How Front App Tripled Revenue in Eleven Months with 40 Employees and $14M Raised (Interview with CEO Mathilde Collin)

Introduction and Company Overview

Nathan Latka

00:00Hello, everybody. My guest today is Mathilde Collin. She is the CEO of Front, a SaaS company working on redesigning email for teams. She went to Y Combinator in the summer of twenty fourteen, and today, Front has 40 employees and 1,700 customers. Mathilde, welcome back. Are you ready to take us to the top?

Mathilde Collin

00:19>> I'm ready. Thank you for having me again.

Nathan Latka

00:21Of course. Of course. Of course. So last time you were on, I think, you know, we we had a lot of fun, but that was almost I wanna say that was, what, about a year ago. Right?

Mathilde Collin

00:30>> Probably.

Nathan Latka

00:31Or or somewhere around there? And I'm and I'm trying to remember too. I'm trying to pull up those numbers. Yeah. So you that was on August or September 2016. You were at 1,200 customers then. You're up at 1,700 now. Back then, you had $13,000,000 raised, about a million dollars in 2015 revenue. The average customer was paying you about $200 per month, so you had an MRR of about $240,000. Your gross churn monthly was 3%. It was

00:56too early on CAC. You weren't spending a lot yet. And really healthy economics team of 20 based in out there in San Francisco. So update us. Where's the company today?

Team and Revenue Growth Update

Mathilde Collin

01:05>> So I think so we doubled the team. We're 40 now. We tripled our revenues. And as you saw, we didn't triple the number of customers that we had because what we've noticed in the past year and especially past two quarters is we have bigger and bigger companies using the product. And because one of the things that we want to make is information being less siloed in companies, The bigger the company is, the most relevant the product

01:29>> is. So that's the trend that we've seen. We've but we kept growing.

Nathan Latka

01:33So your ARPU has increased significantly?

Mathilde Collin

01:35>> Yeah. It is.

Nathan Latka

01:36Yeah. So you said you tripled revenue. It was 242. What? You're now doing $700,000 in MRR?

Mathilde Collin

01:41>> Yeah. Not sure about the right number, but, yeah, we tripled in the past eleven months.

Capital Raised and Cash in Bank

Nathan Latka

01:47That's amazing. And I wanna talk more about how you do that because that's really impressive. In terms of capital raised, still the same have you raised anything additional?

Mathilde Collin

01:54>> No. Still the same. We raised exactly a year ago, and we still have 80% of what we've raised.

Nathan Latka

02:00That's great. And remind me what that number was. It was 11,000,000?

Mathilde Collin

02:03>> We raised 10 for our series a.

Nathan Latka

02:05But total capital you've raised is what?

Mathilde Collin

02:07>> Total is 14.

Nathan Latka

02:10Okay. And of that 10, you just said you still have eight 80% or about 8,000,000 still in the bank.

Mathilde Collin

02:15>> Yeah. A little bit over 8.

Nathan Latka

02:16What are your VCs at the board meeting going, you're growing. Spend our money faster. It's not doing any good on in the bank.

Mathilde Collin

02:24>> Yes. So now it's become a joke at the board meeting. So I'm saying, oh, we increased our burn rate by x percent. And they were like, oh, yeah. This is very scary. But just kidding.

Monthly Burn Rate and Headcount

Nathan Latka

02:34That's awesome. What are you what are you burning right now per month? Like, a $100,000 or something very little?

Mathilde Collin

02:41>> Very little. 250,000, I think.

Nathan Latka

02:43Got it. And most of that, imagine, is headcount or is it variable marketing spend?

Mathilde Collin

02:47>> Mostly headcount. And because we've been growing the team. So when I was on the show last time, it was 20 people, but we ended the year with maybe 22 people. So didn't hire much in 2016 and then 40 now. So we've doubled the team in just a few months.

Nathan Latka

03:02Yeah. And then pulling that through to to average revenue per user per month with 1,700 customers doing $700,000, you went from about a $200 ARPU. Now you're up to what? About a $412 ARPU. Right? Yeah. Per month. Now I wanna dive into well, actually, before I dive into how you've tripled so quickly, because it's impressive. And and for those of you that don't know what frontapp is, maybe we should hit that as well too. But, give

Gross Churn and Net MRR Churn

Nathan Latka

03:21us give me an update on gross churn per month. Has that come down, or where is that at now?

