Datalab Revenue & Funding (2022)

[00:00] Hey, folks. My guest today is Andrej Mertelj. He's a lifelong IT nerd and founder of Datalab, the ERP leader in Southeast Europe. He then did the IPO and caught interest for farming and started development of farm management information systems, now building datalab.eu. Andrej, are you ready to take us to the top? [00:16] >> Sorry? [00:17] Are you ready to take us to the top? [00:19] >> Oh, yeah. Well Alright. Yeah. Sure. [00:22] Alright. Very good. So just to be clear, Datalab IPO'd or your prior company IPO'd? [00:28] >> No. Datalab IPO'd, actually. [00:30] Okay. [00:30] >> We were the first techno technology IPO on the Ljubljana stock exchange. It's rather an essence market or a very sleepy market, so we did not get the bank the bank from the listing that we that we hoped for. This is a this is [00:47] a stock exchange in Slovenia that you IPO ed on. [00:50] >> Why did you want all the pressure of being a publicly traded company? Why not stay private? [00:57] >> Well, we firmly believe in employee stock ownership, and it was very problematic to do it under the local legislation. Basically, the only way to really put it properly in place was to to go to get listed I see. When we were there. So that was our that was our main, actually, goal. Not so much raising capital, but establishing value of the company. [01:25] So when did you guys IPO? [01:28] >> 06/30/2008. So 2000? Yeah. Three months before everything going down. So [01:36] And and what was revenue back in 2008? Do you remember? [01:41] >> I would say 4,000,000. Something like that. [01:44] And what have you grown it to today? [01:47] >> So today, we're close to 15. And One five? One five. Yeah. And we're stepping up we're stepping up extremely in the last two years. So we hope that we'll be getting in the 50 in probably two to three years. [02:06] Now before we go too deep on the economics, tell me who's buying this. Is it small farm managers or folks managing thousands of acres of farmland? [02:17] >> Mostly, we were successful with the large farms. What What we found in farming is that it's the basic business principles that are extremely hard to make because you have such a variable environment. You see, when you think about factory, you have a predictable environment, you have everything that's under control, while if you go planning for the farm, you've got all these variables and very complex processes and stuff like that. And that's what we actually wanted to [02:51] >> to to simplify, to really get an overview of all the resources in the farm and to help you plan, basically to help you manage your farm the way an industrial production would be managed. [03:04] And so how many farmers do you pay for you today? [03:09] >> So I would say that we have roughly 500 farms, but our I think our biggest is 120,000 hectares. So sorry about [03:20] That's your largest. And so what the largest customer, what do they pay you per year? [03:27] >> We we price our software per per asset. So basically, you would be paying us per per cow or per flock of sheep or per hectare of of land or orchard or something like that. [03:45] >> We're charging depends on the market where but where would we would be charging from 1 to €1.8 per hectare per per month. [03:55] Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect [04:18] your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna [04:42] get a different valuation. A VC is gonna pay a different valuation. Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here, Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is [05:04] not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders share with us on the show. So traction, 1,200,000 seed round, 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired, the valuation and the multiple. Maybe you're [05:30] going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. All right, We're gonna go back to the YouTube video here in a second, but [05:52] if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into [06:18] the interview. So can we take a 120,000 hectares times 1.8 times 12? The biggest customer pays you 2,500,000. [06:27] >> Well, it was the first customer, so it's quite discounted. [06:32] Ah, I see. [06:33] >> Yeah. So [06:33] so, I mean, do you have anyone paying you more than 1,000,000 per year? [06:36] >> No. We don't have anyone. So the largest largest invoices, we have projects that we're that we're making are 100,000 per year or something like that. [06:46] Okay. Okay. Got it. That makes sense. And and any I mean, you're now public. Any plans to go private again? Are there any advantages to going private? [06:55] >> Yeah. Just just in the process of of taking the company back private. [07:01] >> And gotten some investors and then scaling up. [07:07] How much do you have to raise to take the company private? [07:11] >> 4 to 5 would be the [07:13] 4 to $5,000,000? [07:16] >> Yeah. It was 4 to 5,000,000 plus [07:19] >> what we have spare actually for the stock buybacks. We would be able to remove almost the complete free float from the market and delist the company. [07:31] I see. So and how much cash do you guys currently have on the balance sheet? [07:37] >> I can only tell you. I don't I can't tell you currently, but I think in the last quarterly report, it was 3.5 or something like that. [07:46] Okay. So 3.5 of your own cash plus raise 4 or 5,000,000, then you could use that money