How LMS 365 CEO Rasmus Holst grew to $40M revenue and 2K customers in 2024.

guys LMS 365 launched in 2003 as a side project by dentist at a local library they finally said well this can be sass in uh in 2016 they broke a million Revenue in 2018 today over 30 million bucks in terms of run rate up from C 18 million a year ago so caught 50% year-over-year growth they're serving 2,000 paying customers they help those customers be more productive in the micro Microsoft ecosystem those customers have over 2 million seats on the platform as Rasmus continues to scale he joined the company as CEO two years ago did a 20 million series a at a 5 to six X multiple he's now growing here with a team of 260 engineers and 14 sales hubs attacking each geography we'll see what they do next hey folks if we haven't met yet my name is Nathan ladka I launched and sold my first software company back in 2015 and went on to write a book about it which you guys made a Wall Street Journal bestseller purchasing over 30,000 copies thank you so much for that after the book I launched this show and went went on to create founder path.com I raised a large fund to do non-dilutive deals with B2B software Founders so far we've invested in over 400 software Founders totaling $150 million here in 2024 we're doing three to four New Deals per week so if you're looking for Capital and don't want to give up Equity go sign up at founder path.com for free to get your offer all right let's jump into the interview hey folks my guest today is Rasmus Holtz he is the chief executive officer at LMS 365 launched it a little over 2 years ago based in Denmark before that he was C at a group called wire for over four years and before that CEO at a group called hudle we'll jump into LMS today Rasmus you ready to take to the top absolutely good good that you want to have me here Nathan I'm ready I'm excited to have you you know it's so hard to get employee performance management right you have all these sort of uh personality tests and you have people that try and build software for it how do you f into this space um we historically come out of a learning background um so this me that actually for longer than I've been here we've been building a learning management platform uh build into Microsoft teams because we believe that learning should be where you actually meet where you at every day but then as we kind of grow with that ambition we don't just want to provide learning so essentially what we've done is we've elevated the way we think about the platform to human success and then you'll ask what's human success it's basically performance it's engagement it's learning it's your skills all underpinned by AI and note that I deliberately use the word success rather than human resource because what we really believe is happening here is you used to have a customer support type of of team that dealt with customer support but it became customer success and it became Centric to the organization how you actually dealt with that and we feel like people is almost the same like why do you want to be a human resource I should actually as a CEO invest in your success whether you're successful here or in the next company you start started by reading out a couple of companies I've been at the my journey to here should be successes maybe not all successes because will not all be successful at everything we do but successes along the way that bring you along the journey and allows you to move further and further up the rank so that's how we think about the product that's how we think about it and we actually think there's a category to be created for human success compliance training Microsoft 365 adoption tracking and Reporting these are some of the solutions that you guys offer now the company was launched all the way back in 2003 I believe and you joined a CEO more recently we'll jump into that story first but give me a sense today can you tell me a customer story uh and give me a sense of what on average a customer is paying you to use your full platform per year yeah uh our core Market is core to uper mid market so 250 to two and a half thousand users often traditional industry so often manufacturing Logistics Health Care Financial Services Services Industries those types of things so typically people with a strong Microsoft install base and they typically pay us around 15,000 for a solution that's the average we did do last per year and and one of just to be clear on that Ras sorry if someone's paying you $115,000 per year how many seats are they likely paying for a couple hundred yeah in the in the three 400s 300s okay um and then one of the growth uh pieces that we put in place here is that last year at the end of the year we acquired weekly 10 so we basically acquired we set up up the human success narrative and acquired into that by acquiring an engagement performance platform we 10 out of rexim so essentially what we did was to buy our way into building a broader platform but obviously also with the with the view that we can scale more broadly uh and get a bigger share of wallets with uh with our customers at the stands today because we can see the market is consolidating uh you want to offer more to the clients that you have uh so that it becomes a sweet more than a single trick pony that you're offering MH uh tech.eu reported that quote Danish learning platform LMS 365 is buys weekly 10 for 4.5 million euros was that correct yeah that's that's in that range it was bought