How Lemlist Hit $40M ARR and Acquired Clap for $25M in 2025 (Interview with CEO Charles Tenot)

Intro and Deal Overview

Nathan Latka

00:00Alright, guys. It's here Tuesday, October 21. I just recorded with Charles yesterday. He just signed a $25,000,000 deal at Lemlist to acquire a company called Flap. What I love about what he did is it wasn't your traditional deal structure. If you don't dig into the 25,000,000, you'll never know how creative you can get to buy other smaller companies to drive with all your inorganic growth. Lemlist is now doing over $40,000,000 of revenue. I bet you they

00:22break a 100,000,000 by the end of twenty twenty eight with Charles'leadership and Guillaume, the original part of the co founding crew and his product led growth is just founder stories on LinkedIn. But the way they did the deal is it was a basically $10,000,000 plus some convertible bonds for the founders at close of that, you know, $1,015,000,000. 5,000,000 was cash. 5,000,000 was basically claps saying, okay, Lemlist. We'll give you a $5,000,000 loan. You can pay

00:45us back over time at a 3.5% interest rate, but we'll defer for two years. Right? So it's a cool way for the founders to get more money over time. And then the second part of the of the $25,000,000 deal structure, the last 15,000,000 is earn out for the clap founders. If they stick with Lemlist and they grow up from $2,000,000 to $10,000,000 of ARR over the next three years. So before December 2020, it'll earn that extra

01:0615,000,000 to get that total deal headline rate of $25,000,000. Really creative deal structure. This one's a really good episode. Let's jump in here.

What Lemlist Does and the Clap Announcement

Nathan Latka

01:14>> Alright, folks. Special guest today. I'm here with Charles to know. He's the CEO of Lemlist and Lempire. As you know, we've had the c Guillaume, the founder and other product experience folks from Lemlist speak at our events and on the podcast. Charles is leading the business into a new era. That's the post $40,000,000 ARR era, and that starts with a big acquisition that they're doing today. We're recording this here Monday, October 20. I think the acquisition

01:36>> also happened today. Charles, tell us what's going on, and maybe for those that don't know what Lemlist is, tell us what the business is first and then why this acquisition made sense.

Charles Tenot

01:45Yeah. First of all, thanks a lot, Nathan, for having me. It's a pleasure. And yeah. So we we are having a very exciting journey at Lemlist because we are growing very fast and reached 40,000,000 ARR, as you mentioned. So Lemlist is a sales engagement platform. Basically, we help salespeople, to do outbound. So we help them, like, to find leads, to find their phone numbers and, and and emails, and then to engage on multichannel. So we support

02:14many different channels, so you cannot reach on email, you cannot reach on LinkedIn, through WhatsApp, through phone. So we try to be the platform that has the most capabilities in terms of engagement. And, yeah, Lemlist, hopefully, it's not done with AWS outage today. You're good. I already checked. We're good. But Clap Clap is actually done, so that's that's for the fun part because because of AWS, I guess. And and, we we just acquired Clap, which is

What Clap Does: Conversation Intelligence Platform

Charles Tenot

02:42a call intelligence platform. So Clap is basically very an AI product that allows every sales rep to record their call and to generate high quality transcript in any language. And the idea of this transcript is to do multiple things, such as automatically get coaching and insight on the call, so help sales improve, but it can help to auto fill the CRM. So avoiding to manually fill the CRM, it prepares the notes that you can integrate in

03:11the CRM or directly to the different fields that you want to fill in. And it helps for, of course, sales coaching, sales enablement, and many different use cases that you can decide. So that's a very, let's say, case extensive product where you can have a lot of fun building like multi use case around the transcripts, and we're seeing like many people use it for that.