Mathilde Collin

03:25>> So churn has always been very low. So we track net churn, and it's always been negative. It's remained negative.

Nathan Latka

03:34How negative?

Mathilde Collin

03:34>> Track minus 10%.

Nathan Latka

03:38Annually?

Mathilde Collin

03:39>> Monthly.

Nathan Latka

03:40Oh, great. Okay. Great.

Mathilde Collin

03:41>> Yeah. Yeah. And then we track user churn, and that's always been around three and a half, 4%. So number of customers divided by I know the churn divided by number of total customers. And but what we see is Right? Yeah. That's monthly. And it's mainly small customers. So our MRR churn is very low, and this way our net churn is negative. Yep. So it's it's been stable. It's not something that we're actively working on.

Nathan Latka

04:09Yep. No. And, look, that's really stable. And, guys, I just wanna reiterate that lesson in case you guys are like, my god. Nathan and Mathilde, they're going through all these acronyms. I don't know what Nathan's talking about. What's happening, and I I believe, Mathilde, correct me if I'm wrong, in your businesses, she's got a lot of, like, people that come in and pay very little per month. And so those people will churn off. Right? The ones

04:28that pay her more per month, which are teams with, like, they call it more than five or 10 seats, are very, very sticky, which is why negative net churn is can be negative. But gross customer churn, which is just a number of customers without looking at what they pay per month, right, the gross customer churn can be negative 3%, but you still have a healthy business that's tripled. Mathilde, is that right about right?

Mathilde Collin

04:48>> That's exactly right.

Gross Margin and Cost Structure

Nathan Latka

04:49Awesome. Awesome. Awesome. Talk to me real quick. We didn't we didn't ask about this last time. What's your gross margin? Do you have any weird costs that we wouldn't know about, or is it pretty high?

Mathilde Collin

04:58>> No. Not nothing no weird cost. Like, the only thing is Amazon as a SaaS company, but that's really the only thing for us.

Nathan Latka

05:04So what's your margin at? I mean, you're 86, 87?

Mathilde Collin

05:08>> Yeah. 88%.

What Front App Does

Nathan Latka

05:1188. That's great. Yeah. And we jumped right into the numbers because we have a history and we know each other, but I I don't wanna take my audience for granted who's new. So what does frontapp do?

Mathilde Collin

05:20>> So frontapp is the easiest way to manage a shared inbox as a team. And a shared inbox is an email address like support at, contact at, or a Twitter account, Facebook account, a Twilio number. And, basically, we just make that easy to centralize everything in one place and have several people managing incoming inquiries.

How Front Tripled MRR: Land and Expand

Nathan Latka

05:38There you guys have it. Let's talk about this growth because it's impressive. How did you triple MRR to 7 from $240,000 to $700,000 in in, you know, twelve months?

Mathilde Collin

05:48>> So we did two things. One is we landed and expanded. So of I think over a third of our growth, net of churn, is coming from existing customers that have been upgraded to either new plans or just adding new teams. Great. So for example, we work with HubSpot. HubSpot HubSpot started with one team on front, their customer success team, and now they have about, I don't know, fourteen, fifteen teams on front. Uh-huh. So that has been

06:18>> driven by our customer success team. And the second thing that we're doing is we have a marketing team now. So it's been five months since we have three people in the marketing team. So we've done more co marketing, more advertising, more content.

Paid Acquisition and AdWords Strategy

Nathan Latka

06:35Which advertising channels are working most effectively for you?

Mathilde Collin

06:39>> AdWords.

Nathan Latka

06:39Really?

Mathilde Collin

06:40>> That's yeah. We yeah. Yeah. It's it's mostly the only one that works as well.

Nathan Latka

06:45Yeah. And what are you spending per month on paid acquisition, would you say?

Mathilde Collin

06:49>> 15 k.

