How RaccoonCare Hit $150K Revenue in 2022 With 20 Customers Before Pivoting to Corporate Wellness (Interview with CEO Svitlana Malovana)

Introduction and Company Overview

Nathan Latka

00:00Guys, RaccoonCare is helps rehabilitation centers rehabilitate folks. She's now pivoting to corporate. She's got 10 pilots running for these corporations who wanna use the raccoon.care app to help their employees stay active, especially if they're sitting at a desk a desk every day. Her engineers are working at a bomb shelters in Ukraine. She's in New York running the company 12 full time. They did a $150,000 in revenue last year, hoping to break a million this year. Hey,

00:24folks. My guest today is Svitlana Malovana. She's a proud Ukrainian, former IT lawyer, and big fan of technologies and digital digitalization with ten plus years of IT experience. She's a contributor at Forbes Ukraine being named as the one of the top 25 IT women in Ukraine, and then her passion is helping human capabilities and productivity. She's fighting the sedentary lifestyle by developing digitized physical tools. Her most recent product is Raccoon dot care. It helps you increase

00:49physical activities. Svitlana, are you ready to take us to the top?

Svitlana Malovana

00:53>> Yeah. Sure. Hello, everyone.

Nathan Latka

00:55Very good. I'm glad you're here. First off, are you safe? Are you in Ukraine right now? How are you?

Svitlana Malovana

01:00>> I'm good. I'm safe. I'm in New York, and our back office is in Ukraine, but they are working sometimes out of bomb shelters, but they are safe, I hope.

Nathan Latka

01:12Well, I I'm I we're we have all of our support. I'm glad you're safe. I'm glad your team is safe as well.

Svitlana Malovana

01:18>> Thank you very much. Yeah. It's this support, we are very appreciate.

Nathan Latka

01:21That's amazing. So tell us what the company does. Who who are you selling to?

What RaccoonCare Does and Who It Sells To

Svitlana Malovana

01:27>> Actually, like, what we do is we fight the sedentary lifestyle with the help of our SaaS, like, app. And at the moment we are selling to corporates with the office workers. So like from 100 to 500 office workers like as employees as a fitness as wellness benefit. And it's like a fitness app, but actually that help people who are sitting all the time near their laptop to do active breaks, to do like different

02:01>> stretching even in workplace, even in costume, and also like different challenges to to actually get it done because we know that people are too busy with their life and they have don't they don't have time actually for their health.

Nathan Latka

02:16And Svitlana, so what do these companies pay on average per month to use your technology to help them keep their employees physically active?

Svitlana Malovana

02:23>> You mean like what is their business model?

Nathan Latka

02:25What does the average customer pay you per month?

Pricing Model: $120 Per Employee Per Year

Svitlana Malovana

02:30>> Actually like annual subscription is $120 per per employee. It's like basic fee. And the rest depends on what kind of reports companies want to get.

Nathan Latka

02:44So taking all that into consideration, what does the average company pay you per year?

Svitlana Malovana

02:50>> We are focusing, like, for example, 100 employees. So, like, in this case, they are paying us, like, $12,000 annually.

Nathan Latka

03:01Okay. So your average cost your average paying customer today is paying you $12,000 per year?

Pivot from Rehabilitation to Corporate Wellness

Svitlana Malovana

03:07>> We suppose because actually we just pivoted from physical rehabilitation field when we sell to rehabilitation centers to corporate wellness. So we just did this transformation this autumn. And before that, starting from 2018, we were selling to rehabilitation centers. And there we actually got this insight that there is one common thing between like an orthopedic neurological cases in sedentary lifestyle. That's why we decided to help people to be more healthy, more efficient, being active on daily basis.

Nathan Latka

03:43Yes. Svitlana, think the the product makes total sense to me. I'm trying to get an understanding of economics. So what does the average customer today pay you per year?

10 Active Corporate Pilots

Svitlana Malovana

03:52>> Right now, we have in this, model, we have 10 pilots and we are discussing the annual agreements and the annual subscription for $12,000.

Nathan Latka

04:05So Svitlana, you're it's this is totally okay. You're pre revenue today on the new model?

Svitlana Malovana

04:09>> On the new model. Yeah.

Nathan Latka

04:11I mean, are you it doesn't sound like you're doing much on the old model though, right? That's why you pivoted.

Svitlana Malovana

04:17>> Actually, we see that here we can bring more value. So like it was medical, the previous one model, it was medical product that, like, need a lot of support. My I mean, like certification, evidence, so on. So that's why we decided to go and to solve one very easy problem, actually, sedentary lifestyle.

