How Coremedia CEO Soeren Stamer grew to $25M revenue with a 151 person team in 2023.

hello everyone my guest today is Zoran stammer he's the CEO and co-founder of core media and the recipient of the German fairness prize of 2009 he's also co-editor of Enterprise 2.0 the art of letting go he's married and a father of four Zoran are you ready to take us to the top absolutely are you that you have your hands in everything family life book deals software tell us about core media what are you doing how do you make money so camellia does actually help brands to create online flagship stores so they take the existing online stores and we turn them into flagship stores that integrate the brand experience and the shopping experience a flagship store yeah the way the idea is nowadays when you go to any bigger city the stores you see in the main road are the iconic stores like there's an apple calm there's an apple store it is not basically just the best buy Apple basically figured out that it's much better to have a direct relationship to the customer and the same happens online so when you look at Apple comm it is an iconic store and it's not basically just the brand side and you have a store of Apple to come back in 2013 so what brands these days need is they need an integrated brand side plus online store and we call that an online flagship store got it so you're helping folks create that online flagship store it's you're making a more robust from a technology perspective and it presents better to consumers to really create a brand feeling yeah you need to be iconic but you can't look like the same as any other brand and especially our customers in the luxury and fashion industry they want to create these iconic experiences because they want to sell you something on your mobile phone that costs 20,000 euros so 20,000 dollar deal on the phone to create that need that you want to buy it it has to be a flawless experience and it can't look like any other store so it has to be you know the brand itself that you feel and that's what we do so we work with brands like Salvatore Ferragamo or brands like uc's netiquette a that run I think they are the global market leader for a luxury brands online so they're 140 different brand stores for a money Valentino diesel and many others and they also run net apart a nukes and and some other of these big online retail in distressed nations where you can buy more than a million luxury products and we learned a lot from those guys the truth is we believe that that is relevant for all the other BtoB brands and retailers as well and join will give me more the backstory here first off business model how do you make money is it a pure sass play or what yeah we have a sass play but we also see that their high-end they want to have more control over the technology so we also enable them to run it in their own private cloud so you do like an on-prem installation we can provide that yeah so they they get the docker images and they can run them in their own environment okay what percentage of your total revenue would you say is a pure place ass model on the cloud right now maybe 10% moving there so the big ones they are we're hesitant that's changing actually the last 12 months so we see more momentum to move to the cloud so explain that more to me than 90% that's not sass how are they paying currently they're on annual like site like maintenance contract kind of things with SLA s they are on contracts yet usually turn-based contracts is like the standard model now they pay fee for usually a yearly defeat tiers usually are signed up for three years because they they really invest in this platform so they don't want you know the price to go up quickly and we want them to be committed as well so a yearly fee lets based on the performance of their site don't how many brands how many countries so quite a few of the brands have something like the 140 different countries at they address like 20 to 80 different languages and on average to swing in a sense of size I mean are we talkin brands paying you on average a hundred grand a month or a hundred grand a year or ten million a year generally where are you falling in terms average price point yeah the the lowest point is hundred thousand a year but we have customers with more than a million okay so would you say if their average is something like 500 or 600 yes the more like 450 to 500 a yep okay now give me more the back story this is the fun part when did you company and why so that's the funny part that we launched the company in 1996 96 that was the year I was born Zoran when they were not you it basically was still in college I'm just kidding I was 89 but still that's a long time ago right we render basically we're the first ones here to to you know say hey we can do content management was the old days Netscape was there but we were very German we were very small we bootstrapped the company we didn't put much magic are you still bootstrapped know we had the first financing in 2000 in april 2000 right after the big bubble was like me you know there there's an impressive time to raise considering everything yes perhaps that was great it was it was that 30 times revenue of the next fiscal year that we projected was the valuation and we didn't have any strings attached so there was no contract you just basically got the money and here are the shares that's it so did you get it before everything crashed yeah we actually 2000 2000 wanted until we were our best years the growth rate hundred twenty hundred two hundred fifty percent so like what were you guys more yet scale wise in 2000 like are you talking like 10 million a year or where we got so we were at that point like that two million a year and we grew at equity to six million over the next two years and then 2003 was that for us because with our customers at that point I'm with the big telco companies like bora phone in europe and Softbank japan team t-mobile and they had to cut down cost because of the red cost cast because of the UMTS licenses so the 3G license were so expensive that they started into cut cost so 2003 he was our top here maybe funny basically we show still wrong with 30% okay at some point time we were too late for the US you know because we didn't have the venture capital to base in the end of the US early and the years at the biggest market we saw the people coming from the u.s. to Europe but we're not equipped with the money to do the code there so we looked for a new attitude new way to approach the US market and what we figured out was there was the last three years that commerce ecommerce