How HRForecast CEO Christian Vetter grew HRForecast to $8M revenue and 100 customers in 2024.

hey folks my guest today is chris vetter he founded hrforecast.com in 2014 his co-founder before joining the company he gained interdisciplinary industry experience in various financial and planning roles he brings with them comprehensive cross-industry experience in solving problems in complex fast-moving environments and studied business administration at the technical university at engle slot all right uh chris you already take to the top yes let's do it nathan all right so hr forecast is playing sort of the people analytics sas space help me understand how customers using you sorry can you repeat that question yeah help me understand how a customer is using you guys okay sure so well in the end hr people they love to work with people and we teach them how to also work with data so basically our whole business model is around enabling our clients to use their data that they have that they have collected about their people and also combining that with the data that we bring in from the outside which we have collected about their people their industries their competitors etc combine that and then basically there are many many use cases how they can use it interesting and are you enabling hr managers to give their teams like personality tests and things to understand how to manage them not really that's not not so much our space we're more working on skills so we would consider ourselves a skill company we basically provide algorithms so that they can explore what knowledge they have on board from all that unstructured data they have lying around we also bring in algorithms that tell them what skills will be required in the future what kind of jobs they would need for the business model so it's more about connecting the business side of things with the human resources dimension combining that translating it uh so what skills what jobs does my business model require and then looking inside where are the people located right now that have this knowledge or how can i train them how can i teach them and where can i find them if i don't have them on board understood and what's the company going to pay you on average per month to use this technology uh it really depends because we don't have one sas product but we have um two of them and we also have a kind of different revenue model uh with where they get access to our data platform so um when they we usually talk about yearly revenues rather than monthly revenues and it would be between well 20 to 200 000 per company on average but your largest customer is paying about two hundred thousand dollars a year actually more but just like a ninety percent a quarter it sounds like you have a massive sort of distribution there's a lot of yeah really really big ones how big is the biggest don't name them obviously but are we talking like a million dollar contract no unfortunately no it's 300 000 euros okay okay fair enough and you're upselling across three separate sort of product ideas and product lines which is people analytic services strategic workforce planning and in the talent marketplace platform correct exactly and we call it um knowing the future which is the data platform where we bring in our external insights planning the future where it's about combining that external data with the strategy workforce plan and then building the future where it's about making sure the employees they have are equipped with the right skills knowing planning building now when did you want this company sorry again when did you launch 2014 was the founding date it was me and my co-founder florian bootstrapped up until today but the initial idea already started in 2010 when we were just finished with university coming from siemens which is the largest german corporate uh coming from the finance and controlling departments we were all about numbers and then we realized hr people need to have some tools and hands to plan to work with data so that's how we all got into this hr domain took us four years to figure that out and then in 2014 we finally got our first paying client so we decided let's uh make a living from that where where'd the first paying customer come from um that's a good question a long time ago i think it was just you know talking talking to people um yeah advertising ourselves and then it was like sorry nothing specific than just your network there was no campaign not really back then it was kind of trial and error i mean we've been doing that for four years already then like as a hobby so we were looking into different clients uh here and there doing something some stuff for free and then in the end it was like an eight project for 18 000 euros or so so it was not too big but it was fun it was the first one yeah that's good so that's your first customer now how many customers are you serving today uh well so far we've served over 500 clients i would say right now around 100 okay so 400 that have turned why why have they left they didn't really churn but they are not in our sas model so they they would not just come to us here and there on demand which is sort of the data platform so if they're not in our sales model or they don't have these continuous yearly plans with us um they basically would do it on demand so they didn't really churn i mean some of them for sure did but most of them they come back from time to time yeah no that makes sense now you mentioned you raised capital how much have you raised no we have not raised capital okay great well that's even better so i thought you said you were bootstrapped until today so what you meant is you are still still still yeah okay yes now now can i take 100 customers on your sas platform at like that 20 000 acv that's the minimum when you guys are doing north of 2 million in revenue at this point uh yeah yeah yeah that's true what do you think you can break this year what's like a stretch goal for this year um three and a half four let's see you think you'll have it it's a good it has been really good for us uh this year so you're on you're on track growing model so it's different difficult to plan but since as you know the bigger deals if the big deals comes in then it might be just right so so perhaps sort of around that sort of two point five three million run rate today help us understand growth where were you exactly one year ago minus fifty percent oh wow so you've gotten fifty percent year over year growth where how are you getting new customers yeah that's a very good question no actually now we know that it's about seventy to eighty percent is success management so we work mostly mostly with really large global companies and obviously um if you know if you have one touch point you can get many many more right there global different locations different business units so most of them we just build from the inside so that's around 70 80 percent of new clients even though they come from existing client companies and then we do a lot with partners here and there so big consultancies that would buy our services to make a tool based what they do and then some also come from google ads and congresses even though they're virtual nowadays so these are the four main sources and of course word of mouth is also very important yeah do you incentivize the consultants that sell your product with the commission it depends mostly actually no we're open i mean we we're very flexible how to to do business but mostly no because they have their traditional business model and we bring in the tools uh where they can build a consulting around because we are not right it's not scalable it's not our core business so we bring the tools data to consulting so the pi is usually large enough that we both can have plenty of fun tell me more about your team chris how many folks uh roughly 50 like 48 49 i would have to look it up and how many engineers 30 35 they're pretty very very heavy engineering then yes we love