How Flexee CEO Andrzej Nowak grew to $1.2M revenue and 3K customers in 2024.

hey folks my guest today is andre nowaki is building a tool called flexi.edu if you want to follow along it's salary on demand he's got a lot of experience in the in finance and banking including a master's degree before he jumped into and now founded uh flexi so we're jumping to it today you're ready to take the top hello thanks thanks nice to meet you hi guys you bet so what does what does salary on demand mean sorry on demand mean it's a service provided by the third party which is a flexi to enter prices to employer together with flexi we provide a service to his employees and by by our app employees can pay out their salaries when they want when they need it yes uh so are you a fintech platform are you lending money to employees so they get their money earlier yeah correct so it's a connection of fintech with a lending platform because flex is providing financing to employees and at the end of the month in easy way uh we deduct whole payouts from the salaries of their employees this makes sense very popular space how many employers are on your platform today how many use it uh you know we are quite young we just closed the seed round today we have more than 20 employer uh who and to to those employers we provide an up to about more than 10 000 employees today yes but the pipeline is very very growing right now we have discussions with bigger employers and in the end of this year probably will provide up to more than 100 000 of users okay so 20 employers today and those employers employ over 10 000 employees yeah okay and you closed the seed today or recently how much was the seed for we close it around in an amount of 2.8 million euro yeah so it's more or less three million dollars now you come from this world so you understand you know equity and a cap table and managing dilution why do you need money to launch a business like this uh you know uh we need money because we provide uh those salaries so we provide the liquidity so we are searching all the time money to provide the location employees so oh you're lending you're lending out your equity yeah by our equity but more more or less we are using the debt yeah so normally we finance our business by debt and the equity yeah equity we are using to finance our scaling yeah sales and so on and that we are using as our liquidity to provide the salaries to our employees so how much debt how much debt did you raise uh in this sit round that was in the amount of 2 million euro okay and equity was 800 000 euro okay okay got it so 2.5 of that okay got it that makes more sense so let's call it 2.2 million u.s is debt and then 800k is is the actual equity going on your balance sheet um so i guess of that because uh before sid round we had a precedent round and it was only equity and it was another 1 million dollar then when was that uh it was one and a half year ago when we start to build a whole business so that was in 2021 uh at the end of 2020. 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 it 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 valuation 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 valuations inside of your frowner path 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 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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 okay five one twenty twenty interesting so and then what money were you lending back then did it was it with your personal money or where'd you get the debt from the uh the money came from two business angels local private investors who believed in my in my idea yeah they invest their money of course i also invest my money uh and on and based on this money we built whole technology team uh andre i'm talking about that i'm talking about the debt so before the current debt you just raised what debt were you lending out to create liquidity in your marketplace uh on our market it was uh you know on before we we get the seed round we provide that in an amount of half million dollar then yeah uh and we found a problem one problem is that we speed up very fast and then we need to close silent in fast way do you know to provide an debt liquidity to our clients yes because we showed uh this product we are the first one who are providing in our country we are based in poland and you know we are right now investing lots of marketing salary on demand to infor employer that there is a flexi who can help their employees yes and right now they are knowing about the service and you know there is a huge demand so that's why we need to close and fast in no way my audience i think totally understands this right an employee doesn't have to wait on their paycheck in poland anymore they can get it ahead of time my question to you is though you can't do this unless you raise a lot of debt yourself so you can front that money so the of the 2.5 million debt you just raised what's your cost of capital on that usually it's around 10 to 12 percent and says it's the same it's the same okay and did you have to give up warrants sorry did you have to give warrants to the debt provider oh no no okay i'm so happy that i found the debt without any warrants uh but normally markets they are you know they want to have a warrant but uh i have a i i knew the investors i found the investor who was uh able to provide it without a warrant yeah so let's use a case study here just so everyone can understand let's say i am working for a company in poland i'm based in warsaw my salary is let's make the map easy it's ten thousand dollars oh let's do a thousand dollars a month so i don't want to wait for that a thousand dollars to the end of the month so you're at the beginning of the month i can take that a thousand dollars from you no normally if your employer decides in such a way you can but normally the procedure is different uh on the first day you will see you will see the amount that you earned for the first day yeah so it will be if you earn in a month one thousand dollars one after one day you will be able to pay down i don't know fifty dollar fifty dollars yes uh so every day your limit increase uh by an amount and you will see one thousand your one thousand dollar uh in the end of the month so andre how much does the employee pay uh so employee then we start from the provision 2.9 percent for it payout if the employee payer pays the fee there is also a subscription-based model where employer can pay a monthly subscription for each employee and the subscription fee is more or less eight dollar per month and based on the subscription employee do not pay anything okay so if the if the employer has a thousand employees that employer could pay you eight thousand dollars per month so that the employees don't have to pay a 2.9 fee yeah correct if the employer says you know what we don't want to front that expense they can use your tool but then the employee pays you know if i get a thousand dollars a month from flexi 29 of that is going to come i'm going to pay your 29 bucks is going to go to you yeah correct that's how it's worked i see so your ability to put the capital out get it back make 2.9 and then put the money back out allows you to