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Founder Interview

How Filestage Grew to 400 Paying Customers at $100 ARPU in 2018 (Interview with Co-Founder Niklas Dorn)

Interview Date
May 16, 2018
Interviewee
Niklas DornCo-Founder
Watch
Watch the full interview

Company Metrics at Interview Time

Paying Customers (2018)

400 teams

Average ARPU (2018)

$100 per month

Team Size (2018)

11 people

Total Funding Raised

600K

Historical Snapshot

These numbers were reported by Niklas Dorn during the interview recorded in May 2018 and are a historical snapshot, not current figures. See Filestage’s current numbers.

Key Takeaways

  • 01Filestage launched in 2015 as a SaaS tool for sharing, commenting on, and approving videos, designs, and documents
  • 02400 paying customer teams as of 2018, with between 60,000 and 80,000 users working inside the platform
  • 03Average ARPU is about $100 per month, with enterprise customers on custom plans paying more
  • 04A year before the interview, MRR was "maybe 5,000" (no currency given), and Niklas called the growth since then a "big, big jump"
  • 05Raised 600K from a German investor the year before the interview, enabling the team to grow from three founders and interns to 11 full-time staff
  • 06Zero spend on paid advertising; growth driven by cold outreach and customer referrals
  • 07CAC is approximately 300 to 400 euros fully weighted, with no external marketing spend
  • 08Freelancers and smaller accounts churned about 6 to 7 percent of revenue per month, measured after expansion revenue; bigger clients churned 2 to 2.5 percent per month, coming from mid-market agencies, as enterprise had no churn so far
  • 09Lifetime value for smaller customers was about 1,500 to 2,000 on average (no currency given); for bigger customers Niklas said it was "way way bigger"
  • 10Team of 11 is distributed across Germany, Portugal, Spain, Romania, and Russia

Company Metrics at Time of Interview

MetricValueSource
Paying Customers (2018)400 teamsFounder interview, May 2018
Total Users (2018)Between 60,000 and 80,000Founder interview, May 2018
Average ARPU (2018)$100 per monthFounder interview, May 2018
Team Size (2018)11 peopleFounder interview, May 2018
Engineers (2018)5Founder interview, May 2018
Total Funding Raised600KFounder interview, May 2018
Year Founded2015Founder interview, May 2018
Paid Advertising Spend (2018)$0Founder interview, May 2018
CAC (Fully Weighted) (2018)300 to 400 eurosFounder interview, May 2018
Lifetime Value (Smaller Customers) (2018)1,500 to 2,000 (currency not stated)Founder interview, May 2018
Champagne Referral Rewards Sent (2018)Around 20Founder interview, May 2018
MRR (Approx. One Year Prior) (2017)About 5,000 (currency not stated)Founder interview, May 2018

Growth Breakdown

Revenue

Niklas did not state Filestage's current revenue himself. Looking back a year, he said: "A year ago, we were like, I don't know, making maybe 5,000 MRRs or something" (he named no currency), and he called the change since then "A big, big jump." At the time of the interview Filestage had about 400 paying customer teams, and he said around $100 a month was a fair overall average.

Customers

The company had 400 paying customer teams as of 2018, with between 60,000 and 80,000 individual users working inside the platform. The customer base grew from freelancers and small agencies toward larger agencies and marketing departments.

Team

Filestage grew from three founders and a handful of interns to 11 full-time employees after raising 600K from a German investor. The team includes five engineers, one UX designer, two full-time marketers, and Niklas himself in sales with one other person ("it's me in sales and another person in sales"). The team is distributed across Germany, Portugal, Spain, Romania, and Russia.

Funding

Filestage raised 600K from a German investor the year before the interview. The company operated in a lean, near-bootstrapped manner with zero external marketing spend at the time of the interview.

Growth Strategy

Cold Outreach

Automated cold email campaigns were one of the two primary customer acquisition channels at the time of the interview. The team ran these campaigns without any paid advertising spend.

Customer Referrals and Virality

Referrals from existing customers were a key growth driver. Filestage incentivized referrals by sending a bottle of champagne for each new customer brought in, and had shipped around 20 bottles by the time of the interview. The guest noted that many customers referred others simply because they liked the product.

