How Plipag Reached 600 Merchants and $15M in GMV Processed on a 7-Person Team (Interview with Co-Founder Cassio Pagnoncelli)

Introduction and What Plipag Does

Nathan Latka

00:00Hey, 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?

Cassio Pagnoncelli

00:19>> Yes. How are you doing?

Nathan Latka

00:20All right. I am well. All right. Tell me about this business here. So what kinds of clients are you typically working with?

Cassio Pagnoncelli

00:26>> Good. Do you know the quick reply or the long reply?

Nathan Latka

00:31Quick reply.

Target Customers: SMBs with Recurring Billing

Cassio Pagnoncelli

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.

How Plipag Helps an Agency Manage Payments

Nathan Latka

00:54Let'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?

Cassio Pagnoncelli

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.

Nathan Latka

02:07So, 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?

Cassio Pagnoncelli

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

From Two Days to Two Minutes: The Core Value Proposition

Cassio Pagnoncelli

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.

Nathan Latka

02:55What 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?

Cassio Pagnoncelli

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.

Nathan Latka

03:38So 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.

Cassio Pagnoncelli

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

Nathan Latka

03:59of the How many customers are you working with now today?

600 Active Merchants and 20,000 Payers

Cassio Pagnoncelli

04:03>> Right now we have over

04:07>> 600 active merchants and over 20,000 payers in our customer base.

Nathan Latka

04:13Got it. So 600 companies and then 20,000 customers there. Now, how do you make money from these 600 customers?

Cassio Pagnoncelli

04:19>> So we take a have a take a percentage fee of every money that every transaction that comes through the platform.

Nathan Latka

04:30What's that range? Are talking like one percent or more?

Cassio Pagnoncelli

04:33>> Well, effectively that's

04:37>> 0.99%, 0.98%. So it's around 1%.

Nathan Latka

04:43I see. And so what is the average customer? You have 600. What's the average one put through in terms of volume each month?

Cassio Pagnoncelli

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.

Nathan Latka

05:06Got 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.

Cassio Pagnoncelli

05:15>> Yeah, something like that. Yeah.

Nathan Latka

05:16Okay, very cool. Give me the backstory here. When did you launch?

Founding Story: Leaving EBANX in 2018

Cassio Pagnoncelli

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

Nathan Latka

05:59Yeah, 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

06:20many people are on the team?

Cassio Pagnoncelli

06:22>> So we are in seven right now.

Nathan Latka

06:25Seven? Yep. And have you bootstrapped or did you decide to raise capital?

First Funding Round: $250K Raised in 2021

Cassio Pagnoncelli

06:29>> We bootstrapped it until end of last year and we made our first funding round right now, so it's $2.50.

Nathan Latka

06:36Why did you decide to raise $250,000?

Cassio Pagnoncelli

06:40>> Because we wanted to preserve equity, and we are preparing to make a larger funding in the next round.

Nathan Latka

06:50Sorry, I'm a little bit confused. If you want to preserve equity, you wouldn't raise money at all.

Cassio Pagnoncelli

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

Nathan Latka

07:20Well, 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.

Cassio Pagnoncelli

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.

Nathan Latka

08:06So you raised $250,000 in 2020, correct?

Cassio Pagnoncelli

08:12>> 2021, early twenty twenty one.

Nathan Latka

08:14Oh, this year? Yep. Oh, got it. Okay. And how did you think about was that a priced round or a note?

08:23Again? Do you remember? Was it a priced round or a note with a cap?

Cassio Pagnoncelli

08:31>> Yes, but that's not public info.

Nathan Latka

08:36Well, 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.

Cassio Pagnoncelli

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.

Nathan Latka

09:08Okay, 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.

Cassio Pagnoncelli

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?

Nathan Latka

09:33Most folks in a seed round like this are selling 10 to 20% of the business. Is that about how much you guys sold?

Cassio Pagnoncelli

09:40>> In the first, I would say very close to 10%.

Nathan Latka

09:47Okay, got it.

Cassio Pagnoncelli

09:48>> So that would put That you at

09:49>> put

Nathan Latka

09:50you 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.

Cassio Pagnoncelli

09:56>> Yeah, a little bit more.

Nathan Latka

09:58I 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?

How Plipag Got Its First Customers

Cassio Pagnoncelli

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.

Nathan Latka

10:52What is retention today?

Cassio Pagnoncelli

10:55>> So we are doing we have about 2% to 2.5% churn.

Nathan Latka

11:03Monthly? A year?

Cassio Pagnoncelli

11:04>> Okay. Yeah. I mean, that's very low for this price point.

Nathan Latka

11:08Got it. So that's a nice lot.

Cassio Pagnoncelli

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.

