Upsalesrevenue & funding

Introduction hey folks my guest it is daniel wickberg he is leading a team called up sales i had the privilege to spend some time with him back in barcelona at sastry he put on a great event something special is happening up sales because they were totally packed the rooftop was really crowded their tools and niche crm and sales development tool for sas companies again called upsales.com daniel you ready to take us to the top yeah let's do it all right so um i guess describe one of your customers today and what they're paying you for uh so i mean we started out as a typical crm almost 20 years ago and then we did a pivot a few years ago to start focusing more on on recurring revenue businesses like ourselves so today we're targeting uh sas companies and other companies that has some kind of recurring revenue uh to help them manage um you know recurring revenue it it's a crm with built-in like subscription and error analytics and stuff like that is it analytics those are more like sas optics where it's like rev wreck and stuff like that too absolutely so so it it's more like sas optics than like bare metrics uh i'm not too familiar with the differences between those but i mean we do revenue recognition we do all kinds of ara and mrr analytics and we spend quite a lot of time to to to you know enable our customers to to manage uh sas specific uh kpis and targets which is kind of a hassle in most other crms yeah no i agree okay so so what are what are companies on average paying you per month to use the tool so our customers base is kind of distorted at the moment so up until around uh Currently serving 1800 customers one and a half years ago we had around 600 700 customers okay and then we used to have a partnership with with another swedish company who uh we provided a white label like smaller version of and a lot of these very tiny customers migrated to up sales a while back to some we went from like 600 customers to 1800 customers almost overnight so i would say like our typical customers they are around fifteen thousand dollars in arr uh but now if you just average it out it's around uh sixty seven those six seven thousand dollars somewhere around that that because you added a bunch more lower paying ones exactly yeah okay so what what you have like eighteen hundred two thousand customers now today yeah something like that okay eighteen hundred um and then put this on a timeline for me when did you officially launch the business uh 2003 2003 and did this come from your own pain point were you like a the lead sdr the lead ae at another company and you just wish you had this thing no i mean the story was i've been doing uh programming since i was 13 years old and the plan was to go to you know after high school go to the university and study engineering uh but i decided to take like a you know sabbathical year off uh and ended up in a sales job and i i realized that you know back then most of the software tools were like really poor uh and and uh most sales people are not very tech savvy uh so that's kind of where i got the idea no that makes a lot of sense now fast forward to today with 1800 customers paying on average seven grand a year i mean what that puts you at like 13 Monthly recurring revenue million in mrna or something like that yeah exactly 13 million right around that's amazing and what do you guys think you'll so i guess if you're at 13 million today where were you exactly a year ago run rate wise uh okay so one year ago we were at uh 9.8 uh so we're growing the error at around you know between 30 and 35 percent um and two or three years ago that number was around 20 so we've kind of had a plan to accelerate the growth and it continues to accelerate so it's exciting times for us oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 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 founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to 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 not built off random data again you guys hear these interviews on youtube all these datas are built from real-time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 to their business go in here and filter by the event maybe you only want to 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 going out right now and you're raising your seed round well 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 data set of sas valuations than what you can get now inside of founder path 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 if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations 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 all right let's jump back into the interview that's very exciting do you remember what year you crossed a million dollar run rate uh a million dollar run rate i mean in mrr no an arr oh one it would have been back in like 20 what like 2009 10 11 yeah somewhere around that exactly uh 2010 i would say so so you just be clear launched in 2003 took seven years to break a million dollar run rate yeah yeah see people never people always forget this see now you're growing great but like people people don't forget their early years right what why was it tricky for you in the first seven years what took you so long i mean i don't say this in a negative way but what took you so long to break a million dollar run rate i mean i think uh you know i was 22 years old when i found the business so you know the first years a lot of the the stuff we were doing we're just experimenting and trying to figure out how to run a business you know sas or any kind of business uh and i think um you know the early days we never raised any capital so uh you know our first 10 years were like barely breaking even you know struggling to pay the bills every month uh so we used to do a lot of um customized uh consulting stuff for our clients and and i think that kind of helped us in the short term to survive but it also kind of slowed down our scalability um so