Segment Focus Shift

Churn was highest among freelancers and smaller accounts, at about 6 to 7 percent of revenue a month, measured after expansion revenue. When the team dug into the data and talked to those customers, "50% of these users said, hey, we really like that software, but we actually run out of projects," which was the signal to focus on bigger clients with continuous work. Those bigger clients churned 2 to 2.5 percent a month, and that churn came from mid-market agencies: "in enterprise we never had any churn so far."

Product Quality as Retention

The guest credited product improvement as the primary lever for reducing churn, emphasizing that a product that fully solves a business-critical problem creates natural stickiness and reduces cancellations.

Best Quotes

“We have a base of around 400 paying customers, so teams. And then they're like 60, 70, 80,000 users. So people that review and work with Filestage.”
“A year ago, we were like, I don't know, making maybe 5,000 MRRs or something.”
“So main acquisition channels at the moment are really like cold mailing, so automatic cold mailings. And the other thing is like really like getting referrals from customers, really what works well for us.”
“At the moment, we we have some... One simple thing actually. It's... We just say, hey, if you bring us a new customer, you get one big bottle of champagne from us. And so far, it worked pretty fine. So actually people are just like, hey, we like you so much. We just recommend you.”
“Last time I calculated it was around, I think 300, €400.”
“We we landed like a German investor last year, which enabled us to really grow the team. And before, we were just like the three founders and a couple of interns. And this way, we really could build like the team.”
“So for the smaller ones, it's between 1,500 and 2,000, something like that on average. And for the for the bigger ones, it's it's way way bigger.”
“Better for us means it's easier to use and it's actually completely solving the problem somebody has. So it really fits like the pain. So that's the number one thing.”

What Happened Next

At the time of this interview in May 2018, Filestage had 400 paying customer teams, a distributed team of 11, and had raised 600K from a German investor. This page captures the company as Niklas Dorn described it on that date and is a historical snapshot. Visit the Filestage company profile on GetLatka for current figures and later developments.

View Filestage’s current profile and metrics

Full Transcript

Chapters

Introduction and What Filestage Does

Nathan Latka

00:01Hello, everyone. My guest today is Niklas Dorn. He's the co founder of the SaaS company Filestage, which is a solution web application that makes it easy to share, comment, and approve videos, designs, and documents, allowing customers and colleagues to mark change requests directly online in the file. This helps to avoid long feedback rounds via email. Before that company, he used to work in different companies around marketing, advertising and e commerce. In that time, he experienced how

00:24time consuming and painful the content review process could be, especially when done via email. That's what led him to Filestage. Niklas, are you ready to take us to the top?

The Problem Filestage Solves

Niklas Dorn

00:33Yeah, definitely.

Nathan Latka

00:33This is definitely a problem.

00:35Think as people create more of their own content, everyone goes back and forth via email with their designers for changes and things like that. It is scary bad sometimes. So tell us what you guys do and how you make money.

Niklas Dorn

00:46Yes. As you introduced myself, I used to work in marketing and that's how we started. And main problem we had back then was, yes, we produce content like amazing videos, designs, flyers, brochures, everything like that. And actually, it was sent via email and then the end you had sent like an email back and forth for the emails for just one minute of video. And everybody was was was driving nuts actually and we said, Okay, why isn't

01:14there a good tool and efficient process, nice workflow? And that's how we started Filestage. Today, Filestage, you can imagine a bit like a Dropbox. So it's super easy and intuitive to use. It's a web application. So you can basically just drag and drop your files into Filestage. Then you can share link, for example, to your video you just dropped there, and then you can discuss altogether your video and give feedback within the video just in the

01:41file. Yep. And you can approve it, accept it and so on.

Nathan Latka

01:44Yeah. And so customers today, mean, is this a pure play SaaS company? If so, what are they paying to you on month per average?

Business Model and Pricing

Niklas Dorn

01:51Yes, it's a pure SaaS company and we started actually pretty small. So we started with freelancers, small agencies and so on, and then we we grew from there to to bigger agencies, to marketing departments. At the moment, like the the typical smaller agency is paying around $100 a month and the enterprise is paying more than its custom plans.

