Agorapulse Revenue, Valuation & Funding (2024)

hello everyone my guest today is Emmerich ern ooh he started his career in 1996 as a business lawyer in Washington DC and then launched his first startup in France in 2000 after three semi failed SAS projects in the social media space he finally got traction with his company Agora pulse a social media management software launched in 2012 he grew it to five million dollars in annual recurring revenue and it's growing at 80 percent year over a year and Mark are you ready to take us to the top I am definitely well I think you're much cooler as a SAS CEO than a lawyer so congratulations [Laughter] so the company just to be clear the revenue number you finished 2017 at a run rate of about five million was that accurate absolutely okay and let's get more the back story now what does the company do and how do you make money as a pure SAS it is pure SAS it's a social media management software so most of your listeners will be familiar with HootSuite so it's like it's a competitor to HootSuite and many others and it's a monthly subscription our cues around hundred and forty five fifty dollars I have most of my numbers in Euros I have to make conversion on the go good and yeah we have we've passed three thousand clients before the end of the year and yeah but some that's where we it's great so 3,000 paying customers paying each about 145 bucks a month for about four and 16 grand and monthly revenue or a five million dollar run right set that accurate yeah it's about right and Emeric have you bootstrap the thing or of you raise capital yeah we did bootstrap okay completely bootstrap that's incredible did you use any debt or no we actually use something that a lot of people are using we had a previous business that was generating some cash not good but enough to kind of you know fuel the next an expense er so we use that cash we basically stopped working on the old product the old project and work on the new one by using the free cash flow we had from the old project which a lot of agency do when they start a product and you know heard a lot of people in the podcast doing that as well so you can't start with zero you got to start with something especially when you're building a complex ass product our thing was that were you able though so the cap table can get pretty messy if you're transitioning were you able to also in that transition clean the cap table somehow or get early people out are they still kind of lingering on the cap table with two three four or five percent that's a great question we've been incredibly lucky that the initial shareholders that we had from the previous business event Ely got cash problems of their own and then when they had we had cash in the bank so we proposed them in exit and we basically bought them out like you know some some of them like eight nine years in so like they've been with us for a long time super patient and super nice and we basically bought them for you know a good chunk of money based on what the university initially they made a huge return like 10x kind of return but for us at the time when we bought there three four five percent it was a great deal based on the air or we were making at the time so well lookey and the way air was that when you executed that most of them were 2017 oh you oh you executed most listen in the just this year 2017 yeah oh god we bought them out we bought the the initial business angels that we got in say two thousand two and four yeah but them in 2017 and we bought them for you know good price for them good multiple that you know they didn't become millionaires but compared you know what they invested in the early days compared with the Gothic was pretty good returning what did on the early days are we talking 200 grand or ten million no yes some of them were like you know forty thirty forty thousand the probably the highest was fifty thousand and you know the fifty thousand we put them out as close to two hundred thousand so like it was a good multiple for them yeah makes it sound yeah you're looking at this I imagine going I know TechCrunch as I said go raise capital and try an IPO but I'm sitting on four hundred grand a month in cash flow top line if I owned the whole thing and have full control I can just pay myself 200 grand in free cash flow every month and my wife's gonna love me forever you know you're touching a great point it all goes back to what's your motivation in life and what you want to build for yourself you know when you're when we're young we usually have big hairy goals and we want to be the next Mark Zuckerberg and as you grow up and you're facing the difficulties of during a business succeeding in business and you get something you start thinking well I'm pretty happy with a pretty decent salary and and freedom and and you know the ability to lead my life in my business the way I want and still grow and and take profit out of that and Basecamp is a great example of bootstrap company that got incredibly incredibly successful and there are a lot of others that are not as successful but still get a lot of cash out of the thing and more importantly a lot of fun and pleasure which which i think is the key the key to everything so do you have a co-founder are you now the sole person on the cap table where two co-founders the CTO ben and myself got and and he's been with you the whole time he's been with me the whole time 17 years so he's a more patient than my ex-wife that's a minute before that's funny so launch day was 2000 Ben's with you from the beginning ex-wife left or you're remarried now oh yeah sort of not not married but we've been together ten years and we have a kid so it's like the same thing yeah basically yeah but - minus the tax it benefits right yeah okay that's true where are you based or even you're overseas right now I'm based in Paris France yeah is that where most your team is no actually it's only one third of the team two third of the team is in Ireland the u.s. Mexico Brazil Slovakia Malaysia Philippines and Guam it must be for kids the remote is a remote team yeah it's mostly 2/3 of them are remote the u.s. is the biggest country I think we have seven or eight people there and how many total are on the team 1440p okay that's I mean that's pretty Sam Kent forty people and help me understand some of the economics here because last time we talked man I think it was like three or four years ago at a conference and and if you don't mind me sharing this I mean it's old enough now you were expressing concerns about things like churn so yeah I assumed that was pre pivot you pivoted somehow what is turn today and how would you drive it down it's a very good question a pivot is something we do all the time like it these are a small you know 10% pivot and then 10% and then 10% you keep adjusting especially in a fast-moving industry such as social media I think when we talk together three years ago we probably were at 12% net mr churn that was the number eight ship and now that was monthly that was well remember we're in the SMB self-service SAS business which which has monthly churn you can you can't totally kid it it's impossible I I don't know anybody in the SMB space who has no churn or negative 2 negative journeys always is for higher paid customers like you know Enterprise they have negative fear and of course those who get you know one year full contract three-year contract obviously they have negative churn with those who have monthly and SMB usually the best turn rate I've ever heard was Constant Contact at 2.5 that's the best I've ever heard and remember they sold for 1.4 billion and they have 600,000 customers so you can make it even with two thousand percent yeah that's still that that company I mean that they were at you know you did some galas conference calls I mean they would add 60,000 but 60,000 customers in a corner but they would churn 50,000 so like they they churn through the market and if you look at the p/e ratio where they exited for was actually a shitty multiple for a SAS company yeah I don't have all their stats metrics insuring is a bad thing overall and you get to the glass ceiling at some point if you if you churn every month of course so you know what everybody does is they go at market and this out went to what when he went today though so we we were 12 we reduced it to 8 the following year we reduced it to 6 the following year we're now between 3 & 4 and my personal goal is to get to 2 or below 2 by the end of this year so by the end of 2018 and you do too as you can see it's a slow process it emerges to be clear that's that's net revenue churn monthly is 4% at mor churn absolute and his logo churn about the same I don't you know tack it you know I don't I I mean we have the number but I don't really care because we have a lot of legacy small very small clients who are going away and we don't really care about them because you know we we really care about the ones that are more in the 99 $1.99 range which which is kind of a core target the ones that used to be at the 29 plan that we killed a year ago there there are still churning a little every month we don't it doesn't really matter because it's not the reflection of the business as we've been heading it for a year so I'm really looking at the business we have now and and and I'm looking at the you know the the cohort we have now in the cohort we have now are better and better over time as we improve product client equation and stuff like that give me a sense of growth you said you finished 2017 so about a month ago out of five million dollar run rate where were you at the end of 2016 we were about two point five well can see almost doubled over here what did W over here that's right that's great okay great and then what are you willing breaking down some of the other economics for me with that kind of churn you obviously can afford to pay a little more to acquire our customer because they're worth more what are you paying right now to acquire customers yeah that's a question I really don't like the cat question because we don't pay to acquire customer it's all organic so putting a number there it's basically doing hocus pocus magic with oh my oh it's because if you do I'm not talking just direct paid if you do a fully weighted CAC you take into account content marketing salaries things like that I know I know it's like I'm gonna give you the number but it's meaningless it's a hundred and fifty bucks but it's meaningless because I'm actually not paying for those and and everything I've done that's paid a dollar to acquire a customer as failed so right now the CAC is interesting when you have a growth lever so when you can you know you look at the CAC and you look at the LTV and you say okay I have a grow flower this is the cost for me this is the revenue for me orbit over the lifetime the customer I can push that lever and acquire more and then raise money and stuff and stuff like that if you have no growth lever meaning that everything you do is organic then knowing CAC is not really interesting because what are you going to do with that well so here's a question right it's the new year if content marketing is working in your calling at organic free growth why not go higher more content marketers because creating great content is not as easy as creating good Facebook ads or good ads on AdWords if you are someone more money well I would be great I would love that the only barrier would be