Nathan Latka

04:39Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 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 Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect

05:02your Stripe account, you see your valuation real time, you can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna

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05:48not 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, 1,200,000 seed round, 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna 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

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07:02interview. I again, I totally understand the product. I just I'm trying to understand economics. So that last biz like, today, right now, including all the revenue from the old business model, I mean, you're doing under $5,000 per month in revenue. Is that accurate?

Svitlana Malovana

07:15>> Yeah. So, like, if we are talking about, like, monthly, it's, $10 per month for one employee.

Nathan Latka

07:21Svitlana, how much how much revenue did the whole company do last year, all year?

Svitlana Malovana

07:27>> 150 k.

Nathan Latka

07:30And what's your goal for this Sorry?

07:33What's your goal for this year, 2023?

2023 Revenue Goal of $1M

Svitlana Malovana

07:36>> For this year, for 2023, we want to get at least 1,000,000 revenue.

Nathan Latka

07:41I love that goal. Ambitious. Alright. And last year with a $150,000 in revenue, how many customers was that from?

Svitlana Malovana

07:50>> The for previous year?

Nathan Latka

07:52In 2022, how many paying customers did you have?

2022 Customers: 20 Rehabilitation Centers

Svitlana Malovana

07:57>> We had 20 rehabilitation centers who actually use the product and it

08:05>> we calculated like per number. So in total, we help to rehabilitate more than 1,000 people.

Nathan Latka

08:13That's amazing. And then go back to 2021. If you did a 150,000 last year, what did you do one year before in 2021?

Svitlana Malovana

08:20>> In 2021, we were getting medical certification.

Nathan Latka

08:24So not zero, right? Yeah. So how did you support the business? You said you launched in 2018. How did you pay bills between 2018 and 2021 when you were pre revenue?

Funding History and Grants

Svitlana Malovana

08:34>> We like in total, we raised $1,500,000 where around 60% was spent on medical certification evidence. We also had devices, so also on manufacturing those devices. And if we are talking about how we get those money, it was our own money. So from my, like, legal business in Ukraine, we raise investments and also we got, like, fund

09:06>> grants for for medical, actually. One of the grants is, like, Horizon2020, like, European grant program also for medical medical staff, for medical staff.

Nathan Latka

09:18So the one the 1,500,000 you raised, that was in 2021?

Svitlana Malovana

09:22>> It was like from 2018 till 2022. So it's in total.

Nathan Latka

09:30Okay. How much of the 1,500,000 was not grants? It was equity. You were selling a part of the company.

Svitlana Malovana

09:38>> Less than 1,000,000.

Nathan Latka

09:39Okay. So

Svitlana Malovana

09:40>> Almost 1,000,000.

Nathan Latka

09:42Alright. Let's just say 1,000,000. So how much equity did you have to give up to raise a million?

Equity Structure and Co-Founder Ownership

Svitlana Malovana

09:48>> Right now, 75% of the company belong to co founders, me and my co founder.

Nathan Latka

09:54Oh, amazing. Okay. So you only had to give up 25% of the company when you did the equity raise. Okay. So it was a 4,000,000 post money valuation. And what sorry. Who did you say your co founder was?

Svitlana Malovana

10:04>> Who my cofounder?

Nathan Latka

10:06You have two co you have two founders, you and one other person?

Svitlana Malovana

10:08>> Me me and another one cofounder. Yes.

Nathan Latka

10:10Did So you guys put it equally at the start, or did you negotiate?

Svitlana Malovana

10:16>> We, like, negotiate, but

Nathan Latka

10:21I bet you got more. You strike me as tough. You're hard to you're hard to negotiate with, I bet.

Svitlana Malovana

10:28>> I think I have, like, a couple of persons more just for investor to see, like, who is the decision making to be sure that there is one person, like, to talk to, but we bring like, I think like half and half resources and That makes sense. Money and so on.

Paying 12 Full-Time Employees During the War

Nathan Latka

10:50That makes sense. How many people are full time on the company today?

Svitlana Malovana

10:54>> 12 people.

Nathan Latka

10:5512 people. So how how are you paying 12 full time salaries today when you're basically I mean, you're you're under a $100,000 a year in revenue?

Svitlana Malovana

11:07>> We actually have have 12 people and we did we decided not to fire them because of the war in Ukraine, but in twenty twenty twenty one, actually one of the reasons why we decided to pivot, it was actually war in Ukraine. Because like in the beginning of the year, we had clients like rehabilitation centers, we get subscription for them, but we still need to raise more to get like some extra medical certification. But to, like,

11:39>> VCs, they just, like, canceled our contracts in February because the war starts. And that's why we decided to pivot because, like, we didn't have Let's be honest.

