Earnr Revenue (2024)

[00:00] At Earnr, they're building a tool called earnr, which is helping accountants serve SMBs faster. They've got between 1,000 and 10,000 registrations, and they convert 20 to 50% of registrations to paid customers at $35 a month. So north of $20,000 in revenue today. They just launched last year, so healthy growth. They've only raised with the accelerator or sorry. Under a million bucks. Right? So pretty capital efficient. Team of 10 today with five engineers as they look to continue to [00:22] scale. Hey, folks. My guest today is Enzo Ottens. He's the cofounder and CEO of earnr, the robo accountancy for small businesses. He's a recovering management consultant, a delivery rider, and former chief of staff at Loot, Bó, and Mettle. I'm sure I butchered that name. Enzo, you ready to take us to the top? [00:38] >> Yeah. Let's go. [00:39] Come on. Give me the real how do you pronounce [00:42] >> All the different challenging bank names? [00:45] Yeah. [00:46] >> Yeah. It's you did you did perfect. Bó, Mettle, and Loot. [00:49] Ah, okay. I nailed it. Very good. Alright. So tell us what earnr is and and why SMBs? You know, SMBs go out of business all the time, so your churn's gonna be an issue. [00:59] >> Yes. It's growing kind of part of the business markets. Like, a lot of people are turning to self employed income as well as starting small businesses after the pandemic. So the kind of trends are gig economy, your passion economy, and your sharing economy. And what does earnr really do? So what we've seen is that a lot of these people still use accountants. They're very, very expensive expensive. Why can't you have software that does the work of [01:23] >> an accountant for you for a fraction of the cost? [01:26] Mhmm. Mhmm. And so how how do you model this? And what's the average customer pay you per month, would you say? [01:32] >> So a traditional accountant for most users costs anywhere between 500 to 1,000 if you're a sole trader and up to £1,000 if you're a small business. We charge them subscription wise £30 if you're a sole trader, and then limited companies anywhere between 50 and 100. [01:48] What do you mean sole trader? Do you have a lot of bankers, traders who use you, stock market people? [01:53] >> So sole trader is the the British term for someone that's self employed. [01:58] Ah, I see. Okay. But but it's about 35 United States dollars per month on average? [02:03] >> Yeah. Exactly. [02:05] Very cool. Okay. Put this on a timeline for me. When did you launch the business? [02:09] >> So we first launched the business in 2021. And then we kinda went through one tax return season at the end of the year in 2021. So in UK every January, and now going to our second tax return season. [02:25] That's awesome. How did you get your first customer? [02:30] >> Our first customer was through a small business community called Mindful Markets. [02:36] Mindful Markets. [02:38] >> Yeah. Exactly. So during the pandemic, a lot of markets that were first in person turned online, so a lot of new business propped up that helped people move from a in person marketplace to online. So they were doing Zoom calls, and that's kinda how we got our first customers. [02:56] Yeah. But was it like a Facebook group or a LinkedIn group? Or how did you find this group? [03:01] >> It was initially, we found the person that ran it through a Facebook group, and then we started doing calls with them over Zoom, helping them with their taxes, and then they were the first customers that then started using the app. [03:14] That's amazing. And I'm sorry. What was the name again? [03:16] >> Mindful Market. [03:18] Mindful Market. Very interesting. Okay. And then fast forward to today, how many customers are you working with? [03:23] >> So we now have thousands of customers. We don't like to disclose the exact amount because we're still quite early, but we're doing pretty well. [03:30] Is it fair to say, like, between 1 and 2,000, something like that? [03:34] >> Between 1 and 10,000. [03:36] Oh, okay. 10,000. Very cool. Now that's not easy to go from, you know, a thousand or, you know, nothing to over a thousand customers in under a year and a half. So how did you do that? How are you growing today? [03:46] >> It's a bit of a mix. So our most effective channels is when the need is highest, which is during tax return season and this classic performance marketing. Something to keep in mind is that your average retention when it comes to accounting is ten years. And on a product that you pay anywhere between 30 to £100 a month for, we can be quite effective when it comes to performance marketing during tax return season. Outside, we just use [04:13] >> a collection of referrals and SEO that works best. [04:16] What do you consider effective during tax season on your paid marketing? Right? What are willing to spend to get a new $35 a month customer? [04:23] >> Yeah. So coming from a a challenger banking background, the average there that we had was anywhere between a 100, 200 pounds, or in dollar terms, like 120 to $250. If we can acquire somebody for less than 100, that's already really effective because the payback payback period is so short. We've seen stuff way lower than that, so anything less than $20. [04:47] 