How Homemaker CEO Sebastian Karlsson grew Homemaker to $675K revenue and 45 customers in 2018.

hello everyone my guest today is sebastian carlson he's a go to market specialist with within vertical sas or b2b as partner in serendipity one of sweden's most well-renowned private incubators he's worked and implemented a number of go-to strategies for sas companies he likes to work close to customers revenue streams and where there's high acv today's focus on a company called homemaker dot io sebastian are you ready to take us to the top yes we are all right good what does homemaker do and how do you guys make money uh we make money by selling our product uh to product developers so real estate developers is our uh main customer and then we focus on getting closer and closer to uh to the heart of our customers business so we have four different modules today we can sell all the modules standalone uh we have one for for helping our customers with creating more leads when they sell apartments and we have one that creates value when when they get new revenue streams digital revenue streams from from add-ons when they have bought an apartment and we also have um uh one module that take care of the guarantee after they are moved in and also we're looking into the renovation so we have customers in in all of these segments and and we we think we might also going for for the crm focusing a lot of on on the the real estate uh business help me understand how a crm in real estate would be valuable you know someone buys a home and that lead in your crm might not be valuable again for another five six ten years when they want to buy another house yeah valid point but but we're looking for and also want to to create or or at least talk about them to them i mean the product developers to create new revenue streams because they don't really focus on on the one who's buying department as a customer but they still have a lot a lot a lot of customers that they could actually uh get to sell more more services to like like you you can sell furniture you can sell you can sell renovation opportunities you could sell you could sell uh food uh amazon need uh need uh places to to get into to the apartments or or the or the housing associations there are there are multiple multiple opportunities but we have just like scratched the surface for for for this business okay so brokers are the ones paying you for these many different modules which modules you're most popular right now in terms of revenue it's actually a homemaker service which is the most boring one it's just for taking care of the errands and the guarantee errands when something is broke and it's not it's not the brokers that pays us it's the product developers okay the project developer yeah exactly the one who is who's building the developer the developer yeah exactly and you said your main revenue stream is the homemaker service so is it is this not a sas company it's actually it's it's different it's just a service company no no everything is also so the service to guarantee it's like it's like a complex fresh desk uh our solution so so we're selling this b2b again but uh of course we are we are um including the the consumer in this in this year so we are we're just uh a software as a service company and taking away all our consultancy streams as much as we can and when you look at kind of what the average developer might pay you per month or per year give me an average i'm sure you have a bunch of different price points but what's the average yeah i think we're around 15 000 per year per customer approximately and we have quite a good and net revenue retention with our customers because we have as i said for standalone products that we can sell uh throughout the circle or process so so um sebastian what's what's good there what's good uh i think we we should go up to around uh 20 000 to 25 000 per year for for the type of uh our our time is so small so we need to hire the the annual contract value of course so so when you look at the code of developers you signed up exactly a year ago in october 2017. you know those signups can either expand and go up to 30 000 acvs or they can also contract or churn totally so when you look at your net revenue retention what is that around 160 percent 116 or 160. now 116. 116. that's pretty healthy though yeah and and we are we have just taken in some some capital informal round two it's a revenue based loans which which is quite new here in sweden and and we just took that money and putting it into uh r d for for us to to take a bigger share of wallet from our customers because there are so many analog processes today in the in this business that we can digitize so much more so i think our nrr will be um a key kpi for us to to improve our business well and how many developers are you working with today in terms of ones that are paying uh we are we have 45 customers today okay and and the most most of them is project developers but we also have some construction companies who is buying our uh our product okay so 45 of these folks paying 15 000 acvs or about 1200 bucks per month that puts you about 56 grand per month right now in terms of revenue is that right yeah your math is good okay or or about 700 grand in an annual so the reason i ask that because typically these revenue based loans you have to hit a minimum mrr before they'll kind of talk to you so which firm which firm do you decide to work with for that revenue-based financing round two capital uh round two capital yeah so they are based in uh in in austria but they are um the founders is uh ella has a history of sweden and also we have a good relationship uh throughout the history with uh with the serendipitous was the incubator behind homemaker as well interesting okay so these revenue-based financing things can take a bunch of different kind of terms and angles typically there is some form of repayment cap usually it's like 1.3 to 1.8 over like three to five-ish years and then you're paying back as a percentage of gross receipt each each month usually between caught three percent and like nine percent can you kind of dial in the terms for us would you agree to i think you were quite spot on i will not say exactly what we what our terms are but uh but you are really really in the in the range where we pay but we we finance that because we have if you look in uh what's um what will the range be for for price price index rates per year uh we are actually paying our mortgage or or um or the the interest with our with our price index rates every year so your pricing sebastian i don't understand that sorry you're paying it with your what your what index at price index we always raise the price index every year from for our customers oh so price index is your way of saying just what your price point is yeah i know exactly so if if we take for example a thousand dollar per month and in one year and then the following year uh because we have quite long contracts so they they even if they're not even when they extend or have a longer contract every year we raise them by x percent i will not go in exactly how much the percentage is but uh it's more than what you're saying those it's more than the interest rate yeah of course i see interesting are those accelera the natural accelerators built into your pricing