How Solides Reached $15.6M ARR and 20,000 Customers with 100% Growth in Brazil (Interview with Founder and CEO Alessandro Garcia)

Introduction and Revenue Snapshot

Nathan Latka

00:00I 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

00:27a $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

00:55to take us to the top?

Alessandro Garcia

00:58>> Yes. Nice to to to have me here. Thank you very much.

Nathan Latka

01:02You 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?

Alessandro Garcia

01:11>> Yes. Yes.

Nathan Latka

01:12That's great. So tell us more about a customer that's using you today and how they use you.

20,000 Paying Customers and Platform Overview

Alessandro Garcia

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.

Nathan Latka

01:52So, Alessandro, just to be clear, so you've got 20,000 paying customers today?

Alessandro Garcia

01:59>> Yes. 20,000 paying customers, small and medium companies in Brazil.

Nathan Latka

02:03That's that's amazing. And how many employees those 20,000 companies manage via your platform?

Alessandro Garcia

02:10>> Close to two millions.

Nathan Latka

02:12Wow. 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?

Alessandro Garcia

02:21>> Exactly.

Nathan Latka

02:22Okay. Tell us more about the backstory here. When did you launch the company? What year?

Company History: 2010 Launch and 2015 Subscription Pivot

Alessandro Garcia

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.

Bootstrapping and First Investment from DGF

Nathan Latka

03:21So how much how much how much did you so this would have been in 2019. How much did you raise in 2019?

Alessandro Garcia

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.

Nathan Latka

03:53And that series b, I think, was for a 103,000,000. Right?

Alessandro Garcia

03:57>> Yes.

Nathan Latka

03:58From 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?

Alessandro Garcia

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.

Nathan Latka

04:32So 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.

Alessandro Garcia

04:39>> Yeah. On the first round, you'll say. Yes.

Nathan Latka

04:45Yes. 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.

04:52Which would mean your post money valuation was somewhere around, like, $800,000,000.

Alessandro Garcia

04:57>> Exactly.

Nathan Latka

04:58I 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?

Alessandro Garcia

05:07>> Yes. Was to 3,000,000 to dollars.

Nathan Latka

05:13Okay. So the 3 Series A. The 3,000,000 Series A in 2019, what valuation was that at? Do you remember?

Series A Details and 2019 Valuation

Alessandro Garcia

05:20>> Maybe $15,000,000 I think that's something like that.

Nathan Latka

05:31Oh, 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

05:54your 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

06:18get 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

06:40not 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

07:06going 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

Series B: $103M Raised at $800M Valuation

Nathan Latka

07:28if 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

07:54the 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?

Alessandro Garcia

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,

Customer Value and Competitive Landscape in Brazil

Alessandro Garcia

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.

Nathan Latka

09:24So, Alessandro, did I hear you say the average customer today pays you $8,000 per year?

Alessandro Garcia

09:30>> Yes.

Nathan Latka

09:31So 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?

Alessandro Garcia

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.

Nathan Latka

10:40Well, 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?

Alessandro Garcia

10:49>> More.

Nathan Latka

10:50More. Okay.

Alessandro Garcia

10:51>> Got it. Yes. Yes.

Nathan Latka

10:54So the the average company that is not paying you $8,000 per year, they're paying you something much higher.

Alessandro Garcia

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.

Nathan Latka

11:17No. 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?

ARPU, MRR, and Growth Rate

Alessandro Garcia

11:29>> Oh, let me check it. Okay. It was our ARPU is a 100 and $130 a month.

Nathan Latka

11:42Okay. 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?

Alessandro Garcia

11:54>> Yes.

Nathan Latka

11:55Oh, that is correct. Okay.

Alessandro Garcia

11:57>> Yes.

Nathan Latka

11:58Okay. So if you're doing 2,600,000 a month today, where were you exactly one year ago so we can calculate growth rate?

Alessandro Garcia

12:07>> Half than that. We were grew a 100% last year.

Nathan Latka

12:11Oh, wow. How how did you do that? Facebook ads, inside sales team, what was your go to market strategy there?

Go-to-Market: Inbound, Inside Sales, and HR Academy

Alessandro Garcia

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.

Nathan Latka

13:14That makes a lot of sense. So going back to the early days, do you remember what year you hit a million dollars of ARR?

