How Maropost CEO Ross Paquette grew to $40.3M revenue and 5K customers in 2025.

hey folks my guest today is ross paquette he's building a company called morrowpost.com launched or at least earliest date i've got revenue data on call all the way back to 2016 2017 uh now scaling up now he took some capital from an outside partner and said you know what i like the bootstrap life much better he said you know i'm gonna buy him back and he did it now he's continuing to scale they're doing m a one of the great bootstrap success stories ross welcome to the show thanks so much for having me nathan okay did i get that right when was founding year it was actually 2000 uh jesus what year are we now it's 2011. sorry ah okay okay so 2011. and then for folks that have not heard of you before just quickly what do you guys do what are you selling yeah absolutely so we have a single solution that encompasses uh commerce cloud marketing cloud and service cloud so effectively ecommerce and retail marketing automation email sms and then help desk so live chat chat bots ticketing and all and so on and our target market is mid-market uh um e-commerce and retail businesses or organizations hot very hot space so so when did you do you remember the year you guys passed a million bucks in revenue yeah that would have been 2013 i guess and what was that like what were you selling back then is the same thing's there is it changing yeah no it was it was mostly email marketing and marketing automation so we very quickly went from 300 000 in revenue in 20 i guess i would have been 2013 actually and then 2014 3.3 million 2016 if i'm not mistaken was 13.3 million and then 26 million in 2017 if i'm not mistaken interesting and then you told me on the last show you broke 40 million in 2019 yeah correct yeah very cool okay so how many of these companies our customers are you serving today uh just shy of 5000 actually we're about to we should hit 5000 in a couple months holy cow okay and average companies paying about what in terms of rpoo uh probably about 1800 per month 1800 a month okay so i mean can we can multiply those bad boys to get mrr if you want yeah and not 9 million in mrr give or take yeah how i made them a little bit less i'm a little bit over yeah yeah will you break let me let me ask you this will you break 100 million bucks in an ar this year run rate uh just shy of it actually uh sorry um yeah just shy of it most likely so you think by december of 2022 so this year you'll do about 8.3 million in an mrr that month right yeah i love that okay so now let's let's reverse engineer from 100 million run rate right so you're getting there a bunch of ways first off you're preserving equity with some buybacks you're doing some acquisitions for mna let's talk about the funding strategy first so you thought you wanted to raise and you did what year was that and how much did you raise that was 2016 and we did an all secondary round for 37 million u.s 50 million canadian if it was relevant okay 37 million u.s and that was 100 secondary to you or also early employees investors yeah it was a combination like everybody got a bonus and all that kind of stuff okay okay and what valuation was that at 163 million did that feel fair at the time yeah it did yeah okay at the time yeah yeah and that was poster pre yeah that was uh there was technically no post or pre because it was all secondary so oh god i got it got it yeah so we could take 37 divided by 163. they bought about 20 percent of the business 21. yeah exactly yeah okay and then you sort of casually said it felt good at the time what happened yeah it was i mean it was it's it's easy to look back i mean it was it was all very positive they were really great people great groups but um you know coming from a fully bootstrapped approach where the business is based on profitability and growth at the same time and not grow by all costs where effectively the founder being myself is is gambling with the growth of the business which is as i see it um you know we were just really weren't aligned from a philosophical perspective but i don't think that would have been any different with any other parties frankly i think it was just you know it was just how the times were then with from an investment standpoint at least from you know kind of the vc to to um you know kind of startup ep firms as well and so for us it it just really didn't make sense to continue down that path oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 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 founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's 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back into the interview and so i mean a lot of people a lot of you might right now be listening thinking about raising capital or doing a secondary like you just described but they're really not sure like what their first board meeting is going to be like you obviously didn't like what you saw or heard in your first couple board meetings otherwise you wouldn't have bought them back out so what were you expecting and what happened to be honestly it was that's actually a great question because i had absolutely no idea so like no preparation whatsoever you know very little from a content perspective we were doing like again you know i think about 16 million at the time with maybe maybe 20 employees in the business and um yeah i just had zero experience from that perspective so it really wasn't anything on that front i think it was a combination of things that happened over you know over the three year period that you know it was just like we better separate here this is going to go sideways the business had gone from triple digit growth to single digit growth um you know so really nobody was happy across the board i don't take a salary or compensation i i do well with the company as well so i'm very focused on again continuing to build the business not just you know ross has got you know compensation coming from salary and options and all this kind of stuff as well so what did you do about it that's right so you didn't you didn't obviously like that