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Sep 18, 2016 · 21m · top-founders

EP 421: SaaS Accounting $238k MRR, $4.2M Raised, 200 Customers with Ceterus CEO Levi Morehouse

Nathan Latka · 10m spoken Levi Morehouse · 8m 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 The Top, host Nathan Latka interviews Levi Morehouse, founder and CEO of Ceterus, exploring how he transitioned a bootstrapped accounting service into an automated SaaS platform generating over $280,000 in MRR with exceptional retention and a $4.2 million Series A round.

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 54.7% of the talking time here. How this is scored →

Nathan as informed peer 5.0 Guest teaching 1.0 Guest disagreement 1.2 Nathan pushing back 2.2
05100:0010:0020:001:35–6:42 · Nathan as informed peer 6/10 Introducing Levi Morehouse and Ceterus's Automated Accounting Model Latka explores Ceterus's history and demonstrates industry knowledge by outlining how agency and service models often provide the blueprint for scalable SaaS products, a pattern Morehouse validates.6:43–12:37 · Nathan as informed peer 8/10 Deconstructing Ceterus's Unit Economics, Sales Funnel, and MRR Growth Latka digs deeply into SaaS metrics, pressing on valuation ranges and lecturing on multi-axis value-based pricing strategies seen in companies like HubSpot.12:37–16:42 · Nathan as informed peer 7/10 Fundraising Insights, Operating Burn, and Future Acquisition Outlook Latka performs rapid mental math to calculate headcount burn against MRR and nudges Morehouse on whether he would accept a buyout offer from Intuit.16:44–18:49 · Nathan as informed peer 0/10 Sponsorship Messages: Scaling Development with Toptal and Hosting with HostGator Solo sponsor advertisements for Toptal and HostGator by the host; no guest interaction.18:49–20:50 · Nathan as informed peer 4/10 The Famous Five: Productivity, Books, Family Life, and Founder Advice Standard Famous Five lightning round with rapid-fire questions and amicable, concise responses.1:35–6:42 · Guest teaching 1/10 Introducing Levi Morehouse and Ceterus's Automated Accounting Model Latka explores Ceterus's history and demonstrates industry knowledge by outlining how agency and service models often provide the blueprint for scalable SaaS products, a pattern Morehouse validates.6:43–12:37 · Guest teaching 2/10 Deconstructing Ceterus's Unit Economics, Sales Funnel, and MRR Growth Latka digs deeply into SaaS metrics, pressing on valuation ranges and lecturing on multi-axis value-based pricing strategies seen in companies like HubSpot.12:37–16:42 · Guest teaching 1/10 Fundraising Insights, Operating Burn, and Future Acquisition Outlook Latka performs rapid mental math to calculate headcount burn against MRR and nudges Morehouse on whether he would accept a buyout offer from Intuit.16:44–18:49 · Guest teaching 0/10 Sponsorship Messages: Scaling Development with Toptal and Hosting with HostGator Solo sponsor advertisements for Toptal and HostGator by the host; no guest interaction.18:49–20:50 · Guest teaching 1/10 The Famous Five: Productivity, Books, Family Life, and Founder Advice Standard Famous Five lightning round with rapid-fire questions and amicable, concise responses.1:35–6:42 · Guest disagreement 1/10 Introducing Levi Morehouse and Ceterus's Automated Accounting Model Latka explores Ceterus's history and demonstrates industry knowledge by outlining how agency and service models often provide the blueprint for scalable SaaS products, a pattern Morehouse validates.6:43–12:37 · Guest disagreement 2/10 Deconstructing Ceterus's Unit Economics, Sales Funnel, and MRR Growth Latka digs deeply into SaaS metrics, pressing on valuation ranges and lecturing on multi-axis value-based pricing strategies seen in companies like HubSpot.12:37–16:42 · Guest disagreement 2/10 Fundraising Insights, Operating Burn, and Future Acquisition Outlook Latka performs rapid mental math to calculate headcount burn against MRR and nudges Morehouse on whether he would accept a buyout offer from Intuit.16:44–18:49 · Guest disagreement 0/10 Sponsorship Messages: Scaling Development with Toptal and Hosting with HostGator Solo sponsor advertisements for Toptal and HostGator by the host; no guest interaction.18:49–20:50 · Guest disagreement 1/10 The Famous Five: Productivity, Books, Family Life, and Founder Advice Standard Famous Five lightning round with rapid-fire questions and amicable, concise responses.1:35–6:42 · Nathan pushing back 2/10 Introducing Levi Morehouse and Ceterus's Automated Accounting Model Latka explores Ceterus's history and demonstrates industry knowledge by outlining how agency and service models often provide the blueprint for scalable SaaS products, a pattern Morehouse validates.6:43–12:37 · Nathan pushing back 4/10 Deconstructing Ceterus's Unit Economics, Sales Funnel, and MRR Growth Latka digs deeply into SaaS metrics, pressing on valuation ranges and lecturing on multi-axis value-based pricing strategies seen in companies like HubSpot.12:37–16:42 · Nathan pushing back 4/10 Fundraising Insights, Operating Burn, and Future Acquisition Outlook Latka performs rapid mental math to calculate headcount burn against MRR and nudges Morehouse on whether he would accept a buyout offer from Intuit.16:44–18:49 · Nathan pushing back 0/10 Sponsorship Messages: Scaling Development with Toptal and Hosting with HostGator Solo sponsor advertisements for Toptal and HostGator by the host; no guest interaction.18:49–20:50 · Nathan pushing back 1/10 The Famous Five: Productivity, Books, Family Life, and Founder Advice Standard Famous Five lightning round with rapid-fire questions and amicable, concise responses.