Nathan Latka

03:37>> And and so this is just to be clear, this is really officially moving Lemlist from sort of maybe email marketing, outreach automation tool. You're really moving into the sort of the granola, Fathom, you know, call recording, you know, Cluely, whatever's left of Cluely, right, space. Is this How did you decide that Clap was the right company to go after? Did you use Lemlist, say, you know what, we know we wanna get into this space, and then

03:56>> it was, do we build it or buy? Here's a list of who we could acquire. Or is this something where, like, you're buddy buddy with the founder, you go back thirty, you know, twenty years, you're not that old, and you say, let's just do a deal together.

Why Lemlist Acquired Clap: Product Love and Profit

Charles Tenot

04:07Yeah. So it's it's always a mix of things. The the general idea that so we were user of Clap, and we love the product. We've been using many different products. And one day, I tried Clap, and I really fell in love with the product. And naturally, all the team adopted Clap, and the sales are using Clap every day. And so that was kind of like, let's say, the the starting point where we started to realize that

04:29the product was very good. And beside this, we're profit making at Lemnist. We do around EUR 10,000,000 profit every year. So we always want to invest in more growth and better product for users. So that was another driver. And the last part is really that we saw very good combination because Clap is selling to exactly the same people as we target. So sales team from three to 50 reps, sometimes a bit more. And they have the

04:58same kind of ACV. They have the same like champions, which are rev ops, business ops or sales managers. And we saw a very strong potential in what they get from the conversation. So the conversation is like unused in many in many companies, so it's a lost asset. But if you use the conversation, you find lots of valuable thing for sales. And one of the thing is what I called internal signal, internal intent. And at Lendlease, we're

05:25really trying to make outreach better and smarter. And doing it to make it smarter, you need to have good intents to reach out to the right person at the right time. And in the conversation, actually, you have a lot of very interesting insights that you can use through outreach. I give you an example, which I gave on my post, but at my previous company, I was CRO. And basically, like my sales were calling all day, and

05:50they were not taking any notes. So basically, the CRM was was empty. And because the sales turnover is high, so you replace your sales rep all the time. And because you have no notes, three months after, six months after, when you give the account to another rep, which happens when you are kind of mature, the the rep calls with absolutely no information, nothing on the account. But if you have something like Clap, you have all the

06:11history of the of the discussion that you had with the account, you have intelligence. And you can use this intelligence to prepare your next call. So instead of calling out of the blue with no idea on on the previous calls, you will call and, for instance, you will know that the the manager is called Eric, that they have three point of sales, and they are opening a fourth one, and they have this type of seasonality. And

06:32so you start the conversation with much more intelligence than if you start from those things. That for me, all of that is is just an example, but in the conversation that are not used in most company, you have a lot of intelligence that you can use to improve prospection and and outreach. And this is the idea of combining CLAP and and Lemnist.

Clap's Revenue, Team Size, and Growth Rate

Nathan Latka

06:50>> Yeah. This makes tons of sense. So start off as you guys are a power user, it makes a lot of sense with your audience. You go out, you get the deal done. What was or what is Clap's revenue?

Charles Tenot

06:59It's roughly 2,000,000 AR.

Nathan Latka

07:01>> Okay. Got it. And were they bootstrapped or they raised a bunch?

Charles Tenot

07:05No. They raised the seeds a few years ago initially to do async work, and they they they were not able to build the category because it was like, yeah, doing clip video for async work. And they pivot to conversation intelligence a year and a half ago, and grew this product to 2,000,000 ARR and kind of very fast growing, like recently, about 10% month over month. And so they had they had raised the seed, but now they

07:34were like almost breakeven. They were they were they were breakeven in terms of cash right now.

Nathan Latka

07:38>> And how many folks were on their team full time?

Charles Tenot

07:41Seven.

Nathan Latka

07:42>> Okay. That's amazing. That's great. And and Yeah. What you Yeah.