Nathan Latka

06:50Okay. And what do you measure? What's important for you? Are you measuring new trials or marketing qualified leads, or do you just go right to how many new paying customers did that 15 k drive?

Mathilde Collin

06:59>> We track SQLs, so sales qualified leads, and those are mostly trials. So even if we've diversified the source of the leads, so for example, someone signing up for a webinar is now a a lead that could be a sales qualified leads. The trials are still, like, the number one source for revenues.

Trial Conversion and Sales Cycle

Nathan Latka

07:18And how many trials do you need to convert one kinda new paying company or new company new business?

Mathilde Collin

07:23>> So seven trials.

Nathan Latka

07:24Okay. I I mean, that's pretty effective. And how long does it take you? Mean, walk me through that process. After your marketing team spends the money or you get organic inbound, you get seven trials, what happens after that?

Mathilde Collin

07:34>> So there are two scenarios. Either it's an enterprise company and then the sales cycle will be pretty long, a few months, or it's not and it's an SMB or mid market company. We have a two week trial. So the goal is for a salesperson to help our trials get set up. Because at the end of the day, if your account is set up in the right way, there is a very high chance that you might convert.

07:57>> Mhmm. And in those case, the sales cycles are just three weeks. So two week trial that we sometimes extend, and so that's why it's and sometimes it take a few days to make a decision. But that's really mainly it. And enterprise for us is new, so we're now the sales cycle is a bit longer. Mhmm. But, historically, 95% of our customers close in three weeks.

Front vs Slack and Intercom

Nathan Latka

08:21Why are people using you guys over Slack?

Mathilde Collin

08:24>> So Slack is good for synchronous communication. So I want to tell you, do you want to have lunch with me? Then Slack is great. But Front is better for asynchronous communication. And asynchronous means every communication that you're having externally, so not internally, should happen on Front. You will not chat with your leads, your customers, your candidates on Slack. That's why you use Front. And and even with your team, sometimes you shouldn't write a Slack message because

08:48>> it can be distracting. And so if I want to ask you what holidays are you planning on having this year, I'd rather send you an email rather than distracting you on Slack.

Nathan Latka

08:56So Okay. Let me let me refer that that's really helpful. So let me ask another question. Why would somebody choose Front over intercom?

Mathilde Collin

09:04>> So that's a better question. I think

Nathan Latka

09:07Let me rephrase that. You're you more you compete more with intercom than Slack.

Mathilde Collin

09:12>> We do. But Intercom founders are very good friends of mine, so we try to love each other as much as we can. But I think the main reason is Intercom is good for customer communication, but what what we're trying to do is having more of your communication. So customer success, product, sales on Front. And on Intercom, you don't usually have your sales team. You'll use Yesware or ToutApp, which will make information siloed. And so the whole

09:39>> point of Front is it's an email client, and everyone as you as your company already use Gmail. So let's take what's great about income, which is the collaboration that's enabled and the delightfulness of the app, And let's make that with Gmail because everyone is using it. And so now you have companies where customer success teams can collaborate with a product team, that can collaborate with a sales team, that can collaborate with a support team. And every time

10:02>> you're interacting with someone, you have the whole history of what happened cross teams with that person.

Nathan Latka

10:07Do you find people like HubSpot will buy you plus intercom plus like, like, are you part of a stack people are buying, or will people replace these guys with you?

Mathilde Collin

10:18>> So I don't think they will buy us. I think at the end of the day, our mission is to No.

Nathan Latka

10:23No. No. Sorry. Not acquire you. I I mean, as a as HubSpot as a customer of you. Are they buying a a marketing stack, or are they just buying frontapp and that's gonna replace intercom and other tools they might use?

Mathilde Collin

10:35>> No. So that's the second option that you said. So most of the time, they will use front to replace, in some cases, email half of the time. In other cases, help desk solutions and Intercom is part of the help desk solution.

Nathan Latka

10:48Name name a few of those.

Mathilde Collin

10:49>> Zendesk, Desk, Freshdesk, Help Scout, etcetera.

