Solides Revenue, Valuation & Funding (2024)

[00:00] I saw today is doing $2,600,000 per month in revenue. That's a $31,200,000 run rate up from a $15,600,000 run rate a year ago. Alessandro believes they'll finish 2023 at a 60. That's $60 run rate, but it wasn't all easy. He launched in 2010, pivoted to a subscription model in 2015, and then it took him four years to hit his first million dollar year. That was 2019. He just finished last year raising a series b for about [00:27] a $100,000,000 at around an $800,000,000 valuation. He's looking at making additional acquisitions and hopes to IPO in a couple of years once he breaks $200,000,000 in revenue. Hey, folks. My guest today is Alessandro Garcia. He's the founder of solides, the number one HR tech for small medium companies in Brazil. The company provides a basic holistic talent management software where you can attract, develop, and retain talent using people analytics, artificial intelligence, and behavioral management. Alessandro, you ready [00:55] to take us to the top? [00:58] >> Yes. Nice to to to have me here. Thank you very much. [01:02] You bet. So just to be clear, you're not a traditional recruiter that takes 30% of first year salary. You're a fixed SaaS fee monthly. Correct? [01:11] >> Yes. Yes. [01:12] That's great. So tell us more about a customer that's using you today and how they use you. [01:18] >> Sure. We have almost 20,000 companies as subscribers, and they used to implement the HR process in the company. Regularly, the small and medium companies doesn't have the HR process already in the company. So we help to introduce the process of hiring talents, developing and retaining and engaging talents to increase productivity and reduce turnover costs. [01:52] So, Alessandro, just to be clear, so you've got 20,000 paying customers today? [01:59] >> Yes. 20,000 paying customers, small and medium companies in Brazil. [02:03] That's that's amazing. And how many employees those 20,000 companies manage via your platform? [02:10] >> Close to two millions. [02:12] Wow. 2,000,000. Okay. So we could take 2,000,000 employees divided by 20,000 customers. The average team size there is about a 100. Is that right? [02:21] >> Exactly. [02:22] Okay. Tell us more about the backstory here. When did you launch the company? What year? [02:29] >> Yeah. The company was launched in 2010, but we run a very traditional way of selling software at that time. It was a transactional sale. So in 2015, we dropped everything out and then started the business again with a subscription, changed the the way of doing marketing and sales. And since that, we start to count customer from one in 2015, and we triple, triple, double, double, and almost double in the fifty year. We run four years bootstrapped. [03:14] >> We have bootstrapped in the the fourth year. We got the investment from DGF. [03:21] So how much how much how much did you so this would have been in 2019. How much did you raise in 2019? [03:27] >> It was it was close to $4,000,000. It's a very small round. We were able to not have a great deletion at that time. And it was enough to to grow company to continue to grow the company to to last year when we made series b. [03:53] And that series b, I think, was for a 103,000,000. Right? [03:57] >> Yes. [03:58] From lot of people's $100,000,000. $100,000,000. Most folks in their you know, most series b's last year companies were selling, you know, around 10% of the company. Were you in that same range? [04:11] >> A little more because we we are planning to the company are very close to the IPO phase, so it's worth it to make a whole lot of sense to us to go with this giant investor a little more far. [04:32] So a 100,000,000 raised at a little under or sorry. You sold a little more than 10% of the company. That would mean your post money value go ahead. [04:39] >> Yeah. On the first round, you'll say. Yes. [04:45] Yes. So a $100,100,000,000 raised in your series b last year, you sold a little more than 10% of the company [04:52] >> Yes. [04:52] Which would mean your post money valuation was somewhere around, like, $800,000,000. [04:57] >> Exactly. [04:58] I see. Okay. And then take me back because I think you did did you do a series a or, like, a 2 or $3,000,000 round in 2019? [05:07] >> Yes. Was to 3,000,000 to dollars. [05:13] Okay. So the 3 Series A. The 3,000,000 Series A in 2019, what valuation was that at? Do you remember? [05:20] >> Maybe $15,000,000 I think that's something like that. [05:31] Oh, 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 [05:54] 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 because depending on who's doing the buying of your SaaS company, you're gonna [06:18] 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 sold the whole thing outright. Now what's cool about this is this is [06:40] 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 a bunch that have been acquired the valuation and the multiple. Maybe you're [07:06] 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, we're gonna go back to the YouTube video here in a second, but [07:28] 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 the platform. I hope to see you there. Alright. Let's jump back into [07:54] the interview. Well, then you're you you are