The unsexy tale of building and selling a 6m$ ARR B2B SaaS startup

The unsexy tale of building and selling a 6m$ ARR B2B SaaS startup

Every startup founder envisions their company’s journey right from the start. 

You know the cliché: round-the-clock grinding, then that “a-ha” moment followed by insane growth, then VCs trying to break down the door to invest in you. And then you buy an island and you are finally happy.

For some, that’s the only dream worth having. But in reality it’s rare. 

As the CEO of Mention, I’m biased, but I love the story of how we built this company. It’s essentially a humble experience about building an efficient business with €1m in seed funding growing 30% year over year. We crossed $6m in annual recurring revenue (ARR) - while being profitable - with a team of 50 talented people.

No breaking news on Business Insider, no co-founders disrupting an industry from their garage, no outlandish growth rate, no mind-blowing vision.

We simply identified a market need and figured out how to make it happen. Which is really what every startup should hope to do. 

Mention sold in August 2018 to MyNewsDesk, a privately-owned public relations company. We’re now a part of a new, happy, family. But we’ll get to that. 

I want to tell the whole story behind Mention, from the very beginning, through growth (and growing pains), to where we are today. Let’s start at the beginning.

The idea

Mention was founded in 2013 by eFounders, a French startup studio in Paris. They had built PressKing (a software to distribute press releases) and discovered that users were very interested in monitoring the performance of their press release online. 

Hence, eFounders decided to build Mention: a Google Alerts on steroids. And of course, it wouldn’t just be limited to press releases. It would let people track any keywords, anywhere online.

It’s not a legendary origin story. This wasn’t some phoenix rising from the ashes, or the next great unicorn. It was a smart business idea, based on a real-world need.

And that’s a fun, exciting, and valuable mission to be a part of.

Back to the story. Arnaud Le Blanc and Edouard de la Joncquiere had been brought in as CTO and CEO, respectively, of PressKing. Instead, they took up those roles in the new company. During this time, I was a partner at eFounders.

After validating the opportunity with an MVP in 2013, the two co-founders together with eFounders raised a seed round of €500,000 with Alven Capital and Point9 in 2013. 

The company was alive. So what now?

Early growth & the first pivot

The big plan was to reach $100m ARR based on a freemium model. This means that we were to acquire 50 million users with an average revenue per user of $10/month, and a 2% conversion rate to “premium” users.

After one year, Mention was at €40,000 of MRR. Around 10,000 users per month were signing up for free, and some would then upgrade to a paid plan.

It became clear that there was a bigger opportunity in the B2B space than with our original “prosumer” user base. We had the same 2% conversion rate for our $10/month package (usually solopreneurs) as we did for our $60/month customers (SMB’s).

And while individuals might be interested in who’s using certain phrases online, businesses had to care. Online reputation is too important to ignore.

I left the eFounders partnership to become the CEO of Mention in June 2014. We decided to kill our freemium offer, and instead target small companies with a transactional model. After a 14-day free trial, they’d upgrade themselves. No sales team.

In 18 months, we grew from 40k€ to 200k€ of MRR, opened an office in NYC, and we became profitable in 2015. I put this growth down to three things: 

  • The average price of plans went up as we focused on B2B clients
  • We still saw the same number of monthly free signups, even though we weren’t really targeting them
  • The conversion rate on these bigger plans stayed at ~2%

The company was growing fast, but we still had changes to make.

The second big pivot

Starting 2016, despite our effort, we keep our 3.5% net monthly revenue churn. This was not good because it meant that we just weren’t keeping enough of our customers happy. 

Having said that, it was normal for churn to be high since people were small companies purchasing and onboarding themselves - they probably didn’t know what to expect. We didn’t have enterprise-level support in place at the time.

But some of our bigger prospects were ready to commit to larger, longer contracts. They needed more than the standard Mention plan, and we provided this to them on a case-by-case basis - representing a huge opportunity.

