PLIPAG Revenue, Valuation & Funding (2021)

[00:00] Hey, folks. My guest today is Cassio. He's building quote to cash for SMBs. Plipag.com.br if you want to follow along. His 50 word bio short and sweet passionate computer scientist in the fintech space. He's been at HSBC Ebank, which is soon to be listed. And again, now the Co Founder of Plipag. Cassio, you ready to take us to the top? [00:19] >> Yes. How are you doing? [00:20] All right. I am well. All right. Tell me about this business here. So what kinds of clients are you typically working with? [00:26] >> Good. Do you know the quick reply or the long reply? [00:31] Quick reply. [00:33] >> Okay. So we tackle small and mid sized recurring [00:39] >> services businesses. Okay. Name one of them. Private schools, unions, we have a lot in Brazil, agencies, offices, [00:52] >> rentals. There's a lot of businesses. [00:54] Let's talk about agencies. So an agency does, you know, let's say they do $100,000 a month in revenue from 10 different clients. How can they work with you? [01:02] >> Exactly. Well, this is very interesting because payment culture is different from country to country. When we started the business in Brazil, we realized that most of these small business owners, they spent a lot of time not only handling all the payment method but also conciliating and in the end of the day actually they spent about 10-15% of their month dealing with all of that stuff. And they didn't really need an ERP or CRM. Actually, of our [01:43] >> customer base, they don't know what a CRM is. And when they know what the near peak is, they don't want it because it's just too much. So we decided to create a super, super thin system that would take care of the accounts receivable and provide an amazing user experience. [02:07] So, Cassio, let's be really specific. There's an agency that has customers that pay them, you know, each have 10 customers that pay $10 a month to that agency in revenue. How can you help that agency? [02:16] >> Brilliant. So right now, if you're in Brazil and you have to take care of those customers, you would spend about two days in a month issuing what we call boleto. This is one of the payment methods we have in Brazil. We have to conciliate. We have to handle them directly with the bank and you will deal with all the requests your customer will have. So if you use Plipag, you will just add your customers in this [02:43] >> system. You'll subscribe them to your recurrences and that's it. So your two days becomes two minutes per month. So that's your work. It'd be back to us. [02:55] What specific, Cassio, what specifically though are you doing? Are you helping them invoice their customers or are you bringing, are you turning monthly revenue into upfront cash or factoring invoices? What are you doing? [03:05] >> Everything. So basically, we Our main engine is a payment processing system. So we do process all those payments just like Stripe would do. But we don't do online. Our public is our audience is roughly offline. And [03:27] >> well, there's a lot of things in quote to cash. Roughly everything from quotes until cash, which is processing those payments. [03:38] So they can come to you and do all these things from issuing the invoice to once the invoice is signed, you can advance them cash until the invoice is paid. You can do the whole thing. [03:46] >> Exactly. So we help them manage their customers. We help them with intelligence. We provide them a portal for their customers to get those billings, get those invoices, get them get their receipts, take care [03:59] of the How many customers are you working with now today? [04:03] >> Right now we have over [04:07] >> 600 active merchants and over 20,000 payers in our customer base. [04:13] Got it. So 600 companies and then 20,000 customers there. Now, how do you make money from these 600 customers? [04:19] >> So we take a have a take a percentage fee of every money that every transaction that comes through the platform. [04:30] What's that range? Are talking like one percent or more? [04:33] >> Well, effectively that's [04:37] >> 0.99%, 0.98%. So it's around 1%. [04:43] I see. And so what is the average customer? You have 600. What's the average one put through in terms of volume each month? [04:50] >> So usually those businesses put around, let me convert to dollars, that's about $10,000 on average. 8 to $10,000. So that's the size of a business with three or four or five employees. [05:06] Got it. So $10,000 going through one of those businesses and you're taking 1%, you make about $100 per business per month, something like that. [05:15] >> Yeah, something like that. Yeah. [05:16] Okay, very cool. Give me the backstory here. When did you launch? [05:19] >> Well, we launched our MVP back in 2018. Me and my co founder, we left EBANX. EBANX is now a unicorn. We grew organically in the sector. And we saw an opportunity in the brick and mortar business in the brick and mortar vertical. So, there's a lot, you know, if you're in e commerce, there's a lot of solutions. So, everything that you need is already there. So if you are a commerce, there's a POS. But what if [05:55] >> you're a service? What do you need? So you issue [05:59] Yeah, Cassio, I'm not challenging the product. It makes perfect sense to me. I understand. I have a lot of Brazilian founders on Diego from Rock Content, others from Latam, where the lateos are a pain to work with, especially if you're not digital. So I totally get the product. It makes complete sense to I just want understand how you've grown so quickly, right? So you launched in 2018. You got your first