effectively compound your irr on your debt fund over a year what do you believe you can drive your ir up to the minimum will be if we earn 2.9 so the minimum margin the yearly rate will be about 40 percent and this is our uh uh yearly minimum year rate that we want to earn yeah so the your ability to earn that is directly correlated to your ability to get the money back out fast enough because if you have 2.5 million of debt that's not out and you're paying 10 then it eats your margin very quickly so what gives you the confidence you can deploy and keep 2.5 million deployed every month you know uh it's uh there is a few points first points as uh flexibility financing from our investors so we need uh liquidity then with it if we do not need it we do not pay it yeah so once ah so you don't have the 2.5 million in the bank you'll draw it down as you need it yeah as we need it yeah that's the agreement that we have like lacking bank like a credit line yeah and of course most important uh is to always have a strong pipeline big clients uh uh always invest in marketing to employees to you know to somehow saying to them here's flexi use it send off the amounts you have money paid out and so on so on yeah so we also spent a lot of uh marketing directly to employees to use our so of the current 20 employee errors that are on your platform today how many seats are they paying for how many employees are they paying a subscription fee for uh today more than 70 of employer passed the fee to employees and the third difference buying uh subscription so you mentioned there's about ten thousand employees on the platform thirty percent would be about three thousand right yeah so three can take three thousand times eight bucks a month you're doing about 24 grand a month in subscription fees from employers i cannot say no and cannot say yes you know what was the math correct i'm just multiplying numbers you already gave me is the math right uh from the subscription yeah yeah okay i mean you're you're doing more than that because you have people paying 2.9 percent i'm just talking just on subscriptions yeah um interesting okay so so i mean how do you go from 10 000 employees to a million employees i mean that's really how this thing really takes off and and also when you go out and raise a seed round you can choose to tell a story that is a business model that is percent of gmv fintech versus sas and you can sort of choose what's hot in the market to get a higher valuation right so how do you tell that story uh to yeah i said as you said it's a mix of the subscription based model uh and the sas platform uh like uh there is a boom on financing commerce so it's something like between yes so this is something that our investor likes and it was important in our evaluation on the seed round how we gonna acquire 1 million clients you know we would like to provide salary on demand in europe because the trend for salary on demand on europe is starting to grow since two years it started yeah so uh we are the first player in poland poland is a huge market having uh 20 million employees yeah and we would like to get out from poland to two european markets and on those three markets we would like to be the biggest player uh in coming to two three years so to having one million uh employees it it's even reachable on one market on poland yeah one million from 20 employees and andre when you look at your total business today and you look at all your revenue from last month is it about a 50 50 split between 2.9 versus the flat subscription fee revenue uh this is our aim uh that it will be splitted halfway half what is what is it though today uh today is more from the provision so from the subscription uh than uh so more than uh from the revenue from the provision are higher than of subscription it's because more users are used are paying provision is it like an eighty percent is provision versus twenty percent subscription seventy to thirty seventy five five okay interesting 70 2.9 fee and then the rest is the subscription so if subscription again is 24 grand a month we can then multiply that times three total i mean you you broke a million dollar run rate recently then um or you're flirting with it right now you're very close very close very cool all right um talk to me a little bit about the team how many folks are full-time uh full-time employees today are 12 people okay and how many engineers there are three engineers and we also have uh our friendship software house who are supporting us if it's needed who do you use first off your software house we are we are outsourcing uh if it's needed when you have higher demand like for example right now we are connecting to a payroll systems a local payroll system because the local payroll system that now we have higher demand for the andre who is it which software house do you use a guy's name's n7 mobile and seven mobile and and like my uh surname yeah and seven oh oh i see yeah i see and are they based in poland yeah they are based in poland and you you're happy with them people are always looking for a good software development firm to use yeah that they are very good yeah i'm happy with them okay very cool let's wrap up here with the famous five number one last book that you read good question i work a lot uh so i didn't read a book since weeks uh last book was the biography of elon musk yep number two is there a ceo you're following or studying sorry is there a ceo you're following or studying is there a ceo the following or studying correct yeah once once again elon musk number three what's your favorite online tool for building flexi the favorite toto bird flexy good question favorite tool to build is something you use andre something a tool you use a lot yeah a tool that i'm using a local payment provider who is a part of dot pay uh it's like a paper a local paper okay number four how many hours you'll sleep to get every night one sorry how many hours of sleep four hour four hour that's not enough sleep that's enough come on all right and what's your situation married single kids single okay no kids no kids all right and how old are you 36 last question something you wish you knew when you were 20. something on the news when i have 20. um i don't know if there's something like that i like my career all right guys there you have it flexi.use helping companies based in poland give their employees their money their salary earlier either the employees pay an eight dollar per month fee for every employee that makes up thirty percent of the revenue today about twenty four thousand bucks a month in revenue or the employees paid two point nine percent of whatever they pull he believes andre believes he can generate around a 40 ir on his debt fund using this model it's a beautiful mix of obviously fintech plus sas with a hyper focus in the again polish market right now 20 employers on the platform servicing 10 000 employees they just raised another 2.5 million bucks in debt to lend out and 800 000 in equity in their seed round we'll see what happens next andre thanks for taking us to the top thank you it was a pleasure 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 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