How Raffle Grew 305% to Pass a $1M Run Rate with 50 Enterprise Customers (Interview with CEO Suzanne Lauritzen)

Introduction and Background

Nathan Latka

00:00Hey folks, my guest today is Suzanne Lauritzen. She's professionally brought up in the tech consulting and dot coms of the 1990s. She's the founder of LogBuy in the early 2000s, an employee engagement platform, which was fully acquired in a split sale back in 2016, 2017, at which point her co founder and her were the sole owners. Today, she's the CEO and co founder of venture backed raffle.ai, inventing the future of enterprise search based off

00:24AI. Suzanne, you ready to take us to the top?

Suzanne Lauritzen

00:27>> Yeah.

Nathan Latka

00:28Alright. So this is your second or third or fourth swing at it with some successful exits in the past. Correct?

Suzanne Lauritzen

00:35>> Yes. It is.

What Raffle Does: AI-Powered Enterprise Search

Nathan Latka

00:36Okay. What does it mean to empower your search with AI? Search for what? Who's using this?

Suzanne Lauritzen

00:44>> Employees are using it, customers are using it on the website of our customers. So it's basically just the search that can find what you need, like Google can find what you need for consumers. We make the same search available for corporates.

Company Founded in 2018

Nathan Latka

01:01Okay. Very cool. And remind us, I believe you founded this way back in 2018, right?

Suzanne Lauritzen

01:06>> Yes. And do

Nathan Latka

01:08you remember I I didn't ask you last time we spoke. Do you remember back in 2018 what your total revenue was your first year in business?

Suzanne Lauritzen

01:16>> Oh, no. Was very, very limited.

01:23>> I think we had maybe a bit of POCs going on, but it was very limited.

Nathan Latka

01:30Yep. Yeah. Okay. Very cool. And then tell me about customers today, right? So you told us about your customers back in October 2020, but Nate, can you name any customers paying you today?

Suzanne Lauritzen

01:42>> Yes. We have corp as a customer, we have E. M. As a customer, we have Visma as a customer, we have Ilva, which is like IKEA. So we have, yeah, we have lots of different kinds of customers, both within insurance, banking, B2B software and e commerce.

50 Paying Enterprise Customers Today

Nathan Latka

02:08And how many total paying customers today?

Suzanne Lauritzen

02:12>> We have around 50 total, know, We big have more customers than that, but paying customers and big corporates, like enterprise customers are 50.

Nathan Latka

02:24It's impressive, Suzanne. I don't know if you remember back back in October 2020, you told me you had about seven. So you've significantly grown since then. Now has has your average contract value changed as well? Or is it still about $35,000 a year on average?

Average Contract Value at $25,000

Suzanne Lauritzen

02:39>> No. The contract value today is about €25,000. No. Sorry. Dollars. Dollars. $25. $25,000. Per year? Yes.

Nathan Latka

02:52Okay. So maybe going down market just a smidge? Is that an intentional strategy or that just happens to be the customers you closed?

Suzanne Lauritzen

02:59>> No. Yeah, it's intentional. I think we'll probably even go further down because we are targeting also the medium segment today and not only the enterprise market. So that's intentional.

Nathan Latka

03:13Mhmm. Now, you have the 50 customers at a $25,000 ACV, that means you're at doing what about 1,200,000 in terms of run rate right now?

Suzanne Lauritzen

03:24>> Little Yes. Yeah.

Passing a $1M Run Rate

Nathan Latka

03:25Yeah. $9,950 a million, something like that. You're about to pass a million dollar run rate. We'll put it that way.

Suzanne Lauritzen

03:30>> Oh, yeah. We have passed a million.

Nathan Latka

03:32Yeah. Okay. You're past a million. Fair. Yeah. That's very exciting. So you've done this, do believe you've also raised some capital, tell us about your last funding round.

Last Funding Round: $3M Seed

Suzanne Lauritzen

03:42>> Well, our last funding round was about $3,000,000, but right now, actually we are in the middle of an A round. I can't tell you anymore about that, but I can on Wednesday. So it's closing on Wednesday next week.

Nathan Latka

03:58Oh, very that's a really big round.

