Lymb Revenue, Valuation & Funding (2024)

[00:00] Folks. My guest today is Markoss Kern. He's a Munich based sports tech company on a mission to make the world more physical physically active using the power of gamification. If you wanna follow along, the website is lymb.io. Markoss, you ready to take us to the top? [00:13] >> Absolutely. Always ready to be active. [00:15] Alright. I feel like the most recent version of this was this, like, AR Pokemon Go. Everyone who's usually sitting on their couches now running around towns capturing Pokemon. Is this sort of what you're building here but at scale? [00:27] >> Yeah. Sort of. I mean, I love the the effect of what happened there because it got people out. It's it's the same approach. We obviously like to focus on a much more holistic workout, so we really wanna make you sweat, not just walk around. And, obviously, we wanna create a hype that's a little bit more consistent and a little bit more sustainable than just doing it for a couple of weeks. [00:45] Who's buying this? Is it consumers or you're signing sports teams or what? [00:49] >> Well, right now, we're very strong in the business to business market. So it's sports teams, clubs, facilities, even kindergartens, a lot of offices. But now we're also launching our b two c console, so it's also gonna jump into your living room. [01:04] Mhmm. And and but who's paying for this right now, though? Is it mainly b two b? [01:08] >> Yes. Mainly b to b because we just launched the new console. It's gonna come out probably in February because, obviously, we have a little bit of delay with the whole SMB crisis. So so far right now, we're in 45 countries, and it's only b to b, about 500 pre orders for the console. [01:25] Okay. So wait. Are you selling a SaaS tool here or is it a physical piece of hardware? [01:29] >> It's a hardware connected with a SaaS. [01:32] Oh, okay. So I love this model because once they install the hardware, they never churn on the SaaS. So so let's let's talk just to be clear, do you have any SaaS revenue yet or your pre revenue on that side? [01:41] >> No. No. We we have around I think the annual should be around 45k in euros right now, SaaS revenue, but we just started early two thousand twenty one to even switch on the SaaS. Before that, it was just lifetime licenses. And, yeah, just like you said, it's it's a hard it's a hard sell because it's hardware, but so far we have a retention rate of a 100%, so we're happy. [02:01] Well, okay. So let me break all this down real quick. So you're doing right now at about $4,000 a month in SaaS revenue, which is about 50,000 United States dollar run rate annually. Correct? And you have 500 preorders of the hardware? [02:12] >> No. We just started 21, so we have around 6.5 k per per month right now, actually. Oh, I see. [02:20] Of SaaS revenue? [02:22] >> Exactly. Because probably around 80% of the systems that we have out there already, they went with a lifetime license. So we just started switching over to SaaS. [02:30] How many systems are out installed currently? [02:33] >> Around 600, I guess. [02:35] Oh, wow. How much does it cost you to make each of those units? [02:40] >> The production cost is depends. The range is pretty good. So the retail price is between I think the cheapest one is $4,500. The biggest one is around $60,000, which is full LED. The production cost is always about 70% of that. So we have a 30% margin. [02:58] That's a massive difference, 4,500 to 60,000. What drives that cost up again? [03:03] >> Well, the smallest one is just what you would put in classroom, for example, then we have complete sets that go into squash courts and we also have massive LED walls that you just put outdoors and you let people interact with it. You can swipe a card. You can play or you can pay with the app and just book it whenever you want. [03:20] I see. So what was the like, take 600 times all of their retail prices. How much total sales of the hardware today? [03:29] >> Obviously, in the beginning, we've been selling at quite other prices. As you know, it was like more like, hey. Get it, please. I think right now, we're, like, approaching around the $4.4, $4.5 no. It must be close to 4,500,000 in lifetime revenue, which probably we made 2.5 last year. [03:47] And that's just on hardware. Right? Not lifetime SaaS stuff? [03:50] >> It's a very small portion of, like, of SaaS, but probably Okay. [03:55] Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 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 Founderpath. Check this out. I'll show you how you can access this in a second. But you log in, you connect [04:18] your Stripe account, you see your valuation real time, you can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna [04:43] get a different valuation. A VC is gonna pay a different valuation, Private equity firm is different. If you're gonna 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 [05:04] not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna 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 [05:30] going out right now and you're raising your seed round. We'll 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 dataset of SaaS 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 [05:52] if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. 