Earnr Revenue & Valuation (2024)

atler they're building a tool called earner which is helping accountants serve smbs faster they've got between 1 000 and 10 000 registrations and they convert 20 to 50 percent of registrations to paid customers at 35 bucks a month so north of 20 000 bucks 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 today with five Engineers as they look to continue to scale hey folks my guest today is Enzo ons he's the co-founder and CEO of earner the robo accountancy for small businesses he's a recovering Management Consultant a delivery writer and former Chief of Staff at loot bow and metal I'm sure I butchered that name Enzo you ready to take us to the top yeah let's go come on give me the real how do you pronounce that uh all the different uh challenging Bank names yeah uh yeah you did you did perfect bow metal and loot oh okay I nailed it very good all right so tell us what earner is uh and and why smbs you know smbs go out of business all the time so your turn is going to be an issue 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 the the kind of Trends our gay economy your passion economy and your sharing economy uh and what does Erna 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 an accountant for you for a fraction of the cost and so um how do you model this and what's the average customer pay you per month would you say so a traditional accountant for most users cost anywhere between 500 to a thousand if you're a sole Trader and uh up to a thousand pounds if you're a small business we charge them subscription wise uh 30 pounds of your sole Trader and then limited companies anywhere between 50 and 100 what do you mean sole Trader do you have a lot of Bankers do you traders who use you stock market people uh so sole Trader is the the British term for uh someone that's self-employed ah I see okay but but about 35 United States dollars per month on average uh yeah exactly very cool okay put this on a timeline for me when did you launch the business uh so we first launched the business in 2021 uh and then uh we kind of went through one tax return Season at the end of the year uh in 2021 so in the UK every January and now going into our second tax return Season that's awesome how did you get your first customer uh uh our first customer was through a um a small business Community called mindful markets mindful markets uh yeah exactly so during the pandemic a lot of um markets that were first in person turned online so a lot of new businesses propped up that helped people move from a in-person Marketplace to online so they were doing Zoom calls and that's kind of how we got our first customers but was it like a Facebook group or a LinkedIn group or how did you find this group uh it was initially we found the person that ran it through a Facebook group and then we started doing um calls with them over Zoom helping them with their taxes and then they were the first customers that then started using the app it's amazing I'm sorry what was the name again uh mindful Market mindful Market very interesting okay and then fast forward to today how many customers are you working with uh so we now have thousands of customers uh we don't like to disclose the exact amounts because we're still quite early but um we're doing pretty well was it fair to say like between a thousand and two thousand something like that uh between a thousand and ten thousand oh okay thousand and ten thousand 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 uh it's a bit of a mix so our most effective channels is when the need is highest um which is during tax return Season and this classic Performance Marketing something to keep in mind is that your average uh retention when it comes to accountant is 10 years and on the product that you pay anywhere between Thirty to 100 pounds a month for um we can be quite effective when it comes to Performance Marketing during tax return Season outside we just use a collection of referrals and SEO that works best what do you consider effective during tax season on your paid marketing right or what are you willing to spend to get a new 35 a month customer yeah so uh coming from a challenger banking background the average there that we had was anywhere between 100 and 200 pounds or in dollar terms like 120 to 250 dollars uh if we can acquire somebody for less than 100 that's already really effective uh because the payback payback period is so short um we've seen stuff way lower than that so anything less than twenty dollars oh what's going on there YouTube good to see you guys now imagine this you love watching these interviews with SAS Founders but imagine if we took all of the valuation data out from over 2807 interviews I've done manually saves you a lot of time well we've done this we've built the into the beautiful interface inside of founder path check this out I'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for evaluation this year now the secret evaluation is there's many different ways to value a SAS business so the reason you're going to see three or four different evaluations inside of your frownerpath dashboard this is all free by the way is because depending on who's doing the buying of your SAS company you're going to get a different valuation a VC is going to pay a different valuation private Equity Firm is different if you're going to 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 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 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 1.2 million seed around 3.7 raise they sold 22 percent of their business go in here and filter by the event maybe you only want to 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 going out right now and you're raising your seed round well 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 data set of SAS valuation than what you can get now inside of founder path 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 if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations 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 all right let's jump back into the interview what enables you to do that that's not she 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 Tick Tock ads or there's not a lot of competition for yet but why why can you get under 100 CAC uh I think it is Tick Tock that we've used exactly like you said um I think what really worked well for us were personable um ads so kind of talking in the camera kind of saying hey where'd this new app it's really amazing you should try and check it out um we built so that's very that's very boring what do you actually say I I think that is literally what we say it's no come on if I saw that on Tick Tock I'm I'm skipping it immediately there's no way that's converting me uh well you're also not our target audience like most of our customers are are women uh most of our customers are are kind of people that like Etsy sellers gig workers um it's it's literally a simple 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 well you should try and download it and check this out that's that's interesting as simple as it was are we is this right now considered tax season uh no not yet uh so for us uh it's December and