How Redtrack Reached $75K MRR and a $9M Valuation with 500 Customers (Interview with CEO Vlad Zhovtenko)

Introduction and Company Overview

Nathan Latka

00:00Hey, 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?

Vlad Zhovtenko

00:19>> Yep. We'll try to. Just

Nathan Latka

00:21to be clear, so is redtrack bootstrapped today or you've raised?

Vlad Zhovtenko

00:24>> No. We raised. And we raised it two times already. Yep.

Nathan Latka

00:27Okay. 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?

What Customers Pay For: First-Party Attribution

Vlad Zhovtenko

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.

Nathan Latka

01:10Love this. Thank Okay. And so what are people paying you per month on average?

ARPU Growth from $40 to $200 Per Month

Vlad Zhovtenko

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.

Nathan Latka

01:33Vlad, just to be clear, sorry, you said you increased from 400 to 200, that would be a decrease.

Vlad Zhovtenko

01:37>> Sorry, for 40 to 200.

Nathan Latka

01:39Okay, that's what I thought. Yeah, last

Vlad Zhovtenko

01:41>> time you came on

Nathan Latka

01:42Last 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?

Pricing Strategy and Product Expansion

Vlad Zhovtenko

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.

Nathan Latka

02:07And Vlad, what is your largest don't name the customer, but what's your largest customer paying you today annually?

Vlad Zhovtenko

02:12>> Annually, around 60 k.

Nathan Latka

02:14Yep. Over a

02:16Okay.

Vlad Zhovtenko

02:17>> Because we

02:17>> have a couple followers.

Nathan Latka

02:18Why do they pay you so much? Are you upselling seats or features or something else?

Vlad Zhovtenko

02:22>> We upselling seats and we're upselling volume.

Nathan Latka

02:26Volume of what?

Vlad Zhovtenko

02:28>> A volume of data are tracked for a particular customer is in billions of clicks per month.

Nathan Latka

02:34Volume of data measured by number of clicks per month.

Vlad Zhovtenko

02:37>> Yep.

Nathan Latka

02:38In this particular Okay.

02:40So for someone paying you $60,000 a year, how many clicks per month are they managing through your system?

Vlad Zhovtenko

02:46>> Well, slightly more than a billion.

Nathan Latka

02:49A billion in clicks per month?

Vlad Zhovtenko

02:51>> Yep.

Nathan Latka

02:52Wow. 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.

Vlad Zhovtenko

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.

Largest Customer: $60K ACV and Billion Clicks

Nathan Latka

03:14I see. Okay. And now how many customers are you working with today total?

Total Customer Count: 500

Vlad Zhovtenko

03:18>> 500.

Nathan Latka

03:19Okay. 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?

Vlad Zhovtenko

03:28>> Well, that's where averages so, yeah, we are doing currently 75 k per month.

Nathan Latka

03:34Oh, you're very close to the million dollar run rate.

MRR at $75K and Impact of Ukraine War

Vlad Zhovtenko

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.

Nathan Latka

04:04Oh, 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.

Vlad Zhovtenko

04:23>> I'll show you how

Nathan Latka

04:24you 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

04:47because 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

05:10sold 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

05:34a 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,

05:59we'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

06:24the 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?

Team Location and War Impact on Production

Vlad Zhovtenko

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.

Nathan Latka

06:37Wow. Okay. Interesting. Okay. So you're obviously moving pieces around as we deal with, obviously, the war going on as well. Right?

Vlad Zhovtenko

06:43>> Yep.

Nathan Latka

06:44Yeah. And how has that impacted you?

Vlad Zhovtenko

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.

Nathan Latka

07:36This 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.

Vlad Zhovtenko

07:43>> Yep.

Hiring in Brazil: Strategy and Cost Savings

Nathan Latka

07:44Now, how many folks are on the team full time today?

Vlad Zhovtenko

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

Nathan Latka

08:06For 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?

