Expandirevenue

Introduction hello everyone my guest today is stefan smolders he's a sas entrepreneur and he's bootstrapped to 5 million in revenue in just under 15 months he's the founder of the world's safest software for linkedin automation called expandy.io based in the netherlands and also a father stefan are you ready to take us to the top yes it's a honor to be here and uh thanks for that for the great introduction nathan you bet now you rarely see linkedin software or marketing software branded as the safest usually that's like construction work or you know dangerous work why do you use the word the safest linkedin automation software yeah let me tell you the story behind i am i'm managing multiple sas companies in the netherlands and one software already for more than five years is a very intelligent ip tracking software it's called lead express similar to software's like elite forensics albacross lead feeder where we can identify website visitors and it's actually a nice software to have but almost all the users of this kind of a software as they struggle with what's the best way to follow up right so actually i receive tons of such kind of requestions from people using the software and what they do is that they try to pick the phone they go to the reception nathan it's stephanie okay you please forward me to the person who's visited my website but it's actually a hard one so after receiving tons of such kind of questions i try to challenge myself to find a way to do acquisition on a much more modern way and then we're talking about somewhere around three years ago uh i jumped on linkedin and uh after be voting a bit on linkedin it became after a lot of spending a lot of time to educate myself as my number one lead channel so that was actually the starting point of helping people achieving results on linkedin as kind of a linkedin agency so you hear first did you write your first line of code for the software then in 2019 uh no uh in between and so so so i think it was somewhere around 2017 i i jumped actually on linkedin to provide a service uh uh in the beginning for myself to generate leads on on the linkedin platform by optimizing the profile or target audience and actually outreaching people in the beginning i did everything manually with two left hands i can't code anything myself and just one simple excel sheet after managing five customers accounts i found out that it was that time consuming that i could it was not scalable so i searched on linkedin or sorry on google on google for tools which could help me automate some repetitive tasks on linkedin and i've had tons of tools and we all know that are hundreds of tools which can automate some repetitive tasks on linkedin from drugstore to linked helper to meet learner to alfred and especially in that time mostly of all these tools were chrome extensions and some of them were catched by linkedin as well that means that linkedin is able to detect which kind of tools and they will actually flag the accounts who are using it so it was not that comfortable especially because i was managing a profile from c-level decision makers which did not know that yep so stephen just sorry just to split up the story because again we're short on time and i want to get sort of as many points here as possible so you launch the agency and it sounds like 2017 2018 you had five clients you were managing on linkedin their accounts you were doing this manually how much revenue did the agency do in its best month it it it's it's best month but that was later on i think uh maybe 100 100k a month and what year was that what month which month yep what year that was in 2018 and 2018. okay and so when did you start building the software expanding when did you launch it yeah we started building it in february 2019 we made our first github registration and we were able to run an and better version in july 2019 okay so in july of 2019 you launched the beta version and how much do customers how much do the initial customers pay you to use the software uh in the beginning uh we did not ask any money just to retrieve and get our feedback for us to define which audience is the best fit for us and we start with outreaching local users which are not that familiar with using any type of linkedin automation but that are all people who are using such kind of an ip tracking software and we found out in that beta that that was not the best audience for us for the simple reasons that we have to sell linkedin first second we have to sell linkedin automation and third we have to educate them because he did not know what they have to send so it was that time consuming and not scalable so after and i think it was september we decided before we launched it globally mid november 2019 to focus on the global market and only on linkedin agencies which had actually the same challenges as i faced when i was an agency owner myself and one of these challenges was to do safe outreach on linkedin because we all know that we're operating and let's call it kind of a grey area right yep no i understand that so those first agencies that were your customers you knew very well because you were a linkedin agency a year prior um so walk let's fast forward to today and then we'll get the growth story over the past two and a half years how much revenue did you guys do in terms of monthly recurring revenue last month Monthly recurring revenue yeah last month we closed on 445 k dollar monthly recurring revenue okay 40 45 000 last month and if you go back a year ago how much did you do in that month yeah we uh we implement our our strike it start counting mid november 2019 at zero dollars and what were you doing in the middle like 2020 uh in june 2020 we did one uh one million annual so let's 85 85 uh monthly so you're doing 45 000 a month