quite the enterprise value creator going from a 15,000,000 valuation to an $800,000,000 valuation last year. Help us understand what drove the growth. How were you what was your growth strategy in terms of getting new customers during those years? [08:11] >> The product itself is generating a lot of impacting the small and medium company. So it make it make for us easy to to get customers and and generate results on that. Just to have an idea, [08:31] >> in average, we save close to 700,000 reais. It's maybe $107,000 a year in savings on turnover costs. And the customers pay us close to $8,000 a year. So there's a lot of saving, and the argument to sell our software is very good. And today, we don't have other players providing HR software for small video companies in Brazil. In The US, you have Bamboo HR and all the players. But here we are playing this game alone. So [09:19] >> we have to explore this opportunity and run fast as as we can. [09:24] So, Alessandro, did I hear you say the average customer today pays you $8,000 per year? [09:30] >> Yes. [09:31] So could we take that would be $650 per month on average. If we multiply $650 times 20,000 customers, it puts you at about $13,000,000 of ARR. Is that accurate? [09:44] >> It's less than that because there is two groups of software. When we talk about this reduction of the turnover costs, we are talking about the the whole platform. And we have a group of close to 10,000 customers using the scheduling point. It was from a company that we acquired last year called Tangierino. They deal with scheduling time [10:20] >> punch clock, electronic punch clock. It's like that. So there is two groups. In that group, we have the holistic platform. We save close to to 700,000 reais, and they pay us $8,000 a year. [10:40] Well, I guess just to be clear, so so monthly recurring revenue today across the entire company, you said is a it's about a million dollars a month or is it more? [10:49] >> More. [10:50] More. Okay. [10:51] >> Got it. Yes. Yes. [10:54] So the the average company that is not paying you $8,000 per year, they're paying you something much higher. [10:59] >> Yes. They pay less. Just to be clear, half those customers use the whole platform and half of them use just a piece of the software to take care of the scheduling times. [11:17] No. I understand that, Alessandro. But but if you take just because to keep it simple, the the across your entire company, the average customer today pays you about how much per month? [11:29] >> Oh, let me check it. Okay. It was our ARPU is a 100 and $130 a month. [11:42] Okay. So I'm some some I'm doing some kind of math wrong. If you have 20,000 customers paying a $130 per month, that means you're you're doing, you know, $2.2600000 per month. Is that right? [11:54] >> Yes. [11:55] Oh, that is correct. Okay. [11:57] >> Yes. [11:58] Okay. So if you're doing 2,600,000 a month today, where were you exactly one year ago so we can calculate growth rate? [12:07] >> Half than that. We were grew a 100% last year. [12:11] Oh, wow. How how did you do that? Facebook ads, inside sales team, what was your go to market strategy there? [12:19] >> Using inbound marketing and inside sales, the whole process. And we have an HR portal where we can get a lot of HR professionals searching for content and how to deal with things. And we have also an academy where we provide courses in HR to help people both small and medium companies to practice the HR in the company and generate results. Because companies, HR professional doesn't have a lot of information and they don't are very experienced in [13:03] >> running HR. So we we can help them and teach them how to do the HR, and we can introduce our software in this process. [13:14] That makes a lot of sense. So going back to the early days, do you remember what year you hit a million dollars of ARR? [13:24] >> No. But it was [13:28] >> two years ago, or two or two years from now. Yeah. I think it's that. [13:33] So 2019? [13:35] >> Yes. [13:37] Wow. Okay. So 2019, a million. Last year, 15,600,000. Today, you're at a $31,200,000 run rate. The one question I've got for you because you're unique, obviously, you're not based in The US, but in The US, a lot of employees that had options valued at last year's valuations are now underwater, right, because valuations have come down. If you were doing 15,600,000 last year when you did a 800,000,000 post money valuation, that would put your multiple at a [14:04] 51 x, which today would seem very expensive. How do you manage employee morale if they feel like their options are underwater? [14:13] >> Today, we don't have this problem even with this lower of the multiples in both regions because we grew a lot since from them. So we don't have to deal with this problem. We have a lot of problems, but not this. [14:31] Are you thinking about an IPO? [14:34] >> Yes. Maybe in three years, we are trying to to build a solid business to to operate this in the public market. [14:44] And would you go public in Brazil or in The US or somewhere else? [14:47] >> We we don't know. We don't know yet. [14:50] What do you think you have to get from a revenue perspective in order to have a successful IPO? [14:56] >> In terms of size of the Revenue. Of the revenue, we expect