How Upsales Reached a $120M Valuation and 30% ARR Growth with Profitable Organic Expansion (Interview with CEO Daniel Wikberg)

Introduction and Company Overview

Nathan Latka

00:00Alright, guys. There you have it. Upsales launched back way back in 2003. It took them seven years to a million bucks in revenue, now doing 14,400,000 in terms of run rate across 1,800 paying customers. Profits around $250,000 per month. They're publicly listed in Stockholm, which is great. It allows him to tap public markets, recruit folks who can see his numbers publicly in his comments. He feels it is a real advantage, and they've done this all very

00:22capital efficient efficiently with a target revenue per employee going from $205,000 today. Ideally I up to something closer to $300,000 by the end of the year. We'll see if Daniel can make it happen. Hey, folks. My guest today is Daniel Wikberg. He's the CEO and Founder of Stockholm based SaaS company Upsales. He started the company in 2003 to help b to b companies grow revenue. Today, the company is 70 people strong with over 90% of recurring

00:47revenue in 1,800 countries in 10 sorry, 1,800 customers in 10 countries. They're at $13,000,000 of ARR and have a long track record of profitable organic growth, which we love. Daniel, are you ready to take us to the top?

Daniel Wikberg

01:01>> Let's do it.

Profitable Organic Growth in a Competitive Market

Nathan Latka

01:02Profitable and organic are two words I feel like I haven't heard in like a decade in SaaS world. How have you done this? You know, you're in a very competitive space.

Daniel Wikberg

01:10>> No, I mean, I think we've been focusing a lot on finding the right niche for us. So we try to focus on a couple of verticals where we think we can make a difference. And also in the Scandinavian market, I think there's a clear gap in the kind of mid market. So you have all of these players for really small companies and then you have Salesforce and a couple more for enterprises, but companies with between a

01:38>> 100 up to a thousand employees, that's where we really make a difference.

Vertical Focus: SaaS and Manufacturing

Nathan Latka

01:42And when you say you have sectors you focus on, what are some of those sectors?

Daniel Wikberg

01:47>> So other SaaS companies is a strong vertical for us. We're also seeing a strong growth in manufacturing companies. And I think also our philosophy has been to the more we focus, the more successful we become because we tend

02:07>> to focus our product development efforts as well to make sure that we have, you know, critical features that our competitors don't for the specific companies we target.

Nathan Latka

02:18Give me an example of that. What's something you've built for the manufacturing vertical that your competitors don't have?

Daniel Wikberg

02:23>> So for manufacturing companies for example, you have this huge problem with if you're selling a complex product that you can sell in like a thousand variations,

02:35>> you have this huge problem with proposals, takes a lot of time for salespeople to create and some of the time, you know, you offer something that's like erroneous to the customer and then you build that stuff and you ship it to the customer like eight weeks on a boat and then the customer calls you and says, this not working for me. So that's one problem we address to kind of streamline the proposal and automating for complex

Seven Years to $1M in Revenue

Daniel Wikberg

03:07>> sales.

Nathan Latka

03:08That makes tons of sense. Now, I had you back, I had you on the show about six months ago and you told me it took you seven years to hit a million dollars of revenue. I would tell most people if you can't do it in three or four, just quit, give up and start something new. Why'd you stick with it?

Daniel Wikberg

03:22>> I mean, I was 21 when I founded the company so I guess, you know, I had a lot of energy and I didn't realize how slow things were going. But yeah, I mean, we saw like gradual success continually. So yeah, I think just continue working. Nothing more fancy than that.

ARPU History and Direct vs. White-Label Customers

Nathan Latka

03:44Now you have an interesting trajectory because back when you were on the show in 2019, you told me that your ARPU was around $1,250 per month. Then when I had you on six months ago, that had dropped to 600, but you had more than tripled your customer base. Where is ARPU today? Is it still around 600?