it took us a while to kind of get the guts to you know decide what we wanted to focus on and eventually you did because you Raised raised i believe did you do a secondary first or did you do the series a in 2019 first yes we did a secondary a pre-ipo which was around the four to five million dollars um and and then in the ipo we we raised around three million dollars uh but we never actually used that money because we had a debt we did a kind of refinancing a couple of years before uh so it's kind of we we raised money but you know we kind of still always been bootstrapped yeah well so i guess tell me about the secondary in 2018 for five million dollars how does that work yeah so i mean i i had around uh 75 ownership back then and um i wanted to to kind of be a little bit more aggressive and focus a little bit more on growing the business and a little less on you know being super profitable every month so i wanted to to take some cash off the table uh so i sold 10 in in the in the pre-ipo uh and i had a partner uh our former ceo who was ceo for for almost five years um he he had seven or eight percent so so the total was like 18 uh that was sold in the in the pre-ipo oh so you use the five million to buy out your co-founder with eight percent and then you took ten percent off the table as well too no i mean we both sold shares in in the secondary round uh in the pre-ipo i guess my question is though you said you had 75 your other partner had about eight percent did your other partner sell all of his equity in that secondary yeah exactly so you were buying him out effectively yeah in a way yeah exactly is he still active today no he isn't okay yeah so you were buying i mean effectively you were buying him out cleaning up the we'll call it cleaning up the cap table yeah yeah exactly something like that yeah fair enough now do you regret anything about that or was that the right move no that was absolutely the right move because the story was you know i i as i said like the early years are really hard so in in 2012 2012 i i felt like i needed a break so that's when when johan the former ceo he he became ceo was the ceo for five years and you know the plan back then was to sell the business but that didn't really happen and and uh you know i started to kind of uh rediscover my my motivation for the business um and and then after a few years you know being the backseat driver is really hard when you founded the founder of the business so i decided to you know i want to i want to push more for growth and be more aggressive but i i don't want to be in the back seat anymore so yeah we're very happy with with that decision no that makes sense and it sounds like if you guys sold together about 20 18 for 5 million bucks that valuation on that secondary was somewhere around 25 million bucks right yeah a little higher even and then when you went public that was at a 36 million valuation right yeah exactly um it i mean today it would translate into like 34 because of the dollar the dollar rate but but yeah something like that and why ipo i mean how much revenue do you have back in 2019 uh so yeah 2019 we had uh i think uh five and a half six million dollars in revenue so i mean the the story about that we had we had a plenty of discussions with a couple of private equity firms and and uh and you know other players but all of them you know the valuation was okay and and uh we felt that some of them could could really contribute to the business but i i think i would have felt kind of you know working with my hands tight behind my back um so going public and you know i'm still the majority shareholder uh turned out to be like the easiest way to continue running the business the way i want to do it uh so so yeah it was um we're very happy with that decision well this makes tons of sense um and which stock exchange was your ipo on uh so nasdaq in in sweden has this uh one of the kind of smaller nasdaq list is it's called first north first north guys there you have it first north and and daniel how many folks are full time on the team today uh we're around 80 people today eight zero how many engineers uh so the product team is a total of uh 30 people uh not all of them are engineers you know we have a couple of like product owners and designers and so on but but uh the product team is around 30 people now this is great so so when you obviously you're an up sales right so your own sales should look really i mean the system should be very tight right so when you look at net dollar retention what's your target what is it today yeah so i mean our target is to go to somewhere around 140 and or 150 uh i think we are today at around 115 120 somewhere around that so i mean we're we're growing uh i mean it used to be like 50 50 of of the new arr net new er came from from new customers and expansion and now because of all the the kind of um the smaller customers we inherited uh a while back now it's around 60 70 percent comes from expansions um so and and we've also been working hard the last few years to to try and bring churn down which is also yeah it's it's it's easier to grow when the churn is coming down what what is gross turn annually uh yeah we're listed so that's one of the kpis we we don't report uh okay fair enough no worries but but you can take your gross plus your expansion to get to the 120 net 115 120 net yes i mean when we did the ipo the churn was around 11 or 12. um and and it's it's been decreasing like every quarter since since then and i mean target we believe we can go as low as maybe four or five percent uh gross churn so over time yeah well we'll see what happens uh that's great where is most of um where's most the as we sort of wrap up here where's most the growth coming today right you inherited a bunch of customers but how are you adding new customers today um yeah so we do a lot of i mean we have two teams we have the expansion team and the new sales team so dedicated for for bringing in new customers