Jan Sommerfeld, COO @ Almedia on bootstrapping to $100m of revenue

0:00Jan Sommerfeld:Hello and welcome back to Scaling Europe. I'm here with Jan from Almedia. Jan, it is great to have you. How are you doing? Hi, nice to meet you. I'm good. Amazing. Now, before we kick off and get into things, can you give a super quick intro into who you are and what you're building? Yeah, so I'm Jan. I'm working for Almedia. So we are building, I guess, the market leader in rewarded user acquisition. That is, we're helping primarily mobile gaming studios, but also other app developers to acquire new users. and we do that through our platforms. One of the biggest ones is FreeCash. Yeah, where our users come, they find those games, play those games and then that makes us special.

0:37We reward those users for getting engaged with those games so they can earn some coins, which they can then redeem in gift cards or real money to get engaged with these games and test them and try them and play them.

0:49Jan Sommerfeld:Amazing. And I was doing research and I saw in two different numbers in two different places, but you either have 40 million or 50 million users is that right well i think by now we definitely have 50 i guess it changes quite quickly acquiring around one or two million users per month so yeah it changes basically every day that's amazing um and you're the coo there right so can you can you give a bit of information a bit of context about some of the operational challenges that come from scaling to 50 million users so quickly and gaining one to 2 million users a month. Yeah. Yeah. So my, I mean, I'm taking care of, let's say, the operations side of it.

1:29So this is besides, you know, the people team, finance team. It's also especially the user support related to that also bit the user quality, the fraud topic. But I guess, yeah, and this is something where we definitely see some, you know, scaling challenges when it comes to growing that user base, especially on the support side. I mean, but initially, yeah, we had maybe 100 tickets per day. So actually when we started, we didn't even have like a proper chat or ticketing system. You know, I just started us being present on Discord with a couple of mods, which were actually, you know, just active users that we turned into mods.

2:05And then, yeah, once we grew, right, it developed actually into a proper, you know, support system where we built ticketing system, work with tools such as Intercom. And then step by step also started to hiring, you know, a bit more professional support agents. yeah but that grew much much more so I guess now we're getting thousands of tickets per day and I guess here the challenge is you know at some point there's only so much efficiency you can gain in terms of processing those tickets right you would have to grow the team in that sense and I guess we have a two-way approach here on how we solve that so one is actually AI that helped us solve a lot right so I think here we also like quite early went onto that bandwagon and really, you know, based on the past tickets, based on all the information we already have on the site, I think now around 70 % of our tickets we solve automatically with a bot.

2:58Of course, the bit more challenging topics, they will always need to require, let's say, a human. And this is something that at some point we also outsourced to a third-party center that can help us with that simply because they're easier to scare, right? You don't need to hassle, especially with the operational aspect of building the team, training them, scheduling them. I mean, we're active in 20 countries all over the world, right? So basically, you also need to cover them 24 hours. And this is a lot of scheduling effort. So this is where they're helping us.

3:29Jan Sommerfeld:Amazing. And can we talk about your team structure and size? I read that, I think it was a couple of years ago, you only had something like 23 people, 24 people. And that was when you had 30 million of revenue. So revenue per employees are very hot metric at the moment a lot of companies are talking about it striving for it you've done very very well from quite early on you touched a bit on using ai has that been a huge enabler for you to stay lean um yeah i definitely i would say also on our tech and developer side we're heavily using ai right all the developers are using it i mean just to to be faster and quicker i mean in that sense and also as you mentioned yes like this whole revenue penalty it's also definitely a kpi that we look for and actively you know try to actually increase the ideas for every new person that we bring on board you know they're not just they don't just need to generate revenue they need to basically generate more revenue than the people before so that this metric gets better and better yeah because we also believe that you know it's it's crucial actually for us to also stay or we believe staying a small team as long as possible is very beneficial because A, helps us keep focus and B, it really helps us that we don't...

