How Cleverreach CEO Sebastian Strzelecki grew to $3.4M revenue and 200K customers in 2024.

hello everyone my guest today is christian schmidt he's been ceo of clever reach since summer of 2015. together with jens and conrad he manages the international email marketing company with more than 200 000 customers in 152 countries christian are you ready to take us to the top yes all right very very good i see are those nerf guns behind your head do you guys have nerf wars in the office frequently yes exactly we have and it's correct we sometimes play nerf guns who wins uh always somebody else [Laughter] you're not you don't dominate no one's a consistent winner no it makes fun and it's we have great teams and sometimes the one team wins sometimes to the others that's good all right let's talk about clever reach what's the company do and is your revenue model a pure sas one yes it is a pure sales fund and uh you know our objective is to deliver a solution for direct message uh communication specialized in email marketing and small smbs and also big agencies and enterprises are able to create their direct communication um to send campaigns globally and to analyze them and that's our solution we try to help people to communicate and to outreach their target audiences globally and then in future we do have other challenges and emails like facebook messenger chatbots like alexa and so on very good and give me a general sense i don't want to talk about every customer cohort but i think you're playing in the enterprise space what's the average customer pay you per month would you say the average customer pay it's completely different because our core target on this are smbs where we have small baskets yeah a basket could be between 500 dollars per month up to thousands per month depending if it's an enterprise an agency and what kind of plans they uh book because we you know we do have flat rates for high volume customers flat rates and prepaid plans for low volume customers but christian give me i understand there's a lot of different cohorts give me a general direction are we talking 10 bucks a month 100 bucks a month 10 000 bucks a month where are we generally it's totally between all of them okay an average means you take all your customers you divide into your current total revenue and you get basically an average of what customers pay you per month if it's pure play sas can you kind of dial us in a little bit there between 500 and 2 000 okay fair enough that's great and that and that some of that is based off kind of volume if it's enterprise some of it is smb totally get there's different cohorts but between 500 bucks a month and 2000 bucks a month is super helpful to understand um put this on a timeline for me it sounds like you joined in 2015 the company when was the company founded the company first founded in 2007 as a spin-off of the shampoo group which is a software comp development company since over 20 years okay good that was 07. now you joined in 2015. did the company pursue you or did you pursue the company well i met someone in 2014 the owners of the companies and i was looking for a new perspective and a new challenge and then we talked about the opportunity with cleverage and they hired me to bring cleveritch into the next level because this was in 2015. now i hope i i'm assuming they give you obviously meaningful equity so you're basically i mean you're you're properly incentivized otherwise you would have just gone and started your own company correct all right yeah okay good now are the original founders still involved um well they are not involved in the operational business i do see them twice or three times a year and they let us do what we want to do good relationship or not so good relationship a really perfect relationship good answer all right and how many people are on the team today total well that's uh difficult you know it's always our goal to be an agile team like which can drive in the speed road you know we do have teams in hamburg munich new york and canada and in italy and yeah okay but again total employees i mean usually people know this within a couple you know five or ten people what are you at today well we are around between 50 30 people depending on how you count our employees because we work together with teams on an outsourced basis and we employ directly just for time just full time well between 30 and 50 people okay three zero and fifty and that's across three or four different offices yeah okay very good so 50 folks and now you're where are you based are you at headquarters i am based in the headquarters in germany and in russia which is uh near bremen okay and that's had you call that hq we call what you call it i mean are you that's where your largest team is based yes of course okay very good all right 2007 launched you join in 2015 teams take out 50 people you're there in germany at headquarters let's talk customers so over the past you know i guess it would be 10 11 years how many customers have you guys scaled to well we now have over 200 000 customers and i would say within the last years we grow we we around about three to five thousand new customers each month okay and just to be clear these are not like free trials they're actually people paying you between 500 and two grand per month the average you told me earlier yeah okay so okay i mean so if i take 200 000 customers times the low end of that average you gave me earlier and what they pay per month so 500 bucks i mean that puts you at 100 million dollars per month in revenue something's not right oh well that if you mean the 200 000 that are not all the paying customers the paying customers number is lower but okay yeah that's my question christian why do people do that right when it's like when i ask like i i ask like how many paying customers and then give me like a user number and it's like super inflated why do you why do you use the terminology customers for people that are not