inventions and innovations yeah it's all that's what we really love to do and how many quarter carrying sales reps uh three uh well including myself 3.5 so but the two of them we just hired actually in april so they're still in the onboarding phase well tell me more about that this is something sas founders struggle with is how to incentivize their first sales higher do you give them a quota uh yes we do and so can i ask i mean obviously what's the quota like a million dollar quota in the first year or something else it's a little lower it's um depends on the experience level so junior senior for senior would be around 750 and that would first year yeah exactly and um it would be like a 50 recurring 50 percent we call it project base which is like the data model they will not be turned but they would be coming back and ideally jump into a sas model later on so yeah 50 50. and and you know you mentioned consultants google ads your inside sales team when you add up all these expenses to come up with your cap to get a new customer what are you spending to get a customer um a lot of time for sure so i i mean um it's easy for for google ads to calculate this number but um maybe what helps is our cost of sales are around 15 um but um i think what's what's even more critical is not the spending because getting a client to be honest is really easy with the stuff we do because everybody wants to know what are the future jobs and skills but getting them really you know recurring model with the sas that's more challenging and the biggest challenge is time rather than the money of course money truck time translates into money but it does take easily over one year sometimes to get a big account because they're just like global companies with very long decision cycles and and what's your churn chris we're at revenue term um we don't measure that to be honest i mean um we have around 70 percent of the clients that we do business with they would come back a little bit more i think now yeah yeah yeah got it so maybe thirty percent churn annually again we're just talking about your sas product because you have the other on yeah yeah yeah first so for sas it's um yeah yeah let's let's keep it like this that's really we didn't really measure that that hard yet it's we're kind of since we have bootstrapped and we we kind of have our own metrics in place what are some of your own metrics well the most important metric is the overall sales because for us sales system the most important um value then other metrics we have is um the customer um net net promoter score how they like it because we know we we think more like an ecosystem so if if they buy one product from us they they would most likely come back some later time so um our tracking isn't too professional yet when it's about months recurring revenues churn but mostly how happy were they how many projects have we done with them uh and in the end are they on a on a limited model like that we risk losing them for a certain period of time or do we have them already on a on a continuous model does your expansion revenue and your bigger accounts more than make up for the 30 annual turn yeah so far yes i mean we have grown 50 last year so um but not including but but that includes new customers you've added so yeah yeah exactly i mean as i said most of the new customers they can a lot of them come from existing clients since they're huge global companies so i would say new customers you're expanding into different departments yeah yeah also interesting it's like a combination what percentage like you grew 50 percent how much of that came from expansion versus bringing on brand new customers all together would you say i think last year was a lot of new customers because we got really strong in the pharma industry so if you asked me one year ago we had like one farmer client now we have i think the five biggest pharma companies in germany are probably our clients so we kind of go industry by industry and i think it's kind of when they're ready for this these kind of questions they would look around and see who can support them so it's it's it's um it has been a lot of new industries and therefore a lot of new clients last year but typically i would say it's around 50 50. yep yep that makes sense to me now would you consider raising capital or do you like staying bootstrapped never say never i mean let's see it's not our we are not pressured to do so we're doing really good but i mean always keeping the is open are you profitable today yes yes we have been profit ever since um because that's how we um how we grow do you pay dividends out to your team members from monthly profits no we try to keep as much as we can in the company and we invested even the the founders we we try to keep as much as we can in the company how many founders are there well originally we were four of them uh when we were still at siemens and in the end two of us ended up at age of forecast the other two stayed at siemens in 2014 and they are still there and we are still here were you able to get their equity back in the company or is it they still have equity but they're not operational the letter one yeah why is that i mean would you buy them out if the opportunity presented itself i mean we for our best friends so we don't really talk about that too much but i mean if if it's time to talk about it i guess since we're good friends we'd go to beer garden have a few beers and talk about it there's nothing wrong with making your friends rich i mean that would be good that's so yeah i think what's uh what nobody would really then fight about yeah well out of curiosity you're growing you know 50 60 women's or 100 year over year you're at the 3 million run rate today i mean what would you buy the company at i better don't judge i hard to say really hard to say what makes it hard well these sums that you hear from from like the investment volumes you see and then the calculated values of companies here nowadays it's kind of extreme it's a bit crazy so i don't really believe in the these valuations i think the true values sometimes were really exaggerated so if i mean i would be happy to to go with those higher evaluations or valuations but i i wouldn't judge all right chris let's wrap up with famous five let's say let's say more more than one million plenty more let's let's uh let's see let's see maybe number one what's your favorite business book um i don't have a favorite business book number two is there a ceo you're following or studying not really okay what's your favorite online tool for building hr forecasts um i would say it is actually collaboration tools teams skype talking that's what you need is there a particular tool you use skype you said well our whole company runs on microsoft software so it's not the best one but it works all right number four how many hours of sleep you get every night uh really depends i would say between six to seven okay and what's your situation married single kids i am single to be married soon no kids okay and what's the last one how old are you oh that's of 1987 so must be 33 yes turning 34 soon last question what's something you wish you knew when you were 20 um take it even faster not uh enjoying life too much when i was a student and yeah i mean looking back at his back at that it already has been seven years with hr forecast maybe we could have done it in a little bit shorter time guys hrforecast.com hr managers use it to keep track of their team and help their team improve they did 1.5 million in run rate about a year ago they've grown out of 3 million run rate they've done this all bootstrap serving 100 north of 100 customers they're profitable team of 48 heavy engineering 35 engineers as chris and his co-founder that stayed on look to continue to build the business chris thanks for taking the top thank you very much for having me 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 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