Trakto.io Revenue, Valuation & Funding (2024)

hello everyone my guest today is paulo donnario he's building a company called tracto.io which is a design software for non-designers he's got 10 plus years of experience uh doing this the designs uh in the sort of the design world has worked with hundreds of clients all around the world paula you ready to take us to the top oh yeah man thanks a lot nathan it's a pleasure to be here you bet so talk us through track dough it sounds like it is a pure place sas company for non-designers yeah so let me make a long story short i was a designer my whole life i lived in many cities in brazil back in 2007 uh i got an invitation to work in the u.s so i moved to salt lake city utah i lived there working with motion design cg effects for a company called media grabbers um so i lived two years in salt lake city then i was invited to work in uh in la in hollywood working with big studios and everything else uh so when i was moving uh from city to city and talking to different professionals and small businesses everyone had a hard time uh trying to figure out how to do their marketing materials that was like back while size was us sas was just starting and uh i had no experience in startup before i had to move back from the u.s to brazil because my dad was sick so i had to move back i spent an year here and then i found my co-founder and i had this crazy idea about like all right let's try to uh come up with an edit or an online editor that's gonna make uh people's life easier when creating business proposals business presentations and so on so that's how tractor came to be and what year was that yeah it was like 2013. 2013 okay and did you did you start off i mean how to walk us through you got your first 10 customers yeah that was like uh at first we started with a mobile app for iphone ios and android uh i didn't thought about like creating a company uh my idea was just to happen having a tool to help other professionals and small business to be able to design like beautiful quotes and business proposals uh but then like i got into some accelerators uh and then people said told me hey paulo you need to come up with a business model and i was like what like why uh and then i realized that i was a startup uh so it took us a while at first we got our first like five thousand like uh uh users active users like in a week and then that how did you get the first five thousand active users in a week well it's just like branding man like going online and and hustling like on on forums be specific what so what forums yes uh so facebook posting that that was something that i did like that was a big thing before instagram became like a thing so a lot of posts on social media that's how i did where did you post where did you post on social media um so brazilian community it's a little bit different what they have it's um they have a lot of different groups and people were following my story because the where we came from which is like small city uh on the north east of brazil a poor region people were not expecting us at all so people started following me on my social media had like ten thousand people following me on facebook and every time that i posted something was getting like reposted by a bunch of different folks what was the first what was the first post you put up on your personal page with 10 000 followers that started the word of mouth oh yeah because we got a demo day competition first place and when i posted that things went like through the roof so it was like the first award that we got okay and how many now customers are they scaled to today oh so right now we have around like 500 500 000 plus users and uh paying clients we are reaching about like forty thousand paying clients so far okay so forty thousand so not not bad that was a seven eight percent conversion rate half a million free forty thousand paid yeah and uh and uh the way that we have the business model we have the b2c version uh as we call the one that you go and do do it by yourself and then we also have a white label version with our api and sdk and through that we are able to tackle two different uh markets at the same time which is uh uh it's challenging but it's rewarding as well how many customers pay you directly not through a white level partner around like 3 000 directly so that's how they pay us and through the the other the major part like comes through like big tickets so we have like an rpo around uh around like ten dollars per month um okay when we got everything else and that's ten dollars across three thousand so you're doing like thirty thousand bucks a month something like that yeah something like that yes okay and and walk me through if white label partners are sort of your largest strategy in terms of user acquisition can you sort of paint that picture who is your biggest white label partner and how do you work with them uh so uh when we talk about white label people have a misconception about what like the modern white label are uh it's basically an api and sdk that you can customize the editor for yourself so we have a big educational group that's using our api uh to be able to have a white label on my online editor so they have like thousands of schools all over brazil and what they do they use our editor to distribute their marketing materials so they create like a marketing campaign and with one push like uh some guy that manages a small school in some other part of brazil they're able to access immediately that file that prior to