Pr Revenue, Valuation & Funding (2018)

hello everybody my guest today is stefan fountain he is the only known startup founder to have been successfully sued by David Hasselhoff that's right his current company PR Co automates and fixes PR for global brands and their agencies currently serving 280 companies with content management tools and research automation across geographies media channels and company functions Stefan are you ready to take it to the top yeah man all right why did David House off sue you so a little caveat here is that we got a season desist letter but to put that on a business card and a bio is too long we're using an image of David Hasselhoff in his underpants as our company logo and it took two years and then somebody told his agents or his lawyer or someone about it and then we got this letter so we try to actually negotiate with the Hoff to see if he could come on board you know for equity and we could use his brand and that didn't go anywhere so in the end we just removed David David Hasselhoff in his underpants from our website that's funny okay what's the company do and how do you make money so peridot is the SAS b2b business for bigger brands that have multiple locations and any brand consistency across different channels and often you know you'd be surprised at a lot of PR professionals still use and Word and outlook to send press releases with images embedded into the word document so it's kind of tricky you know I think there's less and less of it now but basically we're moving all that PR workflow into the cloud and just making it more efficient and and and it's it's cool to see our customers really love that and I mean give me a general sense of the size of customers you're working with what are they paying you per month on average so I think the so we used to have really small companies startups so our numbers are a bit skewed so we'd have you know 50 50 M are our accounts and now recently we just signed Heineken and we have so nose and shimano is a customer TaylorMade Golf and those a CVS are our 20 plus 20 K Plus per month or per year per year a CD and would you would you consider that being an average across your current customer base or is your average maybe closer to 1k or 10k or 5k or what yeah it's much more around the average is probably around 1k and so I think I think there are I think our our our coos gone up in the last year from 48 to over a hundred and that's just because we've turned a lot of the smaller cost $100 $100 per month yeah exactly yeah so um so that's it's nice to see that we're making more money off of less customers which you know it's it's a it's a healthy phase for us as a company to really know who's our customer because we didn't know that for years we're like you know is the agency our customer is the brand or customer are these smaller startups and now we're starting to find you know who really are the people that are best served by our tool mm-hmm and how many customers have you scaled to today that's 287 287 okay good you know what you down to the down to the decimal you know that's good so buy of 287 comma one yeah that's a new Department of Heinicke just signed up today so that's nice so if I take two hundred eighty seven times $1,000 a CV that's about eighty three dollars per customer per month you're doing what about twenty four grand per month and mor something like that that's pretty close okay it's a bit higher it's a bit higher and then we have some one-time setup fees and that also sort of helps and a lot of the customers pay yearly upfront so that really helps in terms of being cashflow positive which we are ru bootstrapped no we well I there's a question for later right we raise 400k from industry experts in a local VC with that money we're able to scale our sales and marketing and now we've got to an acquisition versus LTV ratio over over three going on three so it's really cool to see that we're finding our scalable sales process from that and we've reached cash flow profitability and the keen to see whether this path leads before we go out to raise an a around yep now give me a sense of growth so if you're doing around 20 grand a month today where were you at 13 months ago in December of 2016 oh I don't have that number I know that we grew 67% over the whole year to 2017 compared to 2016 so so you're doing about 16 grand 13 months ago a month I would think a bit less than that okay all right fair enough fair enough good so I mean it's still healthy growth 15 grand we'll call it 14 15 grand a month 13 months go up to 23 ish or 20-inch today I mean that's still healthy growth tell us more your backstory here when did you launch the company what year so yeah there's there's a bit more complex backstory than that because we started as a side project of an existing company the next web blog you might know them they have the biggest sort of tech conference in Amsterdam as well and there's really just a bunch of guys building this product because this group of journalists was getting all these shitty pitches from startups and they're like this is so inefficient can't we make this an online tool where it's easy to copy paste these startups pitches coming in and from that this grew into real enterprise level product where we kept adding features and we still had these smaller startups and you know we've seen that just defined so what was year 1 year 1 of the project itself was 2009 and then there's about 4 years of a couple guys as the side projects working on it for a few months on and off and then in 2013 it really started that we rebranded it to PR Co mm-hmm and then the next two years we're trying to make this thing work for small startups and then we realized oh and then we switched to agencies we also realized that that's not really the end customer the end customers the PR professionals work is inefficient so then we realized that it's really the big bigger brands working across boundaries borders many different media channels often using agencies in different countries and there's a bit much bigger pain point there to solve just a phone what are you at today in terms of team size 7 7 people and where you guys all based all announced to them everybody oh that's great okay and you mentioned earlier some healthy I can what are you right now paying to acquire our customers and where are you finding these customers yeah good question so um most of our customers are word-of-mouth from existing customers which sounds good and is good it's nice that that's happening because if that wasn't happening you know you're not you haven't reached product market yet but we've got there now we're in this stage where we're really trying to figure out this repeatable scalable sales process so we're seeing a lot of leads coming through inbound and what we're really trying to focus on now and crack is how to get outbound leads so the we we've done some tests with paid which hasn't really worked for us what was your knack we need to ran those tests oh good question I don't know that number okay well you mentioned earlier you cited a cocktail to be ratio so you know you're anchoring and some cap number what what CAC number is your ratio anchored in so as 1.3 - so 1 sorry it's one rate here what's the word I'm looking for : is semicolon divided by whatever it's the ratio is 3.3 - that's the the current ratio over the average of the last four months the ratio of what so the CAC versus LTV okay again you can't get that ratio without knowing what CAC is so what is the CAC that's feeding that ratio so the the