Daniel Wikberg

04:03>> I mean, would say our customer base is a little bit distorted because we have around eight or 900 direct customers. And I think those customers account for like 90 plus percent of our ARR. And then we have the other 50 of our number of customers which we inherited from the partnership we used to have with another company where we sold the white label version of Upsales. So we have like a very long tail of very small

04:30>> customers. And so I would say the annual ACV is still around 12 to €13,000 per company, looking at like the the real customers we have, so to speak.

Nathan Latka

04:44The 18. Yeah, that makes a lot of sense. Oh, what's going on there, YouTube? Good to see you guys. Now imagine this, you love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 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 Founderpath. Check this out. I'll show you how you can access this

05:08in 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 eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's

05:32doing the buying of your SaaS company, you're gonna get a different valuation. A VC is gonna pay a different valuation. Private equity firm is different. If you're gonna 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

05:54outright. 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 founder share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have

06:18been acquired the valuation and the multiple. Maybe you're going out right now and you're raising your seed round. We'll 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 dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. All right. We're gonna go back

06:43to the YouTube video here in a second. But if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link, this link, founderpath.com/products/valuations. 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

07:08to see you there. Alright. Let's jump back into the interview. It sounds like there's a story there. Did you have a white label partnership with a partner and they went out of business and then you took it over? What do mean inherited?

Daniel Wikberg

07:18>> No. So the story was there's a Swedish company called Fortnox that does small business accounting and invoicing. And they used to have a CRM in their product, which they wanted to discontinue. So we made a partnership deal where we offered Upsales to these customers who were using their own product. And we had that partnership for I think two or three years, but we realized that churn was a little bit too high and the growth was

07:47>> not really coming from these customers. So we just renegotiated the contract and migrated these customers to become direct customers of Upsales.

Nathan Latka

07:57I see. Do you still pay any kickback to Fortnox, a recurring commission fee or anything?

Daniel Wikberg

08:03>> Yeah. But it's it's like a very small part of of the of the P and L.

MRR Today and Recent Growth

Nathan Latka

08:09I see. I see. Then And cost actually. Okay, yep. And then before we talk about future growth plans and how you're thinking about future product at Upsales, what is MRR today?

Daniel Wikberg

08:21>> So MRR today is, let me just say this in your currency. He did all

Nathan Latka

08:26the conversions ahead of time, which we appreciate.

Daniel Wikberg

08:28>> Yeah. It's it's around $1,200,000 is the current MRR.

Nathan Latka

08:33Got it. So that's up from a that's up about a $100,000 since when we chatted six months. So you've added about $1.1.21 500,000 in new ARR over the past five months. Is that about right?

Daniel Wikberg

08:42>> Yeah. Sounds about right.

Sales Team Structure and Expansion Strategy

Nathan Latka

08:44And where is the growth today coming from? If you've shut down the partnership channel, how are you getting more direct customers?

Daniel Wikberg

08:51>> So I mean, we we divided our our sales team into a new sales team and an expansion sales team. And we also we have a kind of deliberate land and expand pricing model. So I think maybe two thirds come from existing accounts and one third from new accounts.

09:10>> And I mean, we're actually spending some time now thinking about our pricing because we realized that companies up to a 100 employees for those companies, pricing makes total sense and a good customer pays us around 1% of their revenue. But as you go up looking at bigger customers, we tend to have a lower and lower take rate. So now we're working on differentiating the pricing to have more of a kind of an enterprise offering for larger

09:41>> customers. So when I talk to investors, I usually say that we think that we can triple our revenue without bringing in a single new customer because the potential in the existing customer base is still massive. And in our kind of target list of new customers, only in Sweden, I think we have like three or 4% of those customers today. So there's also like a massive opportunity and a long runway of new customers to sell to.

Revenue per Employee and Organizational Efficiency

Nathan Latka

10:14And obviously, would say the macro environment today is more volatile than it was when we spoke six months ago. Six months ago, you told me you were doing about $250,000 a month in profits. Are you doing more or less in profit today monthly?

Daniel Wikberg

10:29>> Yeah, I mean, would say pretty much the same. We had a really good quarter in Q4. So I mean, I think one of the secrets or secrets, mean, to organic profitable growth is just to have an effective organization. So I mean, we look a lot at revenue per employee and try to grow the organization in a sensible way.

