How Brand24 CEO Michal Sadowski grew to $2.4M revenue and 2K customers in 2018.

hello everyone my guest today is mike sadowski he's the ceo and founder of a company called brand 24 a social listening tool used by over 2 000 customers across 87 countries he's a mentor at startup weekend and founder institute awarded a best co-founder prize in the new web startup awards and web summit conference people's stage winner mike are you ready to take us to the top fantastic yeah all right all right good thanks for being here now real quick in your bio you said 2 000 customers across 87 countries just to be clear because sometimes people you know mix this up that's 2000 paying customers not free users right we have uh many more uh sign ups uh however those are only active uh paying customers so uh the ones that count into mrr yeah those are those are the ones we care about those are the good ones right definitely yeah those are the ones that that pay the bill yeah all right tell us more about brand 24 what do you guys do and uh is it a peer play sas model um yeah it's a media marketing tool so whenever whoever talks about your company anywhere on the web we collect the information we let you learn more about your customers what they like what about what they dislike about your product uh we allow you to interact with them obviously whenever they uh post anything about you online so it's a this is a tool for building relationships with customers it's this is a tool for learning more about your customers and actually also get shares because more and more companies are using this to not necessarily to target discussions about them but to target discussions about topics related to their business so for example one of the major sources of traffic one of the major sources of customers for us is using our own tool to find uh conversations about social listening about media marketing about uh tracking your brand online and whenever somebody asks for a good tool for tracking your brand on facebook groups on twitter on quora we know instantly we can engage the conversation and be like hey you know we do this at brent24 so and this actually generates a lot of traffic for the company uh currently over a thousand signups a month is based on the let's say something we call community marketing so engaging all the conversations about the uh related to your business and is that system free for you to run are there extreme server expenses you have to put an sdr on it is it all or is it i wouldn't i wouldn't say it's one of the cheapest uh channels for uh customer acquisition because the only cost is the is any tracking tool uh but but you can obviously start with some free tools uh probably google itself you can you you can pick up the converse the top topics uh related to your business top uh let's say conversations related to your business that are well positioned in google typically if you google you know best social listening or best social crm or best you know anything uh you get some message boards some core opposed some a blog post that you can engage and you can create exposure for your company so typically the major cost is uh is is a community marketer so person that would be responsible for that you can start with uh doing this on your own however uh most companies actually hire the the let's say the specialists the dedicated people to to do this it can be one of the um one of the things to do for content manager as well and mike so just sorry just to cut you off there for a second before we get too far down the line here um on average what are customers paying you per month for access to this tool typically a hundred dollars a month that's the average revenue per user per month okay but then again you can start with free tools or just with google right uh uh finding the existing conversations you don't have to access the the let's say the newest ones uh on the daily basis like we do you can just start with the most popular ones and the ones that are well positioned in google that would be the probably the low hanging fruit because i can imagine you spending a day or two on engaging all those major conversations and the beauty of it is you're not uh trying to get a single customer that started the conversation you are uh exposing your company towards uh many people who will visit this conversations just like you did uh in the future so yeah yeah mike i i totally get the tool i think the audience will totally understand what you do it's a valuable tool it's a valuable space and listening is critical so i got that just to be clear uh back into a little bit your numbers here i mean at 2000 customers at 100 bucks a pop it's fair to see you guys are what somewhere around 200 grand per month right now in revenue uh yeah pretty much okay and have you boost those customers are but are based in uh uh let's say uh all the global customers we we started this company as a local company so actually 50 of portfolio is based in poland where we started and what year did you start we started in poland as a local monitoring tool we but uh mike what what year three okay oh what year sorry uh it was 2011. 2011. okay god and and your team today is mostly in poland how many people are on the team total 65 at the moment sorry 65 65 65 yeah okay and and sorry are they all currently based in poland are you now more remote poland fully based in poland it's actually pretty uh one of the things that shocked me that you that actually customers from all over the world they don't mind buying the product if it's good enough they don't mind if it's from you know based in poland or uh anywhere yeah have you have you bootstrapped this or have you raised capital mostly bootstrap out of the uh let's say six million dollars that took us uh of costs that that took us to the to the place where we are at the moment uh probably uh 300k no uh three four hundred k dollars was the external funding the rest is bootstrap so over 90 of the costs were financed by just revenue from customers rather than investors okay uh well i mean so as you're growing what i heard you say is you've spent about six million bucks to go to grow the platform where you are today you launched in 2011 and today you're doing about 200 grand per month in revenue did i hear all that accurately yeah okay so just so in order for you to basically bootstrap the company you're saying you had 5.5 million essentially and in revenue cash flow over those years that you're able to reinvest yeah okay we don't see the we we prefer to reinvest all the revenue back all the profits back in the back into the company because you know 2 000 customers out of the tens of millions of companies that would be that are potentially interested in monitoring uh it's it's not a time to high five each other it's rather time to reinvest back into the company uh you know hire more developers hire more marketing people and just scale how are you sustaining i mean i'm just doing back to napkin math here with 65 teammates if i assume an average salary of 60 grand a year that's five grand a month times 65 people just head count is 325 grand per month so are you burning a ton of cash right now or is your cost of labor way lower uh i'm i'm not sure that we are getting close to 60k dollars a year per uh team member this is an advantage of po i know a lot of people have poll dev shops in