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 [06:18] into the interview. But we can take that 4,500,000 of hardware sales multiplied by 70% cost of goods sold to get your margin of the 30%. Yes. Which should be about 1,300,000 on 4.5 of total sales. [06:32] >> Yeah. We always have to factor in that in the beginning, obviously, creating this hardware, it's it's it's not as profitable in the beginning. We're also now bringing down or bringing up the margin quite much. But at the very beginning, it was obviously much you you sell the first units as it added as a deficit, obviously. [06:48] And you did all of that. This is just you launched in 2020, so your first hardware sale was last year or two years ago? [06:54] >> No. Actually, we're more almost five years old now. [06:57] Oh, okay. It took a very [06:58] >> long time to develop the tech before we even started going on the market, and it it was a very slow start. Hardware is like to get the first clients took a very long time. And now the last year, we've grown 2.9 times the size that we had before. So now it's really starting to show off. [07:17] So when what year was your first hardware sale? [07:20] >> 2017, I think '2. [07:23] '2 you sold two units in 2017? [07:26] >> Something like that. Yeah. [07:27] Okay. Got it. So between 2017 and today, you've done 4,500,000 total of hardware sales, which is about 600 units. Does that 4,500,000 include the 500 in preorders for the 500 new units? [07:41] >> No. It doesn't. [07:42] Okay. So you're you've done much more than 4,500,000 revenue if you add the 500 in preorders? [07:48] >> Yeah. We had a kick Kickstarter campaign, so that's where we obviously sold the preorders at a quite discounted price. And now there's, like, every week, four, five, six, nine, ten sometimes coming in. [07:58] I see. Interesting. Okay. And and the what'd you sell it for on the Kickstarter campaign? [08:04] >> Well, the Kickstarter campaign, started with around 800 to $900, which is also the retail price that we're aiming for. Right now, we had to go up quite a lot because production is insane. So we're now selling it at around 1,400 for the first But units at [08:18] if you pre sold a bunch at 600 a pop, let's say, just to make the math easy, sold all 500 at 600 a pop, that's $300,000 in sales. With COVID supply chains changing so rapidly, couldn't you potentially lose money on every one of those pre sales? [08:32] >> To be honest, on the Kickstarter ones, definitely. Yes. Absolutely. We factored that in already in the beginning, and this is also what we're compensating with the new price for. But, obviously, the very first batches, when you produce something, you always have to estimate that you're, like, not making any it's economy of scale, like, you're always losing money. If we would sell the first 20 units, we would have to charge, $3,000 per system. We're now sending them [08:54] >> out, actually, which obviously wouldn't it would be very hard to sell those. So it's it's always quite an investment. [09:00] Mhmm. Okay. Understood. So so tell let's let's now I understand this. Let's now talk about how you're turning on the SaaS revenue. So how many customers are are making up the 6,500 a month right now you're doing in SaaS revenue? [09:14] >> I'd have to exactly look around that. I think about sixty, seventy, 80, something like that. [09:20] Okay. And just to be clear, have to have hardware in order to pay for SaaS. Right? They can't only pay for SaaS? [09:26] >> No. Makes no sense. Why would someone buy the part [09:30] why would someone buy the hardware and then not pay the SaaS? [09:34] >> They didn't. It was just our choice in the very beginning because people hate in that business. Like, the the fitness industry and schools, they hate monthly payments. They hate yearly payments. So we always just said, hey. Instead of charging them, let's say, $99 per month, let's just charge them a thousand and say that you never have to pay again. So it was, like, the kind of, like, cost that we did for for just getting Yeah. [09:55] You're pulling ten months or a hundred months of revenue forward effectively. [09:59] >> Exactly. So and also for our cash flow, it was amazing because every sale was like, okay. We have a much higher margin. So now we're slowly shifting. Yeah. [10:09] No. This this story is making complete sense to me. So launch in 2017, you get your first hardware sales and sorry. First hardware sales in 2017. You launched also that year as well. You've wrote first line of code that year? [10:20] >> Late twenty sixteen. [10:22] 2016. Okay, cool. So first hardware sales, twelve months later, 2017, you did two. Now today, up through this last year, you've done, call it 600 orders that are now out