Founder Interview
How Pepperi Moved Upmarket With Just Under 1,000 Customers, Bootstrapped and Profitable (Interview with CEO Ofer Yourvexel)
- Interview Date
- January 20, 2021
- Interviewee
- Ofer YourvexelCo-Founder and CEO
Company Metrics at Interview Time
Customers (2021)
Just under 1,000
Min. Monthly Price per Customer (2021)
$1,000 per month
Team Size (2021)
100
SaaS Revenue Share (2020)
90%
Historical Snapshot
These numbers were reported by Ofer Yourvexel during the interview recorded in January 2021 and are a historical snapshot, not current figures. See Pepperi’s current numbers.
Key Takeaways
- 01Pepperi served just under 1,000 customers at the time of the interview, about the same number as when Ofer last appeared on the show at the start of 2019, after losing customers that shut down their businesses during COVID.
- 02The company offered three products: B2B e-commerce, field sales applications, and a proprietary iPaaS integration platform.
- 03Minimum pricing was $1,000 per month per customer; the largest customers paid $60,000 to $70,000 per month.
- 0490% of 2020 revenue came from SaaS subscriptions and 10% from one-time services.
- 05Pepperi was fully bootstrapped and profitable at the time of the interview, with no outside investors.
- 06The sales team consisted of six quota-carrying reps and a total of nine salespeople including customer success.
- 07The engineering team numbered 30 people focused purely on R&D.
- 08Expansion revenue across the customer base over the prior twelve months was around 20% on a percentage basis, and upsells in the US exceeded new sales during COVID.
- 09Asked whether he would raise if growth returned, Ofer said he would "for the right price": no more than $5,000,000 to $10,000,000 for organic growth, and no set limit for fast expansion through acquisitions, which "depends on the plan."
- 10Pepperi was actively moving upmarket, focusing on mid-market and enterprise customers with higher contract values.
Company Metrics at Time of Interview
| Metric | Value | Source |
|---|---|---|
| Customers (2021) | Just under 1,000 | Founder interview, Jan 2021 |
| Products Offered (2021) | 3 | Founder interview, Jan 2021 |
| Min. Monthly Price per Customer (2021) | $1,000 per month | Founder interview, Jan 2021 |
| Max. Monthly Price per Customer (2021) | $60,000 to $70,000 per month | Founder interview, Jan 2021 |
| SaaS Revenue Share (2020) | 90% | Founder interview, Jan 2021 |
| Services Revenue Share (2020) | 10% | Founder interview, Jan 2021 |
| Expansion Revenue, Percentage Basis (12 months to Jan 2021) | About 20% | Founder interview, Jan 2021 |
| Sales Reps (quota-carrying) (2021) | 6 | Founder interview, Jan 2021 |
| Total Salespeople (incl. customer success) (2021) | 9 | Founder interview, Jan 2021 |
| Engineers (R&D) (2021) | 30 | Founder interview, Jan 2021 |
| Total Team Size (2021) | 100 | Founder interview, Jan 2021 |
| Profitable (2021) | Yes (bootstrapped) | Founder interview, Jan 2021 |
Growth Breakdown
Revenue Mix
In 2020, 90% of Pepperi's revenue came from annual SaaS subscriptions and 10% from one-time services. Ofer declined to state a specific MRR or ARR figure on the recording: "I prefer at this point not to talk about my MRR." He said revenue held up even as the customer count fell ("we did not drop revenues, we just dropped number of customers"), but that growth was weak: "All in all, I grew very little last year because of this corona."
Customers
Pepperi had just under 1,000 customers at the time of the interview, about the same number as when Ofer last appeared on the show at the start of 2019. COVID caused the company to lose customers who shut down their businesses, but Pepperi offset this by moving upmarket toward larger accounts with higher monthly contract values.
Team
Total headcount was around 100, including about 30 engineers working purely on R&D and a nine-person sales organization with six quota-carrying reps; customer success staff carried no quota. Nathan noted that the engineering team was much bigger than when they last spoke.
Profitability and Funding
Pepperi was fully bootstrapped and profitable at the time of the interview: "We don't need investors." Ofer said he liked talking to investors but had told them it was not a good time, "especially because the business results are not great, as I explained. In terms of growth." Asked whether he would raise if growth returned this year, he said he would "for the right price", and that for organic growth "I don't need more than 5 to 10,000,000"; fast expansion through acquisitions had "no limitation" but "depends on the plan."