tractal was using a photoshop or like powerpoint to be able to customize some marketing materials so this is like one client the other ones are tech companies we have a company called mlabs which is like a social media scheduling tool they use oh sorry hold on to go back to your first example so who are you selling the white label version to and then like who's been distributing it to thousands of people like what's the name of the white label partner uh no no it's just that we are doing by yourself so this is a client that i just mentioned it's called sentient this is a a big educational group from spain actually and you name a white label partner though that's that's what i'm curious about can you name a white label partner right now i'm bringing you lots of users no no we don't have like a partners what we do we have clients so we have a white label uh uh team sales inside tracto so that's how we distribute uh our white label what do you mean by white label just it says you just remove powered by tracto yeah yeah okay got it so when you say white label you're not selling your software to like mailchimp and they're using your tool inside of mailchimp so that people writing email newsletters can customize designs when you say well you mean you have a premium plan where you can remove powered by tracto no no that's like exactly what you mentioned like they want uh like a mayushim kind of a kind of use of track though so people so who who is your equivalent of mailchimp that's what i'm asking oh yeah it's called mlabs right now mlabs labs yeah it's uh it's one of the largest like uh social media scheduling tool so we are not like selling in the us yeah uh so that's our plan for 2021 okay so mlabs pays you to white label tracto and mlabs and sells that to their customers and pays you a little cut yeah that so what they do they actually have like the editor that that their their clients are able to customize their social media content using our editor uh and then like uh we charge a monthly fee based on usage uh depending on what kind of features they want like background removal specific fonts like some kind of specific rendering so we have a specific set of uh features that we charge by usage and what is the usage metric so it's you know give me an example it's 10 bucks if they edit 10 images what's the metric yeah uh right now we are uh they have been with us like for about a year and what we've realized it it's uh some people like to get back like every day using like in a heavy uh way and some people just come like once a week and do some social media whatever like fast posting that they have so the metric that we use is active users uh people coming and creating new documents so we charge based on the creation of new documents and also proceed as well so and as as you have like an active user uh then we can scale that up with the amount of uh documents that they're creating i see got it so so weekly now today how many documents are being created across your entire platform direct customers and white label do you know yeah i have that number it's around like uh 40 uh it's it's in between like this week it's like it's it's gonna be like 48 to 50 000 like new documents uh every week um we had a month that we reached almost like a million new designs like in a month so that was good uh we have now better instrumentation using amplitude so right now that's great and and i mean walk me through sort of what your team looks like today did you do this sort of by yourself or what's your team look like and man like that's the thing like we have like a 24 uh uh people on the team including the two founders um and uh so as i mentioned before tracto uh raised it so far around like 500 uh thousand us dollars uh brazilian currency right now sucks so uh yeah i mean that's five to one and makes everything smaller but yeah that's even worse than it's even well it's a little worse than five to one yeah it's 5 30 yeah so you've raised so you've raised 500 000 bucks you've got 24 people on the team how many of those 24 people are engineers uh six of them are engineered uh and uh uh it makes between like junior and senior levels and do you have any quota carrying sales reps or no uh we do we actually have but it's just like a team of two so it's like a a small team that we do but we have a bigger team for customer success that goes like up to six um this is how it goes interesting and um are most easy folks remote or do you have an office that they'll come into yeah before the pandemic everything was local when we had like few people uh working remotely but right now everybody's remote people love we have a beautiful office here and it's becoming like a studio and a kind of like um let's say a co-working space basically so people go there when they want things are better here in masaya so we have one of those where are you it's like a city on the northeast of brazil it's by the people i see like the brazilian caribbean so you're living you're living the life all right yeah yeah so so talk to me a little bit about sort of sustainability right obviously to keep serving your customers you've got to have cash in the bank how much are you guys burning per month right now uh right now we're about like 15 000 per month uh it's not as bad uh and the reason why we are burning uh it's because we want to move faster we just got accepted into a really nice accelerator i'm really proud to be part of the the venturi city team they're based in miami uh laura is the ceo we just got on on the