customers. You're at 600 today. How [06:20] many people are on the team? [06:22] >> So we are in seven right now. [06:25] Seven? Yep. And have you bootstrapped or did you decide to raise capital? [06:29] >> We bootstrapped it until end of last year and we made our first funding round right now, so it's $2.50. [06:36] Why did you decide to raise $250,000? [06:40] >> Because we wanted to preserve equity, and we are preparing to make a larger funding in the next round. [06:50] Sorry, I'm a little bit confused. If you want to preserve equity, you wouldn't raise money at all. [06:55] >> Well, but time is also a variable. So you don't want to go on alone through all of your time, but we want to be efficient as possible in cash. So this is how Brazilian VCs look. So it's a little bit different than [07:11] >> American VCs would look at you. So you are looking to build an efficient business from [07:20] Well, Cassio, sorry. There are people raise capital and give up equity because they want to move faster to build a bigger pie. Flip side to that is you keep 100% of your business and you bootstrap, but it's slower growth and a smaller pie. So time and equity are usually opposites of each other in this scenario. [07:37] >> Yeah, we did something in the middle. Actually, [07:43] >> back when we started, I would say the VC landscape was not as developed as it is right now. So we wanted to raise with the best. So what does it take to raise with the best if you're an unproven entrepreneur? So let's build a business. Let's do a part. And when we mature the business in Earth, then we can raise with the best. And I think we did, we are doing. [08:06] So you raised $250,000 in 2020, correct? [08:12] >> 2021, early twenty twenty one. [08:14] Oh, this year? Yep. Oh, got it. Okay. And how did you think about was that a priced round or a note? [08:23] Again? Do you remember? Was it a priced round or a note with a cap? [08:31] >> Yes, but that's not public info. [08:36] Well, regardless if it was a cap or a note, Founders choose to fund their business another way. This is a show about founding a company. So that's why I asked, did prefer a price round versus a note for any reason or vice versa? Don't know what you actually did. [08:49] >> I don't. [08:52] >> To be very, very honest, we set a range in the rounds and we try to accommodate every investor within that range and we were able to do that. So in practical terms, yes, it was a price round. [09:08] Okay, got it. So there's not a discount on it. Doesn't convert at a 20% discount and when your next price turns an actual valuation attached to the money. [09:16] >> Actually, had a valuation in mind and the VC came to us and say, well, I think the company is working a little bit more. How about I invest more in the business? So would you accept some no discount than we we essentially took? [09:33] Most folks in a seed round like this are selling 10 to 20% of the business. Is that about how much you guys sold? [09:40] >> In the first, I would say very close to 10%. [09:47] Okay, got it. [09:48] >> So that would put That you at [09:49] >> put [09:50] you at about a $2,500,000 valuation when you raise the $2.50. So you preserve some equity. That's Humana, you said preserve equity. [09:56] >> Yeah, a little bit more. [09:58] I see. See. Very cool. Okay. And so when I look at obviously growth today, you have 600 customers. How did you get those first customers? [10:06] >> So, well, the first customers we tried a different approach. So we're not doing digital marketing. So we launched the MVP and we tackled small private schools within the city. So it was roughly based on field sales and we approached every school in the city. So we built an inside sales team then. Then we found out, well, CAC LTV is not working. We need to improve the product and we need to build a digital marketing process. Then [10:42] >> we were later going to find out that there is a better strategy, which is PLG. That's what we implemented and CAC LTV start to make sense, especially retention. [10:52] What is retention today? [10:55] >> So we are doing we have about 2% to 2.5% churn. [11:03] Monthly? A year? [11:04] >> Okay. Yeah. I mean, that's very low for this price point. [11:08] Got it. So that's a nice lot. [11:11] >> Actually, this is one one point. I don't remember exactly right now. I think I think it's a little bit more now, but that's about it. [11:18] Okay. Got it. And I mean, can I do the math? If you have 600 customers that each put about $10,000 to the platform and what you guys process, like, what, about 6,000,000 in total transactions last month? [11:29] >> No. No. Not really. [11:33] >> Actually, we had some merchants that were not active. But right now we are over, [11:42] >> I think we're close to 15,000,000 in GMV for the last one year in dollars. [11:50] But what about last month though? Do you know? [11:56] >> Let me see. That was about a million dollars. [11:59] 1,000,000? [12:01] >> Yep. [12:01] Okay, got it. So if I take Okay, got it. So what you're saying is a couple of those 600 were not active? [12:08] >> Yeah, part of them were not active. Part of them were from other verticals that we don't really look at. So we aim to some verticals and we bring all the verticals too because we are somewhat related. [12:24] >> And I think we're quite successful in the verticals we attack. [12:29] And Cassio, because you said you take 1% of GMV and you did a million last month in total GMV, is it fair to say your revenue is about $10,000 a month currently? [12:38] >> Yeah, about that. Yeah. [12:39] Okay. And how do you grow? How do