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Dec 23, 2018 · 17m · top-founders

1247 This SaaS Product Has No Website but Does $3m in ARR, How?

Gustav von Sydow · 9m spoken Nathan Latka · 5m 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 interview, founder Gustav von Sydow explains how he transformed Burt from a struggling ad-tech startup into a profitable five-million-dollar umbrella company, successfully spinning out above.ai to achieve three million dollars in ARR without a public website.

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 39.3% of the talking time here. How this is scored →

Nathan as informed peer 5.2 Guest teaching 2.6 Guest disagreement 1.8 Nathan pushing back 3.2
05100:0010:001:19–4:50 · Nathan as informed peer 5/10 Introducing Gustav von Sydow and Burt Nathan breaks down the rough unit economics using mental math based on ARR and customer count. Gustav clarifies that rather than flat SMB pricing, accounts are structured into larger enterprise contracts.4:50–7:04 · Nathan as informed peer 5/10 Rationale for Product Spinoff and 140% Net Revenue Retention Nathan digs into net revenue retention metrics and historical growth rates. Gustav explains their 140% NRR and the split between expansion revenue and new customer acquisition.7:05–11:23 · Nathan as informed peer 5/10 Team Structure, International Footprint, and Role Allocation Nathan probes deeply into historical bridge rounds and attempts to theorize how the debt was restructured. Gustav pushes back and clarifies that the convertible debt was an addition on top of seed equity rather than a converted down round.11:23–13:37 · Nathan as informed peer 5/10 Cap Table Alignment and Total Portfolio Revenue Nathan asks if Gustav is entertaining offers to sell off any secondary portfolio business lines. Gustav asserts they are committed long-term to the customer data management space.13:38–16:24 · Nathan as informed peer 6/10 Enterprise CAC, Payback Periods, and Future Capital Strategy Nathan presses Gustav on enterprise CAC and forces a distinction between cash collection up front and true deferred revenue payback periods. The segment closes with the standard rapid-fire questions.1:19–4:50 · Guest teaching 2/10 Introducing Gustav von Sydow and Burt Nathan breaks down the rough unit economics using mental math based on ARR and customer count. Gustav clarifies that rather than flat SMB pricing, accounts are structured into larger enterprise contracts.4:50–7:04 · Guest teaching 1/10 Rationale for Product Spinoff and 140% Net Revenue Retention Nathan digs into net revenue retention metrics and historical growth rates. Gustav explains their 140% NRR and the split between expansion revenue and new customer acquisition.7:05–11:23 · Guest teaching 5/10 Team Structure, International Footprint, and Role Allocation Nathan probes deeply into historical bridge rounds and attempts to theorize how the debt was restructured. Gustav pushes back and clarifies that the convertible debt was an addition on top of seed equity rather than a converted down round.11:23–13:37 · Guest teaching 2/10 Cap Table Alignment and Total Portfolio Revenue Nathan asks if Gustav is entertaining offers to sell off any secondary portfolio business lines. Gustav asserts they are committed long-term to the customer data management space.13:38–16:24 · Guest teaching 3/10 Enterprise CAC, Payback Periods, and Future Capital Strategy Nathan presses Gustav on enterprise CAC and forces a distinction between cash collection up front and true deferred revenue payback periods. The segment closes with the standard rapid-fire questions.1:19–4:50 · Guest disagreement 1/10 Introducing Gustav von Sydow and Burt Nathan breaks down the rough unit economics using mental math based on ARR and customer count. Gustav clarifies that rather than flat SMB pricing, accounts are structured into larger enterprise contracts.4:50–7:04 · Guest disagreement 1/10 Rationale for Product Spinoff and 140% Net Revenue Retention Nathan digs into net revenue retention metrics and historical growth rates. Gustav explains their 140% NRR and the split between expansion revenue and new customer acquisition.7:05–11:23 · Guest disagreement 3/10 Team Structure, International Footprint, and Role Allocation Nathan probes deeply into historical bridge rounds and attempts to theorize how the debt was restructured. Gustav pushes back and clarifies that the convertible debt was an addition on top of seed equity rather than a converted down round.11:23–13:37 · Guest disagreement 2/10 Cap Table Alignment and Total Portfolio Revenue Nathan asks if Gustav is entertaining offers to sell off any secondary portfolio business lines. Gustav asserts they are committed long-term to the customer data management space.13:38–16:24 · Guest disagreement 2/10 Enterprise CAC, Payback Periods, and Future Capital Strategy Nathan presses Gustav on enterprise CAC and forces a distinction between cash collection up front and true deferred revenue payback periods. The segment closes with the standard rapid-fire questions.1:19–4:50 · Nathan pushing back 2/10 Introducing Gustav von Sydow and Burt Nathan breaks down the rough unit economics using mental math based on ARR and customer count. Gustav clarifies that rather than flat SMB pricing, accounts are structured into larger enterprise contracts.4:50–7:04 · Nathan pushing back 2/10 Rationale for Product Spinoff and 140% Net Revenue Retention Nathan digs into net revenue retention metrics and historical growth rates. Gustav explains their 140% NRR and the split between expansion revenue and new customer acquisition.7:05–11:23 · Nathan pushing back 5/10 Team Structure, International Footprint, and Role Allocation Nathan probes deeply into historical bridge rounds and attempts to theorize how the debt was restructured. Gustav pushes back and clarifies that the convertible debt was an addition on top of seed equity rather than a converted down round.11:23–13:37 · Nathan pushing back 3/10 Cap Table Alignment and Total Portfolio Revenue Nathan asks if Gustav is entertaining offers to sell off any secondary portfolio business lines. Gustav asserts they are committed long-term to the customer data management space.13:38–16:24 · Nathan pushing back 4/10 Enterprise CAC, Payback Periods, and Future Capital Strategy Nathan presses Gustav on enterprise CAC and forces a distinction between cash collection up front and true deferred revenue payback periods. The segment closes with the standard rapid-fire questions.

