WordLiftrevenue, valuation & funding

Introduction hello everyone my guest today is andrea valpini he's the ceo of word lift a visionary web entrepreneur focusing on semantic web artificial intelligence and seo the platform is a semantic platform for online content developed by working at the intersection between semantic technologies natural language processing and search engine optimization andre are you ready to take to the top totally all right so what is this sitting i mean is it sitting on top of like gpt3 or what's the underlying technology so we built our technology uh from the ground up during research projects back in the past and we technically analyze the content and build knowledge graph that's that's what we do in simple terms we also use gpt3 now for content generation but that's not the core of it okay so so explain to me can you tell me the story of a real customer using you and how they're using you yeah so um we get your site and then we analyze the content on your web pages and we build a knowledge graph much like google would do and then we help google understand your content on your website by using these knowledge graphs so it's a it's an intermediate layer of metadata that allows search engine to understand the content better so if i plug in getlatka.com to wordlift.io you'll scan the site basically give me a knowledge graph report and say nathan this is how google is probably seeing get lack of here are four things you could do to improve right but even more than that i mean we would help google understand all the different entities that you have inside get leica we're working for instance with zoom info and other you know database oriented companies that use wordlife to present their data at best to search engines interesting when did you start working with zoom info so um a few months ago i think we're just wrapping up the the case and the numbers are good how's it going are you enjoying working with them henry's been on the show many times that's why i that's that's why i'm pointing this out yeah yeah they're they have an amazing team they have an amazing team um yeah so you know you're doing a really good job he'll just try and buy you so so are you in acquisition talks with henry uh not at all not at all not yet i mean i haven't got a proposal but i can i can do the seo and get luck yes where oh there we go we love that so what would i pay you what's the average trust we're gonna pay you right so um the the the the package that uh you would probably fill in it would start at maybe a thousand or two thousand uh you know dollars per month something like that okay uh and then and then it would go up depending on the amount of data and and the revenues that we can help you generate and when did you launch the company so we started in uh 2017 uh with the commercial operation but as i said we've been working on research for many years before that okay when did the research first start um 2013 uh 2014 i started a company called red link in austria where uh we do like part of the back end of the infrastructure of word lift and then 2017 i was commercially ready to to enter into seo got it do you remember that first year how did you get your first 10 customers um so i've been in the business for many years so it wasn't it wasn't hard for me to get the first i think what it's what it was hard this is like kind of making the first subscription and getting you know the first uh what was it like a 2 000 euro a monthly recurring that's that's kind of you know was like my okay so we got it because of course um i always been doing uh consultancy and working on on different areas so at a certain point you have to decide now sas is the thing and and you're going to put your effort there though it gets very easy to maybe get you know a gig for a lot more money but then you have to kind of focus on on on building the machine that makes the money and creates the value for the end user and that's that's the game i was uh you know i started in 2017 with with your agency andrea this is a big thing the most successful stats going to start as agencies how large what what year did your agency do the most revenue and how much revenue did it do um so my my my biggest experience in that field i got to 5.4 million uh euro uh but uh there was a different agency than i sold that and then i started uh basically preparing for world lift which was uh back in 2012 when did you sell that first agency uh when when the year yeah it was it was 2011 2011. interesting so you learned i mean i love this right you learn what your customers need you go into sas but it's harder to get started in sas versus agency because you have to build recurring revenue in 2017 how much did you grow your mrr to sorry how much did you grow your mrr to in 2017 your first year uh first year i think uh we we broke even uh after one year now brook even means that we were paying our salaries and and the team at that point was maybe three people so um and how long was it to take you to break even uh one year and a half one one and a half okay so in 2018 you had three yeah 2018 i was i was i was profitable and uh and i've been profitable since then that's great okay so and do you remember what revenue was in 2018 uh 2018 we were making what uh maybe maybe less than 200 000 euro per year yeah okay interesting so that's less than call like a fifteen thousand dollar a month run rate up from two grand a month in 2017 your your first uh your first year in business but good growth two grand to 15 grand a month is nice growth yeah yeah i mean we had a three x uh in the beginning uh i think now we are getting into between 30 and 40 that's a more sustainable growth rate uh we we we can expand a lot there is a lot of need of you know improving seo with automation what can i ask what mrr is today uh Monthly recurring revenue we are around uh 80 80 90k per month well hey we congratulate that means you just broke the million dollar run rate so congratulations yeah we we did we've done that uh last year so 2020 we broke a million dollar we were actually 906 in europe so we're below a million in europe but yeah we broke the one million dollars yes well king i love that congratulations especially i believe Bootstrapped because you're bootstrapped correct yeah totally love that okay so last month if you did call it 85 000 in revenue how much went to the bottom Profits line are you profitable yeah we are profitable um and um yeah of course we are now investing on growth but we are keeping an lt balance so pretty much we always keep like 30 40 percent of that wow so you took about 20 000 and your bank went up by 20 grand last month basically yeah that's incredible now how do you talk about your team how many