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Closing the Series A: Amount Withheld

Nathan Latka

06:24interview. Don't share anything you can't, but about how much do you think they'll end up being for a range? And and just to be clear too, we're recording this on January 12. This will go out on February 25 just for timing purposes.

Suzanne Lauritzen

06:38>> Yeah. But the thing is, don't know if I can if I can reveal that until Wednesday. So I I I know that's I I don't know what I can reveal, but but I'm happy to to tell you later on, and then you can clip it in or whatever, you know.

Why Raffle Is Raising and European Expansion Plans

Nathan Latka

06:51That's no problem. We we would love to do that. Let's talk about the strategy behind the raise. What what do you why do you need the money? That obviously comes with dilution.

Suzanne Lauritzen

06:59>> Yes. We need the money to scale European wise. First of all, it's actually going to mean American. It's a US venture capital firm. So eventually, we'll also go to The US, but I think we'll wait one year to do that and just scale in Europe for now. So that's what we need the money for. It's basically sales.

Nathan Latka

07:20Yeah. Most most folks, Suzanne, in their series a are selling 10 to 20% of the business. Were you sort of in that same range?

Suzanne Lauritzen

07:27>> Mhmm. Yeah.

Nathan Latka

07:29Okay. And and do you have to set up an employee stock option pool afterwards, or did you already have one set up anyway?

Suzanne Lauritzen

07:35>> We already have one, actually. We do have a warrant program, an exit warrant program.

Nathan Latka

07:40I don't know what that is. How does that work?

Suzanne Lauritzen

07:42>> It works the way that you have you have the option to oh, you have warrants that will be released the day that we actually exit, which is the day where we sell more than 50% of the company. So you have to stay to the end, so to speak, or to the day that we exit to to get value for that money. If you don't stay, you will lose it. So it's basically a way to say to

08:09>> people that we really want to stay on board for, you know, for the long run.

08:15>> Yeah.

Nathan Latka

08:16And what are those called? Sort of what warrants?

Suzanne Lauritzen

08:18>> It's an exit warrant program.

Nathan Latka

08:22Interesting. I like that. I have not heard that before. So that's interesting.

Suzanne Lauritzen

08:26>> It's just a warrant program and it's just exit based. So I think that Yeah, exactly. The

08:32>> Most people would probably just say it's a warm program.

How the Customer Base Scaled in the Nordics

Nathan Latka

08:35Yeah, fair, fair, fair. I like your idea better though. That's kind of fun. Yeah. Okay. Talk to me about the customer growth. How have you gone from 7 to 50? Where are you getting these customers?

Suzanne Lauritzen

08:45>> It's in The Nordics primarily, but we've just, I mean, we've just scaled the business, we have been much more clear in the vision now, we have a product now that can scale very rapidly.

09:00>> And also we can now implement the customer within two days, which we were maybe two months doing, you know, just one and a half years ago, it would take us two months to actually implement the customer. So it's just more rapid now. It's a clearer vision, so.

Nathan Latka

09:21And how many folks are on the team full time?

20 Full-Time, 8 Part-Time, 12 Engineers

Suzanne Lauritzen

09:24>> 20 is on the team full time, and then we have eight part time employees as well.

Nathan Latka

09:33How many engineers?

Suzanne Lauritzen

09:36>> We have 12 engineers on board.

Nathan Latka

09:38Okay.

09:39Now back in October 2020, you told me you had about 23 on the team. Did you have to let some people go, but still have that revenue growth maybe because of COVID or something?

305% Revenue Growth Since October 2020

Suzanne Lauritzen

09:48>> No. I think what we what we calculated at that point was also the part time employees. So we haven't we haven't scaled that much. We have scaled about five full time employees since then, and then some part time employees as well. I see. But still, we have grown 305% in revenue or in ARR since then.

Sales Motion and Quota-Carrying Reps

Nathan Latka

10:11Yeah. I I don't care about team growth. I care more about revenue growth. I'd rather you build a billion dollar company with one person on it, you know? Exactly. Have you changed anything about your sales motion with your sales reps? Last time you told me you had five quota carrying reps and their quota targets were set at about $420,000 of new ARR per year.

