How Restworld Reached $396K ARR and 95 Customers with a €100 CAC (Interview with CEO Luca Lotterio)

Introduction and Company Overview

Nathan Latka

00:00Guys, restworld.ai.it launched in 2020. They're doing €33,000 per month day in revenue up from 8,000 just a year ago. So nice growth rate. They've raised small seed rounds to be very capital efficient from their customers. Most recently, a $265,000 seed round at 3,200,000 valuation. Today, investors own 20% of the company, and the other four cofounders own the other 80 split evenly. They've got 12 on the team today, three engineers looking to scale their servicing restaurant owners

00:29with between one and twenty employees who need to hire. That's what they go to restworld to do and to use it for. Hey, folks. My guest today is Luca Lotterio. He's a 29 year old CEO managing the evolution of restworld.it, which helps match workers and employers in Horeca. That's in that's in Italy. Alright. Luca, you ready to take us to the top? Are you ready to start?

Luca Lotterio

00:53>> Yeah. Absolutely.

Business Model: Recruiting as a Service

Nathan Latka

00:54Great. So how do you guys make money? Is it a SaaS company or is this a marketplace? So, basically,

Luca Lotterio

01:01>> we understood that we we are still not a SaaS model exactly, but we are still a RAS model. That means not software as a service, but recruiting as a service. This means that every time that a customer need our help, they used to pay a subscription like a monthly subscription, quarter subscription, annual subscription, but they've got not a service that is a software that they can use alone, but they got the help of our customer success

01:26>> managers that manage their researches. We used to match our work is to match people and companies to work together. So we help restaurants, hotels, and bars to find stuff. So it's more like as I told you, it's a recruiter as a service. It's like if you have an outsourcing of the recruiter. But so what is in your What

Pricing and Average Revenue per Customer

Nathan Latka

01:46is the is the average customer then pay you per month or per year to use your service?

Luca Lotterio

01:51>> Okay. So in per month, normally, it's a restaurant it's a little restaurant between one to 20 employees that they need just a research. So they start a research over one month, they find the right person, they hire the person, and they leave. So they quit. The turnover, the churn rate is really high in this part, but it is a momentum churn rate. This means that after two or three months, they come back because they need the

02:14>> service again. Otherwise, it's completely different into chains, franchisees, How all this kind of

Nathan Latka

02:22much do customers my question was how much do customers pay you per month or per year?

Luca Lotterio

02:26>> Okay. Between $204,100 euros per month per single slot. The zoobot is the number of available researches that they got simultaneously. So we got customers that pay €2,000 per month as well.

Nathan Latka

02:39Mhmm. But the average pays €200 per month?

Luca Lotterio

02:42>> The the the average actually is 350.

02:45>> 3 50.

Current Customer Count

Nathan Latka

02:46And how many customers are you working with today?

Luca Lotterio

02:50>> Actually, 95. Today, it's 95 open. Five.

Nathan Latka

02:53Can I take 95 customers times €350 per month? You're doing about €33,200 per month in revenue?

Luca Lotterio

03:02>> Absolutely. More or less is monthly recurring revenues.

Revenue Growth: Then vs Now

Nathan Latka

03:05Congratulations. Where were you exactly one year ago in terms of revenue so we can calculate growth rate?

Luca Lotterio

03:11>> So one year ago, we were making revenues €8,000.

Nathan Latka

03:15Oh, well, congrats on the congrats on the growth. And when did you launch the company? What year?

Company Founding and COVID Impact

Luca Lotterio

03:20>> We launched the company one week before the pandemic started of the COVID. So we spent our first six months without any market. It's So that's very clear.

03:322020.

03:32>> Yeah. Yes. And we actually started making revenues

03:38>> during the half of 2021.

Funding History and Equity Rounds

Nathan Latka

03:42Have you done all this bootstrapped or have you raised capital?

Luca Lotterio

03:45>> We raised capital. We raised capital at the beginning from restaurant owners.

