How Elly Analytics Reached $600K ARR with 30 Customers and 100% Year-Over-Year Growth (Interview with CEO Seva Ustinov)

Introduction and Company Overview

Nathan Latka

00:00Guys, ellyanalytics.com is your omni channel, your single source of truth for omni channel attribution. He built a 100 person agency and then spun out ellyanalytics, a software company in 2018. They're doing $50,000.05 0 a month today in revenue, up from $25,000 a month just a year ago. So a nice growth rate. They raised $360,000 in pre seed funding last year at a 5,300,000 post money valuation. They still have about $150,000 of cash in the bank. Net

00:27burn is $25,000 per month. So four to six months of runway, but Seva said that they are growing nicely, which they are adding on new customers. Today, they've got 30 customers paying on average $20,000 per year as they look to scale north of a million dollar run rate here in 2023. Hey folks, my guest today is Seva Ustinov. He is building ellyanalytics at ellyanalytics.com. He's a second time founder, founded a digital marketing agency back in 2004

00:53when he was a computer scientist student. He scaled the agency to a 100 employees and transformed it into a self managed dividend business. He spun off ellyanalytics four years ago, initially bootstrapped and raised his first investment last year, 600 ks and committed ARR growing two X year over year with a 90% logo retention rate. Seva, are you ready to take the top?

Seva Ustinov

01:13>> Yep.

Nathan Latka

01:14All right, very cool. So let's go back to the agency here for a second. What were you selling to agency customers?

Agency Background and What Seva Sold

Seva Ustinov

01:22>> So we're responsible for growing revenue from digital channels, like Google Ads, Facebook Ads, landing pages, conversion rates, and typically, we just were responsible for the whole channel.

Nathan Latka

01:36Got it. And were you, a 5 k monthly retainer for six months, or how did you structure pricing?

Seva Ustinov

01:43>> Mostly, it was retainer plus success fee based on the results.

Nathan Latka

01:48Okay. How did you make sure that you could attribute the results to your work directly so you could get that extra fee?

Seva Ustinov

01:57>> We started creating full funnel dashboards back with them when we're at agency. So we're looking at all of the data and actually knowing where each of customers came from, and this is how we attributed them to our channels.

Attribution Methodology at the Agency

Nathan Latka

02:13Interesting. Makes a lot of sense. Okay. So what happened to the agency? Why did you shut that down or spin out elly?

Seva Ustinov

02:19>> I didn't shut it down. It's actually up and running. It's just a separate company now. I've been building it for fourteen years, and at some point, I got this, okay, Me and my partner will build a marketing agency. It was bootstrapped, and it's self managed on dividend business now, and it's in Europe. And now I want to build a venture company, software company, and in US. Mhmm.

Spinning Out Elly Analytics from the Agency

Nathan Latka

02:52This makes sense. So what did you go to market with? When did you launch the software product officially? What year?

Seva Ustinov

02:59>> We launched it in 2019,

03:05>> and it was like part of the agency and then we spinned it off to a separate company.

Nathan Latka

03:10Okay, so you launched in 2018. Now, how did you spin it out? Does the agency own any equity at seva.com or no, it's totally separate?

Seva Ustinov

03:17>> Oh, it's totally separate.

Nathan Latka

03:18Okay. Totally separate. Interesting. And so 2018 is when you spin it out. When you spun it out, what did the team look like? Did you bring a bunch of people with you?

Seva Ustinov

03:27>> Yeah. We started with a small team, like six or seven persons.

03:34>> Basically, we found first six customers and started building a platform and dashboard for them, and then

03:44>> using that experience and expertise and those clients and the team to build platform and transition it to a more software like business.

Monthly Recurring Revenue and Pricing Structure

Nathan Latka

03:55And so today, how much monthly recurring revenue are you doing?

Seva Ustinov

03:59>> Monthly

Nathan Latka

04:01Recurring revenue.

