How Loyalistic CEO Antti Pietila grew Loyalistic to $240K revenue and 100 customers in 2019.

hello everyone my guest today is anthony p attila he's the founder and ceo of loyalistic he's also loves to help sas companies grow at finnish software and e-commerce association he's the father of four and avid cyclist and skier auntie you're ready to take us to the top yes all right so you saw me i think you said speak at sas doctor we get a chance to chat when we were there or no uh no we didn't have a chance to uh speak well good now we're catching up so this will be good yeah all right tell us about loyalistic what's the company doing how do you make money uh basically we are doing uh uncomplicated marketing automations and so one end of the hubspot price basically okay now you're doing everything that hubspot does as well or no uh everything for a much smaller company okay so what's the customer going to pay you per month on average would you say average uh about 1000 euros per year so around 95 euros per per month okay or about 100 usd united states dollars per month something like that and put this auntie put this on a timeline for me when'd you launch the company uh we're actually a very old company we are over 20 years old already and we have a at it so 1999 something like that yeah okay were you there at the beginning or no yeah from the beginning you were there yep it's your baby uh not really i actually joined as a fifth person and and throw the others away during the first year also okay why so how did that work why did you throw them away uh basically um we have a deal that um we started as a student so everybody put their effort in in the company and and if you leave you're kind of out so uh that was the deal so so others have other priorities who who have to study somewhere abroad and and so forth so little by little they dropped out someone wanted to have a steady income and move to another company are they do they all still have equity do they vest at all or did you have a long cliff where if they left before the cliff they got nothing we have a shareholder agreement so basically uh there was not much value on the uh consulting business basically so okay i could buy them out with one euro per person so so you own 100 company now i own the whole company now okay so 100 yeah okay and and so walk me through when that happened when did you kind of buy everyone out what year was that that was something like um around millennium and then we did something like 15 years of consulting basically software uh building custom software project for smaller and bigger customers but now you're peer sas yeah we have been selling for something like five years but we have private it a couple of times during that era as well okay first from consulting to a let's say larger sas products which require a lot of selling and and uh basically solution selling uh before the customer could buy it even though the product was was a multi-tenant and so forth but anyway we with couple of pilots we end up in in this space so how many customers have you scaled to today around hundred okay about a hundred folks and what's the team look like how many people we have three bootstrapped now or have you raised capital bootstrapped and we are profitable i'm making something like 300k per year at the moment that's great so what that means you're doing uh what is that about 25 000 in free cash flow per month about about that yeah that's that's wonderful this is the best kind of business so you're you're rich right no no not yet uh we still have problem of acquiring new customers so so um with this product so we are making quite a quite a lot of let's say about half from the uh previous sales products which we basically don't do anything anything anymore but so this so this one this one loyalitics you have 100 customers paying 100 bucks a month so you're doing about 10 000 united states dollars per month yeah that's around the other on the figure okay so how can you do 10 000 per month but free cash flow 300 grand your top line's not even 300 000. uh we make it from the uh from the uh older sales products well what are the other sas products we have a loyalty product and couple of others with with a couple of customers and someone are paying thousands of euros per month basically is that is that a part of loyalistic or it's different butterfly elastic okay so you're doing what are you last month total sas revenue how much did you do the total sales revenue is about 95 off of our turnover surround cannot remember the last month figure but last year around 300 thousand and of that um maybe ninety ninety five percent is um uh recurring revenue from sas products so it's basically a sas business but we have uh all the products which are basically financing this new one yeah auntie this shouldn't be a complicated question last month how much sas revenue did you um because you did 300 grand all last year divided by 12 that's 25 grand a month around um 20 000 or so uh i don't follow the figure uh because we uh we build um annual contracts and some of the contracts are monthly so i i check the um how much invoicing we are sending out each month so it takes a little bit processing of how much is it then sure your mrr your i mean this is a very typical thing in a sas company to have annual contracts paid up front but you still have to know mrr which is you take the annual contract and divide by 12. and then add that to your annual and then add that to your people paying monthly so you think that number is about 20 000 per month right now let me check it out around that um okay you understand why that confuses me because if you're if you you're telling me last year you did 300 000 in free cash flow bottom line correct uh three hundred thousand busy uh revenue and they are profitable so uh i making like 10k or 20k per year as a profit okay so so so so monthly if you're doing twenty thousand dollars a month what what are you profiting on twenty thousand today uh about ten percent uh sorry um less than five percent is profit okay so that would be about that okay that'd be about a thousand bucks so you're basically break even each month yeah okay okay that's awesome at this team size basically something that we can adjust so it's that uh depends on how much money you want want to take out or i want to invest somewhere else of course so there's a team of three of you guys is everyone in finland no okay and then um tell me more about churn what's your turn today um i don't have a process in this figure but it's quite quite small but we have so many different um cohorts that um i really don't calculate the or it's it's difficult to calculate what's the the churning in each cohort okay is but basically until you listen to the show right it's manageable yeah you you told me you've listened to the show right yeah so you know i mean churn is like the killer of sas companies and the fact that you don't know like the back of your hand is a massive red flag how do you not know your churn it's because of our in our um number of customers in each segment is uh too small to really calculate it okay here's how you do here's how you would do it no auntie here's how you would do it you'd add up across all your sas products the total revenue at the beginning the beginning of 2018. when all those contracts come up for renewal at the end of 2018 or early 2019 and only 200 000 out of the 300 000 renew you even know you have 33 revenue churn you don't have to go on a cohort basis per product you can still look at an overall revenue basis uh and still get an accurate churn figure i guess the reason i'm asking is so you have no idea which of these products are healthy or not because you're you're not even trying to measure churn in any of them is that accurate sorry the line was a little bit weak i didn't catch your question fully yeah i mean i guess it doesn't matter you're not measuring churn basically is what you're telling me uh i'm uh measuring in in feeling based so that um uh that's not the problem at the moment but uh what's the problem at the moment uh it's it's growing the customers i mean so how are you growing customers now they start with the with the basic plan basically and uh within the first year uh almost all will continue to the second year but they don't need uh they don't they don't need to expand their product okay that has nothing that has nothing to do with with customer grow with adding new customers so so how are you adding new customers which is that is that that's the problem uh right that's another problem this is too expensive at the moment uh again we are not spending uh outside money uh or we are not spending money on advertising uh we are using our own resources so how do you calculate my uh my time but it's it's simple you take your salary and you divide by 12 and that gets your monthly payment and then you divide that by number of new customers you're adding every month uh yeah that's the problem but i'm doing 10 different things like customer acquisition and i'm a location how do you know auntie then how do you know it's expensive to get customers if you're not measuring anything um at least numbers that we are having the small amount of customers we are getting every month uh calculating it it uh really doesn't um...