How MiniHotel SaaS Hit $1.3M ARR with 1,400 Customers While Staying Bootstrapped Since 2007 (Interview with CEO Yuval Shtokhamer)

Introduction and Company Overview

Nathan Latka

00:00Guys, minihotel.io got going in Israel in 2006, 2007, father son team. Today, they're doing a million 3 in annualized revenue up from a million a year ago. They've done this all bootstrapped. They own 100% of the business, which they love. They just turned out a 6x multiple. So call it like a $67,000,000 offer. They want to stay focused, keep building. They're focused on serving these 1,400 smaller hotel chains or folks managing vacation rentals that each pay

00:21$85 per month. So very distributed customer base, which they love adding 40 new customers per month, mainly through $4,000 a month in paid ad spend and other sites like Capterra as they continue to scale. Hey folks, my guest today is Yuval Shtokhamer. He is a ITT and cloud admin started minihotel SaaS with his dad in 2007, has been leading the company operations since 2020. It's a hospitality SaaS. You can find it at minihotel.io. Yuval, are ready

00:47to take us to the top?

Yuval Shtokhamer

00:49>> Good noon and back.

Nathan Latka

00:50Alright. Very cool. So what what is minihotel? Is it pure play SaaS?

What MiniHotel Does and Who It Serves

Yuval Shtokhamer

00:54>> Yeah. It's a pure SaaS, the classic SaaS for hospitality businesses, mainly low market.

Nathan Latka

01:01Okay. So when you say more than 1,400 hotels in 70 countries use you, that means 1,400 hostels, hotels, etcetera, use you to manage

Yuval Shtokhamer

01:09>> It's mainly mainly small hotels, guest houses, vacation rentals, hostels, guest houses, these kind of, businesses, a lot of the moms and pops Mhmm. Of the world of hospitality. And we have some four and five stars, but mostly it's not our expertise. Our expertise is like zero to two star hotels, mainly vacation rentals. This is where we excel, you know.

Nathan Latka

01:38And Yuval, what do these companies, these hotels pay you on average per month or per year to use the tech?

Pricing and ARPU

Yuval Shtokhamer

01:44>> Currently, it's around $85 per month. When we started back in 2007, it was higher, you know, and the monthly average price per hotel dropped since then, because we focused more on the low market as we went, you know, as we as we evolved, you know, and more focused because we started in Israel, mainly in Israel and later on in Argentina. And we work with bigger hotels, you know, like the three stars or in Israel, it was

02:19>> more boutiques, you know, but as time passed by, we decided to focus more on the low market and more like international global markets, you know, so we have clients in 70 countries today.

Customer Count and ARR

Nathan Latka

02:35And how many paying customers total?

Yuval Shtokhamer

02:38>> It's like on our side, it's around, it's around 1,400 something like that. Yeah.

Nathan Latka

02:46You've all kind of take the 1,400 times 85 a month dollars, you're doing about 120,000 a month in revenue?

Yuval Shtokhamer

02:53>> It's around, we are almost 1,300,000

02:59>> ARR USD.

Nathan Latka

03:00Okay, yeah. So that again, that'd be about 120,000 a month in revenue. Where were you exactly one year ago so we can calculate growth rate?

Yuval Shtokhamer

03:07>> We were about 1,000,000.

Nathan Latka

03:09Okay. It's about 83,000 a year ago. And have you guys bootstrapped the business? Or did you decide to raise capital?

Bootstrapped Since 2007

Yuval Shtokhamer

03:16>> Bootstrap $0 since 2007.

Nathan Latka

03:20That's amazing. So you and your dad own 100% of the company?

Yuval Shtokhamer

03:23>> Yeah, yeah, that's right.

Nathan Latka

03:24That's awesome. So I guess how a lot of people go, well, Yuval, he cheated. His dad started and like, sort of he jumped in. What would you say to that?

Yuval Shtokhamer

03:35>> You mean about the bootstrap referring to the bootstrap?

Founder Equity Split Between Father and Son

Nathan Latka

03:38Well, how like you're like, how much of the blood, sweat and tears did you really put it into it versus just sort of took it over from your dad? How would you, how do you think about that?