plan are those built into the contracts up front or do you renegotiate those every 12 months no they're built in to the contract that's great so each contract is how many years typically uh we we have actually we have quite long contracts now i think we have an average contract length of around 24 months okay okay but some some are longer actually that's great now and they're not always paying those all up front but what you're saying is every 12 months you have like a natural five or maybe ten percent accelerator in terms of you know increasing price exactly interesting okay very cool um and and give me a general sense i won't i won't push harder on the exact terms on your loan but i am curious like did you go more for sorry sorry i lost a little that's okay sebastian i was gonna say i'm not gonna push too much harder on getting your terms of what you got from round two but i am curious did you go for a longer repayment time frame of call at five years and a higher repayment cap or did you get a shorter kind of payback period and a lower repayment cap we have actually quite more of a mix where we can pay paid back um quicker but then of course uh then we will have a a smaller cap for them for us to repay them or otherwise we can't can spread it out for for for a continuous range of years but but then of course it will be much much more expensive for us no warrants or covenants no and no personal guarantees no that's good so you'd recommend round two then yeah i would recommend round two uh all the time and especially in the in the early stage uh because capital uh or or or money is really really expensive then so um this is a really good way of us to take take the first steps together with them and we can also we have also negotiated in our terms that we could if we want to uh continue to um to borrow on our uh on our ar yeah yeah yeah they they'll they'll kind of do a refi or recap as you grow exactly that's great put this all on a timeline for me when did you launch the company what year uh 2015 we were go to market ready okay and what are you at today in terms of total team uh we are seven people and we have two uh part times as well that's great so seven folks and is everyone in sweden or stockholm are guys spread out no everyone is in sweden uh we have one guy in poland but we are quite a multi-ethnical team though that's that's good and then besides this besides this financing are you bootstrapped or have you raised bootstrapped that's great okay and did you uh the the funding that you have now available to you i mean did you do like 100 or 500 grand how much did you raise there uh we took in now i just need to do this in dollar uh approximately 120 000 dollars we just took in and that's just for cover there we need more r d that's that's where we focus right now got it so you'll spend that on what like developers and things yeah developers and then also some ui ux interesting um talk to me about growth if you're at about 56 grand today per month or about 700 grand in ar where were you exactly a year ago in october of 2017. uh we were approximately half the size of that so we have a year-over-year growth of around 100 and that's what we need to keep uh going forward and and as a natural next step we need to of course leave the the nordics and go into uk and germany yep interesting so again growth is great this early you mentioned you have natural pricing accelerators which are driving expansion revenue walking through those signing up a new customer how do you find one of these new customers what's the sales cycle typically we have around now say a size sales cycle is around 45 up to 120 days actually depending on which of their modules some of the modules are more complex than others we need more c-level manager to take the decision actually but uh approximately between 45 and 120 days we work with direct sales we educate our market quite a lot so it's it's quite expensive right now i think we have a cost of customer acquisition around five thousand dollars and but now we are really um increasing uh the marketing money that we that we didn't actually earlier did so um we will try to lower that to approximately two thousand five hundred dollar that's the target for our cost of cost acquisition next year okay but five thousand right now and if people are paying 1250 per month i mean you're getting paid back still though in like four or five months right yeah yeah and and of course we're getting uh 12-month payment in advance all the time so it's it's easy for us to to still scale but but we need to lower that and we're focusing quite a lot now on email marketing we're doing account based marketing and we're also going into to going um more in-depth with the seo in in different markets and we we haven't been really really good that and i think sweden has a sauce sauce market we are not really as good as you are over there in the u.s with the marketing and lowering the cost of customer acquisition you might be giving us too much credit sebastian we'll see [Laughter] all right let's uh let's wrap up with the famous five number one what's your favorite business book how to win friends and influence people number two is there a ceo or uh or founder that you really follow or like uh i actually like a company in sweden called fort knox i don't know the ceo but fort knox has an amazing go-to-market strategy which i really really is fond of which is why they have they have actually teamed up with with the big force but pwc uh deloitte e y and um what's what's the last one uh pwc deloitte mckenzie uh yeah but they they have all all the all the auditors and and they they are selling their product for for the bookkeeping and and i think that's amazing so they put in part partnership from from the beginning little channel strategy though that's good number number three what's your favorite online tool for building your business upsells our crm marketing automation tool and also we do the invoice from there so that's that's the heart of our business right now upsales.com yeah dot see that's a swedish company as well very good i like that lots lots of stuff happening in sweden that's good all right number four how many hours of sleep to get every night i think around six okay that's good and what's your situation married single kiddos single okay no kids running around and not that you know of no no all right all right sebastian how old are you i'm 36 36 last question what do you wish your 20 year old self knew oh what should i say something really cliche but uh yes trust the process and and and continue to grind and believe in what you're doing guys homemaker dot io founded in 2015 today doing about call it 45-ish 50 gr no 56 grand per month that's up here over here about a hundred percent you know they're doing about 25 30 grand per month back in october of 2017 bootstrapped except a new uh revenue-based financing vehicle they took from round two capital based out of austria they've got about 45 customers which are developers that's who he's serving they pay about 15 grand per year with natural accelerators year over year which is driving net revenue retention north of 115 116 team of seven people based in sweden building this out about to double down on research and development sebastian thank you for taking us to the top thank you nathan