How SpotMe CEO Pierre Metrailler grew SpotMe to $17M revenue and 300 customers in 2020.

hello everyone my guest today is pierre mctrayler he joined spot me in 2001 as a software engineer in 2004 after a research position on a distributed algorithms at ntt japan he returned to spot me and led the pivot from proprietary hardware to sas with spot me becoming the leading pure play event engagement platform pierre's a graduate from insead and the swiss federal institute of technology pierre you ready to take us to the top absolutely thanks for having me late you bet thanks for coming on so the obvious question is anyone that sells into the events world is going through a lot of change right now what is spot me selling right now and how you've been impacted by kovid yeah so we are a what most people would call us and they would think of a wordpress for events right so we are an end-to-end platform for launching managing running your events and of course it happens today that most of these events are actually online right so we provide all the tools to create a website a mobile app a social network live stream and a community and you can do this in few clicks and without having to code now what you're saying is yeah of course covet huge change and a lot of people in the industry were focused on in person they were doing a lot of stuff on reg on checking people in and payments and none of these things happen right and all the focus now is on engaging online as on streaming and that's actually something we had we had a product before because one of our clients actually asked asked us a few years ago and so we were quite ready to pivot extremely quickly so yeah business was pretty tough the first two months from march to uh to um i think may and and starting june we went up very very strong about how much monthly recurring revenue do you guys lose between march and may it's a great question i think we're still trying to figure this out we had about 900 uh cases with customers we're trying to you know uh pull back their contracts uh but we do think overall we're gonna lose between three to four months of uh of of recurring revenue and and here we're talking potentially a lot of churn like because some people immediately went to some other providers and and there's also a big potential now to win those clients back and so still a question mark but overall going very strong what does that mean losing three to four months of revenue can you quantify that in dollars yeah so um last year we had our top line revenue last year was about 22 million dollars right and and one of the things we did last year and in that you we're counting about six million uh arr right and so we were in the process of transforming that 22 million into ar because the year prior we had zero right 2018 2018 you had no revenue we had we had no recurring revenue okay and we transformed that into into ar okay uh so three two i mean three months that will be you know that will be something like two uh two million a month so probably about six to six to seven million okay got it so you think you'll lose between six and seven million in sort of contracts that you had a combination of recurring plus sort of setup fees from canceled events correct correct plus services and upsells that didn't that didn't happen yeah okay so this is a fascinating story i love stories where it's sort of a consulting setup business that is sort of slowly transforming to sas because just sas is better from a valuation perspective etc planning perspective so this year where do you think you'll finish like what's your just pure run rate today on the sas side yeah so on on the side and and this covet thing is actually for us just perfect i hate to say this because it's stable for a lot of people but for us it's just perfect because it pushes us and it pushes our costume more towards stats anyway uh so i think we're going to be hitting 12 to 30 million so more than 100 growth in in ar okay and what are you at right now like last month what was monthly recurring revenue yeah it was about 9.5 uh okay yeah that's great i mean that's that's not bad so you're still up from 6 million last year even with covet absolutely yeah absolutely yeah now will overall revenue in 2020 take a hit because you won't have so much of the setup fees and all that yeah yeah yeah well we we don't know yet right because the business is going like very strong we required i think about 100 new customers from from may till like september and and now we're going probably 100 just for the last quarter right so so probably you know anywhere between 16 to 20 16 to 20 million is probably where we land on top line this year yeah but but what's nice about that is you'll have you'll go from being you know about 30 true sas revenue to almost 65 70 true sas which while it stinks that your top line revenue declines you're now more prepared sas that's right the the only the flip side though is that we are we're not bootstrap business we did get investment in the early years like 20 years ago when we were a hardware business and it was a single-digit investment but since then we've been purely from cash flow and in-depth and bank debt right so we've got to manage cash flow very carefully if you lose you know 46 million revenue that's not a small that's not a small hall and uh if one thing you know history did teach me here is that if you manage the company a little bit like a household and it works right and and you know things like coffee can happen and you can still you know pivot the business and still have a bit of a safety net to grow now something someone listening right now might be going oh this is great you know pierre seems cool and hip but you guys are an old company when was the company launched so the company was actually founded in 2000 i'm not even the founder i'm a joiner i joined a few months after the company was founded and there's actually none of the original founders on on the company anymore they're still invested some of them uh but the companies completely changed in 2012 into into into software uh and then later on into sas yeah and when so so there's debt and equity involved has there been an equity raise that happened while you've been at the company yeah we did a really small round with uh actually equity and debt were actually tied together uh because the way it works with banks is that if you know if you do raise some equity you can then leverage some debt after that so we did that at the moment you changed from hardware to software because that was a pretty big investment right we had to rewrite the software from scratch what year was that here 2011 2012. we launched 2012. okay got it so 2012 is when you took the equity plus debt deal and about how much did you take oh very very little by you as standard okay got it like two three four million uh yeah okay you're you seem shy of it you seem shy about that well we have we have a culture of secrecy in my home country in switzerland so uh but but that's that's that's about that's about that that's about it right okay fair enough so so i mean i would say it's still pretty impressive that the company is only really raised call it two million or so to go from where you were to where you're at now very capital efficient so we went 2012 we had a four million business uh to went to 22 and and twenty actually nineteen and all of this was it with a 20 15 to twenty percent you know ebitda margin so being very cash flow effect efficient that that's great um it doesn't allow you to make some big bold moves and but the big thing is that if you have a history of being you know cash flow efficient when you go and talk to banks you know that's a really really easy discussion yeah it's almost like a credit score kind of right you have a lot of history to point to exactly yeah um that's great now are you still today uh about 15 to 20 percent ebitda margin you'll think you'll do that in 2020 now with with losing 46 million uh no and plus we're investing crazy so this year we'll take a dig a big a big dip in in cash flow we are just now i was just talking to my cfo we are anticipating to be break even um next month back to break even next month oh that's pretty close pierre so i mean you're only burning you're only burning like net burn then like call it 100 grand 200 a month right now yeah we we're going to be going i mean this month we'll be booking about north of 2 million yeah and most of this is collected up front so you know that's uh that's a solid cash flow yup yup yup yup so okay got it so you see clear path on a cash flow i mean you're gonna be casual positive this month on a cash basis absolutely yeah now if you divide the two million collected up front by 12 you might need another month or two to get to true break even on an mrr basis which you know we have with a high on full cash flow positive for you know 20 20 21 and even there uh because now the beauty of this new coveted situation is that it's very clear how you can acquire like a ton of new customers right and we've established a clear cac and and wait tell us about this yeah so it's it's very simple the we have two products there's one platform but it's packaged into two offerings one is one offs for people who are not quite...