Stefan Bader: CEO on Cello on automating growth and GTM

0:00Mishcon:Hello and welcome back to the Scaling New York Show presented by Deal. I'm Seb Johnson. Today I've got the co-founder and CEO of Cello, Stefan. Stefan, how are you doing today?

0:07Stefan Bader:Hi, Seb. Doing great. Thanks for having me.

0:10Mishcon:My pleasure. My pleasure. Thank you for joining me. For those who don't know, can you give a bit of an intro about who you are and what you've built? Yeah, sure.

0:16Stefan Bader:I'm Stefan, based out of Munich. I'm the co-founder of Cello. Cello is an all-in-one referral platform that helps software businesses to launch in-product referral programs for basically everyday users to personally incentivize them to share the product, to basically build a virtual sales army with your users. And we also recently launched a partner product running on the same infrastructure where our customers can now manage affiliates, influencers, et cetera. And the vision of the company in general is to become the revenue growth infrastructure for the AI era. So we got two products launched, a lot more are in the pipeline and yeah, pretty excited about that.

0:57Mishcon:And this is sort of not your first time building this product, right? This is something that you're building in your previous job. Can you touch a bit about the founding experience where this idea came from?

1:08Stefan Bader:Yeah, sure. So a few years back, I used to run the commercial site at a company called Shores. I was a CRO there. And we had very often users coming back to us after they had brought a few new customers out of their own network. And they were always asking, like, is there something in it for us? We brought you a few customers. And back at the time, we didn't have, like, a mechanism how to reward them, how to pay them out, how to give something back to them. And at that point, always it stopped, right? And so, basically, we wanted to keep the lights on. We wanted to accelerate this motion by providing these very helpful users that used our product with something that is tangible to them personally.

1:55Stefan Bader:and basically give them a piece of the cake for the business they were bringing to us. At the time, we looked into vendors, so I personally thought there must have been something out there. But then we realized that there is no vendor, nothing. There's no infrastructure that basically helps B2B software businesses to exactly do that in product completely without friction, compliant, handles all the payouts, etc. and that was a starting point for me to to start cello and how's it going you know what's the

2:28Mishcon:reaction been like in the market has this been you know have you seen good uptake of you how's it going like yeah tell me what has been like since you since you actually launched yeah um

2:37Stefan Bader:uh i mean this is the second company i'm building so the i i wasn't on the journey for a couple of years before uh so i knew what i was potentially getting myself into it therefore i did quite extensive research to not get it wrong and not start like a multi-year journey without um you know having a good understanding of the market so therefore i also talked to many other uh other founders out there like is that something they have thought about they uh would like if that would be available on the market um and the overall reaction was like super super positive uh and this basically got me the confidence to to start cello uh four years ago um we got now around about 250 customers with some iconic customers like Miro, Tideform, Veed, etc.

3:25Stefan Bader:So we are handling around 10 million monthly enabled users on our platform. So we got to quite some scale already, but it's still day one. We're, you know, I think at the beginning of our journey still. And yeah, I'm very excited for what is there to come.

3:45Mishcon:And what does the go-to-market engine look like for your business?

3:48Stefan Bader:Yeah, I mean, we're building in growth as an industry. So I'm basically thinking the whole day around go-to-market and growth. And the way we approach it is we think about our go-to-market as a growth system. So we have several growth loops. Referrals is one growth loop. And, for example, casual contact loop is one loop. I can maybe talk a little bit about this later. And then there are linear activities. And probably most people out there that don't spend too much time thinking about it see GoToMarket as a linear activities like ads, like outbound, things like that. And these linear activities basically fuel leads and customers into our growth system.

4:37Stefan Bader:and the growth loops itself generate more growth with every new customer and every new user we onboard to that growth system. So it's like an engine that spins faster with more customers and users entering our customer base. And therefore, our growth efficiency metrics, as investors would probably look at it, are quite good.

5:02Mishcon:Amazing. And what are some of the key metrics that you look at every day to make sure that the business is performing the way you want it to?

5:10Stefan Bader:Yeah. I mean, net dollar retention or net revenue retention is something we care a lot about. For our product specifically, as we are monetizing based on the success of our customers, so expansion is a very important part of our business. We have around about 180 % net dollar retention. Amazing. Wow, that's huge. we are you know we're pricing the product at a fair entry price and then with kicking in success basically we're growing with with our customers uh and that is like a you know direct translation like how successful our customers are uh on on our platform but then of course we have also like more leading indicator um indicators like uh overall like net referral ar so like how much referral volume is active on the platform, how many referrers are active, how many referrals are being shared, partners being added to the platform.

6:08Stefan Bader:A bunch of more leading indicators and AR is important. Obviously AR is something we're looking at.