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

0:00 · Nathan 74% · guest 26%0:00 · Nathan 74% · guest 26%3:00 · Nathan 22.5% · guest 77.5%3:00 · Nathan 22.5% · guest 77.5%6:00 · Nathan 48.1% · guest 51.9%6:00 · Nathan 48.1% · guest 51.9%9:00 · Nathan 58% · guest 42%9:00 · Nathan 58% · guest 42%12:00 · Nathan 56.6% · guest 43.4%12:00 · Nathan 56.6% · guest 43.4%15:00 · Nathan 51.3% · guest 48.7%15:00 · Nathan 51.3% · guest 48.7%18:00 · Nathan 61.5% · guest 38.5%18:00 · Nathan 61.5% · guest 38.5%21:00 · Nathan 100% · guest 0%21:00 · Nathan 100% · guest 0%
Sharpest disagreement ▶ 15:49 Morehouse refuses binary acquisition hypothetical

When Latka pushes for a direct yes-or-no answer on selling to Intuit for $45M, Morehouse rejects the simplistic framing to give a nuanced response about scaling.

 Hardest push from Nathan ▶ 8:06 Latka forces a valuation range after guest demurs

When Morehouse states he keeps the Series A valuation private, Latka immediately pushes back by throwing out a specific range to force confirmation.

 Biggest teaching moment ▶ 11:47 Morehouse corrects Latka's revenue projection

Latka assumes Ceterus is on pace to do $3.5M to $4M based on run rate, but Morehouse gently reins him in by specifying they are targeting $3M.

 Nathan holds their own ▶ 10:32 Latka details advanced SaaS pricing architecture

Latka demonstrates sophisticated SaaS expertise by explaining how leading enterprise software firms build tiered pricing across multiple value metrics.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Introducing Levi Morehouse and Ceterus's Automated Accounting Model 6112 Latka explores Ceterus's history and demonstrates industry knowledge by outlining how agency and service models often provide the blueprint for scalable SaaS products, a pattern Morehouse validates.
Deconstructing Ceterus's Unit Economics, Sales Funnel, and MRR Growth 8224 Latka digs deeply into SaaS metrics, pressing on valuation ranges and lecturing on multi-axis value-based pricing strategies seen in companies like HubSpot.
Fundraising Insights, Operating Burn, and Future Acquisition Outlook 7124 Latka performs rapid mental math to calculate headcount burn against MRR and nudges Morehouse on whether he would accept a buyout offer from Intuit.
Sponsorship Messages: Scaling Development with Toptal and Hosting with HostGator 0000 Solo sponsor advertisements for Toptal and HostGator by the host; no guest interaction.
The Famous Five: Productivity, Books, Family Life, and Founder Advice 4111 Standard Famous Five lightning round with rapid-fire questions and amicable, concise responses.

Statements from this episode (9)

Assertion Not checkable as stated
Ceterus generated $2.2M in total revenue in 2015
“2.2 million.”
Levi Morehouse Sep 18, 2016 ▶ 2:58
Assertion Not checkable as stated
Ceterus reached seven figures bootstrapped before pivoting to SaaS in 2015
“So we initially from 2008 through 2014, we were an outsource service business purely bootstrapped did not raise any capital as myself and built it to a nice business. You know, doing seven figures over, over seven figures and doing okay to really scale and gro…”
Levi Morehouse Sep 18, 2016 ▶ 5:13
Assertion Supported
Ceterus closed its Series A in May 2016 after eight years
“We actually just closed a series A back in May. So we have taken capital, but we kind of went this strange, I'm like the oldest startup in the world.”
Levi Morehouse Sep 18, 2016 ▶ 5:41
What-if
Raising capital in 2008 would have caused Ceterus to fail
“If I would have raised money and tried it in 2008 or 2009, it would have been an epic failure because what I would have thought the customer needed Would not have fit the mark.”
Levi Morehouse Sep 18, 2016 ▶ 6:26
Assertion Not checkable as stated
Ceterus generates approximately $13,000 in average revenue per user
“Yeah, it's around 13,000 right now. Annual, annual basis.”
Levi Morehouse Sep 18, 2016 ▶ 8:49
Assertion Not checkable as stated
Ceterus operates with net negative revenue churn and sub-1% logo churn
“So our churn is actually net negative, and it's on a, but on an actual unit basis, it's less than one percent, significantly less than one percent. So most customers have not left.”
Levi Morehouse Sep 18, 2016 ▶ 9:56
Assertion Not checkable as stated
Ceterus grows MRR at just under 10% month over month
“It's close to 10. That's kind of always what I'm targeting. I think we're just slightly below that.”
Levi Morehouse Sep 18, 2016 ▶ 12:08
Assertion Not checkable as stated
Ceterus estimates customer lifetime value between $45,000 and $50,000
“Lifetime's around 45 to 50,000.”
Levi Morehouse Sep 18, 2016 ▶ 13:07
Disclosure
Ceterus targets a customer acquisition cost payback period of one year
“So if I, yeah, if my ACV is 13,000, if that's how much I'm going to bill a customer their first year, I kind of like to keep my acquisition costs at or below that.”
Levi Morehouse Sep 18, 2016 ▶ 13:28
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