and we launched a um a uk expansion uh like uh 12 14 months ago uh so now we're adding like maybe 20 25 customers every month in sweden and in the uk and we we really try to i mean we've had this kind of very deliberate land and expanse strategy uh the last three four years so we don't we don't try to kind of we almost try to kind of decrease the deal size when the customer joins us because it makes everything easier and it decreases the risk for the customer as well um so so yeah we just try to add as many customers as we can and then grow them over time how many folks are full time on your expansion team today uh so expansion with a quote uh i think we're 12 or 13 13. we have like seven or eight in in the new sales team okay seven or eight interesting very cool i know you took a bunch of numbers ahead of this just to prepare any numbers you want to make sure we chat about that i haven't asked about uh yeah i mean we're very proud of you know growing revenues uh 35 per year with like uh 25 30 free cash flow margin uh so that that's the number that's impressive 25 percent free cash Profits so you're making like to the bottom line about a quarter million dollars a month uh yeah exactly somewhere around that yeah wow and so so and you're growing so your rule of 40 is effectively like 20 plus 20 or i mean you're basically right at rule 40. yeah exactly and i mean uh we're one of those weird fast-growing tech companies who also pays a dividend yeah wow oh yeah what is that what's the market have you varied at today what's your market cap uh it's around 120 million dollars is that cheap yeah i think i mean you know it used to be 200 in in january before everything blew up but uh i mean i think uh we're net cash we don't have any debt so i think uh enterprise value arr multiple is around 7.5 or eight which is which is lower than a lot of our peers i would say yeah so but we're still you know more stock market-wise a small company so um yeah hopefully it's gonna get bigger all right we'll see what happens daniel meantime let's wrap up with the famous five number one favorite business book uh i would say hard thing about hard things number two is there a ceo you're following or studying um [Applause] yeah i really like uh uh the netflix ceo his book uh you know they get a ton of now but uh yeah i like his thinkings i read hastings number three what's your favorite online tool for building up sales uh we're using a linkedin bot it's called wallaxy it's a really small french company but it's it's an awesome tool spell it it's a w-a-a-l-a-x-y well alexi i've never heard of them linkedin tool okay great it's crazy effective okay number four well sorry i guess what makes it so effective i mean it it uses my linkedin account to connect with uh you know you you you pull a list of companies you want to reach so you upload like these are the 2000 companies we want to want to talk to and then it use my linkedin account to connect with the ceos of of of those companies uh so it's kind of a way to you know make make me scalable pretty much yeah that's amazing okay very cool uh number uh three how many are number four how many hours of sleep are you getting every night uh i try to get at least seven okay and what's your situation married single kids married three kids uh and lots of hobbies barry a busy guy uh how many uh how old are you uh 41 41 last question daniel something wishing you when you were 20. i'm sorry something you wish you knew back when you were 20 years old uh yeah i wish i knew that most of the business decisions you make you always have a lagging effect uh so you need to make the decision and then you need to wait um it took me a long time to realize that instant gratification is not a thing in business guys upsells.com launched almost 20 years ago in 2003 took them seven years to break a million bucks in revenue the slog is real but now they've just broken 13 million bucks in revenue growing 30 year-over-year they're listed publicly on small stock exchange in sweden and what's beautiful is they're paying out a dividend they take about 250 000 a month to the bottom line in profits right on 1.1 million bucks of mrr they're serving 1800 customers and you know adding 100 you know caught 100 per month as they continue to grow with their team of about 80 folks daniel thanks for taking us to the top thanks a lot 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 don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive i am on these shows but i do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya

hello everyone my guest today is daniel wickberg he founded a company called upsales in 2003 when he was 22 years old he's still ceo and majority shareholder doing an ipo on april 24th on the nasdaq first north married with two kids private pilot power lifter and a fan of meditation daniel you ready to take it to the top sure all right tell us about upsells what does the company do and how do you guys make money so when we started the company we we provided a cloud-based crm um and uh 10 years later we uh we added marketing automation and also analytics so uh we're kind of a sales and marketing and analytics suite i would say okay and what space are you playing playing in like smb mid-market enterprise what's the average customer paying per month uh the average customer is paying uh around a thousand dollars per month okay thousand per month and um so what would you put that in like probably mid market pushing enterprise yeah i would say that so it's not the pure self-service and it's not like the fortune 500 clients we're going after and you said you founded this 10 years ago that would've been what 2008 no no sorry uh 2003 15 years ago oh wow 15. okay 2003 you were 22 that's very good so what are you 37 today yeah correct that's got i love it though that's you're an overnight success right 15 years in the making playing the long game i like that okay how many customers have you scaled to uh we have just