Suzanne Lauritzen

10:27>> It's the same.

Nathan Latka

10:30Okay.

Suzanne Lauritzen

10:30>> It's basically Mhmm. The

10:34>> Well, it's well, I I wouldn't say that it was working perfectly before. It's working perfectly now. So that's the Did

Nathan Latka

10:42you have to make any changes to make that happen or no?

Suzanne Lauritzen

10:45>> Yes, I think the product has developed so that it's easier to implement, as I said before, so it's also easier to sell because it's a box product. It works off the box, so it works the same day that you actually get it, And you don't have to train on the AI anymore you did before. And then, I mean, it's just, we are also more mature, We have a bigger brand today. So it's always, as time goes,

11:15>> it will always be easier to sell the product as others have, if your neighbor has it, you want it. So it's basically about that, I think.

Nathan Latka

11:25No, I love the story. It makes a ton of sense. Now you've mentioned these exit warrants. You've talked about the 3,000,000 seed you did. Now was that seed, was that like traditional seed round you sold, you know, 20% of the business Yes. Back then

11:38Okay. So it's like what, a 15,000,000 valuation, something like that?

Suzanne Lauritzen

11:42>> Yeah.

Nathan Latka

11:43Okay. Interesting. And did you were you the sole founder prior to that?

Suzanne Lauritzen

11:48>> No. We are two founders owning, you know, equally

11:57>> much, and then we have some investors from the very beginning that were angels that threw in money in pre seed.

Nathan Latka

12:04How much was that over year?

Suzanne Lauritzen

12:07>> That was already in 2018 actually. So they threw in, I would say it's about

12:20>> k US from the beginning and that's what we lived from, so to speak for the first year.

12:28>> Yep.

Nathan Latka

12:29So is it fair to say sort of investors now today own about 40 before the series a, about 35% of the business?

Suzanne Lauritzen

12:37>> Before the Yeah. Current

12:40>> That's fair. Yeah.

Nathan Latka

12:41Yeah. Yeah. And then you guys how much have you reserved for employees?

Suzanne Lauritzen

12:46>> We have reserved 9% up Yeah. Until

Nathan Latka

12:51Pretty fair you probably increased that after the series a.

Suzanne Lauritzen

12:54>> Yes. Exactly.

Nathan Latka

12:55Yeah. Can you

12:56share what you're increasing that to or no?

Suzanne Lauritzen

12:59>> No, because I'm not really sure yet. That's It's no not been set. Yes.

Nathan Latka

13:03That's no problem. So 35 to investors, nine for employees, that means you and co founder own about 22 each

Suzanne Lauritzen

13:10>> as That's of a very good calculation. Yes.

Nathan Latka

13:14Okay. Very cool. That sounds like you're managing the cap table in a super healthy way. It'll be fun to see what you do with this new capital in terms of investing in sales and marketing. When you say moving to The US market, does that mean literally opening an office here or hiring sales reps here or what?

Suzanne Lauritzen

13:26>> But not I don't think we're going to do it right now, I think we're going to do it in '23. So we are first going to expand in Europe, we have plenty of room in Europe, we have the whole Nordics, which we are only beginning there. And then we have Germany, of course, and The UK and The Netherlands that we're going to focus on.

Customer Acquisition Cost and LTV to CAC

Nathan Latka

13:51Very interesting. Now you have a high ACV, which means you could have a high CAC as well. What are you spending to get a new $2,000 a month customer? Do you know?

Suzanne Lauritzen

14:01>> Yes, our LTV or our customer acquisition cost is 5, I think, at the moment.

14:11>> And that is only because we have an LTV only on three years that we calculate it with, so I've learned that five years is actually normal. So basically,

14:26>> formula should be better,

14:29>> we're quite conservative in that sense. So five from a conservative point of view.

Nathan Latka

14:35Yep, fair enough. And if you're, again, if you're managing and you think your annual contract values are somewhere in the $25,000 a year range, multiplied by three years, you get up to about $75,000 there. So you're telling me that you're totally comfortable spending $15,000 to acquire that customer, a five to one LTV CAC.

