Roomchecking Revenue & Funding (2023)

hello everyone my guest today is jonathan wiseman he is the ceo and co-founder of roomchecking.com he's been working with software engineering since the late 1990s survived the dot com burst and continued building great products like my ditto and zpen which got a macro world award in 2011. he's enjoying working with hoteliers and the great room checking team to help improve the work and results of hotel operations staff jonathan are you ready to take us to the top yeah i'm ready thank you very much all right okay so tell us in a nutshell what room checking does and how you make money so actually uh when you book for a hotel you you go through booking.com and then when you check in you go to the front desk but then what you don't see is that there is a full team a full staff of operation in the hotel like the attendant that cleans the room the housekeeper the inspector the maintenance the front office it's a really full staff and we equip them with a mobile solution that gives them productivity and communication and the way we do business our business model is that we charge per room and per month okay and on average on average what are folks i mean do you sell directly to the hotel or the consumer or to the brand the parent company who do you sell to so we sell to the hotels and um and of course when we find brands that brands uh try to convince the hotel to use uh to use it but we sell two in two hotels one by one okay one by one and on average what's a hotel gonna pay you per month uh to get access to what you offer so it's 2.5 dollar per room in per month so our average customer today is 250. oh 250 bucks a month yeah okay yeah that's great that's great and how many hotels are you working with now so we have now 240. okay 240. that's very good and when did you launch what year so we launched actually uh four years ago and we almost failed because we totally missed uh one very important point we had to connect to the hotel uh repository of reservation called the pms the property management system i mean where all the guests are listed because without that we're useless and i i thought it would be easy it was not and we for two years we we tried to connect them and to convince them to give us an interface but it was a it was just awful very awful but after two years we managed to have most of the communications and then it's been now we i think we imported like uh 80 of the customers we've been one year and a half got it so 2014 you launched by 2016 you have all the integrations you need now you have 240 customers paying 250 bucks a month so you're doing about 60 000 per month is that right no it's a little bit because um you have to they are the first customer we actually we were so happy that they accepted the users they were really cheaper so we were more like uh 45 45 today okay and what were you at about a year ago today um so um you mean last year yeah like in june so we're recording this now in june 2018 how much revenue were you doing in june 2017 a year ago uh 10. oh 10k okay yeah yeah so you have more than four x obviously these are small numbers but your growth is there yeah yeah yeah so we know uh 45 something like that per month yeah that's great and have you bootstrapped us or raised capital so uh we bootstrapped it then we when we failed because of uh waiting so long to get the connectivity then we uh we got a 500k um investment okay and that's all that you've invested or that's all you raised so far yeah yeah yeah and what was that money on was it a convertible note or was it like an actual equity round so it's an equity round so i really like a dilution yeah okay that's great and and was that because you couldn't do a convertible note or i think you're based in in france right yeah true so so there you couldn't find investors willing to do a note so actually yeah i think those investors are actually some of our clients uh the regular vcs didn't see in the hotel industry enough growth or um a big enough market to invest so um i think virtually just no one accepted to invest only clients and this was a condition i see i see and what valuation did you raise at it was four million for pre-money or post post money okay and did you just find one of your customers to kind of lead or did you have a bunch of people put in 50k each no it was actually i think it's very interesting we almost failed when uh two customers came and said look we would like to invest because i was looking for vcs and actually customers have put the money inside oh interesting so it took a virtually one week to raise the money and what and when was that it was in april last year uh sorry what month in april uh april april 2017. that's 17 no 16. you know 17 17 sorry 17. so last year and so what are you raising are you raising more capital today yes we we're gonna raise uh something like by the end of this year yeah okay and how much are you gonna raise at the end of the year um hopefully uh i mean of course it's not uh booked but uh should be between three to five million okay and how do you get to those numbers why is that money important so and actually i mean right now we have i mean 240 customers is approved that there is a value because those people are wanting to pay for what we do and and it works i mean the the customer satisfaction is quite high and um so we think that now