Smartassistant Revenue, Valuation & Funding (2018)

hello everyone my guest today is Marcus Linder he's the chief executive officer and co-founder of smart assistant the leading global technology provider for digital advice and guided selling technologies for online retailers manufacturers and service providers over the last 11 years on their marxist guidance the company's guard internationally with offices at several locations and three continents markets are you ready to take to the top Gary decided okay good you have a new title tell us about the new title and what prompted the change yeah I'm president and CEO of the company so we decided to bring a new CEO on board like an external very experienced CEO because we see a huge opportunity and we're growing like crazy and at the same time none of us to be honest a proper job before founding smart assistant and now was really the right time to print some professional management into the company and that's why from now on serving as president as you know I want to talk more about how you kind of made that transition of smooth one a little later in the interview but first take us to the top right smart assistant what are you guys doing how do you make money so smart assistant is a software service solution that allows brands and retailers to build and optimize intelligent sales assistance so our software would do the job that millions of great salespeople do out there every day figuring out what your needs are what the requirements are in recommend the right product explain why there's great fit and you know allow you to take choices so just to give an example if you today I want to buy a new mattress and you're not an expert in mattresses you really struggle on life figure out hey - I need a format for mattress Latics mattress but what smarter system does it engages with you would ask you questions like do you sleep on the back on the side on the front what's your rave do you suffer from allergies and then make that those needs onto the right product features and recommend the right products to you and we do that not on the website but also through chat pod on Facebook Messenger or even through voice on Virtual Assistants like it's just almost question based selling especially for e-commerce products yeah I would say need-based telling but it's not only free commerce product so our customers our banks our customers our telcos our customers our retailers brands it's a very project because if you think about it we as consumers we need to every day we take choices in so many domains and we are confronted with a huge amount of choices and at the same time we are expected to almost become an expert in between each damage of those domains before we can choose next obviously leads to a lot of abandonment people don't buy stuff at all they go so markets just to be clear though all your kind of questions you're asking your or your needs you're identifying it's the goal is to drive to a sale in orange are not doing like customer support for a bank with automated chat BOTS yes we do that as well so there's a marketing product or become a sales product and you can use smart assistant for customer service as well for guiding traffic routing like hey ever promise my card what's the problem lost stolen rejected which country are you in then it guides you to a solution since digital advice okay I got it and walk me through give me a sense of kind of what the average customers paying you for this product per month they're difficult to learn the question because you can start with smart and free of charge with a freemium product that allows small brains we tell us to start completely free of try free of charge and our large customers you know it goes up into the millions so it's difficult yeah I understand I understand a nuance but we're short on time and I don't want to go to on every customer cohort just give me a minute general average are we talking 100 bucks a month ten thousand bucks a month generally what are folks paying per month no it's right a lot of debt so like to pretend to a hundred thousand and more okay 10 10 200 thousand per month so very much in the enterprise space yeah okay very good and then walk me through some of the backstory here what you did you launched something in sorry say what year did you launch the company in where when the company correct yeah we launched a company back in 2006 as an agency building and optimizing guided telling solutions for our customers so we really hard coded those solutions and about four years ago we decided and I got the first investors in we decided to really make a software service platform out of it allow our customers to build and optimize those advisors instead of always us being the ones who have to build an optimize those prices and since then things move into the very right direction so you raised four years ago that was would've been in 2014 how much did you raise so we raised about three million dollars from angel investors the original founders of ICP Hybris so Hybris is an e-commerce platform that consult 2sp for 1.5 billion dollars and their former CEO and a couple of folks around him as invested into us any moments was that it was that a convertible note or was it actual equity that was that was equity and that was were multiple citrons and lasso 16-17 we got ABC on port UK west based DC within a six million dollar round so today you raise nine million total yeah okay and and then give me a sense of kind of what you've scaled to in terms of customers how many customers are using you now yeah we are with more than hundred customers we have in terms of the teams we are more than hundred team members across US Europe and we are growing at triple triple digit percent year-over-year so what was the growth last year we're talking like a hundred percent or four hundred percent LuAnn okay is it can we put a row began is it fair to say you're going somewhere between a hundred percent to another percent year-over-year is that fair okay very good and and so walk me through the transition why bring in a new CEO yes mentioned onion none of us really had