How Fotoware CEO Anne Gretland grew Fotoware to $6M revenue and 4K customers in 2018.

hello everybody my guest today is an gret 'land and before joining her current company photo where she held the position of CEO at Campello group she spent 17 years at Microsoft and held several leadership positions in Microsoft Norway and Western Europe headquarters she's one of the founders of Oda the largest network for women in tech in the Nordics with 8,000 members she's educated in the USA and Norway and communications marketing and leadership and in 2017 she was named one of Norway's 50 leading IT women and are you ready to take us to the top I am alright photo where it's not your company it sounds like it sounds like you joined is that true yes I joined just before Christmas and I'm very excited about it okay so I want to dive into what it does here in a second but first how long had it existed before you joined a CEO well the company has existed actually for twenty years it was one of the first companies who invented something that they know now called software management or asset management it was founded by two photojournalists who worked in Norway and they wanted to have an easier way to get the pictures that they took into a database so they could share it with a newspaper and other journalists so they were one of the first in the world to actually make such a system and it turned out to be so popular that they thought hey let's let's stop being a journalist and start to making a software company so this is 20 years ago so this would have been 1997 then yeah Wow okay so 1997 so were they running it all the way up to just before Christmas when you joined a CEO they they were running it until up until four years ago when they have another CEO and then now they switch because you know they wanted to think a little bit differently they've been selling on-premise solutions mostly and growing organically selling big heavy high-end solutions and of course now as we know it's it's a digital transformation you're the cloud CEO you're the cloud transition CEO that's pretty funny so now that really was behind the CEO change it was going from on you're making annual corn revenue based off SLA agreements and service agreements you're trying to now transition doubt to a pure cloud model of maybe a pure place ass well at least a high very high percentage cloud we certainly will have as anybody some on premise solutions because some some customers just have that name security reasons I mean we have an amazing product and we have customers all over the world so we want to reach out to those markets where we don't have to have a partner it doesn't have to be in a city we don't have to talk with them they can buy online and you know we can help them the other cloud okay so this is curious I love this because there's a lot of CEOs thinking just like you that they're taking on Prem old solutions and trying to remember the cloud so this is gonna be a great interview let's understand where you are today so you join a year ago the transformation starts what is your revenue split today in terms of on Prem Revenue verse cloud revenue [Laughter] and we have been selling infrastructure as a service solutions and as you know we only just moved in our solutions into a cloud but it's not really platform as a service so it's not really cloud and so this bit though I say would be about 80 80 % premise in 2000 that's pretty good for two months of work well you know like I said they've been working on it for a while and then you know selling cloud but not real cloud so now what we're doing is having a completely self-service platform service where a customer can go in choose how they want to buy how many users do they have and then just basically do it online and if they want a special made solution them then they can contact us and they can contact our partners so on the set just the SAS Parker nor all the legacy revenue just the SAS product give me a general sense of size of customer on average what are they paying in a month are we talking 10 bucks a month 100 bucks a thousand 10 thousand because we have some small customers but we also have some large customers I mean we have some customers in the US and we have some customers in Asia and we have some customers in Norway there are buying our soul solutions so it would be anything from $500 a month to you know up to twenty twenty thousand dollars a month okay I mean it's it's it all varies because it all depends also how much storage you need yeah so you might be a small customer but you need a lot of storage because we have videos you have pictures and that means that you you need to buy extra storage yep so you don't include the storage in the monthly plans it's an upsell we do it we do include storage but if you have millions of mice that means that we're gonna have to buy extra storage so that means that you have to pay a little bit extra got it so so if I so you give me a range 500 to 20,000 a month if I forced you though into an average would I mean would you say somewhere like 3 4 5 K range somewhere in there is fair or no yeah like that okay right now yeah and who who is who are these buyers are they big publishers with huge assets on hard drives in their storage closet they want to move it to the cloud yes we have a wide range a variety of customers some of them are the big publishing houses and some of them are more marketing departments all over the world and we're seeing as I'm sure you know the damn solution sell a lot in the marketing space but what we have is we also have customers outside let's say the normal we have police customers we have evidence-based customers we have customers who are using our systems to to find and locate pictures that not only have been taken because they want to use them but but they have been taken because they're part of a criminal investigation for example how interesting very interesting so okay good so and what have you scaled this part of the business to how many customers are you serving now we're talking hundreds or thousands in general we have about 10,000 users worldwide okay and like I said some customers