paying well the question is when do you call a customer a customer you know and uh we do not relate to pay to a customers who someone who pays money the customers where you do have a relationship to and a contract and you do a service a contract for what if they're not paying they are using our solution so it's a user it's a user and he has a user user solution contract with us because we are delivering his emails to the world and there are some rules and we do have a contract okay so i know obviously mailchimp you have you can have up to 2000 subscribers there's like a free plan there they call those people users so these people that are sending emails with you how much can they do for free uh it's different we have a similar opportunity in the u.s where you can send to 2500 customers free emails to four times a month you mean subscribers to your list 2500 yes yes and in in europe the number is much lower it's 250 subscribers four times a month okay fair enough and then how far under 200 000 are your actual paying customers we're talking a thousand or a hundred thousand give me a general range well we do not talk about this number oh why not i'm not allowed to give that kind of numbers to the public okay why do you say 200 000 customers though it's very misleading well i i don't i don't understand why you uh uh uh let's talk about customers about users it's for us everybody's the same you know and uh we treat everybody the same everybody is on the same quality everybody should uh grow with people christian just sorry just to jump in you can't treat an enterprise customer paying you 20 grand a month right who might have an account executive a cs rep on them the same as somebody on a free plan the economics don't work why can't we you can't afford to have an account executive spend time the same amount of time as they spend on a ten thousand dollar a month customer on a free customer that you that doesn't scale it doesn't work let's say all your customers were free you're saying instead of this exact same team today no revenue well with cleverreach we have a calculation where a few customers pay another a few customers or large customers do not pay and they have all the same treatment all the same professional solutions and of course cleverage is treating everybody the same we don't care we our approach is that everybody has the same opportunity as a professional tool to do the same uh direct message marketing or email marketing like a a huge enterprise is doing for lots of needs sorry just to be clear i'm not talking about the solution you offer the actual software that's easy to give the same to a free versus a big enterprise account i'm talking about the human touch right i assume if someone's going to come and spend 20 grand a month with you there's an account executive on that and there's customer support and customer success and onboarding there's real people you can't put those same p there's no people there are people but we don't have account executives for key accounts okay so how do you land i assume you have enterprise deals in the 10 20 grand a month range how do you land those deals the same like we we do we do not have people to make special deals we do not make any special deals with an enterprise we do have price plans and everybody has the same price plan and can book and decide for a plan yeah christian sorry just to be clear if if i'm on your website and i see all your pricing tiers and i know based off my total subscribers that i'm going to be following your twenty thousand dollar a month plan i'm not just gonna put me in my credit card and start but i'm gonna want to talk to somebody you're telling me you have nobody that those people can talk to well with clevery we have people we have a service team where people can talk to and and okay and where do those serve how big is that service team and who do they focus on they focus on every client who calls and they consult every client the same and if a big client asks for a huge number of uh receivers he gets a special offer or they calculate and give them the offer and that we do have the opportunity instead of credit card to pay by invoice in germany in germany for example and how many people are on the service team we do have 10 to 15 people on the service team okay so 10 to 15 people they have they have limited time in a day right they have eight or nine or ten hours right if if every one of your 200 000 people whether they're free or paying messaged you right now how do they decide what to focus on well shoes come first serves okay so if all the free people emailed first and you would tackle them first even at the risk of everyone who is paying significant amounts could potentially churn because your support goes to three four five days uh if that would be the case yes but this is not the realistic case well i'm obviously being black and white here because i'm trying to understand how you how you handle enterprise accounts and and it's tricky because you're throwing go ahead yes if if you want to be treated faster or be on a primary line you can book a a primary uh support you know and and that for example uh we have a free email support and we have a phone line where you need to pay for to call us and to speak to somebody and if you have booked the uh primary in support you you get treated faster than um then who who has not uh booked this this special support and that's paid yes okay yeah so even support is not paid and the email support is for free the the phone support uh the help center and the phone is only for a payment uh for payment button not you know you can have a free plan and just pay for phone support then you and we do have a guaranteed uh reaction time within the paid support within 24 hours yeah so just to be clear christian you don't treat free users paying nothing and people who are paying the same they pay for support and services but we have to we have plans for sending emails and we have a