4:49Yeah, that we're just so fast and quick, right? Because if you grow a team, the complexity grows quite quickly. It tends to slow everything down and we rather want to be fast and rather be also focused on a few key core important products with high impact rather than spreading us like too big and too quickly onto multiple different areas and projects.

5:12Jan Sommerfeld:Yeah, absolutely. How many people have you got in the team at the moment? So right now, I think, I guess, just 10 people joining three days ago. So I think now we're at 110 probably. I know like last month, it was around 100. Amazing. So you are still, you know, growing the team quickly. And like I said, I think 2023, it was, you know, 25 people. That's amazing growth yeah definitely i mean sure right at some point you still need uh you still need people um you cannot automate everything away and we're really growing on on all sides right of course as we grow our customer base our advertisers you know we're still a fully managed service so basically every advertiser you know they don't manage themselves like you do for example on google on meta where we do everything on our sleep ourselves we do it for our advertisers so that has its limitations in terms of how you can automate it so again if we grow our customers we need to grow a customer success team of course another big topic and focus is now nevertheless hiring a lot of data engineers and scientists and building up the data team because if we want to automate that is basically the way to do it that's the team that we need and so yeah we're always trying to kind of keep let's say 50 % of the team really focused on tech meaning like data product engineering I think right now it's like 45 % so yeah this is always kind of what we also have in mind when it comes to growing.

6:35Jan Sommerfeld:Got it okay so stay technical you know your team is three or four x in the last couple of years have you seen that level of growth in your revenue as well? I would say even more as i said before right for every employee we try to grow our revenue over proportionally and yeah that's definitely has happened so i think like the year on year growth is around five to six x um yeah amazing i mean can i ask you know either what is your current revenue or your revenue per employee is that something you're able to share um so revenue per employee i would actually have to calculate but in terms of overall revenue i mean so what i can share is we're definitely in the nine digits safely.

7:19Yeah.

7:19Jan Sommerfeld:That is, that's amazing. Yeah. And with, you know, a hundred employees that firmly puts you on at least, you know, a million per employee. You are an entirely bootstrapped business. You know, that's a phenomenal result. You're not a very old business, but you've got to a hundred million plus of revenue. I want to talk about and ask about being bootstrapped. Was that a strategic decision? Have you ever considered raising VC cash? Is that something on the horizon down the line? Or are you going to stay firmly bootstrapped? So our plan is actually to stay, let's say, bootstrapped. I mean, the business model in that sense allows to do that as well, because you can fairly quickly, our advertisers that pay us, the money flows quite quickly, right?

8:04You don't have to invest necessarily too much in a year, hands in any machinery or something like that. so we've always made sure that we you know that we're profitable and grow profitable and basically every profit is simply reinvested I mean this is also kind of why growth is then I wouldn't say exponential right but it depends I guess on the profit the month the month before we're reinvesting that into primarily marketing new user acquisition of course then we have the next month a bit more profit so we can invest again the next month a bit more and so this is what really enabled our growth on that side.

8:37And yeah, and so from that perspective, I mean, what's the plan with the company? I mean, there's two ways on how we can grow, right? So one is kind of the team and simply making sure that, you know, we improve our product. And I think here with our current capabilities that we have financially, we're fine, right? We don't want to overgrow and just hiring a hundred more people because it will just dilute the focus. Rather have a few people really focus on a few impactful product improvements. So we're good from that side. And then sure, you can also always just, you know, use funding and pump it into more marketing.

9:13But the problem is it's just a very short-term thing, right? It doesn't help us if we then acquire much, much, a lot more users for like two months, we use all the money and then they don't retain. And then they, you know, leave free cash again three months later. So it's not really, you know, a long-term solution. The long-term solution is really working on the product, making sure the retention comes naturally. And again, so we wouldn't even know what you wouldn't do with additional financing, to be honest.