A Hypothetical Buyout and Founder Mindset

Nathan Latka

10:53Got it. Interesting. So so now I'll go to where your brain already was, which is interesting and telling. If HubSpot comes to you and writes you so what you're doing, $700,000 per month, so that's what about a they call it a $9,000,000 ARR, give you a great multiple because you're healthy. So let's do 10 x. So let's say they offer you $95,000,000 for the company. Do you sell? No. What's the number?

Mathilde Collin

11:12>> I don't know. Truth is I think it really depends on the confidence that you have in the business. At the end of the day, I know that I'm not saying I will never sell, but I think I will sell when I'm not as confident as today that Front could be a huge business. And so that's why there is no number I can tell you right now where I would say also, another thing is Front makes me

11:34>> very happy, and I think that has no price.

Nathan Latka

11:36I can tell you have great energy.

Mathilde Collin

11:38>> Thank you. It's also because I'm going back to France in a few hours.

Nathan Latka

11:42Where where where are you right now?

Mathilde Collin

11:44>> I'm in San Francisco right now, but I'm going I'll be in Paris in twenty four hours.

Nathan Latka

11:49Is that where your that's home?

Mathilde Collin

11:50>> Yes.

Nathan Latka

11:51What's your team size over there compared to in San Francisco?

Mathilde Collin

11:53>> Zero. We don't have a team in Paris. I'm just visiting.

Nathan Latka

11:56Oh, very cool. That'll be exciting. Yeah. And how old are you? Give us some context here.

Mathilde Collin

12:02>> 28.

Nathan Latka

12:03Love it. Such a cool story. And for people that didn't hear your first interview, how how when did you launch Front, and how'd you get into the space?

Mathilde Collin

12:11>> So we launched two years and nine months ago, I think.

Nathan Latka

12:16So 2015, early twenty fifteen?

Mathilde Collin

12:18>> Yeah. And

12:21>> what how did I enter I mean, the thing is, the reason I started this company is because I wanted people to be happier at work. And so I thought I will both create a company where I hope people will enjoy coming to work every day and work on a product that would change how people work. And so I wanted to do a SaaS products. I was using email to get work done, and so that's what I

12:40>> wanted to change in people's life at works because most knowledge workers are using their inbox most of their day.

Nathan Latka

12:48Yep. This is gonna be, I think, a hard question for you because I don't think you think like this, but I'm gonna try and force you to and see what happens. A lot of people when they're where you're at, and I can sense the energy. Right? There's a lot of optimism. Everything is going well. Do do do. A lot and the the example I can think here is Mark Cuban. Right? When he sold his company to

13:08Yahoo, he was on high, but he immediately protected his downside by selling basically put options to Goldman. And then when Yahoo stock crashed, right, he still made billions of dollars when he would have made almost like very, very little if he held onto the stock. So he even in a time when he was super optimistic right after a sale, right, he still protected his downside. How as a founder who's part of a SaaS company that's well

13:33funded, 8,000,000 in the bank, tripling every every, you know, fourteen months, right, could probably do anything. How do you think about creating some personal wealth for yourself so you can be happy no matter what happens with the company moving forward?

Mathilde Collin

13:48>> So to be honest, I've not thought about it yet because the company is still very young, we just raised a series a, and it's very rare that founders would cash out any money during their series a. So I guess the also one thing to know about me is I've never had a lot of money and always been very happy. Yeah. So, of course, I I care about making money at a point, but it's not, like, a

14:12>> huge priority for me. So right now, I'm confident at least that we can do a series b Mhmm. With and I think that's probably the moment when I'll think about putting some money aside.

Nathan Latka

14:22So so can I be specific there? When you go raise a series b, maybe you'll say, hey. I have x percent of the company. I'll sell 5% of my shares and put a little bit of money to safety for, you know, when I'm 80 years old and don't wanna work anymore.

Mathilde Collin

14:35>> Yeah. Exactly.

Fundraising Plans and Series B Timing

Nathan Latka

14:36Got it. Very cool. Are you raising right now?

Mathilde Collin

14:40>> No. Because we still have 8,000,000. So I

Nathan Latka

14:42You're smiling. You are you are just because you have a lot of money in the bank doesn't mean you don't have investors writing you term sheets. Right? If you're tripling every eleven months, you you have some inbound.

