How Propster CEO Milan Zahradnik grew to $1.4M revenue and 100 customers in 2024.

hey folks my guest today is milan zarednik he's the co-founder and ceo of a company called propster with over 15 years of experience in the real estate industry he's the industry's leading voice on how the doc region is currently embracing prop tech and what possibilities this may present world wide follow along at dot tech milan you ready to text the top yee i'm excited thank you for that just be clear you're not an agency you actually have software built right uh yeah it's actually a quite interesting story props was bootstrapped out of one of one of my former agencies so it i it was an agency before interesting how in terms of revenue how much revenue the agency did before you spun out propster it was around 1.5 million and what year was that uh it was 26 yeah it was actually 2017 2016. and the end of 2017 we uh found it uh on props and you said 1.7 million agency revenue yep interesting so so what gave you conviction to move away from the agency and into software that's not a small amount of revenue to walk away from that's true and my wife was also not very happy about that but um there was a quite simple simple reason like i was i'm i was working in the industry with the agency for more than 15 years and i was really ready to do something new you know to do something big i already reached somehow the ceiling and um yeah this this opportunity popped up and i just embraced it and uh what does that mean milan popped up did you own a hundred percent of the agency yeah yeah i owned 100 of the agency and um uh props that was actually uh built out of a pilot project uh with a with a client 217. did you give the client equity in the new business or do you own 100 of robster no no uh i founded props of the three business angels from the industry but uh the client was not involved oh i see okay so so you took the the validation from the client to some of your friends with money angels raised some capital early and built this and you already had your first customer exactly the pilot project was actually paid it was a it was a uh um it was basically a paid project um and when we started um we realized that what we are doing here is actually a sas business we can build the sas business out of it and i was sharing this also with one of my mentors and uh he also and he just recently sold a company and said hey milan you have to go for this this is like huge opportunity how much was the pilot for i think it was like 20k or something like that okay 20 000 bucks so again and then how much did you raise from angels to get going um we started quite small with 150k um yeah and um um this was like the let's call it kind of seed precede um yeah back in 2017 right yeah end of 2017 actually the business started 2018 beginning of 2018. okay now fast forward to today what are customers paying you for describe the technology yeah so basically it's a sas enabled marketplace but this also something what developed through the last um last uh three years um right now on average the clients pay around 800 euros euros in per month or a year monthly per month yeah it's about 950 and what again what are they paying for when you say sas enabled marketplace what are the two sides of the marketplace yeah so um the sas business is just simply explained a configurator you can configure your apartment house or office like configuring a car online and everything what you configure online all the products and the services are coming from a marketplace so um the sas is enabling the marketplace and the market place the i the idea behind the marketplace is to get commissions out of the products which have been chosen for the configurator oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 interviews i've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when i hover over here right so the teal is what a vc would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on youtube all these datas are built from real-time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 percent of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of sas valuations than what you can get now inside of founderpath and we're thrilled to bring it to you all right we're gonna go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your valuation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform i hope to see you there all right let's jump back into the interview i see icic okay so can you um i'm gonna go in here and try and find an example um i'm in your configuration tool and i just pulled in this very cool sort of like circular table name one of your table vendors and how do you pass me someone using your sas tool as a lead to the person and the manufacturer that makes this table um like you mean um can you explain a little bit more in detail what do you mean with table i'm using your software right now designing my apartment i drag in one of these tables to see what it looks like in the virtual design how do you pack yeah yeah this is uh it's a it's working a little bit differently so um we are a b2b sas business so uh our clients are mainly property developers general contractors and the biggest issue what they have is exactly what you just um uh what you just tried to describe like i have an individual request i want to have something individual in uh in my apartment and this is a huge issue and what we try to do is with the sales solution is really to build something more modular to guide the customer through a predefined