Piwikrevenue, valuation & funding

just got done editing this interview you guys are gonna love it before i do that though i want you to know that i'm going to be in the comments for the next 30 minutes or so answering your questions if there's additional questions you want me to ask the ceo next time i interview them leave them below or if you're just loving the data points i get ceos to share click the thumbs up button below that's your way of telling me you're loving this stuff and i'll get you more of it additionally again i'll be in the comments answering any questions you have all right for 30 minutes enjoy the interview hello everyone my guest today is amacha gzawajinski he is the ceo of piwik pro and clear code analytics and advertising technology expert entrepreneur and startup founder magic you ready to take us to the top yeah yeah all right thanks for having me you bet so privacy friendly alternative to google analytics p p i w i k dot p r o tell us how a customer's using you and how do you charge for the product sure sure so we are a privacy friendly alternative to google analytics and uh we uh we charged well like our average subscription is 20 to 50k a year it's a yearly subscription uh we host software either in cloud or private cloud or on-premise okay so just to be clear if you look at all your customers right now divided by your total turn your current revenue they're paying on average you know two thousand dollars a month something like that um it would be the average on the full portfolio would be probably uh a bit less than that but definitely that's true for the last uh 12 months of subscription so more maybe more like 1500 across your entire customer base yeah yeah yeah exactly and now you told us on the last episode which is episode 817 back in october of 2018. it's been a while man i'm glad to see you again but uh you said a company you founded in 2013 you were serving back then about 400 customers how many are you serving today so uh that's actually interesting because we saw despite our revenue grow grew uh we serve less customers so we have around 200 customers right now uh but since we spoke last time we closed our uh offering for the small business clients and we we focus entirely on the mid-market and corporate clients okay so what have you grown revenue to um so we we are over four million annual requiring revenue uh which uh basically should add up with this 2 over 200 clients times the average subscription that you mentioned yeah so now last time you came on you told me you were doing about 300 000 per month which would be about 3.6 million annually now it sounds like you're right around kind of maybe 4 million annually so and that's you know that's okay growth but certainly not growth that you'd expect from someone that's raised you raised two million dollars back then why hasn't growth been faster so uh the this uh last round uh was mainly dedicated it was partly dedicated to also buy out one of our former shareholders and founders that was uh that is no longer in the company um so we self-financed the growth uh till today uh pretty much like also two million over like uh six years isn't isn't that much uh of the the capital rise and we actually didn't uh glue that much but our portfolio of the clients has has changed plus we uh when we started uh the company we started as a a subscription service based also on the open source product piwik which is now called matomo and in the meantime we developed a new product uh which is a totally property platform developed from scratch on the newer technology and we were over this last two years we were also uh working on migrating these customers from the legacy product to the new product so uh when you look at the last two years we were maybe having like 10 percent or so revenue from the uh from the new product um and the rest was legacy two years ago and now the product is much more major and we have uh over two thirds of the customers and revenue uh going from the new product and that's a quite big achievement because if you look at the growth of the monthly recurring revenue from the new product it is actually like you know uh it went from like 10k to over 200 200 k so what do you think you'll finish 2020 with in terms of mrr um we should finish somewhere around 450 470k now that we we see that like our growth started we started growing again somewhere around like mid last year so we had uh last uh two quarters of the 2019 uh that went very well we are on target for q1 this year so it looks like this growth is sustainable and we'll see how it goes with the everything that is going on with uh coronavirus but uh i think we are on the good way to to actually uh make uh make the targets uh this year and so how much of that two million you raised previously actually left the company immediately to pay out i guess it sounds like an old founder mm-hmm um so uh that was uh so that was that was a bit more complicated because we also owned a software business part uh software services that doesn't count towards the the the webinar yeah so that so that uh there was uh the round was uh bigger than two million because there there was the uh what was the total round size so so the total the total was uh over uh four million out of two million more than two millions wants to buy out the the existing ic okay and have you raised any additional capital since then no no because we we self-finance everything that we need so you're profitable today um so we are not profitable in the product business but we have the services arm which is a software development focused on the marketing technology called clearcode which is the uh our uh let's say uh sister company and we everything that we uh make from the uh software uh development services we really invest in the product so much though just just to be clear because i don't want to be any confusion the the current 360 000 you're doing per month right now that's pure technology correct pure product uh uh revenue no agency no agency at all how much agency do you do per month agency revenue uh it makes uh somewhere around 400 to 500 depending on the amount okay so you'll then plow that money back into the tech product yeah i mean of course like the profit out of that uh maybe to give you a better sense of that so we burned last year one comma seven million uh us dollars yep and how much are you bringing per month today the profit from the company uh from the services company yep how much did you burn last month uh last month hundred twenty ish okay okay yeah and and how so 120 000 net burn which again you make up from from the agency revenue what is the mechanism that allows you to take cash from the agency and put it in the business are you essentially investing in yourself there or how does it actually work uh it's a a holding component so we we have the same uh shareholders in the