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

0:00 · Nathan 66.9% · guest 33.1%0:00 · Nathan 66.9% · guest 33.1%3:00 · Nathan 27.5% · guest 72.5%3:00 · Nathan 27.5% · guest 72.5%6:00 · Nathan 31.1% · guest 68.9%6:00 · Nathan 31.1% · guest 68.9%9:00 · Nathan 24.8% · guest 75.2%9:00 · Nathan 24.8% · guest 75.2%12:00 · Nathan 31.6% · guest 68.4%12:00 · Nathan 31.6% · guest 68.4%15:00 · Nathan 60.9% · guest 39.1%15:00 · Nathan 60.9% · guest 39.1%
Sharpest disagreement ▶ 9:57 Gustav refutes down-round restructuring assumption

Gustav emphatically rejects Nathan's assumption that equity was converted into debt to dodge a down round, clarifying the actual capital structure.

 Hardest push from Nathan ▶ 14:20 Nathan challenges cash payback framing

When Gustav claims immediate payback due to upfront enterprise cash payments, Nathan pushes back to demand the metric on a recognized deferred revenue basis.

 Biggest teaching moment ▶ 9:57 Gustav details convertible debt stack history

Gustav educates Nathan on the mechanics of their bridge financing after Nathan completely misinterprets how the early equity round interacted with debt.

 Nathan holds their own ▶ 14:09 Nathan demonstrates SaaS cohort and accounting expertise

Nathan showcases his industry knowledge by explaining cohort analysis practices and holding the founder accountable to GAAP deferred revenue payback metrics.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Introducing Gustav von Sydow and Burt 5212 Nathan breaks down the rough unit economics using mental math based on ARR and customer count. Gustav clarifies that rather than flat SMB pricing, accounts are structured into larger enterprise contracts.
Rationale for Product Spinoff and 140% Net Revenue Retention 5112 Nathan digs into net revenue retention metrics and historical growth rates. Gustav explains their 140% NRR and the split between expansion revenue and new customer acquisition.
Team Structure, International Footprint, and Role Allocation 5535 Nathan probes deeply into historical bridge rounds and attempts to theorize how the debt was restructured. Gustav pushes back and clarifies that the convertible debt was an addition on top of seed equity rather than a converted down round.
Cap Table Alignment and Total Portfolio Revenue 5223 Nathan asks if Gustav is entertaining offers to sell off any secondary portfolio business lines. Gustav asserts they are committed long-term to the customer data management space.
Enterprise CAC, Payback Periods, and Future Capital Strategy 6324 Nathan presses Gustav on enterprise CAC and forces a distinction between cash collection up front and true deferred revenue payback periods. The segment closes with the standard rapid-fire questions.