9:40Jan Sommerfeld:Amazing. So I guess you just don't need it. You can just reinvest your profits and you're seeing strong growth. When I talk to VC-backed founders or leaders, they have a certain ambition in their head, even if they don't immediately want to admit to it. And maybe it's becoming a$100 billion company, a$10 billion company, a unicorn. on. Do you have, you know, those valuations usually come with fundraising and big announcements. And I guess that doesn't apply to you and your business in the same respect. But do you have an ambition like that? Like, do you want to become, you know, one of the first bootstrap German companies to be valued at$1 billion,$10 billion?

10:20Jan Sommerfeld:Do you have a view of going public in five years? Is there some big, ambitious target or metric that you're aiming towards, which is kind of inspiring your company to keep pushing forward? Yeah, definitely. I don't think actually that we are much different than, let's say, VC-backed company in terms of our ambition. I think the good thing is like the goals and everything, it really comes from us, right? And we can make it realistically. We don't need to rely on any ideas that come externally from VCs. So that's the big benefit. But still, yeah, we do have these ambitions. And it's definitely becoming the number one market leader in our space, really in the narrow sense.

10:58This is rewarded user acquisition. So I think there's four or five other players right now in the market that we would say are in our area and really strong competitors. So yeah, here we want to become number one. And that definitely means being revenue-wise a billion-dollar business. what it means on the valuation you know we don't have any investors but ultimately our goal is at some point to sell the company that's kind of what everyone is here is working for we're quite open with that you know that's kind of all the people that we want to hire to join us and to also think about and i guess yeah what it means and the valuation in the end we don't know but i guess that's definitely our goal in terms of what we're working for i guess no amazing yeah yeah yeah a

11:46Jan Sommerfeld:A billion dollars revenue is certainly not a small ambition. And it's amazing to see how well you're kind of progressing on your journey to getting there. The growth that you're seeing is extraordinary. And actually, this is a really incredible story. And the stories of bootstrap businesses don't often get told because they don't have those funding announcements. They don't have the publications talking about it. They don't have the VCs trying to promote their story. And how have you found that being slightly more hidden than the VC-backed businesses? Has that been good in terms of being able to stay focused?

12:18Jan Sommerfeld:Was that been difficult in terms of getting visibility? Yeah, so I think it's both. And I said, especially the second point you mentioned in terms of visibility, I guess we don't need the visibility from a business growth perspective, but it definitely, of course, helps with attracting the right people, right? I think this is the biggest disadvantage. challenge again. Yeah, as you said, you don't have these flashy news, like what, of course, and then if you're interested in start artists, we want to join these kind of companies that are ambitious, and you want to put, yeah, kind of want to work for these kind of companies, of course, you go for the ones you need to know about them, right.

12:51And then you have those announcements. And for us, it's a bit, yeah, we're a bit more under the radar with that. And that makes it a bit more difficult to be on the radar for the right kind of people. But yeah, the benefit is, of course then also of being under the radar right there's less distractions you can really focus on on growing the business and it also leads to the fact right that sometimes you're also getting a bit underestimated because nobody knows what you're doing which can also be beneficial sometimes I guess from a business perspective if you're not under radar of

13:21Jan Sommerfeld:competitors or something like that no yeah it's um yeah the more we talk the more impressive of your story is, you know, and I love talking to people who are building businesses like this that are not taking the traditional VC route, that have seen exponential growth, profitability, have huge ambitions. I think it's really special. I also want to talk about building in Germany. You know, there's a lot of noise I see on X and LinkedIn about building in Germany and how it's not got the level of innovation that somewhere like Paris might have or London or Stockholm has that been your experience um I mean I think in the end right if you're talking about um I think it especially has an impact on the talent um and I guess here we're not different to any of the other VC or non-VC tech companies uh right it's it's very hard to find good talent to find ambitious people um and so I guess here yeah we're also relying and sourcing kind of worldwide so to say I think on top of that our challenge is also that we really have this in office culture so we do want people to come to the office because you know especially at our stage you know we need to be fast we need to be quick we rely on that quick interaction you know it's again so it's actually quite important for us to be in the office again which makes it actually more difficult because not everyone is willing to do that anymore or in the risk of talent pool Of course, you need to basically relocate people if they're willing to work in the office.

