How Varbi AB CEO John-Erik Hassel grew to $5M revenue and 550 customers in 2021.

hello everyone my guest today is john eric hassell he is he lives and breathes business internet internationalization and entrepreneurship he started out as a consultant assisting swedish companies abroad founded and co-founded three startups between 2005 and 2011. sold the first company in 2012 second in 2019 and now he works with internationalization at barbie as well as being cobs married with two kids generic you ready to take us to the top hi nice to meet you yeah definitely so what is what does cob at barbie mean oh chairman of the board um i i founded the company in 2007 and i left this ceo in 2010 to to leave the ceo part of my my colleague and i um actually i'm more operative c c chairman of the board than normal uh i i work very much together with the ceo in order to grow this company what does the company do and is it pure sas yeah it is uh varby is an ats company um we deliver an ats to faculty recruitment public companies authorities municipal offices and private companies so we have three three segments where we work ats company uh meaning uh recruitment solution uh backend system for um handling recruitment uh processes okay and and so what talk me through what the average customer pays you per month and what do they get for that yeah so uh we are very diverse that way we have customers from one employee up to 60 000 employees so we we definitely have a very diverse uh portfolio so if you look at our numbers the average customers are paying us around 6 000 plus something dollars a year we have annual uh annual licenses with our customers um um but our bigger customers of course is ten times that interesting so what is your biggest contract it's got what two hundred three hundred thousand dollars a year um um let's see now i know it's about i would say that the biggest countries are around a hundred thousand dollars a year um where we have long contracts we we are very much into tender processes with our customers especially in the public sector the higher ed uh the private customers are are more on a year like year-to-year uh basis where they have an open end they can make a castle after uh the twelve months uh license that they that they purchased i see front and when did you launch the company we launched in 2007 um we ran right right into the economical downturn in 2009 and then from that we started growing and we've been profitable since 2012. how profitable like this year how much would you take the bottom line uh so this year i would guess we will end up at having about 400 thousand dollars uh profit that's great on how much revenue about uh 3.6 okay that's super healthy and now have you bootstrapped this whole company or did you raise so we we started out in 2007 with a business angel he funded um our startup with about 300 000 and then in 2009 when the as i said the economic downturn came in um we ended up getting another three hundred thousand dollars from our angel and after that we haven't uh we haven't raised any more money what valuation did you raise that in 2009 oh well that's a long time ago now um i would think we did around um i think around a million dollars okay so he that angel owns about 30 north of 30 of the business today yes he does yeah okay wow so hopefully it's someone you really like oh yeah it's he's like a third founder okay fair okay great so six hundred thousand dollars raised that's great um you're scaling nicely you said 3.7 million dollar run rate this year where were you exactly a year ago oh okay we were about on the ar side we have had an uh i guess around 20 25 growth uh we will see these numbers coming in in december i think we can end up at 25 growth we are we're quite um okay when it comes to the to the pandemic and everything uh we know that many companies struggle and it's really tough for them out there we have been very blessed and had an opportunity to grow even in a year like this and john eric do you remember how much revenue you did in your first year 2007 2007 we did probably not like that must have been like 5 000 or something we were we were building and and and developing this tool and and we actually uh were more more focused on on getting the solution to the market than than selling um so that was that was uh not much where did you get your first hundred customers from first hundred customers that's a good question even yeah yeah no it took some time actually for us because we we spent a lot of time um developing this fantastic tool that we were thinking now we were very product focused in the beginning uh we had an idea of uh getting a linkedin type of or facebook type of system that had a back-end recruitment solution which is what was actually built on hr and recruitment processes so we tried to be very academic in the way that we were creating this tool and the first 10 customers we got them more or less like tryout customers they were testing the system for us and then some of them kept the tool working with us to develop it and uh some of them um uh moved on and and then we hired uh sales people and started selling this tool and when we started to um grow uh in a different uh areas actually but then we won a tender and that was kind of the start starting point and i would say that was in 2010 11 we still have that customer with us interesting so in 2010 how many sales people were on the team in 2010 uh i think we had two people that was selling for us um that was probably it and what was the total team size in 2010 four oh wow okay so and i i include that i include the ceo at the time and that that was me so we were we were trying yeah so we were we were three founders more or less if i if i include the business angel and and the other founder magnus is the ceo today and the team size today is how many today were 22 people 22 how many engineers seven i think i wrote it down yeah seven on r d we are eight and um in um sales and customer oh sorry sex and marketing and we are about the same seven people in customer success and administration that's great so okay a great story here how are you getting customers today what's your what are your big inbound channels or just channels in general yeah so