How Memsource CEO David Canek grew Memsource to $5.3M revenue and 500 customers in 2018.

hello everybody my guest today is david chanyaki he's the founder and ceo of a company called memsource a software company providing cloud-based translation technology headquartered in prague czech republic david a graduate in translation and comparative studies received his education at charles university in prague humboldt university in berlin as well as the university of vienna david are you ready to take us to the top sure all right tell us about memsource what's the company doing how do you make money so i founded mansource in 2010 and we help global companies translate more efficiently and we're cloud-based software so we provide subscription and what's the average customer pay per month it's about five thousand dollars okay so you're very much in the enterprise space yeah okay got it very good and and what do they get if they pay five grand a month what do they get for that so they get pretty [Music] a much solution uh that has you know two major components for your enterprise globalization basically it's a translation management system uh so it's a it's a workflow so it's a way to connect to your content registry it could be a you know a cms that we connect to and then we we we have a workflow that ships the data to maybe the translators the revisers and then back to to the cms and then we also have a translation tool for for all the translators survivors both editors you know the linguists so these are the main two things the workflow and the actual translation tool and you've launched you launched in 2010 what have you scaled to today in terms of total customers on the platform so we have we have about 500 paying enterprise customers and we have uh about 200k users um and uh you know our users are basically uh our translators transition companies and enterprise uh users so these are the you know these are the three big kind of user groups and in terms of you know you can also get the segment so we provide you know we provide uh the transition tool to translators and the workflow the whole workflow component the transaction management system we provide to global companies and david when i take 500 customers times that 5 000 per month price point you just gave me that would put you at 2.5 million dollars per month is that accurate it's actually it's a little less okay but can we say but between 2 million and 2.5 yeah more or less okay great well more or less so is it in that range or is it still lower than 2 million so we're um so we're going you know we're um what we're doing is uh is uh we have a growing number of enterprise customers uh that are joining our platform so uh historically we were focusing more on the small on smaller customers you know when they're still with us makes so perfect sense so new customers signing up or at that 5 000 per month price point on average but historically by the way this is very typical historically folks were paying less so so what are you at today are you doing one eight per month so so we're uh our next aim or our next game is to get to 10 million dollars of of uh annual uh uh revenue you know okay and so and walk me through kind of where you're at today do you think you'll hit that this year um probably next year okay yeah so 10 10 million in an ar would be 830 grand per month in revenue again can you give me a general sense of where you're at today so um a range is fine by the way if you don't want to say the exact number yeah a little guy i think are you you get the idea i know where we are well no no i'm actually not sure i thought it was 2 million by multiplying your numbers but it's actually it's it's less than that i don't know if it's 100 000 a month or 500 000 a month yeah so so are you trying let me ask you differently let me ask you differently so you don't have to so you don't have to say an actual number are you are you trying to double your what growth rate are you targeting what growth would you have to hit to hit that 10 million mark next year so we grew 100 year on year last year and uh we're going you know we're going to so as we grow bigger you know we're uh we're going to grow at a little bit lower rate than 100 percent uh this year yeah that's what i'm asking so that 10 million target what if you hit that what growth would you have hit are you are you kind of modeling 80 year over year growth 60 year over year growth what's that put you at yeah so so you know last year we uh uh we were at about uh uh five million dollars great so you're trying you're still trying to i mean these are big numbers they're getting bigger you're trying to still double you over here uh this year we won't double so if we doubled this year we would be at 10 million yeah and so we'll be at 10 million 10 minutes next year so we will not double uh uh this year because uh i think doubling forever is probably not our not our strategy and also you know we're bootstrapped so so we're we're you know our uh our growth is is is uh you know needs to be profitable in in so so we need to you know we're running a company that is a self-financed crowd yeah by the way congratulations uh on the scale that you've reached bootstrapping that's rare and i applaud you and i think that's wonderful i can't wait to go through the rest of the interview and learn how you've done that just to confirm this at the end of december 2017 you said you hit that 5 million run rate is that accurate okay good and you're giving yourself essentially 24 months to double that yeah i think that's that's pretty reasonable yeah great yeah so at a 5 million run rate in december of 2017 that means you're doing north of kind of 420 grand per month you've got 500 customers some of them paying less than five grand per month but new ones you're signing up are at that five grand per month level for these translation services give me more of the back story here so you launched in 2010 what were you doing before that so before that i was uh i worked in uh you know my first job was was uh was with a recruitment company then i uh you know i was i was always interested kind of in technology so in that recruiting company i was trying to figure out the market uh the the you know the uh and i was uh i actually uh went to work for a couple of technology companies afterwards telco and and a startup afterwards so it was a language technology startup and uh that's where i you know met some of the uh some of the people that work with me currently at memsource and what's the team size today so we're uh we're 80 currently is it eight eight zero yep eight zero great and everyone's in prague no so we have uh most people in prague and then we have some people in the u.s we have a small team in japan also and then we have a few people you know all over europe and we have one person in canada we have uh one person in korea so that's great we'll do it look i have to tell you we've interviewed thousands of b2b sas ceos and the average revenue per employee across all these is about 137 000 bucks if a cro just across bootstrap companies that number's about 250 000 currently if you're north of a 5 million run rate and you've got 8 employees you're up at like 660 grand so i love that you're doing this highly in a highly profitable way you're super capital efficient walk me through some other some of the key kind of unit economics churn is critical in a sas business what is your turn today and how do you manage it [Music] so um so you know mems search memsource is a a uh is a you know pretty sticky service so so obviously to uh be able to succeed you know we you know we make sure that our terminate is pretty uh you know pretty manageable so well we'll quantify that for me so what is churn what's what's logo churn per month today or annually so so uh we you know month and months you know we're we're between two and three percent of of uh revenue that we lose okay so and that's that's net that's net or gross that's net okay sure so you're adding back expansion revenue yeah is that is that i you seem uncertain is it i accurate lost i lost you for for a sec can you please repeat yeah i was just saying you seemed uncertain when i said you add back expansion revenue i just want to make sure so it's you have less than three percent net revenue churn per month which means you're adding back expansion is that accurate little guy i'm probably you know i would i would need to check with the person that's managing the turn to answer uh david come on hold on there's eight people in the company one of the critical metrics in the sas company zero people in the company oh you said eight zero yeah oh i thought you said eight okay i take i i take back my comment about revenue per employee then it's it's it's it's way less that would that wouldn't make any sense and actually you know we've uh uh we've grown a lot we've we've actually been very successful last year and we expanded um the menstrual steam from um 35 to 70 between 2007 early 2017 and and and early 2018 and we've added few more people in the meantime so uh so this actually you know this year or the last 12 to 16 months you know we saw you know huge expansion in in in our team and uh...