January 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 grand a month on paid or like a million per month unpaid no no way less than that um we last tax return Season I think the highest we went is maybe two grand a week okay okay about it but never hide enough yeah yeah okay so call like you'll cut maybe like 10K per month in paid but that was last year you double it who knows I think for us it's really about the payback ratio if we get enough customers to go directly to our um monthly subscription then why not now when you look at the core you signed up exactly one year ago and folks were recording this November 2nd here if you go back and look at the core Enzo from last December how many of them are still paying today like what's your churn look like uh I think it's quite sticky so most of our customers are still paying uh after one year 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 100 that's really fantastic especially at this price point uh we kind of track monthly active usage um like we use platforms like post hog that works quite well uh for us to track that um but most of our payments kind of done through Stripes so it's quite easy to for us to measure that as well there well yeah so when you look at this in stripe I mean are you guys above 100 in a dollar retention year over year uh we're not actively measuring all the 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 our 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 well let me paint a picture for you right if you spend 100 bucks on a tick tock ad to get a 35 a month user and they cancel after the second month you only made 70 bucks so you're losing money how do you know if you're losing money or making money if you're not tracking retention I'm tracking retention in terms of multi-active usage I'm tracking retention in terms of because we're talking about this 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 app every single month and looking at that in terms of sharing if somebody churns after month two without ever having touched the app I don't I wonder whether the problem is because we didn't do the service right product wasn't right I'm looking more into um kind of the same kind of 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 looking at it I'm not looking at total figures yet just to be clear though when you're spending 100 bucks on paid that's it's 100 bucks to get a new paid customer not a new free trial right yeah yeah correct yeah okay uh God 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 do you know if users stay long enough to for you to make your payback period back if you payback periods three months but they turn after two months you lose money yeah that's correct we we but we don't yet I like it's it's um it's not something that we're currently just focusing on we're focusing on multi-active usage revenue is important churn is important uh okay let's focus on what you focus on I'll stop I'll stop trying to push you to think about something you're not thinking about so monthly active view what is it how do you define a monthly active user somebody that logs into the app once a month okay but isn't that like a sort of a fake way to do it anyone can log in don't you want to know if they actually like got value from it not just sort of like log in uh yes of course uh but I mean Define value like this for example there's some people that log into the app the only thing that they really look at is what their tax estimate did for that year and then and then we don't see them for another month okay there you go so that's what you're tracking did they log in and view that particular report and then that's active uh no because that's that's one of the features that we have the other one is uh 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 the app we also have a feature that allows people to see short videos explaining key text terms like it's not it's I'm not looking at oh somebody has done a specific feature I can look at there's different reasons why they log in the total pictures what I see is multi-active users we don't really see users that just open the app and then immediately log off again yeah but that's that's why I'm asking right there's a bunch of you know this is our 3280th episode right and plenty of people come on and say we have a million monthly active users 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 a training video or view their profit and loss statement or look at their tax 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 going to pay you eventually uh the key activation 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 um Powers the rest of the features that is our key activation uh metric how many people put in their National Insurance money or the social security number for the US like those are the key things that that lead people to move to the paid part of the app rather than the usage I would say those are two very 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 tick tock ad uh what do you think so around a fifth of our customers connect their bank account straight when they download the app that's huge 20 are connected so if you sign up I'm making this up a thousand people last month uh you're saying 200 of them will connect their bank right away first first session wow correct yeah I mean 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 doesn't work like that no you're using platter salt Edge or rails or kodat or yeah yeah yeah exactly um and that's kind of getting more people are getting more and more used to that and this pain point is high right like people really don't want to spend any time on tax so if all I have to do is connect my bank account you can help me with that great they're they're willing to do that yeah uh and then uh that kind of goes up significantly after they log into the app so some people choose not to connect to the app but then a lot of the features don't work so they kind of play around with this realize okay this is not just a random company it's a lot more legitimate than that and then they connect their app later on they're good the bank account later on so before I go back and get more the origin story here because you have a background in the space that I want to capture um the when you look at monthly active users today um like what is it and how do you what do you want to hit by the end of the year or end of next year uh we've kind of focused a lot on growth recently uh what I really try and focus on now is retention so in terms of percentage uh I want to make sure that our customers uh anywhere between 60 to 70 percent 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 um so in terms of total numbers I don't really care about that as much over the next 18 months well sure but you could have uh 10 users that log on and six login every month and that hits your Mau goal but that's not a viable business long term yeah okay but you already know that we're not 10 users so I I think I have a big enough data set now to look at uh actual Trends and not statistic anomalies and once I've hit a certain kind of attention points and we've already tested certain acquisition channels that seem to work for us I can put more money