you go to $20k, $30k, $50k a month? [12:44] >> Good. That's a very good point. So we found that rather than investing growth, we have to invest in a very good product that has a lot of retention. And beyond that, we would need to build a product led growth, bring a product led growth approach in the system. So we pretty much look at built an AARRR funnel, the pirate-metrics funnel and started measuring and doing maybe tests of what works best. So should we improve this onboarding? [13:25] >> Onboarding is the bottleneck. So if we improve onboarding by, let's say 10%, then we can grow the revenue by 30%. And then we go around, we went on tickling those [13:42] >> points across the freemium. And that's how we started optimizing and we still are optimizing that freemium. [13:49] And with all that optimization, what does growth look like today? If you're doing $10,000 a month today, where were you a year ago? [13:56] >> We were I believe we are about $2,000 or less. [14:02] Okay. Good. Got it. So nice growth. And you mentioned CAC earlier. What are you spending to get a new customer right now? [14:09] >> Right now, it depends on where you look at, but our general CAC is about the missing dollars. I have the numbers in Brazilian reais. That's about $30 [14:23] Okay. Got it. So nice payback. [14:26] >> Yeah. And just about twice that much to have an active [14:32] >> merchant. [14:33] >> Yep. Yep. Very cool. [14:34] So $30 for a trial, $60 to make sure they're active and they're paying you, which is great. Team size is seven. How many engineers? [14:43] >> So we are in one, two, three, four brought [14:50] >> the fifth yesterday. [14:52] Oh, very cool. And the co founders, is it just you and one other guy or gal? [14:56] >> Yes. Me and Bento. So Bento is the company. And we're a very lean company, I would say. [15:06] You guys just split equity right down the middle at the beginning or something different? [15:10] >> Yeah, we did quite fair, to be honest. Fifty fifty. [15:13] Yeah. Okay, fair enough. [15:14] >> Until January, we had only it was only me and my co founder and sales girl. So I had to build the whole system. My co founder had to, you know, do all sales by himself. By now, but by that point, we had processed over a million, million dollars over time. [15:31] Cassio, good stuff here. We're rooting for you. Let's wrap up with the famous five. Number one, what's your favorite book? [15:38] >> Zero to One. [15:39] Number two, is there a CEO you're following or studying? [15:42] >> Again? [15:43] CEO that you're studying. [15:46] >> The last one I saw was Francois Matzo. I met him in London a couple of years ago, right after. [15:53] What's his name? [15:55] >> The no, it's a hard name. [15:59] That's fine. No problem. What's the he's the what's the name? [16:02] >> The entrepreneur guy. Yeah. [16:04] What's the he's the CEO of which company? [16:07] >> For Zomato. [16:08] >> Okay. [16:09] Number three, what's your favorite online tool for building the business? [16:13] >> I like Pipefy. [16:15] Pipefy? Excellent. [16:16] >> Yeah. They are a BPM software. [16:19] Number four, how many hours of sleep do get every night? [16:24] >> This night is three hours, three and a half. [16:27] That's not healthy at all. [16:29] >> No, it isn't. But you have to be honest. So if you work six hours, seven hours, eight hours a day, you won't get your business up and running. So you have to [16:37] be The last thing I want to promote on this show is that people should get no sleep to get their startup going. [16:42] >> Why are you compromising your health for the sake of the startup? [16:46] >> I'm not. And if I can tell you, most of the stories that I see, so when you see a CEO, I say, yeah, I work like four, five hours a week. Well, when they reached that point, they had already built a business. [17:00] No, no, no, no. I'm not talking about working four or five hours a week. There are plenty of founders that are working their butts off working twelve hour days, but they're getting seven hours of sleep. You can't survive on three and a half hours of sleep. Mean, that's not healthy. [17:13] >> Yeah, but I didn't say it. I do sleep three hours a day every day. I sleep these nights three hours and I usually sleep like six or seven or eight. [17:23] Okay, that's why I asked was how many hours of sleep do you get. Got it. So just last night you got not a lot. Understood. [17:29] >> Yeah. [17:30] What's your situation today? Married, single kids? [17:34] >> No. I think I'm too young to marry. [17:36] Alright. No kids. [17:37] >> How old are you? [17:39] >> 33. [17:40] >> 33. Last question. [17:41] What's something you wish you knew when you were 20? [17:45] >> I wish I would have traveled to other places earlier and, you know, have been taking more risks. [17:55] Guys, already have it plipag.com. Brazil. They're helping Brazilian companies, especially ones that are not online, manage getting customers, sending them invoices, factoring those contracts, basically full cash to quote model or quote to cash model. They've got 600 customers with over 20,000 customers of their own on the platform and processed over $15,000,000 in volume, grew from $2,000 a month to $10,000 a month in revenue over the past twelve months, raised $250,000 at around a $2,500,000 valuation this [18:21] year with their team of seven. Cassio, thanks for taking us to the top. [18:25] >> Thank you so much, Nathan. [18:29] One 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, 1PM [18:54] Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. 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