product selection through predefined packages so you can like like a car yep so milan i i totally understand that what i'm trying to get is the other side of the market so name a sync manufacturer that you're going to give leads to or table manufacturer that you're going to give leads to from your sas yeah sure yeah we have like uh manufacturers like gibberish or villarreal like european manufacturers in the marketplace how many manufacturers have you given at least one sort of paid customer to over the past 12 months um i would say around 25 something like that okay 25 and how many how many builders right construction folks have used your sas tool to plan their buildings um right now we have around 100 clients with over 15 000 nearly 20 000 users and like 20 thousand what twenty twenty thousand users so um we the uh basically the proper developer is um um providing the solution to their customers like you have a you have a apartment building with hundreds uh hundred units and these are the users for us well a unit is not a a user it's not an it's not a a live thing what do you mean that the units are the users the unit is the apartment and one apartment is a user for us you know what does that mean who an apartment can't use software it's not a living thing who who who is the thing using the person who is buying the apartment i see okay got it got it okay this makes a lot of sense to me now um and so when you say that the average person is paying 9.50 per month is that the building owner and they have to get enough seats for all the people buying each of the 100 apartments to cover like the use yeah the so the property company is paying the license it's around 800 euros per month they they give it to the to their customers for free basically got it so you and you have a hundred of those okay so a hundred at 950 us dollars per month means you're doing about what ninety thousand a hundred thousand dollars a month right now in revenue exactly yeah this is what we are uh we're 21. well that's great congratulations on the growth where were you exactly a year ago um so the first year we tripled um then double double so we doubled right now well okay got it so you're at 95 000 a month today which means in january of 2021 you're at about forty five thousand dollars a month in revenue [Music] um yeah it was actually forty four thousand forty five fair enough fair enough very close um what and did and did you raise more after 150 000 precede round or you've bootstrapped yeah yeah yeah yeah so as you can imagine it was quite a challenge you know to coming from a agency business into sas so in the beginning it was a combination of uh license and one-time payments and we learned like our way uh how sas business should work uh trying to focus more on on the license on on the licenses and getting going away from one-time payments and with focusing more on mrr it was it was also more and more interesting for for investors and uh last uh last year in may uh 2021 um we raised our c plus round of three million and today until today we raised 3.5 million i see got it so three million in your seed 150 000 in your pre-seed i'm missing about 400 000 bucks where'd that come in yeah we uh there were like some some extension seed extensions and some some some smaller smaller convertible nodes between icc plus yeah i see okay got it so more like last year you raised like 3.3 million on top of the 150 000 you already raised yeah exactly i see okay very cool now most people when they're raising their seat around they're selling 10 to 20 percent of the business were were you signing sort of like 20 as well yeah a little bit less so the valuation was was the last one was 10 million 10 million and did that feel like the right valuation to you when you did it uh the hard question i would say it's fair um it's it's it's yeah it was it was it's good um was that free pre-money or post uh post money okay so pre was 6.47 million post was 10 million yep so you sold i mean so you sold about 30 of the business yeah um we had some convertible nodes there too and um um actually it was in i think 25 was in the end um the equity we gave away i see okay because of how the caps worked on those notes i see okay um what about the the your co-founder story are you the sole founder you have co-founders yeah i'm i'm solo founder but i have a piece of incentivized co-founders i see what does that mean like how much equity have you reserved for the team uh 45 oh okay great very easy number there so so employee the the estop pool is 35 investors own it sounds like total about 25 and then you own the rest it's okay and that would be about 40 is what you would own today yeah okay do you still get excited about waking up every morning only owning 40 i mean look the journey has just started right uh so um i think sure i'm excited like um excited uh uh but on the other on the other side of course it's still lots of work and and the journey is ahead of us so yeah milan how much of that three million is still in the bank today 1 million okay so are you looking at another raise here soon yeah we want to race this year how much are you hoping to raise uh it's a good question something between 5 10 15 million something like that it really depends on the growth now the next month what do you want to get revenue to before you go out and raise um yeah we would like to to um be at around 120k mrr okay well you're pretty close to that already right yeah yeah we are it's not so far away so i mean if you're at a hundred thousand