Vlad Zhovtenko

08:14>> Amazing. We're extremely happy. Yeah.

Nathan Latka

08:16But 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?

Vlad Zhovtenko

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.

Nathan Latka

09:14Did you pay that first employee? Did you pay her to bring on new people? Did you pay her

Vlad Zhovtenko

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.

Nathan Latka

09:27And what did she say? She gave you company names to go pick people out of or location?

Vlad Zhovtenko

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.

Nathan Latka

09:46What's a smaller city in Brazil that's better to hire from?

Vlad Zhovtenko

09:49>> I don't know what the smallest one.

Nathan Latka

09:51Well, what's where did you hire your people? What city?

Vlad Zhovtenko

09:54>> We hire from the North.

Nathan Latka

09:56Spell that?

Vlad Zhovtenko

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.

Nathan Latka

10:06The North.

Vlad Zhovtenko

10:07>> We have live calls, but I heard the names of the cities several times, but they never stuck in my memory.

Nathan Latka

10:14And 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.

Vlad Zhovtenko

10:21>> Yep.

Fundraising: $550K and $750K Seed Rounds

Nathan Latka

10:22Wow. Interesting. Very cool. And so you mentioned back in '20 I believe in 2020, you raised a $550,000 seed round. Is that correct?

Vlad Zhovtenko

10:30>> Yep.

Nathan Latka

10:30Exactly.

10:31And what

10:31what and and have you raised since then or no?

Vlad Zhovtenko

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.

Valuation: $9M Post-Money

Nathan Latka

11:10Mhmm. So $750,000 raised at what valuation?

Vlad Zhovtenko

11:15>> We raised at post money would be 9,000,000.

Nathan Latka

11:20And did that feel fair to you? Did that why did that feel good?

Vlad Zhovtenko

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.

Nathan Latka

11:37Yep. 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?

Vlad Zhovtenko

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

Burn Rate and Development Team Expansion

Vlad Zhovtenko

12:15>> over the last six months. And so, our burn rate actually increased despite the load is growing.

Nathan Latka

12:21Are you burning like a 100,000 a month now? Or what's your burning No,

Vlad Zhovtenko

12:23>> we're burning like 60,000 per month right now.

Nathan Latka

12:27Okay. That's total. That's net burn, right?

Vlad Zhovtenko

12:30>> Yep.

Nathan Latka

12:31So, your bank is going down 60,000 per month?

Vlad Zhovtenko

12:33>> Yes. Yes. So, that's why we got the runway.

Nathan Latka

12:36Yeah. 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.

Product Deep Dive: SaaS Attribution Use Case

Vlad Zhovtenko

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.

Nathan Latka

14:08This 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?

Famous Five: Books, Tools, and Lessons Learned

Vlad Zhovtenko

14:18>> My current favorite book and probably still the favorite book for the last year, it's even here. It's Extreme Ownership.

Nathan Latka

14:25Extreme ownership is a good one.

14:27Number two, is there a CEO you're following or studying?

Vlad Zhovtenko

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.

Nathan Latka

15:20Guys, 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?

Vlad Zhovtenko

15:31>> My favorite online tool would be actually Google Drive because of the docs, slides, everything.

Nathan Latka

15:38Number four, how many hours of sleep do you get every night?

Vlad Zhovtenko

15:42>> From six to seven.

Nathan Latka

15:44Okay. And what's your situation? Married? Single? Kids?

Vlad Zhovtenko

15:48>> Two kids in a partnership.

Nathan Latka

15:50Okay. Good. And how old are you?

Vlad Zhovtenko

15:54>> Hold on. This year, I'll be 43.

Nathan Latka

15:5743.

15:58Last question. Something you wish you knew when you were 20.

Vlad Zhovtenko

16:03>> I wish I would not quit my first own business.

Nathan Latka

16:09Guys, 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

16:3250% 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.

16:40One 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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