holding company so we can move the money around so pretty efficiently without conflict of interest i see how many folks are on the team today just the tech side just the tech side is 105 people okay still but still 105. that's what it was that's what it was last to make him on you're consistent it also changed a bit like uh structure-wise so we invested a lot in the for example customer success teams and more like consultancy teams um so the the mix is a bit maybe different uh we do things more efficiently on the technology side but we are still around the same size when it comes to the head count and as a company we think that we will stay this size we we have pretty much all the walls that we need uh so uh except for natural electrician will will stay the the same size and we we plan to grow like we should be able to triple the business without uh growing much of the team of the 105 how many are engineers uh there is around 40. and how many are of quota carrying sales reps um quotas carrying sales reps will be around eight eight okay interesting now has your has your churn profile change so what's gross revenue turn on the tech product these days yeah so that's actually thing that has changed a lot because we uh manage finally to make upsells to work uh so we have last year we had 97 percent uh revenue retention net aggregation uh which is uh which is i think quite good net or gross uh so it's uh i'm not sure if i understood the correct so before before you add back expansion revenue right what was gross revenue churn okay so before we added expansion there was like 20 something so 22 and we had around uh we made up this uh 19 percent or so with the with the absence yeah so 20 lost rev from the cohort that was active exactly a year ago 20 of the revenue churn but you up sold 17 or 18 so net revenue retention is about 98 yeah and are you still i mean what's cac today to get these new higher value customers what are you spending to acquire them um so uh from the marketing uh spending itself uh it's around seven thousand uh dollars per customer um and uh on top of that we would have to add some sales uh expenses because sometimes it's partner traders sometimes it's inbound etc what kickback do you pay your partners uh for partners we pay anywhere from ten percent to uh 25 uh but it's worth to mention that we do still around 85 90 from our own channels mainly inbound yep and now do you pay those partners 10 to 25 uh affiliate fee in perpetuity or only for the first year or something else uh it depends on the relationship because we we do business with uh several agencies and in case they hold the billing relationship with the customer it's in perpetuity in case they just bring customers and the customer designs their contract directly with us it's only for the first year interesting and which agency can you name the agency that that is most effective for you brings you the most traffic so actually the largest partners because this partner program i think we talked about this uh when we when we spoke last time we were just starting that so the largest partners haven't brought yet big deals but there are some in the pipeline so the the partners that worked out really well were smaller uh smaller partners and we have agency for example in denmark called abstract or we have a partner in um in netherlands that's called candid goods so it's another big names uh but what we saw is these smaller partners are much more engaged and um and they bring actual deals we have another partner in spain that is specializing in government deals which is one of our biggest sectors and uh they are like you know in the last month i think there are three new topics with them that we are discussing so very good would you ever instead of continuing to fund the 120 000 a month losses in the technology side with market you know your agency revenue would you ever consider raising debt in the technology business and using someone else's money to pay off that burn to drive growth um so we we are considering splitting the companies all together in that case we will uh will probably think about rising depth uh but it's still something that we are going back and forth we are in a very comfortable position uh that we have uh almost no depth uh in the in the holding component and uh and we are break even at the holding company level yeah so uh that gives like you know you much more security than having a debt piling up and you need to go faster and then rise more money and so on so we we we took us this more sustainable uh uh approach which if the recession will come probably will be the the right decision uh to have yeah very good let's wrap up with the famous five number one favorite business book um so i don't have any specific business books except some like you know all classics like uh scaling up or good to great uh but i i really liked the books that tell the story and i think the last one i i uh i read that i really liked was about pixar to pixar and beyond and uh yeah i would recommend anyone who haven't read that to to take a look number two is there a ceo you're following or studying [Music] i'm not following too many ceos but i have a couple like uh and a couple of people known in the sas industry that i really know just name it um so christoph janz from 0.9 capital yep number uh three what's your favorite online tool for building your company uh linkedin number four how many hours i sleep to get every night seven eight hours and what's your situation married single kids um single okay no kids running around all right two cats how old are you um i'm uh 34 right now 34. last question what do you wish your 20 year old self knew my check i would say don't stress out too much like some things take will definitely take much more time than you would expect yup guys there you have it founded in 2013 they are a privacy friendly alternative to google analytics currently doing called 360 000 per month in revenue about 200 customers paying between 1500 and 2 000 per month they've done this by raising just two million dollars in capital they're currently burning about 120 000 per month but they make up that loss with revenues from a different company which is their agency that is fueling the growth of this tech company which is very exciting 105 people exclusively on the tech team of which 40 are engineers eight are quota carrying sales reps economics unit economics on this side of the business ninety-eight percent net revenue retention spending seven to ten thousand dollars to get a new customer for a five to eight month payback period matrix thank you for taking us to the top thanks these ceos rarely give these kinds of interviews i hit them hard i get the data and i want to do it more so if you want to get more of this stuff make sure you subscribe up here and then additionally go check out one of my other ceo interviews right now