Mathilde Collin

14:53>> Yeah. No. I I do have some inbound. I have a lot of inbound, but I think we can still do better. And so I'd rather wait till probably the end of the year and make more progress and prove more things. For example, enterprise is new new for us, and so I want to see if that's scalable or not. And then I think we'll be in a better position to raise.

Press and Its Real Impact on Business

Nathan Latka

15:14Entrepreneur.com has recently brought me on, so I've started writing for them and doing a lot of content with them. I I'm curious about this. I recently did an article. It did really well, like, 6,500 shares. I know you shared it a ton. You were part of that list. Did were you actually because people always obsess about press. And then sometimes it creates a spike, sometimes it doesn't, and it's just a lot of noise. Was that actually

15:33helped? I mean, did you see a movement in your business that day when that thing went live, or is it just a nice to have?

Mathilde Collin

15:39>> No. I I see some movement, but I think what people expect is different from what happens. So I think with press, people expect that they will have customers and people going to their website. Website. What we see is it triggers the interest of candidates and investors. That was that what press is good, at least for us.

Nathan Latka

15:56That specifically what you saw that day that article went live, you just saw more inbound people wanting to work for you or investors or things like that?

Mathilde Collin

16:03>> Yeah. And then it's just a good reason to reach out and saying, congrats. By the way, let's keep that conversation going about raising your next round.

Famous Five Rapid Fire Questions

Nathan Latka

16:10Yep. Very cool, Mathilde. Let's wrap up here with the famous five. Number one, what's your favorite business book?

Mathilde Collin

16:16>> Business book? Zero zero to one.

16:19>> Zero to one.

Nathan Latka

16:20Good one. Number two, is there a CEO you're following or studying right now?

Mathilde Collin

16:24>> Patrick Collison, as always.

Nathan Latka

16:26Stripe? Yes. Yep. Number three, is there a favorite online tool you have? Like, besides your own, like maybe Acuity scheduling?

Mathilde Collin

16:35>> I've been, I think Slack is the honest answer.

Nathan Latka

16:39Number four, how many hours of sleep do you get every night?

Mathilde Collin

16:43>> Eight and a half.

Nathan Latka

16:44Oh, very good. Okay. And, current situation, married, single, do you have kids?

Mathilde Collin

16:49>> I have a boyfriend that I've been dating for seven years now.

Nathan Latka

16:52Wow. Okay. So not married and no kids, but in a relationship.

Mathilde Collin

16:55>> Exactly.

Nathan Latka

16:56Okay. And you said you're 28. So last question. Take us back eight years. What do you wish your 20 year old self knew?

Mathilde Collin

17:02>> I think I wish it knew that it would be hard to start this company. And I think when I'm chatting with you, it seems easy. Yeah. And I think I want to remind people that it's not easy, and I'm struggling every day. And I think if I had known it before, that would that would have prevented me from thinking every day, oh, is it normal to be that hard? Yeah. And I think it's easy in fifteen

17:25>> minutes to just highlight the things that are going well, but, it should people that are struggling should still be super motivated because that's what everyone goes through.

Nathan Latka

17:34There you guys have it from. She's got a ton of energy because she's about to go back to Paris in twenty four hours, but she's also happy because her business has tripled over the past eleven months. That's frontapp. Gone from 200,000 in MRR to about $700,000 in MRR. Serving out 1,700 customers paying on average $400 per month. Gross margin is about 88%. Customer churn in their cohorts that are paying less is about 3.5%, but they have

17:56net negative churns. They're doing very well there. Team sizes doubled up to 40 people. Again, founded, many, many years ago, now 28, really living a, exciting, exciting time for their business. Mathilde, thank you so much for taking us to the top.

Mathilde Collin

18:07>> Thank you so much.

Nathan Latka

18:09You bet. What do you think, man? Have fun?

Mathilde Collin

18:11>> Yeah. It was great.

Nathan Latka

18:12When does your flight take when does your flight take off?

Mathilde Collin

18:14>> 3PM. So it's 10AM right now.