into actually acquisition channel that leads to um exactly like you said not people that that come in pay for two months and then and then never come back yeah so how many new installs do you think you'll get here in November uh um that is depends it depends on how much money we're going to spend at the moment we're not spending any any money on on anything in terms of acquisition well I assume you'll still get users even if you don't you you can only get users if you pay for them no no we get users when when um so how many folks will sign up how many folks will sign up for earner here in November I'm just trying to get a sense of if you're signing up thousands per month or hundreds per month or Millions per month oh no no outside tax season is hundreds hundreds okay got and then tax season you spike yeah exactly I see very very cool all right let's get more of the story here so you launched this thing in 2021 Soul founder you have co-founders uh I have a co-founder Anil how'd you guys meet who does what are you this CTO or business guy or how do you split it uh he's CTO I'm a business guy uh we met on an accelerator program called antler um it's kind of putting 80 people in a room and say go go find a partner and build a business that's amazing does atler is a sort of typical sort of YC seven percent for 125 case or a deal uh yeah basically um I think uh the things that we have here single entrepreneur first um antler they're also in the US they start out in Singapore they kind of they will write a check right you're not just having to give them a bunch of equity for nothing right yeah they'll write a check yeah yeah yeah I think they're standard terms uh it depends on the location but it's anywhere between 100 and 150 for uh somewhere close to 10 yep so have you guys stayed relatively sort of efficient in terms of bootstrapping or do you guys to sort of go raise a bunch right out of the gate no we stayed quite efficient we've raised less than a million so far um I mean I'm originally from Holland we're all very frugal over there so that that's awesome and what's the team size today how many folks full time uh there's ten of us at the moment 10. very interesting and what's your what's your focus mean at some point you're I mean you said you have between a thousand and ten thousand folks already installed I don't know how many total accounts there are in the world but eventually you get all of them um and then and then it's sort of like you either have to launch into a new market or focus on our poo increases in that base and that's how you're going to drive growth how do you think about that uh 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 uh and tax probably even way more complicated than it is here and the fact that everybody has to do with tax return there right here is mainly still small businesses it's a very interesting opportunity uh the other thing is that accounting kind of cuts through a lot of the different 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 uh 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 yeah so just to be clear again if account if you have it and when you told me a thousand to ten thousand that's users or paid folks that have converted to paid uh those are users at the moment user okay got it that's obviously very different than how many have converted to paid um so um 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 can 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 my best that's not really necessarily the accounting elements of it okay so so so for someone to really get value out of connecting a bank account to earner they also need to be paying you sort of 30 40 bucks a month then they really unlock some value exactly exactly yeah you can't do any tax returns you can't do like the majority of the app um you're actually paying you today I see and then most most apps that are sort of at this price point are very happy with like a three to seven percent conversion rate from free to paid or are you sort of in that range and are you happy with that range no no no we're we're way higher than that um and like I I think uh when it comes to like I said acquisition costing pain texts are so high I think you need to have anywhere between 20 and 50 for this to be a sustainable business model yeah yeah yeah yeah okay so it's fair to say you're sort of somewhere between 20 and 50 yeah yeah exactly yeah yeah so we could say you have something between like 500 and 5 000 paid accounts on the platform today yeah 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 accounts um the way that we're looking at it is is kind of twofold so one is what kind of things done does an 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 uh 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 uh what 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 yeah yeah 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 many of those folks are engineers uh four five five very heavy engineering very cool all right very good stuff um anything else you want to add before we wrap up uh thank you for taking the time for grilling me yeah yeah I know I mean look congrats what you've built I mean from my math on the low end if you've got at least 500 paid Accounts at 35 bucks a month you guys are past 20K 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 bucks a month that's obviously even faster growth I think that puts you at like 150 Grand a month in Revenue so so congrats on your growth thank you appreciate it all right Famous Five here we're gonna wrap up number one favorite book uh shoe dog number two is our CEO you're following or studying uh I want to talk to Louis Vuitton yesterday which I thought was great CEO of which company Duolingo ah very good uh number three what's your favorite online tool for building earner uh post Hulk that's great are you saying hog h-o-g or Hawk like a bird hog hog hog okay number four how many hours of sleep do you get every night seven and situation married single kids uh I have a partner okay any kids no kids yeah no kids yet all right and how old are you I'm 31. 31 last question something you wish you knew when you were 20. uh it's okay to take a risk guys there you have any minutes go Upon Our antler they're building a tool called earner which is helping accountants serve smbs faster they've got between 1 000 and 10 000 registrations and they convert 20 to 50 percent of registrations to paid customers at 35 bucks a month so north of 20 000 bucks in Revenue today they just launched last year so Healthy Growth they've only raised what the accelerator sorry under a million bucks right so pretty Capital efficient team of 10 today with five Engineers as they look to continue to scale one more thing before you go we have a brand new show every Thursday at 1pm Central it's called Shark Tank for SAS 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 our poo CAC LTV you name it they share it and the buyers try and make a deal live it is fun to watch every Thursday 1 p.m 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 SAS World whether it's an acquisition a big fundraise a big sale a big profitability statement or 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