we do a lot of uh marketing we work a lot with linkedin we work with a webinars of course um we do our own blog we work with these uh standard things to to to reach out and and and create a dialogue with our customers and then we have a sales team that are really good at uh hunting and and and and calling and we do a lot of uh relationship uh uh sales more or less so uh both um up sales from existing customers and also uh new customers coming in so i would say we have we probably um added approximately five to ten new customers every month um we have seen an upsell of our customer uh existing customer base if you look at the numbers that we um got from each customer in 2017 i would say they are uh 50 up at least uh in 2020. so we're we're working a lot with modules and and and new we're adding on um third-party software also and advertising advertising solutions to add up options for the customers to buy from us expansion from 2017 sells something like 15 to 20 sort of annual expansion revenue to get to net revenue retention then we need the churn number what's annual dollar churn yeah so oh dollar turn i would i would say i was looking into this because i knew you were asking you're gonna ask about it and and we did about uh uh four or five percent churn um this year and this was high is high here for us uh we have been lower than that we have long long-term customers and long-term relationships that has been keeping us very busy for a long time which is great how many customers are you working with about 550 and over the past 12 months how many employees have you placed candidates placed i'm sorry one more time yeah over the past 12 months you helped them with recruiting correct yeah how many candidates have you have placed yeah we've got two million applications running through the system two and a half million applications running through the system each year i i don't have the number of of of um um job posts that has been run in the system actually so i'm sorry for that number i don't have that number that's i mean is that that feels like to be a critical metric right uh no because we don't charge that way um if we have it we have an option for them where they can choose to to buy uh like job post advertisement through our system but that is through third party so that's linkedin facebook other job boards and stuff like this but we charge for the license for using the system so our customers are paying per uh user more or less or or the size of the company and rather than paying for each and every recruitment process they do i see i see and what are you spending on customer acquisition costs to get a new six thousand dollar a year customer oh the six thousand dollar a year is not much like if you look at an average i would say that we pay about two dollars for every dollar arr in the company if you look at an average but we do a lot of tender processes we do a lot of three to six to nine months processes with some customers but then again we get contracts that are maybe five seven ten years uh with the six thousand dollar customers they are uh not uh a lot of money spent to get the way because they're coming either through through our um marketing uh processes or through um uh cold call sales and uh um i wouldn't say that we spend that much as a we don't spend two dollars per dollar are there we spend much less and you know you've bootstrapped to date have you thought about raising capital yeah uh we are well-funded the way we've been profitable since 2012 um which means that we have we have a a good uh [Music] financial situation we uh are looking to uh work internationally more than we have done before we are a new norwegian swedish company we do have business in in in denmark and we now have an office in the netherlands and are working in our way into belgium and we are doing them the way that we've done um before so we're taking one step at a time but yes we are looking at at the us we are looking at at the uk and we do have funds to do these things but if the right partner comes along yeah it might be an interesting idea to get uh funding to do that faster yeah would i would i be an interesting partner there oh sure definitely okay we'll talk we'll talk i have an idea let's let's wrap up john eric with the famous five number one what's your favorite business book oh that's crossing the cast and joffrey moore definitely yep number two is there a ceo you're following or studying right yeah i i think uh i must say there that i'm going to go with a fellow norwegian and i'm really is i'm psyched about what 24 7 office is doing in in the u.s right now and as the andrew steinis team and i think those guys i i really admire what they've done so i must say that number three what's your favorite online tool for building barbie well that's awful building warby okay yeah for for the for the system well for the for the for the group and the organization i must say slack what a great tool that is now uh for building the site i have i have actually no clue because i have never done i've never written a a line of code yeah number four how many hours of sleep are you getting every night well i'm trying to get at least six hours okay fair enough and what's your situation married single kids yeah i'm married to teenage kids yes the fantastic situation is perfect and how old are you i'm 47 now uh time flies 47. okay last question what's something you wish you knew when you were 20 oh what i was what i was wishing when i was 20. something you wish you knew when you were 20. yeah i was i was dreaming of of building and creating businesses and that's what i've been doing for the last 25 years guys there you have it varby is a tool that customers can pay for to help them understand and get job applicants over 2 million go through the platform every 12 months the team is 22 people today they are basically bootstrapped they'll generate 400 000 in profit on 3.7 million in revenue this year up from 3 million in revenue last year so 25 year-over-year growth founded in 2007 as they look to continue to scale sean eric thanks for taking us to the top thank you so much 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 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