sites is the way to go so we have a very powerful kind of management platform but the e-commerce platforms from IBM Salesforce and SAV they are pretty bad at experienced Asheville's so they basically give you the transactional capabilities to sell stuff and pay for it but they really don't look good oh and so horrible they look they look like you know some guy that's been sleeping for eight days and wakes up to shovel and tries really Oscar she doesn't fit in exactly yeah and the brands were the first ones to say they the luxury brands no we can't do this so there's not a single bit that would from your platform will show to the other end of that is luxury guys create these really complicated flash sites which don't actually work anywhere and they never so you're kind of a nice blend of both of them yes this happens now that basically the rants I started hey well the marketing people have this nice side and the commerce people have this transaction side fungals you not only have an integrated one it's kind of like one of our clients they have a hundred million visitors on their brand sites but only 20 million make to the store so why do you leave 80 million just walking by your store window and I've never come into the store yeah and we help them to get all the hundred million into the store and make it very seamless to buy something that's very cool so the continued the revenue story there what were you able to scale to with this additional e-commerce place a in 2010 so the know that ecommerce picked him later right in between we had a DRM play actually we were them global market leader for mobile DRM yeah that was 2016 10 the DRM the commerce play was the last three years okay so what do you what do you at generally today then we are now above 20 million in dollars we are ARR is above 10 and we've grown with like run about 20 25 percent they are grown here that's that's great so so sorry you said AR was about 10 million of the 20 million in total revenue right and then left and yeah okay and you said you're scaling about 25 percent year-over-year so AR you know twelve months ago with somewhere around what seven seven and a half yeah in the hub and a half interesting is that your fastest growing revenue stream it is yeah interesting and is most of that coming from converting kind of old you know folks to cloud or are you going and getting new customers it's both actually we were surprised that basically existing customers we had a professional license in the past that we got them to do recurring revenue and they paid more for the same technology before because we brought them to the cloud so the specs ability is something that people value interesting how our churn rate is basically net negative for revenue so it's kind of how negative we basically with the the former customers with like minus eight percent so we grow our revenue base with the existing customers that's that I mean that's impressive right so the expansion you drive on your current base makes up by more than eight percent the lost revenue from all your customers right and we have a very low showing of any way basically even absolutely what's your logo yeah what's your absolute churn your logo churn annually yeah there was like around three percent now it's that little more than five without some technology being phased out by one of our partners Mississippi so but but people who use our platform it's very rare that they leave us yeah like what we have yep any now it sounds like though and this is significant when you look at your revenue streams there's a portion that sounds like it's maybe professional services or setup which leads me to believe that there's a lot of setup there's a lot of onboarding cost I didn't read you to hear about your team size and what your team does but I imagine once you get them locked in they're locked and I paid the upfront fee they're using it and money is coming through right exactly because thing what they realize is the big brands they have the commerce platforms but what is even more important now is to get the content the content is hard because you have it globally you have different languages like up to 80 languages that you have to provide and you on it be you know consistent over all the different channels we want the print channel the online ads the outdoor ads everything has to be consistent has to be fresh and that's harder and harder because you have more and more channels that you want to address so the customers that use our platform they they kind of like innovate with it doing new things they haven't planned in the first place so it becomes like an integral part of the infrastructure to basically be able to innovate quickly and that's also the the reason why we as a small company basically are succeeding how many team members you have is Oren for how many are on your team like 170 okay okay so you small we're not really small as yeah but still small kind of compare with the Adobe and the big ones yeah but we we basically are the agile ones that help customers to be very agile and create new stuff so innovators lovers and the people who are in the high-end who have basic very very precise requirements it has to be unique it has to be iconic they love us too so but then you know the German government is our customers they basically they build huge infrastructures to do all this digital you know like step four for loaders and for the German army so it's not that it's just relevant for brands the truth is long term I believe every company has to communicate more and need better understanding of content and the ability to communicate in different channels different country different languages different devices so it's a very generic topic that will be bigger and bigger and longer so 96 to 2000 you bootstrap you do your first fund raise in that general timeframe what do you like to say in terms of total funding listen tell me well okay listen that's good okay so you're still I mean you're still running pretty efficient are you a cash flow positive at this point or no yeah we financed since 2001 we basically finance ourselves yeah well hold on explain to me how that works so if you raise a bunch of capital unless that money is all sitting in the bank you had to have some years where your cash flow negative yeah mm doesn't want than to and then from then on we were pretty much positive okay were some crises in between you know and right now with a switch of the of the model to recurring revenue we had a dip but overall it's kind of like a pretty solid self financed business well you've pivoted a bunch to uh you