How Convert Group CEO Panayotis Gezerlis grew Convert Group to $3.8M revenue and 78 customers in 2024.

hello everyone my guest today is pam desureless he's been managing projects and firms across various industries with the focus on e-business and technology amongst his roles was head of business planning for the leading mobile commerce firm upstream with business development responsibilities in 40 countries he founded convert group in 2014 as an e-commerce consultancy and as we see in sas a lot has now pivoted successfully in an enterprise sas play with his partner elena pan you ready to take us to the top yeah let's do it all right take me back to the consultancy when was your first dollar revenue there well we we were going pretty good since we're founded in 2014 so we managed to have businesses and projects in 13 countries around europe and also asia we reached about 2 million euros in annual revenues so it was going fantastic until we had the idea well that was about last year that we had these revenues annual revenues okay so so founder 2014 took you six years to grow about 2.3 2.4 million in revenue and then what well it was three years ago that l'oreal came to us and they asked us if they could find a way to measure their market shares in e-commerce so we told me that this doesn't exist anywhere in the world neither in asia or in the united states uh and they asked us to make a project so that's why how we came with the idea to create a sas platform to actually give data to brands like l'oreal on how they perform on e-commerce but now you have a big question do you shut down the agency revenue and go all in our sash or do you try and do both i was trying to do both for like two years i saw that this was not possible so we sold our our consultancy to instant young this january oh congrats yeah that was fantastic both deloitte and ey beat to buy our consultancy and we did this just to focus on our dream which is you know to go big with our sauce product and we put all the money we put all the money in the business so you sold the consultancy to ernst young in january this year that's right how did how do you value an agency doing 2.4 million top line well it's about the uh one times the revenues you know since we are in in services or something like that and uh you know it was a good transaction they didn't get the founders didn't get me they took my people uh they took our clients uh and we were able to invest the money you know to our business as a product and actually it's not the money it's the focus we wanted to have and what we do now correct me if i'm wrong but i think you raised 50 000 in 2017 3.5 million in 2019 and another 6.9 million in 2020 was that is that the business you just sold no we didn't raise any money for our consulting business we've raised for our product business uh and uh it's less money than what you said we've raised about one two we've raised one to 1.2 million euros about two years ago okay and and the website is convertgroup.com correct that's right yep i wonder why my research team told got these raised did you raise debt no but uh yeah that's interesting but we are raising now i don't know maybe your research team is too good because we are raising now three million three million euros so maybe they're ahead of their of their game there well no i believe you over my research team you're straight from the source so just be clear you raised 1.2 million for convert group your product company in what year yeah that was two years ago okay and uh but listen as we were pouring all the money from our consulting business it was very very profitable uh to tell you the truth the numbers that your research team came up came with sounds like right if i uh calculate how much money uh i didn't take back as a shareholder but put back in the product business it took a lot of money to build what we have today so it was like like other other companies have heard in your show that their services business was um funding their product business until it was big enough to go to investors yup yup okay got it so you raised 1.2 million two years ago what valuations you raise at that was uh six million pre-money it was two years ago how much revenue were you doing then well it was about uh 400 000 euros more or less okay and again this is just the product business not the agency the product so it was about you know 12 times our revenues yeah yeah and then what did you grow that 400 grand to in 2020 last year well uh last year we were about double of that 800 and this year again we're double of that so every year we go uh you know double times our arr that's great okay so 1.6 million now today and you said you're planning to raise capital now how much do you want to raise that's three million euros now and about six million euros uh in a series a uh next year that's really wow three million you're looking to raise now what valuation are you hoping to raise at well we're about 17 to 18 million again it's 15 times our revenues and you know there are many ways to do valuations for for companies i think it's more like an art not not a science and we've done all of the valuation methods but what i think it's more comparable to us it's similar web that the ipo's in new york stock exchange a couple of weeks ago at 17 times the revenue so we're something like that only we focus on e-commerce and data for brands and retailers that are selling uh fast-moving consumer goods and medicine online like l'oreal right so what is a brand what are the outcomes on average per month well our customers are like l'oreal unilever png buyer galaxy smith client we have 15 of the 20 biggest multinationals in fast-moving consumer goods and consumer healthcare and they give us contracts of about its enterprise contracts about 20 000 euros per year on average you know a company like l'oreal will give us double of that but we have smaller clients with about 10 000 euros per year yeah how many total customers today we have uh about 78 customers 79 customers with an average where was that a year ago uh that was about a little bit higher than the than a half but we are able to increase the revenue from every customer like 10 year after year because we uh upsell the contract we have we get more more money from them yup are you able to quantify what that upsell revenue looks like and you know what's your net dollar retention over the past 12 months well uh absolutely actually our turn is very very low we have 2.5 uh churn uh this is annually talking about logo turn because if we if i tell you about our uh you know our net churn and money we are minus five percent i mean existing customers give us more money than the customers we lose i don't know if it's our product it's too it's a low price because it's abnormal for a startup to lose only 2.5 of the customers you know i think it's normal to be around 10 percent yeah i mean i think these economics are good right so if we just round up you're turning three percent you're expanding that same code from a year ago eight percent so your net dollar retention is 105 which is the same as negative five percent net churn um so it's all healthy economics now how are you getting new customers what are you spending to get a new fifteen thousand dollar a year contract right uh funny enough nathan we didn't have any marketing department and we didn't have any sales people it was happening organic after today so now we're investing in the sales organization and you know doing some marketing and spending some money on adwords and linkedin etc up to today it was uh word of mouth so you know l'oreal greece would recommend us to l'oreal spain and laura spain laurel italy and johnson johnson et cetera and you know i i try not to feel guilty about it that we didn't spend money to go to to grow faster but on the other side i can see now the upside of this that now we are ready we have the people we have the um we know we can we can spend money in order to to grow faster and all the metrics i told you happened without salespeople what's this what's the team size today sorry what's the how many on the team today we are about 50 plus people something like that how many engineers 20. engineers and data scientists yeah we're transferring oh okay and how many sales people like even if they don't have a quota okay no today we would just build the sales team we are it's like uh three people we just got the third one on one director so it's been from january after we sold to ey but we started building the a really great world-class caliper sales team four on the sales team with that director three of them those three are they carrying a quota yeah absolutely what's the annual quota well uh you know they should bring something like half a million each uh on on arr okay got it so they have to bring in half a million in arr and if they do that what can they earn full compensation well uh you know it's we do it mostly for for our sales people getting extra salaries uh it's not like a percentage of sales but for the director we have a different arrangement having said that what we're doing at converter group actually we have a data marketplace so it's not selling to l'oreal that will give us the money or johnson johnson these brands nathan are ready to give us the money they want data they want to visibility commerce like crazy it's the easy part the difficult part...