close to close to $200,000,000 a year. [15:13] Yep. Before you IPO. [15:15] >> Yeah. So I I think we have a business. If we open the company in Brazil, we can do that a little less, maybe a 150 could make sense for us. [15:29] Yep. And if you're doing a $31,200,000 run rate today, we're recording this 03/22/2023, what do you think you'll finish out this year in terms of revenue? [15:41] >> Our expectation is to double again. [15:44] So you wanna finish this at a $60,000,006.00 dollar run rate? [15:49] >> Yes. 80% that will come from organic growth, And we are looking to, you know, organically do the M and A, but close to 20% of the growth will become from M and A. [16:08] And, Alessandro, how many folks are full time today at your company? [16:13] >> 700. [16:15] Wow. How many of them are engineers? [16:18] >> A little more than 200. [16:22] Okay. And tell me more about how you've structured your sales organization. How many people carry a quota? [16:28] >> Today, have [16:33] >> maybe a 150 salesperson. They are divided in teams. We have an expansion team, [16:43] >> medium business team, and a small medium. And we are trying to VSB a very small business. [16:53] >> This thing is running very well, but I don't know why. Because those are company from 15 to 30 employees. So basically, the owner takes care of the managed people. So [17:12] >> the churn is very good. 2.1 for a very small business in that. [17:17] That's monthly or annually? [17:20] >> Monthly. [17:21] Okay. So 24% gross churn annually, but how much expansion do you have? [17:29] >> In this field, I don't have this information on the BSB. Okay. But in general, it's close to 5% in expansion. So a 105% in the match revenue. [17:43] Well, so so as a company, you've got a hundred and fifth a 105% net dollar retention annually. But as a company, what's gross churn per year? [17:53] >> Oh, 1.9. Per year? [17:55] Thank you. No. [17:57] >> No. Sorry. 1.9 per month. [18:01] Okay. So 24% gross churn annually, which means you've got 30% expansion. So net revenue retention is a 105%. [18:10] >> Yeah. [18:11] Wow. Okay. Those numbers work. That's very exciting. [18:15] >> Yeah. We have a lot of opportunity in growth from 105 to a 130%. We are working on that. On this place, we have a lot of opportunity to explore. [18:27] As we wrap up here, you mentioned acquisitions. How do you think about what companies to go acquire? [18:35] >> Sorry. I didn't get the the question. [18:39] Talking about companies that you wanna go buy, acquisitions, how do you think about what companies that you could potentially go buy? [18:46] >> Awesome. We are looking to we have opportunity on products that are very hard to build, and we we would we won't lose a lot of time if we expand to to make to develop this software. So and we also are looking to opportunities in cross selling between the companies. So it was very important for us in the next movement. [19:18] Very good. Well, Alessandro, we're out of time. Let's wrap up here with the famous five. Number one, what's your favorite book? [19:26] >> No. I like every time I use the the 48 Laws of Power. [19:33] >> That's a good one. [19:34] Robert Green. Number two, is there a CEO you're following or studying? [19:41] >> I'm trying to understand Parker from [19:47] >> replay. He are doing a a awesome [19:50] job. Parker Conrad, number three, what's your favorite online tool for building solides? [19:58] >> I use every time Google Calendar. [20:01] Number four, how many hours of sleep do you get every night? [20:06] >> Eight hours. I don't have much problem with that. [20:10] And Alessandro, what's your situation? Married, single, kids? [20:15] >> I'm married. Two kids. About ten years and 15. [20:20] And how old are you? [20:23] >> 45. [20:24] Last question. What's something you wish you knew when you were 20 years old? [20:32] >> Terms of business, [20:35] >> Stan, to to know the power of the the subscription model. I think this is this is very interesting, and I could explore it better. My friend is. [20:50] Guys, solides today is doing $2,600,000 per month in revenue. That's a $31,200,000 run rate up from a $15,600,000 run rate a year ago. Alessandro believes they'll finish 2023 at a 60, that's $60 run rate, but it wasn't all easy. He launched in 2010, pivoted to a subscription model in 2015, and then it took him four years to hit his first million dollar year. That was 2019. He just finished last year raising a series b for about [21:17] a $100,000,000 at around an $800,000,000 valuation, is looking at making additional acquisitions, and hopes to IPO in a couple of years once he breaks $200,000,000 in revenue. Alessandro, thank you for taking us to the top. [21:29] >> Thank you very much much. It's nice to talk to you. [21:33] One 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 [21:58] Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button, and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big [22:20] fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you want to take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign [22:42] up for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. [23:02] We got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. All right. I'll be in the comments. See you.

