How Cookie Information CEO Karsten Rendemann grew to $69.8M revenue and 1.5K customers in 2024.

Introduction hello everyone my guest today is carsten renderman he's a private tech company specialized in developing consent solutions they help your website comply with current privacy regulations and framework set frameworks at cookieinformation.com carson you're ready to take us to the top absolutely all right so first off what does this mean are you basically helping people be complying with gdpr yes we are in the area of consent to cookies on websites and mobile apps very good and how do you make money is it a pure place sas business yes it is walk me through that how much do people pay you per month on average uh the average client pace is a about uh uh [Music] okay sorry can we do this again no we don't start over how much do they pay Monthly recurring revenue you on average with our total arr is is two million usd and we have 1500 paying clients so you have to do the math [Laughter] you probably you probably gave me better data by just saying the array so you're right you're at 2 million in terms of run rate today carson that's great when did you launch the company uh originally back in 2011 but it was a really really slow start because there was no gdpr at the time cpa only only came mid 2018 and that's really where the business took off and you said you have 1500 customers yes and it's uh growing at a rate of of a little more than 100 year and year now that's incredible so exactly a year ago you were doing a million dollars in revenue yes is that right okay yeah and and how did you get your first 10 customers take me through that story oh that was really difficult i i did some uh some empirical studies at harvard in 2008 and i realized that if people understood how their personal data was collected and resold from websites and apps they probably visit the internet less and if company knew how their clients personal data would be collected and resold and and used to show ads for their competitors they would probably be hesitant to invest in websites so i basically knocked on the largest company for a few years and trying to tell them this and arguing that they should have some sort of a consent solution and avoid that kind of data transfer and that was really difficult so i put myself i set myself a goal of two new clients each week and i did that for a few years starting in what year uh 2011 2011 so yes and at that time it was consultancy and very far from the business model that we have today so we've pivot a few times and but the sales reps today still have one of their kpis is at least two new clients a week like i did uh new two new clients per week paying about what in terms of are uh in terms of ar each new client is on average for us as a company one thousand usd but the ones that are per month uh that is uh per year but the ones that we actually talk to and the the sales reps handle is three to five times that on average uh then we have a number that that that pays less and they are purely self-service via platform yeah i mean with two million run rate and 1500 customers today the average customer is paying about 1300 per month what you're saying is if you put a sales person on them that sales person is going to be closing a much larger account three to five thousand dollars in terms of annual revenue or monthly uh that that is a annual we usually uh our clients usually pay uh per year so some of them some of them will pay 10 or 20 000 usd a year car karsten what what quarter do you have your sales reps trying to hit sorry what what quota do your sales reps have to hit each each sales rep have to hit 15 000 usd uh per month in new monthly recurring revenue or annual revenue uh in annual revenue okay got it so that means annually they're adding about 180 000 a new arr 15k per month yep exactly and and so what will they earn if they hit that quota like full base plus commission is typically about what we have a a system for that and each strip should generate turnover at least two and a half times the salary okay which means if if your quota is 180 000 an arr and you want a two and a half ratio between that and what the sales rep makes at full on target earnings you're paying them full base plus commission of something at like eighty thousand seventy to eighty thousand dollars is that right yes that's correct i see okay and flesh out the team for me how many folks total on the team today totally uh we are 27 and we have about half oh sorry one third is sales one third is customer success and one third is development okay so about 10 engineers 10 quarter carrying sales reps yes a little less i think we have eight okay fair enough fair enough this is great now when did you you know the first sales hour is always the toughest when did you hire your first sales rep do you remember that was that was uh in the summer of 2018 so not too long ago and how do you know is the right time uh we we went into 2018 being only two people and then the the crude just started to grow really fast and that was because the gtpr kicked in in may and then everything basically went crazy so how many people did you finish 2019 with 2019 we finished with 10 people 10 people now you're at 27. Bootstrapped and have you grown cookie information.com organically or did you raise capital no we have done it completely bootstrapped no capital thank you well we love that completely intentional actually we were looking for capital a year ago but i think we were too small for the international investors we were too big for the danish investors and we were too odd for the remaining like they it was really difficult for them to evaluate our tech whether it was proper tech well how much were you looking to raise so but we have but we've been lucky enough that the federal trade commission did a study and tried to find out what companies have real tech within this area and there was only 18 we're one of them and since then we have the spring of this year being by the danish state we've been evaluated as one of the seven most innovative companies here and they have actually given us quite a large grant to expand the company how much uh i i cannot tell you it's it's in the largest bucket of what they're allowed so so what's the range it's uh it is more than two hundred and fifty thousand dollars but less than a million yes and it's a loan or do you have to pay it do you have to pay i don't know it is a grant oh god i got it no no paying back okay that's nice to have that's almost better that's almost better than raising equity right uh yes it has been really good for us so you launched in 2011 you stay basically a two-person agency for six years seven years you realize there's an opportunity with gdpr when do you start selling sas uh we started selling sas in in 18 like in our own platform so we developed it i basically found everything i had and then we hired a 10 people development team and then we built the platform and then we just got so many so many companies were contacting us because