Nathan Latka

11:50Sorry. I just I feel like we're on a my question was just today, how are you paying 12 full time people? Are they doing are they actually full time? Are they consulting? What's how are you doing that?

Svitlana Malovana

12:01>> They they are full time, but we also, like, give them possible so we are they are full time working, but they also have some extra things to do to to get, like, extra money for living.

Nathan Latka

12:13But but how do you what where do you How do pay? Yeah. How do you pay them when you're doing under a $150,000 a year in revenue or under about $10,000 a month in revenue. You can't pay 12 people full time salaries with 12 with 10,000 a month in revenue. Can you?

Svitlana Malovana

12:28>> We still, like, have some, like, revenues for out of my other business. So, yeah, we pay them actually salary.

Nathan Latka

12:35Oh, so you are putting more money into the company every month as you pivot? Yeah. Oh, I see. Okay. That makes sense to me. Okay. Great. So as we wrap up here, I wanna talk about these pilots because you just pivoted. You've got 10 pilots set up. How do you structure the pilot to optimize the likelihood that they actually start paying at the end?

Pilot Structure and Path to Subscription

Svitlana Malovana

12:58>> Actually, we start looking for clients with some, like, not not scaling, like, models. So we start not focusing on some digital process of lead generation. We start looking for their focused customers to use our network to find this, like, first pilots. And we right now have, like, doing trial period together with them. And after this trial period with a part of the team, we are implementing into the full company and suggest them as a subscription on

13:30>> the subscription basis like the SaaS model. Did I answer your question?

Nathan Latka

13:36Well, most people when they were on a pilot, they'll say, we'll do this amount of work for you for x amount of time. And if we generate y results, then you start paying us $12,000 per year. Right? Do you have that kind of structure set up in your your pilot legal agreement?

Svitlana Malovana

13:52>> With first, pilots not because actually we had to test if they like the product, if they like the, like, customer success and so on. So but three last actually pilot, we start with the model where they have like one month trial period and after that they are selling like full subscription.

Nathan Latka

14:16I see. I see. Very cool. Alright. Let's wrap up here with the famous fives, Svitlana. Number one, what's your favorite book?

Famous Fives: Books, Tools, and Personal Life

Svitlana Malovana

14:24>> My favorite book is Leadership of Manchester United, something like that. About, like, management in Manchester United.

Nathan Latka

14:35Number two, is there a CEO you're following or studying?

Svitlana Malovana

14:38>> Sorry?

Nathan Latka

14:39Is there a CEO you're following or studying?

Svitlana Malovana

14:44>> Following.

Nathan Latka

14:45Name name a founder you're following.

Svitlana Malovana

14:52>> Let me think. I don't know.

Nathan Latka

14:55Okay. We'll skip that one. Number three, what's your favorite online tool for building RaccoonCare?

Svitlana Malovana

15:03>> Actually, I like ClickUp. I saw like your interview with them and I really like actually, CEO, I think, also will be the person who I'm following because, like, I try to bring a lot of of that product and of their, like, strategy and culture, everything.

Nathan Latka

15:21Understood. Alright. Number number four. How many hours of sleep do you get every night?

Svitlana Malovana

15:26>> Sorry?

Nathan Latka

15:27How many hours of sleep do you get every night?

Svitlana Malovana

15:30>> At least seven.

Nathan Latka

15:32Okay. And what's your situation? Married? Single? Kids?

Svitlana Malovana

15:35>> Single.

Nathan Latka

15:36Okay. And do you mind me asking how old you are?

Svitlana Malovana

15:40>> Yes. 32. So three two.

15:43>> 32. Last question.

Nathan Latka

15:45Something you wish you knew when you were 20.

Svitlana Malovana

15:52>> More listen and less talk.

Nathan Latka

15:54Guys, RaccoonCare is helps rehabilitation centers rehabilitate folks. She's now pivoting to corporate. She's got 10 pilots running for these corporations who wanna use the Raccoon. Care app help their employees stay active, especially if they're sitting at a desk a desk every day. Her engineers are working at a bomb shelters in Ukraine. She's in New York running the company 12 full time. They did a $150,000 in revenue last year, hoping to break a million this year. Or

16:18certainly certainly rooting for Svitlana. Svitlana, thank you for taking us to the top.

Svitlana Malovana

16:24>> Thank you very much.

Nathan Latka

16:25One 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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