dollars a month in revenue or 1.2 million a year in terms of run rate and you go out and raise 10 million bucks right what valuation do you hope to get yeah i think um i tried to to get at least like 50 million valuations something like that a little bit more mm-hmm you said you said one one five five oh right five oh yeah yeah yeah yeah uh that'll be great i mean i i i've certainly seen crazier things i mean what is that in terms of a multiplier that is like a 1.2 that's like a 40x multiplier but really fast growth right true yeah i mean yeah yeah yeah let's see let's see is like um still we have some homework to do and um i'm looking forward to to to um um start fundraising um why do you need to raise all that money i mean what requires capital about this business why can't you bootstrap and get profitable and just pay yourself and get rich off dividends yeah it's basically about the the pace of growth um we want to invest into into sales and grow faster grow more international so when we started it was uh very much focused on the dark regions of german-speaking countries and like the first uh important step was outside like having business outside of the dark region this is something what we established um last year and now we know that we can basically build a global business out of it and that's why we want to uh use the investment to to um yeah to to invest into into growth how many folks are on the team today uh we have a head count of 41 right now 41 how many sales reps with the quota yeah this will surprise you we have only two sales guys two what's their quota um uh it it's um you have 5 5 000 um mrr per month so you want them to add 60 000 in new well hold on 5 000 per month which would be six so you want them to add about 1.2 million in new ar or sorry seven hundred twenty thousand a new ar per year yeah yeah yeah yeah interesting okay and have they hit it over the past 12 months no why not um yeah there are different reasons um i think uh um we still still um underestimated a little bit like the sales the sales cycles uh the industry is um like the real estate industry is old-fashioned slow um we we when we started it was kind of you know like uh we we had a quite boosted the whole business quite as i said like we tripled in the first year and we were like super excited and then um um the years after we realized okay uh we have to be um um aware of of um that the business can grow also a little bit slower and um yeah it is you know there's always the story that you have these early adopters and uh people jump into on new technology quite quickly and then you have to um you have to make um you have to prove that actually the whole or the bigger market is also jumping onto your technology and this is something the le on the stage we are right now understood how many engineers are on the team uh right now we have 12 12. and what are you paying to get a new well you know one of these 100 property owners how was it what's your cac again what do you mean what's your customer acquisition cost the customer acquisition cost is wait i just received the latest um [Music] it was just give me one second because i saw that where is it [Music] i think it was around 5k or something like that okay so 5000 bucks to get a new customer that pays about a thousand bucks a month so you have about a caught a five month payback something like that yeah okay that not not terrible it'd be interesting to see what you do here as you grow and contemplate raising capital but for now milan let's wrap up with the famous five number one favorite business book uh delivering happiness by tony shea who passed away sadly some some months ago number two is there a ceo you're following or studying [Music] yeah of course like elon musk number three what's your favorite online tool for building propster um um the favorite what again online tour uh linkedin linkedin number four how many hours i sleep to get every night i would like to have at least eight but in average it's like six okay emily what's your situation are you married single kids yeah i'm married and i have two children two kids it's great how old are you i'm 40. 40 years old congratulations what's something you wish you knew when you were 20 um um when i was 20 listen to to to the more experienced people and uh um yeah just uh be thankful for advice and uh yeah this is this is something what i would tell my 20 year old myself guys i predict this will be a hundred million dollar business quickly because he follows a similar pattern built an agency to 1.7 million bucks in 2017 before shutting it down and spitting out his sas company with a 20 000 project built directly with a client brought on 150 000 from angels to get it launched in 2018 today a hundred customers paying 950 bucks a month on average for about a hundred thousand dollars a month in revenue they raised 3.3 million seed last year on a 10 million post money valuation milan still owns caught 45 50 percent of the business looking to scale potentially raising 10 on a 50 here later this year we're rooting for them again it's technology that helps you plan your apartment and also find the materials build it it's a sas enabled marketplace milan thanks for taking the stop thank you very much nathan one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas 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 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 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 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