Nathan Latka

10:54What's your target there?

Daniel Wikberg

10:56>> I mean, I think now we are at around

11:01>> maybe $200,000 per employee per year in revenue or something like that. And I mean, I think we can push that to 300 if we do if we do everything right.

Nathan Latka

11:14Where which job title do you think you can get more efficiencies out of to drive up the revenue per employee? Is it salespeople ramping fully? Is it engineers releasing product you can upsell? Where's the efficiency gap?

Shifting to Senior Sales Reps with Higher Quotas

Daniel Wikberg

11:26>> I mean, I think we have more efficiency to do when it comes to kind of the everything related to customer success to support and onboarding and the small part of the business that services. But also I think that as we are kind of moving up the value chain and trying to sell to larger customers, we realized that the right type of salesperson can carry like a three times bigger quota. I mean, they need some more support

11:58>> in terms of pre sales or sales engineers. But I think there's more efficiency

12:05>> to gain from that.

Nathan Latka

12:06Well, I was surprised in 2019, you told me that some of your quota carrying sales reps would make a $20,000 US base. Their quota was $200,000 for the year. And if they hit quota, they would earn another 20,000 in commission. So 40,000 OTE against the $200,000 quota. I remember thinking, woah, that's a low quota, but you're also paying a lower amount. So the ratio still works. Has that changed today?

Daniel Wikberg

12:29>> That has absolutely changed. I mean, used to have a strategy that was of a shotgun approach, you know, let's hire ten and ten newly grads every quarter and hope that three of them survive.

Nathan Latka

12:41Everyone's listening right now laughing because we all do that. That's how it all starts.

Daniel Wikberg

12:45>> Yeah, but I mean, it's not a long term initiative because the people who are able to hit the numbers, they grow tired of this kind of banging the head against the wall strategy. So I mean, now we are more and more looking for, you know, people with five, at least five years of experience selling software and giving them a quota between 500,000 up to a million dollars per year.

ARR Growth Rate and Future Plans

Nathan Latka

13:13And if they hit that million dollar quota, what would their OTE be?

Daniel Wikberg

13:17>> Their OTE would be around between a 120 or a $150,000.

Nathan Latka

13:23Oh, wow. Okay. That's great. That that makes tons of sense. Before well, actually, I guess talk to me about where you wanna go this year. So so you're at call it a $13 to $14 million run rate today. What do you hope to get to by December this year?

Daniel Wikberg

13:36>> I mean, our growth rate has been around 30 per per year, our ARR growth rate. And I mean, don't, since we're a listed company, we don't have any guidance, official guidance of where we wanna go, but we've been able to increase the growth rate for two years in a row. And I mean, I think the opportunity in the market is just massive. So it's all about just scaling the organization. That's the bottleneck for us. And us

Public Listing on Stockholm Exchange

Daniel Wikberg

14:07>> being still a really small company, actually, I think that, you know, just finding five or 10 more good salespeople can can bring us from 30% to 50% in growth rate. So I mean, that's where I spend all my time just thinking about how to scale the sales organization as as as effectively as I can and

Nathan Latka

14:27And is this right? I'm on Yahoo Finance right now. I'm seeing a 1,236,000,000 market cap this morning. Is that you guys or is that a different company?

Daniel Wikberg

14:34>> Oh, that that's us. But that's in SEK. So you have to divide it by 10. So it's around a a $120,000,000 right now.

Nathan Latka

14:41I was doing that going, holy crap. Most other public traded Saskings are trading like at a three or four x. He's trading it like up almost a 100 x, but it's in SEK. Oh, no.

Daniel Wikberg

14:49>> A 120,000,000.

Nathan Latka

14:50Right. Is it is it good? I mean, you went you IPO ed earlier than most SaaS companies in US, they wait for a $100,000,000 in revenue. Has being public been a real advantage for you?

