How Latakoo CEO Paul Adrian grew to $5M revenue and 142 customers in 2024.

hello everybody my guest today is paul adrian he's worked with video and big data files for three decades and understands the complexity of sharing those files his experience in the broadcasting and cable industry and the contacts he nurtured through the years helped him establish lataku inside some of the biggest broadcasting companies he's won numerous awards including emmys for investigative journalism has a bachelor of journalism for the university of texas and an mpa from the harvard kennedy school with a focus on entrepreneurship paul are you ready to take us to the top absolutely all right tell us about the company what do you guys do and how do you make money so so lataku is a cloud-based platform that's the fastest easiest most secure way to get video from anywhere to anywhere regardless of file size or connectivity now what that means for our customers and our customers by the way are major broadcast media companies some of the world's largest media companies and they have folks that go all over the world photographers they got to get the video back home on deadline and the highest quality possible so what we do is we help them upload the video from the ground to the cloud we have patented technology so that that experience is the best experience possible for that circumstance in our cloud it's a cloud collaboration platform where thousands of users with an organization can work and meet together over video but what we're doing is we're notifying folks by role of video movement that's important to them they can also transcribe and comment on the video in the cloud and then from our cloud and this is what's particularly important to us because we're a video delivery workflow the video gets pulled through the firewalls through the dmz's gets on the protected corporate network and finally lands at the stations or the news bureaus or the production studios on iraq you know right beside these asset managers the broadcast systems that are the heartbeat of these stations and so we transcode the video we inject it into their avid our grass valley our delete we send the associated metadata and transcription data if that's been collected as well so paul when we do this so like i'm not a big broadcaster but we've done this before we've have film crews across the country and they have to upload large video files quickly and we use drive for that the biggest issue we have with this really is just actually connection speed because the upload takes forever do you have some very unique thing you've built where the uploads are faster or do you speed up the wi-fi somehow that's that's definitely the heartbeat of what we do nathan um first of all you know there are variables the variables are video all shapes and sizes internet connectivity all shapes and sizes hardware all shapes and sizes and that continually changes and there's not one solution that works for all those variables so what we do is we first we check the internet to our infrastructure use a couple different protocols tcp and udp automatically select the one that's best for our customer and then we compress the file we give them control over that compression to meet the standards of their organization but we have a patented simultaneous compression and upload so i would break the file up encode the chunk upload the chunk to a network of edge servers so wherever you are in the world we're gonna get that video to the cloud quicker than you could using some other tools very interesting really interesting okay and how do you price for this thing what's someone going to pay on average per year for this so our average customer pays us about a thousand dollars a month our annual customer value is about 11 250 today okay very good and when you launch the company what year 2010 and that was yeah 2010 that was a very beginning and also the beginning of development on this product because we come from the broadcast background we had connections were able to get customers pretty early major customers that would help us really co-develop this product in terms of what do we got to do to meet their needs and how many customers today 142 customers oh very good okay so 142 customers i mean can i do the math 142 times a thousand about 140 grand a month right now and what'd you scale from a year ago what were you doing per month a year ago so we've grown this year about 25 30 that's great it's about 100 grand per month a year ago something like that that'd be correct yes that's great he's reading notes which means paul you've listened to the show before you're ready for this i've been listening to a lot of nathan latka recently do you are you are you enjoying you don't get sick of it i don't we um uh my co-founder jade carrion is also my spouse and we live in austin right down on lady bird lake and there's this wonderful 12 trail and we run on it all the time so it's like an hour run so this morning for example i got four nathan lotkas pretty fantastic i love that i'm glad you're enjoying it thank you for that okay so healthy growth launched in 2010 have you bootstrapped the company or raised capital so we did raise capital um in the beginning raised a couple of million dollars primarily from uh team members but also from angels primarily and we ran through that pretty quickly you know because of the development cycles and early you know trying to push push push maybe before it's ready to sell and so you know we got to a point where we need to figure things out and sort of forced austerity um helped us build a profitable company so as of 2017 we went profitable and for the last two years that's great absolutely profitable so cash flow positive and so total funding you said it was about a million or a million too about yeah about 2.3 about 2.3 million total okay very good but casual positive today and how many people full-time i'm sorry i missed that question how many folks full time about a dozen about all here in austin no we have some in austin some in san antonio and then we're distributed netherlands ukraine india um all over where we find talent very cool talk to me about churn i mean do you see meaningful churn and what is it so we are a mission critical workflow nathan i mean they really bake us into the heart of their systems and so our turn as a result is extremely low our logo churn is on a monthly rate about point four percent and then do you have meaningful expansion revenue year over year to customers grow or they kind of they stay at a grand a month no matter what year they're in i would say that's our primary growth today is expansion and so we have a negative net revenue churn rate of about 1.7 minus 1.7 per month so on an annual basis that's about minus twenty percent so what that means um in a sense is a buck that we had from a customer a year ago we now have about 20 from that customer this is great i love when i get a guest on who's listening to the show because they know i mean he means he knows what i'm going to ask before i'm going to ask it it's great so said differently this would essentially be net revenue retention of 120 or actually paul you said it better than i even say which is a dollar in today from a customer turns into a dollar 20 after 12 months which is great um talk me talk to me about how you're getting them in the first place so what's your fault in cac so our cac is um nine thousand right just under nine thousand dollars today so that's about a nine month payback period and where yeah so where are you spending most that money is it you traveling hustling closing deals or what yeah it is i mean because um in terms of sales you know we're a small team today and and to this point the sales has primarily been myself my co-founder you know working networks that we know and uh and the rest of the team you know marketing and finance on the inside but the reality of our growth is our early customers expanding usage and so these are very large media companies we get