How Starred CEO Daniel Birkholm grew Starred to $4M revenue and 200 customers in 2023.

hello everyone my guest today is lars van wyer and he comes from an entrepreneur family and had his first car cleaning business at the age of 13. he even studied small business and entrepreneurship and after working at a startup and google he founded his current company starred with two r's two years ago star made a pivot into the people experience which means measuring feedback from higher candidates to retire employees lars has two other pre-revenue startups called vesper uh and june which we'll dive into all right larger takes the top absolutely let's go okay so it started your main gig in terms of which one you make the most money from yeah so maybe the other two are more a joke those are my two daughters so it's a five-year-old and a two-year-old daughter so i often refer to them as my pre-revenue i that went way over my head i was just reading your bio i had no idea okay so you started do you have two kids start is your thing absolutely okay so what's what's walk me through sort of what people pay for when they when they pay for start what are you selling yeah so it's a typical uh software as a service so we pivoted away from uh from client satisfaction now fully focusing on both candidate experience and employee engagement and if you look at the candidate experience side it's more or less ten thousand acvs or ten thousand per year and employee engagement is more like a twenty thousand per year okay got it so so the last time you came on this was back in november of 2018 if you remember uh two you said you had about 250 customers paying about seven grand per year now you're saying minimum is more like 10 000 per year is that right yeah okay and how many customers are you working with today yeah it's so we we divide our business now in like more the the legacy business so the the customer satisfaction business and that's still uh the majority of our revenue so that's around 150 clients and we have around 70 80 clients in the in the new focus also okay hold on so break that down for me the old focus is what yeah so that's really uh customer satisfaction and i think i made a first-time founder mistake by going too broad so we tried to fix every problem with feedback out there but essentially we tried to be there for for everyone so we were there for no one and two years ago we sat down because every day we saw another competitor and we were a tiny fish fish in a big ocean and we thought it's better to become like a big fish in a small pond so we sat down and we decided to fully focus on candidate experience also because there's a little competition and that's our way in also for the whole people experience so from higher to retire the feedback okay guys so you've got about 250-ish customers today between both lines of business yeah that's correct and what does that add up to in terms of total mrr last month so it's around to 2 million right now and it's uh it's it's equally uh amongst the two and what we did see happen also with kovit 19 that also in the in the legacy business because it's less focus we saw a higher churn and yeah in our focus we're still we're still growing got it so you're doing about 170 000 per month in revenue or 2 million run rate yeah something like that yeah so i mean how do you think about that right because that that means you're about flat since when you last came on almost you know a year and a half ago right but have you bootstrapped or have you raised no so we uh we're now actually making money so at the last time we spoke we were burning a lot of money so uh and and i think that's that's also one of the the the pain points when making a pivot you really need to to fight your way how would you take one step back before you can take two forwards you know you need to do it all by yourself so here we're uh we're doing it ourselves right now so while the the total revenue is flat in a way uh in our focus so we're doubling every year and uh we're signing also big american companies or at least big tech companies like elastic robin hood bricks so so on on that 170 000 in last month how much is profit uh about 20 so that's i i think and that's that's also uh about 30 000 then profit yeah yeah and already last year uh it's not that we have that we could predict uh of it but we were already seeing in the market there with with quite some ipos that didn't went too smoothly and also with wework we saw that uh that the things were changing so we thought okay let's let's uh focus on making um making a profit so we can keep the lights on ourselves and uh right now with the focus and with the growth rates there uh it makes sense around you raise the you raise 750 000 though correct yeah that's correct have you raised any more since then we only got a bank loan uh government-backed uh bank loan of 1.5 million but we don't have a vc yet okay and of the 1.5 million bank loan was that from the government that was the government loan yeah it's a government loan but uh yeah so so it's it's an actual loan you need to repay it but when things go sour the government what's the interest rate it's only four percent so it's pretty yeah so you still have all that outstanding [Music] well we we spend most of that unfortunately so uh but we have quite a stable business right now and and because we're really focusing uh right now we we finally found a niche where there's a little competition and uh yeah we're i believe the best out there how many folks on the team now today sorry how many folks are on the team 20 okay 20 people guys so so there were 35 last time you you've shrunk down about 20 but you're more focused now yeah far more focused and far more international by then we had an office in amsterdam and london now we've centralized everything again in amsterdam and we had plans to open up in new york this year but yeah i think that will take at least a year longer so and of the team how many are half of them half of okay so 10 engineers any quota carrying sales reps or no uh yes but only uh only two so also fewer than before and that's also because we shifted to a product-led road and we also have a freemium model right now in times of crisis if you can't get their money you can at least get their time so yeah we're absolutely shifting and we're investing a lot in partnerships so with applicant tracking systems like greenhouse and smart recruiters and that's really working for us so we we really reinvented the business in two years time what are you saving the profits for and the reason i'm asking is i'm you know once you raise capital these investors want you growing sometimes at all costs so it's it's probably they probably don't like the fact that you're profiting money it's basically a sign of you saying i'm not sure how to invest to drive faster growth how do you manage their expectations the investors that put in 750 thousand dollars yeah so we're so right now it's it's really to uh to to weather the storm so we don't know uh uh what what will happen towards the end of the year in the world so when we when we do see fit we will invest that money it's it's not that that money will go to my pockets it's we will reinvest all of it and we are also having some conversations with other companies maybe to to acquire our legacy business so and we're working with some vcs and we have some other ways we might raise funds but for now it's really to to weather the storm do you have a number in mind in terms of what you'd set up like a legacy business for that would make you happy it's a great question and i don't have an answer yet and right now it's it's it's a cash cow for us um so it's it's still working we have happy customers there but if there's uh a company offering a three to five ex for instance it's definitely a word uh uh looking at yeah or the time is also worth something to us if people want to look at like i think it might be unclear what is legacy versus what is new if they go to your website what what product what would they click to look at your legacy product is the candidate experience or the employee experience you can't find our legacy products any longer so that's also uh something we changed beginning of this year we said if you really want to focus we should stop selling in our lives what would you be selling though i'm talking about buyers listening right now where can they go to see what they would be buying yeah so it's uh uh it's uh it's it's customer satisfaction and feedback so um often it's it's around customer support so when closing the salesforce tickets but they really need to reach out to me because they won't find it online anymore got it so basically we can't see it on your website but it is tech you would sell them code and you have 150 customers still using that technology yeah and also great logo so uh if if there are companies in this space i think it's uh it it's a good it's great to acquire it because also the ac fees are i think still a bit too small and if a company is really focusing on this they can definitely upsell or cross-sell them so yeah feel free to reach out to me and that business does what a million a year in revenue yeah and 150 logos yeah interesting um i have some ideas on...