Growth Strategy
Upmarket Focus
Pepperi deliberately shifted toward mid-market and enterprise customers during COVID, trading customer count for higher average contract values. Ofer noted that the effort to onboard a $1,000 MRR customer was sometimes the same as onboarding a $10,000 MRR customer, making larger accounts far more efficient.
Upsell and Expansion Revenue
Expansion revenue over the twelve months before the interview came to around 20% on a percentage basis, and upsells in the US exceeded new sales during COVID. Ofer called the upsells one of the nicest things that happened to Pepperi in 2020, and said that, counting upsells against churn, "I had the negative churn all in all."
Industry Vertical Concentration
Pepperi concentrated on fast-moving consumer goods and eyewear verticals, which performed better during COVID than slower-moving product categories. This focus helped the company maintain revenues even as overall customer count declined.
B2B2C Platform Expansion
Ofer identified direct-to-consumer as a strategic growth direction, noting that many of Pepperi's existing B2B customers were adding their own B2C websites. He expressed a desire to serve those customers end-to-end rather than directing them to third-party B2C solutions.
Lean Sales Model
Pepperi sold with six quota-carrying reps and no BDRs: asked how many people were on the sales team in total, Ofer said "That's it. Six." Customer success staff "do not carry quota", and with them the sales organization numbered nine.
Best Quotes
“We sell a sales platform for businesses who are selling physical good, typically consumer good products.”
“Ninety ten. 90% SaaS, ten percent one time services.”
“About the same number. We had a tough year last year because of the COVID.”
“We concentrated on specific industries that are more successful during this period. Generally speaking, those are the industry I just mentioned, as opposed to slow moving item types industries. We focused on larger customers. Doing these two, we did not drop revenues, we just dropped number of customers.”
“Yes. We are profitable. This is the beauty of it. We don't need investors.”
“If it's just for organic growth, it depends on the strategy. If it will be for organic growth, then I don't need more than 5 to 10,000,000.”
“When you're 20, you think you have plenty of time. When you get to 57, you feel like, wow. Should've... I should've done more fun.”
What Happened Next
At the time of this January 2021 interview, Pepperi was a bootstrapped, profitable B2B sales platform serving just under 1,000 customers with a team of 100. Ofer Yourvexel was weighing whether to raise outside capital for the first time, contingent on returning to a stronger growth trajectory. Visit the Pepperi company profile on GetLatka for the most current available data.
View Pepperi’s current profile and metricsFull Transcript
Chapters
- 0:00Introduction and Company Overview
- 0:19What Pepperi Does and How It Makes Money
- 0:39Three Core Products Explained
- 2:09Pricing: From Minimum to Largest Customers
- 2:49Revenue Mix: SaaS vs. Services in 2020
- 3:11Customer Count and COVID Impact
- 4:34Moving Upmarket: Why Fewer but Bigger Customers
- 5:58Sales Team, Upsells and Expansion Revenue
- 7:49Team Size and Engineering Headcount
- 8:13Bootstrapped and Profitable
- 8:48Would Pepperi Raise Capital?
- 9:32Hypothetical Roll-Up and the B2B2C Vision
- 11:44Famous Five: Books, Sleep and Life Lessons
Introduction and Company Overview
Nathan Latka
00:00Hello, everyone. My guest today is Ofer Yourvexel. He's the cofounder and CEO of Pepperi, the b to b sat... Sales platform for brands and wholesalers. Before founding the business, he spent over twenty years in executive leadership positions with enterprise technology companies including Amdocs, Shikata, Enigma, and Tefan. Alright. Ofer, you ready to take us to the top?
What Pepperi Does and How It Makes Money
Nathan Latka
00:19So the website is pepperi.com. What's the company doing? How do you make money?
Ofer Yourvexel
00:27We sell a sales platform for businesses who are selling physical good, typically consumer good products.
Nathan Latka
00:34Okay. What does that mean? What are they typically paying you per month to use the tech?