Yuval Shtokhamer

03:46>> No, firstly, my dad is still in the business, firstly, and I'm not a kid myself, you know, my father is like 65 and I'm 40 years old. So, when I started, I was 24, you know, and I really like, we started it both of us. Before that, we we were both like, employees for hire. He was a CTO and I was working in the same company. We worked with, the larger, the bigger hotels in Israel, like

04:14>> the four and five stars. And, I actually, I was working in that company a little bit after him. He was working there, like, two decades, you know, and he was the CTO over there. And I'm an IT and cloud expert. And I used to code a little bit in high school, but my father is the real genius. He's a So I mean,

Nathan Latka

04:35do you negotiate equity with your dad? How much equity do you own versus him?

Yuval Shtokhamer

04:38>> Firstly, we started the business together, but he started in 2006 when he was just making the MVP alone. So when we launched in 2007, I started partial time. And later on, I joined into full time, but it basically was it for the two of us together, you know, started the business. But because he was there, like, one or two years before me is like 60% right now, and I'm 40%. I see. Which is fair, which is

05:06>> we're we're not we don't have fights about that. Fight about other stuff, but not

05:11Like what? What do

05:11>> you fight about? Like, product, you know, and how to run the company, how to hire, you know, the daily daily stuff.

Nathan Latka

05:21Oh, 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

05:45your 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

06:09get 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

06:31not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders 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

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Team Size and Office Locations

Nathan Latka

07:45the interview. How many folks are on the team today full time?

Yuval Shtokhamer

07:49>> We are we have 25 people hired directly and full time in three offices, and we have, like, four or five more always, like, in the partial time. So it's almost right now, 30 employees with us together. It's 30

Nathan Latka

08:08employees. Many people argue right now where macro conditions macroeconomic conditions are not favorable for startups. How are you sort of managing to make sure you're sustainable? Are you profitable today?

Profitability History and 2022 Investment

Yuval Shtokhamer

08:18>> Yeah, we are like, since we started the business, we were profitable all years since 2007 till now, except for 2022. Because in 2022, we had

08:32>> investment of our own funds, and we opened up a new office in Serbia, you know, joining our two other offices. We have one office in Israel. We have only six people in Israel because it's, you know, it's expensive to hire here, you know, it's almost like The US, you know, so

Nathan Latka

08:49How much does a does a senior engineer cost in Israel today?

Yuval Shtokhamer

08:52>> It's around like

08:56>> most senior ones take around maybe between 15 and $20,000 per month. You know, so it's stiff. It's stiff for us. It's stiff. My father is an engineer himself, but we have other like foreign engineers in Argentina, directly hired because we have three companies. We have the company here in Israel, and we have another one in Argentina and another one in Serbia. So it's three entities that we have locally. They're all

Nathan Latka

09:24wholly owned subsidiaries of minihotel, right?

Yuval Shtokhamer

09:27>> Yeah. Yeah. And all of them are directly hired and managed by us, all the employees. And it's quite nice because in Serbia and Argentina, we can afford ourselves to hire more.

Nathan Latka

09:40How much did a Serbia office cost to build?

Yuval Shtokhamer

09:44>> You're talking about, like, not the people, the the hiring of the place itself, the office. Just because it's it's just all the money.

09:53What did it cost?

09:53>> There's a story to it. I mean, to the office and how how cheap it is, basically.

Nathan Latka

09:58Because So Yuval, sorry, just to be clear, you said you weren't profitable in 2022 because you made significant investments in, quote, openings

Yuval Shtokhamer

10:04>> Oh yeah, so we all because we hired five people in the office, you know, so altogether we invested like around maybe, more than 1,000 k. For us, it's it's a lot of money, you know, of our own pockets. You know?

Nathan Latka

10:201,000. So a million dollars?

Yuval Shtokhamer

10:23>> No. No. I I mean, all year round, all 2022, we had more than 100 ks of our own money. We invested just to open up, to advertise, to hire people, to find the office.

10:42>> But right now we have a very nice office over there with five people. We have our six people in Israel and we have 14 people in Argentina. And these are the ones directly hired. You know, and we have some more in Argentina that we, sometimes they like they are partial. So it's all together 30 employees.

Nathan Latka

11:03Understood. Moving forward here. So, what's the plan for the business? You know, how do you plan to get 1,400 more customers?

Growth Plan and Customer Acquisition

Yuval Shtokhamer

11:11>> Firstly, right now, COVID, actually, we've done quite a pivot because we were firstly working with legacy products and stack. And during COVID, we had time to pivot the business and to pivot both the strategy and the product. And we migrated into cloud. We migrated into Cloud and Browser since 2020, basically. And since 2021, we market only a new browser product, very nice, very top notch work. And since then, specifically, we add up around 40 clients per

11:54>> month. And where do you know,

Nathan Latka

11:56where do you find them? Tell me how you get the customer specifically.