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 [05:11] 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 [05:35] 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 [05:57] not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder 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 [06:23] 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 [06:44] 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 [07:11] the interview. What enables you to do that? That's not cheap. I mean, as you know, in the challenger and bank world, people are willing to spend a lot to get a new customer. So have you found, like, a unique keyword you're targeting with paid, or you're doing, like, TikTok ads or there's not a lot of competition for yet? But why why can you get under a $100 CAC? [07:27] >> I think it is TikTok that we've used exactly like you said. I think what what really worked well for us were personable ads. So kinda talking in the camera, kinda saying, hey, We're this new app. It's really amazing. You should try and check it out. We built trust [07:45] that's very that's very boring. What do you actually say? [07:51] >> I I think that is literally what we say. [07:53] It's it's No. Come on. If I saw that on TikTok, I'm I'm skipping it immediately. There's no way that's converting me. [08:00] >> Well, you're also not our target audience. Like, most of our customers are are are women. Most of our customers are are kind of people that like Etsy sellers, gig workers. It's it's literally as simple the the the thing that did the best was just talking into the camera while you're walking somewhere and be like, talking like a normal human being saying, you know, this kind of stuff is really hard. I found a tool that works really [08:23] >> well. You should try and download it and check us out. That's that's kind of as simple as it was. [08:29] Are we is this right now considered tax season? [08:32] >> No. Not yet. So for us, it's December and January. [08:36] So so give me a sense of, like, what you'll scale to in terms of paid spend. Are you talking like you're spending $10,000 a month on paid or, like, 1,000,000 per month on paid? [08:43] >> No. No. Way less than that. We last tax return season, I think the highest we went is maybe $2,000 a week. [08:53] Okay. Okay. [08:54] Got it. [08:55] >> But never higher than that. [08:56] Yeah. Yeah. Okay. So call it, like, you'll cap maybe, like, 10 k per month in paid. But that was last year. [09:00] Maybe this year, you double it. [09:01] Who knows? [09:02] >> I think for us, it's really about the payback ratio. If we get enough customers to go directly to our monthly subscription, then why not? [09:10] Now when you look at the cohort, you signed up exactly one year ago, and folks were recording us November 2 here. You go back and look at the cohort Enzo from last December. How many of them are still paying today? Like, what's your churn look like? [09:21] >> I think it's quite sticky. So most of our customers are still paying after one year. [09:27] Do you do you use any tools to measure this? I mean, net dollar retention is the name of the game in this world. Right? If you can have above a 100%, that's really fantastic, especially at this price point. [09:37] >> We kinda track monthly active usage. Like, we use platforms like PostHog that works quite well for us to track that. But most of our payments kinda done through Stripe, so it's quite easy for us to to measure that as well there. [09:50] Well, yeah. So when you look at this in Stripe, I mean, you guys above a 100% net dollar retention year over year? [09:56] >> We're not actively measuring net dollar retention figures. Like, we're we're focusing more on just kind of what we built so far. We're looking a lot more into monthly active users and what different features within our app customers use. Revenue is obviously an important metric of that, but it's not it's not the thing that I look at every single day. [10:14] Well, let me paint a picture for you. Right? If you spend a $100 on a TikTok ad to get a $35 a month user and they cancel after the second month, you only made $70. So you're losing money. How do you know if you're losing money or making money if you're not tracking retention? [10:27] >> I'm tracking retention in terms of monthly active usage. I'm tracking retention in terms of because we're talking about the subscription, but we're not only just a subscription business. We also have a freemium business model that people move into onto subscription. So what I really care about is how many of these users are using our our app every single month and that we looking at that in terms of churn. If somebody churns after months two without ever [10:48] >> having touched the app, I don't I wonder whether the problem is because we didn't do the service right, the problem wasn't right. I'm looking more into kinda the same kinda strategy that the guys from Superhuman did. Look at the customers that would be really sad if you would no longer exist. What are you getting right? And how can I replicate for those customers that aren't getting that value into the same scenario as them? That's how I'm [11:11] >> looking at it. I'm not looking at total figures yet. [11:13] Just to be clear, when you're spending a $100 on paid, that's that's a $100 