people are on it so we have now uh 15 people uh one five and uh six are attack and uh i kind of include myself into the tech but uh maybe i shouldn't so yeah between five and six uh so and then and then we have uh like three three sales and and two marketing or 3.5 sales and two marketing but it's gonna grow i mean we're gonna just expand now the the the marketing and the sales team because currently we acquire clients with uh inbound which means that if i take the marketing cost and i kind of put the Customer acquisition cost into into the you know the numbers we spend 180 euro per acquisition of a client and what's the client going to pay per month on average so so the the the lifetime value is between 1 200 and 1 400 euro um so the ratio there it's very good and then i realized that maybe we should start selling but uh what's the payday period on the 200 year or the 150 euros sorry the payback period on 150 euros um so usually the lifetime value is is 29 months for for a client um but then we have these different cohorts because we have the you know the self-serving that gets the store uh and buys maybe the starter for uh for a few bucks per month but then you know the the money are are driven uh by the the vip and the enterprise so the larger clients so we do have these uh you know 80 20 split between enterprise and uh and self-serving and how many customers today um so we have a served uh 2070 Currently serving 805 customers clients last year uh and and we have roughly 700 active subscription because like last month yeah yeah because i mean a client would would probably buy more than one in our case and retention is very good after of course a period of time i mean we lose a lot in the first month and then and then of course you know it goes kind of flat down i think we we have an annual churn of uh between five and uh and six percent monthly annual annual and that's revenue or logo term that's that's the the revenue wow six percent of revenue trend that's super low do you have expansion revenue that makes up for the six percent loss uh yeah we do now we're we're trying to to to understand you know between scaling up because we have these very large clients that kind of demand attention and we can scale up in terms of covering more websites or more data sets and then you know on the other side we want to balance and get new clients on board so that's kind of the tricky balance i also love to make the product more than i love to make the business run but i'm trying to fix that i promise i will you've made some bets on the pricing page in terms of what triggers will allow you to have upsell revenue you upsell currently based off domains by web editors and by schema types those are the quantifiable things that people you currently show which one is most powerful for driving expansion revenue i think the the entity types are very powerful because depending on the type of content that you're serving i can optimize for that type of content but if you are a large organization then my skill will be on the number of urls if you have like you know one of our clients it's all clay and then you know the more urls that we have to serve the the higher of course the the retainer will go interesting very interesting okay love the site this makes a lot of sense to me um is talking about quota do your sales people have a quota uh we do have uh a two sales uh that have a quota uh and uh one is focus on the enterprise maybe you know them gennaro kofano for wic mba is a big fan of your work and uh and it's it's it's been uh you know creating the the commercial team from scratch basically so yes what was his what was his name uh gennaro qualfano uh four week mba he has he has a a a website and a podcast how did you convince him to join the team he he was coming back from the u.s and uh and he was very strong at growth hacking but he didn't understand the web much and i taught him about the web and and about seo and so we have a strong uh partnership there and uh did you have to film equity uh i tried but i didn't succeed because he wants money like you he thinks that you know he wants money and no promises uh i think now equity are becoming money so maybe maybe i'll try it again what do you mean by that equities becoming money i think the company is getting more value as we grow we get more interest uh from from people around the industry we have a few fortune 500 companies that are using were lifter ready so i think there is uh there is a potential that we can grow this big do you own 100 sorry do you own 100 of the business uh well most of it i mean we have uh like um the cap table now is going to be uh kind of revised and simplified but yes me and my partner david riccitelli on the most of the company yes and most is more than 95 uh no it's less i mean uh we are in the range of uh um 80 okay where's the rest of the equity go to employees and stuff uh yeah i mean it's uh it's uh it's internal yep that's great now do you allow your employees since you're bootstrapped and probably participate in the profits at all do you give out dividends to them or anything uh we haven't done that yet uh but i'm thinking about uh creating like incentivation plans we do have like a five percent kickback if you bring me clients stuff like that very basic but we should do more i think that uh there is a lot of potential in building a team together we have kind of a distributed team so i'm kind of struggling to you know bring everyone together and and find a good way to to to motivate people and grow because that's essential how many so how many of the 15 are our remote employees uh i would say that we are 50 50 split got it yeah i i got to tell you i just found this tool called remote.com and they make it so easy to manage remote employees like i don't want to deal with freaking paperwork in indonesia or china or australia but you click a button remote enables you to handle it do you use any tools like that to manage your remote teams um so we we do have a lot of tools for uh kind of feeling that we are all in the same space you know slack trello probably the one that we use the most uh we use every hour for tracking times and tasks which allow us to optimize you know that the work of everyone uh so every hour probably is the one that we would use the most but uh you know i think it's more about the spirit of the company kind of you know for us we used to do like two gatherings per year where everyone gets in rome or somewhere else and we get together i think these are essential we kind of miss that because of the pandemic but uh yeah we have to get back there and and definitely definitely an incentivation plan is needed guys remote.com asks they could sponsor the show and if you listen or