Statements from this episode (15)

Disclosure
Von Sydow: above.ai has not launched a public website yet
“So that's actually a URL called above, above.ai, which is not launched yet. So it's going to be launched in the next week or two.”
Gustav von Sydow Dec 23, 2018 ▶ 2:56
Assertion Not checkable as stated
Von Sydow: above.ai generates about $3M in annual revenue
“So we carved it out last year. So we ran it as a product line. So it's doing about three million dollars right now.”
Gustav von Sydow Dec 23, 2018 ▶ 3:09
Assertion Not checkable as stated
Von Sydow: above.ai grows at 140% to 150% year-over-year
“It's growing about a 140, a 150% year over year.”
Gustav von Sydow Dec 23, 2018 ▶ 3:14
Assertion Not checkable as stated
Von Sydow: above.ai integrates with 50 to 60 systems per enterprise customer
“So I'd say typically we integrate with about. 50 or 60 systems on a reasonable size customer.”
Gustav von Sydow Dec 23, 2018 ▶ 4:01
Assertion Not checkable as stated
Von Sydow: Three of the top 10 global media groups use above.ai
“So we have about three of the top 10 media groups in the world that use the platform in some capacity right now.”
Gustav von Sydow Dec 23, 2018 ▶ 4:26
Assertion Not checkable as stated
Von Sydow: above.ai signs $200K to $400K annual enterprise contracts
“Typically our contracts are sort of structured on the enterprise level. So it'll be like two, three, 400,000 dollars a year contracts.”
Gustav von Sydow Dec 23, 2018 ▶ 4:41
Assertion Not checkable as stated
Von Sydow: above.ai maintains roughly 140% net revenue retention
“So we're about a 140% net revenue retention.”
Gustav von Sydow Dec 23, 2018 ▶ 5:53
Assertion Not checkable as stated
Von Sydow: above.ai operates with 20 people in engineering and product
“So we have a, 20 or so person team, and it's mostly engineering and product.”
Gustav von Sydow Dec 23, 2018 ▶ 7:30
Assertion Not checkable as stated
Von Sydow: 70% to 80% of above.ai revenue comes from the US
“And now we're building out sort of a geographical footprint with our office here in New York, because I think 70 or 80% of the revenues for this product line is in the US.”
Gustav von Sydow Dec 23, 2018 ▶ 7:40
Disclosure
Von Sydow: Burt downsized from 35 to 15 employees during a downturn
“So we had to go from 35 people to 15 people there for a while.”
Gustav von Sydow Dec 23, 2018 ▶ 8:44
Disclosure
Von Sydow: Burt failed to raise Series A, took $3M bridge round
“So we raised a three million dollar seed, and then we completely failed at raising a sort of a decent sized series A, and we ended up doing like a three million bridge, and that was about it.”
Gustav von Sydow Dec 23, 2018 ▶ 9:13
Opinion
Von Sydow: European ad-tech startups struggled against US partner ecosystems
“It was very tough as a European company to make a dent. It was very Americanized in terms of the type of partners that you needed and the type of funding that you needed.”
Gustav von Sydow Dec 23, 2018 ▶ 10:59
Assertion Not publicly verifiable
Von Sydow: Burt portfolio generated over $5M in combined revenue last year
“So we did about five and some and change last year.”
Gustav von Sydow Dec 23, 2018 ▶ 12:44
Disclosure
Von Sydow: above.ai CAC is $100K for enterprise, $25K for mid-market
“No, it's about a 100,000 or so and about 20, 25 perhaps or a slightly less for the mid market.”
Gustav von Sydow Dec 23, 2018 ▶ 13:58
Insight
Von Sydow: The only reason to raise SaaS capital is competitive risk
“I sort of feel like the only reason to raise money in, in SaaS if you have significant competitive risk, and right now I sort of feel like we're winning the deals that we want, and customers seem to be sticking around.”
Gustav von Sydow Dec 23, 2018 ▶ 15:22
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