How Sorryasaservice CEO Indrek Poldvee grew to $244.2K revenue and 11 customers in 2024.

hello everyone my guest today is indrek behold V before started a start-up worked in sales almost for ten years in Estonia lived in India for 12 months and then a Nepal for six months in 2015 he was one of the founders of a company called sorry as a service which we'll focus on today in 2016 he went to startup wise guys accelerated her in Estonia and in Sonia and then in 2016 went to the tech stars London accelerator he sent over seventy thousand gifts to date on behalf of companies you may have heard of his biggest customers are British Telecom DPD UK transferwise along with many others in 2017 he started his own podcast in Estonia indrek are you ready to take us to the top yeah hello and great to be with you guys alright so real quick tell us some of your podcasts then we'll jump into your company so the both castes in Estonian language so unfortunately a lot of people cannot understand it by its name is how come with a goat some it means just start doing something I love that just start doing something so speaking of just start doing something you started sorry as a service tell us what the company does and how do you make money yes so sorry service was founded with four founders and one of the founders was extern service worker and the thing that they saw is like people or companies really don't know how to deal with the company complaints in a really personalized manner everything is automated or everything is we give pouches and gifts and we thought guys that's that change that a little bit and we probably made the software that companies like you mentioned in the beginning DVD and British telco that they can send the personalized gifts by just pushing a button and we provide the software and all the gifts that we are sending are handmade so this is how we differentiate from other gift providers is like we send cookies handwritten notes chocolates and cookies and chocolates they have the first customer name written on them and all the items that mostly we send have also handwritten note with including with it and with your money how do you get paid is it as a service or is it pay-as-you-go or what yeah so it's a SAS model and we we like to work with bigger companies and we also have a small margin the items that we ship out okay there's a two revenue streams okay on this I imagine a SAS model revenue makes you more than the margin model right it's also sometimes actually because the volumes are so high like we are sending like four or five hundred items per day so sometimes it's actually margins are pretty pretty interesting they're interesting okay so what are people paying you on the SAS side of things on average so it depends on the company size if it's a bigger or smaller so right now we are focusing on API integrations that we like to automate as much as possible and it's starting four thousand pounds a month so they say so foul is that is that would you say that's a fair average a thousand pounds a month yeah okay so it depends on the customization also what the customers want right now like because our API can integrate with any web-based CRM and with the DPD UK we have been integrated with Salesforce for example yeah and we can do a lot of custom features there so it's really interesting so a thousand kind of pounds or which is about thirteen hundred United States dollars today that's average reserves pay per month that's just the SAS side of thing then you have the margin side of things as well give us more the back story here's what you do to launch the company in so we got together in 2015 and that we actually our company we were started in a hackathon so all the founders all the four founders that well actually there were seven in the beginning we were in a hackathon we had the idea and none of us knew each other before so all of like pretty much random people and we got the idea and it took about five months after the hackathons when we registered the company and we we had to prove four concept and the proof of concept that we had was pretty much mean Ickes of file and a car that I went just hustling I had actually left my job and I had two job interviews and I why did you why did you leave your job because before the hackathon I I realized I didn't like the job I was doing like I was working in a small company and in housing company and there was a sales guy and I wasn't really good but it was not really exciting how much were you making how much my did you give up when you quit Oh in Estonia I don't know not not much it's average like a thousand thousand two hundred euros a month that's average salary in Estonia god it's about eighteen hundred US dollars so you quit that you're going to job interviews then what so when the job interviews happened after the hackathon and then on job interviews I realized that these jobs that I'm implying they don't get me excited as the stories the service that we did in a weekend yeah we saw the hackathon was 48 hours yeah and in the 48 hours we have we needed to build from idea to do a first MEP and then we actually won the hackathon and we got really really excited about it and so what was what was the total revenue in that first year 2015 out 2015 Oh a couple of hundred euros okay so now I only only only three or three months we launched it was in October 2015 okay buddy it took us it took me to church I had two job interviews which I turned into customers oh that's a cause in the end of Patrol job interview I realized like oh damn this is not very passionate and I told them hey okay I had this job is interesting but I was in a hackathon and let me know what you think of this idea that we're doing and these people who I had the job interview they said okay let's try this guys have it there's your hack to get your first two customers just going through their job portals on their website and then when you're in the interview pitch them on your product and ask for their feedback right yeah all right so would you revenue though would you scale them to in 2016 in total revenue so 2060 we got into the accelerators so again we were all first-time