badge and we got like a hundred thousand uh uh investment right now uh how much equity do they take uh actually they take six percent of the next round uh and they have like a threshold that you must raise more than a million and a half dollars uh so they're able to catch in if we are not able to cash in then like uh they're not going to get a cut so they well so let's say you go raise 1.4 million their 100k they gave you is free money they get no equity they get no equity like from this perspective but then if we keep growing and once we reach like a bigger check then they get the six percent doesn't matter the valuation what if you never raise after that after them and then you sell the company do they get a cut yeah they lose their money uh at some point yeah yeah but if we sell then they get a cut out of that okay so they don't they don't lose their money right if you do nothing after they give you money and you and you sell they they get a cut what six percent yeah six percent i see i see interesting uh okay and what was that studio called uh which one what was the name of the accelerator oh it's the venturi city venturi city yeah so lara was like the head of grove for facebook for a long time and she decided to leave the company she's spanish uh based in the u.s and the company is like uh the accelerator man like it's data driven uh growth which is like uh one of the best programs that i have been uh since i started trakto that's great talk to me you know driving sort of stacked revenue in sas is tricky at this price point because small businesses go out of business what does your gross revenue churn look like right now you know we have around like six percent of uh revenue growth uh revenue churn um but also monthly or annually monthly or annually medford monthly okay so 72 annual revenue churn yeah yeah uh but one thing that happens with tractor tractor uh as a design software it depends a lot like we fight with canva uh with some other tools that they are like hyper funded right now uh so they're able to push like the better freemium version and that's one thing that we are working right now to make it better and we are focusing a lot on the brazilian market right now even though we have clients like in many different countries but the main focus is to conquer brazilian market and become the number one to design to for small business even though when small business they go out of business the entrepreneur himself needs to position himself sometimes with a new business meaning that they need a new global they gonna need like social media pos so actually we grew more than 300 percent like since the pandemic started which is like a sweet thing for us well so you said you're doing about 30 000 a month today in revenue what were you doing exactly a year ago um around like uh 15 000 uh we didn't have a white label we didn't have like a lot of different things that we have right now so got it so you're doing about fifteen thousand dollars a month so you've doubled year over year yeah um got it what were you meaning to say then when you just said that you tripled during the pandemic yeah it's because like a design software it's a it's a different beast when you talk about startups um sorry what what tripled what your revenue didn't triple it doubled over the last 12 months what were you talking about triple is it usage or something yeah the amount of uh paying clients and active users we use bare metrics and we have to open data if people want to check out because it's connected to stripe which is our main gateway you go through tractor.barometrics.com and then you can check out how we are doing churn and arpu and everything else so i i made sure that we had the open data for our revenue and everything else this looks great let's wrap up here paul with the famous five number one favorite business book oh man i have one here the mass middle from scott belski a messy middle it's a good one number two is there a ceo you're following her studying oh yeah i i follow close uh two women's actually uh laura from defensive city she's helping and teach me a lot and the other one is emilia from uh growth hackers she's uh she's a monster man i agree she's emilia she's great number three what's your favorite online tool for building dracto online two to build tractor just a tool you use yeah i would say like firebase changes everything on tractor so google firebase number four how many hours i sleep to get every night how many sorry you can get hours of sleep four maybe five and a good day i have two kids as well so let's say nothing two kids and married yeah yeah how old how old are you paulo i'm gonna be 40 next year like oh exciting okay last question what do you wish you knew when you were 20 man uh i wish i knew what a startup was [Laughter] guys there you have it tractor helping non-designers create designs they've got three thousand paying customers that pound average ten dollars a month so 360 thousand dollars in ar in terms of run rate that's up from 180 000 a year in terms of run rate just 12 months ago so doubling year over year they raised about 500 thousand dollars they're burning 15 000 in net burn monthly as they reinvest in growth team of 24 as they look to continue to scale paulo thanks for taking us to the top man thanks a lot let's go one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas 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 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you 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