Yuval Shtokhamer

12:00>> Right now we have this year, we have a lot of organic, but we have still a lot of paid ads in Google Ads and in Facebook Ads.

Nathan Latka

12:10How much total on paid ads did you spend in July of this year?

Paid Ads Spend and Keywords

Yuval Shtokhamer

12:14>> We spend around $4,000 per month.

12:19Okay.

12:19>> For paid, just for paid ads. I mean, that's less

Nathan Latka

12:23than 2% though of your total revenue. That's very small.

Yuval Shtokhamer

12:26>> Yeah, yeah, yeah. We are quite efficient. We are quite efficient and we get thousands of leads, you know, so basically

Nathan Latka

12:35What's a keyword that you would run this paid ad against?

Yuval Shtokhamer

12:38>> Hotel management software, hospitality software, PMS, because our specific business is called PMS, property management system. For example, you have Opel Cloud, you know, by Opel in our business, you have Cloudbeds.

Nathan Latka

12:52Are you specifically, I was gonna say Yuval, are you specific, like when I do hotel management software, Capterra dominates that spot, Cloudbeds and

Yuval Shtokhamer

12:59>> We are on Capterra as well. We are

Nathan Latka

13:01on Captera. Got it. If I could just finish my statement here. So there's life house Cloudbeds and Captera. So my question to you is, are you specifically targeting only a certain geo when they search hotel management software in Google?

Yuval Shtokhamer

13:12>> Yeah, right now we cannot target like all the world, although we have clients in 70 countries right now, but we are targeting by tiers. So we have like a second like tier two, for example, it can be the emerging markets and countries like it can be Philippines, it can be Hungary, etc. And we have like a tier, this is only for the EU, for example, EU countries. And basically we have IP based pricing. So if you

13:42>> get from Tanzania, for example, or from Morocco or from US or from UK, you will get different pricing, different currency as well.

Nathan Latka

13:52Yuval, on Capterra, Cloudbeds has three zero six reviews, Host Away has six thirty five, Think Reservations has 111 and others have hundreds. You guys are at, I guess, 21 right now against your 14 Is 100 Capterra main channel for you? Do you get a lot of customers from Capterra?

Yuval Shtokhamer

14:07>> Yeah. We get more clients recently from Capterra and definitely we can see clients in the survey that we have saying they got from Capterra. Yeah.

Nathan Latka

14:15So why do we invest time capturing reviews there? You only have 21 reviews. If that's working, why not go get a 100 reviews so you can rank above host Something

Yuval Shtokhamer

14:23>> that we just started working on. So it's definitely at work.

Nathan Latka

14:27I see. How do you ask how do you ask a customer for a rodeo on Capterra? What's this what's the channel you use? Email? And if so, what's the email say?

Yuval Shtokhamer

14:34>> No, our own guys in the support team, when they end the call, they ask clients, especially the ones that are mostly they're happy, but the ones they have a good vibe, they ask them, maybe you can, put a good review for us, you know, and mostly they are happy to do it because the clients are mostly happy.

Nathan Latka

14:54Where else are you getting customers? So you have paid ads four ks month, Capterra, where else?

Word-of-Mouth, Capterra, and Localization

Yuval Shtokhamer

14:59>> Word-of-mouth is very strong and it's getting strong this year specifically. We see a lot of numbers in countries that we never imagined, you know, people from Philippines, Hungary, Czech Republic, it's all over. We get good traction right now. One big advantage for us that even our funded competitors don't do is that we are very much localized. Who's your biggest

Nathan Latka

15:23two competitors?

Yuval Shtokhamer

15:26>> Cloudbeds, Room Raccoon, Muse also. We have, although we are not funded and we are a small company, we have a lot of advantages, you know. We have invoicing, for example, already in more than 50 countries. So when you make, like, when you're in the reception making the accounts, making the invoice from the client, it's transmitted to the government. Yep. It's not just a paper.

Nathan Latka

15:51Understood Yuval. How many sorry to cut you off. We're just short on time. Of the 25 on your team today, how many are engineers?

Yuval Shtokhamer

15:58>> We have including my dad, it's five engineers.

Nathan Latka

16:01Okay. Five engineers. And and if someone came to you guys and offered you a five x multiple all cash upfront to acquire the company, would you sell?

Yuval Shtokhamer

16:09>> We already got we get like one offer per month organically, and we declined like a six x multiple recently. And So what was the

Competitors and Differentiation

Nathan Latka

16:19total what was the total value of that offer at a six x multiple?

