Redtrack Revenue, Valuation & Funding (2024)

[00:00] Hey, folks. My guest today is Vlad Zhovtenko. He's the Founder and CEO of Redtrack, redtrack.io. He combines his passion for digital marketing and creating things since 2000. And now as a founder, he's always looking for to learn from people who are ahead of him on both path and fundraise, but also likes to have a nice life besides startups. Vlad, you ready to take us to the top? [00:19] >> Yep. We'll try to. Just [00:21] to be clear, so is redtrack bootstrapped today or you've raised? [00:24] >> No. We raised. And we raised it two times already. Yep. [00:27] Okay. All right. Well, don't tell us how much. We'll touch out about that in a little bit. But first tell us, what is the company? What are people paying you for? [00:33] >> People paying us to get comfortable daytime when they do digital marketing. Basically, they see everything in their campaigns in green and they know things are going good. If something goes bad, we have automation that can stop the campaigns, let them know, and they will look and address the issues. Why they're paying us money? Because the whole digital marketing is shifting from third party cookies to first party data. And that's how Redtrack operates. It helps digital marketers [01:02] >> measure their campaign performance across all channels consistently and based on first party data. So that's what people are paying us for. [01:10] Love this. Thank Okay. And so what are people paying you per month on average? [01:16] >> For the last two years, that's basically since last time we talked, we increased our average revenue per customer from 400 to close to $200 per month. And that's what people are paying us now. Of course, we have legacy customers, we have new customers, so that averages are what they are. [01:33] Vlad, just to be clear, sorry, you said you increased from 400 to 200, that would be a decrease. [01:37] >> Sorry, for 40 to 200. [01:39] Okay, that's what I thought. Yeah, last [01:41] >> time you came on [01:42] Last time you came on back in 2019, you told me you were doing about $40 per user per Now you're at 200. What drove that expansion? [01:51] >> Two things. We basically were cutting low tier subscriptions, adding high tier subscriptions and to, but not just cutting, we actually were expanding the product for those two years, making sure that when we charge more, we actually deliver the value to those people who pay more. [02:07] And Vlad, what is your largest don't name the customer, but what's your largest customer paying you today annually? [02:12] >> Annually, around 60 k. [02:14] Yep. Over a [02:16] Okay. [02:17] >> Because we [02:17] >> have a couple followers. [02:18] Why do they pay you so much? Are you upselling seats or features or something else? [02:22] >> We upselling seats and we're upselling volume. [02:26] Volume of what? [02:28] >> A volume of data are tracked for a particular customer is in billions of clicks per month. [02:34] Volume of data measured by number of clicks per month. [02:37] >> Yep. [02:38] In this particular Okay. [02:40] So for someone paying you $60,000 a year, how many clicks per month are they managing through your system? [02:46] >> Well, slightly more than a billion. [02:49] A billion in clicks per month? [02:51] >> Yep. [02:52] Wow. That feel a billion is a big number. It feels like that ACV should be like a $120 k or 1,000,000 a year or something. [02:58] >> That's our legacy customer. We have actually very friendly system towards big data, a lot. And most other customers we have don't have nearly as much volume as this one customer does. [03:14] I see. Okay. And now how many customers are you working with today total? [03:18] >> 500. [03:19] Okay. 500 customers. And so, I mean, can we take 500 customers at $200 a month? You guys are doing about a $100 k a month in revenue? [03:28] >> Well, that's where averages so, yeah, we are doing currently 75 k per month. [03:34] Oh, you're very close to the million dollar run rate. [03:37] >> Exactly. Yeah. And I mean, I'll be honest, if not the war in Ukraine would be there, last three months were a bit rough for us. A lot of customers we had from Europe, actually they and actually from Europe, they were on a bit of not decline, but let's say steady growth. So we were growing a couple of last month just 1% or 2% per month, which stopped us short of reaching 1,000,000 ARR, which was my goal [04:02] >> for June. [04:04] Oh, 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. [04:23] >> I'll show you how [04:24] 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 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 [04:47] because depending on who's doing the buying of your SaaS company, you're gonna get a different valuation. A VC is gonna pay a different valuation. Private equity firm is different. If you're gonna 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 [05:10] 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 founder 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 [05:34] 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. We'll 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 dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. All right, [05:59] we're gonna go back to the YouTube video here in a second, but if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. 