sort of pressure it didn't make a lot of sense right so what did you do about it you raised this capital are they still on the cap table today no no so i bought them out or you know there's a few more nuances to it but yeah we effectively decided on a figure i went our separate ways and um [Music] you think i'm just going to let you off the hook by saying we decided a figure how the hell do you go with the figure they just paid 160 million valuation can you convince them to sell them back at like 1x or they're going to say ross you got to give us a premium our capital was tied up no no it was nothing like that it was just uh kind of what you said okay so they're like they're like if we put the same 37 million bucks in the stock market we would have earned 10 so give us 10 more than 37 million you can have your 20 back something like that something like all that fair enough okay and then and then what so you get that deal done where did you get that money from by the way was it the cap i mean was that all the money on the balcony all the secondary funds so effectively at the time i just taken the capital didn't spend any of it invested it and you know the money was just sitting there and so i think we're very fortunate in that regard to have done an all secondary round whereby you know we didn't put all the money into the business spend the money and now we're like we're totally screwed here on both sides yeah that makes it that makes a ton of sense so okay got it so so you you do that in 2016. let's before we talk about like more recent capital news let's talk about product between 2017 and today right so how was that off have you done any acquisitions yeah yeah so we did the two acquisitions that you you mentioned that we've spoken about before so we acquired a company out of australia called neato back at the end of 2020 so right in the thick of of covid um and then acquired another uh coincidentally australian business as well at the end of 2021 clearly we have an affinity for christmas deals and uh that was in the um point of sale space called retail express and so back to your question which was you know how has the product evolved we've had the same vision for the last six years which was this unified again commerce marketing automation and um and support uh solution and so really we acquired those businesses to just help bolster a lot of the knowledge a lot of the understanding a lot of the nuances that come from retail and and e-commerce that you know we just didn't have the experience with and so those have been you know very successful for us especially as we're continuing forward in our in our product strategy how do you measure success of an acquisition good question um i mean the percentage of failures is so high you know i i think when you when you're able to look back and say that the asset still has retained the value or amplified the value of the overall business that's successful right things aren't always going to work out with the you know with the founders with the previous leadership team things aren't also going to work always going to work out from a customer technology perspective but i think if you can look back and say i would still do this you know 24 months later 12 months later even for that matter you know that's really the key you know to the success side of things and i don't think that's very common in you know the examples that you and i have both seen over the years no i would agree so neato how much arr were they doing when you bought them do you remember they were around uh just over 10 million usd okay got it um and bootstrapped uh no they had they were owned by this is all public information so they they were uh major their majority shareholder story was telstra it's an australian telcos of someone at t or verizon uh but in australia and so was that an advantage or a disadvantage that they were owned by a big king i think it was actually in a way it was an advantage um because telstra was a huge company they were making changes with the effectively with the strategy that they were implementing that caused them to acquire or invest in a business like that and so you know when a company that's doing billions and billions of dollars in revenue you know is making a turn you know a 10 million dollar revenue company is really not that important to them they're just thinking the strategy is different now let's exit the you know investments that we've made across the board and and move into the new direction we're moving in so i think everybody was very motivated to you know to complete the transaction in a mutually uh beneficial way yep and and i guess when you look at how ross likes to structure deals right of that total price that you paid for neato what percent was like all cash up front versus them taking a ride with you now and sitting on your cap table no no it was all cash so we oh yeah our cab table is still myself and the employees that's it wow that's incredible okay so so 60 million all cash up front for neato 6x 6x multiple yeah interesting and can you share those same metrics sorry that was in usd so it's a little less than that it was closer to 4x multiple i see i see usd okay cool and what about by the way you like 60 million retail express i think was a 55 million dollar deal uh same sort of size 10 million revenue uh so a little bit smaller but um completely bootstrap and founder owned and operated and the founder there is now our managing director of australian new zealand coincidence ah that's super cool and did you pay about the same multiple four to six x something like that yeah something like that yeah okay and but in his example there was a little bit more you know a big part of it was the partnership continuing forward you know having an aligned vision on the business so i'm really excited to have him here and he's obviously a big advocate for us in in australia so i'm keynoting sassiest here in a couple days and i said i want to put some of this at the front of my keynote and what i want to put there is founder a lot of owners don't know this is going to sound very conceited i don't