Seva Ustinov

04:03>> So we are at 600 k ARR, that's something around 50 k per month.

Nathan Latka

04:13Okay. And what are you what are people paying on average per month to use the technology?

Seva Ustinov

04:18>> So earlier, customers pay less, but now we have this structure. We start with 1 k per month that grow to 3 k per month, and the biggest clients pay 6 k per month.

Nathan Latka

04:31Oh, 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

04:54your 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

05:18get 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

05:40not 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

06:06going 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 to the YouTube video here in a second, but

06:28if 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. All right, let's jump back

First Customer Story and Early Pricing

Nathan Latka

06:54into the interview. Walk me through the story of how you got your first customer.

Seva Ustinov

07:02>> Well,

07:04>> as a founder of marketing agency, I had a lot of exposure to the clients. So like, first clients, I got them from my personal network and from the agency audience.

Nathan Latka

07:15Mhmm. And what was the first sale price? Do you remember the price of that first plan?

Seva Ustinov

07:21>> Plus something like

07:25>> 10 k for integration and 1.5 k per month sup for subscription.

Nathan Latka

07:31Interesting. So 10 they didn't they didn't get upset at the 10 k setup fee.

Seva Ustinov

07:38>> Yeah. So we they they paid for we thought that it will be enough, but actually it took longer and more expensive for us. Yeah. So they paid part of the building price and then transitioned to subscription.

Nathan Latka

07:52Okay. So you're doing $600,000 a month today or about $50,000 a month in revenue. Where were you exactly one year ago?

07:58Do you remember?

Year-Over-Year Revenue Growth

Seva Ustinov

08:00>> Like exactly two times smaller.

Nathan Latka

08:04Okay. So you're doing about $300,000 a year exactly one year ago? Yeah. Or about $25,000 per month. Interesting. And how many customers are paying now today?

Seva Ustinov

08:13>> Actually, actually one small correction. The overall revenue was higher because we used to charge for the integration separately and that gave us additional cash flow. And now we transition to subscription only.

Nathan Latka

08:28How much total revenue did you do last year?

Seva Ustinov

08:34>> I think something like 400 or 500 k per for the whole year.

Nathan Latka

08:42Okay. So there is about, call it, 40% of your revenue came from sort of one time or setup fees?

Seva Ustinov

08:48>> Yes.

Nathan Latka

08:49Okay. Very cool. What's the plan this year? What do think to grow revenue to?

2023 Revenue Target

Seva Ustinov

08:54>> I think at least to 1,000,000, but we're actually targeting 1,500,000 in subscription revenue per year.

Nathan Latka

09:01Okay. Well, we certainly hope you get there. Have you done all this bootstrapped, have you raised?

Fundraising: Pre-Seed Round and Valuation

Seva Ustinov

09:06>> Initially bootstrapped and used resources from the agency and we'll start raising our first external money in November and December last year. We raised 360 k at 5,300,000 valuation.

Nathan Latka

09:24And so you would consider that your seed round?

Seva Ustinov

09:27>> It's between 3%. And seed. Yeah.

Nathan Latka

09:31Yeah. Yeah. Well, congrats on getting that done. How much of that money do you still have in the bank, or did you spend it all immediately?

Seva Ustinov

09:39>> I think at least half and no. Not not, I think. Half. Exactly.

Cash in Bank and Runway

Nathan Latka

09:44So you have a 100,000 a $150,000 cash in the bank today. How many months of runway does that buy you?

Seva Ustinov

09:50>> With the current burn rate, it's,

09:56>> I think, four to six months, but we're flexible there. We have our recurring revenue, and it's growing. And we have additional money to spend more on onetime projects to boost our growth.

Nathan Latka

10:12So you have if you have a 150,000 in the bank and you've got and you're burn you know, runaway four to six months, that means your net burn monthly is about $25,000 per month. What are you spending money on today?

Team Size and Engineering Headcount

Seva Ustinov

10:25>> We we hired a couple more developers, but mostly we're spending on

10:31>> sales and marketing efforts.