experience in a company before starting smart system decided to model system to students and we had to learn everything by heart and we figure out that you know it takes a lot of energy a lot of pain if you really need to learn everything by ourselves and we figure out that there are people out there that have built already magical companies that have already lots of experience in scaling a sales team and with this huge amount of growth you know obviously that also brings that's super exciting but also shows showed us that it was the right time to make that transition and yeah we're very happy about it was it part of a round was a part of the six million round around we went to a board and said hey guys we had to convince them actually and say hey you know you really think we have I mean one thing that I learned as an entrepreneur is that you need to focus on your strengths and I have a lot of strengths in going out there angel eyes in the world exciting people in building and maintaining a very strong dish but I'm not necessarily the best manager I'm not the best you know scaling person out there and I [Music] am too excited about our mission and burnt through too hard to make that happen that I you know just because of ego reasons would say hey I need to remain as CEO of this company forever what's the team size today so we're more than hundred modern hundred people okay where it was everybody based New York City Vienna Austria and Bratislava Poland from yeah from West East god I hope you can see I mean kind of disability men yeah and you mentioned you mentioned you did some expansion to Austin Texas what was an awesome that you liked so initially actually sales we started in New York right away I wanted to say send my first till two records up to Chicago but she said it's way too cold there I want to go to New York or else I won't go so I had another chance to say okay and in Austin that was also like a fine situation because we hired a girl in Vienna as our first professional services team member for the US market and she wanted to go back to Austin and so that was the obvious choice for us to start our professional services team in Austin and later we figure out that we need to bring the team together and really focused on New York City we also have sunny whale but the core team is New York tell me about charm cheering we have a single figure generate in terms of annual charm Anna's logo or revenue both so in both eras it's it's it's one one one two one two your percentage number yearly here customers we see Cheung and I'm sorry is that is that gross or net that's our our gross terms so we have a positive net retention rate so a customer is going quite nicely in spite of that we churn customers and Charlie really completely comes just from one sector which is we can't be up to our early weekend customers are in serious troubles at the moment and just simply can't cool that strategy off anymore to become their customers trusted advisor and don't have the manpower and resources to pull that off and unfortunately some of them are also going out of business and this is where we see the generators when you look at net revenue attention annually I mean how far above 100 re are we talking 1 105 110 130 yet in the range 110 plus temp okay that's great and most the expansion revenue where is that coming from as upselling additional seats or upselling additional products or something else so we sounds with my drivers we have Isis starts so how many people actually engage with smart assist and amount of countries the amount of brands so some of our brand customers like Microsoft like Canon like Worldport they are typically start small for example in you know one country and a couple of domains and then the expanding to multiple countries get more and more users into that wires getting to more categories this is how to move on into higher you know license pockets and what do you you know as you as you focus on kind of not only driving expansion driving but also adding additional customers what are you currently spending to acquire new customers in the past we really have to go out we have to evangelize so we went to events we told people hey you can compete on price on product on location anymore you need to provide your customers real convenience and an easy way to choose the right product and we had you know really evangelize actively and we had to spend a lot of time and energy on events on outbound fields and yet products quite quickly but now we're really seeing about taking off because more and more organizations realize that this is the only way for them to survive them to have a key advantage to benefit in the matter yes so Marcus when you look at your fully weighted tach what is it including your internal sales team any paid expenses any conference expensive things like that I mean generally speaking what's your cap we so when I can share with you is that it's the payback time is at around one year on the way got it and you said your first year a CV is somewhere around 10 grand per month so about 110 grand typically and 12 grand I'm sorry hundred 20 grand so we don't care we don't care our a CD but it's definitely a kind of range okay well just to be clear I'm just I'm repeating numbers you just said earlier you said earlier that monthly it stores between 10 grand per month up to a hundred grand per month so minimum first year a CD would be ten grand times twelve months right I mean mostly zero because we're a freemium product and it's that you can you can use our freedom product for free or for a couple of hundred yeah sorry I'm not talking about free accounts I'm just talking about your paid customer accounts customers when we look at paying customers Emily it's like five figures a CD okay so ten grand per month what you're saying 10 grand per month might be a tad high but what you're saying is you do have an enterprise cohort where some of them are paying you way north of five figures per month but generally speaking new customers are paying between fifty fifty and a hundred grand and first your a CV yeah mm-hmm what'd you say yeah and more you got