half in cash and half in share so the numers is there thereabouts yes I love seeing a company you know look this is this is an American host and a European founder but so many times when I talk to Europeans they just feel like they don't want to talk about as numbers and be as aggressive as their American counterpart CEO so I love that you guys were aggressive you went out and got this deal done what feedback do you have for maybe other CEOs based in Denmark or Sweden or the EUR European looking to be aggressive with m&a remember I am I'm I am Danish by origin but I spent seven years of my life in San Francisco I work with Robin I I work with I work with Robin Daniels on a daily basis he spent 20 years of his life in Silicon Valley and I work with Henrik jebber he spent 10 years of his life in Silicon Valley so there is a bit of DNA and I will say it's a great question because I've often been been invited to uh ask answer that question actually at the the Danish Embassy in Silicon Valley when you had found us come over and I still play a part in that also in the sassist community where we will meet next week um and trying to say hey often we are a little bit timid there's a little bit of a glass ceiling in in the nordics we're super good at longevity building businesses but the burst and the window of opportunity that that Americans see and that they they cherish and hey I have the opportunity now we often forget here and thereby it becomes more of a long stable growth rather than these burst Sprints that you're able to do with the with the US and also I think perspective on that is failure in the US is a different kind of Beast if you're taking off the football team as wide receiver and you have to go to junior varsity and try come back to Varsity you celebrated more if you make it back to varsity because you endure it you fought you got back in Europe it's especially in the nordics it's a lot like hey you failed and that's a stigma more than it is an opportunity to come back and get better and I know that Nathan took my spot as wide receiver I want that back I I I'll fight for it and and and that mentality we can we can apply a little bit a lot more in the nordics to to to compete with our us counterparts we're running on yeah sorry about that R Miss I said we're running short on time here but I do want to talk about capitalization for a second because I believe if I'm wrong here that when you joined the company was bootstrapped and then you guys did a series a in April last year is that correct and if so how much was a series a for the series a was 20 million so it was actually under the premise that we have an a world-class cash flow engine uh when you sell to Microsoft customers they used to paying up front uh so that made us bootstrapped all the way up to $8 million ra yeah of ARR I should say you hit that you hit 18 million last year 18 we hit 18 million in in 2020 uh early 2023 and we came out last year with about 30 million oh wow wow okay so you grew Almost 100% uh ah 50% we ended sh shy of the 20 Mark and ended at 30 so around 50% growth Mark I got it I was 15 15 million to 30 I gu was going to give you the 100% number but 50% year year is good too around around the 30 million Mark and 50% growth was last year for us um but yeah we did it under the the um the belief that we could actually while everyone was struggling with 2021 valuations by taking in more Capital we would be able to grow faster through this and if you look at our publicly traded uh competitors like get to CH or Cornerstone we certainly outgrew them uh and obviously we also wanted to to be part of this consolidator play we didn't want to be Consolidated and just get bored we actually wanted to to create the category of human success because we do believe we have a a there's a higher value to what we do and there's a higher purpose to the mission we have but Rasmus so these these Founders though that launched the company3 I mean it sounds like they were bootstrapped they were it sounds like over 10 million of AR at the point when they brought you in I mean they have all options on the table why did they make the decision to replace themselves why' they bring you in uh the original founder was a dentist in northern part of J and he's had for a long time not been associated with the company um so essentially it was a bunch of or a group of of Highly wealthy individuals who ran the company nothing to do with SAS Industries actually they Bakers and one is a shipping in shipping and all kinds of stuff uh but they we did have some uh our chairman was from navish um which is the first ever Danish unicorn at 2.5 billion exit to Microsoft who went back and said this does not belong in a slow steady growth phase we can actually give it the burst and therefore I was brought back from Silicon Valley to come here and give that that birth so that ties a little bit back to our storytelling here and that's what we've done we've given a bit of injection of this hey we can do stuff we can be world class we can be category leading we can be category creation we can do all of the things you believe you can do in Silicon Valley because we had the financial underpinning of it we had distribution that was world class and then we can essentially build that burst of energy that it needs to to get up into to World Elite what pricing were able to negotiate you still want to manage dilution even though the company's bootstrapped and the cap table was super clean