Nathan Latka

10:33Okay. How many folks are full time?

Seva Ustinov

10:36>> 20 something.

Nathan Latka

10:37Oh, wow. You're getting up there. You have to deal with people problems then.

Seva Ustinov

10:41>> No. Actually, because I managed agency at 100 employees, it was significantly more difficult. Until any number below 30 people, it's very comfortable scale for me.

Nathan Latka

10:56Of the 20 folks that are full time, how many are engineers?

Seva Ustinov

11:02>> I think five developers, eight marketing data analysts, engineers.

Nathan Latka

11:10So there's eight engineers total?

Seva Ustinov

11:14>> Depending on how you count.

Nathan Latka

11:16How many people write code on a monthly basis?

Seva Ustinov

11:23>> Five. Five.

Nathan Latka

11:24Okay. Very cool. That's great. And now do you do you have sales reps that carry a quota or are you too early for that?

Seva Ustinov

11:32>> We hired our first rep recently. But before that, I've been closing all of the deals myself. And also, we rely heavily on our partner network for lead sourcing.

Nathan Latka

11:48There are lot of founders listening right now doing 500,000 revenue thinking about their first sales hire, and they don't quite know how to structure the compensation package for that first sales hire. How did you do it?

Seva Ustinov

12:01>> So first we tried like a standard approach, like base compensation plus fee plus commission from sales. And

12:18>> right now, I'm

12:21>> I actually want to hire several sales reps part time with fixed compensation and commission, like, to try more things,

12:33>> understand what's working better, and then scale it.

Nathan Latka

12:36Oh, but Seva, you didn't answer my question. What's the comp structure of the first sales hire?

First Sales Hire and Compensation Structure

Seva Ustinov

12:47>> It's like

12:51>> so right now, he transitioned to part time. But, initially, we tried, like, 80 k base and 80 k in commissions.

Nathan Latka

12:59And and how much would he have to sell to earn the 80 k in commissions?

Seva Ustinov

13:07>> 1.2 deal per month.

Nathan Latka

13:12One so what if he only closes one deal? Like, what what does 1.2 deals mean?

Seva Ustinov

13:17>> It's on average. It's the the the the to get the the debt compensation.

Nathan Latka

13:21So you want him to do 14 deals per year, 1.2 times twelve months?

Seva Ustinov

13:26>> Yes.

Nathan Latka

13:27Okay. So 14 deals per year. And what would that mean for you in terms of new revenue if you closed 14 deals?

Seva Ustinov

13:41>> It will add around 600 k in subscription revenue.

Nathan Latka

13:48Okay. So he's so you're paying him 80,000 to add $600,000 of ARR. Isn't is that ratio a little off? Shouldn't they earn more?

Seva Ustinov

13:56>> It's 80 base plus 80 commission. So it's 1.6.

Nathan Latka

14:02Yeah. No. It's a 150 k into into 600 k OT, like OT. So if you divide $600,000 of new ARR into the one fifty base plus commission salary, was essentially a four x multiple. I'm just asking you from your perspective, does that feel like a good ratio to you for a first time sales hire?

Seva Ustinov

14:21>> I think so. Yeah. And one additional important thing here. So we allocate up to four hundred hours of our team to build

14:34>> to actually onboard the client and build everything needed using our platform. So

Onboarding Model and Retention Economics

Seva Ustinov

14:42>> my initial business model is that we spent around 30% to 50% of the first year revenue on the sales and 30 to 50% of the first year revenue on onboarding. And then clients stay with us for many years, and this is where we make money.

Nathan Latka

14:59How many paying customers today?

Seva Ustinov

15:02>> Several dozens.

Nathan Latka

15:03Okay. So I call it maybe 36, something like that?

Seva Ustinov

15:06>> Something like that. Yes.

Nathan Latka

15:07Okay. So $600,000 of AR divided by 36 customers, each one's paying about $16,000 per year or about $1,500 per month.