Nathan Latka

02:15If you took it like just an average just to avoid every customer cohort, is a $100 a month a fair average or is it a bit higher?

Niklas Dorn

02:24I would say overall it's fair average because we also have smaller ones, but yes, we also have these peaks.

Company Origins and Founding Year

Nathan Latka

02:30Take me back to day one. So what year did you launch the company in?

Niklas Dorn

02:35Sorry?

Nathan Latka

02:35What year did you launch the company in?

Niklas Dorn

02:38When year?

Nathan Latka

02:39What year did you launch the company in?

Niklas Dorn

02:40Oh, okay. Sorry. Corvette. Yeah. In 2015, yeah.

Nathan Latka

02:442015. And I mean, where was your head at that point? You were doing a lot of professional services work, marketing, advertising, e commerce stuff, or did you like quit a full time job to jump into this?

Niklas Dorn

02:55Yeah, basically it was right after after my masters. So I used to work before then I did another masters in marketing. And that's where I, yeah, where I met like the connection with my my co founder. And from this, started both. So he has, a background in advertising and the film industry, and he always had his problem himself, so we well connected, like, at this moment. And we said, okay. We started.

Nathan Latka

03:18Yeah. Interesting. Okay. So 2015. And then what have you scaled to today in terms of total customers?

Paying Customers and Total Users

Niklas Dorn

03:24We have a base of around 400 paying customers, so teams. And then they're like 60, 70, 80,000 users. So people that review and work with Filestage.

Nathan Latka

03:37That's great. So 400 customers at a $100 ARPU, is it fair to say you guys are somewhere around $40,000 a month right now in revenue?

Niklas Dorn

03:37More or less. Yeah.

Nathan Latka

03:37Okay. More or less. And give me a sense of growth rate since you're still kind of early, but take me back a year ago. What were you doing a year ago?

Growth Rate and MRR One Year Ago

Niklas Dorn

03:54A year ago, we were like, I don't know, making maybe 5,000 MRRs or something.

Nathan Latka

03:59Oh, really?

Niklas Dorn

04:00A big, big jump.

Nathan Latka

04:01Yeah.

04:02So what's driven most of that growth? How are you getting new customers?

Customer Acquisition Channels

Niklas Dorn

04:07So main acquisition channels at the moment are really like cold mailing, so automatic cold mailings. And the other thing is like really like getting referrals from customers, really what works well for us.

Nathan Latka

04:21How do you incentivize that? How do you drive that behavior?

Referral Program and Champagne Incentive

Niklas Dorn

04:24At the moment, we we have some... One simple thing actually. It's... We just say, hey, if you bring us a new customer, you get one big bottle of champagne from us. And so far, it worked pretty fine. So actually people are just like, hey, we like you so much. We just recommend you. It's fine. We don't need like incentives, but for sure we are working on something to to push this even more here.

Nathan Latka

04:46How many bottles of champagne have you shipped?

Niklas Dorn

04:50Around 20 maybe.

Nathan Latka

04:5120. Okay. So pretty good. So when you look at kind of your fully weighted customer acquisition costs, what would you say your CAC is? What's your cost to acquire these customers all in?

CAC and Marketing Spend

Niklas Dorn

05:02So actually we have like, at the moment, have zero marketing spendings at external costs. So no Facebook advertising, anything like that. So zero here and then we have internal costs. And this is like we have two two full time people doing marketing for us and then it's me in sales and another person in sales. Yeah.

Nathan Latka

05:23So when you add up like, you know, all of the salaries of people related to sales plus the champagne you're sending out, right, plus any referral fees or kickbacks. Mean, and then you divide that into the number of new customers you guys land per month. I mean, what is your CAC right now fully weighted?

Niklas Dorn

05:38Last time I calculated it was around, I think 300, €400.

Nathan Latka

05:38Okay.

05:43Mean, I look, that means your payback period then is what? Somewhere around... You get that money back in about four months. Is that accurate?

