One Shoe Revenue & Valuation (2021)

hello everyone my guest today is michelle valendelbe he's the founder ceo and brand strategist of creative and digital agency one shoe he's got over 20 years of comprehensive leadership and consultancy experience with multi-side multicultural global organizations including pharmaceuticals consumer healthcare and fmcg michael you're ready to take us to the top yep absolutely so just be clear this is a consulting play or is there a sas component a software component to this as well [Music] sorry this is a consulting just consulting business yeah pure consulting business and again something yeah and so what are you helping most of your like your biggest customers what are you doing for them um well uh 14 years ago 15 years ago i started the agency called oneshoe to offer an integrated experience starting from brand strategy and then directed to digital strategy and then translate it into either campaigns or uh building large-scale websites platforms uh basically of complete digital experience um so so i built basically an integrated agency for our clients yeah and what year did you launch uh 2006. yeah longer than six those first year engineering is always really difficult do you remember what sales were that first year oh it was pretty easy actually yeah um the funny thing was um i started with two second-hand laptops um i registered myself at the the trade register and that evening my wife gave party at home and she said okay mike um it's really interesting that you have a company but do not give your uh your business card to every people to all my friends please don't do so so the first person that comes in starts telling me a story that he just started a a company and that he needed a website um and and basically a brand strategy everything so and that's where i've basically got my first client um and then i approached several of my my well basically my my closest friends in in my network who worked at large brands um and well they they believed my furry and they gave me my first opportunities so how much revenue in that first year in 2006 uh revenue in first year was about 200 300k okay it's a good start for an agency now fast forward to today how many folks are on the agency how many team members um well the interesting bit is you know i sold my company last year uh to the interactive which company one shoe i sold one shoe to the intracto group and i basically built the company up until 45 people and now my company has become part of the intracto group and we we now have over 1500 employees how many are just in your group though all fifteen hundred forty five forty five okay got it okay so 45 people and how many of them are engineers uh 25. okay so heavy heavy engineering then definitely heavy engineering yeah yeah they're writing custom code for websites mobile apps things like that yeah yeah definitely yeah and and that change came basically in 2008 when the um uh basically the crisis you know the friendship financial crisis hit us uh everybody moved to open source web development and we were already a a well-known player uh with regards to open source web development um so that's where i basically drew the majority of our clients in the in web yeah so and just be here what is like the number one product you're delivering for customers is it new websites or mobile apps or something else uh yeah you know large-scale platforms websites and mobile apps yeah yeah majority dhl big enterprise customers big large international clients yeah yeah what is your average sort of per project fee would you i mean it's probably in the hundreds of thousands right yeah yeah so so between uh a 150 two six seven eight over a million plus yeah it depends yeah uh okay got it that makes sense and in any given year how many customers like so let's go from year one to year two right in 2006 you did a couple projects 300 grand what did you do in 2007 um 2007 we grew them up until i think it was about 400 500 000 um and in 2008 when the financial crisis hit us that's why we started growing rapidly and i mean very rapid in in 2012 um i decided to join a competition for the fastest growing company in in the netherlands and in europe and we became number 25 in terms of fastest growing companies in in the netherlands so what did you do in 2012 um well the thing was open source at the time was a major draw for us we we used drupal which is an open source content management framework to build website with and now it's a digital experience platform at the time it was a content management framework um and it got a lot of attention in the news because i was i was playing the news i was creating a lot of free publicity around drupal um and that brought in a ton of work and i mean a ton of work yeah specifically from the pharmaceutical industry and the educational industry that's where a lot of our profit came from so so what i'm trying to calculate your growth rate so from 500 grand in 2007 to what's june 2012 um i think the the when it won the award i think that it was about two three hundred percent growth yeah from what though so like are we talking like um no no that's in in uh from 2009 to 2012. that's uh yeah okay i don't know what revenue was in 2009 so i can't calculate what 200 growth is yeah yeah i i don't know the figure from 2009 uh out of my head what what was that i'm trying to trying to get when you won the award what was the number do you know what the revenue was when you won the award i don't know if i had no range i i think it was about you know two and a half i think something like that yeah okay and then were you how long were you able to ride sort of the drupal sort of press did that wear off over time or did you keep growing above 2.5 million yeah it's growing growing rapidly yeah yeah it's been growing ever since you know and and even last year during covet you know we we grew massively as an agency you know there was so much work being thrown as uh at us because we have a specific knowledge from the pharmaceutical and and healthcare industry you know and that's where a lot of work was thrown at us i see they need you to be like hipaa compliant like you you just know stuff about the niche where that's why they're hiring you yeah yeah definitely now how many customers did you do a project for last year uh about 50 50 customers yeah yeah how many that's also includes um well not only project but also maintenance you know maintenance of large scale websites hosting direct and stuff yeah so campaigns ux and design [Music] so 50 last year how many customers do you think you'll service this year project uh i think uh we'll grow on a project you mean about about 65 i think yeah we're growing yeah okay so you're continuing to bring on more pharmaceutical clients more in this space 65. well we see a massive growth in b2b because um it was not only drupal that we're doing we do a lot of front-end development as well uh with the latest java trip javascript frameworks and so there's a lot of work coming from the b2b sector as well they want uh client portals and uh to serve their clients uh specifically in this calvin area everyone's looking for client portals yeah that's a big decision to sell so i want to dive into your sort of