in the wild, 4,500,000 total volume. You just add another $300,000 in sales from 500 preorders on Kickstarter at $600 a pop. You're still adjusting what your hardware costs will be because supply chain issues with COVID, but what's growing really nicely is you just recently turned on your [10:46] SaaS revenue with 70 ish customers paying $95 a month for $6,500 a month in monthly recurring revenue. Is that all accurate? [10:55] >> Sort of. We have a range obviously for the SaaS, but you're probably pretty close to the common average. [11:00] Interesting. Okay. So what's the sales approach now? How are you convincing? You changed. Now people are paying monthly. How'd you change your sales approach? [11:07] >> To be honest, so far, the sales approach is very different because we're so we've never spent any money on advertising. We're very happy that so far the inbound is much more than we can actually do. We're now 32 people. I think we have we just upgraded to six people in sales until a couple of months ago. It's only been three. So so far [11:23] So have 32 people total? [11:25] >> Yes. [11:26] Oh, wow. Okay. You've raised cap you've raised you've raised capital? [11:31] >> Yes. We did. Surprisingly little so far, but yes. [11:35] What's little? [11:36] >> Like, we only raised 2.8 over the whole five years. [11:41] Break break down the rounds for me. [11:44] >> Oh, that would be very because we've very obviously, we're not a classic startup. Everybody hates hardware. We started with little tickets here and there, a hundred, two hundred, 300. And now last year, we just raised about a million from the first institutional investors. [11:58] Okay. So when what would you consider that? Like, your seed? [12:02] >> Yeah. Yeah. You could say seed. It was a little late because yeah. But I would say seed. We're now preparing for a big round towards end of the year, so that would have been a seed. So now it's a series a. [12:12] And most folks in their seed are selling 10 to 20% of the business. Is that about what you sold for the million bucks? [12:18] >> Over the time over the whole time, we sold about 35 over the whole process until today. [12:24] Okay. So so right now, your cap table, investors own 35%. Do you have an ESOP pool set up for your teammates? [12:33] >> Yes. We do. [12:34] How do you structure that? The founders always wonder how we set that thing up. [12:38] >> I wonder myself, to be honest. Obviously, it's just we have a couple of people that have been with the company so far. I'm still the only founder. So I still hold the rest of the percentages and we blocked about 10%, which we now slowly give out to the employees. [12:52] I see. So 45% between investors and your ESOP pool and then you own the others, call it 55%. [13:00] Great model. Love that. Okay. Talk to me about the hardware side of things. If you could figure out a way to subsidize the hardware and give it away for free, all of a sudden, you, like, really jack up your ability to drive MRR. Have you considered, like, raising a debt fund or something to facilitate this? [13:19] >> Yeah. Very smart, smart idea, and and this is what we're also working on. Right now, the pain points to our growth are are a little bit different, so it's not exactly it's first of all, we're only working with inbound. So we're structuring a couple of things to optimize that and fully get up to capacity, but we're already preparing to raise some money for our own financing model, so we work with leasing partners and financing partners, but [13:38] >> you know how it is, especially globally, it's a very complicated deal sometimes, so it's very hard to find somebody who does a financing deal in Dubai, and then obviously the one making the most money out of it a lot of times is the bank. So we're already experimenting with giving out systems only for subscriptions, so you don't pay, let's say, the $7,000 that you need for a Multipol, which is a small system for a school, and [14:01] >> instead of paying $7,000 and $59 per month for the software, we just tell you, listen, you're gonna be paying 299, and you just pay for that forever. So we're experimenting with it. At this point, I think we're not gonna take it to the crazy scale because just with the fact that the hardware is so expensive, it would be insane. Like, we would need to raise, like, 25 mil to really scale with that. And in the end, [14:26] >> we're not trying to be a bank, so we try to find partners to rather give us this working capital for a certain fee that we can then work with. [14:33] Mhmm. Can lend out? I mean, I'm looking at this beautiful thing. It almost looks like futuristic three d goggles, but it's not. You don't wear it on your face. You put it on the wall and it projects out. Can you lease these out or or you wanna keep selling them? Do your customers actually own them? [14:50] >> It's a it's a question of the time. In the beginning, obviously, the first movers and the people that wanna be sexy and, you know, own this, their threshold to actually getting