look again to continue scaling into this cohort serving again a big chunk of marketing agencies 15 thousand customers total mikel thank you for taking us to the top thanks 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 it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we 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hello everyone my guest today is mikhail dunaberry he is it was a struggle it was struggling getting marketing data together so dedicated uh time to automate it at a company that he was working for google liked what uh he did and blogged about it uh this then led him to found a company now called super metrics which he then operated alone for five years until it took off and he could start hiring mikel are you ready to take it to the top absolutely all right do it supermetrics.com what's the company do and how do you guys make money so what we do is um platforms like google they have a web analytics tools some data in a database they have crms we help them get all of this data together into one place so they can see how their marketing efforts are are working out okay and is it is it a peer play sas company are people paying per month yeah exactly okay interesting so give me a general sale i mean are these like smbs you're working with or enterprise folks what are people paying per month on average so the average uh average prices is rather low at the moment so uh in average it's uh around 100 usd per month uh obviously we do have a much larger uh size customers as well so uh the highest value customers are right now maybe five six thousand uh per month and we are moving moving higher all the time and average customer value uh as for the type of companies they vary a lot so ranging from from you know one-man scm seo shops to to you know google or or other other big companies yeah when did you launch the company what year uh first as a side business uh part-time business for me uh in 2010 but that's like a real full company in 2013. seven you said 2017. mikhail started 20 you said 2013. yeah very good and so now since 2013 have you decided to stay bootstrapped or did you raise capital for a long time my state was trapped so the company has always been profitable so there's no financial need to raise capital but uh at some point i figured it's good to get some more experience backing for the company so in 2017 i raised uh 3.5 million from a finnish vc called open ocean capital okay and as it kind of panned out how you hoped it would have they been helpful yeah it's been helpful so they have brought in some experienced people to help out and their networks and advice has been been helpful in other matters as well and so since you raised in 2013 up to today now how many customers are you serving today so right now we have our own 10k okay about 10 000 paying customers yes exactly and are you um obviously the funding allows you to hire you know higher faster what's the team size today are around 50 people now and and growing really rapidly 5-0 yeah so i operated 20 alone for five years so it was for a very long time about my company but now there isn't uh like last two three years we've been hiring fast yeah and it sounds like it sounds like growth is there too right so if you have ten thousand customers paying an average a hundred bucks a month i can obviously do the math that puts it like a million dollars a month in revenue is that about right yeah about doing this and where does help me understand growth so about 12 months ago where were you uh so we are growing at around 150 percent year on year okay so that would mean you're doing like 400 000 about 12 months ago yeah around that where that's i mean it's impressive growth where is most that growth coming from i mean how are you signing up new customers so we get a lot of organic leads so actually we got a huge in inflow like maybe 10 000 leads per month uh these are mostly from organic sources so uh word of mouth um is the different google application galleries where we are highly rated uh we get a lot of uh like you know many influencers uh talk about us in conferences and so on so uh a lot of that is is fully organic and we have pretty good brand position in the digital advertising uh industry already uh we do some paid advertising as well let me go let me go to paid in a second let's talk about kind of the organic leads via google search so name like one or two keywords that you rank really well for that kind of bring in the most traffic per month so i would say google data studio dashboarding um you know facebook ads reporting google ads reporting stuff like that by the way that's how i found you so i was putting together i was just experimenting with google data studio um and i'm like god they don't do the freaking charts that i want like i need someone like superpower and i typed like google data studio like charts or something and i found you on my plane to hong kong when i was doing this about three weeks ago and i said i want to have this guy on the show he's killing it does that make sense okay so that's the search volume talk to me about the influencer kind of giving keynotes and mentioning you who's like the top influencer that mentions you all the time when they're on stage i'm sorry i would have to get back to you on the names actually i'm not uh you're not sure i'm not involved in that part that much so no problem it's our marketing team handling that so no problem and then how i mean so talk to me about marketing spend i mean how much are you spending per month on all your paid direct channels do you think 100k about 100k okay and so when you start looking at and planning for things like your fully weighted customer acquisition cost i mean how much are you spending to get a new 100 a month customer would you say uh so the average uh cost per acquisition is around 200. okay and that's cost per paid customer not like per new lead or something right uh that's actually of all customers so paid is is a bit more it's maybe around four hundred but i mean still healthy economics right you have a four month payback period there it works yeah very cool where so so um a lot of again growth going from seo influencers mentioning you and then you're spending 100 per month on paid um you raised capital now when you said you raised the 3.5 in 2013 uh 20 2017. oh 2017 sorry 2013 is when you started kind of going full time on this hiring people and then 2017 is when you raised uh so 2010 i founded the side business 2013 i made it to a real company 2015 i hired the first employee 2017 i raised the funding got it okay very good so so you raise the capital you're not scaling the team i'm i'm going to guess you're probably burning cash right now to drive growth how aggressive are you being burning like 10 grand a month 100 grand a month or more actually we are very profitable still oh you're okay so the three you're not using a three five it's just sitting in the bank it's in the bank i'm investing that no that's good so so you said you are investing that or you're not i'm investing in partially oh okay what does that mean i'm putting it in etfs oh got it so it's cash sitting in the