over 500 clients today that's great okay now 500 customers uh obviously at a thousand dollar price point we can do the math there right so what you're doing about 50 000 500 000 per month uh yeah a bit more actually uh our arr right now is around uh seven million dollars okay good so yeah you're doing maybe closer to 550 something like that yeah yeah that's very good now now you mentioned that you're looking at making the company public right so so most of us in the states and we think of this we're thinking like you have to have at least 80 to 100 million bucks in terms of arr to think about going public um walk me through why you guys made a decision to file and go public um yeah i would say you know i i wanted to uh i want to sell like a small uh small piece of my shares uh and we we wanted to uh raise just a little bit of money because we've been profitable profitable from day one so uh you know we don't need like a huge amount of cash and the transaction we were looking to do was kind of it was too small to go to to any of the private equity funds and the traditional vcs you know we're growing around 30 to 40 percent uh per year and i like to you know keep it at uh keep it keep the risk at a manageable level uh so the vcs you know tend to see it as uh not not fast growing enough and the private equity players tend to want to own your majority share so ipo basically was the only option left on the table yep yep now you said you're growing about 30 to year over year so if you're doing this kind of 625 per month today 625 thousand dollars that means you're doing what like 420 000 about 12 months ago yeah that sounds about right something like that yeah um or sorry a little bit higher would have been like 675 something like that but regardless healthy growth so you want to raise some capital because again too small for private equity folks but too little for you to do by yourself so what when you ipo i mean how much the company you hope to sell on for how much uh so we we did uh we actually did a pre-ipo placement uh before the new year uh so i sold the ten percent of my shares and uh a former partner of mine owned eight percent so he sold his shares uh and then we do a pretty small new share issue uh with the ipo uh it's about 2.5 million dollars 2.5 million yeah okay and how much of the company will you sell for that you think uh so the valuation is 340 million swedish kroner which would translate to about 40 million dollars okay got it got it so you're selling about five percent a little more than maybe maybe six percent of the company yeah i think around seven yeah seven percent of the company now the 18 that you and your buddy took off the table before in the new year that's just you guys personally right you guys that was kind of personal liquidation yeah exactly and how did you do that with that did you sell that 18 to private investors or that was to actually public market investors no that was private investors but uh it was kind of it's been like one process so the pre-ipo we have the same advice to do who did the pre-ipo and then doing the ipo okay so the same value the 18 you sold was at the same valuation it was slightly lower yeah it's about six six million bucks or so then for eighteen percent uh it's something like that yeah yeah or or maybe seven million something in there though um interesting and why do you um so why do you want to raise the 2.5 million dollars is there some acquisition you're trying to do or a growth channel you want to invest in yeah i mean we want to invest more aggressively in the product and in marketing we are like 90 percent of our clients are in sweden where we are based um so but we are starting to get some international traction uh so we have a um a project where we are targeting the german and swiss market uh so um uh yeah part of that money will go going to the international expansion okay but give me like specifically your take me back 15 years ago your first 10 customers what'd you do to get them what was your growth channel like back then uh really hard work and cool calls okay cold calling yeah and who'd you call i mean how'd you figure out who to call um well actually i just i think i went to kind of the yellow pages you know i had an idea because i got my first client uh through a friend of mine and they were a media company so i just figured that if i can sell to one media company i probably can sell the more media companies so i just made a list of like 200 media companies and i just you know hit the phones that's so funny okay and your last now fast forward to today your last 15 customers where'd you get them from um i would say today maybe 50 of our business is uh is inbound um but it's not only inbound marketing it's a mix of you know referrals from from satisfied clients and uh and from our marketing efforts uh but you know everybody says that cold calling is dead and uh i mean we don't do like ice cold calling but you know we we still need to pick up the phone to get some business never heard that ice cold calling what's your break down your team today how many people uh so uh we are uh around 50 people today and how many of them are sales uh around 15 uh and half of them targets existing clients and half of them goes to to new clients to driving upsell revenue yeah absolute revenue and and also i mean retention and uh what is your retention look like right so your gross churn annually a revenue churn what's that look like it's actually historically it's been around ten percent uh but we did some some changes last year so now it's uh down to five percent okay and that's again that's gross revenue churn annually yeah exactly okay uh so and then what's your expansion revenue annually look like uh so our target is to grow um existing clients uh net uh 20 percent okay which means it'd be about 25 total because you have to cover the five percent that you lose yeah exactly okay now that's your goal but historically what have you actually done uh