Charles Tenot

07:47You'll be shocked if you tried the product. If you tried the product, tell me, and tell me honestly. But to be honest, everyone who has tried the product was shocked when they knew that it was only seven people. And it's one of the reasons why we bought Clapp. It's because they have a very strong tech end product DNA, and they lack a bit of distribution, which we are good at, at Lemlist. So for us, it's a

Distribution Gap and Strategic Rationale

Charles Tenot

08:06product that was under distributed in terms of potential. It's a product that is much better than the 2,000,000 ARR product. It's a it's certainly at the level of a 20,000,000 ARR product, and the idea is that we can catch up on that and and help and use, like, our Lemmy's customer base and the audience to grow Clap, and so we're very bullish.

Nathan Latka

08:25>> Yeah. Yeah. And what so I wanna dive so the distribution, by the way, looks like most of their traffic organic comes from the blog. You guys obviously run really good playbooks. We had we had Kevin actually from your team come teach us at one of our events, and obviously, we go through, you know, how how you guys run your founder playbooks. You obviously have your all kinds of gold community courses. I mean, you guys name it.

08:45>> You guys do it. Product hunt launches. You've also done a bunch of these deals before. You know, you build many free tools, right, as as lead gen. Can you tell me more about how the deal went done? When did you guys first reach out to the Clap team to actually talk about, hey, we would love to buy you guys?

How the Deal Came Together: Founder Outreach in May

Charles Tenot

08:59Yeah. I reached out to Robin, the CEO in May, just randomly, and I I didn't know him. I just said, hey, I love your product. I've been using it for for one year. Would you be open to sell? He told me that it was not on his plate. It was not a project right now, but he will think of it. And then we had a few follow-up meetings where I explained to him like the vision of

09:20like building a world class sales platform that is like very product and tech driven, that we have the same DNA, that there will be a lot of synergies by integrating their intelligence and their conversation insights in Lemlist. And so he yes, slowly he bought the vision, I guess, and he wanted to do a competitive deal. So he tried to find other buyers to see what type of price he could get. So we've been facing like two

Competitive Process and Culture Fit

Charles Tenot

09:45players, including one leading AI platform in France, like much bigger than us. And ultimately, made the difference, it's not really the price because we bid slightly less. It's more the fit with the product and the team. So they were convinced that we have very good synergies and that we can build something great together. So that's that's my learning that M and A is more about relationship and people than than really strategy, to be honest.

Nathan Latka

10:11>> And Charles, what did you guys end up bidding?

Deal Structure: Cash, Vendor Loan, and Convertible Bonds

Charles Tenot

10:14So the price is between $15,000,000 and $25,000,000, but there are some components that are earn out parts, so it depends on future growth. But basically, we paid around EUR 15,000,000 right now and with add on price if they reach revenue targets.

Nathan Latka

10:33>> And the EUR 15,000,000 sort of deal value at close today, it's you're announcing this today basically, How much of that was, immediate cash versus an escrow for, know, two years?

Charles Tenot

10:42Yeah. It's a it's a mix. It's $50.50, but it's not an escrow. It's a vendor loan. So it's basically like deferred cash. Yeah. It's just basically it's a debt, but instead of getting the debt from a financial institution, you get the debt from the vendor. So basically, they get deferred cash. But they get they get they will get the cash

Nathan Latka

11:00>> just deferred. They they're effectively they're effectively giving Lemlist an 8,500,000 or a $7,500,000 loan, then you pay them back over time.

Charles Tenot

11:08Yeah. Exactly.

Nathan Latka

11:10>> Yep. Okay. So the all in cash consideration for Lemlist, like here at close, is basically around $78,000,000 cash, which is equal to three or four x their current ARR. Is that accurate?

Charles Tenot

11:20Yeah. It's it's it's slightly lower because there is a small part that is in convertible bonds for the funders. So the deal structure is slightly more complex because we wanted the funders to be incentivized in future Lampire value or Lampire value. And so they have they have some part of the price, which is like convertible bonds. So basically, they have like bonds that gives a, yeah, fee, and again, this bond into shares into some scenarios.