as a founder your mental state why you decided to make that decision but first let's let's bridge the gap between the award in 2012 and when you chose to sell do you remember about how much you grew between those periods 2012 to last year yeah but 2012 through to now that was was quite difficult actually because at the time in 2012 i think we were about 25 people and growing past 25 is really difficult as an agency that that's where the first hurdles come in and then you know when we passed 30 then we made a rapid growth until 45 and and and that's where we basically ended up and uh and then we got an offer to sell the company in turn but that's team growth in terms of revenue growth did you continue to see like 200 300 400 years no no no no no no it's it's slowed down yeah so on a percentage basis how much did you grow the business between 2012 i think i think about you know between 10 15 20 growth yeah right per year yeah yeah got it and why make the decision to sell um well when i started the agency i believed in an integrated experience um and i i found it weird at the time there were internet agencies and there were like branding agencies and there were advertising agencies but if you in 2006 i was already thinking about the customer journey you know and that nobody understood me at the time you know what a customer journey was and i decided okay if you want to do it properly you need one single agency that serves all touch points um and so i started building the company organically because i started with zero money no investors whatsoever the whole thing yeah so so i built a company myself um two secondhand laptops that's what i started with at the kitchen table at home it's like okay i want to be a top agency in europe you know um and i want to win a lot of awards and want to be recognized for the work that we do um so in uh so so i think by the end of 2019 we got approached by the interactive group who has a buy and build strategy and um so i gave my presentation about my vision on the market about creating an integrated experience and um and then basically the founder peter johnson he was looking at me like like gosh this is a good story and then he gave his presentation which was exactly the same but only from a buy and build strategy and not uh uh i did it organically he had a buy and build strategy so that's why he was really interested in our proposition yeah and uh yeah value i mean look if you're growing 15 20 year over year since 2012 needed 2.5 million that would put you somewhere i'm making this up around 4 million bucks in revenue when you sold last year valuing agencies are always tricky sometimes you know higher okay okay great but not by i mean what maybe five million not by a ton right yeah okay how do you value an agency is it off pure bottom line cash flow multiple or can you convince them to pay a top-line revenue multiple it's um uh it's a mixture you know the the there's always a negotiation uh going on um but uh we got a good multiplier yeah but we're there's a lot of agencies listening right now which is why i asked you were able to tie it to bottom line profit or top line revenue it was it was a a a mixture so so it was only multiply one thing so were they were they what were they multiplying the multiple against top line or profit uh profit okay got it got it yep all right yeah and they would maybe give you a higher multiple face all your top line growth was higher or lower is what you're saying yeah yeah interesting okay so and and why was this i mean you've been doing this for i guess what 12 years 13 years at that point i mean that's it's a big decision to work for somebody else i know i know um well the interesting bit is you know um i grew the agency organically and i was not able to um to offer both like uh php.net java multiple content management systems um high-end because we we do a lot of campaigns for example uh but we are not serving every single uh market um so so we'll be focusing on fast moving consumer goods and uh the healthcare industry and um so several uh verticals but um becoming part of the interactive group gave me the possibility to serve all markets with all kinds of technology and serving um all clients from from from low-end to high-end global clients yeah no it makes a lot of sense very good uh let's uh let's wrap up here with the famous five mike number one favorite business book favorite business book well the interesting bit is it's not a business book um it's a book which which i advise to every single entrepreneur it's called i'm okay you're okay [Music] and it's a book about transactional analysis on how to communicate effectively that's been serving me a lot in terms of negotiation but also internally with my colleagues number two is there a founder you're following or studying currently well i've always been a fan a great fan of richard branson you know because he's very adventurous i'm adventurous myself i drove from amsterdam to beijing china once in my life i set up on an expedition myself well he flew across the atlantic in the balloon so there's a there's a couple of similarities and uh but he he did it on a larger skill than i did yeah and hopefully you didn't have any kind of crash landing no i didn't have a trash landing no number three what's your favorite online tool for building the agency the favorite tool online tool yep online tool um well for me personally it's linkedin because that's how i get my business you know by creating a lot of connections and everything by running the business um i don't know there's there's multiple uh i'm just a great fan of google actually lincoln's right number four how many hours of sleep do you get every night i'm a good sleeper eight hours that's good and what's your situation like married single kids i'm married yeah how many kids two kids do yeah how are you married lovely kids yeah how are you i'm i'm how old are you you yeah yeah 48 48. last question what's something you wish you knew when you were 20 um something i wanted to know before when i was 20 um that entrepreneur being an entrepreneur is just awesome you know i would have started earlier you know that's um but but you know having read that book as i was telling you about you know i'm okay you're okay i would have you know if i would have had that book you know if life would have been a hell of a lot easier especially in the early days of entrepreneurial one shoe launched in 2016 in revenue grew to 2.5 million dollars in revenue in 2012 writing the popularity of drupal which they helped build websites and applications for they specialized in a niche which was pharmaceuticals and sort of healthcare now scaling nicely they ended up selling the company to agency last year when they were flirting with that five million dollar run rate mike is now happy building the company inside the parent company that did the acquisition they've got 65 customers they'll serve this year in a team of 45 building fast mike thanks for taking the top absolutely thank you very much 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 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 1 pm 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 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