Niklas Dorn

05:49Yep.

Nathan Latka

05:49Okay.

Funding and Team Growth

Niklas Dorn

05:50And So we are really, yeah, bootstrapped and lean here. So

Nathan Latka

05:53I was just gonna say that. So you're totally bootstrapped right now, right?

Niklas Dorn

05:57Almost. So we we landed like a German investor last year, which enabled us to really grow the team. And before, we were just like the three founders and a couple of interns. And this way, we really could build like the team. And yeah, it's a German investor, but it was not like a really large investor.

Nathan Latka

06:13How much did you raise?

Niklas Dorn

06:15600 k

Nathan Latka

06:15I

06:17mean, it's still a pretty healthy amount. So 600 raised. And then what's the team size today?

Niklas Dorn

06:23Around 11 people.

Nathan Latka

06:23Okay.

Niklas Dorn

06:23Full time and then a couple of other people. Yeah.

Nathan Latka

06:28And and you said four of you... Two of them are full time on sales plus you and one other person. So four are kind of sales. Break down the rest of the rest engineers?

Team Breakdown and Roles

Niklas Dorn

06:36Yes. Okay. So it's like, one person that is half like sales and half customer success. Then five people, yes, in, in development, then we have one in UX.

Nathan Latka

06:48Got it. And, you know, churn is obviously critical in a SaaS company. Tell me about your churn.

Churn by Customer Segment

Niklas Dorn

06:53Yeah. Honestly, we have, like, two symptoms we we recognize. So actually, we had, a rather high churn on on freelancers and smaller accounts.

Nathan Latka

07:04What's high? I mean, we talking like 8% a month?

Niklas Dorn

07:06High 6%, 7%, something like that. And then we really went like into into data and we talked to the people because as a founder, you're really like, my god, why do they churn a... Why do they don't use it anymore? And 50% of these users said, hey, we really like that software, but we actually run out of projects. And for us, this was like a signal to say, okay, maybe it's better to focus on like bigger

07:30clients where they have like continuous business to work on with Filestage. And in this sector, we have like a churn rate of 2% to 2.5%, something like that.

Nathan Latka

07:41And that's gross logo churn per month or revenue churn?

Niklas Dorn

07:45The first was like revenue churn, yes, with the smaller ones.

Nathan Latka

07:50So 6% revenue churn?

Niklas Dorn

07:527%. Yep.

Nathan Latka

07:53Okay. And is that gross or net?

Niklas Dorn

07:57How do you, how do you define it?

Nathan Latka

07:59Is it before or after you add an expansion revenue?

Niklas Dorn

08:04It was after.

Nathan Latka

08:06Yeah. Okay. So that's a net number then.

Niklas Dorn

08:08Yeah. Yeah. Okay.

Nathan Latka

08:10And just to be clear, like in a year, if you churn at a gross level 10% of your revenue, would mean you have 90% gross retention. But if you upsell your current customer base by 20%, you well, take the 20% and minus the 10% loss. Your net expansion is still 10 plus. Just to be clear, your net revenue churn per month was 6% to 8% in the smaller cohort.

Niklas Dorn

08:10Yes.

Nathan Latka

08:10And it was 2% to 3% in

08:37the enterprise cohort

Niklas Dorn

08:37Definitely.

Nathan Latka

08:39Monthly. Okay. And and what is... I mean, what are you doing to drive those numbers down or up? How do you make them better?

Niklas Dorn

08:48So one strategy is really like, first of all, focus on the product. So the better the product, the less churn you have. I think that's the number one thing. Second thing is

08:57to

Nathan Latka

08:57That's relevant though, right? Like how do you... That's the whole problem, right? You might think like what does better mean? How does better actually equate to stickiness?

Niklas Dorn

09:06Better for us means it's easier to use and it's actually completely solving the problem somebody has. So it really fits like the pain. So that's the number one thing.

Nathan Latka

09:17But what if it's perfect, but the enterprise customer still runs out of projects? They're still gonna cancel even if it's the perfect product.