premium support where you pay for to get faster support okay i get it we've beat this in the ground let's move on um talk to me about uh kind of how you've been efficient with capital have you raised capital or have you bootstrapped uh sorry i do not understand what you mean with raised capital i do not understand have you raised capital from venture from outside people have you have you raised funding rounds or are you bootstrapped no sorry are you so are you bootstrapped or have you raised what means bootstrap we have owners and we do not need money from venture capitals we we pay everything out of our of the money we earn yeah bootstrap means you haven't had to raise outside capital funded means you've raised outside capital now i'm asking too even before you arrive so the company to date there's no one that's there's no venture cap there's no funding that's been gone in the company outside of the current owners exactly okay got it so you so you you call that obviously bootstrap that's great um and and that obviously means you have to operate cash flow positive because you don't have a bunch of money sitting in the bank correct we don't need banks uh to invest money we have the cash on our side yes yes so the question is today you're managing the company you're cash flow positive yes you're not burning a ton of capital yeah um okay some other economics here churn is really critical especially in the email marketing space what's your churn today and how do you make sure to keep it low uh to be honest i do not understand what you mean with the churn okay christian churn is like i mean i i don't want to churn is like 101 sas metrics it's not a recruit i mean if you don't churn is basically how many customers stay or leave your product over a period of time oh okay you mean the churn rate yeah sorry yeah you know that's okay so so do you track your churning if so what is it today well we have a less we have less people uh leaving the company than running new car customers too well that's good otherwise you'd be shrinking so the what you just said is basically the company's growing my question is when you look at if you had a million bucks in revenue last year that same group do they turn down to 800 000 per year or did you expand them up to 1.2 million per year generally speaking what is your revenue churn per year well at the moment our growth is around about 25 year by year okay but again growth covers up kind of cohort analysis because you're including new customer ads in that churn you look at from a cohort basis so of that growth how much is coming from historical cohorts people that have signed up you know more than a year ago most of the i would say 80 percent and say 70 70 of your 25 growth is coming from new customers uh that's why yes okay when you are upselling past customers are you selling them new products typically or just higher uh volume plans higher volume plans okay and that happens organically no touch or do you have a you know a sales team that's actively selling into those accounts no touch that's great good so just kind of a volume play there and then um last question here on economics so so cac what are you spending to acquire a new customer typically sorry it's a please say again what do you spend to acquire a new customer it's called your cac well we usually say that we are willing to to uh to pay one year average uh sales of one customer to invest into a new customer okay so you said earlier your average customer is between 500 and 2 grand per month so you'd be willing to spend costs maybe 6 000 bucks to acquire a new 500 a month customer yeah okay that's a 12 month payback that's obviously healthy very good all right let's uh let's wrap up here christian with the famous five number one what's your favorite business book well uh traction challenge for example what's it called traction channels traction challenge traction channels oh channels very good number two is there a ceo you're following or studying well um not really i i'm following my son he's the best ceo in the world i would say what's his name and what company is he with my son son is tim he's got tim and he's nine year old okay all right so no ceos that you're studying currently number three is their favorite online tool that you have uh it may sound funny coming from someone like me but i definitely prefer direct and personal contact over any online tool so i do not have a favorite online tool a number four how many hours i sleep to get every night oh well too little it's usually six hours at the moment and what's your situation married single and you have more kids than just tim well yes i have a second son nick which is 17 years old and i i have a partner okay you know so now not married but you have a partner two kiddos and how old are you yes the ma you know the mother of the two kids died five years ago ah so that's the reason why why i have a partner and i'm yeah i'm not mad i'm i'm sorry to hear that um talk to me more though uh tell me your age how old are you today i am 39 years old 39. okay last question what do you wish your 20 year old self knew sorry what do you wish your what do you wish your 20 year old self knew well to be more positive and to be more brave and live your dreams guys there you have it be more positive be more brave clever reach they've got less they've got 200 000 free and paid users they have some amount less that are actually paying the ones that are paying pay between 500 bucks per month and 2 000 per month they're going about 25 percent year over year 70 to 80 of that growth is coming from new customers the rest is expansion from older cohorts uh uh christian uh or joined the company in 2015. it was founded in 2007 today they're about five zero people 50 people uh in remote locations spending up to 12 months of first year acv to acquire the customer so six thousand dollars uh 12 month payback period christian thank you so much for taking us to the top you're welcome