founders we were we got into the start of wise guys we got the first investments and then we got into tech stars we got the second investment and then I think our total revenue in 2016 was a 150 to 200 K that's healthy and how much did you raise to have you raised today in total we only took money from the accelerators we actually didn't take any outside investment so so how much it was funny because 250 total okay yeah total and it was funny because we were in textiles London we had the biggest team but the lowest burn rate yeah what was the things we were we are we are Estonian so we try to make everything quite cheap they were like but with the high quality story we were living in dorms and and we really really looked after our burn rate because our CEO who is really really crazy about that you're one of the founders but you're not the CEO yeah okay I am focused on the sales and what's the team size today team sighs today's eight people eight people and what's burn yeah so burn rate though it's like now it's 20k okay that's net or gross that's gross okay gross got it so so what would net are you breaking even or is your net your net burning so yeah so we are breaking even so so it depends on a month so that that's where the the volume comes into into play where we are when we are shipping more items then we get the break-even if we send less items then we are so so got it so your total expenses in a given month it's about 20 grand right depending on what your sales are we'll determine if you're kind of break even at month and a lot of that comes down to volume and the margin you make exactly exactly interesting and how many customers are you serving today so right now the we are focusing on enterprise customers so the problem with them is the sales occurs quite quite long months how many are you working with today they we have eleven customers eleven and how do you deal with I mean imagine gift-giving can be very seasonal or cyclical how do you do how do you try and sell these people a monthly recurring product when they'll say and requi only want to use this during the holiday season and then we want to turn it off so the thing is what what we try is that's why we're making the software is we want this to be continuously poor exceptionally hour now I know that our company story is a service which is short for sauce and it's a panel of that but most half of the gifts that we are sending is loyalty thank you for example if if you're a bank and the customer takes the first loan then we automatically send them a gift thank you for trusting us with a handwritten note for taking this first loan or or right now DPD is using us when something goes wrong or British Telecom sends like when the customer buys for example extending the contract for another two years of their cable service they send thank-you flowers thank you for trusting us thank you for doing this and this is a huge huge model and there are so many people you need to thank and you need to keep your customers happy and it's not like you're sending a customer regular customer regular t-shirt or something that is not customized it was personal so what's the genius the challenge I mean why aren't more people than sticking what you have eleven customers today why don't you have more so the problem is we are nice to have product right now that we haven't market ourselves better and because also we have limited funds and we we haven't showed that the pain is big enough and we need help with that a little bit we have seen amazing amazing numbers actually that what our gifts can do yeah I mean it's exactly right like with your business it's a nice to have like any CML would say yeah we would love to do that it feels like the right thing to do if we have the budget but when push comes to shove we're gonna cut it unless you can prove that this cohort of customers that you gave a gift to last year you know they expanded the revenue by 20% more than the cohort that you didn't give a gift to but you don't have data like that yet I know we have some some results with British Telecom where we have and some other customers where we have actually shown that our ry is 2.6 times higher than normally you give out yours and and other things so it makes more money in try and actually yeah what what is what does it cost you to acquire one a these customers oh yeah that's that's a hard number to put because again I told you the same suckers are eight to twelve months and and not putting our own working hours because he's that you don't count your own hours because you're working for passion and and and we're eating by yourself yeah and now we start in the beginning again that's why our burn rate were so low because the salary you pay yourself and are you the only sales person we have other also we have partners that we are working with but there are more mostly consultants and we paid them when they get the new customer and what percent do you pay them it depends on the deal so it really depends on it you know yeah what is it Enterprise is small what's the most that you'd pay them per like 10% or 30% or what it's a twenty twenty-five and also that we have like different schemes because we pay also for the one is for the software and porn is for the item so the item margins that also varies because it depends on the volume sure the software we know exactly yeah so on the software if someone's standing up for thirteen hundred bucks a month are you paying that that channel partner twenty percent just on the first month revenue or for every month after as well so we have a timeline we normally do like four to six month islets to prove that this really works and if they sign on then we pay for another longer period okay so we like we like them to keep also like generate the passive income for them yeah so generally speaking you'll pay you'll pay these folks about twenty percent of monthly revenue but is that does that go on in perpetuity forever or just the first year right now just the first year and because we take over the customer toppings and and upselling got it so if the first immers are paying on our thirteen hundred bucks a month that's