bank and you're like well hell i might as well earn like a couple percentage points on this thing i'll stick it in an ecf yeah you know we're trying to grope the team uh rapidly enough to to not make a profit but it's uh we haven't been able to hire that fast yeah yeah that's a good problem to have so i mean are you talking like 10 ebitda margins or like more oh it's actually more okay i mean that's great i mean can you put a cap on it is it less than like 50 less than 50 definitely okay between 10 and 50. that's good that's good good um okay so how do you um i mean you're already scaling it sounds like pretty rapidly right you're where do you think you'll finish in terms of ar by the end of this year 2019 so our goal is to be somewhere around 15. okay so you're at 12 right now yeah that's i mean obviously super healthy place to be and then you already told us you're over your growth can i yeah maybe you can cut that piece all right i forgot i i i meant turnovers would be 15 this year and the ar should be 20. tur i don't understand what you mean when you say turnover should be 15 million uh danielle turn it over oh god i got it so if you're just looking at like a kind of cash collected basis you're saying you'll collect 15 but arr by the end of the year you're hoping to be about 20. yeah i got it got it um very good and then and then where did you finish do you remember a previous year so 2015 you made your first hire do you remember what you did that year total uh i can check the numbers yeah sure why not love stories like this i love a side hustle that turns into a full-time thing that turns into hiring that turns into revenue and raising and it's a good story yeah so 2015 i made around uh 500k okay and what about 2016. [Music] uh one country and then we're about 2018 or 2017. uh 2.2 that's good and you want to finish out with six months ago and december 2018. uh that was uh 6.2 that's great i mean really again really healthy growth very cool so what's the next step i mean do you do you want to keep kind of building this organically do you think you can uh do you think you can maybe make some acquisitions in this space to drive further growth or how are we going to deploy the capital effectively we are looking into acquisition as well yes so how do you think about those if you were going to acquire a company what kinds of things would you be looking for well obviously we are looking for some talent that we don't have have here and uh some kind of directions that we want to pursue in addition to what we are doing here but we don't have the resources to do ourselves right now so uh we have a really strong position uh being the data pipeline company like moving data from place to place like uh from all of these advertising platforms into google search google data studio into excel tableau things like that but with the huge amounts of data that is moving to our to our system there's obviously a lot of potential to add some more value on top of that and we are looking at companies that that do uh things like that for advertising yeah data turns critical on your space what does annual churn look like today on a revenue basis so on uh um net revenue return we are actually negative right now how negative less than one percent more okay but um we haven't really been uh we haven't really been doing anything for that so we just hired our first customer success person to try to get to drive that uh that um uh upsell to the existing customer base yeah yeah so so net revenue retention of 100 or net negative revenue of negative one percent same thing it basically means your expansion revenue is almost making up for all of your churn revenue can you would you know what those two parts of the those two layers are do you know what gross churn was and what expansion was so our client churn is around one percent uh per month okay so about 12 annually and then you're expanding those same accounts by call maybe you know 12 13 percent annually yeah yes yeah yeah that's good what is the up where what is the upsell revenue or is it selling number of seats or more data pipelines or more charts what is it it's all of those partially so in some products we price perceived time we sell more seeds uh that is driving part of that uh then we also uh in some products we price uh by the number of data sources and and certain data sources uh are like priced uh higher than others and then we try to sell those ones and obviously we try to also bundle the products so there is some uh if someone has our google search product we try to uh add our new bigquery product on top of that to get that get them to a higher overall level that's great if someone came to you today and offered to buy you guys for a call at maybe you know 40 million bucks would you which would be got three to four extra current revenue would you would you would you take the deal oh definitely no not just no definitely no no no no 40 million where where where where does it start to get interesting for you it would have to be more like 789x yeah i think more like looking at that growth rate and profitability i you know it's going to be quite a lot yeah yeah more than 100 yeah i would say yes yeah yeah very good well no look what you're building is fun you know that's kind of a cheap question for me to throw to you because you wouldn't you have no reason to sell you wouldn't sell there's no reason to do it um let's uh let's wrap up here with the famous five number one what's your favorite business book well i just read uh um what did i say street when genius fails yeah that's cool um when genius fails number two is there a ceo you're following or studying right now say some lampkin i like your stuff uh number three what's your favorite online tool for building your company [Music] i'd have to say google sheets it's just spotted good answer good answer how many are number four how many hours of sleep to get every night maybe seven okay and what's your situation married single kiddos i'm married at three kids three holy mackerel you're busy how old are you i'm 39 39 last question what do you wish your 20 year old self knew i could tell them that uh maybe consider forming the business earlier i would say like i had never considered when i was standing never considered even starting a business but now i know no no no how how fun that can be so maybe i i should have started earlier than i did and being more brave in that supermetrics.com 10 000 customers paying 100 bucks a month so a million dollars a month in revenue up from 400 000 a month just a year ago 150 year-over-year growth they've only raised 3.5 million bucks but he hasn't even spent in fact he's putting that and reinvesting in the etfs while the company grows profitably right now there's about 50 people on the team 12 annual churn 13 expansion for 101 net revenue retention he's spending 100 grand a month on adwords spending 400 bucks to get a new paying customer which is obviously about a three to four month payback period super healthy there again a nice healthy growth year over year started back in 2010 as a side hustle mikhail thank you for taking us to the top thanks a lot