have many users and some I just have a few but yeah but but sickly why we want to go 100% into club is that we want to be able to scale yep yep because right now we're doing like a lot of customers were talking one-to-one we're selling one-to-one that we basically want to have a self-service platform where customers that don't require a special specially made system they can just buy it themselves so just to be clear there there are 10,000 seats across some amount of paying customers how many how many yeah good about four thousand four thousand okay got it so you've got on average call it two-and-a-half seats per customer yeah is that you and who is that what's their position typically inside that company it's well well it's also we don't vary in in terms of what the customer is so certain at certain times it's those who work directly on for example we have some museums so it will be the people who store and categorize typical librarians or or those who have responsibility for the pictures in other companies it will be the marketing managers in other companies it will be it will be the police where it will become typical photo journalists and journalists making you know and the huge newspapers making a story I'm making sure that they can get the pictures quickly and then the right size into the newspaper okay now and I think this math is wrong here and I know you're gonna correct me if I take those four thousand customers times a monthly ARPU average of three grand that puts you at 12 million a month which means you owe me a steak dinner I don't think you're that big though where's my math wrong and so yeah it's we we also have because we wanted the customers to get used to having the subscription way of thinking and so we have a lot of customers who have on-premise solution if we actually are giving us subscription revenue so yeah I think that I'm doing the wrong that's okay so generally I don't want to push to Aria but generally speaking are you guys doing north or south have caught three or four million a month today um I actually can't say because in my head I'm thinking Norwegian kroner but you are thinking you as dollars away sorry what what metric are you in I'm in the Norwegian kroner okay so how many of those I have no idea what they are but how many of those how many of those a month on average average I guess we would say if we'd say well I guess you would say a little bit more than yeah I guess it will be 400,000 and Norwegian kroner yellowcake got it and so that's kind of where revenue is today how do you think your business will grow as you shift to cloud well I know from experience that because I I was really shaped when I worked in Microsoft when Microsoft went from office to office 365 and when we went from on-premise server solutions uh sure I know that we will see a little bit of a dip in revenue but an increase in customers because we're getting more customers but they're paying less per license right because they're using a huge upfront amount but now they're paying a lot less and they're paying as they go and ask the use yeah so we will see in this year and and probably the next year as well in revenue but a huge increase in customers interesting because that yes exactly and so so also that's what I discussed with the board when I was taking on this is what we have to expect going forward because making that shift even though we're not even thinking about trance transcending the customers that we already have firstly we want to reach out to new customers and eventually those customers that we do have that buy on premise or gonna turn to us and say look I don't want to have a server in the basement anymore I don't want to be up keeping a server when I switch to new right now no I can't be bothered with it I want to boil out and then they're gonna turn to us and our partners and say hey are you ready do you have can I borrow cloud from you and that's when we need to be ready because otherwise they lose because so many so many producers and and software vendors are offering cloud now there availa yeah they are yeah I mean look size-wise I just did the conversion 400,000 Norwegian krone I believe is equal to about fifty fifty thousand ish US dollars she goes within about six hundred seven hundred grand a year in revenue and United States dollars and and and you think over the next twelve months that might dip a little but your market share will increase yes got it talk to me about team size where yet today well we are twenty eight people all together some of us most of us are sitting here in Oslo we have some people that are sit in Australia some people that sit in Russia and some people that sit in Sweden okay and and all together I just want to say this because I'm kind of proud of this we are seven nationalities all together I love that I love that yeah and where where is the company biz is everyone based there and in Norway well most of us are based in there lie but some in Australia someone Russia some in Sweden okay no so notion Norway Australia Sweden what was last one Russia oh and Russia okay good so twenty people in are you guys bootstrapped review raise capital we have we have grown organically so the when the company was started twenty years ago they they actually made money from from the second month and their in making money and they have been profitable ever since so they've just grown organically and they've never taken on any extra capital from outside and they just let me ask you a question with 28 employees if you pay them an average you know seller of 60 grand a year which is not that much in US dollars that's about a hundred forty thousand dollars a month and expense but you guys are only doing right now fifty thousand so how have you been able to keep a team size of 28 people but stay cash flow positive well I think then that we we actually are profitable so if if I look after the I think that my messing up the the dollar and the Norwegian thing because I I made a small calculation on the side here and we are making 5 million u.s. dollars on average a year ok so sorry you were yes there was an extra 0 we left out that's all yeah