Three Core Products Explained
Ofer Yourvexel
00:39They are paying us annually. We are pure SaaS platform. They typically pay us for three main products. One of them is the B2B e commerce. This is the main one. Then we have all the different sales applications for reps in the field, typically these are three types of reps: reps taking orders in the field, reps doing merchandising jobs in the field, and drivers doing sales, drop shipping, DSD, route accounting.
01:15So these are two products. The third one is
01:19our integration platform iPaaS as a service. Typically, system is integrated to the ERP, and we are doing that through our own proprietary iPaaS. So these are the three products.
Nathan Latka
01:37Now is this exclusively for e commerce brands?
Ofer Yourvexel
01:42No, it's for any type of sales of physical goods, whether it's
01:50face to face or through an e commerce website or through
Nathan Latka
01:55So beauty, healthcare, jewelry, fashion, eyewear, anything like that?
Ofer Yourvexel
01:59Yes, but we are focusing mainly on the fast moving ones, as well as eyewear. These are the main industries that we are very successful with.
Pricing: From Minimum to Largest Customers
Nathan Latka
02:09And what are these brands paying you per month on average to use this technology?
Ofer Yourvexel
02:14It can vary from the minimum of around 12 k per month, sorry. It can vary from a minimum of 1 k for the very smaller ones, and it can go up to around $60k to $70k, the largest
Nathan Latka
02:14Per month?
Ofer Yourvexel
02:14Per month, yeah.
Nathan Latka
02:37Got it. So your largest customer is, you know, paying you $850,000 a year or something like that.
Ofer Yourvexel
02:42Yep. Even more if you take even more if you take services into account, one time services.
Revenue Mix: SaaS vs. Services in 2020
Nathan Latka
02:49So when you look at your revenue from twenty twenty, what percent was services versus SaaS?
Ofer Yourvexel
02:55I lost you on that. Can you repeat your question?
Nathan Latka
02:58When you look at 2020 total revenue, what percent was services versus SaaS?
Ofer Yourvexel
03:03Ninety ten. 90% SaaS, ten percent
03:09one time services.
Customer Count and COVID Impact
Nathan Latka
03:11And last time you came on in 2019, it was the beginning of twenty nineteen, you shared you'd passed about a thousand customers. Where are you today?
Ofer Yourvexel
03:19About the same number. We had a tough year last year because of the COVID.
03:26However, one of the things we did is we concentrated on specific industries that are more successful during this period. Generally speaking, those are the industry I just mentioned, as opposed to slow moving item types industries. We focused on larger customers. Doing these two, we did not drop revenues, we just dropped number of customers.
Nathan Latka
03:51So you're 1,000 customers paying about 1,000 a month, so is your MRR about a million dollars right now?
Ofer Yourvexel
03:58I prefer at this point not to talk about my MRR.
Nathan Latka
04:02Okay, but I can multiply the thousand customers times the minimum of a thousand in ARPU and that gives you a minimum of 1,000,000 a month in revenue?
Ofer Yourvexel
04:10Yeah. I just say that we have bit less than thousand now. Have less customer, but bigger customers.
Nathan Latka
04:16I see. When do you think you can way bigger.
Ofer Yourvexel
04:19When do you think...
Nathan Latka
04:20Just on the SaaS side, I mean, do you think you can pass a million dollars a month in revenue? This year?
Ofer Yourvexel
04:25I don't think so.
Nathan Latka
04:26It'll take A million dollar?
Ofer Yourvexel
04:29Yeah. Yeah. A million dollar is...
04:33Sure. Yeah.
Moving Upmarket: Why Fewer but Bigger Customers
Nathan Latka
04:34And and walk me through why you've made the decision to move, you know, aggressively enterprise, less customers, higher price points.
Ofer Yourvexel
04:46It is quite complex, and because it requires integration, it cannot stand alone, then it's not so simple to implement it as a stand alone product.
04:59I mean for novice, non IT people, and for that reason it's much easier for us to work with companies that have some IT infrastructure, and typically those companies are companies that are mid market and above.
05:15Also,
05:18our product is very scalable and it's enterprise level, so doing a project sometimes it's the same project, the same level of effort to bring 100... I mean, 1,000 MRR or to bring 10,000 MRR. And you always have limitation on your capacity, your resources. So if you can focus on the largest one, and they also can have a much bigger potential for growth.
05:55And patient to full blown implementation of our entire system.