this and having it in their room is really, really high. Obviously, this is what we now want to first take care of, but then obviously we're going to reach to a point where we then have to get into real scale, and then these things, it's like [15:10] >> you only rent it, will be highly attractive for people that are not as sold as they are right now. So I think it's probably gonna be one to two years until we go into models like these, but it's definitely on the list. [15:21] Mhmm. And just to make sure, like, I'm getting this pricing right. I mean, I'm on your limb.io forward slash product right This graphic I see just this projector, it looks like it's about sort of like this big ish. This thing is is how much per month for for that's how much does it cost to purchase retail? [15:38] >> Right now, it's 1,480 to purchase it. Right now, we're still working with a freemium model. So because also there's only 45 apps on the on the system. You can already start purchasing stuff like a monthly subscription, but we're still waiting. I think we're now at $19.90. We're still waiting till we fill up the app store more, so it actually gets much more interesting. So it's not gonna be a model like with the usual Peloton, where you [16:03] >> say like, hey, listen, if you buy the hardware and you're not paying this subscription, you can't do anything with it. Because our clients, also our families, their elderly care facilities, they're like so we try a little bit more more of a fairer freemium approach. You can still play if you don't pay. It's just not gonna be the premium content, but you still use it. If you wanna have the premium content, you obviously gotta do your subscription. [16:25] I see. But but your cost of goods sold on this model I'm looking at right here, $1,480 retail, your cost of goods sold is still about 70% or a thousand bucks, so your margin per sale is about $400? [16:36] >> Not at this time, to be honest. We're planning to go there again. With the current crisis right now. It's it's actually much worse than that. It's like you buy some components and they would normally be like $1.5 and they're like $15. Wow. So it's it's a crazy time to be doing this insane, like and people just broker stuff and you buy something and you pay the purchase order and they call you back. It's like, listen. Somebody [17:00] >> else wants to have it. Are you also gonna be willing to pay double price? You're like, hey, guys. We we ordered 2,000 units from you. It's sold. We sent you the money. I can send the money back or you pay double. It's it's the Wild West right now when it comes to hardware. [17:13] That is crazy. Okay. Interesting. So so SaaS growing quickly now. Has any any of these seventy, eighty customers that are paying the SaaS, have any of them signed up with the hardware and then canceled? [17:25] >> No. Yeah. So one thing that we're also super happy with, all the hardware comes with a five year warranty. So we're we're very German. Like, all the metal parts are, like, massive stainless steel. Everything's, like, industry grade, and it's, you know, we literally been asked by school operators what happens if kids pee into the sensors that the sensors can take. We're like, yeah, I guess. So every single system that we ever [17:48] >> sold pinky shit over there in Berlin. [17:49] That's all I have to say. [17:50] >> That's weird. [17:51] >> Maybe. Maybe. So every single system that we still sold, none have return have been returned and all of them are still active. [18:00] Yep. Interesting. Okay. Very cool. Again, you you you've sold about 35% to investors so far and you raised, you said, 2,000,000, 2,200,000 total? [18:08] >> I'd have to check. I think it was 2.4, 2.6, something like 2.4. [18:12] Okay, cool. So valuation wise, I mean, you could argue it's sort of like a 6 to 11,000,000 valuation, but I predict, you know, as you add on the SaaS component, your valuation will go up. You're planning to raise later this year, you said? [18:25] >> Yes. But for we're actually also because the last time that we raised is quite a while back, so we're we're aiming at a quite higher valuation. [18:33] What valuation would you are you gonna try and raise that or you're targeting? [18:37] >> Well, we're right now exactly in that phase, so we're gonna keep that a secret. But it's [18:42] What would make you happy? Maybe it's not what you end up going with, but what would make you happy? [18:50] >> Let's say it this way. Low double digits is a good point to be. [18:56] Okay. So call it something between, like, 10 and $30,000,000, something like that. [19:01] >> Somewhere in that range, maybe. [19:03] What do you think you need to get SaaS revenue to to raise it a 30,000,000 valuation? [19:08] >> Well, I mean, right now, also, our valuation is a little bit different because we're we're taking a classic SaaS approach, so our valuation would be a little bit would not be fully suitable because with the hardware, you have such a long term but a very, very solid and very predictable. For