today 445 400 okay i was about to say i thought you said five million dollar run rate so okay got it so last month you did 445 000 in revenue and a year prior to that you broke a million dollar run rate eighty three thousand dollars a month uh yeah in june 2020 last year one year ago i'm just trying to calculate a growth rate so a year ago you're at a million dollar run rate today you're at a five million dollar run rate now in november 2019 that's let's say uh 15 and a half months ago we started at zero okay yeah i understand that yeah you said in june of last year which is 20 20. yeah that's let's say nine ten months ago then right it's now april yeah ten months you did eight you did eighty three thousand dollars that month which is a million dollar run rate correct yeah now today you've broken a five million dollar run rate correct correct so over the past ten months you've 5xed from a million to five million dollar run rate correct that's what i was trying to get at so this is Bootstrapped impressive growth have you done this all bootstrapped or did you raise capital uh no it's all bootstrap so how did you do this i mean this is not easy right how did you get those first hundred agencies paying you to use the tech use your technology the first thing i actually did was finding out why people are buying from it so in the beginning i run more than 700 demos in five months with only agencies myself to understand why are they making a decision to pick x funding and not one of our competitors to have a better understanding about how we can position ex-funding and i find out that safety is it's it's the main topic for everybody that was one thing another underestimated thing in this grey area and let's call it a special market is that people want to do business with a reliable partner and a lot of our other profilers they are hiding themselves for linkedin so actually you even do not know who's behind that software especially if you want to outreach them or contact them or try to ask support it's very hard so we decided to not hide ourselves related but show our faces and our team and create videos and be visible and try to provide high priority support almost 24 7 around the globe with myself and our team of course and i think these two points are the basics which achieve the most success for us and the fastest growth and only picking a nice because the market is so huge so we decided to only go after linkedin agencies because we really understand what where their main challenges and we understand steven so help us understand sort of growth today so so this month how many new customers will you add i think we have two revenue streams and one revenue stream is that people can sign up straight from our website and we have somewhere around 300 signups per week on our website they are they they start trialing with the seven days trial and then we hope to convert as many as we can and the other revenue stream is that we provide wide labels and they are exclusively for agencies with more than 20 accounts and we have agencies on board with more than let's five six seven hundred accounts um so on the website we have uh let's say a thousand signups a month new signups and uh our revenue stream is that we only focus on wide labels and larger agencies because they are bringing more more accounts and they grow with somewhere around maybe 10 10 larger agencies per month got it so on the website you get a thousand sign ups per month now as a sign up are they putting in a credit card they're putting in a credit card but they can cancel it uh in the trial of course how much does the does the trial cost or is it free uh it's free they only have to add their card and then they can use it seven days for free and so you will automatically build them at the end of seven days if they don't cancel all right and what do you build them for what's the starting point price 99 okay got it uh makes a lot of sense and how many customers are you are you uh Currently serving 10,000 customers serving today uh we managing more than ten thousand active accounts in the expanded software along all the user ways so including the white list you said 10 000 total right and that's 10 000 customers or 10 000 linkedin accounts among your customers linkedin accounts among the customers and how many custo instead of counting the individual linkedin accounts if you just count the number of customers how many customers um i think for the for the for we have 155 right labels running so that are actually the customers and we have somewhere around 2000 i think 1970 or so people who are paying a subscription on the site but they can also manage more linkedin account of course i see so it's about a 50 50 revenue split between revenue you make from white label partners versus revenue you make directly from people paying 99 a month uh not exactly it's somewhere around 60 40 at the moment 60 white label yeah we have 300 k revenue at the moment per month from people who are paying straight with a card on the website and somewhere around 150k have coming from from agencies and white labels tell me about your team today stefan how many people total we have 22 people 22 and how many engineers nine nine engineers any quota carrying sales reps or no uh no we have uh uh uh only a small marketing team with five amazing girls which are providing demos and that's them that's their main job and supporting and serving our agencies and white labels so no no sales reps correct okay no sales reps nine engineers four on the marketing team or sorry five on the marketing team uh they're only goldar two demos so so again nine engineers five on marketing where's the rest of the team what are they doing it's in the support support okay got it and and and obviously churn at this price point with these kinds of