hello everyone my guest today is alessandro garcia he's the ceo from solidades a startup that provides an hr behavioral management software platform to improve performance and reduce turnover costs it's a sas company with 100 employees and more than a thousand customers in brazil he's a statistician from ufmg with courses at stanford and berkeley alessandro are you ready to take us to the top okay thank you very much for having me here you better so tell us tell us more about the company is it a thousand customers today what's the company do we provide a software using official intelligence to identify behavior and reduce turnover costs uh we know that the people are hiding for this the hot skills and fired for their behavior and then we are trying to figure out how uh people will have have a better fit to the curtain company got it and what is the tell me understand what does the average kind of company pay per month to use this technology in highs 600 highs it's closer to uh one and a half hundred dollars a month 150 a month yes yes okay so it's a very cheap software just to a small and medium business sure you know 150 bucks per month and you said most these customers are in brazil yes we have some customers in portugal in uh us we have one and some cultures in america latin america but uh our focus today is in brazil okay and behavioral management software so if i take 150 kind of monthly price point times a thousand customers you guys are doing what about and fifty thousand dollars per month right now yes close to that okay okay i i believe uh one uh yes uh um a little more than one one million and a hundred and five hundred you mean 150 000 u.s yes yes okay just want to make sure it take me back a year what were you doing a year ago in terms of monthly revenue uh half then that half yes we are uh tracking the triple triple double double double uh we are growing this year two times uh what we got last year that's great now are you doing this bootstrap drop of your race capital uh alvia bootstrap you are bootstrapped that's great and when did you launch the company what year in 2015 uh we we we had the software before but in 2015 we change all the strategy to uh sas software and starts to provide some features in hdr uh basis like employee records and climate survey and etc and uh starts to correlate this information to identify uh some patterns some some kinds of uh correlations in information about the behavior and performance to to find that uh very good information to radio people and provide some benefits on that you're in a very crowded space kind of behavior management platform for internal teams what do you do that's unique to other tools that you're competing with we are correlating behavior with performancy and turnover in the world ibm is doing something like that with watson and uh what we are doing is to make the software to learn on what uh will perform better in employee management and turnover and see and provide this kind of information to improve performance and reduce to normal i believe no one in the world is using behavior algorithm to you to to make that it's only to see how people works in hiring process yep it's interesting um i'd like to understand more about kind of how you've grown to a thousand customers so what are you paying right now fully weighted cac to acquire a customer it's close to five hundred dollars okay 500 which and if they're paying 150 bucks per month your payback is between about four and five months is that right yes exactly and where are you spending that five hundred dollars uh in marketing we are using inbound marketing uh basically uh our strategy is focused on small and medium companies then about marking this work it's working very well and in inside sales process i believe that it's all of our costs to to acquire a customer and what's your team look like today how many people one hundred five fifty people win come in sales one five zero yes so 150 people total on the team and how many are sales no no sorry at 100 in total uh the team huh 50 is in the sales i see that's a lot of people in sales are they all quota carrying yeah they are doing good uh we are trying to improve the performance in the sales process but today it's giving us a very good uh performance now you said you're bootstrapped which means you're cash flow positive today right yes correct how do you pay a hundred people when you're only doing 150 000 a month in revenue we start to grill the the team uh in while we get money and then uh today we hire people when we have money to do that and uh but just to be clear you if you have a hundred people today and 150 000 a month in revenue that means on average if you use all that money for a