before the series a round did you raise at the traditional sort of sell somewhere between 10 and 15% of the company um we raised that around between five and 6X is what I will give you okay so that's about 100 million around 100 million valuation yeah and and I'll I'll say this the reason here again to keep a calm cap table we have a situation where we'd obviously grown bootstrap and there's lots of stuff that's not right when you grow bootstrap and we had hey do you have all these Financial things and no we don't and do you have this so the company was running immensely well but for $20 million round we had outgrown the oh we've done it on a spreadsheet but that was what we had yeah so the deal was basically with blue cloud Ventures they trusted us to be able to deliver exactly what we promised them and we trusted them to come in and help the business it was was with all the uh VCS that I've worked with over the year and that's a lot I think I've raised Capital seven times I've been part of four exits in my career U this was the most gentleman agreement type of of arrangement and the great thing about it is blue cloud Ventures are far in the money already um my existing investors are far in the money which means it makes decision uh Focus on the right things and not everyone's who's underwater who's not underwater allp of things just to cut that up real quick there a lot there's a lot that a lot I want to unpack there just very quickly so 20 million series a around at somewhere around 100 million valuation that was a 5x on the 20 million AR which is what you were at when you raised you said that first off was the full 20 million going on the balance sheet or was part of that secondary yeah and that was all all balance sheet because then that was that was the tradeoff right you want to take money in to be able to grow blue Club ventes understood this and you didn't want to sell out secondaries at at that rate and again it's been a good deal for for everyone we turned down a number of of $50 million term sheets uh with a lot of secondaries in there but then it was like hey we don't want that valuation so this was the perfect deal for us at the perfect time so just to be clear again uh you say they're in the money because since the raise you've added about 102 million of new AR you're about 30 million run rate today correct yeah what do you think you'll finish this year at what's your goal just north of 40 40 and so how do you get there is it expanding current customers or adding that new logos we've been super good at at increasing our nrr uh last year it grew about seven percentage points so what was it last year 10 and something yeah late just shot 108 108 Revenue retention last year okay uh so we've been good at that and then obvious why why why is that I mean teach the audience right is it upselling more seats per plan is it cross selling into new products uh it's it's it's upselling new seeds it's upselling new plants um largely last year because the acquisition of weekly 10 was so late that it basically didn't have an impact on last year it had a very very limited impact on on the business last year and then it's actually the fruit of an investment we did two years ago which was to start building a customer success team we didn't have any um so was the second round of of uh renewals that we did with a full customer success team by now they understood the first year we spent putting in place NPS H uh customer focus groups all of those types of things actually learning how to do this and all those and you saw the the U because you can then calculate our NR was just around 100 the year before if we grew 7% so it wasn't fantastic but the team then stepped up to the second round of that and then started to be actually under understanding what the task really was and what they wanted to a what they needed to achieve if flushed that out for us today What's the total team size today 200 people and how many are incs 18 I think something like that interesting and what about how many Engineers UH 60 60 something else I see Founders really struggle with and so any advice we can get here as helpful is how do you hire your first 10 reps what quota do you give them how how long do you give them to ramp up what is your quota car in rep based like today how many people total and how did you set their quota uh our quota philosophy is attainable so that's probably more Nordic than it is American uh and that meant that we we run 14 hubs which is essentially sdrs and business managers as a hub and of the 14 hubs that we run uh 13 of them made quota or above last year uh first uh quot is in I think that one I'll keep to myself just just just for the sake of of but we is that because each qu each each Hub has a different quota or is that like I it qu quotas are distributed according to HUB and and all of that so I think the generalization would give a wrong picture of what this is but it's targeted towards the market you sell to and all of that and what is just to be clear that the Hub is made up from one SDR one AE and one bdr what's the ratio it it could could be multiple sdrs to one uh AE uh or it could be one to one relationship it depends again on on the market um opportunity sizes so if you go into the UK for instance the UK Market is a coherent large siiz US coherent large siiz organization we have a market model where we understand how many of the various vertical companies exist in that region so we basically staff according to