to get a new paid customer, not a new free trial. Right? [11:19] >> Yeah. Yeah. Correct. Yeah. Yeah. [11:21] Okay. Got it. I guess that's what I'm a little bit confused about, though. Right? So how do you know if your paid marketing spend is is worth it or not? How you know if users stay long enough to for you to make your payback period back? If your payback period's three months, but they turn after two months, you lose money. [11:36] >> Yeah. That's correct. We we we but we don't yet. I like, it's it's it's not something that we're currently just focusing on. We're focusing more on monthly active usage. Revenue is important. Churn is important. [11:52] Okay. Let's focus [11:53] on what you focused on. [11:54] I'll stop I'll stop trying to push you to think about something you're not thinking about. So monthly active what is how do you define a monthly active user? [12:00] >> Somebody that logs into the app once a month. [12:03] Okay. But isn't that, like, a sort of a fake way to do it? Anyone can log in. Don't you wanna know if they actually, like, got value from it, not just sort of, like, log in? [12:13] >> Yes. Of course. But, I mean, define value. Like, this for example, there's some people that log in to the app. The only thing that they really look at is what their tax estimate did for that year, and then they and then we don't see them for another month. [12:25] Okay. There it goes. That's what you're tracking. Did they log in and view that particular report, and then that's active? [12:31] >> No. Because that's that's one of the features that we have. The other one is people can see how much income they've made in the app. But the other one is see people can see what their profit margin is. Yeah. We also have a feature that allows people to see short videos explaining key tax terms. Like, it it's not it's I'm not looking at, oh, somebody has done a specific feature. [12:50] >> I can look at there's different reasons why they log in. [12:53] >> The total picture is what I see is monthly active users. We don't really see users that just open the app and then immediately log off again every single month. [13:01] That's why I'm asking. Right? There's a bunch of you know, we've this is our 3,200 and eightieth episode. Right? And plenty of people come on and say, we have a million monthly active users. Yeah. But you know what? They're bankrupt because they consider an active user someone who, like, touched the app one time in a month. They didn't actually log in and watch training video or view their profit and loss statement or look at their tax [13:19] planning. So what I was trying to learn from you is what are those key activation things you want people looking at every month? And if they do that, you know they're gonna pay you eventually. [13:29] >> The key activations isn't really about multi active users. The key activation that we've seen is, does somebody trust us to connect their bank accounts in the app? So kind of how we how we automate it is we get access to transaction data, and that kind of powers the rest of the features. That is our key activation metric. How many people put in their national insurance number or their social security number for The US? Like, those are [13:52] >> the key things that that lead people to move to the paid part of the app rather than the usage of certain things. [13:59] Those are two very, very, very, very, very strong signals if you can make those happen. So what have you tested? I imagine it's not easy to convince people to connect their bank off a TikTok ad. [14:11] >> More than you think. So around a fifth of our customers connect their bank account straight when they download the app. [14:17] That's huge. 20% are are are connected. So if you sign up I'm I'm making this up, a thousand people last month, you're saying 200 of them will will connect their bank right away first first session. [14:27] Wow. [14:28] >> Correct. Yep. I mean, in in in The UK, it's maybe slightly different than The US where there's a lot of regulation around open banking, as they call it. So it's not like give us your login codes to your Chase bank. It it doesn't work like that. [14:41] No. You're using Plaid or SaltEdge or Rails or or Codat or [14:44] >> one of these Yeah. Yeah. Yeah. Exactly. And that's kinda getting more people are getting more and more used to that. And this pain point is high. Right? Like, people really don't wanna spend any time on tax. So if all I have to do is connect my bank account and you can help me with that, great. [14:56] They're they're willing to do that. Yeah. [14:58] >> And then that kinda goes up significantly after they log in to the app. So some people choose not to connect to the app, but then a lot of the features don't work. So they kinda play around with this, realize, okay. This is not just a a random company. It's a [15:12] >> lot more legitimate than that. And then [15:14] >> they connect their app later on their their bank account later on. [15:17] So before I go back anymore the origin story here, because you have a background in this space that I wanna capture. The when you look at monthly active users today, like, what is it, and and how do you what do you wanna hit by the end of the year and next year? [15:32] >> We've kinda focused a lot on growth