know as well why in those moments where you go to the DRP to an e-commerce solution why not why did you make the decision to keep pivoting versus sell the thing to somebody else as it is and then launch a new company as a DRP or launch a new company as an e-commerce play that's an interesting business the e-commerce place there are so many right and we saw that the value bring to the table is we basically go to a customer say well you have salesforce wonderful just add our stuff and basically we leverage the salesforce installations we don't have to replace it you don't have to Ripon replaced because they're competing with Salesforce IBM as ap that's the tough game yeah but basically going on top of them basically making their customers even happier that's a very attractive one because we well we are the market leader we have loksat occur for example a to oakley ray-ban all these different glasses brands we have office depot and so it's like a lot of different vendors who already had invested a lot and soren GU cell sales data to PE firms as they're analyzing investing in somebody's companies because they're public no no we don't so and nothing at all imagine you've had that temptation before no we actually I believe that this the opposite is true and you are come on czar and I am sure you've had when you are a premium brand you basically you want to be the digital but Allah you want to be the trusted partner so I think there will be a big shift and F Apple is playing this game well they are the building trust and now they want to get you know ministry or health data and I think that's the big one actually compared with Google and Facebook so I think we will see high-end brands who will be digital butler's all right completely trust and if not they will out of the game we'll see we'll see last few questions here because we're out of time how many customers are you at today like 120 120 ish okay and your team where you guys all based here in Hamburg in the UK and Washington then some of this bill okay Washington DC yeah okay got it and last few economics question what are you spending to acquire customer fully weighted um that's I don't let the average number here but it's a because the big customers can be expensive can be two years I'll set sales cycle so we spend like 50,000 can be camp could be 50,000 yeah were the big ones but we have like you know proof concepts and partly they they pay for it that's not that no because you said your your your average ACV you said earlier is about five hundred grand a year which is what is that 40 grand a month so if you're spending 50 grand to acquire them you're getting paid back in in a month or a month and a half that's not bad yeah this is part of this basically high-end game but you have to invest it on interesting what but but a two-month payback period is actually really good why not be more aggressive with khaki AG feel like you could be more aggressive and get more customers or no there's nowhere you can spend more money yeah that's the topic now with basically financing that we indeed think about that we be much more aggressive now that we have a model that works and yeah protect the US market with that so we would need more money to be more aggressive in Asia and in the u.s. so how much are you raising right now I can't disclose that yeah you are you are you are absolutely looking at it though yes yeah very good lifetime value what do you assume lifetime value is for these folks we have like long term data right and we have companies that are with us for more than ten years and we we don't see that likely today's the jump is it's going up because they invest more and more on the platform so the lifetime values is enormous in some cases like like more than 10 million how do you avoid lying to yourself in other words you look at these customers that have never left you and you go WOW lifetime value is infinite which means I can spend an infinite amount on acquiring them that would obviously be a bad decision how do you stay rational exactly so we basically we plan with something like seven years okay because that's that's below the they would birds we have got it so you plan for seven years at around a $500,000 a cv that's about 3.5 million in lifetime value conservatively but you can look at your own sales history and see some people paid you over 10 million got it very interesting alright Zoran let's wrap up here with the famous five number one what's your favorite business book I think it's on the late shift sorry what is it the nudist under late shift a long time ago the nudist on the white I can barely yeah the nudist under late shift on the late shift okay yeah you should read it it's good okay number two is their CEO you're following or studying right now yeah II don't musk is basically defining our time yeah number three what's your favorite online tool for building a business for building a business I thought about basically more like for keeping sane so I like kayak to all the travel they have to do number four wise then I'm a big kind of Twitter's them okay number four how many hours of sleep to eat every night run about seven okay and what's your situation married single you have kids married happily marriage within a nice American and have four kids for kids all right and how old are you I'm first of all right Zoran last question what he was your 20 year old self knew that ever in the world is a good idea make it earlier you know and he was still free lifetime and no kids to basically take care of their you guys have from Zorin travel earlier he launched core media in 1996 can you believe that bootstrapped all the way up through 2000 had their best growth years when everyone else was crashing raised their first round of capital they've now raised about or less than 10 million dollars are serving 120 customers helping them create premium online shops much like you'd have an Apple store in person they're helping you create that great experience online so that more people more of your website visitors quote-unquote enter that online shop and obviously your conversion rate goes up from there annual contract value is around 500 grand they did two million in 2000 up to six million in 2002 did 7.5 million in AR and 2016 scaled out to about 10 million 12 months later today their revenues actually double that though at about 20 million about 50 percent of revenue is recurring the rest as other solutions that are not cloud based but growing rapidly again with her team of 170 people between UK Washington DC and San Francisco Zorin thank you for taking us to the top hey thanks