StarZero All shows Try the podcast clipper →

Apr 4, 2021 · 17m · top-founders

He Makes $4m Selling Other Peoples Software, Inside The Head of A Power Reseller

Len Rio · 8m spoken Nathan Latka · 5m spoken Frank Bien · 4s spoken Eric Yuan · 4s spoken Vivek Bhaskaran · 2s spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this episode of Conversations with Nathan Latka, host Nathan Latka interviews Ativo Group founder Len Rio to explore how his bootstrapped value-added reseller business scaled to 3.8 million dollars in revenue by customizing and implementing SAP Business One ERP systems for mid-market manufacturers.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 36.6% of the talking time here. How this is scored →

Nathan as informed peer 5.4 Guest teaching 3.4 Guest disagreement 1.2 Nathan pushing back 3.4
05100:0010:001:31–3:55 · Nathan as informed peer 4/10 Introducing Len Rio and Ativo's ERP Solutions Latka opens by probing the ERP buyer profile and customer journey, noting that nobody enjoys buying ERP systems. Rio calmly lays out Ativo's ICP and the specific business headaches they solve for complex manufacturers.3:56–7:23 · Nathan as informed peer 6/10 Pricing Tiers, Seat Roles, and Early Origins in 1993 Latka drills into the business model, asking whether Ativo builds proprietary software or acts purely as a reseller. Rio clarifies that they are an SAP Business One value-added reseller that employs custom developers to adapt deployments.7:25–11:41 · Nathan as informed peer 7/10 Active Customer Scale, Revenue Metrics, and Referral Marketing Latka attempts to calculate top-line revenue by multiplying 240 customers by $20k average ACV to estimate nearly $5M. Rio corrects the calculation by explaining that many legacy accounts are on older perpetual maintenance agreements rather than subscription SaaS.11:41–14:45 · Nathan as informed peer 7/10 Exit Requirements, EBITDA Margins, and Customer Concentration Latka drills into valuation, profitability, and customer concentration, immediately pointing out the risk of a single customer paying $600k-$700k out of $3.6M revenue. Rio transparently agrees with the breakeven assessment and concentration hurdle.14:46–17:02 · Nathan as informed peer 3/10 Famous Five Rapid-Fire Questions with Len Rio Standard Famous Five sequence where Rio shares his sleep habits, favorite CEO, and key business advice before Latka provides an executive summary outro.1:31–3:55 · Guest teaching 3/10 Introducing Len Rio and Ativo's ERP Solutions Latka opens by probing the ERP buyer profile and customer journey, noting that nobody enjoys buying ERP systems. Rio calmly lays out Ativo's ICP and the specific business headaches they solve for complex manufacturers.3:56–7:23 · Guest teaching 4/10 Pricing Tiers, Seat Roles, and Early Origins in 1993 Latka drills into the business model, asking whether Ativo builds proprietary software or acts purely as a reseller. Rio clarifies that they are an SAP Business One value-added reseller that employs custom developers to adapt deployments.7:25–11:41 · Guest teaching 6/10 Active Customer Scale, Revenue Metrics, and Referral Marketing Latka attempts to calculate top-line revenue by multiplying 240 customers by $20k average ACV to estimate nearly $5M. Rio corrects the calculation by explaining that many legacy accounts are on older perpetual maintenance agreements rather than subscription SaaS.11:41–14:45 · Guest teaching 3/10 Exit Requirements, EBITDA Margins, and Customer Concentration Latka drills into valuation, profitability, and customer concentration, immediately pointing out the risk of a single customer paying $600k-$700k out of $3.6M revenue. Rio transparently agrees with the breakeven assessment and concentration hurdle.14:46–17:02 · Guest teaching 1/10 Famous Five Rapid-Fire Questions