Sales Team, Upsells and Expansion Revenue
Nathan Latka
05:58So, Ofer, when you look at
06:00driving expansion revenue, you wanna look at obviously your sales team to look at upsell opportunities. How many people are on your sales team right now with a quota?
Ofer Yourvexel
06:10We have six people on... With a quota. One of the nicest things that happened to us in 2020 is that the upsells were amazing, especially in The US, and we sold... The upsell in The US were more than the new sales
Nathan Latka
06:10Mhmm.
Ofer Yourvexel
06:10During the COVID.
Nathan Latka
06:10When you look the full you look at
06:38business, Ofer, I hate to keep... I don't mean to keep cutting you off, but it's limited time, and I wanna keep learning here fast. So when you say expansion revenue was great, can you quantify that across the whole customer base? What was expansion revenue over the past twelve months?
Ofer Yourvexel
06:53Couple of million.
Nathan Latka
06:55Sorry. On a percentage basis?
Ofer Yourvexel
06:59Around 20%.
Nathan Latka
07:0120%. Okay. And would that put your net revenue retention at something like 110, 120%? Obviously, that... It's driven by your churn.
Ofer Yourvexel
07:15I had the negative churn all in all. You know, when you take upsells versus churns, gross churn.
07:24All in all, I grew very little last year because of this corona because we lost a lot of customers that actually shut down their business.
Nathan Latka
07:32Yep. So six quota carrying sales reps. How many people are total on the sales team?
Ofer Yourvexel
07:38That's it. Six.
Nathan Latka
07:40Oh, so you don't have any BDRs or customer success reps
Ofer Yourvexel
07:40No.
Nathan Latka
07:40With no
Ofer Yourvexel
07:44I have customer success. Customer success do not do not carry quota.
Team Size and Engineering Headcount
Nathan Latka
07:49Yeah. So what's total team size of the salespeople, including ones that don't carry quota?
Ofer Yourvexel
07:49Nine.
Nathan Latka
07:49Okay. Nine. Got it. And how many engineers?
Ofer Yourvexel
07:59About 30.
Nathan Latka
08:00Oh, wow. 30. That's much bigger than the last time we spoke.
Ofer Yourvexel
08:04Yeah. I'm talking pure engineers for R and D, not for implementation and such. Yes.
Nathan Latka
08:09Yeah. And what's the total team size?
Ofer Yourvexel
08:12Around 100.
Bootstrapped and Profitable
Nathan Latka
08:13100. Now I was really impressed last time we chatted. You've done all this bootstrapped. Are you still bootstrapped?
Ofer Yourvexel
08:20Yes. We are profitable. This is the beauty of it. We don't need investors.
Nathan Latka
08:26I love that. I love that. How have you resisted? I'm sure they reach out to you all the time. Do you just say, no. Thank you?
Ofer Yourvexel
08:33No. I do not say that. I I like chatting with them, but generally speaking, we told them that this is not a good timing, especially because the business results are not great, as I explained. In terms of growth.
Would Pepperi Raise Capital?
Nathan Latka
08:48If you do get back to a growth trajectory this year, would you consider raising capital?
Ofer Yourvexel
08:55In capital for the right price.
Nathan Latka
08:55Mhmm. Yep.
Ofer Yourvexel
08:55Not for any price, but for the right price, sure.
Nathan Latka
09:02And if you did go down and raise, obviously, valuation is what you mean by price, but how much would you look at raising if you did do it?
Ofer Yourvexel
09:12Actually, don't need a lot. It depends. If it's just for organic growth, it depends on the strategy. If it will be for organic growth, then I don't need more than 5 to 10,000,000.
09:24If we're talking about fast expansion with acquisitions, then there's no limitation to that. But it depends on the plan.
Hypothetical Roll-Up and the B2B2C Vision
Nathan Latka
09:32Kind of companies would you go acquire if a private equity firm gave you $100,000,000 to spend on a roll up?
Ofer Yourvexel
09:40B to c.
Nathan Latka
09:41Can you name companies?
Ofer Yourvexel
09:44No.
Nathan Latka
09:47Why not? Come on. I wanna know I wanna know who you'd go after.
Ofer Yourvexel
09:50No. I don't want I don't want to to provide that.
Nathan Latka
09:53When you say b to c, what do you mean by that?