the gdpr was coming question how much did you spend on those 10 developers to build the mvp before you had your first sale of the sas i was very very simple it was a very simple uh model you could say and it was a million usd you spent a million dollars before you had any any sales on the sas product yes wow that so are you rich i mean where'd you get that money from uh i basically pawned everything i owned i sold my house i moved in the in the summer cottage oh you're not joking you're serious you you sold your house frankly uh you know i had to take out a live life policy the bank asked me to i was more worth that than alive seriously interesting so you had to take out a life insurance policy the bank you sold your home and the bank gave you some money and you put all that into your mvp they didn't give me anything they loaned me they paid for it they loaned you money i did and frankly uh i was very excited the night it went live i love it i love it well you're happy now 2 million bucks in revenue it was worth the risk yep absolutely are you profitable today or are you burning cash no no no we're profitable and that has really changed over the last year so it was a big problem for us in the beginning that we spent more in sales and marketing than we could then new customers would generate but we managed to change that via some very very particular focus on on kpis and inbound sales process so we are positive each month ebitda about 50 on average fifty thousand people fifty thousand usd per month and it's growing at a 100 rate and we have slightly slider slightly lower but about half a little more than half as much in the liquidity surplus that's great so each month you're doing about 170 000 in revenue about 50 000 of it just goes to your bank account as pure profit every month and how much how much is sitting in the bank right now uh we still have to pay off some loans and stuff so you still have loans but but how much cash is currently in your bank oh we have uh 300 000 usd cash and how do you decide whether to keep it in the bank or to pay off some of the loans uh we i actually struggled in the beginning to to to transfer the loans into more longer-term loans that sort of reflects the the the life span of the software so we're very happy that we have like uh you know five-year commitments on the loans which we believe matches match the uh the write-offs that's right now obviously a key part of growing a sas company like cookie information is making sure your churn is in order what's your annual return today annual churn is four percent and that is stable so it's been just just four percent annual revenue churn total that's gross yeah no no that that is tall so on average we lose about four clients a month out of 1500 yep so 48 per year out of 1500 is you know about yeah less than four percent do you ha do you have the ability to drive expansion revenue do you have upsells that you can give customers yes on average our existing clients uh buy for 40 more year two than year one and we are launching new products continuously that that keep them motivated to buy more and about how much are you spending to get a Customer acquisition cost new customer on average our our cost of acquisition is 500 bucks that's pretty good to get a new thousand dollar month account yep so your payback is less than a month yes uh if we calculate it it's it's half a year but since most of the clients pay up front for a year it's uh it's profit more than profit neutral the first month oh yeah you're paying 500 to get a thousand dollar a year account but if they paid up front on a cash basis it's instant payback on a revenue recognition basis it's a six month payback exactly what's next are you gonna go raise capital or gonna sell the company what's next we we there's so much out there for us to do this sicily uh the gdpr equivalent rules is they're coming here they are being established around the the globe so gartner says that today 10 of the world's population live in a country where you need consent to cookies in two years it's 65 percent it's coming now in california and brazil in india korea thailand japan it's coming everywhere and we want to ride that global frenzy and we have a lot of new products coming up how do i invest [Laughter] well you have to send me a lot of emails i think no send me an email i hate you i hate emails i love to look at this company and i think what you're building is extremely special it's timely it's relevant and you clearly have some product market fit and you've done it all bootstrapped literally mortgaging your house to make it happen i love that let's wrap up carson with the famous five number one what's your favorite business book i uh your brainerd work is one that i really love it's like an old one but i just keep coming back to that the only the other one which is sort of more contemporary is the exponential exponential organizations by uh salem ismail yep so your brain network and exponential organizations number two carson is there a ceo you're following or studying i actually followed julie brill corporate vp at microsoft i think she's doing absolutely amazing work who uh julie brill julie brill okay very good number three oh go ahead i think she's done absolutely amazing work also i i follow ken b baday from onetrust and see you at logitech uh bragg and daryl yeah i think there are three wonderful people number three what's your favorite online tool for building your company uh what has really really transformed us is hubspot yep number of spreads how many hours of sleep to get every night oh all three hubspot stripe and intercom yeah number three number four how many hours of sleep to get every night i i i should lie here but i don't somewhere somewhere between four and ten hours depending on how much there is to do fair enough and what's your situation married single kids i have two grown-up kids and a girlfriend and we live separately and it works really well two kids not married but with a girlfriend how old are you karsten i am 52. only no you're not oldie man you get the energy you got my kind of energy man last question what's something you wish you knew when you were 20 uh i wish i knew how many opportunities that are that exist in this world if you just go out look for them there is an abundance of things you can do seriously you can yeah lots of opportunities guys cookie information.com helps brands say gdpr compliance started off in 2011 as an agency then in 2018 spent a million bucks building an mvp for a sas product now over 1500 customers pay for the product uh they're doing 2 million bucks in terms of run rate that's up 100 year over year doing a million dollars in a run rate back finishing out 2019 he's got 300 grand in the bank loans he's paying off he mortgaged his house to make this happen and he's done it all bootstrapped carsten we love you we love this thanks for taking us to the top well it was a pleasure 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 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