with Len Rio Standard Famous Five sequence where Rio shares his sleep habits, favorite CEO, and key business advice before Latka provides an executive summary outro.1:31–3:55 · Guest disagreement 1/10 Introducing Len Rio and Ativo's ERP Solutions Latka opens by probing the ERP buyer profile and customer journey, noting that nobody enjoys buying ERP systems. Rio calmly lays out Ativo's ICP and the specific business headaches they solve for complex manufacturers.3:56–7:23 · Guest disagreement 2/10 Pricing Tiers, Seat Roles, and Early Origins in 1993 Latka drills into the business model, asking whether Ativo builds proprietary software or acts purely as a reseller. Rio clarifies that they are an SAP Business One value-added reseller that employs custom developers to adapt deployments.7:25–11:41 · Guest disagreement 2/10 Active Customer Scale, Revenue Metrics, and Referral Marketing Latka attempts to calculate top-line revenue by multiplying 240 customers by $20k average ACV to estimate nearly $5M. Rio corrects the calculation by explaining that many legacy accounts are on older perpetual maintenance agreements rather than subscription SaaS.11:41–14:45 · Guest disagreement 1/10 Exit Requirements, EBITDA Margins, and Customer Concentration Latka drills into valuation, profitability, and customer concentration, immediately pointing out the risk of a single customer paying $600k-$700k out of $3.6M revenue. Rio transparently agrees with the breakeven assessment and concentration hurdle.14:46–17:02 · Guest disagreement 0/10 Famous Five Rapid-Fire Questions with Len Rio Standard Famous Five sequence where Rio shares his sleep habits, favorite CEO, and key business advice before Latka provides an executive summary outro.1:31–3:55 · Nathan pushing back 2/10 Introducing Len Rio and Ativo's ERP Solutions Latka opens by probing the ERP buyer profile and customer journey, noting that nobody enjoys buying ERP systems. Rio calmly lays out Ativo's ICP and the specific business headaches they solve for complex manufacturers.3:56–7:23 · Nathan pushing back 4/10 Pricing Tiers, Seat Roles, and Early Origins in 1993 Latka drills into the business model, asking whether Ativo builds proprietary software or acts purely as a reseller. Rio clarifies that they are an SAP Business One value-added reseller that employs custom developers to adapt deployments.7:25–11:41 · Nathan pushing back 5/10 Active Customer Scale, Revenue Metrics, and Referral Marketing Latka attempts to calculate top-line revenue by multiplying 240 customers by $20k average ACV to estimate nearly $5M. Rio corrects the calculation by explaining that many legacy accounts are on older perpetual maintenance agreements rather than subscription SaaS.11:41–14:45 · Nathan pushing back 5/10 Exit Requirements, EBITDA Margins, and Customer Concentration Latka drills into valuation, profitability, and customer concentration, immediately pointing out the risk of a single customer paying $600k-$700k out of $3.6M revenue. Rio transparently agrees with the breakeven assessment and concentration hurdle.14:46–17:02 · Nathan pushing back 1/10 Famous Five Rapid-Fire Questions with Len Rio Standard Famous Five sequence where Rio shares his sleep habits, favorite CEO, and key business advice before Latka provides an executive summary outro.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 68% · guest 32%0:00 · Nathan 68% · guest 32%3:00 · Nathan 22.5% · guest 77.5%3:00 · Nathan 22.5% · guest 77.5%6:00 · Nathan 29.2% · guest 70.8%6:00 · Nathan 29.2% · guest 70.8%9:00 · Nathan 32.9% · guest 67.1%9:00 · Nathan 32.9% · guest 67.1%12:00 · Nathan 25.7% · guest 74.3%12:00 · Nathan 25.7% · guest 74.3%15:00 · Nathan 43.6% · guest 56.4%15:00 · Nathan 43.6% · guest 56.4%
Sharpest disagreement ▶ 11:06 Rio reframes the acquisition landscape