Nathan Latka

11:50>> Charles, this is interesting. People don't get in the weeds, and very few companies build in public quite like you do. So thank you first for your transparency. It's educating the entire audience, but let's act like I was one of the cofounders of Clap, just to understand here. You're saying, okay Nathan, handshake, we've got a deal. It's 15,000,000, 7,500,000 will be on this sort of loan, right? We'll pay you back, you know, Lemlist will pay Clap that

12:09>> $7,500,000 loan over time, and then additional Nathan, founder, we really want you to stay at Lemlist and build together. Here's a bond. What does that sound like? Does it say, Nathan, here's a $2,000,000 bond with a 3% interest rate, and you can convert it to Lemlist equity at a $200,000,000 valuation whenever you want, or how does it actually work?

Charles Tenot

12:26Yeah, so the precise number, I don't think that's always helpful, but it's like let's say let's give you an over idea. It's like I give you 5,000,000 in cash. I give you 5,000,000 it's it's not the exact exact amount, that's close to the exact amount. Example. I give you I give you 5,000,000 in vendor loans. So meaning I give you 5,000,000 cash now that you can split between investors and and your team. Then I give you

12:495,000,000 in loan, meaning that I will give you the 5,000,000 for sure, but I will just give it through time. So it it gives me time to generate more cash myself to to pay you back. And then I will give you convertible bonds. So that's worth like that's let's say that 2,000,000 of like worth of Lampire share. So let's say anything happen, any liquidity event happen, you can buy 2 millions of share. You can you will

13:16add 2 millions of share on this deal with a discount. So the discount is like 20% to 30%. So let's say that you have 20% discount. So it means that you will get the 2,000,000 share, but you will buy them at 20% discount. So if there is a sale or partial sale of the asset, then you get an upside, you get your 2,000,000 plus 20% of upside naturally, plus the eventual capital gain that there was from

Earn-Out Structure and $10M ARR Target

Charles Tenot

13:39the time you purchased to now. And Charles, to look

Nathan Latka

13:44>> at the capital gain, you know, what are you seeing the valuation out of Lemlist today?

Charles Tenot

13:47We we don't set the valuation. We don't need to set the valuation. We don't know, to be honest. Like, you don't need to set the valuation because you convert the bonds at the time that there is an operation, you know. The the 2,000,000 worth It's was a

14:0020%.

Nathan Latka

14:02>> Okay. Got it. So

Charles Tenot

14:03Yeah. Sorry. I I was not really clear maybe.

Nathan Latka

14:04>> $500,000,000, like, a year from, say, for $500,000,000. You're basically saying, okay, times point eight. Right? That's a 20 discount. Right? So that takes it down to 400,000,000, and then they can basically buy 2,000,000 worth of shares at that discount. So the gain is basically the extra 100,000,000, right, on a pro rata basis based off the shares they bought.

Charles Tenot

14:21Yeah. Exactly. It's 20%. It's always 20%. I see. Or or 25% or 30%, they don't. And and the last part that I didn't mention that can be helpful is is the earn out part. So the earn out structure is there is some earn out presence, so you have to stay to to just be here in the company to touch that, and it's a rather small amount. And it's shared between the founders. And you have performance earnouts

14:45that depends on AR milestone. For the last deal, we combined with EBITDA margin criteria. In this case, we didn't. But, yeah, basically, just you reach a milestone of AR, you get some money, and and the more and and it can go up to 10,000,000 AR. So time sink.

Lemlist ARR Growth Since Charles Joined

Nathan Latka

15:01>> That full to get that full $25,000,000 deal value, what does Clap's revenue have to grow to inside of Lemlist?

Charles Tenot

15:0810,000,000 ARR.

Nathan Latka

15:09>> Oh, I see. In what period of time?

Charles Tenot

15:12Three years.

Nathan Latka

15:13>> Three years. Super interesting.

Charles Tenot

15:14But we'll do we'll do in one.