Yuval Shtokhamer

16:23>> It was it was I can tell you, it was around we just talked multiples, you know, back then we were 1.2, so it was between 7 and $8,000,000.

Nathan Latka

16:38And was it all cash up front?

Yuval Shtokhamer

16:41>> We didn't negotiate the terms yet. I

Nathan Latka

16:43just So did did

16:44>> you when you

16:44so when you when you say you declined the offer, was there any

Yuval Shtokhamer

16:46>> There was no letter of real There was no letter of intent, just a few Zoom meetings. And sometimes, mostly, we get, like after the first meeting, we filter out those. We are not seeking to sell or anything, but we do hear out people that approach us. And if there is a very good multiple for a secondary deal, we can hear them out, you know? So we are not saying no

Nathan Latka

17:12to why didn't anyone. Why didn't this group? You liked them enough to take the Zoom call, but they didn't give you a term sheet. Why didn't they give you an LOI or a term sheet?

Yuval Shtokhamer

17:17>> Because we declined when they say, smooth six six. We didn't want six six. We are growing right now, and we

Nathan Latka

17:26What what do you think you're worth today, Yuval?

Yuval Shtokhamer

17:30>> I in my head, it's at least $15,000,000.

CAC and Payback Period

Nathan Latka

17:35Okay, so something like a like a ten eleven x 12 x multiple something

Yuval Shtokhamer

17:39>> like that. Of course, we can wait and grow the company because we love working in our own company and we are growing and we add up 40 clients per month. And we have automated tools that help us add up a lot of clients with low CAC and quite fast, you know.

Nathan Latka

17:55What is your CAC A

Churn Discussion

Yuval Shtokhamer

17:57>> client mostly costs us around 300 or $400 to implement because we have automated tools that are helping us. Wizards, for example, that the seller or the hotelier sometimes he can self serve himself.

Nathan Latka

18:12Yuval, just to be clear, you spent $400 to get an $85 month customer, so you have like a five month payback period.

Yuval Shtokhamer

18:18>> Something like that. Yeah.

Nathan Latka

18:19What about churn?

Yuval Shtokhamer

18:20>> It depends. Our churn is quite low for us.

Nathan Latka

18:23It's low

Yuval Shtokhamer

18:24>> than 3%.

Nathan Latka

18:253% per month?

Yuval Shtokhamer

18:29>> It's the same, right? It's a percent. It can be the same for one month or per year,

Nathan Latka

18:33but No. It's very different. If you turn 3% per month, then you're turning 36% No.

Yuval Shtokhamer

18:37>> I'm talking yearly. I'm talking yearly.

Nathan Latka

18:39You turn 3%. So you're turning under 0.5% of your revenue per month.

Yuval Shtokhamer

18:45>> Yeah, we don't have a lot of clients leaving. Sorry, are

Nathan Latka

18:48you sure that that's accurate? You're

Yuval Shtokhamer

18:51>> churning We less than add around 40 clients per month.

Nathan Latka

18:54Yeah, but customers you add. Churn has to do with your current customer rates and do any of them downgrade their revenue or cancel things?

Yuval Shtokhamer

19:01>> We don't have more than one client per month leaving us, basically.

Nathan Latka

19:06Well, a client doesn't have to leave you to count as churn. They can downgrade from a bigger plan to a smaller plan. That's still churn.

Yuval Shtokhamer

19:11>> My question We don't have bigger or small plans. We just have a plan by the size of the hotel.

Nathan Latka

19:17Okay, so just to be clear, I mean, these kinds of things go out of business all the time, I would imagine just the failure rate on the business, ignore your software is much greater than 3% per year. How do you have under three? I just don't understand I have under 3% per

Yuval Shtokhamer

19:28>> year The product is very sticky.

Nathan Latka

19:31But it doesn't matter Yuval, if the company goes out of business, they're not going to pay you no matter how sticky you are.

19:37I mean, how did you make a bunch of these companies went dead during COVID, when no one was booking hotels? I mean, the hostels went underwater. I was an investor in a hostel, went underwater during COVID.

Yuval Shtokhamer

19:45>> Our clients were, during COVID, we had 50% drop in our revenue, but the clients came through it and 90 plus percent of them stayed, basically. And we have a very sticky product and very, very good support team. And we are working since 2007. We know the business. I mean, this business is twenty years.