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 [06:24] the platform. I hope to see you there. Alright. Let's jump back into the interview. I didn't know that. So you're you're currently based in Ukraine? [06:31] >> No. We have part of the team in Ukraine, part of the team in Lithuania, part of the team now across Georgia and Tokyo. [06:37] Wow. Okay. Interesting. Okay. So you're obviously moving pieces around as we deal with, obviously, the war going on as well. Right? [06:43] >> Yep. [06:44] Yeah. And how has that impacted you? [06:47] >> I would say the biggest impact more was on team production and capacity to move because, you know, when we have developers actually having to run to bomb shelters three times a day, that impacts the production. In terms of Wow. And meaning that, [07:06] >> like, part of our company was not working proper full times, a part of our company was even being full times, you know, people have other things to think about when there's work going on. So it was an impact. It was mostly a mental impact to the production rates. But I'm grateful to the whole team that they managed to find strengths to actually also think about the company, not only about things that are more important than business. [07:35] >> Mhmm. [07:35] >> Mhmm. No. [07:36] This makes sense. And I'm glad that, you know, everyone's okay and you're managing through and still growing. You didn't grow as fast as you wanted, but you're still growing, which is great. [07:43] >> Yep. [07:44] Now, how many folks are on the team full time today? [07:46] >> We have 35 people. Sorry, two people will join next week, so we have 35. Now we have 33 people full time. And actually, we expanded ourselves into new world. We have three people in our Brazilian office to address most of this customer success, our US and 30 customers, which [08:06] For everyone listening right now who was or who are based in Europe looking to expand to Brazil, how did you find those first three employees in Brazil? [08:14] >> Amazing. We're extremely happy. Yeah. [08:16] But how? For anyone listening right now who's based in Europe and wants to expand to Brazil, what can they learn from you? How can you how'd you find your first three? [08:25] >> Well, we used LinkedIn just to find people who worked in companies that looked like our right profile. So basically doing the recruiting ourselves. But surprisingly the path to us was opened by our first Brazilian hire when we had a local ad. She reached out to us and said: Hey, guys, I want to join the team. Said: Well, and it was about committee time, so we already said to work remotely. Why not? So we confirmed her suggestion, [08:56] >> we hired her and we found her to be an amazing team member. So we said, Hey, can we hire more people around? Yes, of course. So we started to look around. We hired one more person, then one more, and we actually plan to hire more people in Brazil by the end of the year. [09:14] Did you pay that first employee? Did you pay her to bring on new people? Did you pay her [09:18] >> a She did not bring us new people. She just advised, well, shared a bit where to look for people. That's it. All the hiring was done in Rio. [09:27] And what did she say? She gave you company names to go pick people out of or location? [09:30] >> No. She basically gave us location, like don't hire in Rio or in other big cities because the pay grades, and we actually checked, is probably two times compared to smaller cities. And again, since everybody works remotely, that's fine with us. [09:46] What's a smaller city in Brazil that's better to hire from? [09:49] >> I don't know what the smallest one. [09:51] Well, what's where did you hire your people? What city? [09:54] >> We hire from the North. [09:56] Spell that? [09:56] >> We from the North Of Brazil. We have three cities. And actually, I don't know not a single name of the city. That's a shame. I'm just I just know that our team is in the North. [10:06] The North. [10:07] >> We have live calls, but I heard the names of the cities several times, but they never stuck in my memory. [10:14] And the compensation you can pay the folks in North Of Brazil is about half what you'd pay a developer if you hired them in Rio. [10:21] >> Yep. [10:22] Wow. Interesting. Very cool. And so you mentioned back in '20 I believe in 2020, you raised a $550,000 seed round. Is that correct? [10:30] >> Yep. [10:30] Exactly. [10:31] And what [10:31] what and and have you raised since then or no? [10:34] >> We raised another round and we actually did the closure just a couple of months ago. We raised a late seed round, let's call it at 750. Basically, this would be the money to help extend our runway until series A that we plan to raise in US next year, because easy now, what is better than me, you don't raise series A until you got at least to 1,500,000. And we are very close to that 1,000,000, but we [11:03] >> still need probably at least eight to ten months to get as close to 2 millions as possible. [11:10] Mhmm. So $750,000 raised at what valuation? [11:15] >> We raised at post money would be 9,000,000. [11:20] And did that feel fair to you? Did that why did that feel good? [11:25] >> That felt fair to us given the industry win, the situation we're in, the support we get from VCs existing and the new ones, and how fast they were moving with the deal. [11:37] Yep. It's about 11x multiple on your current revenue. Congrats on getting that funding in the door. Gives you more runway. You mentioned last time that you were on that you were burning about $30,000 a month, so you weren't profitable. Are you still burning capital today? [11:50] >> We're still burning capital today. And actually, we realize that if we want to hire developers aggressively, we will not be able to build product as fast as we need because the market is evolving and like as we get bigger customers, we're going upmarket, we get more complex demands. And so, we were not managing to get where we need with the small team we had in terms of development. So, we actually tripled our development team in size [12:15] >> over the last six months. And so, our burn rate actually increased despite the load is growing. [12:21] Are you burning like a 100,000 a month now? Or what's your burning No, [12:23] >> we're burning like 60,000 per month right now. [12:27] Okay. That's total. That's net burn, right? [12:30] >> Yep. [12:31] So, your bank is going down 60,000 per month? [12:33] >> Yes. Yes. So, that's why we got the runway. [12:36] Yeah. You have plenty of, obviously, of runway. Let's wrap up here talking more about product, right? Because this is a very interesting product. It's a very interesting trend, which is, again, people moving away from cookies and more to first party data. You are working. One of your four key customers you sell to are SaaS companies. You help SaaS companies understand why their leads turned into subscriptions. Explain how you do that. [12:57] >> Well, we do that by allowing the companies to see, A, the channels that drive them traffic, the channels that give them leads and actually, which is more important, to see the customer journey. Because for SaaS companies, that's not like one touchpoint conversion. But typically, especially for SaaS like redtrack or even with larger tickets, they get multiple touch points across different channels, Facebook display ads, partners referrals, before somebody commits to even a trial and then to subscription. [13:32] >> So redtrack allows SaaS customers, we're just talking about them, to see all those typical puffers that a visitor would make before converting to a trial. And then later on, since we combine on-site data with offline conversions coming from CRM Hubspot, for example, we can keep building that customer journey into multiple conversion stages from trial to demo to initial sign up to recurring sales, so that the marketers can see the best channels that are driving the best [14:06] >> impacts. [14:07] >> The Very of channels. [14:08] This makes tons of sense. Guys, if you wanna check it out, it's redtrack.io. Highly recommend it. Vlad, we're out of time. Let's wrap up with the famous five. Number one, what's your favorite book? [14:18] >> My current favorite book and probably still the favorite book for the last year, it's even here. It's Extreme Ownership. [14:25] Extreme ownership is a good one. [14:27] Number two, is there a CEO you're following or studying? [14:32] >> I used to study a couple of them. Now I'm more I can't sell them, still just learning from many people in the niche. So when I have a problem or a question, I reach out to the VCs or to the community we have. I ask that question and I get advice whom to talk to, who would give me the best solution. So that's why I say the advice that sticks most in my memory would be my [14:56] >> talk with competitor CEO six months ago when he helped me reshape our approach to pricing by just looking into our numbers and saying me one phrase, that your customer pricing is not a journey from all over to high. Your customer should be in buckets. And that was like, wow, you're so right. And we reshaped our pricing completely. [15:20] Guys, you have it. Pricing should not be a journey. It should be buckets. That's a good takeaway there, Vlad. Number three, what's your favorite online tool for building redtrack? [15:31] >> My favorite online tool would be actually Google Drive because of the docs, slides, everything. [15:38] Number four, how many hours of sleep do you get every night? [15:42] >> From six to seven. [15:44] Okay. And what's your situation? Married? Single? Kids? [15:48] >> Two kids in a partnership. [15:50] Okay. Good. And how old are you? [15:54] >> Hold on. This year, I'll be 43. [15:57] 43. [15:58] Last question. Something you wish you knew when you were 20. [16:03] >> I wish I would not quit my first own business. [16:09] Guys, don't wait. Redtrack.io, helping SaaS companies understand where their leads come from. He's grown from just $30,000 a month back in 2019 to now almost $80,000 a month in revenue, about to break that million dollar run rate. They just closed a $750,000 seed plus round at a 9,000,000 post money valuation as they look to scale their team's base between Lithuania, Ukraine, and now also Brazil. They just opened an office in Northern Brazil because developer salaries are [16:32] 50% lower there, scaling nicely with their team of 33. We'll see what happens next. Vlad, thanks for taking us to the top. Thank you. [16:40] One 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 [17:05] Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM 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 get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big [17:28] fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you want to take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign [17:49] up for 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. [18:09] We got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.