so you were doing it just to be clear you are gonna do the math real quick you are doing 4 million nor we almost 4 million Norwegian krone per month which comes out to 5 million more than 5 million at US dollars a year a year yes absolutely ok good I'm missing up a little bit the cloud thinking and no it's it's tough conversions but I'm going there's no way they can be profitable with this money into it okay now you're really profitable so your headcount expense caught one 40k a month your monthly recurring revenue in u.s. dollars is 500 grand a month or four million Norwegian krone that's obviously hugely profitable how are you acquiring customers what's your customer acquisition costs look like I have no idea how are you know how you're getting customers because when I started we only had one marketing manager and we only had two people who were selling and so obviously having a sales person talking to people one-on-one is costly right a lot of money and so we haven't really scaled anything when social media and and social marketing yet in since I started we have increased our Facebook followers from four hundred to a thousand mm-hmm and that meet that tells me also that and so you asked for some numbers and and 150 thousand people visiting our website last year and 33,000 actually ran our blog posts so it means that when we put something out there it's certainly is of interest to people but we haven't had the scale scale or the possibility to scale because we only have one person working with marketing yep but I see like on your profile you guys sponsor the DM conference is all over so you are spending money on paid channels you just don't know yet what your return is on those exactly and I think that that you know when we start to scale really well and through social media if our acquisition cost will come down quite a lot because then we will reach a lot more people in scale without actually you know talking to them or calling real quick and because we're out of time what's your tummy about churn what's your turn today oh well actually we looked at the churn and so I can see that you know what's very interesting about the term when it comes to January I think we've lost about 13 customers but they're all on premise and that what percent does that by the way in terms of revenue churn do you know not only look at the customer churn okay because I come for my marketing so 13 out of 4,000 30 another 4,000 for January yep but when we see last year we lost about a hundred customers yep on premise but nobody on sauce interesting which is very interesting yes and that actually confirms to me that when you have a customer own sauce that means you know they're on the owner model that means that they want the software they're paying a fee monthly fee and they're happy with that they can get updates but when they're buying on premise they sort of shift now I have to say that some of the customers who who we've lost we've only lost the subscription part of it so the customer has already bought the the software and they're using it but they just have said no I don't want to buy the subscription anymore make sense yeah so it doesn't mean that we lost the customers just means that were you know they don't the revenue mix is changing yeah very good okay let's wrap up quickly with the famous five one-word answers you're number one what's the last business book you read well I keep reading I just reread the seven Habits of Highly Effective People that's a good one because I love that am i and I currently lead Sheryl Sandberg's lean in being a being a woman in history I think it's I think it's a really inspiring book and there's always keep coming back to it and that's the tipping point by Malcolm and the reason for that every time I join in your job I read that book because it reminds me that certain products really take off others don't but they're equally good why what's the tipping point what what do I have to do to make sure that our product is the one that actually makes it out there yep that makes good sense and number two here one word answer is their CEO you're following or studying right now well I'm I really like Arianna Huffington she's great number three is there a favorite online tool you have for growing your business [Music] well I have a several of course the falta where is the online tool that I use teams right now Microsoft Office 365 teams very good yeah because yeah number four in how many hours of sleep are you getting every night nine okay that's pretty good what's your situation married single you have kiddos I am married no no no kids yet and you mind me asking how old you are forty-seven the reason I asked because I want you to now take us back 27 years what he was your 20 year old self new I think I would would be very pleased to know how well it turned out because I I've always followed my gut in my integrity in my instincts and and I thought gosh maybe I should have gone to do you know become a leader in in a management position earlier but I felt that I needed to learn first and now I'm happy that I took those steps but I would have probably told myself don't worry I keep working it's gonna work out you know you'll be you you'll make it in the end they're very guys heard from Ann you'll make it in the end it will all be okay she joined photo we're just two months ago they were launched in 1997 no 28 people transitioning and really started as file storage on-premise solutions I'm talking servers in the basement kind of on-prem they're now shifting under and efforts to a pure-play cloud model SAS model as they transition revenue will be flat and maybe decline for a little bit but their market share will drastically increase they're serving four hundred thousand four thousand first paying on average hundred twenty-five bucks a month that's how you get five hundred thousand bucks in monthly recurring revenue which is again 4 million Norwegian krone per month less than 3% logo turn annually that's about a hundred of the four thousand so that's healthy again team all base between Norway Australia Sweden and Russia and thank you for taking us to the top thank you