it I mean but sorry mark is an average is only one number right so so again average can't be like this Plus this plus a different one we simply don't don't don't share that number but just like I can just tell you the range that our customers you know you can start free and it goes out to yeah six six so seven figures Emily okay fair enough talk to Stuart so payback period sounding it's pretty healthy uh at about a year that's obviously that's obviously good lifetime value what do you assume lifetime value is on these guys and how effective is the lab Tamiya metric for you in terms of actually guiding the business and marketing so we see that so the ratio between custom acquisition collect and menu is at about eight nine so we want we have we have one a customer they are very loyal and they really grow and expand and going because because our kids which is very healthy and they do that because to really see that the yeah it works the secret KPIs to see that customers have a higher conversion rate have a higher average order value and that they really become more loyal compared to them again and again yes last question here before we move to much easier questions the famous five and wrap-up goals for this year you have a new CEO coming in fast forward to December of this year what a our goal if you hit it everyone's gonna be popping champagne it's a stretch goal but it would be a big miracle you had tried so many ways to get to numbers with amazing that's what you're famous for right look I think numbers are important is a lot of people are just honestly Marcus full of right latest are I mean I've read articles before on TechCrunch you know we're doing a hundred million in revenue but then I know the CEO and he's he or she has told me they're not doing anywhere near that right so I like to just cut through it that's all I'm trying to do so you sure what you can so we will again will be a triple digit growth we want we have still significantly below 200 million unfortunately are you north of 50 are you between 1500 do you think you'll break 50 this year is it a stretched is that a fair stretch school no 2020 no one coming them in sorry well how many years do you think it would take you to get past the 50 million mile so I'm curious about that's definitely a goal that we have set ourselves for a next couple of quarters but which is not realistic for the next year okay God so yeah so sometime over the next several quarters so that's healthy I mean that's that's great growth and look thank you for being transparent on that that helps people go back and of the well this guy knows what he's doing I'm gonna listen to more of this episode I'm actually gonna you know hear more about what he's saying so I appreciate that and we can kind of back into that right with a hundred customers right and you give us an are proof you know call it minimum ten grand per month you can multiply their that's a million a month right there but obviously you're you're north of that at this point so healthy growth healthy economics let's wrap up here with the famous five number one with your favorite business book good question I'm growing if you don't make one up to say there is like a great book on how to create categories how to really build out categories growing bigger I believe and that's really right number two is their CEO you're following or studying not read I'm more the type of guy who is you know going on doing his own thing and yeah I need great people and love to exchange with them but I don't have like you know am role model I admire that are you following on the philippines' number three what's your favorite online tool for building a business at the moment it's something super simple it's Trello which it just used to really quickly take notes assign them to the team and yeah mark mark is number four how many obviously for you getting every night um ideally I get seven and a half hours of sleep what do you hear tonight I had maybe six okay good and what's your situation married single your kiddos I'm engaged oh good so good but no kids yet how many what just one okay good so engaged one kiddo and how old are you I'm 36 of you 36 okay last class to your if I can you meet your age out of you which is like an easy number and this is why it's been difficult to get any other numbers out of you right all right number last question here what do you wish your 20 year old self knew to be honest I'm really stubborn so I'm sure at the age of 20 I were you're really stubborn I would never guess listen to to myself being older but just what I learned in I need to be super persistent you need to follow your dream you need to not not give up lightly there are so many people who told me hey get yourself a proper job to something real that will never work and that's the positive side of the stubbornness that we just you know I went through this and my partner's got us through those ten years of Darkness to a point where we now have a really quickly growing very healthy American business and that's just what I would have also whatever I would tell myself again and again but that's anyway you need so good there is how that Marcus launched company in 2006 as an agency he says we would as told us 20 old self be more persistent and he was this agency was growing growing and growing them in 2014 they they turn on a SAS product at a small bench around for about three million bucks raise additional six million recently so 9 million total raise smart assistant is basically helping folks whether it's online or banks etc have conversations and do kind of need-based or questions based selling and support with folks scaling and making teams significantly more efficient they've got a team of a hundred people based between New York City London pull an Austrian other remote locations over a hundred customers paying north of 10 grand per month so well north of 12 million bucks an AR with south of 50 they hope to cross that maybe in the next couple of quarters growing 100-200 percent year-over-year so healthy growth Marcus thank you for taking us to the top thank you very much it's great talking to