fifteen thousand dollars per year you're paying the person that gave you that business about three thousand dollars that I carrot yeah we're talking about that religion they're also like everything can be negotiated and and see if they have really good rapport relationship with these companies then we keep on and if they upset themselves they don't want to keep the customer for for all the details and again like there are many many opportunities mmm yeah that makes sense so tell me about your churn yeah so that's that's that's also something that we are we are looking on because we are focused on the customer who are actually buying from us every every day or every month so we have actually huge shirt but it's because you mentioned like they want to only use us in holiday or just once a month and we actually don't like to work with these companies because they don't give us steady steady volumes and because all the items we are shipping it's handmade our Baker's also need some kind of minimum volume so it's really hard to predict like if if I need like in two weeks I need 5000 items so it's very hard to predict these things but right now if a company makes every every day like four or five hundred items we can predict that for the next two months or so so it's much easier for us to work with suppliers yeah but that's like Amazon saying everyone that only uses us on Black Friday but pays us prime annually we don't want them because they only use this once a year all right you they actually do use you consistently it's just it's consistently on an annual basis not a monthly basis so you think like what can you change your like supply chains and stuff to match that you know that pattern exists you know it exists but we don't know the volumes so it's random good news for them also they want to say maybe we start with 200 and something else next time and it's really difficult for us because we need to focus because we still a start-up and in a really small one so we need to need to focus on where we can get the most revenue stur fastest and steady income yeah on the saucer but the ones are really really really interesting on because you have you're dealing with physical products here even when some page you want to sass multiple you have to need to pay for the letter to get shipped and all that I mean what's your gross margin is it does it is it like 50 60 % or is it like typical SAS companies at 80 or 90 percent no it's not that much so for the software is different but for the items is definitely not that much because it's again it's a physical product okay so what do I get if I just pay for the software so for the software you you get the access to our API and they yeah you can integrate with your CRM and you can actually start making the gift giving and everything much faster but there's no my point is that there's no value to just having us software you'd only buy the software as you off if you also used gifts yes yes so what your blended gross margin across the across the both the software on the product side do you know that's that's no I don't know okay alright but my point is if you have other you have costs that most software companies don't have because you are dealing with shipping physical product yeah no but the thing is like we don't ship anything ourselves everything is shipped by suppliers so we don't have a warehouse we don't have anything we are just the connector of connecting the people who pay is this a fire yeah so we paid the supplier so we pray for the items that but that's already in the price they calculate the price and they keep it for us for example for if we want to send out the handwritten note this price is for the suppliers and then we add our Martine yes but the margins code that go down when there are bigger volumes yeah yeah I mean what your margins probably like five 10% on an item yeah yeah five ten fifteen depends how much we get interesting if Salesforce came and offered you you know four hundred grand to sell the company's then would you sell depending on the terms and it will be really interesting discussion and we are all open to these kinds of partnerships all right and Rick let's wrap up here with the famous five number one what's your favorite business book how to make friends and influence them by number two is their CEO you're following or studying right now oh there are so many in Estonia one in Estonia ah that's a good one let me think he's not a CEO but well the thing is I listen to a lot of podcast I can give you a podcast about your name one if that's so bad Flynn smart passive income good number three what's your favorite online tool for building your business Oh using Gmail and all the plugins Gmail offers it's amazing sales tools there are so many of them number four how many hours of sleep to get every night oh seven eight okay and which city was very very what's your situation married single you have kids I'm single and I have kids okay how many kiddos I have one and she's seven years old and going to school in the fall oh wow okay and how are you I'm 36 all right and Rick last question what he was your 20 year old self new start faster and don't worry about and don't worry what happens just go with the flow guys there you have it start faster he quit his job many years ago 2014 timeframe they went for two job interviews it turned up ended up turning those two job interviews into sales of his new product that he'd just put together last weekend over a hackathon launched company in 2015 sorry is a service it helps you send gifts at scale to your customers keep them happy keep them longer they now have eleven customers paying about thirteen hundred bucks a month doing about 14 grand Justin software revenue they also make a five to ten percent margin on the actual products they sell or the products they ship to customers who paid them they've raised two hundred fifty grand just from two accelerators to date burning out seven grand per month as they look to scale again I depends on volume at any given month with their team of eight in Estonia Indra thank you so much for taking us to the top yeah Thank You Nathan for this opportunity