6:17Mishcon:Amazing. Those are phenomenal stats. Especially in the age of AR, retention is one of those. It's become crazy hot metric. I'm a big believer that B2B companies in the age of AI have actually got the biggest opportunity to have the highest retention with like great quality sticky products and how has the business changed right you talk about building the infrastructure I think you specifically said AI companies how is that changing you started building this business four years ago are you seeing more demand among AI companies how is it changing now that we're in this crazy world of AI yeah I mean we obviously

6:51Stefan Bader:launched before the JTBT moment, right? However, so what's happening on the market? We see what has been coined by Reforge, the AI product channel fit collapse. So basically AI leads existing acquisition channels to collapse. So if you think about SEO, if you think about written outbounds or email on LinkedIn, if you think about cold calling, all these channels are in decline. You see overall, like on a macro view, that CAC payback, so like how long does it take to actually recover your customer acquisition cost, has 5x in the last five years. I think we're now at 57 months, so like around about six years, which is insane.

7:41Stefan Bader:And these are stats from like public SaaS companies, so like companies that are like oiled machines, right? so overall you can say go to market is broken and it's breaking more and more because of AI while at the same time the barrier to build products has never been lower, right, like everyone can build a product on a weekend now have security, payments, everything plugged in directly natively so the real challenge is go to market, like if I built a product now everything else is like you know uh plugged in how do i actually get my product into the hands of customers on a sustainable way because it doesn't doesn't really make sense to like have to wait six years to to recoup my my initial acquisition costs uh and this is exactly where where cello comes in right we're like infrastructure you can plug into your product and it solves go-to-market uh at least partially we're also not a silver bullet at least yet um it helps you with go-to-market at like way better customer acquisition costs and efficiency metrics.

8:49Stefan Bader:So, you know, I could say like I have all foreseen this, that AI is like changing their picture, but I would be lying, obviously. But yeah, sometimes you have to be at the right point in time at the right place. And I think this is exactly where Cello is like solving a very big issue in the market. And AI is just like accelerating that picture.

9:11Mishcon:And are you seeing a difference? I don't know how close you get to be with some of the teams who are kind of working with or buying your product, but are you able to see some amazing go-to-market teams who are doing cool or interesting things in the age of AI in a way that like I imagine those SaaS companies, those public SaaS companies are like, you know, those are the ones that are falling behind and probably struggling to innovate. But, you know, some of those companies that you mentioned, like Veed, are amazing companies that are growing crazy quickly. Do you get any insight into what makes some of those GTM teams really strong?

9:42Stefan Bader:So first of all, it's really a pleasure to work with these individuals on a daily basis, because our team is also getting much better by seeing the practices that these teams apply. and then the way our product works is we are hooked into the most important systems like payment gateway, CRM, into the product itself so we have a pretty good understanding on how the product works and performs and for example things like retention etc which is also a very interesting positioning for us as a company as we evolve because we can help with many of these issues with out-of-the-box tooling that we're building and then in general they're like I think on the every like native AI company or not every but like most of the native AI company they have a very strong top of funnel so it's comparably easy for them to acquire customers because they just like have something completely new or they are for example they're replacing human labor which is something you happily pay for it because it's just much cheaper.

10:59Stefan Bader:At the same time, we see in AI companies that retention is a struggle because every week there's something else shiny coming on. The industry calls them as AI tourists. They're happy to try out your product. They may be also happy to pay for the product once or twice, but then the time continues and maybe something else comes up. So I think retention or like acquiring customers that are in the right ICP and that have the will to stick around is like the challenge for AI, like native AI companies out there right now.

11:39Mishcon:Talk to me about the go-to-market awards, right? They're in process right now in the sense that I think people are submitting, judging is probably going on somewhere. Talk to me for those who don't know about it, who haven't heard about it. What is it? And I guess, how are you involved? Yeah.

11:55Stefan Bader:So we saw that in GoToMarket, there is basically a wide spot of putting amazing operators into the spotlight or put a spotlight on amazing operators. So we thought, you know, maybe there's a chance to partner up with some of the players in the market that we highly trust and that we see as like, you know, as role models. So we, for example, initiated this. It's called GTM 10 Awards. We initiated that together with Lightspeed Venture Partners. So in our view, one of the absolute best, one of the best venture capitalists out there. and we have assembled basically the best jury we could come up with.

12:42Stefan Bader:We're doing this a second year now. So we had a first round last year. It was a blowout success, went very viral. We had people like Kyle Poyer or Mark Roberge, for example, like founding Zero of HubSpot on the jury and like many others. this year. I think we even increased the level of talent and just how professionally it is set up. Some of the winners of last year joined the jury. For example, Kyle from the CEO of Owner.com or Kate, the CCO of Airtable, next to other amazing operators in the jury. We also have, for example, the VP talents of Sequoia, of Index, of Andreessen, Lightspeed, etc.