poland because the the labor's just significantly cheaper and it's high quality yeah the there's a lot of talented people here and and you know i'm [Music] i would have to calculate but i'm not sure even i'm making that much uh uh to be honest so uh so yeah that's that's the beauty of the the the word right now that we we can run this business with poll let's say polish costs while charging in dollar and are you running it at about break even right now yeah we're we're uh again we're very close to break even all the time because we had no external funding so we have to be close again we we're not putting money away in the bank or in a safe or or something because the it's it's not a it's not a time to to to to put money away we reinvested back into the company but we are mostly bootstrapped as as i mentioned so and give me a sense of your growth story so today you're at 200 grand per month in revenue but if you go back to the beginning of 2017 where were you at and where did you finish 2017 at uh 2017 we finished at uh 2017 or twenty one hundred customers more or less uh uh it was in dollars it depends on the on on the [Music] uh the price of the dollar versus zlata it was 7.5 million zlatan in revenue which is roughly 1.8 million or something like that in total revenue yep and just to be clear that's not you're not taking december of 2017 monthly revenue and multiplying four by 12. it's not a run rate yeah it's uh it's it's it's just the total revenue if i if i were to multiply that you know the the december times 12 it would be much more i guess okay what would that number all the all the data i can i can send you the public information because we uh we did ipo in january so all the all the last year's financials are public so tell me so tell so that's interesting tell me more about that uh most people think in order to ipo you've got to be doing 80 90 100 million per year you're obviously significantly lower yeah tell me more about it yeah i'm sure that for nasdaq you would have to do that but for the for the local ipo in poland on local stock exchange which is still uh it's it's it's pretty good option for raising capital uh those those you know other other other stock exchange markets than than the nasdaq and new york stock exchange um it's it's a viable so how much did you raise in your ipo just one million in just one million dollars november last year but you know the shareholders get gave us an option to raise anywhere but between one and ten million dollars uh well mike hold on sorry so just to be clear you had you said earlier you had 300 about 300 or 400 grand coming in externally from the company and the rest of the six million costs you funded but you had this ipo that basically brought in another million yeah but but uh so what i mentioned with this uh let's say six million costs and uh less than 10 percent of external funding this was until the ipo which just happened like uh i see a month or two months ago so we haven't started to spend this money yet that's why i'm not counting this as uh you know yet um okay but you have raised an additional million bucks through an ipo yes got it okay good and and again strategically why decide to do that now you have more scrutiny you probably have to move a little slower you have to validate all your stuff with shareholders not really i'm i'm actually so there was a lot of work to do the ipo itself because it was six months of preparing you know due diligence all the documents uh all the necessary formalities but otherwise a post ipo it's not much different than before that so i don't see any uh a huge downside uh in terms of uh workflow um we were also pretty afraid of the all this communication uh let's say rules post uh ipo so but we were pretty transparent about the business before that we were notifying our let's say friends or or or even customers about the results on monthly basis before ipo so yeah you're already communicating yes so mike we're running out of time so quick answers here if you can tell me about churn what do you guys think now in terms of churn the churn is currently uh more or less at five to seven percent ballpark uh and that's logo gross logo churn monthly not user turn okay so so five percent net logo churn per month it's logo though not revenue between five and seven percent that that would be uh more or less the ballpark okay but but is it is it logo i'm trying to get to is it logo or revenue it's a number of customers number okay so net user turn what what we call the the revenue churn is uh significantly lower because we we tend to lose the cheapest customers like how low like one percent maybe two percent um i'm i'm not sure if i can share this information because of the ipo uh that's that's another thing that apparently we we could have been much more transparent about the results before ipo yeah all right last few economics questions here before we wrap up with the famous five a cac what are you spending to acquire customers uh at the moment uh it's uh uh it's around 280 um so the the the the return on uh customer acquisition cost is uh on average after three months yep yep at about at about a hundred bucks a month and 280 cost you get it back in three months that's great and what do you assume uh what do you assume lifetime value is on these customers at a minimum uh that would be around fifteen hundred dollars okay that's good all right good stuff let's wrap up here i'm mike with the famous five number one what's the last business book that you read uh elon musk's uh biography by ashley vance i guess okay and number two is there a ceo in poland that you really study or admire in poland yeah raphael agnes and he's a ceo of what he's uh ceo of a conglomerate of of websites the biggest one is probably furgonetka.pl which is the major uh local um spell that mike for us sorry a dot pl okay that's one of the major uh like uh something like postmates i would say yeah good number three what's your favorite online tool for building your business i would say amplitude number four how many hours of sleep to get every night i'm sorry how many how many hours of sleep do you get every night eight yeah that's good in which situation married single you have kids married with two kids two kids all right and how old are you mike i'm 36 36 all right last question what do you wish your 20 year old self knew i i wish he knew uh to spend more time on numbers and analytics it might not look sexy and it might not sound sexy but there's a huge value here and i i would probably find places on my website that i that we were losing most customers earlier so my company would be probably so much bigger now brand 24 social listening tool mike he would have started doing analytics and numbers earlier on at least understanding them founded the company in 2011 in poland now the team is 65 people they've scaled about to over 2 000 paying customers so doing about 200 000 bucks right now in monthly recurring revenue 5 net logo churn per month spending 280 bucks to acquire a 100 a month customer so healthy payback period with a lifetime value of about 1500 bucks he only had about 350 between 300 400 grand raised in the company before he recently ipod where he raised another million dollars now he's obviously public on the polish stock exchange mike good luck and thank you for taking us to the top thank you so much