our Market model and therefore some of the the account executives are able to to run a larger a larger territory with the support of a couple of sdrs and thereby carry a larger number so just to be clear you're splitting these hubs they're they target individual geographies you don't split them by contract size or SMB or men Market they're split by geographies geography yes I see makes a lot of sense okay this is great now you've got a lot of systems in place you came in you really operationalized business you've capitalized business how many paying customers are you working with today 2,000 is and about just a north of 2 million users which would be two million seats across the 2,000 paid logos yes that's Wonder that's wonderful um well this is great is there anything that we should have touched on that I didn't ask about no I think U the fact that we want to be our own best case study for human successes is the last piece it's absolutely amazing to be the C of a company where the product you deliver has to do with people and there's no way around being your own best case study I think that's at me at least for me as a CEO where you can tie together the mission with the product we deliver with the value we deliver to customers is absolutely exceptional and and it's a shame it took me so long in my career to find something that has all of these elements but I'm very very happy with where I'm at today can you flush out the revenue growth I do you remember what year the company passed a million of Revenue and 10 million of Revenue uh 10 million would be 2021 okay and 1 million uh was all the way back in 2017 oh wow so the company was stuck under a million of AR between 2003 and 2017 2018 2018 would be the million yeah wow so there were 15 years where the company was really stuck under a million of Revenue then something happened where it took off no no no 2016 2018 it's 2018 we were a million yeah yeah but the founding year was 2003 according to Crunch Bas is that right yeah but so the story here is is crazy because it's for the longest time it's a dentist who decides to quit his job write a learning system for the local communal library and that's the first ever LMS system that ever existed and from there on it hums along as a SharePoint consulting company for the longest time a of people join including our CTO in 2016 is the birth of the the company as it is today because Freddy bang who's still our CTO comes and says to the board I will rebuild this for Asher and for teams and they give him 50,000 Dan gronos or $77,000 he spent $70,000 rebuilding it and if it wasn't for that decision the company would never be here today wow and then the the the timeline between 16 to 18 is what it takes to get to a million and then from 18 to today is what it's taken to scale from a million to 30 million that's amazing on the same on the on the same business modelas super exciting story let's wrap up here with the famous five uh what software tool do you spend the most money on do I uh every Everything Microsoft my largest contract is with Microsoft surprisingly fair enough number number two is there a CEO you're following or studying uh I think that everything that SAA nadela does is absolutely spectacular uh um I think the way he's transformed that business is is is fantastic and the way he does it with Grace and and Humanity on top is is uh something to behold number three is there a book that you're uh studying or reading yeah I'm actually reading one now uh the hard thing is about hard things um which is uh CEOs uh is a CEO journey of of what is really when things are hard uh do you actually get through those I love that I love that good one from Ben horz there number four how many hours of sleep do you get every night eight that's good in situation at at an average sleep score of 84 so I'm good at sleeping you're an aing guy I'm a Garmin watch ah gin watch fair enough and what's your what's your situation married single kids uh I've loved and been married to the same woman for over 20 years she's traveled with me to Luxembourg to uh to San Francisco and back here uh she's my support in everything I do every day uh two lovely kids 21 girl studying engineering just like her mom and dad and a son still finishing up High School uh so that's that's and then a dog and a horse we'll count that as another kid together last something you sorry how old are you today and then what's something you wish knew when you were 20 H 50 today uh when I was 20 yeah ah take it easy everything doesn't actually go as fast as you think it will and and and that that's probably very true I still run at a way too high Pace but I've learned that things don't change as fast as I think they should guys LMS 365 launched in 2003 as a side project by dentists at a local library they finally said who this can be sass in uh in 2016 they broke a million Revenue in 2018 today over 30 million bucks in terms of run rate up from C1 18 million a year ago so called 50% year-over-year growth they're serving 2,000 paying customers they help those customers be more productive in the micro Microsoft ecosystem those customers have over 2 million seats on the platform as Rasmus continues to scale he joined the company as CEO two years ago did a 20 million series a at a 5 to 6X multiple he's now growing here with a team of 260 engineers and 14 sales hubs attacking each geography we'll see what they do next Rasmus thanks for taking us to the top hey thank you if it's the time