head count you're only paying them about 1200 bucks per month yes so that okay so labor's just really cheap where you're hiring uh yes we have a cheap labor here in brazil uh i believe uh it's close to the market it's because the market where we are then we can hire people in the the the the low costs okay so is there are all 100 people based in brazil yes okay everyone everyone's in brazil okay um last few economics questions here so churn is critical in a sas business what's your turn today 1.5 1.9 a month and that's revenue churn that's logo sure revenue is 1.2 percent a month okay so 1.2 1.2 times 12 months so you're turning about 14 of your revenue each year yes okay and what are you growing customers by what's your expansion revenue uh sorry i didn't understand the question that's okay do you have expansion revenue so if someone that signs up a year ago for 150 bucks do you expand them to 300 or 400 the month of the week sorry the year after uh we are taking the march of uh 15 of the lifetime value to uh to to to retain the those customers okay wait sorry you're expanding the account by 15 year-over-year uh 15 the year over year of the lifetime value then we got the the the price where the people were paying in the monthly basis and we are getting 15 to retain these customers okay i'm not sure i follow you you what do you mean you get 15 to retain those customers we are allocating uh that money to to make the vacation you're allocating 15 percent of the revenue to retain them exactly oh i see you were saying very cool all right and those are like on like customer success representatives or something like that yes okay that's very good and you said you're bootstrapped are you looking at raising capital yes today we are uh receiving a lot of uh proposals but uh we are trying to select what uh fund will uh boost our company to an other stage yep so if you do raise capital how much would you want to raise in an ideal world chill three million uh dollars at the first round okay so if you raise three million bucks what valuation would you want to raise at ten million i don't think we are looking uh well do you think sorry do you think 10 million is pre-money or post money pre-money free money yeah we we are looking the market uh here in brazil they are paying six times in average of the arr then uh i believe i believe we are growing faster to to look for some multiple like that yeah that makes a lot of sense to me makes makes perfect sense very good well let's alessandra let's wrap up here with the famous five number one what's your favorite business book oh i love books let me see um i i can't mention just one book but uh there is a book of the that um let me remember the name but they talk about the comfort zone and how will improve but i i don't remember the name okay number two is there a ceo you're following or studying uh today i'm studying uh the i'm sorry i i'm i'm having problem with that the don't make somebody up you can say none yeah they're back sorry i i forgot the name warren buffett yeah exactly great buffett it's a biography uh very cool and i love how he does the things number three what is your favorite online tool for building your business online online online okay i love uh pack drive is for me one of the good things and we use a day station here in brazil a lot to get leads and it's uh it's very helpful for us good number four how many hours of sleep do you get every night well six seven hours i live and what's your situation married single do you have kids married i have kids it uh let's make the entrepreneurship very how many kids chill kids two kids and how old are you six years and 11. how many how old are you uh 41. 41. okay alessandra last question what do you wish your 20 year old self knew sorry what do you wish your 20 year old self knew oh um uh working only working no no but what what's something that you wish that he knew a lesson you wish you knew okay i would like to learn about how to create a big story and make a bigger big difference in the world that's what i'm looking for and that's what i'm trying to do guys there you have it make a big difference faster founded his company solids.com.brb in uh 2015 today 100 people they're doing about 150 grand per month a thousand customers paying 150 bucks they've doubled year over year up from about 75 000 bucks a month just a year ago they're bootstrapped 14 revenue churn per year that's on a gross basis spending 500 bucks to get 150 a month account so five month payback period there again growing in a super healthy way down there in brazil again helping people with uh reduced turnover costs increase employee productivity alessandro thanks for taking us to the top thank you nathan