in order to uh to go faster and uh go to different countries we really need to push sales and uh you know all marketing and support so that's gonna be the the money we need that's for so let's say you raised three million at the end of the year what valuation do you ideally want to raise at um i think ten ten pre-money yeah yeah yeah good so you'll sell call it what is that third you know 25 30 on the company something like that exactly yeah yeah yeah that's great and what's the team size look like today uh we're 10 10 people all based there and are you in europe uh yeah we're all based in paris although uh half of the team is from the us but they joined the team in paris got it so paris and then the us yeah all right last few economics questions your churn what's your turn rate today um it's almost close to zero okay and is that right on a revenue basis or a logo basis uh on both or both okay i mean i mean it's not true but i would say that we lost like two hotels out of 240. so it's a zero but it's uh so called one one one percent annually something like that yeah so it's not succeeding and this was it was really more like something like a mistake uh the sales was a mistake itself yep yep that makes sense and then uh what about cac what are you paying to acquire customers so that's a more difficult question and that's something we we don't we don't know how to answer yet uh that's a tough question because we have many channels to get them and it's not very clear today what do you pay today in total paid spend per month you mean uh for sales and stuff like that yeah i mean um i would say like uh we have something like 15k per month okay uh of uh to uh to acquire our customers yeah and how many but how many customers are you adding per month um so in my industry it's very weird because uh you could have no customer for one month or two months and then after four months then you have certainly 20 or 25. so um if you say on average because it's not every month but an average is uh 10 per month 10 new customers per month yeah and actually they don't come every month no i understand i get that yeah so but 10 on average per month and you're spending 15 grand a month so you're spending caught a grand to acquire a customer that's paying you 250 bucks a month something like that yeah exactly yeah but my contracts are for two years so do they pay it all do they pay it all up front uh some of them do they pay two year all the full two years all up front with no discount some of them do some of them do two some of them do one and some of them the every month why would somebody pay for two years of a service all up front why wouldn't they just stick with month to month so we would give 20 percent that's why okay very good and then um you know your churn is so low your lifetime value can get pretty crazy pretty quick what do you assume your lifetime value is um two years is a is a i mean we i mean it's very early to tell you that because we in the tiny industry it's very hard to get in but it's very hard to get out of it so because we we really um you know we are we equip just every staff member and we're installing their information system so i guess and i hope that if we do well we we they should stay with us fighters well again yeah if you have one percent sure and you can just do one divided by .01 and that assumes basically a hundred months of lifetime value but that's obviously a huge number right uh you have to get a larger kind of sample size to see if that pans out but anyways you're assuming 24 months today or two years at 250 bucks a month that's about six grand in lifetime value the numbers obviously make sense jonathan so um that good stuff let's wrap up here with the famous five number one what's your favorite business book um oh jason nemkin from uh impossible to inevitable number two is there a ceo you're following are studying right now a ceo yep um jason lim kintu number uh number three what's your favorite number four sorry number three what's your favorite online tool for building the business online tool for building the business uh wow hard question i would say stripe stripe number number four how many hours you'll sleep to get every night how many what okay okay so it used to be four and now it's six okay good and what's your situation married single do you have kids married five kids how many five five holy moly and how old are you i'm 47 today 40. okay birthday happy birthday very good i hope you're drinking after this jonathan all right last question what do you wish your 20 year old self knew wait wait what sorry what do you wish your 20 year old self knew huh i don't know actually it's a heart to tough question um i would say um it's hard the path is hard to build that's very hard guys it is hard he founded room trucker again back a few years ago called 2014 took it to about 2016 to get a working product paying customers now serving 240 hotels that pay on average 250 bucks a month some pay for two years all up front less than one percent gross revenue and logo churn annually doing about 45 grand per month today in sales a year ago in june 2017 doing just 10 grand per month in sales so healthy growth small numbers but they're building their customer base with their team of 10 people based between paris and the us jonathan thank you for taking us to the top you're welcome thank you very much