Nathan Latka

15:18>> Interesting. Hey, this is really interesting. So is there anything else I should ask you about how you guys are considering and and thinking about additional growth? We know the bootstrap story, we know the secondary with Guillaume, we know the book, we know you come in, you're now leading, revenue's grown from, think, when you took over, you took over right around, like, 20,000,000 of revenue. Right? So you've almost already doubled revenue. Right?

Charles Tenot

15:35Yeah. Exactly. Yeah. I when I joined, Lemnis was at 15,000,000 precisely, and now Lemnis is at 36. And the the other Lampire products are at 4, so almost 5, so we are around 40.

Profit Margins, EBITDA Discipline, and Hiring Model

Charles Tenot

15:49So yeah, now we are exactly. That's accurate. We are at 40,000,000, a bit more now. And we are profitable. We try to remain around 25% to 35% of profit margin, just because we always try to invest in the team. So we hire more developers, product managers, sales to grow the company, but we always try to remain highly profitable. So our, let's say, threshold is like, we always want to be above 20% EBITDA, while we always invest

16:24in growth. So we just adapt let's say that the growth is slowing down, so we'll reduce hiring. And when the growth is faster, we'll accelerate hiring. And we keep managing the companies this way. So we do just a monthly EBITDA check. And with the profit we generate, the IDs the cash we generate yes, so basically, as we try to remain above 20% to 30% EBITDA margin, most of the time around 30%, We have then a positive

16:54cash flow. And with the positive cash flow, we try to invest in M and A deals. Yeah, because it creates more value for our end users ultimately, and we try to build the best platform.

Using Cash Flow for M and A

Nathan Latka

17:05>> Yep. Now this makes a ton of sense, and I appreciate you taking time with us. I told you I'd queue for fifteen minutes, so we're out of time today, but to summarize again, you guys are acquiring Clap, all in deal value of $25,000,000 if they can grow the revenue from 2,000,000, where to say 10,000,000 over time over the next three years, but cash consideration upfront, you've got 5,000,000 sort of cash, 5,000,000 vendor, right? So you're basically

Wrap-Up and Where to Find Clap

Nathan Latka

17:24>> they loaned you money, you pay it back to them over time. You have some convertible bonds at a 20% discount to whatever the valuation is if a transaction happens that the founders are incentivized with to stick around longer and then you got that earn out chunk where if they grow the revenue they get up $25,000,000. Lemlist continues to grow past $40,000,000 of revenue. Charles, if people wanna jump into the product experience and test you guys out

17:42>> with this new announcement, where can where can they find more about you online?

Charles Tenot

17:46So you can follow me on LinkedIn. They can try clap on clap.io. So unfortunately, the website is done. People say it's because of AWS, and I say it's because of the announcement that was so big that everything crashed at Webflow. So the website is unfortunately done, but we we have the stat, and we already have an all time high, like maybe 50 times the normal creation of Workspace. So we already see a big boom in the

18:11creation of Workspace creation of Clap accounts. So I hope that you guys can try it, and and give me feedback. If you if you like it, tell me that you liked it. If you don't like it, tell me what we can improve. Always good to get feedback and and make a better product for you guys.

Nathan Latka

18:24>> Alright. Charles, CEO of Lemmas, thanks for taking us to the top, man. Congratulations on the deal.

Charles Tenot

18:28Thanks so much for having me, Nathan. Take care.

Nathan Latka

18:31I'm only telling you this because you watched until the end. Deal or Bust is coming back. The first season got millions of views. I go into small towns in The US. I find the owners of SMBs. I ask about their revenue, and I make an investment offer on the spot. Episode one of season two launches next week here on YouTube. We've got 16 episodes coming out very quickly. Don't miss any of them. Click subscribe here on

18:53YouTube right now and click like on this video. Then leave a quick comment and just say deal or bust. That way I'll know you watch to the end, and you'll be one of my insiders here as we do more episodes. Maybe I'll ask you where we cast next, what kind of investment deals we'll do. Maybe we'll co invest together one day, but excited to show you that next week. Alright. See you guys.