Seva Ustinov

15:19>> I think okay. A little bit like, maybe 30 clients. Average is 20. And new clients, they pay more in subscription, but they don't have to pay anything in for for integration.

Nathan Latka

15:35I see. Okay. That makes a lot of sense. How are you getting new customers today? What's your growth strategy?

Growth Strategy: Partners and Outbound

Seva Ustinov

15:42>> So first, we've got a partner program. So marketing experts

15:49>> who consult their clients when they see that they need that their client needs solution like ours, they bring us in and we build, like, funnel

16:01>> multichannel attribution and dashboards for them. And this is, like, half of our new clients. And the second half is personal network and outbound. Mhmm.

Nathan Latka

16:13How much are you spending on outbound?

Seva Ustinov

16:18>> Like, we just hired our first rep, and this is what we're spending.

Nathan Latka

16:22Oh, I oh, I see. But why didn't it work though? You said he was full time and you moved him part to part time.

Seva Ustinov

16:31>> I feel like with current cash on hand, it's a little bit too too expensive.

16:39>> So this is why we try a little bit different strategy. And at the same time well, we started with the test period with with that sales rep. And

16:53>> actually, he found another job at that same time and closed his first deals. So now he's working, like, part time for for us. I'm continuing that, and this works best for all of us.

Nathan Latka

17:06That makes sense. Talk to me real quick before we wrap about equity. Do you have a cofounder, or are you sole founder?

Famous Five and Closing

Seva Ustinov

17:13>> I'm I have a co founder, but I'm the one responsible for managing and growing this business.

Nathan Latka

17:22So do you you own more than 70% of the company?

Seva Ustinov

17:29>> So I have a partner, and we have several businesses, but each of one is responsible for one of them. We have fifty fifty in all of those businesses. This one is just my responsibility.

Nathan Latka

17:41I see. I see. That makes sense. On that note, Seva, we're rooting for you. Let's wrap up here with the famous five. Number one, what's your favorite business book?

Seva Ustinov

17:51>> Good to Great by Jim Collins.

Nathan Latka

17:53Number two, is there a CEO you're following or studying?

Seva Ustinov

17:58>> Andre Husseid, the founder of Miro.

Nathan Latka

18:03Number three, what's your favorite online tool for building ellyanalytics?

Seva Ustinov

18:12>> Google Sheets, basically even that.

Nathan Latka

18:16Number four, how many hours of sleep do get every night?

Seva Ustinov

18:22>> Six to nine.

Nathan Latka

18:23Okay. And what's your situation? Married, single, kids?

18:27>> Single.

18:27Okay.

18:28No kids. And how old are you?

Seva Ustinov

18:31>> 36.

18:32>> 36. Last question.

Nathan Latka

18:34What's something you wish you knew when you were 20 years old?

Seva Ustinov

18:42>> That the world is really big and I can explore it and find the best place to live and best opportunities for me.

Nathan Latka

18:51Guys, ellyanalytics dot com is your omnichannel, your single source of truth for omnichannel attribution. He built a 100 person agency and then spun out ellyanalytics, a software company in 2018. They're doing $50,000.05 0, a month today in revenue up from $25,000 a month just a year ago. So a nice growth rate. They raised $360,000 in pre seed funding last year at a 5,300,000 post money valuation. They still have about 150,000 of cash in the bank. Net

19:18burn is 25,000 per month. So four to six months of runway, but Seva said that they are growing nicely, which they are adding on new customers. Today, they've got 30 customers paying on average $20,000 per year as they look to scale north of a million dollar run rate here in 2023. Seva, thanks for taking us to the top.

Seva Ustinov

19:36>> Thanks for having me.

Nathan Latka

19:38One 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, one

20:02pm 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

20:25big fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you wanna take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You wanna 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

20:47for 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, but I do it so that we can all learn. We have to counter those people. We

21:06got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. All right. I'll be in the comments. See you.