tools is critical what was your churn over the last 12 months i have to verify it with my co-founder glenn you can see it exactly in our swipe so i have to came back to you later on that um it's not that bad but since we're growing so fast the numbers are going to be larger because of the amounts of course so the i think it's somewhere around the [Music] turns and downgrades 35k a month 40k a month okay about 35 000 of churn per month and downgrades but yeah we can divide turns on different ways right yeah that's a lot though i mean that would be 35 000 against your 450 000 a month in total revenue i mean that's about an 87 revenue churn per month which means over a year you're going to turn through the majority of your full customer base for example last month in total we growed with 68 000 dollars uh monthly recurring and so maybe we go with 110 and then 40 was done grace insurance and then 70 was the girl okay um 40 churns okay so you're saying last month you added 68 000 of new monthly recurring revenue net that that was the end result i see i see yeah i mean the the tricky part with that is when you're measuring churn on a cohort basis you don't include new customers that sign up and start paying so in the math you just gave me obviously you include new customer sign ups that's how you got 110 000 of of new revenue before subtracting away churns so we'll skip that for now since you don't have your stripe dashboard in front of you but let me go back to your funnel you're using so a thousand new signups on the website per month into the seven day trial how many of those will convert into paid accounts at the end of the month it will be somewhere around 400 380 400 that's a lot how do you get such a high conversion rate um i think because we focus a lot on people who are already familiar with using automation right so our main lead generator is actually our content strategy we have more than 15 14 15 000 unique visitors per week on our website so most of them are coming from our content and they actually are more familiar with they already use this kind of of a tool and what are you spending on when you look at your fully weighted cac to get a new 99 a month account all marketing budget you mean or what are the actual initial costs for for for the hosting and uh yeah we calculated that we have i think 70 more than 70 profit at the moment my question is how much do you spend all Customer acquisition cost in to get a new 100 a month customer that's actually not that much at the moment maybe uh twenty twenty dollars okay okay do you include your marketing team salaries in that calculation then it is if we count all the costs then it's let's say [Music] okay so if you take all of your five people on your marketing team and their salary let's say they make 5k each right so it's 25 000 a month in expenses there and you divide that by the 400 new customers that you convert on your website each month right that's sort of one way to calculate customer acquisition cost i'm just trying to understand when you say your 30 is your customer acquisition cost what are you including in that 30 dollars uh yeah that are the salaries we don't have for all areas the expertise in our team so we are outsourcing a lot of activities for example our whole sales strategy we are outsourcing that to kuliti from i don't know if you know from olga and we're working with the bumps team together to to to to help us also with marketing activities we have a lot of content writers so if i count all these costs together um that's somewhere around 4 40 40k 45k a month okay got it yes of 45k a month divided by 400 new customers right that you get from your website each month that's not including new white label partners obviously but across 400 customers it's about 100 100 bucks to get a new hundred dollar a month customer that's obviously a very healthy payback period so the math works out nicely there um help me understand how you go from 5 million today to 10 million by the end of the year where do you think your growth is going to come from yeah our growth will come from managing the company more based on data right we see also that we can improve a lot in in interns and in onboarding so from next month we will hire an external expert to focus more on the onboarding and and for the previous three months we start tracking why people are canceling and why people can't move forward for example from the first to the second payment so i think the quickest wins for ourselves are in that area to close the door in the back a bit more and if people are satisfied we see for example now that if we can bring people from the first to the second payment and that's also the uses challenge to make it more clear for them and if you can bring them results with examples and templates in that time period they if you can bring them to the second payment they will go to the third fourth five six and center step and are you guys profitable today stephen are you or you break even uh now we uh Profits we are very profitable we have an er i think from all the revenue 70 70 percent is perfect so of the 450 000 you did last month you're saying you take about 300 000 to the bottom line in profit yeah definitely okay so last month your bank account went up by three hundred thousand dollars after you pay all expenses salaries everything it's three hundred thousand extra yeah i think 275 to 80. oh it's still pretty close it's still pretty that's still pretty darn good so as founders what do you guys do with the profit do you pay it out as dividends or do you let it sit in the company bank account um a part in the company bank account we invested a lot of things in the beginning with our own money so we took that back as well and we investing at the moment a lot in um a new product so we hired some