example, we have a hardware sales quota of around 30% quarter to quarter increase. [19:32] >> There's been [19:32] some Flip side of that would be much harder to go to market if everyone has to buy a piece of hardware to use your SaaS tool. Right? It's both double edged sword. [19:38] >> Exactly. Exactly. But so so, generally, there's also patents. There's also proper technology with we build our own sensors stuff like that. [19:46] Patents? [19:47] >> Yes. How many? Actually, even six so far, even one in, like, three three different kinds of patents. Two of them already been granted also in The US. [19:59] So How many engineers are on the team? [20:02] >> We have altogether around 12 engineers right now. [20:05] Okay. Pretty heavy. And do you have your own in house creative and media people designing these 45 apps and games, or is that do you do you incentivize the market, the world to build? [20:13] >> A little bit both. So we we have our own game development part. So we have four, five game developers. And we also work with so we also have some revenue share models where other people create apps on our system. So it's like, it is an open platform, but it's more like an app store. Like, we Yep. There's profit shares. There's but people can actually join very easy and just create cool stuff. [20:38] >> So, yeah, I think in the in the long term, it's gonna switch quite much. Right now, we're probably building around 70 to 80% of the content that's on the platform that comes from us. [20:46] Mhmm. But in the future, we're looking more like at 20 to 80%. [20:50] Mhmm. Interesting. Hey. I love this model. I wanna get an update from you in a year, but in the meantime, let's wrap up today with the Famous Five. Number one, favorite business book, Markoss. [20:59] >> Favorite business book? The funny thing is I think my favorite business book is is probably not I love business books and there's a lot of them that I could recommend, but what I would recommend at this point is probably Sapiens by Yuval Noah Harari, which is not a classic business book, but it very well defines the origin of people, why we started forming communities, and how people interact with each other, and what effect that has, which [21:25] >> is the main basis of business, like working Number together onto [21:31] two, is there a CEO you're following or studying? [21:36] >> There's a few not really following or studying. There's a few people that I highly highly respect for the way that they're they're doing their decisions, but not really like [21:48] Okay. No worries. Number three, what's your favorite online tool for building lymb? [21:52] >> For what? [21:53] For building the company. [22:00] >> Probably end up with Slack because it's just a nice communication tool. It's not even like a so many I don't know. [22:08] Number four. How many hours of sleep do you get every night? [22:12] >> Pretty pretty straight with, five and a half, six. [22:15] Okay. In situation, married, single kids? [22:19] >> Not married, but I have the right woman for it. It just didn't it just didn't occur right now, but I I'm very, proud father of 1.5 year old. [22:28] Very cool. And how old are you? [22:29] >> And four raccoons. [22:31] And four raccoons. How old are you? [22:32] >> Yes. I'm now 39. [22:35] >> 39. [22:36] Last question. Something you wish knew when you were 20. [22:40] >> Wish. Don't take myself too serious and realize that some things just take time. [22:45] Guys, there you have it. Lymb.io. They're helping people get active finally in your homes, at your businesses, etcetera. They sell a little unit for $1,400. You install that piece of hardware then pay 90 to $95 per month to access all these games you can play with your family. It's taken them many years to get this level, but they have 600 of these devices installed in the wild today, about $4,500,000 in total sales there where they made [23:04] an average call at 30% margin. That margin plus a million bucks or $2.2 to $2.4 million they raised from outside partners has enabled them to grow that hardware, decrease their costs, launch games on the platform now, 45 apps available as they look to continue to scale, maybe raising a series A or maybe, you know, late seed later this year at a 10 to 30,000,000 valuation. We'll see what happens. Markoss, thanks for taking us to the top. [23:26] >> Thanks for perfectly summing it in the top, man. You're a machine. I'm just gonna steal that. And that's gonna be my pitch, Tom. Thanks, man. [23:34] One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM [23:59] Central. Additionally, remember these recorded Founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the world, whether it's an acquisition, a big fundraise, [24:22] a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you want to take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign up [24:43] for that at nathanlatka.com slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. [25:03] We got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.