Advantages of Being a Public Company

Daniel Wikberg

15:00>> Yeah. I would say it has. I mean, I I have some friends who have really poor experiences from doing an IPO. So I try to learn from their mistakes. And I think one key thing that actually made it work for us was that we made a very deliberate decision when we went public that we're not gonna allow this stock market stuff to, you know, eat 90% of my schedule. So I spent two days every quarter in investor

15:28>> meetings, always in relation to when we released the quarterly reports.

15:34>> And yeah, I mean, I think we've been able to, we don't spend too much time on it and then it doesn't cost, you know, more than it should. And I think that especially when recruiting people, it has been an advantage that, you know, people can read our numbers and read the CEO comments and yeah, you get some increased exposure basically. So yeah, I mean, I'm super happy with that decision.

Famous Five: Books, Tools, and Lessons Learned

Nathan Latka

16:01On that note, Daniel, let's wrap up here with the famous five. Number one, favorite business book?

Daniel Wikberg

16:08>> I think it's still The Hard Thing About Hard Things.

Nathan Latka

16:12Yep. Is there a new CEO you're following or studying?

Daniel Wikberg

16:17>> No. I'm I'm into geopolitics the last year, so mostly boring people I read right now.

Nathan Latka

16:23Who's a politician you're you're you're reading a lot about right now?

Daniel Wikberg

16:26>> I mean, not a politician, but there's a guy called Peter Zeihan, who's this geopolitical expert. He he's quite a cool guy, writing a lot

Nathan Latka

16:33Okay.

Daniel Wikberg

16:33>> About

Nathan Latka

16:34Now are you are you do is there a is there a presidential run-in your future?

Daniel Wikberg

16:39>> A presidential run-in my future?

16:41>> Well, in Sweden, obviously, not in The States.

Nathan Latka

16:43But are you are you gonna get active in politics at some point, think?

Daniel Wikberg

16:47>> Never. Never.

Nathan Latka

16:48Smart man. Number three, what's your favorite online tool for building Upsales?

Daniel Wikberg

16:53>> I mean, we we've had I I think you mentioned it the last time, but we've had massive success with this French tool called to prospect on LinkedIn. Yeah. We're still using that quite a lot actually to to

Nathan Latka

17:06drive Do you let them use it on your account? I always get nervous with these tools actually using my account because I'm like, if they do anything bad, then I get banned and I'm and I'm cooked. So you let them use your personal account and how do you get comfortable with that?

Daniel Wikberg

17:19>> Yeah. Actually, they do. And I mean, we we we started slow and we like monitored it, but but everything everything the tool does is you you do the pro programming yourself. So you are kind of in the driver's seat.

Nathan Latka

17:33Very cool. Very cool. Alright. Number four, how many hours of sleep do get every night?

Daniel Wikberg

17:37>> I'm sorry?

Nathan Latka

17:38How many hours of sleep do you get?

Daniel Wikberg

17:40>> I mean, I try to get eight, but I have a 3.5 year old, so sometimes I get two.

Nathan Latka

17:45That's funny. Okay. So so three kiddos, and I think you're 41. Right?

Daniel Wikberg

17:50>> 42.

Nathan Latka

17:51Ah, happy birthday. You had a birthday recently, sounds like. And, Merritt, I guess last last question here. Something you wish you knew back when you were 20.

Daniel Wikberg

18:02>> I mean, I think I've actually matured a lot in the last two or three years in my thinking about business and I think just, you know, I'm a very hands on guy and that's not always a good thing. So try to let go of more of the details basically.

Nathan Latka

18:18All right guys, there you have it. Upsales launched back way back in 2003, took them seven years to a million bucks in revenue, now doing 14,400,000 in terms of run rate across 1,800 paying customers. Profits around $250,000 per month. They're publicly listed in Stockholm, which is great. It allows them to tap public markets, recruit folks who can see his numbers publicly in his comments. He feels it is a real advantage and they've done this all very

18:41efficient efficiently with a target revenue per employee going from $205,000 today. Ideally, up to something closer to $300,000 by the end of the year. We'll see if Daniel can make it happen. Daniel, thanks for taking us to the top.

Daniel Wikberg

18:52>> Thanks a lot.

Nathan Latka

18:53One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. 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, 1PM

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