you come on like android you know i'm a tough cookie when it comes to negotiations so if a sponsor doesn't give me some special deal they never get mentioned if they give me a special deal i brag about them to everyone so i'm going to brag very quickly if you guys want to onboard your first remote employee at like a 50 discount remote.com has given that to us you can check it out at nathanwhack.com forward slash remote if you're trying to build a great bootstrap team like andrea totally bootstrapped past million revenue and profitable checkoutremote.com andrea what would you buy the company at today sorry what would you value your company at today uh around five walk me through that wi-fi five million euro yeah why is that why five i mean we have a a kind of an aggressive business plan for the next uh three years um i think we we we have all the elements to to to to grow at the moment um we just have to do more marketing more sales and and get the product a lot more simpler for a large user base would you consider raising capital or you really want to stay bootstrapped i think i think we we're evaluating also the option of raising capital i think it's a good time i'm not scared about it i think we have good financial money in the bank so i don't need that i can use it in order to bring the company to the next phase how much money come well look it's a different mentality right the bootstrap mentality is just different the second you take your first dollar of vc you have a board you have to manage you have reporting you have to do monthly you know it's just a different world but if you did raise how much would you try and target how much did you raise uh if i would raise yeah how much do you think you would try and raise i think i think i would i would try to keep you know an healthy balance so probably i would give you know less than 20 of the equities and uh yeah that that would be that would be a good a good match for me but if you find me someone that wants to buy at seven million then i'm ready yeah yeah well do you need all the cash today like could you take a quarter million today and then a quarter million in five months and a quarter million five months after that or do you want the full like whatever a million or two million investment today well we don't need it today because as i say we're cash positive and in any case in order to spend you need to find the right resources you need to you know build the team i don't need you know the cash immediately i need someone that kind of helps me drive the company to the next phase because there is a lot to do yeah well look we we've just raised a very large fund at founder path specifically for this but we don't take equity what we do is we just turn your mr to upfront cash and so if you're at 90 grand a month in revenue i mean we could probably get you 400 500 brands today and you keep your equity you grow and then you go raise an even higher evaluation in the future right that's pretty fascinating i i i look at that um there is also this uh secure token offering that i was looking at because that's another way problem is that you know what i'm expecting from kind of bringing some investor in is also the guidance to kind of make the next steps it's not just about the liquidity because i mean liquidity now it's very cheap to get because yeah because of the existing economical situation it's not hard to find cash well i would be very excited to download everything i've learned from interviewing three thousand sas founders to you try and help you grow get in with your four-week nba guy help them steal the enterprise side of things that could be i think way more than cash free but we'll take it offline we'll chat more about it i want to learn more about this product because this is interesting we're spending a lot of money and time on seo right now so this is interesting um i want to put get lacka through word lift and see what you guys spit out i hope you see a bunch of opportunities yeah i do i do i mean one thing that that world does in the seo sector which i'm sure you're familiar with is that seo has been primarily driven by analysis so understanding you know what you need to do now what we try to do is is what i call that gentive seo so we want to do it for you without you having to understand it so that's kind of what we try to do all right on that note andrea let's wrap up here with the famous five number one favorite business book um the diamond cutter it kind of i don't know if you read it but it's a good mix between buddhism and business development number two is there a ceo you're following or studying oh man i follow a lot of ceos but uh jack dorsey probably won but i also like yoast a lot i mean it's uh we i admire the way in which he created a space in wordpress number three what's your favorite online tool for building the business i use a lot personally i use a lot uh zapier but i think company wise we are in love with trello number four how many hours of sleep to get every night i think average this week is 7.43 minutes that's great you you must track that i use what do you use uh uh garmin very good and what's your situation under a married single kids uh i'm married uh with two kids uh super happy uh father so yeah i love that how old are you i'm 43 and uh uh the the oldest daughter is is six and and the other one is four love that wow what a special time for you last question what's something you wish you knew when you were 20 um focus more on things that that can you know bring you significant growth rather than kind of messing up with things that you love which will you know you will spend a lot of years before getting too bad at the same time i really have no regrets so i don't know what to say to my 20. and hey i meant to ask you what's growth if you're doing spot 80 to 90 000 a month today what were you doing exactly a year ago a year ago we were probably within 50 60 something like that i mean we yeah that's that's pretty much yeah guys there we have it word lift dot io doing seo work for you so you don't have to understand it it's one click they get it done growing very fast two grand a month in mr back in 2017 they've now scaled to over a million dollar run rate they did more than eighty five thousand dollars in revenue last month and they profit a big chunk of that 20 grand goes to the bottom line they've done this with 705 customers a team size of 15 they're bootstrapped right now they would potentially raise sell less than 20 of the business that maybe around a five or six million dollar valuation we'll see what andrea decides andrea thanks for taking the top awesome 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 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