way the way we look at it is the total the total revenue we're getting from new revenue so new bookings and then we compare that and so that's yeah I don't know bro I'm it's late I've had a long day and I'm probably not getting the ratios right that's okay let me let me go down a different line of questioning here what's your churn rate look like yeah so that's that's interesting so also here we have to divide the different types of customers we've got we've got the the churners on the low end of the scale so under 50 M our our our turn rates about 10% monthly monthly yeah and if we look at the and this is also by design we you know you know we don't really want those customers anymore and and so we've been also been pushing them up the scale so we're getting them to get on a new pricing level so a lot of them are like you could measure turn 2 ways logo churn and a revenue churn right revenue churn is better to use if you have kind of higher paying clients that you're doing a good job retaining so what's your revenue churn look like each month yeah so this is this is the good news isn't that negative so we're actually getting more from the existing customers than the smaller customers that are leaving got it so you're expanding revenue from your current base more than any lost revenue from smaller customers each month yes exactly and how negative is it it's about 3% okay all right but your logo your logo churn is obviously significantly worse than that because you're churning lower pricepoint customers and that's about 10% per month you said right yeah bingo yeah okay interesting that's good what percent of it mean do you have two or three customers that make up more than forty or fifty percent of your revenue no you don't no no okay and the reason I ask is it just sounds like there's a lot of lopsidedness if you can have 10% logo churn and have negative net revenue churn it's usually signifies you have a few customers that you're adding you know you're doing a good job upselling yeah so that's that's exactly it so if we look at the top tier let's say ten customers it probably the top 30% of our mr are a bit higher than your top 10 most valuable customers are making up about 30% of your total mr are or about 7 or 8 K per month yeah plus it's growing which is nice and so and that's also the segment we've been focusing on so it's it's we're having less customers of higher quality delivering more mor yep and you said your cashflow positive now yeah okay how are you where are you testing paid spend or are you testing it at all no not yeah we stopped we did it early early last year for three months and we realized that we really didn't have the expertise to do that I mean you read all these blogs right and you're like god it's got to be easy how much do you invest with so I think we spent about maybe 12 K up to 15 K on different sources most of that was Adwords some of the various different channels to really get it right I mean it there's there's a I don't think the space was that competitive I just don't think that we had the right execution on our end and so then at that point it's like okay we're just gonna focus on outbound for a while and I'm converting the inbound leads that we're getting instead of creating new leads that we then you know would have to be sifting through bad quality leads are you stoked about this business and to work on it for the next five or ten years or if someone gave you an offer and the range of you know four or five hundred grand to buy it would you sell not in that range not have to be 10x that range ten ecstatic come on that would be that would be pure insanity you're what you just said is it have to be 10x a $400,000 offer meaning you'd want four million dollars for a company doing 300 grand a month right a year right now in revenue that's insanity no hold on you're you're anchoring this question outside of your previous question the the question say hey are you excited about this industry I mean and then you're giving a timeframe of five years you know there's there's there's something wrong in the PR world and the truth is it has a PR problem and rightly so and so our mission is to really try and fix that if you look at news publishing and so full-width reprinted press releases in speed to market over truth and and what we call journalism it's no longer about the truth and what we'd like to do is we're on a mission to help companies be able to create awesome stories that really deliver truth and and build their brand and that's really the mission on the long term if it isn't in the market talking to you you started fiddling around others in 2009 you did it as a side project with some buddies for four years and officially launched in 2013 okay four years later you're still doing about twenty grand a month in revenue alright so the markets telling you something so I joined three years ago okay even three years ago you're still it's taken you three years to get up to twenty grand a month in revenue the markets telling you it's not a big problem thirty months thirty grand a month in euros but still yeah this is peanuts I agree but no the market is telling us it's a big problem you don't have the sales not yet why if it was a big problem you'd have way more I think the main issue is that we just being a bunch of engineers trying to build this product and a little in in our back room and only this year we've been going out to sell and we grew seventy percent now we're figuring out how to do this scalable and you know and that's starting to work so I disagree I mean 70 percent defend seventy percent year-over-year growth when you're talking about numbers this small is not that interesting like I mean it's the you know going from $1 to $2 and mr r is a hundred percent growth right it which is really really easy I mean a company at your size should be like doubling or tripling their bootstrap companies tripling year over year as a you know good indicator of a real problem they're solving all right let's wrap up stuff on here with the famous five number one with your favorite business book can I always say one yeah pick one okay tribal leadership David Logan tribal leadership number two is their CEO you're following or studying right now not a CEO David Scott from foreigners blog number three besides your on with your favorite online tool Reina Femmes rain FM that's a good one number four how many hours of sleep TK ever night I have a baby so right now it's three hours three my gosh okay so in situation you're married with one kid right two kids now two kids and how are you I'm 37 30 seconds are five and eight months and the eight month old that's sort of the sleep problem alright last question take us back seventeen years what he was your 20 year old self new I would say think big but act small and I think the the thinking big was was always there you know believing in that that you can do stuff I think the act small of figuring out how to perform and execute on a day to day week to week month to month basis think big act small areas have it from Stefan found launched company seriously in 2013 fiddle around with it all the way back to 2009 today to they're upset to seven people looking to fix PR all based in Amsterdam they've got about 287 paying customers that pay them a total about 20 22 ish grand per month that's up seventy percent year over a year from 15 grand a month in December of 2016 again net negative revenue turn which is a good sign let's see if they can scale Stefan thank you for taking us to the top thank you very much Bob