between 15 and 20 i would say okay so not bad so you expand them 15 you lose five so you're about 110 net revenue retention uh no i mean we expand them around 50 in the net so i would say net revenue tension is probably around uh 115 120 perhaps okay got it but is that because your churn was lower or your expansion was higher see obviously because net wherever your retention is you take expansion minus what you lose and then you get to 115. yeah i mean i would say um that the changes we did last year i mean it it helped our uh it brought down a churn but it also you know it improved our our upsells yeah um what was that change by the way so other people can do the same thing uh well historically i mean we have we have a pretty low part of our revenue with services it's about 15 uh so historically we had one uh consulting team uh who built like custom integrations and did the product management for for new clients and then we had the um kind of account management team so what we did was we actually merged these two to create like cross-functional teams so the key account uh the account executive uh he's the team leader uh and then he has um like one customer success manager he has uh also two developers in the same team um and they have like a shared set of kpis because the problem we had with the typical situation was that the account executive goes to see a client uh the client is pissed about something uh and he goes back and and tells the consultant guys that um we need to fix this now because this client is not happy and you know they have different goals and different bonuses and it created you know a lot of conflict yeah no that makes sense to me you have to obviously work that stuff out and get it working smoothly but now your sales org is about 15 people and humming along yeah absolutely very good what about cac fully weighted customer acquisition cost what do you pay to get a new thousand dollar a month customer um well we i mean we are kind of sales heavy so i mean we look at the we look at cac on an annual basis so if you look at our total uh like cost of sales and marketing it's around uh uh eight hundred thousand dollars uh and with that money we bring in around uh 1.2 1.3 arr okay so it's like you put in 70ish cents to get a new dollar of ar yeah something like that um got it got it 70 cents sorry you said 1.2 comes out yeah exactly yeah interesting um and where are you spending most that money is that mostly like uh like uh kickbacks compensation uh commissions to your sales people yeah i mean the the majority of that is it's obviously the the cost for the sales team with salaries and stuff like that and um around uh 30 percent is marketing yeah um but now when we're going internationally i mean we're trying to uh to do it more more of an inbound game so are you are you profitable today yeah sure sure but by how much i'm sure you probably had to disclose this when you filed uh i mean historically we've been around uh 30 profitable over the years okay 30 so if you're doing 625 a month today right that means you're taking 180 a month to the bottom line uh yeah what we're doing right now and in the future i'm kind of uh my hands are tied to to say anything about that well just talk about whatever you can so when you filed right if you said that you're taking 30 to the bottom line 30 of your current monthly recurring revenue 620 grand would be about 180 grand of the bottom line per month yeah if we look at last year uh we did we did a lot of investment and changes last year so it was kind of a uh not our best year but we did the revenues was around uh six million dollars and our ebta it was uh so around 5 last year sorry how much you cut out what percent uh 25 25 yeah so again just extrapolating that ford on a monthly basis you're doing somewhere called added 150 grand 180 grand a month to your bank account in terms of profitability something like that yeah boots dropped the company up to this point or no have you had you raised no 100 bootstrapped that's great now obviously you're raising now 2.5 million from public markets yes yep very good all right let's wrap up with the famous five number one what's your favorite business book uh ben horowitz so the hard thing about hard things number two is there a ceo you're following are studying uh no okay number three what's your favorite online tool for building your company um email and the website visitor tracking what's website visitor tracking what do you use uh we do uh uh we track the ips uh you know to get a list of all the companies yeah what tool do you use to do this uh we have it uh now we have it ourselves in upsells so we use upsets for it okay name a tool that's not your own that is a tool that you use to build the company uh in the past we used another uh swedish supplier called prospect eye but i also like clear bit has some interesting stuff for that as well if you're doing something international number four how many hours of sleep are you getting every night i'm sorry how many hours of sleep do you get each night uh i have twin sons who are three years old so uh you know not too many five maybe five and uh you said married with two kids yeah okay and uh how old are you uh i'm sorry how old am i yep 37 last question what do you wish your 20 year old self knew um how to be more patient with with uh with new recruits i would say guys be more patient with new recruits again you've got daniel launched upsales.com 15 years ago now doing 630 000 a month in revenue they've done it all bootstrapped now going public raising 2.5 million from public markets hopefully again really is uh the sales and marketing go-to platform especially in sweden they've got about five percent gross revenue churn annually 20 expansion for 115 net they're spending 70 cents to get a new dollar of ar and they are profitable every month pulling 15 to 25-ish percent to the bottom line healthy economics daniel good luck thanks for taking us to the top thanks enough