In fact, it was a no-brainer: we had to move up-market and offer a new, improved product. It would cost around €4,000/year (at the time), with an inbound sales team and a proactive customer success organisation. We would attract bigger clients, and we’d work harder to keep them happy.

In 2016, we signed 257 customers on those €4,000/year plans. This was a big win for us. They were 10 times more valuable, and the retention rate was twice that of our transactional buyers.

Our entire business model changed because of this. 

From 2017 onwards, we decided to focus solely on that mid-market segment. The monthly recurring revenue (MRR) from transactional plans has stayed at €200,000 since 2017. Now, we’re now seeing €250,000 of MRR from our mid-market segment.

In a way, this was a “eureka” moment. The original game plan was a higher volume, lower price tool. But the big change didn’t come from a week of all-nighters, or some new genius brought in to shake things up - it was what our customers wanted.

The sale

We continued on this path and grew steadily into 2018. Then early 2018, we received a good acquisition offer from MyNewsDesk.

Funnily enough, MyNewsDesk actually looks a lot like what PressKing was going to be. And they saw the exact same thing that we had seen at eFounders : businesses needed more help to track their communications online, starting with press releases. 

Mention wasn’t exactly up for sale. I had actually attempted to raise further funds in 2017 - but more on this shortly. 

We were at $6m ARR, and I agreed with our investors that to reach $20m would likely take another four years. We’d also need more investment if we wanted to grow faster. 

So we put together a formal merger and acquisition plan with the help of an investment bank. If MyNewsDesk was interested, perhaps there would be others. We contacted 20 possible partners, and had advanced talks with six.

In the end, we went back to the first offer for two main reasons: 

  • They didn’t want to change Mention. This was not a deal that would gut our company, lose people jobs, and essentially undo what we were proud of. Mention would still be Mention, but with a big sibling to work with.
  • Financially it was an attractive exit (both in amounts & terms). Our investors - including Mention employees - would benefit.

So we agreed. The investors - again, including the Mention team - had to sign off, and the deal was signed on 31 August, 2018.

Did we need to sell? 

As I said, we’ve built a great company. We were growing at a nice rate, we were profitable, and had (and still have) a lot of happy customers. So why sell? Why not keep running an independent business?

Because that was never the goal. Our investors owned the vast majority of the company. And VCs aren’t looking for that kind of model. 

There was always an exit in mind. We were just waiting for the right opportunity - and it came along at the exact right time

This route may not suit every entrepreneur. Some may look at building a startup as “IPO or nothing.” But in truth, not every business is supposed to be Salesforce or Snapchat. And we’re working in a highly competitive industry with modest resources.

We took a small (but much appreciated!) round of funding, and created a successful SaaS company with around 50 employees in Europe and North America, a well-known and recognisable brand, and nearly one million customers. 

Our early investors are happy, our new buyers are happy, and I’m very happy. 

But it wasn’t always an easy ride.

Hard lessons from building a business

A lot of this may sound like a fairy tale. But we still had ups and downs along the way.

Let me share some my most difficult moments: 

  • Fundraising

I tried to raise a €7m series A in summer 2017, but I got rejected by the 15 VCs I spoke with. Why? Most didn’t see a billion dollar opportunity and questioned the scalability of our Inbound driven model.

The “listening market” (social media and web monitoring) wasn’t big enough for most of these VCs. Salesforce acquired Radian6 for $350m, and this was seen as the ceiling for companies in our market. 

This wasn’t a big enough opportunity for investors and our inbound model was seen unscalable.

And while our growth rate was good (30% year over year at $6m ARR) - good enough to get me in the door with the top VCs in the world - it was hard to show how we could get to 100% year over year growth. If you can’t scale to that extent, it’s very hard to get the investment we had hoped for. 

  • Staff turnover

24 people left the company during my time as CEO. Either from their own initiative, mine, or with a mutual understanding. It means that every 2 months, we had someone leaving the company. 