to take the company private? [07:53] >> Yeah. With with with this. [07:55] Interesting. And so what I mean, why why do that? You went public for a reason. You don't like it. Now you wanna go private. What didn't you like about being public? [08:05] >> Well, first first of all, being public on on a backcountry market is not the way to go. And we thought that the the financial markets will consolidate, and we basically hoped to get the backboard to also to some larger stock exchange, that either the Vienna Stock Exchange will buy, that's the Ljubljana Stock Exchange, and we would be automatically listed in stuff like that. Unfortunately, by after 2008, everything went south, and those plans did not materialize. We [08:41] >> did not establish full potential. We were stuck on an illiquid market, and that became a hurdle to our raising capital because, again, being public in an unknown foreign market with unknown legislation decreases your enterprise value. [09:00] Mhmm. When did you start the company? What year? [09:04] >> '96. [09:05] 1996. Wow. So you you you did you bootstrap it from 1996 to 2008? [09:15] >> 1996 to 2008, we were we were working on ERP systems for small and mid medium sized businesses, carry a lot of similarity for with the Yeah. [09:25] My my question, though, was did you bootstrap or did you raise capital in that time? [09:28] >> No. We we completely bootstrap. Actually, I went bankrupt in '94 with my previous company. So, actually, we were not even credit I I was deemed not credit worthy. So it was basically the last paycheck, a garage to computers, and and a lot of will. [09:48] Why'd your last company go bankrupt in '95? What was the name of the company? [09:52] >> We we did wholesale of computer chips, and and as it was fashion that day, we assembled PCs, personal computers, importing from Taiwan, assembling and selling the fixed computers. [10:08] And what why go bankrupt? [10:12] >> We then well, 70% of our revenues came from brokerage of computer chips. We just loaded up for the Christmas season, and then Hyundai and Samsung are announced a new factory of chips and the price went the price halved while our chips were on on the on the flight. That that was the tip of the iceberg. But, basically, we were much too leveraged. [10:41] I see. I see. Interesting. Okay. So you launched a new company in 1996. You boot strap it. And then how much did you raise when you IPO ed? [10:49] >> We did not raise we we raised zero on IPO. We we simply listed because we wanted to have this valuation. But we did in 2010, we we raised the first million for the farming. So first, we raised it by the Swiss private investors, and with them on board, [11:12] >> we we raised it via secondary stock offer. [11:16] Interesting. So do you I mean, do you personally still own the majority of the business then? [11:23] >> I'm the biggest shareholder here, but I don't own the majority. [11:26] Why not, though? If you didn't raise any when you IPO ed, and then you only raised 1,000,000, and you're now doing 15,000,000 in ARR, I mean, shouldn't you as the founder own 95% equity? [11:37] >> No. I actually well, first of all, 30% was given to to my colleagues, the employees that helped us bring to to this. And then you have roughly a 10%. You have you have outside investors. And so I was basically on 60, then I truncated that spin off [12:05] >> of a philanthropic foundation. I was quite active in that one, and there went another 20%, and so I'm with 30 something. [12:17] Okay. Well, that's that's not that's not terrible. Yeah. Yeah. So okay. So you you now when you take this back private, you are you're are you buying out the investors right now that own 10% and replacing them with new investors? Is that how that works? [12:32] >> Probably. I would probably buy a lot of also a lot of employees and ex employees. [12:41] >> And [12:44] >> the small the smallholders. And also, we our shareholders are basically a banking fund that needs to exit if we exit the stock exchange and we cease to be a public company. [12:58] I see. [12:58] >> So this this is the pool of of of shares. [13:01] How many folks are full time at the business today? [13:05] >> Roughly 200 directly. [13:07] 200. Okay. How many engineers? [13:11] >> Development would be 95. [13:13] Okay. Wow. That's a lot. How many salespeople? [13:20] >> 20 something, but we have a strong reseller network. [13:26] Tell me about that. [13:28] >> Well, we we we're partnering with with anybody that brings value. So our natural partners would be accounting services, then the subsidies agencies. [13:39] How do you find accounting services that specialize in farming? [13:44] >> Well, first, you go to the rural areas. There that's where it happened. [13:53] >> We were we were quite known from within the accounting community by our small business ERP, and so it was easy to speak to them. [14:02] I see. Okay. That makes sense. Very interesting story here. Okay. So go to market is that way now. When when an accounting firm resells your products, what kickback do you pay them on the 30,000 a year contract? Do you pay them 10%, 20%? [14:17] >> It's a bit [14:20] >> It's somewhat more in the first year and a bit less in the second and third year, and then it ceases. [14:31] Does it ever stop or does it is it go on forever? [14:33] >> Yeah. No, no, no. It stops. Perpetual perpetual commissions are are a killer for the business because they sooner or later, your