know a better way to ask it founders know how to get personally rich or wealthy without exiting which they don't want to do because it's like selling your baby you're going gonna go do the same thing again so what if there's a way to not sell your baby but still generate personal wealth the way you obviously can do that is sort of via secondaries dividends things like that you know obviously without sharing personal net worth and things you don't want to share but how have you how have you built the business so you can extract personally wealth and build a great life so it goes back to my comment before so i i don't have a salary i don't have a bonus i don't have anything i have my ownership in the business and if the business does well i do well so typically through dividends as you just described and we've been fortunate enough to build a you know a strong performing business when it comes to cash flow and ebitda and profitability so that has really driven that side of the coin granted that's not very common certainly not in the in the tech spaces we've seen most companies are burning through capital so i think it just it takes that you know that unique focus on on ensuring that a profitable business is a part of the strategy as well so as in it's great to grow 50 year-over-year in my opinion but it's also great to have a 40 or 50 even a margin or on the cash flow side of things you guys are you're doing 50 percent even to margins right now last year you have about 52 yeah this is insane guys this isn't i'm laughing i'm laughing because i mean this isn't small scale we're talking about i mean this is like i think you guys had like a 63 million dollar or some revenue usd last year or something like that right he's like yes yes right so 53 i mean you guys do the math 53 now ross obviously that whole dividend that's not all coming out of business it's not all personally your money but you use it for the acquisitions yeah yeah yeah yeah but you then you also obviously when you even when you paid a dividend do you structure it in a way where it's weighted so for example if employees own 10 business you own 90 you're gonna pay out 10 million in profits it's split evenly like that no we don't we don't have any shareholders except for myself um so we have option holders like everybody else and we're very generous with that side because we want people to enjoy in the the journey that we're going down but they are nonetheless still option holders so i guess my question would be do you let them if so if you ross as founder pay or spot a dividend which i love you should it's a great way to build wealth and this is why you start a company in the first place it's for freedom do you enable the employees to sell back options to the company at like a certain price they can okay got it so they can't get so how will they get liquidity long term uh they would get it when we we hit an exit event so in our case when we go public or be a public listing or direct listing or an ipo that that is our our path i mean alternatively you know most other companies are trying to sell themselves so that would be their liquidity event but for us that is the specific path we're heading down oh ross i think you would be a terrible public company ceo because it's not your prince not your personality at all yeah i'm not interested in that either and that's that's not my goal that's different my goal is more to to retain 80 of the business and and be able to operate from a product perspective or a vision perspective and really be supportive to somebody like that i don't aspire to be the ceo of a public company i say in a joking way but that's a compliment yeah i mean you don't you don't fit the mold right like you're doing things a very different way which i think is it's frankly healthy but my question still stands though so if you don't want ipo you don't want to exit you want to keep 80 percent grow yourself we do we do want ipo or we do want to go public i use the goal oh you do want ipo correct but i don't aspire to be the ceo of that public company you know after a few years i will you know of course uh either you know bring somebody in from from outside or have somebody uh you know elevate within the organization and we're positioning ourselves even now for those those stages i see okay very cool now the reason we're recording this is twofold once i wanted your story ahead of sassy's because you're actually doing some deals in sweden and the nordics but second is i think you did recently a secondary so update us what did you recently do yeah so uh just as of sorry it's still ongoing right now so i'm not even sure if i should share this but we're doing a secondary round at a 1.7 billion dollar evaluation i love this okay so just for people that don't know what a secondary is can you explain it in maybe two three senses yeah absolutely so secondary is is it is providing liquidity to the shareholders as opposed to um directing funds right into the business in terms of primary yep so so if we take let's say you're at like uh i mean what are you doing right now at mrr um six i have to look six million something around six yeah so i mean if so that would put you right now at like a run rate whatever what is that seventy two million dollar run rate right so i'm just under sixty under sixty okay cool so i i'm trying to back into your multiple right so did you was it a competitive process and that's enabled you to drive up to multiple no not really we've gone with a much wider net so there's not just one or two or even five parties involved there's more than 50. um we've taken a bit of a different approach to this because we have a lot of people who have been involved in the business for years i've been in you know customers of the business partners in the business employees family members friends this was their opportunity to really to enter into the um you know effectively wouldn't be the cap table again but effectively enter into an investment that they can you know join the journey over the next few years as we head to our public listing as well and so what do you think the size