How Reviewpro CEO Michael Kessler grew Reviewpro to $15M revenue and 45K customers in 2018.

hello everybody my guest it is rj friedlander he's an entrepreneur investor based in barcelona he's the founder and ceo of a company called review pro the world leader in guest intelligence for the hotel industry focusing on hotel tech the guest experience or entrepreneurship he's spoken to more than 100 events worldwide from prominent industry conferences to annual strategy meetings of renowned hotel brands and enthusiastic and natural storytellers compelling presentations explore the latest trends and technical innovations impacting reputation and enabling savvy hoteliers to gain a competitive advantage rj are you ready to take us to the top absolutely thank you all right you mentioned renowned hotel brands i'm curious which brand uh annual strategy meeting did you present that that we would all know well brands like if you're european based for those of you that are on this side of the pond brands like kimpinsky um amman resorts um large brands like radisson so today we work with 43 000 brands across across the globe and from all different segments for review pro absolutely and just are those 42 000 those are all paying or are there like a free plan no those are all paying clients so we have everything is a b2b sas product right and so we have clients that pay us for our tools so there are a number of different we have four different tools and then we also sell data to destinations so on the tool side there's about maybe about 35 000 uh hotels that pay us a monthly sas fee for one or all of our are and then we have uh the balance of ten thousand pairs for our data that's interesting and that data thing really is what more like a one-time product type service every now and then no it would be for example like in the uk the automobile association of the uk uh uses our data uh in that case it's 5000 hotels as a part of their national star rating system so no it would be it would be through our api an ongoing feed where they're using our data um as a part um you know of and combining that with other data sets i see when you look at your historical revenue over the past 12 months what percent was based on the data feed versus the 35 000 hotels actually paying you everybody's paying us for data um so 100 of our revenue comes from b2b sas for data on the tool side so they're using our data through our our dashboard and they have access to our analytics and our reports um that would be in terms of of revenue would be like 95 percent over 90 i see okay great and rj i mean what got you you know this is a very fascinating space with the advent of kind of airbnb but people still craving hyper curated experiences what got you into this space in the first place well i was working i was previously ceo of digital media for the largest media company in spain and that was back in the old days before uh well right when user generated content was kicking off uh started an obsession with photography and using flickr early on i really saw and felt that there was um this unstoppable force of user-generated content i always like b2b business models um personally more so than b2c um i like aggregation business models where you're taking data and you're adding value because the inside insight you can drive through quantitative and qualitative analytics and so really uh review pro was born out of that original interest and obsession with user-generated content and sort of a reverse engineering of where would there be an opportunity where could we grow a great business and when did you launch the company what year so uh we started coding in january 2008 we signed our first paying client in september 2009 but also review pro is an interesting story from a capital standpoint i funded the company for a year and a half um we raised a total of five million euros in equity which to build a global uh sas business model uh where we work with as we said uh 45 000 hotels 150 countries we support uh the product and and account management in seven languages to have built all that on only five million was a bit of an issue how much did you put in personally um of the five million i put in much less than others oh oh oh so sorry the what you put in the funnel for the first 12 months that's included in the five million not on top of exactly the total yeah exactly total funding of about five million i see no that i mean look that is fantastic so so help me understand you know launch in 2008 you're scaling up today what's the team size today how many people today we're um we're about 110 people globally uh the majority are in our boss our barcelona headquarters and then we have people in the u.s singapore and eastern europe that's great and then give me i want to kind of dive into maybe a unique kind of customer story i'm sure you have you know many different customers you already articulated there's two types one that's a data play one that's kind of directly using via your interface help me understand though on average i mean what's the customer paying per year for this sort of thing well again we have four products we have the online reputation we have surveys both in stay and post day we have uh the ability to for our clients to assign tasks and basically have a case management system and that's all wrapped up in a in a guest messaging hub so they can communicate both pre-stay and stay so again it depends on what the mix of the product suite is but um you know to give you an idea this year we'll do over 15 million dollars in revenue five zero or one five one five one five okay great uh so 15 million um if i obviously divide that by 12 that puts you out i think about 1.2 million uh per month right and then divide 45 000 customers into that each one's paying 20 30 bucks per month is that right um no the math doesn't really work out that way because the data the data on a per unit basis is much less um so now the well so what is the 45 000 though is that is that brands or locations of the hotels no that would be individual hotels so for example we work with radisson globally that's our largest brand so radisson hotel group has multiple brands all of those hotels worldwide use our online reputation our surveys our case management um and so how many logos rj then do you work with uh brands uh we don't look at the business that way but it would be hundreds and hundreds okay now what i'm trying to get a sense of is about how many locations per logo you're working with do you average and that helps me get a sense of what size of brands you're working with yeah but we work across all segments so for example our smallest client is a hotel that has seven rooms uh they have one property it's an independent property with seven rooms and our biggest client as i said is this russian that has uh 1300 properties globally so that was one of our successes as a sas company is we were able to build a product that was relevant for all segments and that we were able to build a customer acquisition strategy built around content and we were able to drive leads and volume across all segments and then while we also and obviously do a face-to-face sales a large large part of ourselves are done over the telephone and remotely so that was what allowed us to scale the business um you know i sold the company uh about two years ago to the largest hotel technology company in the world it's called shiji when we sold the company we had 62 full-time employees right and so we've grown the business and the team significantly since since the acquisition but we were a very very optimized company that was very capital efficient and and our ability to build a great product and scale the business and and the reported price on that was 35 million bucks is that accurate um well they acquired they acquired 80 initially and the price was higher than that okay so yeah the the reporting diving deeper on that they said they paid about 28 million bucks to take about a 79 stake in the in the company which would value the company at 35 million at that point is that are those numbers wrong uh it's that's pretty close pretty close okay and so here's my question to you it's very you know i run a very small private equity firm and one of the difficult things is once you make somebody rich it's very hard to retain them uh so why are you stopped the company right well first of all i love the business and i love the team and the product and our clients and when shiji acquired us we had just launched two of our of the products i mentioned we just launched two so they acquired us at a point where you know i live in barcelona so they use football terms it was it felt like half time right there was still a lot there was a lot uh of work to be done um you know as a ceo as a person emotionally and professionally vested in this company so a lot of the motivation came from that the fact that there was still a lot to do secondly when shiji acquired the company or 80 of the company they gave us um you know they invested into the balance sheet so all of a sudden we had more capital to scale the business than we'd had to get to that point right so we had more resources after being bootstrapped for so long uh thirdly that 20 um i i have the you know the significant part of that 20 and an agreement to stay with them and puts to for them to acquire the rest of the shares over three years so two two years has passed um we're on pat we're on track to by the...