Witty Works Revenue, Valuation & Funding (2024)

[00:00] Hey folks, my guest today is Nadia Fischer. She is one of the top 10 entrepreneurs in Sweden, formerly head of marketing in San Francisco based startup. She became an IT project manager and thereafter joined PwC to build their digital experience center. At wittyworks, she is the CEO and acts at the interface of clients'needs and technological implementation. Nadia, are you ready to take us to the top? [00:21] >> Yeah, sure. [00:22] Okay. So what is wittyworks? What are customers using you for? [00:26] >> Well, customers have real trouble scaling diversity and inclusion, and that's what our b to b sauce is for. It helps them to write inclusively and to act inclusively, and this thanks to a debias language AI and microlearning. [00:41] So give me an example. Maybe someone's putting copy up on their website that says, hey, guys, we hope you enjoy your product. And you might say, hey, the word guys is not inclusive. Try this language instead. [00:51] >> Exactly. And it goes also deeper. Like, you know, there's much language out there that is a lot of people do not feel addressed because their socialization is different. So, if you also write, yeah, we're really an ambitious team and performance is super important, that's all kind of language that only attracts a very small part. [01:09] Interesting. So, how what might you recommend I change that sentence to? [01:14] >> Well, talk much more of the cooperation you're doing. Like, here, together we try to reach a certain goal. You know, we believe in taking responsibility within the team. So, much more the cooperative and supportive side of language. [01:28] Interesting. And you're doing this via software, right? People are paying you a monthly fee or annual fee? [01:33] >> Yeah, exactly. It's subscription based. I mean, there's a freemium out there. So, please try it out. We're happy also for feedback and everything. Please try it out. Yeah, it's like while you are writing, it highlights the terms that are problematic and then you get proposed with alternatives so you can write exclusively. And you also get more information behind the term, what the bias is behind the term, so you can actually learn about your own biases. [01:58] Very cool. And the website is witty. Works if you wanna check it out. Now, Nadia, what are people paying you per month on average to use the technology? [02:06] >> So it's easy. It's a license per year of 180 US dollars per year. [02:13] Okay. So every customer is paying a 180 a year. There's no cheaper. There's no more expensive. It's all a 180? [02:17] >> Yeah. I mean, it's, you know, as soon as companies start to buy 2,000, 3,000 licenses, we have a yeah. We have another pricing going like a gradual pricing. [02:28] I mean, do you have a lot of those customers that are so it's a $180 per year, that's per seat? [02:33] >> Yeah. Exactly. [02:34] That's it. So so ignore the per seat cost because I'm gonna what I'm really interested in is when someone signs up for you guys, are they signing up 10 people on their team or a thousand? So what's the average customer paying you per month all in, not not per seat? [02:46] >> Yeah. I mean, we're not so old yet, so we just kind of started out, like, a half year ago. So at the currently, the average contract values are between, let's say, five and then 10,000, I would say. But naturally, we're hoping for the compounding effect that now it kind of starts to expand within the companies. And, you know, with that, we'll reach ACV's of like 150 to 200,000. [03:10] That's great. Okay. So, you just started, it sounds like you just started having customers about six months ago. When did you write the first line of code for the platform? [03:20] >> Like, one year ago? About, yeah. We had a kind of MVP which we tested the market with and found out that, you know, yes, customers are actually ready to spend money on inclusive language. And then as soon as we had that, we started to build the real product. [03:38] I see. Okay. So witty works, you get going in 2021 last year. Now did you have you bootstrapping or have you raised capital? [03:44] >> So, yeah, the first month, we were bootstrapping, and then we raised capital mid last year with an eight line friends and family round. [03:55] 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 in a second, but you log in, you connect [04:18] 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 doing the buying of your SaaS company, you're gonna [04:42] 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 outright. Now what's cool about this is this is [05:04] 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 been acquired the valuation and the multiple. Maybe you're [05:30] 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. Alright. We're gonna go back to the YouTube video here in a second, but if [05:52] 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 to see you there. Alright. Let's jump back into the [06:18] interview. How much did you decide to raise? [06:22] >> 750 US dollars 50,000 US dollars. Sorry. [06:27] No. You're okay. And and most folks, when they're raising a pre seed around in that range, they're usually raising on a note. Did you use a note? [06:36] >> No. This was a little bit complicated. I guess in Switzerland, we made an equity round, but in the aftermath, I wouldn't do that anymore. It's just, you know, in Switzerland, when you use notes, it's rather very small notes, like twenty to twenty five thousand, so you would have to raise a lot of notes and that makes it very complicated. So that's why we went for an equity