Alessandro Garcia

13:24>> No. But it was

13:28>> two years ago, or two or two years from now. Yeah. I think it's that.

Nathan Latka

13:33So 2019?

Alessandro Garcia

13:35>> Yes.

Nathan Latka

13:37Wow. 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

14:0451 x, which today would seem very expensive. How do you manage employee morale if they feel like their options are underwater?

Alessandro Garcia

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.

Nathan Latka

14:31Are you thinking about an IPO?

Alessandro Garcia

14:34>> Yes. Maybe in three years, we are trying to to build a solid business to to operate this in the public market.

Nathan Latka

14:44And would you go public in Brazil or in The US or somewhere else?

Alessandro Garcia

14:47>> We we don't know. We don't know yet.

Nathan Latka

14:50What do you think you have to get from a revenue perspective in order to have a successful IPO?

Alessandro Garcia

14:56>> In terms of size of the Revenue. Of the revenue, we expect close to close to $200,000,000 a year.

Nathan Latka

15:13Yep. Before you IPO.

Alessandro Garcia

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.

Nathan Latka

15:29Yep. 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?

Alessandro Garcia

15:41>> Our expectation is to double again.

Nathan Latka

15:44So you wanna finish this at a $60,000,006.00 dollar run rate?

Alessandro Garcia

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.

Gross Churn, Expansion, and Net Dollar Retention

Nathan Latka

16:08And, Alessandro, how many folks are full time today at your company?

Alessandro Garcia

16:13>> 700.

Nathan Latka

16:15Wow. How many of them are engineers?

Alessandro Garcia

16:18>> A little more than 200.

Nathan Latka

16:22Okay. And tell me more about how you've structured your sales organization. How many people carry a quota?

Alessandro Garcia

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.

Nathan Latka

17:17That's monthly or annually?

Alessandro Garcia

17:20>> Monthly.

Nathan Latka

17:21Okay. So 24% gross churn annually, but how much expansion do you have?

Alessandro Garcia

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.

Nathan Latka

17:43Well, 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?

Alessandro Garcia

17:53>> Oh, 1.9. Per year?

Nathan Latka

17:55Thank you. No.

Alessandro Garcia

17:57>> No. Sorry. 1.9 per month.

Nathan Latka

18:01Okay. So 24% gross churn annually, which means you've got 30% expansion. So net revenue retention is a 105%.

Alessandro Garcia

18:10>> Yeah.

Nathan Latka

18:11Wow. Okay. Those numbers work. That's very exciting.

NDR Improvement Opportunity

Alessandro Garcia

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.

Nathan Latka

18:27As we wrap up here, you mentioned acquisitions. How do you think about what companies to go acquire?

M and A Strategy and Acquisition Criteria

Alessandro Garcia

18:35>> Sorry. I didn't get the the question.

Nathan Latka

18:39Talking about companies that you wanna go buy, acquisitions, how do you think about what companies that you could potentially go buy?

Alessandro Garcia

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.

Nathan Latka

19:18Very good. Well, Alessandro, we're out of time. Let's wrap up here with the famous five. Number one, what's your favorite book?

Alessandro Garcia

19:26>> No. I like every time I use the the 48 Laws of Power.

19:33>> That's a good one.

Nathan Latka

19:34Robert Green. Number two, is there a CEO you're following or studying?

Alessandro Garcia

19:41>> I'm trying to understand Parker from

19:47>> replay. He are doing a a awesome

IPO Plans and Revenue Targets

Nathan Latka

19:50job. Parker Conrad, number three, what's your favorite online tool for building solides?

Alessandro Garcia

19:58>> I use every time Google Calendar.

Nathan Latka

20:01Number four, how many hours of sleep do you get every night?

Alessandro Garcia

20:06>> Eight hours. I don't have much problem with that.

Nathan Latka

20:10And Alessandro, what's your situation? Married, single, kids?

Alessandro Garcia

20:15>> I'm married. Two kids. About ten years and 15.

Famous Five Rapid Fire

Nathan Latka

20:20And how old are you?

Alessandro Garcia

20:23>> 45.

Nathan Latka

20:24Last question. What's something you wish you knew when you were 20 years old?

Alessandro Garcia

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.

Nathan Latka

20:50Guys, 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

21:17a $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.

Closing Summary

Alessandro Garcia

21:29>> Thank you very much much. It's nice to talk to you.

Nathan Latka

21:33One 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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