recently. What I really try and focus on now is retention. So in terms of percentage, I wanna make sure that our customers, anywhere between 60 to 70%, are monthly active users. So I'm looking at kind of how can I make them come back to the app, how can I make them get value out of the app? So in terms of total numbers, I don't really care about that as much [15:55] >> over the next eighteen months. [15:57] Well, sure. But you could have 10 users that log on and six log in every month, and that hits your MAU goal, but that's not a viable business long term. [16:05] >> Yeah. Okay. But you already know that we're not 10 users. So I I I think I have a a big enough dataset now to look at actual trends and not statistic anomalies. And once I've hit certain kind of retention points, and I've we've already tested certain acquisition channels that seem to work for us, I can put more money into acquisition channel that leads to exactly like you said, not people that [16:29] >> that come in, pay for two months, and then and then never come back. [16:34] Yep. So so how many new installs do you think you'll get here in November? [16:40] >> That is depends. Actually, it depends on how much money we're gonna spend. [16:44] >> At the moment, we're not spending any any money on on anything in terms of acquisition. [16:50] Well, I assume you'll still get users even if you don't you you can only get users if you pay for them? [16:55] >> No. No. No. We we get users when when when [16:58] Yes. And so how many folks will sign up how many folks will sign up for earnr here in November? I'm just trying to get a sense of if you're signing up thousands per month or 100 per month or millions per month. [17:07] >> Oh, no. No. Outside tax season, it's hundreds. [17:10] Hundreds. Okay. Got it. And then tax season, you spike. [17:12] >> Yeah. Exactly. [17:13] I see. Very, very cool. Alright. Let's get more of the story here. So you launched this thing in 2021. Sole founder or you have cofounders? [17:20] >> I have a cofounder, Anil. [17:22] How'd you guys meet? Who does what? Are you the CTO or business guy, or how [17:25] do you split it? [17:26] >> He's CTO. I'm a business guy. We met on an accelerator program called Antler. [17:33] >> It's kind of putting 80 people in a room and say, go go find a partner and build a business. [17:38] That's amazing. Does Antler is this sort of typical sort of y c 7% for a 125 k sort of deal? [17:46] >> Yeah. Basically. I think that the things that we have here is Entrepreneur First, Antler. They're also in The US. They start out in Singapore. They kind of [17:56] But they will write a check. Right? You're not just having to give them a bunch of equity for nothing. Right? [18:00] >> Yeah. Yeah. They'll they'll write a check. Yeah. Yeah. Yeah. They I think their standard terms it depends on the location, but it's anywhere between a 100 and 150 for [18:06] Yeah. [18:08] >> Somewhere close to 10%. [18:10] Yep. So have you guys stayed relatively sort of efficient in terms of bootstrapping, or do you guys just sort of go raise a bunch right out of the gate? [18:18] >> No. We stayed quite efficient. We've raised less than 1,000,000 so far. I mean, I'm originally from Holland. We're all very frugal over there. So [18:26] That that's awesome. And what's the team size today? How many folks full time? [18:29] >> There's 10 of us at the moment. [18:31] 10. Very interesting. And what's your what's your focus? I mean, at some point, you're in I mean, you said you have between 1 and 10,000 folks already installed. I don't know how many total accounts there are in the world, but eventually, get all of them. And then and then it's sort of like, you either have to launch into a new market or focus on ARPU increases in that base, and that's how you're gonna drive growth. How do [18:49] you think about that? [18:52] >> We're thinking more of initial geographic expansion. So we're just in The UK at the moment. We think The US is a really interesting market when it comes to accounting and tax, probably even way more complicated than it is here. And the fact that everybody has to do a tax return there, where here it's mainly still small businesses, is a very interesting opportunity. The other thing is that accounting kind of cuts through a lot of the different [19:17] >> costs of a small business. We can see what kind of insurance you have, we can see what kind of loans you have, we can see what other services you use as part of managing your business. I think there is a really interesting play here in starting to increase the type of services you offer to a small business as part of that. [19:35] Yeah. So just clear, to again, if account if you have a [19:37] and when you told me [19:38] a thousand to 10,000, that's users or paid paid folks that have converted to paid? [19:43] >> Those are users at the moment. [19:44] User. Okay. Got it. That's obviously very different than how many have converted to paid. So [19:50] but but point being though, even in the free trial, they can connect their bank account to get value even before they start paying you. Right? So the way it works is if you [19:59] >> connect your bank account and get some value, but it doesn't really do anything. Like, it just gives you an overview of, okay. Great. These are