Direct Sales Strategy and Marketing Plans

Nathan Latka

14:53Where are you spending that money? Is it on the sales rep commission or something else?

Suzanne Lauritzen

14:58>> Right now, we only do direct sales, so it's primarily actually just on salaries. And of course commission bonus and stuff like that, but not so much on the marketing side. We're going to focus on that a lot more in the coming year. Mhmm. And also the branding, of course.

Net Dollar Retention and Closing Thoughts

Nathan Latka

15:16Yeah. Net dollar retention above a 100?

Suzanne Lauritzen

15:20>> Sorry?

Nathan Latka

15:21Do you know what your net dollar retention is? Is it above a 100?

Suzanne Lauritzen

15:25>> I have no, I don't know. Okay. I actually saw that question. I don't know. Had to ask my accountant, I think.

Nathan Latka

15:32That's funny. You're referencing the Latka SaaS report that you filled out and I was like, and you're going, what is this? What do you mean net dollar retention?

Suzanne Lauritzen

15:39>> Yeah, exactly.

Famous Five Rapid Fire Questions

Nathan Latka

15:40Yeah, yeah. You'll you'll guys will get to that soon. You're growing so fast right now. You probably don't even have time to think about it. But it's a great story, Suzanne. I hope you come back on in a year. Give us another update. In the meantime, today, let's close out with the famous five. Number one, favorite book.

Suzanne Lauritzen

15:55>> Well, I think it's still Think Fast, Think Slow.

Nathan Latka

15:58Yeah. You're consistent. Number two, is there a CEO you're following or studying?

Suzanne Lauritzen

16:03>> No.

Nathan Latka

16:04Number three, what's your favorite online tool for building raffle?

Suzanne Lauritzen

16:09>> What is my favorite one?

Nathan Latka

16:11Online tool. I

Suzanne Lauritzen

16:16>> I don't understand the question. Sorry.

Nathan Latka

16:19A tool. A tool that you use, like a like a tool. Like Google Docs or Slack, Twilio, HubSpot, favorite online tool that you use.

Suzanne Lauritzen

16:29>> Yeah. Okay. We use HubSpot. We use Slack. We use a lot, but I don't know if they're favorites. But yes.

Nathan Latka

16:35Which one do you use the most?

Suzanne Lauritzen

16:37>> I use HubSpot. I'm sales.

Nathan Latka

16:40Number four, how many hours of sleep do you get every night?

Suzanne Lauritzen

16:44>> I get seven.

Nathan Latka

16:46Okay. And what's your situation? Married, single, kiddos?

Suzanne Lauritzen

16:51>> I have a boyfriend and I have kids. Yeah.

Nathan Latka

16:54Not married, two and two kids. Right?

Suzanne Lauritzen

16:57>> Two kids. Yeah.

Nathan Latka

16:58And have you had a birthday since we last chatted? You're looking younger, but I have to I have to ask.

Suzanne Lauritzen

17:03>> Oh my god.

17:06>> You I will put 50.

Nathan Latka

17:08You're oh, happy birth. I was gonna say, sir, you said 48 last time. So 50 is right. Happy fiftieth. That's exciting. Don't look at day over 30, Suzanne. Alright.

Suzanne Lauritzen

17:17>> Yeah. Okay.

Nathan Latka

17:18Take us take us home. Something you wish you knew when you were 20.

Suzanne Lauritzen

17:23>> Yeah. I think I I think I would probably tell myself to relax a bit more, but I still don't. So I guess I'll live up and learn.

Nathan Latka

17:35Guys, there you have it. Raffle.ai is AI powered search for the enterprise. They've got 50 paying customers that pay an average $2,000 a month. So 90,000, a $100,000 a month right now in revenue. Just broke a million dollar run rate up from $20,000 a month back in late twenty twenty, scaling nicely. Raised a seed round back in 2020, 3,000,000 on a 15,000,000 post money valuation. About ready to close a series a. Look out for that announcement

17:58here soon as they look to scale in The US. Suzanne, thanks for taking us to the top.

Suzanne Lauritzen

18:03>> Great. Thank you. Thank you.

Nathan Latka

18:07One 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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