hello everyone my guest today is vlad joftengo he started with digital marketing way back in 2000 from website building to lead generation to sas ad tech he still has a passion for digital advertising with redtrack.io he's trying to address one of the core problems that he was facing often accurate real-time and actual measurement and analytics solution for performance focused digital marketing vlad you ready to take us to the top yeah i'm ready so let's go good so first off what's your business model do you do you get paid on a sas model or is it some other model yeah we run pure sauce and i think that's the way to go for most of the technology companies especially with customers who might see different volumes months or months they can change their plans freely to pay just for what they need okay so that's the best way and so give me a sense on average what are companies paying per month to use your technology yeah you'll be surprised the companies are paying average 100 bucks for months for using the right track and basically depends on the volume we build the product that is very uh high load friendly and scalable so i guess our biggest cost is support so you upsell on volume volume measured by what ad spend number of creatives no we don't want to jump into customers budget so we sell on volume and some extra features regarding automation yeah but sorry vlad volume measured by what yeah we measure data basically the clicks impressions conversions so we don't care what our customers budget so we have customers with six figures but in very low subscriptions because the clicks are expensive okay so you upsell based off volume volume of clicks impressions and conversions yep what what where did you launch the company in uh sorry can you repeat my last one what year did you launch the company in uh last year so we launched the company early 2018. okay and i would say the uh product not some viable concept she was ready by september and only uh almost a year after september we reached the point where we started to release all the features regarding automation which was the real purpose of the tracker so how much money did you spend building the mvp before you had your first dollar of revenue well we had our first deal of revenue the first month this will be a big surprise but we got our first hundred customers uh in ten months uh we built this uh with a four main team two developers me and one person in marketing so we didn't spend much okay but you have in order to get a sale selling software either your pre-selling idea or you built the tech really fast in under a month and got it live my question is again you either bootstrapped or you put in your own money what did you spend to build the mvp uh we uh built on top of the other technology solution they were catering the similar market uh performance advertising but they couldn't address the need of uh media buyers especially small ones that we work with so basically we took the technology repurposed to our needs and that was very fast so which allows us to close the first sale and then we keep repurposing the technology okay so you feel like you feel like you spent less than ten thousand dollars on the mvp yep okay very cool now to date have you bootstrapped the company or did you decide to raise uh we are raising uh second rounds right now and we're in the talks with several we see funds how much have you raised to date though uh we have raised half a million half a million and how much are you hoping to raise right now uh next half a million and afterwards we'll see how much we'll need to raise to get to scale so raising 500 now are you gonna do that on a note or a priced equity round do you think i think we'll do it on the price equity so what valuation are you hoping to get uh right now based on the all the talks we have our volition is uh 2.5 million okay do you think that's fair well uh i think it's fair and we talked with different people who did to put them down in volume up relations the numbers match so i think it's fair and how many customers are you serving today we sell more than thousand customers a thousand yep okay i mean so can i take a thousand customers times a hundred dollars a month you're doing about a hundred thousand dollars a month right now on revenue uh it would be very good we started as a freemium so i guess uh well the right which says uh users with customers being less than that customers being about 500 we still keeping customers who signed up when we had lower subscriptions and to get first people on board we uh give quite heavy discounts so right now so right now about how much are you doing per month [Music] uh well uh i don't want to disclose this number sorry uh because that will influence some of the negotiations we have well you said 500 vlad you said 500 customers and you said 100 rpoo and rpu stands for average revenue if you let me finish our poo stands for average revenue per user right so if you take rpoo times customer account that means you're doing fifty thousand dollars a month do you need to correct one of those numbers is arpu actually lower uh yeah i would pick lower because the errors really per customer would be around given the small number of subscriptions