Nathan Latka

03:50How much did

03:51you raise

03:51in what year?

Luca Lotterio

03:52>> At the beginning, in 2020, €42,000. In 2021, 100,000. In 2022, it's $20,250,000 euros, more or less.

Nathan Latka

04:07That's great. Okay. And are you raising that money on convertible notes? Were they priced rounds?

Luca Lotterio

04:14>> It was always in equity. So directly directly into into the company.

Nathan Latka

04:19So how much equity did you sell last year when you raised $250,000? So

Luca Lotterio

04:24>> the the last round was about 2,800,000. Now we are closing this week another round for €265,000 for 3,200,000.

Nathan Latka

04:373,200,000. That's post money valuation.

Luca Lotterio

04:40>> Yes. No, that's pretty much valuation. Sorry. Post money valuation means 3.5.

Nathan Latka

04:45Oh, 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

05:09your 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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05:55not 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 a bunch that have been acquired, the valuation and the multiple. Maybe you're

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Founder Background and Origin Story

Nathan Latka

07:09interview. So I love that you're raising money directly from your customer. That's obviously a great way to to build a company. Do you come from the restaurant industry? How did you have this idea?

Luca Lotterio

07:19>> I was studying psychology actually, and psychology of work. That means human resources. And in the meanwhile, I was working as a waiter in different restaurants to pay my studies. So I just mentioned that you think so. My thesis was about how can we improve the recruiting in hospitality and talking with the restaurants, they asked us if we were able to help them find staff. But we were just students, I mean, didn't have any expertise in recruiting

07:45>> or hiring people. So we started, me and a friend of mine, as a game. So we started making as freelancers to help restaurants to find recruiters. And at some point we decided, we said, okay, maybe we should do some business on this. Not that we were completely unable to understand which was the rules of the business. Never had a startup, never had people in our family working in the entrepreneurship world. And we matched with two engineers,

08:14>> an IT engineer and management engineer, and then we started the company.

Nathan Latka

08:18That's amazing. So there's two of you, two co founders.

Luca Lotterio

08:21>> We are four actually. There are two engineers and two psychologists.

Nathan Latka

08:25Did you guys split equity evenly at the start?

Growth Strategy: Advertising and CAC

Luca Lotterio

08:28>> We start we start splitting the equity. Yes.

Nathan Latka

08:30Interesting. And so today, how much of the company do investors own?

Luca Lotterio

08:35>> The the investors have the 20% of the company with the round that we're going to close the next week.

Nathan Latka

08:42Okay. So they own 20%, which means you guys each also own 20% before cofounders today? Yes. Very cool. Talk to me about how you grow. How do you get to a million dollars a year in revenue? What's your growth strategy?

Luca Lotterio

08:57>> So actually, our growth strategy is every time we we catch, we collect leads of employers from basically from advertising. So meta meta advertising is busy. And we convert it really well. I mean, our cost per lead is something like three or four euros, and we used to convert one of five leads into customer that pay already.

Nathan Latka

09:23So this means that is something like €25?

Luca Lotterio

09:26>> Yes. If you include the cost of the sales, so speak with the person, etcetera, it's something a bit more, but still under €100 And they used to pay €350 on average per month. So, I mean, in the first month we have already the money back. The second thing is that, obviously, when you have more customers, we need to scale the recruiters team. Cause as I told you, the customer success managers still manage all the, the, the

09:50>> relationship with the customer. So every single customer cannot open their job positions or they, they cannot sponsor their job positions alone. They need someone in our team. So every time that we put one sale and we grow a bit the the acquisition, the the the the the budget in advertising, we grow the number of customer success managers. So it's like a cycle.

Churn Rate Explained

Nathan Latka

10:14That makes a lot of sense. You mentioned churn is very high. Restaurants notoriously go out of business. What is your churn today?

Luca Lotterio

10:21>> So our churn today is, on average, 50% per month per year.