additional developers who are focusing on developing new software because we rely with everything what we do on one huge platform which is not that amused with it so it can be any data case that we have to change with them or move to some other products in the meantime and staphon what does your founding team look like how many of you are there and how did you guys split equity yeah we uh we are ready to i have to go call farmers so we are with the three of us and everything is uh uh divided uh separately do you so you each own 33 of the business that's correct so you did it equally okay and do you do anything since your bootstrap do you do anything with your team last year to give them a bonus if there's a lot of profit do you do a profit sharing plan with employees uh what we what we do is that we have a quarter bonus it's it's a along all the company uh so we will give everybody 500 net per quarter um if we reach reach to goals and we have a salary increasement of 10 for the well-performing people so you'll increase their salary 10 and you'll give them a 500 cash bonus if the team hits the quarterly goal yeah that's uh that's correct and what we also do but that was before the cove but now it's a little bit hard and every month we have a team activity uh for example we will go karting or a dinner with everybody uh who is in over we our company is located in eindhoven in the netherlands and most of our colleagues are there as well just a small amount is working remote but since it covered it's a full log down here in the netherlands so it's a little bit harder to do it now we have the idea in mind to do somewhere in july and huge work vacation for a couple of weeks in a house in spain where we invite everybody with mention somebody for for for the company but it's not realistic i understand that'll be that'll be fun once you can do it can you tell me what the court with the quarterly goal is right now for this quarter what's the goal yeah that we go with uh 35k a month okay so last month you did 68 000 so you're you're way ahead of that goal so if you if the team adds another 35 000 next month and the month after then everyone will get a 10 salary increase in a 500 cash bonus uh the salary increases are per six months and the quarter bonus are yeah per three months yeah okay got it that's great do you like that plan do you anticipate changing that profit sharing plan for employees at all over time or do you stick with it um to be honest when we started the company we were just with a couple of people less experienced and we all were single entrepreneurs solo entrepreneurs before so it's an interesting journey in terms of educating ourselves um how we can improve such such such kind of things and also to ask feedback from the from all the people working in in the company so such things can be changed uh fast and stevon before we uh wrap up here with the famous five tell me how 2020 ended how much total revenue did you do in 2020 and how much profit uh yeah we ended 3.1 million uh annual and how much profit did you make in 2020 uh that was uh a little bit less because it was our first year and i think somewhere around um one nine okay about one million in profit that's great well we love what you're building i love that you're doing this bootstrap out of curiosity what would you value your company at today um i i really don't know maybe maybe you can help me out but no i don't know either it's all personal that's why i asked yeah it's uh i put a lot of effort time and love into it so it's it's also a little bit of emotion um it it it's yeah it's really hard for me to say also because of that we operating on on the linkedin platform and which makes it maybe a little bit harder with all the upcoming changes and that they try to avoid spam and that we have to do smarter outreach and it's not so i think a lot of such kind of things will affect it as well so let's wrap up let's wrap up with the famous five years on number one what's your favorite business book um favorite business book is predictable revenue from uh from advanced number two is there a ceo you're following or studying um yeah i like uh uh following the landless team so uh our french friends number three what's your favorite online tool for building your business um i use actually mostly our own tool like spending uh besides yourself yeah besides your own oh oh sorry besides uh besides your own um then i shoot that on hyper eyes hyper white hyper eyes personalization tool number four how many hours of sleep to get every night five and what's your situation married single kids i'm married and i have one one kid a boy from uh four years and how old are you stefan i'm 37 37 last question what's something you wish you knew when you were 20 that i have the knowledge i have now because then i was quite my school very early as they launched their linkedin automation tool called expandy back in 2018 today they just broke five million dollars in revenue profiting almost 70 percent so last month they did 450 000 top line they took 300 000 in profit to the bottom line which they're paying out as dividends and rewards and reinvesting in new products across their bootstrap team of 22 people they finished last year 2020 with about 3.2 million revenue and about a million in profit they've grown 5x over the past 10 months really incredible growth story here stefan thanks for taking us to the top yeah it was a pleasure to be here and uh i wish you all the best as well my friend one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try 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 1 pm 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 fund raise a big sale a big profitability statement or something else i don't want you to miss it 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