and discounts uh will be roughly at uh 60 dollars so yeah okay got it and where were you so that would put you at more like thirty thousand dollars a month right now where were you a year ago do you remember a year ago we were at just a thousand dollars a month yep so healthy growth a year ago we had our first uh 20 customers and a year ago we ran into the first three bucks so return rate was awful how bad what was the percentage well it was like 20 months till october 20 turn per month yes what's it now i know it's about 10 per month basically because of our lower tier subscriptions which we are letting go by september okay but ignore lower tier subscription instead of measuring logo churn measure revenue churn what's revenue churn over the past month uh roman percent okay so about six still sixty percent annually that's pretty high i do know uh because we right now in the niche there is affiliate performance marketing which is very uh very aggressive people come and go and to this is why we're actually raising the money and we're moving to working with digital advertising agencies they are more predictable more stable we have those guys within our customer base uh and i don't see any one of them actually go since uh october last year we just keep adding them up so it's a point of uh building out the product to the point with all those automations coming that we can work with uh agencies not affiliate marketers well i feel like markets are good customers but they come and go and how aggressive being to get a new 100 a month customer in terms of your fully weighted cac uh well uh i would say currently we spent let me do the mess i'm not ready for this question uh so we spend roughly uh 150 to get this customer okay so about a two-month payback period yep and where are you spending the 150 we're spending uh mostly uh so we have three channels to spend and we don't spend much we spent on uh some sponsorships and affiliate marketers so that sorry are influencers that would be 30 of the budget then under 30 would be on paid advertising and uh the last 30 would be on content generation and that would include people who actually work in payroll and generate the content so last month how much add up all those categories how much did you spend 6k okay so about 2k on each of them yep and are you burning i imagine you're burning capital today to drive growth correct yeah we burn capital uh and we're burning capital roughly at 30k per month okay so that's i mean do you feel good about that or does it keep you up at night well uh i feel good because the burn rate is increasing steadily so and we want to actually reach close to maybe 10 to 15k by the end of the year and the burn rate will be keep at this rate more because we plan to grow aggressively both in terms of team and marketing space what's your team today team today is 14 people one for 14 folks very good um and so where tell me how you got your first 10 customers what growth channel did you use um well i would say it would be uh reaching to people directly asking them to go travel product and then yeah but how did you target them how did you find them what titles did you go after how to get your their email and that's very tricky because there is no such thing as titles in affiliate marketing they are more media buyers there are specific communities where those people hang around name one or two of them sorry name a couple of mono communities okay uh let's take that money forum affiliate fix i'm affiliate uh a number of linkedin groups like media buyers and sellers cpa marketers all such groups okay interesting so you go in there that's how you get your first 10 customers very cool all right let's uh let's wrap up here with the famous five number one what's your favorite business book i would say my favorite business book would be good to greet is there a ceo you're following or studying um i would say i'm studying cup oh well i'm not exactly following but i like what different people do i would say uh i'm rather inspired of what joker willing does i also follow uh what my past ceo uh kell brown from world depth does i admire this man a lot and i have other people they're not very familiar about it i think they do great stuff number three what's your favorite online tool for building your company uh google docs number all we'll see what number four how many hours you sleep to get every night seven and situation married single kids i'm married to kids and how old are you 40 40. yep last question what do you wish your 20 year old self knew uh not to quit my first own business guys don't quit too early red track dot io during 30 000 a month right now helping again media buyers and sellers with digital advertising and their date managing their data they've raised 500 000 burning 30 grand a month right now to drive growth team of 14 people churns too high right now 60 gross revenue churn annually they obviously are trying to fix that spending 150 to get a new 100 a month customer so three month payback period there again healthy economics they look to scale hope and raise another 500 grand right now on a 2.5 million dollar pre-money evaluation vlad thank you for taking us to the top thank you have a good day bye