of the secondary will be you know 50 million 10 million 100 million yeah probably close to 50 million 50 million okay interesting so this is sort of a way for you know partners friends supporters marketing agency owners who love you to death and sell automorrow posts to buy in pre-ipo yeah exactly interesting super interesting how do all your other sort of ipo metrics rule of 40 you good yeah we're good on that one yeah absolutely that dollar return remember the actual yeah well uh this year will be well above 150. okay that's that's world class i'm trying to think yeah revenue per employee revenue per employee is just over 200 right now but it'll be significantly higher we've been staffing up yeah much like other companies are aggressively that well so sorry that number will go down because you're adding head count no no so we've added that head counter we're already in that process we've staffed up for a much higher revenue multiple at the end of the year which is great because you're already above average most public trading companies is about 129 000 average revenue for employee you're already at 200 rule of 40 is rule of whatever higher and net dollar retention is already world class at 150. yeah we're targeting about three over 300 300 350 on the on the employee side of things i just love that you track it i never talked to a pre-ipo founder that's even tracking revenue it's not even a thought unfortunately so i think it's great how have you driven you know some i guess we'll wrap up on this um you're that net dollar retention surprises me because you're selling the mid market these aren't enterprise deals necessarily how are you going to be able to get how am i going to keep gross churn low and then also cross sell enough to get up to 150 net yeah so the the the key element of the platform is people are usually coming in for one you know through one of the areas of the platform so one of the three or one of the four arguably is you know ecommerce retail marketing or or service clouds and so they're coming in through one of those and then we're cross-selling them over the rest of the platform so if anything 150 is probably generous because somebody could easily come into service cloud and maybe they're using a shopify or they're using a clayview for marketing and that's fine and then we cross-sell them into those solutions and all of a sudden what was a you know thousand dollar a month customer is now a four thousand dollar a month customer and those other areas of the solution are of significantly higher maybe not cost space but value for the business overall that makes a ton of sense and what's the what's the full team size today how many people uh 305 305 and how many of those are engineers uh about 125. okay so heavy there as expected how many sales reps that carry a quota only 15. interesting why do you say only uh because usually companies would have you know usually the numbers would be the other way around to what i just described so um you know you'd have a hundred people in in sales that you know at a minimum and then marketing be another 50 or 60 even and then the rest trickles down through support and client success and development and so on well ross this is a hell of a story man are rooting for you let's wrap up here with famous five number one favorite business book favorite business book uh elon musk uh musk's autobiography number two by the way is he gonna is is he about to take over all of he has nine point two percent of twitter he's gonna take over the whole thing or what i don't think so number two is there a ceo you're following or studying probably him to be honest with you it's not like i'm a fan or anything i should say i'm not a fan but i'm not a fan in particular i just really appreciate the hard work and and i can obviously sympathize with the fact that it you know takes so much of that to get to where he's been um you know mariposa is of course not comparable to tesla in any way shape or form but yeah we certainly hard worked our way to a lot of our successes number three what's your favorite online tool for building maro post besides your own hmm good question honestly probably microsoft office yeah they've just done a great job tried and true number four how many hours of sleep you get every night uh six hours six that's impre because you have a new one so that's impressive six hours is pretty good actually i've been lucky to uh to maintain that to be honest i've been talking a lot about it yeah i forget first kid or is it second or third kid yeah in a week wow well hey congratulations man that's so i was my email was right on when i said i think the babies do it was literally exactly yeah it was last friday sorry the friday before last i was so i was only two days late about that two days late exactly it's amazing all right and how old are you ross i'm 38 38 last question something you wish you knew when you were 20. something i wish i knew it was when i was 20. jesus [Laughter] good question i wish i knew how hard it would be to get to this point nothing at the time it seemed very easy and it wasn't as easy as i thought it would be not an easy journey guys mario post launched back in 2011 2012 2013 i did 300k in revenue in 2013 3.4 2014 fast forward to 2016 to 13.3 million and sold 37 million bucks uh worth of capital capital on 163 million valuations so sold 20 of the business and said you know what i don't like these board meetings with other investors i want to buy him back he did now the company basically him and employees own 100 of the business they've scaled up to 60 million bucks in ar serving over 5 000 customers 52 profit even a profit margin last year and now are raising caught between 15 60 70 million bucks in a secondary at a 1.7 billion evaluation about a 28 x multiple this is how you build a great sas company keep control and build a great life as he welcomes his first little one into the world ross thanks for taking us to the top yeah thanks so much nathan 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 deal or bust one founder 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