we pay someone more money I would pay that person more money right now you gotta find the right the right people and that super hard to find and then you have to execute the right strategy which sometimes you succeed at sometimes you don't and honnestly content marketing works great but it works slow so we have a lot of content marketing experiments that we started that are starting to produce results but they will probably be at their full speed in 12 or 18 months m1 cannot the social media lab that we lounge for months ago it's basically us doing tests on social media on you know any time that any any kind of topic you'd like to test on social media you can give it to us and we're gonna test it we're gonna basically spend a week or two weeks running the test gathering the data writing about the result we have a podcast about this and I made them I made the math on the cost of that and every blog post is costing us around $2,000 $2,000 to $2,500 per post just to give you an idea on the on our regular blog post that the one we've been having for five years an average blog post cost us between 200 and 250 so it's like 10 times more so it's a big bets and I'm convinced it's gonna work out and I'm convinced it's gonna produce result and we're also leveraging that in a lot of influencers you know marketing tactics and stuff but again it takes a lot of time and I I'm not patient enough to wait for 18 months from now to you know to grow my business so we're gonna do a lot of our different things less organic I mean more that we have control that can be considered growth levers you know running webinars with partners we're working on a lot of stuff right now to build a lot more webinars and I know you're big fan of webinars and you've built a great business with webinars we've never done any of that and now we're gonna we're gonna try that so I want to I want to I want to get Grove leathers and and this is gonna be one of them we're gonna wear it or trying Adwords right now of 6,000 a month just to test it out just to see if it can work for us to be honest we're doing come on friend sponsorships at all oh this this is not something that's very easy to measure so I don't see that I don't look at that as a growth lever and I'm really into finding some growth levers that I can actually you know Porsche or pool yeah scale I'm moving forward so yes so so CAC right now it's kind of organic content it's hard to really know what you don't spend to get one you're testing some six grand spend right now on ads to maybe see if you can dial in that cat ratio because if you know what that ratio is it becomes way easier to pour oil Pharr gas on the fire so that'll be left up you back on in a year and see how those pan out but uh oh yeah in the meantime America let's wrap up here with the famous five number one what's your favorite business book my favorite business book is called extreme ownership that's a good one I feel like I just finished reading that I don't know where I said it though number two is there CEO you're following or studying right now yeah well I I used to say none but in the last three or four months I've been listening to David cancels podcast seeking wisdom which which I enjoy very much and I like very much so David if you listen to us you aren't the founder of drift I have to say that you know the guy is pretty interesting to follow through the podcast and is sharing all his wisdom and how what he's learning and it's a very interesting piece if drifter and David offers you've 15 million bucks for the company 3x ard cell 15 1.5 no five zero is more interesting huh five zero I'd consider yeah all right number three one thing I learned one thing I learned in my life is never say no to a good check I when I was a business lawyer I had clients of mine who said no to huge checks because you know one guy was proposed nine hundred and fifty million and he said no I'll sell to a four billion like supposed to be dumb is that and five years later he saw this company that was almost bankrupt for five million and I've seen that many times and I decide you know I thought to myself if in my life I ever get the opportunity to get a big check I'll take it because I've seen too many people say no to a big check and then regret it you know bitterly later on so number three besides Iran what's your favorite online tool ah my favorite online tool that's a great question slack what's it sir no all right and how many hours of sleep are you getting every night I'm getting eight and when I can get nine I'm happy that's good and you said you're in a relationship in a relationship one kiddo and Emeric how old are you I'm 45 45 last question take us back 25 years what do you wish your 20 year old self now it's gonna be okay don't worry coming coming from the lawyer it's gonna be okay he turned his nose onto Washington DC left as a legal job launched his company back in 2000 lost his wife but his co-founders stuck with them all the way through to where they are today with the Guara boss again social media management doing many other things really focusing on enterprise or more enterprise level accounts moving away from SMB they have about 3,000 customers paying about 145 bucks a month so hitting about a five million dollar run rate at the end of 2017 up from a two and a half million dollar run right at the end of 2016 so healthy growth churns coming down 4% net revenue churn monthly obviously again really healthy his goal is to get that below 2% CAC even though he's not really important to him is about 150 bucks average customer staying 25 months for a value of about 3,600 bucks his team of 40 spread all across the world Emmerich thank you so much for taking us to the top Thank You Nathan