Ofer Yourvexel
09:56We are a b to b platform. I'll be happy to complement the platform to be b to b to c.
Nathan Latka
10:03So so describe what that platform would do.
Ofer Yourvexel
10:08A B2B2C platform?
Nathan Latka
10:10In your space?
Ofer Yourvexel
10:11Yeah. So our customers today are customers that are selling to businesses. Typically, are talking about retail store or websites that are selling their products, and typically we are talking about manufacturer. As I'm sure you know, people are moving more and more towards e comms sales, and it became much easier to sell B2C, and there's huge pressure on my customer to go direct. And we saw many of our customers moving from pure B2B to B2B2C, meaning opening
10:49their own websites, in some cases opening their own stores, but in the most cases opening their own B2C websites, and no longer doing it behind the scene, because before that we also knew some of them were doing it behind the scene with different names.
11:09So now, which is is called today direct to consumer, New businesses in many cases are doing it from the get go, but many traditional businesses are adding that to their business lines.
Nathan Latka
11:23Got it.
11:24What out of time.
Ofer Yourvexel
11:25We're do is to
11:27No.
Nathan Latka
11:28Go go ahead. Sorry. But wrap up here because we're out of time.
Ofer Yourvexel
11:29What would you like to do?
11:31What we would like to do is to serve those customer a to z, meaning b to b to c and not and... To not tell them as we are telling them today, go and find a b two c solution, and we'll integrate to it.
Famous Five: Books, Sleep and Life Lessons
Nathan Latka
11:44Alright. Let's wrap up here with the famous five. Quick answers. Number one, what's your favorite business book?
Ofer Yourvexel
11:50I'm an old guy. It's
11:54the chasm.
11:55Crossing the chasm.
Nathan Latka
11:56Crossing the chasm. Number two, is there a CEO you're following or studying?
Ofer Yourvexel
12:03I think Amazon. Yeah.
Nathan Latka
12:05Number three, what's your favorite online tool for building the business?
Ofer Yourvexel
12:08Again, I didn't hear.
Nathan Latka
12:10What's your favorite online tool for building pepperi?
Ofer Yourvexel
12:21Power BI.
Nathan Latka
12:22Number three. How many... Or four. How many hours of sleep do you get every night?
Ofer Yourvexel
12:27How many?
Nathan Latka
12:28Hours of sleep.
Ofer Yourvexel
12:30Oh, four, five.
Nathan Latka
12:32That's not healthy.
12:37Why don't you sleep more? You feel healthy sleeping just five hours a night?
Ofer Yourvexel
12:42I wake up at five in the morning and typically six in the morning I'm in the sea and I'm rowing.
Nathan Latka
12:50Oh, very good. Okay. What's your situation?
Ofer Yourvexel
12:53Hours.
Nathan Latka
12:54Are you married, single, kids?
Ofer Yourvexel
12:57Married with two kids.
Nathan Latka
12:59And how old are you?
Ofer Yourvexel
13:0157.
Nathan Latka
13:0257. Last question.
13:04What do you wish you knew when you were 20?
Ofer Yourvexel
13:10That's life are short. When you're 20, you think you have plenty of time. When you get to 57, you feel like, wow. Should've... I should've done more fun.
Nathan Latka
13:20Life is short.
Ofer Yourvexel
13:22Life is short. Much more than you think when you're young. The older you get, you... More you realize it. And then make as much fun as you can, and this is why I'm waking up at five in the morning, not not to work.
Nathan Latka
13:34Pepperi, guys. Connected selling seamless buying, a b to b sales platform for brands and wholesale distributors. They're over 11,000,000 call it a year in terms of run rate, basically flat though year over year as they focus and double down on their enterprise customers. Their biggest customer pays call it $800,000 per year. That's just the SaaS. They also have 10% of their revenue is services. He's done all of this with a team of 100 people completely bootstrapped,
13:57which we love. They're gonna keep growing. We appreciate you coming on, Ofer. Thanks for taking us to the top.
Ofer Yourvexel
14:03Welcome. Bye bye.
Nathan Latka
14:06One 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, one
14:30p. M. Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at two p. M. 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 SaaS world, whether it's
14:50an acquisition, a big fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you wanna take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You wanna 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
15:11saying. Sign up 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
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