Rio politely counters Latka's assumption that buyers would only be existing competitors, explaining how non-SAP ecosystems acquire VARs to avoid the steep multi-year learning curve.

 Hardest push from Nathan ▶ 7:26 Latka presses on top-line revenue math

Latka attempts to corner Rio on Ativo's revenue run rate by multiplying customer count by average annual contract value.

 Biggest teaching moment ▶ 7:44 Rio breaks down perpetual vs subscription revenue

Rio educates Latka on why customer count cannot be multiplied directly by SaaS seat pricing due to legacy perpetual maintenance contracts.

 Nathan holds their own ▶ 13:33 Latka highlights enterprise concentration risk

Latka immediately isolates that a single client representing up to $700k on a $3.6M topline constitutes significant concentration risk for M&A multiples.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Introducing Len Rio and Ativo's ERP Solutions 4312 Latka opens by probing the ERP buyer profile and customer journey, noting that nobody enjoys buying ERP systems. Rio calmly lays out Ativo's ICP and the specific business headaches they solve for complex manufacturers.
Pricing Tiers, Seat Roles, and Early Origins in 1993 6424 Latka drills into the business model, asking whether Ativo builds proprietary software or acts purely as a reseller. Rio clarifies that they are an SAP Business One value-added reseller that employs custom developers to adapt deployments.
Active Customer Scale, Revenue Metrics, and Referral Marketing 7625 Latka attempts to calculate top-line revenue by multiplying 240 customers by $20k average ACV to estimate nearly $5M. Rio corrects the calculation by explaining that many legacy accounts are on older perpetual maintenance agreements rather than subscription SaaS.
Exit Requirements, EBITDA Margins, and Customer Concentration 7315 Latka drills into valuation, profitability, and customer concentration, immediately pointing out the risk of a single customer paying $600k-$700k out of $3.6M revenue. Rio transparently agrees with the breakeven assessment and concentration hurdle.
Famous Five Rapid-Fire Questions with Len Rio 3101 Standard Famous Five sequence where Rio shares his sleep habits, favorite CEO, and key business advice before Latka provides an executive summary outro.

Statements from this episode (14)

Disclosure
Ativo Group targets $2M to $30M businesses for first ERP implementations
“We work with small manufacturers and wholesale distributors, as well as certain types of service companies, and by small, I mean, two million to thirty million in revenues, those that are on their first Real true ERP implementation journey.”
Len Rio Apr 4, 2021 ▶ 1:59
Disclosure
Ativo Group targets complex regulated industries like pharma and medical devices
“When we go to market, we focus specifically on complex industries food and beverage pharma, medical device, metals manufacturing. Anything where there's a high degree of quality control traceability of product production scheduling and supply chain complexity …”
Len Rio Apr 4, 2021 ▶ 3:19
Disclosure
Ativo Group charges $16,000 to $20,000 annually for 10-user ERP implementations
“Well, a 10 user implementation. Typically ranges about 16 to 20,000 dollars per year. It's all subscription software. So, you know, a 10 user system is really about 1500 dollars per month.”
Len Rio Apr 4, 2021 ▶ 3:57
Disclosure
Ativo All-in-One is built upon adapted SAP Business One
“Our product Ativo all in one is the SAP business one application as adapted for ease of implementation by our team.”
Len Rio Apr 4, 2021 ▶ 5:25
Insight
Subscription software transformed ERP customer lifetime value into a 10-year relationship
“It replaces the need to have to spend to write a check for six figures to buy the license upfront, like the old model was some three, four or five years ago. And, you know, it shifted the lifetime value of the customer from that, just that first year where it …”
Len Rio Apr 4, 2021 ▶ 6:57
Disclosure
Ativo Group serves approximately 240 active customers
“We currently have about 240 active customers.”
Len Rio Apr 4, 2021 ▶ 7:26
Disclosure
Ativo Group generated roughly $2.9 million in 2019 revenue
“I think we did about 2.9.”
Len Rio Apr 4, 2021 ▶ 8:55
Prediction Not checkable as stated
Ativo Group projects approximately $3.6 million in 2021 revenue
“We'll probably do 3.6, I would think.”
Len Rio Apr 4, 2021 ▶ 9:59
Assertion Supported
SAP Business One has approximately 700 to 800 global resellers
“There's approximately 700 or 800 SAP resellers for the product line that we work with around the globe.”
Len Rio Apr 4, 2021 ▶ 10:53
Insight
Learning a new ERP product requires three to four years and $500,000
“Starting from zero and trying to learn a new ERP product is a long, long road. It's a good three, four years. And Half a million dollars of learning. So it's a lot easier to acquire.”
Len Rio Apr 4, 2021 ▶ 11:22
Disclosure
Ativo Group currently generates about 60% of its income as recurring revenue
“We're about 60% there. We need to get to say, 80, 90% recurring revenue without any large, without any one large customer being, you know, the driving force behind that number.”
Len Rio Apr 4, 2021 ▶ 13:20
Disclosure
Ativo Group's largest single customer accounts for up to $700,000 annually
“Probably Six, 700,000 a year.”
Len Rio Apr 4, 2021 ▶ 13:37
Disclosure
Ativo Group operated at roughly breakeven EBITDA on $3.8 million revenue
“It was basically break even.”
Len Rio Apr 4, 2021 ▶ 14:02
Disclosure
Ativo Group is fully bootstrapped without outside venture capital
“It's a hundred percent bootstrapped.”
Len Rio Apr 4, 2021 ▶ 14:36
Made with StarZero

Turn any episode into a week of clips.

This entire site, over 2,600 episodes transcribed, diarized, checked and made playable, runs on the StarZero media pipeline. Drop in your own episode and the podcast clipper finds the moments worth sharing, cuts them, captions them, and reframes them for every feed.

Try the podcast clipper Learn more