10:28>> Yeah, but if we have a look to this, to twelve months, this is just 15%. Because as I told you, the little restaurants are opening a monthly subscription, then they charge because they fix the problem. But they come back in after two months or three months or four months because they need another person.

Nathan Latka

10:46Yep. That makes sense.

Luca Lotterio

10:48>> So we can say that we have an exact churn rate. We got different kinds of churn rate. If you want to have a look to the monthly churn rate, yes, it is 30%. If you want to see the the annual churn rate is about 15%.

Team Size and Engineers

Nathan Latka

11:00And what's your team today? How many people are full time?

Luca Lotterio

11:03>> We are 12 people.

Nathan Latka

11:06Engineers?

Luca Lotterio

11:08>> There are three engineers.

Nathan Latka

11:09And Including the two cofounders?

Luca Lotterio

11:12>> One of them, yes, because it's the IT. The other one is the management engineer, so it's the CFO of the group. So no. We've got the front end and the back end, and we are now adding the fourth fourth one of the engineers.

Nathan Latka

11:26Very cool. Well, we're out of time. Let's wrap up here with the famous five. Number one, what's your favorite book?

Luca Lotterio

11:32>> My favorite book?

11:36>> Talking about startups zero to one from zero to one.

Nathan Latka

11:38Number two, is there a CEO you're following or studying?

Luca Lotterio

11:43>> A CEO that I'm following

11:47>> hundreds. I mean, a lot of I don't know. I don't I don't have one, actually.

Nathan Latka

11:53That's okay. Number three, what's your favorite online tool for building restworld?

Luca Lotterio

11:58>> Google Calendar.

Nathan Latka

12:00Number four. How many hours of sleep do you get every night?

Luca Lotterio

12:05>> Eight.

Nathan Latka

12:06And what's your situation? Married? Single? Kids?

Famous Five: Rapid-Fire Questions

Luca Lotterio

12:10>> I I live with with my girlfriend, but we are still not married, and I don't have kids still.

Nathan Latka

12:15And how old are you, Luca?

Luca Lotterio

12:17>> I'm 29.

Nathan Latka

12:1829. Last question.

Luca Lotterio

12:19>> What's something you wish you knew when you were 20 years old? When

12:25>> I was 20 years old, what I was wishing to do?

Nathan Latka

12:28Something you wish you knew?

Luca Lotterio

12:32>> Something I wish I knew

12:36>> when I was 20 years old. If it was when I was 15 years old, I was was studying economy at the school at the at the at the high school, and I never studied. So I had to study two times now. So this was the first one. When I was 20, I don't know. I was I was quite happy about my twenties.

Nathan Latka

12:58There's nothing there's nothing you the question is, is there something you wish you knew when you were 20? You're saying there's nothing there's nothing you wish you knew when you were 20?

Luca Lotterio

13:05>> Okay. Yeah. Well, I think, yes. I got one. To know that I was able to create a startup because I was thinking to create a startup into the psychology sector and to have psychologists online. And today is a fucking cool trend. I don't know if I can say fucking, but anyway, it's it's a it's a good trend, and there are companies raising thousands of hundreds of bill. I had not a lot of money in in this

13:27>> sector. And we had the idea, but we we didn't have the the execution. So

Nathan Latka

13:34Guys, restworld.ai.it launched in 2020. They're doing €33,000 per month day in revenue up from 8,000 just a year ago. So nice growth rate. They've raised small seed rounds to be very capital efficient from their customers. Most recently, a $265,000 seed round at 3,200,000 valuation. Today, investors own 20% of the company, and the other four cofounders own the other 80 split evenly. They've got 12 on the team today, three engineers looking to scale their servicing restaurant owners

Closing Summary and Outro

Nathan Latka

14:03with between one and twenty employees who need to hire. That's what they go to restworld to do and to use it for. Luca, thank you so much for taking us to the top.

Luca Lotterio

14:12>> Thank you, Nathan.

Nathan Latka

14:13One 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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