a part of it then we get another part of it then we get another part of it or they test us out you know in one place i'm at a couple of stations and they say hey let's expand this nationwide the other growth thing we get today is you know somebody leaves a customer where they're using us and they go to another place where they're not using us and they say hey there's a solution that solves the problem that we have and so they bring us into places we are also a partner with a company called avid and avid is kind of one of the preeminent makers of the systems that broadcasters and major production companies use to edit the video and to go to air we're certified solution and we're in their price book so that gives us access to their network of direct sales and resellers in more than 140 countries and that's beginning to bear fruit we've been working that a long time interesting okay good so avid is a big channel for you guys talk talk to me about driving growth moving forward so you have a cac you have a nine month payback i mean are you raising additional capital to put more money in those channels or or is it not possible so so what we're doing if you look at you know our size and our growth what we found is um that because we became profitable we have access to a different kind of funding and so we are right now going through um a raise for debt financing which firm are you working with um we're working with a bank actually in arkansas which is kind of funny given that i'm in austin in austin tech place but um you know the interesting thing about debt financing is um you know there's this whole market that's sort of blown up recently where folks have figured out that sas companies with reliable revenue but without kind of that um infrastructure that you you know need as collateral are actually a really good bet and so that's what we've done today and we did folks like abel here here in austin and then we did credibility right now and but you still you get a rate that's higher right you get a rate that's like 12 13 15 probably so now we're going after sba money and that gets us down to like you know seven eight percent and a ten year payback so uh we can get a lot more capital and pay basically the same thing we're paying today which will allow us um going forward next year to expand and and to to spend the money on technology but also on sales and i've heard of paul i've heard the process though to get the sba stuff is a pain in the ass in terms of the paperwork and the time and all that stuff i mean has it been pretty quick for you um there are some banks that um make it easier on you and we're working with a bank like that right now and i kind of i'm a little bit hesitant to tell you who it is don't name the banks yeah we're still going through that process and i don't want to you know do anything that might hurt it but but they're phenomenal in the sense that um they they've realized that companies like us could be of value to them do they take covenants warrants no no no no i'm not at all you guys have to personally guarantee anything and i'm missing a question if you're asking a question i think the screen just froze that's okay paul do you guys have to personally guarantee anything um yes i mean again it is it is attached to the company but it's also attached to the founders so there's other stuff we've got to throw into oh this is high risk this is high risk stuff have you not looked at any of these venture debt firms that don't require personal guarantees avenge your debt though you typically need venture and you need um not always you don't need vcs don't always have you did i introduce you to lighter capital well see the thing is lighter capital we have we have spoken to them and sort of the royal royalty financing um sort of road and they're one of several that are out there that that do that but it's still if you look at the payback you're looking at at a 3x to a 5x um expense on the capital that you get and so doing it the way we're doing it we get a much lower wait wait what do you mean by that so the typical rates at lighter that they have a repayment cap of 1.3 to 1.5 x typically which means if they lend you 100 grand you got to pay them 130 grand over three years up to 155 grand is that are those terms that you saw or no the terms we saw and we actually spoke to them it would have been more like a hundred percent um payback so it would have been um twice what they gave us we would have to pay back and others we've seen have been like in the three x uh category over what period so like what period of time would you have to pay it back well um i mean it's typically like a three year three year [Music] yeah the nice thing is there's no personal guarantees right that's that's the kicker that a lot of entrepreneurs it's the big thing for them that's that's true but i mean this is a risky endeavor right i mean if you're an entrepreneur in the first place you are sort of saying i'm i'm willing to take this chance and i'm gonna push hard and i'm gonna make it happen and you know so that's where we are i like it very good all right paul let's wrap up with the famous five number one what's your favorite business book well you know if i look back when we started this thing and and i you know transitioned from 20 years in journalism to entrepreneurship and so you know i read a ton of books at the time you know folks like robert childani uh influence the science persuasion of course crossing the chasm jeffrey moore and i remember those books today so i like those but to give if you were to ask what am i listening to today or what am i reading today it's stuff like this i want to listen to ceos who are out doing it and hear their experience and so we listen we listen to you um also read read hoffman you know this masters of scale is just a fantastic podcast and continually listen to that and get feedback from real ceos you'll have to watch carefully uh related to reid and i coming up here in the next couple of months i think you'll be pleasantly surprised on one of your jogs around the austin lake oh awesome all right number two is there an under the radar ceo you're following are studying i don't you know under the radar i don't know that i would say under the radar i will say that the folks who inspire me are folks like well we're here in austin uh whole foods john mackey you know starbucks howard schultz uh folks who are who realize that you can capitalism doesn't have to happen at the expense of others that you can make the world a better place with a profitable company so those are the folks i want to emulate number three what billing tool do you use what billing tool do we use uh we use braintree and quickbooks braintree and quickbooks number four how many hours of sleep to get every night i do my best to get eight that's good and what's your situation married single kiddos married uh jade curion co-founder is my spouse and we have one child a daughter named lark and atlanticu is a type of art found in south africa so this family is all in in every way i love it and how are you how old am i uh 50 what last question paul what do you wish your 20 year old self knew uh i would tell my 20 year old self to do this to become an entrepreneur much earlier in the life cycle guys start sooner coming from paul got out of broadcasting and said you know i'm gonna solve this whole file problem you know people are teams are spread out files are getting bigger and bigger internet connections are not strong well today's got over 142 major broadcasters publishers outlets using them paying about a grand a month so 142 grand per month in sales up from about 100 grand per month just a year ago cash flow positive as of several years ago they raised about 2.3 million early on they're scaling nicely now though with their team of 12 in austin san antonio and other remote locations net revenue retention 120 nine month payback spending about nine grand to get those customers paul thank you for taking us to the top thank you