Nathan Latka

11:18Okay. 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?

Cassio Pagnoncelli

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.

Nathan Latka

11:50But what about last month though? Do you know?

Cassio Pagnoncelli

11:56>> Let me see. That was about a million dollars.

Nathan Latka

11:591,000,000?

Cassio Pagnoncelli

12:01>> Yep.

Nathan Latka

12:01Okay, got it. So if I take Okay, got it. So what you're saying is a couple of those 600 were not active?

Cassio Pagnoncelli

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.

Nathan Latka

12:29And 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?

Cassio Pagnoncelli

12:38>> Yeah, about that. Yeah.

Nathan Latka

12:39Okay. And how do you grow? How do you go to $20k, $30k, $50k a month?

Shifting to Product-Led Growth

Cassio Pagnoncelli

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.

Nathan Latka

13:49And 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?

Revenue Growth from $2K to $10K a Month

Cassio Pagnoncelli

13:56>> We were I believe we are about $2,000 or less.

Nathan Latka

14:02Okay. Good. Got it. So nice growth. And you mentioned CAC earlier. What are you spending to get a new customer right now?

Customer Acquisition Cost: $30 General CAC

Cassio Pagnoncelli

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

Nathan Latka

14:23Okay. Got it. So nice payback.

Cassio Pagnoncelli

14:26>> Yeah. And just about twice that much to have an active

14:32>> merchant.

14:33>> Yep. Yep. Very cool.

Team of Seven Including Five Engineers

Nathan Latka

14:34So $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?

Cassio Pagnoncelli

14:43>> So we are in one, two, three, four brought

14:50>> the fifth yesterday.

Nathan Latka

14:52Oh, very cool. And the co founders, is it just you and one other guy or gal?

Cassio Pagnoncelli

14:56>> Yes. Me and Bento. So Bento is the company. And we're a very lean company, I would say.

Nathan Latka

15:06You guys just split equity right down the middle at the beginning or something different?

Cassio Pagnoncelli

15:10>> Yeah, we did quite fair, to be honest. Fifty fifty.

Nathan Latka

15:13Yeah. Okay, fair enough.

Cassio Pagnoncelli

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.

Nathan Latka

15:31Cassio, good stuff here. We're rooting for you. Let's wrap up with the famous five. Number one, what's your favorite book?

Cassio Pagnoncelli

15:38>> Zero to One.

Nathan Latka

15:39Number two, is there a CEO you're following or studying?

Cassio Pagnoncelli

15:42>> Again?

Nathan Latka

15:43CEO that you're studying.

Cassio Pagnoncelli

15:46>> The last one I saw was Francois Matzo. I met him in London a couple of years ago, right after.

Nathan Latka

15:53What's his name?

Cassio Pagnoncelli

15:55>> The no, it's a hard name.

Nathan Latka

15:59That's fine. No problem. What's the he's the what's the name?

Cassio Pagnoncelli

16:02>> The entrepreneur guy. Yeah.

Nathan Latka

16:04What's the he's the CEO of which company?

Cassio Pagnoncelli

16:07>> For Zomato.

16:08>> Okay.

Nathan Latka

16:09Number three, what's your favorite online tool for building the business?

Cassio Pagnoncelli

16:13>> I like Pipefy.

Nathan Latka

16:15Pipefy? Excellent.

Cassio Pagnoncelli

16:16>> Yeah. They are a BPM software.

Nathan Latka

16:19Number four, how many hours of sleep do get every night?

Cassio Pagnoncelli

16:24>> This night is three hours, three and a half.

Nathan Latka

16:27That's not healthy at all.

Cassio Pagnoncelli

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

Nathan Latka

16:37be The last thing I want to promote on this show is that people should get no sleep to get their startup going.

Cassio Pagnoncelli

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.

Nathan Latka

17:00No, 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.

Cassio Pagnoncelli

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.

Nathan Latka

17:23Okay, 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.

Cassio Pagnoncelli

17:29>> Yeah.

Nathan Latka

17:30What's your situation today? Married, single kids?

Cassio Pagnoncelli

17:34>> No. I think I'm too young to marry.

Nathan Latka

17:36Alright. No kids.

Cassio Pagnoncelli

17:37>> How old are you?

17:39>> 33.

17:40>> 33. Last question.

Nathan Latka

17:41What's something you wish you knew when you were 20?

Cassio Pagnoncelli

17:45>> I wish I would have traveled to other places earlier and, you know, have been taking more risks.

Nathan Latka

17:55Guys, 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

18:21year with their team of seven. Cassio, thanks for taking us to the top.

Cassio Pagnoncelli

18:25>> Thank you so much, Nathan.

Nathan Latka

18:29One 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

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19:38for 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 those people. We

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