round. I think in the aftermath, I'd rather go to [07:01] >> The US or bigger markets and see if I can, you know, attract VCs from the start and two nodes. [07:08] Well, how do you how do you price around your pre revenue? Mean, how do guys come up with the valuation? [07:13] >> Yeah. This was actually a negotiation topic. We were it was funny because in the thing in the beginning we thought, okay, this is a scientific thing, right? And so we researched and calculated and calculated again. And then we find out because we didn't have any experience. We're first time start upers. So we realized that it was much more of a negotiation thing. So you come out with a certain number and then, you know, angels will tell [07:37] >> you, No, that's too high. Or, you know [07:40] >> it's a little bit of a risk if you don't have any experience yet, actually. And also, it depends very much on the market. So, in Switzerland, the valuations are normally quite low. In Europe, a little bit higher and compared to [07:53] How low in Switzerland? [07:56] >> Well, you know, if you come out as a pre seed, it's it's really hard to get anything like you. The pre seed valuations are like between 2,000,000 and maybe 3,000,000, something like that. Where I see when I watch now The US, you know, like that can already be at $8,000,000 to $10,000,000. [08:15] Yep. Yep. Okay. So you sort of raised in the 2 to 3,000,000 valuation range, something like that. [08:19] >> Yeah. Exactly. [08:20] I see. Okay. Now, second question, obviously, it's very dilutive. Right? I assume that was pre money. So maybe you sold 20% of the business, something like that. Yeah. I mean, did you need that capital to grow? Or could you have bootstrapped this? Why did you need the capital? [08:34] >> Well, we wanted to be much faster because we So we realized, okay, this is being bought by the companies, but we knew we needed expertise from NLP and from machine learning, also, you know, some more experts in front end development. And if we had done it ourselves, yes, we could do it and, you know, just continue like that. But taking up capital just meant that we could be much faster. And, you know, in the end, we [09:01] >> brought the product out within half a year, and if we had done it ourselves, it would take us much longer. [09:10] And Nadia, how many customers are you now serving today? I know you're early, but are we talking two customers or 20 or something else? [09:15] >> So, 32 customers, and some of them really big brands like Microsoft, Intel, Deutsche Bahn, [09:24] >> Deloitte, so quite big customers actually. [09:27] Yeah, no, that sounds great. Now, if we take the ACV target you told us earlier, you know, those customers are all paying between 5 and 10 ks ACV, that means you're doing something like, I mean, sounds like something like $250,000 in annual recurring revenue already. Is that about right? [09:40] >> Yeah. That's about right. Exactly. [09:42] Yeah. Or about $20,000 a month if you calculate it on a monthly basis. [09:45] >> Exactly. It's a 23,000 MRR. Absolutely. [09:49] There you go. [09:50] >> She knows the number exactly. [09:51] 23 up up from nothing a year ago. So you have infinite growth. Right? [09:56] >> Yes. [09:59] That's great. Okay. So, I mean, look, selling enter your first sales at 5 to 10 k a pop, that's not easy. Most people are selling premium tools for $5 a month and they upsell from there. You went right out and are landing $5 to 10 k contracts. How are you doing that? [10:14] >> Well, I guess it's because the need is really big. I see that a lot of companies are looking for inclusive language. They're really, you know, coming towards us, actually. We didn't have any marketing spend so far either, so that's really cool. It's a lot of content marketing we do, but we didn't have to have any paid advertisement. And I think, yeah, they're just ready to actually pay that price in order to finally have a solution, and [10:39] >> so far, there's just nothing on the market. [10:42] Fascinating. Tell me more about your team. Are you the sole founder? [10:46] >> No. So I'm together with Lukas. I'm our CTO. And, yeah, we both we actually met when we we used to work together before. So we knew each other already and how we work together. So that's really cool. And, yeah, he's a really big open source person, I would say. He's very known. He used to be the global release manager of PHP. So that's also really cool when we, you know, when we're looking for tech talent, it's [11:11] >> never a problem to find anyone. [11:14] That makes a lot of sense. Now, what did you guys meet in Sweden? [11:18] >> So we're from Switzerland. [11:19] Switzerland. Sorry. Did you meet in Switzerland? [11:22] >> Yes. We met in Switzerland. Absolutely. Yeah. [11:25] And the reason I'm asking is, so I'm actually headed in a couple days out to Malmo in Sweden for the SaaSiest event. Are you going to that? It's a big SaaS conference. [11:35] >> No. I'm not. I've never heard of it. Oh. [11:38] Okay. I'll I'll I'll have to send you it'd be so cool to meet you in person. I love meeting meeting founders in person. But, yeah, it's I think the link is saasiest2022.com. It's April twentieth and twenty first in Malmo. It'll be a lot of fun. Tell me more about the rest of your team, though. There's you and Lukas as founders. What's what's your total team size today? [11:56] >> So in total, we are like 11 people, eight and a half FTEs because not all of them work 100%. What's really cool is we're from nine different nationalities, which for Europe is very, you know, is a very diverse team. And I really like that. But