Niklas Dorn

09:24I think then you don't solve the real problem. So whenever you you solve a problem that has, like, business relevance, then people shouldn't run out of problems. Otherwise, it's just a minor problem to be solved.

Nathan Latka

09:36Well, see, it's an interesting question because you could argue what you're doing should not be a SaaS pricing model, right? Because you actually are solving a very real problem. I know this problem, but I also don't run projects 24/7, so I wouldn't pay monthly for it, but I'd pay per project or per something like that. So when you have an enterprise account that is addicted to you when they're doing a new video release or something,

09:57you've built the perfect product for them. It must be so frustrating to see them churn when they're telling you, We love the product. That's the worst place to be in because then you don't know what to do to fix it if they tell you it's perfect. How do you handle that frustration?

Niklas Dorn

10:11So basically for enterprise clients, we haven't had it because they never run out of projects that were re recognized.

Nathan Latka

10:18But you said it was 2% to 3% churn?

Niklas Dorn

10:21Yes. But in enterprise we never had any churn so far. Let's say in mid market we had, so agencies and so on. But these were then people that were like saying, okay, it doesn't fit with our customer base. We don't continue because of these reasons. But in most cases, yeah, we haven't had like churn because they ran out of projects in this case. But the smaller ones, they always told, yes, we run out of projects. I

10:49don't want to spend money on this, but we say,

Nathan Latka

10:51What is your... What do you assume lifetime value is on these customers once you close them?

Niklas Dorn

10:55I feel what? Sorry.

Nathan Latka

10:57What do you assume lifetime value is on these customers once you close them?

Lifetime Value by Segment

Niklas Dorn

11:01So for the smaller ones, it's between 1,500 and 2,000, something like that on average. And for the for the bigger ones, it's it's way way bigger. Yeah.

Nathan Latka

11:13And last question before we jump into the famous five. Where are you guys all based?

Team Location and Remote Setup

Niklas Dorn

11:19The headquarter, it's it's in Stuttgart, Germany. But actually, we are like a remote team, so half the team is not working here. So we have one person in Portugal, one in Spain, one in Romania, one in Russia. So it's really like all over the place.

Famous Five Rapid Fire

Nathan Latka

11:33Very good, Niklas. Alright. Let's wrap up here with the famous five. Number one, what's your favorite business book?

Niklas Dorn

11:39It's the Ultimate Machine, Ultimate Sales Machine.

Nathan Latka

11:43Check. That's a good one. Number two, is there a CEO you're following or studying right now?

Niklas Dorn

11:47Not really, no.

Nathan Latka

11:48Okay, number three, besides your own, what's your favorite online tool for building your business?

Niklas Dorn

11:55Intercom. Yeah.

Nathan Latka

11:56Number, four, how many hours of sleep do you get every night?

Niklas Dorn

12:00Eight hours.

Nathan Latka

12:01That's okay. That's good. And what's your situation? Married, single, do you have kids?

Niklas Dorn

12:04I have a girlfriend since ten years.

Nathan Latka

12:06Oh, wow. Okay. So no kiddos yet.

Niklas Dorn

12:09Yeah.

Nathan Latka

12:10Alright. And how old are you?

Niklas Dorn

12:12I'm 31.

Nathan Latka

12:1331. Alright, Niklas. Last question. What do you wish your 20 year old self knew?

Niklas Dorn

12:20To start a business earlier and to negotiate harder. So that's what I learned in business, think.

Nathan Latka

12:27Guys, start a business earlier, negotiate harder. He saw this problem internally when he was doing marketing and sales inside of kind of agencies and such where it was very hard to collaborate on video edits and document edits, things like that. He launched Filestage with one of his friends back in 2015, bootstrapped the company, then raised $600,000 They now have 400 customers paying on average $100 a month, so about $40,000 in monthly recurring revenue. That's up from

12:50$5,000 in MRR just about a year ago. They've got 2% to 3% net revenue churn monthly in their enterprise cohorts, $400 CAC, so a four month payback period. Lifetime value is north of $2,000, again, helping solve a very real problem with their team of 11 based between Germany and other remote locations. Niklas, thank you for taking us to the top.

Niklas Dorn

13:07Thank you.