How Honestly CEO Mateo Freudenthal grew Honestly to $3.2M revenue and 100 customers in 2024.

hey folks my guest today is mateo fruttental he's the ceo of honestly a cologne-based hr technology company who helps organizations to understand employees needs and motivations using honestly increases retention and decreases sickness rates 100 companies with 60 000 licenses used honestly by the day mateo you ready to take it to the top yeah of course so these 100 companies that are using you can you name one or two of them yeah of course one of them is for example sunrise technologies um which is like a mobile technology company or big insurances um users helvetia would be like one example and so there's a hundred of these companies using you to manage it sounds like about 60 000 employees so tell me how they're using you what are they using you for to help with their employee relationships yeah so basically we help them to understand what needs to be done in hr so we have like an employee survey module so we have prepared surveys and they send out these surveys and they have like their internal communication through honesty so we give basically the leadership of these companies a closer um yeah a closer way to reach their employees and have um a closer relationship with them so they understand what makes people leave the company what makes people stay at the company and they also use it to drive internal projects so if they have like change project they make sure it is successful and they measure the progress and what do you charge these customers on average per month a license would be like two dollars one to two dollars per user per user per month yeah okay and if you have 70 000 sort of seats today across 100 customers the team size average is about 700 per team yes that's correct all right and at two bucks a seat for 700 seats that means the average customer pays something like 1500 a month or about you know 20 000 a year i think it's i think it's 12 uh 13 yeah 1300 a month yeah okay that's great so with that sort of con and that would be about you know 15 to 20 000 a year as the average sort of acv right and with that go ahead no sorry sorry yeah it's it's more or less right yeah with that context give us more of the backstory here what year did you launch the business oh we launched it way back but we had to do two pivots until we finally landed on our business model and this model we're executing for the fourth year now so we have three yeah like three years completed and now it's the fourth year of this of this business model but we don't want to just skip to the success we want to understand the early failures too so when did you actually launch the original company so the original company 2012 will be 10 years old next month 2012 congratulations so what was the first idea so first we wanted to like just make uh surveys online and we would say for everyone hey we have the easiest way to do customer feedback and we gained many many customers with that but none of the customers were actually working so um they did like people wouldn't give feedback back then over a mobile phone and a restaurant or at like a travel agency but we had one product which actually worked very well and it was a tablet with we placed supermarkets and we scaled that up it was actually like a hardware software thing and we had thousands of supermarkets across the germany all the kit before uh tablet solution odyssey terminals yeah so we were like the number one provider for supermarkets um grocery stores and uh that business model simply um yeah it turned up to not be profitable so it didn't we weren't able to make it profitable um but we're making a lot of revenue but we had to spend all the revenue on um what was a lot of revenue how much like like uh let's say uh two million dollars per year 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 whole business that's a different valuation you can see all those when i hover over here right so the teal is what a vc would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on youtube all these datas are built from real-time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 percent of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of sas valuations than what you can get now inside of founderpath 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 so what year did you kill that business uh the same year we launched a new one so when we pivoted we said okay we will no longer focus any businesses we will get the cash but we cannot we were not able to grow it that's why we built the revenues so you killed that business in 2018. yes okay and then how did you get the idea for honestly oh actually customers came to us or potential customers came to us and said hey we really like what you do for customer feedback but we need this for employees and they explained us the problem and um since they were like different customers with the same problem we were like okay let's ask them if a solution like that would work so we build up like a mock-up and we send it to them would you buy this if if we would have this and they all said yes so we started building it and we actually signed contracts with all three of them so we had like three companies with i don't know 15 000 licenses or something three bigger companies like using the product right from the start and uh yeah that helped like actually like customers had the idea and we just said oh it's so much better than our business model that we have now that we had back then that we decided to pivot and mateo fast forward now today a hundred customers paying you know thirteen hundred dollars per month you're doing about what a hundred and thirty thousand dollars a month in revenue uh rounded yes around that and if that's today's revenue where were you exactly a year ago so we can calculate growth it was like 50 less 55 percent less okay so something like 65 000 a month in revenue and where did most the growth over the past year come from adding seats to current customers or adding new customers all together 20 to 30 uh came um from up sales and the rest came from new customers okay so like so with 20 to 30 percent of the growth yeah so so when you look at your net dollar retention right the amount you grew customers subtracted by the amount those same customers shrunk what is your net dollar retention today uh it's i think it's six percent plus something like that so churn is six percent annually no no minus six percent okay so yeah so so that's so yeah net what you just gave me is net negative churn of six percent but what i was asking was so net dollar retention is it 106 yes like based on the on the dollars not on the number of customers it's like six percent yeah yeah you're giving me a churn number and i'm asking for a retention number they're usually just inverse so i just want to be clear your net dollar retention not churn net dollar retention is a hundred and six percent correct you're expanding yes yes okay and then do you have meaningful churn but like what is gross churn before expansion oh i i don't know that number i don't have it like in front of me it's um yeah it's mostly let's say like the smaller companies at the moment it's not like there are bigger accounts maybe we focus too much on bigger accounts but um i don't have that number in head and have you built all this bootstrap...