these are transactions that I have in my bank accounts. That's not really necessarily the accounting elements of it. [20:10] Okay. So so so for someone to really get value out of connecting a bank account to earnr, they also need to be paying you sort of 30, 40 bucks a month. Then then they really unlock some value. [20:19] >> Exactly. Exactly. Yeah. You can't do any tax returns. You can't do, like, the majority of the app that you are actually paying using. [20:26] I see. And then most most apps that are sort of at this price point are very happy with, like, a three to 7% conversion rate from free to paid. Are are you sort of in that range, and are you happy with that range? [20:37] >> No. No. No. We're we're way higher than that. Okay. Like, I I think when it comes to like I said, acquisition costs in fintechs are so high, I think you need to have anywhere between twenty and fifty percent for this to be a sustainable business model. [20:52] Yeah. Yeah. Yeah. Yeah. Okay. So it's fair to say you're sort of somewhere between 20-50%. [20:56] >> Yeah. Yeah. Yeah. Exactly. Yeah. [20:57] Yeah. So we could say you have something between, like, 500 and 5,000 paid accounts on the platform today. [21:03] >> Yeah. [21:04] Yeah. Okay. You obviously are sitting on a data gold mine with bank accounts connected. Right? So if an accountant connects their bank to you, you can see everything they spend money on, every every way they make money. How are you using that data to invent new products for accountants or think about your product roadmap for accountants? [21:20] >> The way that we're looking at it is is kinda twofold. So one is what kind of things the unpersonal accountant use at the moment, and that actually has nothing to do with their payment data. It's literally what kind of reporting, some stuff like payroll, VAT, aka sales tax, income tax. In terms of what's more interesting in terms of the bank data is really understanding how these people earn income, what kind of expenses do they have, what [21:45] >> kind of other products as a small business are they paying for? And how could we potentially in the future help them optimize for that? [21:53] Yep. Yep. That makes sense. And then, I guess, before we wrap up here, what's your team look like today? How many folks are full time? You sorry. You said 10. You already said 10. How how many of those folks are engineers? [22:04] >> Four? Five? [22:05] Okay. Four. Five. [22:06] >> Three. Three heavy engineering. [22:08] Very cool. Alright. Very good stuff. Anything else you wanna add before we wrap up? [22:13] >> Thank you for taking the time for grilling me. [22:16] Yeah. Yeah. No. [22:16] >> Appreciate it. [22:17] I mean, look, Congrats on what you've built. I mean, from my math on the low end, if you've got at least 500 paid accounts at $35 a month, you guys are past 20 k a month in MRR at this point for which means for this kind I mean, and for this kind of app, that's pretty impressive. On the high end, if you've got 5,000 paid accounts at $35 a month, that's obviously even faster growth. I think [22:33] that puts you at, like, a $150,000 a month in revenue. So so congrats on your growth. [22:38] >> Thank you. Appreciate it. [22:39] Alright. Famous Five here. We're gonna wrap up. Number one, favorite book? [22:44] >> Shoe Dog. [22:45] And number two, is there a CEO you're following or studying? [22:49] >> I went to talk to Luis von Ahn yesterday, which I thought was great. [22:53] CEO of which company? [22:54] >> Duolingo. [22:55] Ah, very good. Number three, what's your favorite online tool for building earnr? [23:03] >> PostHog. That's great. [23:04] Are you saying hog, h o g, or hawk like a bird? [23:08] >> Hog, h o g. [23:09] H o g. Okay. Number four, how many hours of sleep do you get every night? [23:13] >> Seven. [23:14] And situation, married, single, kids? [23:18] >> I have a partner. [23:19] Okay. Any kids? [23:20] >> No kids yet. [23:21] No kids yet. Alright. And how old are you? [23:24] >> I'm 31. [23:25] 31. [23:26] Last question. Something you wish you knew when you were 20. [23:31] >> It's okay to take a risk. [23:34] Guys, there you have it. I mean, it's cofounder Ottens at Earnr. They're building a tool called earnr, which is helping accountants serve SMBs faster. They've got between 1,000 and 10,000 registrations, and they convert 20 to 50% of registrations to paid customers at $35 a month. So north of $20,000 in revenue today. They just launched last year, so healthy growth. They've only raised what the accelerator or sorry. Under a million bucks. Right? So pretty capital efficient. Team of 10 [23:55] today with five engineers as they look to continue to scale. [24:00] 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 one [24:25] p. M. Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at two p. M. 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 [24:46] an acquisition, a big 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 You can go in there and quickly search and see [25:07] what people are saying. Sign 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. 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, I do it so that we can all learn. We have to [25:27] counter those people. We got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.