13:37Stefan Bader:on it. So we're basically trying to assess, or the jury is trying to assess, the best talent. And we have like several lenses to look at that. And then it's an award where you can basically nominate someone in your network that you think has earned the right to basically be on that spotlight. It's called GTM 10 because we are awarding the best 10 operators in five different categories. So from sales, marketing, customer success, growth, and partnerships. And the winners basically will get, there's no financial payout, but like basically they will really be put in the spotlight. we have a billboard on the Times, like a very famous Times Square billboard where basically they're shown and there's like a lot of communication happening and it's just like a little yeah it's an award basically to award all the work that is happening in the industry that is in many cases not really seen and the feedback so far has been Great.

14:53Stefan Bader:I've seen some of the applicants already for this year, so that the field is insanely strong. But I could also highlight it to everyone that is listening here. Please recommend people for the award. The deadline is the 5th of May. And then also, if you think you have earned the right to be there, ask someone else to recommend you. I think it's really worth it. I've been on a similar list not industry related but it has really accelerated my own career as well so I think there's something to look at

15:29Mishcon:For sure I've nominated a bunch of people who I think could win it and they've gone through the process they've spoken to people from the team I don't know what the exact process is but I think they had a phone call and they were talking about their experience and stuff and they've loved it so far and it's like Like it's a, I had a couple of people talk to me about it who were like, oh, it's like really interesting. Like I should definitely be doing more of this. Like, especially in this world now where it's like very content driven, very personal brand driven. You often have these amazing operators who are just like heads down building and selling and who are not thinking to like sell their story or celebrate their own successes.

16:06Mishcon:So I think it's an amazing initiative, right? And I can't wait to see who comes out on top this year.

16:11Stefan Bader:Yeah, I think so too. I'm very excited about this. We have also, maybe also interesting to mention, we've also partnered up with strong brands in each category. So for Marketing Peak, for Customer, Intercom, for example, Anthropic, also Epify. And we're very happy that we have assembled now such a, like the Rothschild machine as well, such a great group of companies and brands actually we're looking up to, to make this a success. and yeah happy about feedback if you want to be nominated send me a message if you have any feedback what to do what to improve send me a message on LinkedIn I'm quite curious to hear

16:56Mishcon:feedback and this isn't you know you don't do a physical thing do you don't do like a physical award show is that on the roadmap is that something that you think about for next year

17:03Stefan Bader:yeah so there is a physical award that's being sent to people and like a little gift box etc so we thought about a physical event but it's difficult because we're awarding people all around the world so there's not this one place where everyone can easily get to however we are doing GTM 10 award dinners so last year for example we did one in New York we did one in San Francisco this year we will expand to a few more cities like London as well so there is going to be a physical gathering and like you know where we pick up the bill, have like a nice little dinner, some drinks in a restaurant. And it has been very cool last year already.

17:47Stefan Bader:And we're basically building this little community around. The community is doubling this year because there will be more winners, more jury members. And I think the quality of the people is just insane. I've never been invited to a dinner where the quality of all the people was so high.

18:09Mishcon:I mean, that's amazing, right? It gives you such a great opportunity to build this incredibly strong community of real go-to-market experts. It's an amazing idea, even just to learn from and to build a great peer group. That's so powerful. It's like, that's such a great thing. If that was the only thing that you got from it, that is amazing, right? And that's such a high-value group of people who are the best of what they do across the world. It's amazing. I mean, the amount of things you could do with that community, how much value you could add to each other is phenomenal.

18:38Stefan Bader:yeah and uh what's also quite quite interesting and like very fulfilling for for me for example is i see basically personal careers accelerate and take different paths like people becoming solopreneurs after that uh people are like you know joining companies they have always wanted to join but like didn't get in and it's just like extra uh recognition on the sidelines that's just I think up levels the profiles and gives really credit to the operators out there that are doing a great job. To maybe answer the questions you have not asked, like how is the selection process, how does that look like and work?

19:20Stefan Bader:So if people apply, we typically jump on a quick call with them, ask them standardized questions, obviously record the call, transcribe it, and provide it in a format for the jury that they can then go through basically the applications. So there's going to be a short list of applications because we can't provide like hundreds of applications, obviously. Like the jury's time is also quite valuable. But then they go through this mid-list of people where they then apply certain points to certain categories. Then it's like a numeric list of people that make the cut and win the award.

20:07Mishcon:Amazing. And can you touch on the timelines? You mentioned that submissions are until the beginning of May, but when are the winners going to find out?

20:15Stefan Bader:yeah um i should have that slide with me uh maybe maybe that is something we can put in the um in the in the show notes so it it basically takes so 5th of may is like stop of uh the uh stop of the application phase and then it typically takes like two to three weeks more and this is where then uh everyone will be announced uh we do daily announcements of a certain category. So there will be basically a full week of like five different days, five different categories that are being, where the winners are being announced. And yeah, then at the beginning of that, there will be then also the recording on Times Square, et cetera.

21:07Stefan Bader:So it's also cool. We saw last year that people were actually flying there, you know taking taking selfies uh and and had a had a cool time amazing like i'm looking forward