it also means, for example, we have somebody who's half Russian, half Ukrainian, so that also, you know, the whole conflict is brought into the team, is totally fine. That's what we're here [12:22] >> for. And, yeah, like half is working on the tech side and half is working on marketing and sales. On the tech side, we actually have more women than men. So that's also Nice. [12:32] Wait. So, how many engineers? Four engineers? [12:35] >> Yeah. Four engineers and three of them are women. [12:38] Oh, that's amazing. Why you're growing so fast. Alright. Four engineers. Great. The others are sales marketing. Your go to market is content marketing strategy. It sounds like 32 customers to date. Talk to me a little bit more about the product. What's the next big product release you have planned? [12:54] >> So, the next big product release is the whole gamification part within the app to make that better, so you can see your own progress, you can see your analytics. And then naturally, you know, especially for big corporations, have to take a look at the whole privacy and data protection issue. Naturally, I know in The US it's maybe not such a big problem as in Europe, but, you know, many corporations cannot, you know, let you work with [13:25] >> a browser extension if the whole privacy issue is not regulated. Right? [13:30] Yep. Yep. [13:31] >> So we need to find their solution. We actually already got it. We just need to build it as, you know, to build private clouds for these corporations so they don't have to worry about a thing. [13:40] Nadia, do you already have a sales rep that carries a quota or you're too early for that? [13:45] >> We have one sales rep, but I would say his job is still very mixed. So on the one hand, it's like customer success, getting back all the info, you know, getting back all the feedback in order to make sure that we develop according to customer needs. And also doing partnerships, partnerships with new language partners, because we work together with language partners to make sure that our vocabulary is really being tested by externals as well. [14:11] Mhmm. Okay. That makes sense. I was gonna ask about churn and things, but you're probably too early to look at most of that stuff. Right? [14:18] >> Well, I can tell you that we have a really good rate from our freemium from our visitors to our freemium. That's like a 10%, which is really nice. We see that there we were a little bit higher than other SaaS. And the churn, yeah, I think we brought at least we brought it down, I would say. Before, it was like 9%, and now we've got it down to 2% when we, you know, made some improvements on [14:44] >> the product, but it's still not stable. So we're still working on that. [14:47] >> Yep. Yep. Okay. This makes sense. [14:48] Hey, great story here. Let's wrap up with the famous five. Number one, favorite business book? [14:54] >> Favorite business book? Oh my god. I'm overwhelmed. I think the favorite one is not so much biz well, half. It's Daniel h Pink about the third driver. He really talks about what does motivation in work come from, and it is not money. So [15:12] Number two, is there a CEO or founder you're studying or following? [15:18] >> Good question. I'm so bad with such role models, I must say. [15:24] Okay. We'll say none. Number three, what's your favorite online tool for building witty besides your own? [15:29] >> Sorry. I didn't understand. [15:31] Your favorite online tool? [15:34] >> Slack. [15:37] Four, how many hours of sleep do you get every night? [15:40] >> I really make sure that I get seven hours. [15:43] That's great. And what's your situation, Nadia? Married, single, kids? [15:47] >> So I'm married and I have two kids. They're 14 and 16. [15:51] Oh, wow. And how do you mind me asking how old you are? [15:54] >> I'm 50. [15:55] Oh, wow. That's amazing. Okay. So 50 years old. Take us back thirty years. What's something you wish you knew when you were 20? [16:02] >> I well, when I was 20, the web just started going, and I was kind of doing some HTML, and I wish I had stayed with it. I really regret not having stayed with that, but it wasn't the thing at that time. So you didn't know. It was like, oh, okay. [16:20] Guys, there you have it. Witty Works launched last year, helps you make sure all of your copy speaks to the largest audience possible, the most targeted audience as possible in the best way by helping you make sure you don't fall into weird words like using guys or super ambitious and try to be very specific to cater to the needs of your readers. Again, launch with a $750,000 pre seed round at a 2,000,000 to $3,000,000 valuation. They're [16:39] now doing $23,000 a month in revenue across 32 customers, scaling nicely, team of eight. They have four engineers, three of which are female, which we love. Maybe that's why they're growing so fast. Nadia, thanks for taking us to the top. [16:50] >> Thank you very much. Have a nice time. [16:54] One 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 [17:19] Central. Additionally, remember these recorded Founder interviews go live. We release them here on YouTube every day at 2PM 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 SaaS world, whether it's an acquisition, a big [17:42] 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 SaaS 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 [18:03] up for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and 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, I do it so that we can all learn. We have to counter those people. We [18:23] got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.