Famous Five and Wrap-Up

Nathan Latka

20:07Yuval, I'm not saying you don't know the business, but I don't believe that this industry, not your company, this industry, I don't believe that has 3% annual churn. Just like this, I think so the survivor rate is under that just on the hostile business overall, but maybe I'm wrong. I don't know. Maybe you see something different in your data. Anyways, we're out of time on this one. I love what you guys built. I love I love

Yuval Shtokhamer

20:25that you

20:25>> Yeah. I mean, it just yeah. Just on

20:29Go ahead.

20:29>> No. About churn, if I take a 3% for, I don't know, 20 1,200 clients that we have, for example, it's like 30 something clients living

Nathan Latka

20:39Yuval, I'm asking about dollar churn.

Yuval Shtokhamer

20:43>> Oh, I see. No. I cannot calculate it because I in my head, it's by clients. It's not by dollars, but I can get back to you about that number.

Nathan Latka

20:52No, no, it's okay. It's okay.

Yuval Shtokhamer

20:53>> It's 20 or 30 clients per year, which is like in clients, it's basically less than 3%.

Nathan Latka

20:59Yeah. Yeah. But if it's your biggest 30 clients, the revenue churn could be much higher than

Yuval Shtokhamer

21:03>> three We don't have big or smaller clients. This is the nice.

Nathan Latka

21:07So if someone runs that if someone runs a hostel with 800 beds, they're gonna pay the same as a hostel with five beds? No, but most most of our clients So then you have bigger and smaller?

Yuval Shtokhamer

21:16>> No, no, no, most of our clients don't go over 70 rooms. Most of our clients are less than 50 rooms.

Nathan Latka

21:22If someone has a bonus, you've also someone's

Yuval Shtokhamer

21:24>> paying you

Nathan Latka

21:26for 50 homes, someone else is paying you for two homes, you're going to charge them both the same rate.

Yuval Shtokhamer

21:31>> No, but But then you have

Nathan Latka

21:33bigger clients and smaller clients.

Yuval Shtokhamer

21:35>> No, but again, but most of our clients are less than 70 rooms, and they are paying between 80 and 100 and $80

Nathan Latka

21:43What's their large don't name the customer, what's your largest customer pay you per month?

Yuval Shtokhamer

21:47>> Around $400.

Nathan Latka

21:49Okay. Got it. Okay. Yeah. So you are it's pretty very low customer.

Yuval Shtokhamer

21:51>> Yeah. It's quite homogenous. This is what I'm trying to say.

Nathan Latka

21:54Understand. Live

Yuval Shtokhamer

21:55>> we live our business. It's in our blood.

Nathan Latka

21:58Yep. Understood. Yeah. Alright. We're out of time. Let's wrap up here with the famous five. Number one, your favorite favorite book.

Yuval Shtokhamer

22:03>> What got you hurt won't get you there?

Nathan Latka

22:06Number two, is there a CEO you're following or studying?

Yuval Shtokhamer

22:08>> Brian Chesky.

Nathan Latka

22:09Number three, what's your favorite online tool for building the company?

Yuval Shtokhamer

22:13>> Google Calendar.

Nathan Latka

22:15Number four, hours of sleep.

Yuval Shtokhamer

22:16>> Six.

Nathan Latka

22:17That's pretty good situation married, single kids?

Yuval Shtokhamer

22:20>> Married, two kids.

Nathan Latka

22:21That's awesome. And you're 40 you said, right?

Yuval Shtokhamer

22:23>> Yeah.

Nathan Latka

22:24Last question, something you wish you knew when you were 20 years old.

Yuval Shtokhamer

22:28>> I would say aim bigger. I was too modest then.

Nathan Latka

22:32Guys, minihotel.io got going in Israel in 2006, 2007, father son team. Today they're doing a million 3 in annualized revenue up from a million a year ago. They've done this all bootstrapped. They own 100% of the business, which they love. They just turned out a 6x multiple. So call it like a $67,000,000 offer. They want to stay focused, keep building. They're focused on serving these 1,400 smaller hotel chains or folks managing vacation rentals that each pay

22:53$85 per month. So very distributed customer base, which they love adding 40 new customers per month, mainly through $4,000 a month in paid ad spend and other sites like Capterra as they continue to scale. Yuval, thanks for taking us to the top.

Yuval Shtokhamer

23:04>> Thank you very much. It's been great.

Nathan Latka

23:07One 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

23:32Central. 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

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24:16up 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, but I do it so that we can all learn. We have to counter those people.

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