14:54Again, it reduces that. So I think this is the biggest challenge. I don't think necessarily a challenge in terms of building the business in itself. I mean, the idea is, right, they can grow everywhere in Germany or not. It doesn't matter if you have your office in Paris or in Berlin. As long as you have the right people there, it doesn't really matter much. And I guess the only thing I guess that can I say out of my personal experience, because I'm a bit more on the operational administrative side. I think it's rather this general mindset also in Germany, like a bit this bureaucracy that you have here, all these regulations, you know, it's, yeah, it's sometimes a bit more difficult and you have to deal with things like, you know, what is the distance between the tables and the office?

15:35And I was just like, you know, you know, that's not really the mindset you want to have, especially in Germany, right? Like the past two years, not much growth happening overall in the economy and everyone say, yeah, you know, everyone we need to work more uh but then you have to kind of have to deal with that people coming in and measuring your table distances yeah i'm there's a bit of a gap in between the ambition what everyone says what we should do but then what it is on the ground on the daily uh on the day day when it comes to these really yeah this regulation kind of is that is that a

16:05Jan Sommerfeld:real bit of regulation there's you know to do with space between office desks um i mean definitely everyone has to like officially write like everyone has to have nine square meters uh wow if you're in the office yeah so if the tables are too close um yeah and there are people checking it that's crazy wow um you know i'm running out of time but i also wanted to talk about your own background right i think you you co-founded prep lounge you know before coming to media you'd also worked with rocket internet how did these kind of experiences then shape the approach that you're taking to to being the coo um yeah i mean i've always been at startups right that's really my thing like and also different stages and um because i simply really like you know to help companies to grow um especially you know once the first initial product is validated and then it's really yeah scaling it helping to set up the organization around it that enables that this is why I also joined our media back then yeah in terms of how it has shaped me I guess I would I would say especially you know back from the rocket times it's not too much different in the sense of I mean sure right rocket internet always BC financed all these these these companies but in the end it's also not too much different because it's you know for example back where I was you know they launched in 30 different countries so also than there you know the prioritization is important like you know In the end, money is always limited, right?

17:37And you have to really think of where you want to allocate your resources to monetarily or team-wise. And this is something, I guess, that has shaped me, right? Really focus on the things that have impact. And then also, I think, and just again, in terms of ambition, right? Like you don't get into like a startup. Well, there's different types, right? Some startups definitely start with the ambition of becoming number one. That was back at Rocket also. the case and I think it's also ambition here. Yeah, in between us all I've also worked for companies where that was not the ambition and honestly you can also see then that their growth is also not going towards that.

18:18Jan Sommerfeld:Yeah, got it. Yeah, that makes sense. Look, final question before, you know, I'm conscious about time. What is going to be your number one priority, our media's number one priority for the next six months? I mean ultimately I guess not only for the next six months but it's always been our core is really delivering the quality to our customers to our advertisers because in this market I mean advertisers have no loyalty right they just go wherever the performance is best so I guess in the past two years a lot was coming to reward it and it was taken away from those classic Google meta app loving channels where they spent the money it came to us but as soon as there's someone else but it could also quickly go away to someone else who might be better but this is of course our ambition it can also be doubling if we deliver the quality right if we always make sure our product is the best and this is our ambition and we do have lots of ideas it's never the lack of ideas of how we want to achieve that you know to just really deliver the best users to our advertisers and here yeah i think this is really the core focus of the next six months especially on the data side.

19:25Also on the product side, we have a couple of ideas. And yeah.

19:31Jan Sommerfeld:Amazing. I will be looking, I'll be watching and following. I think what you've built is phenomenal and there's such an exciting and great story that I feel like hasn't been told yet. So thank you so much for coming on and sharing it all with me. I think this is, yeah, it's a phenomenal business. And yeah, thank you so much for taking the time, Jan. It's been great to chat. Thank you. It was a nice meeting you all. Have a nice day. Thank you, you too. Bye-bye. Thank you.