partner will [14:47] >> start treating that investment as a pension fund and will lose incentive to to sell more, and it's a death spiral. [14:55] Mhmm. So just to be clear, you stop kickbacks in year three? [15:01] Yeah. Yep. Yep. [15:04] >> Year year one or year three, it it really depends on on on deal to deal. It also depends on the uptake. You cannot or usually you don't implement our system in a big bank. You would start first getting the materials under control, the quantities, then go into the fixing ordering, then HR and stuff like that. So you it it would be an onion. And depending on that onion, we would also give you a commission plan. [15:39] What's the company valued at today? [15:44] >> Stock exchange value is, I would say, in the low twenties. [15:49] So if someone offered you $20,000,000 all cash upfront today to sell the whole business, would you sell? [15:55] >> No. Absolutely not. [15:57] And why not if that's what it's valued at right now on the stock exchange? [16:01] >> Because well, several several things. First, I I believe that the the business is worth much, much more. [16:11] You look [16:11] >> at we our [16:13] >> have a 3.5 mil after tax profit on a 5 mil cash flow, which is seriously cool numbers. We're growing 30%, so 15% to 30% year on year, and we plan to really [16:33] >> put the pedal to the metal in the future years. That would be I simply believe in the strength of the company and on the possibility to really revolutionize this. I've not seen many solutions like ours in the market. [16:51] >> Are more second The dirty details that that we're capable of handling are really what I think that makes the progress of the software. And also, would not be selling the whole company because frankly, I do not know where to invest. [17:08] Mhmm. [17:10] >> Mean, you have a you have [17:11] a you have a philanthropy. Right? [17:13] >> Yeah. Mhmm. [17:14] I mean, if someone sells you if someone offers you 30,000,000 all cash upfront today. Right? 20% of that's gonna go to your philanthropy. All your investors get a great exit. Your employees get money. That's great. That's 30% there. You personally make 30% of the 30,000,000. Would you sell for 30,000,000 all cash upfront today? No. What's the number? [17:37] >> No. That that I I think I would I would be violating a lot of regulations if I would give the major the major shareholder would tell you their market. [17:49] You're [17:50] probably right. [17:52] >> I'm I'm really sorry about [17:54] Let's wrap up with the famous five here. Number one favorite book. [17:58] >> My number one favorite book, The Mars Trilogy. [18:03] The Mars Strategy? [18:05] >> The Mars Trilogy. Red Mars and Green Mars. Would say that. [18:11] Number three. [18:12] >> And number two, is there a CEO you're following or studying? [18:17] >> Used to. Now, frankly, I would I would rather go reading and following philosophy or something like that than the CEOs. [18:25] Number three, what's your favorite online tool for building Datalab? [18:30] >> My favorite online tool for building Datalab? Jesus. I would be so nineteenth century if I told Excel. Mhmm. That's okay. But I I think, you know, I I'm a fan of our models, and I I love my Excels. Sorry. [18:47] Number four. How many hours of sleep do you get every night? [18:52] >> Up until three years ago, so last twenty five years. Last twenty years were hundred hours a week. The last six, seven years are, I would say, seven. Seven. I I really scaled down. And The company is so [19:11] No. No. How many hours how many hours of sleep do you get per night? [19:15] >> Sleep. I would say seven. [19:18] Okay. And what's the situation? Married, single, kids? [19:22] >> Divorced, but single father. [19:25] Any kids? [19:26] >> Single. [19:26] One kid? [19:27] >> Two, actually. [19:29] Two kids. Okay. And how old are you? [19:34] >> Oh, ancient. 52. [19:35] That's not ancient. You're young. Alright. Last question. Something you wish you knew when you were 20. [19:40] >> Something? I'm sorry? [19:42] Something you wish you knew when you were 20 years old. [19:46] >> How to get my temper under control. [19:49] You have a temper? [19:51] >> Oh, Jesus. Huge. [19:53] I haven't seen it. Alright. Fair enough. Guys, there you have it. Datalab.ch launched in 1996 after his first company went bankrupt in 1995. He learned a lot. Datalab is helping farmers manage their hectares, their orchards, their cows, their sheep. That's what they price off of. One of those units of measurement. The average farmer pays him $36,000 per year. They're doing $15,000,000 in revenue today, from 12,000,000 a year ago, and up from 4,000,000 back in [20:14] 2008 when the IPO'd on the Slovenia Stock Exchange. He's now raising 4 or $5,000,000 to try and take the company private so he can unlock additional value. He thinks the company's worth way more than $30,000,000. We'll see what happens next. Andrej, thanks for taking us to the top. [20:28] >> Nathan, thanks for having me. Goodbye. [20:32] One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM [20:57] Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big [21:19] fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you want to take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign [21:41] up for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. [22:00] We got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. All right. I'll be in the comments. [22:07] >> See you.