It’s hard not to take this personally as the leader of a company. 24 times I had sleepless nights and difficult discussions with these bright team members. And while I can compartmentalize other aspects of running the business, this always takes a toll. 

Of course, high turnover is natural in startups. But I do think some of this stems from my own failure in setting out the clear vision and mission of Mention. Not everyone is a good fit in every company, but you’ll find a better match if the company values and roadmap are crystal clear to everyone. 

If I could do it again, I’d definitely invest more effort here.

  • Technical challenges

Social platforms have changed a lot over the years, and they are making our mission more and more complicated. Listening platforms rely on these partners to deliver the data our customers need.

In some cases, they reduced the information they share with us (hello Facebook and Instagram). In others, they just kept on significantly raising their prices (I’m looking at you Twitter).

  • The tax man cometh

In 2017-18, we heard maybe the scariest two words a business can hear: tax audit. This process lasted nine months, and became an incredible burden on a lot of our team - not just the ones who normally handle the money.

I was confident we did everything by the book, but of course you’re always going to imagine the worst case scenario. Every crazy outcome raced through my head, and my level of anxiety skyrocketed. 

I tried hard not to let this affect the team around me, but of course it had an impact on everyone.

[Note: This actually had a positive effect on the eventual sale. Normally our buyers would’ve had to go through this process themselves, but the French government did it for them - rigorously!]

  • Loneliness and self-doubt

If you haven’t run a business before, you may not have thought about this: being a CEO can be very lonely. 

I feel I have an eternal responsibility to be positive, attentive, and to exude the same motivation I hope to see in the team. I have to maintain this despite the failed fundraising, talented staff leaving, recruitment challenges, strategic doubts or concerns, and the cursed tax audit!

Every six months I would be physically and emotionally exhausted because of a mix of loneliness, doubts, frustration with the company’s growth, and a lack of strategic vision. At the end of every day, these issues rested with me.

And yet, I never didn’t want to be CEO of this amazing company.

The wonderful things that kept us going

So yes, things got tricky on more than a few occasions, but three things made all of it worthwhile: 

The Mention team

I know that most team leaders will say this, but we really have an extraordinary group of hard-working and fun-loving Mentionos (as we call ourselves). Everyone is willing to learn new things, test, fail, and keep trying on a daily basis. 

More importantly, real, lifelong friendships have been forged between people from Europe, North America, South America, Asia, and beyond, and they all love spending time together to build something wonderful.

I’m as proud of the fact that they all came together to build our company as I am of the company itself.

My own passion for building a business

I'm no a visionary, nor a social media guru. nor passionate about social media. (I actually deleted my Instagram and Facebook accounts a few months ago. LinkedIn, you’re next).

But I'm passionate about building great businesses. That means companies that grow quickly, become financially sustainable, and have a strong team with a great culture. 

My family

My wife, kids, and friends. Each in their own way helped me overcome those difficult periods above, and always helped me to keep things in perspective. 

Finally, there are a few key people I’d like to thank that were alongside me on the Mention journey:

Arnaud, still Mention’s CTO for building a successful and scalable technology from scratch. We wouldn’t be here today without your extreme talent, pragmatism and motivation. For many startups, tech can be a weakness. Thanks to you, it’s a key strength of Mention. 

Every Mentiono for building the Mention rocketship. Each of you defined the business we built. You can be very proud of what we achieved. As important as the business, thanks for making the journey such a human and friendly journey, with countless memories I will never forget. 

eFounders for giving me the opportunity four years ago to become the CEO of Mention. Without your support and trust I would still be having lunch with you at Mini-Pouse every day.

Francois (Alven) and Rodrigo (Point9) for challenging me, but also to reassure in tough times. You are the only funds I worked with, and you are the absolute best :)

All of our customers! Let's be honest, I haven't met enough of you personally, and it's a shame - we couldn’t have done this without you!

Clement Vouillon for being part-psychologist and part coach. From lengthy calls to reassuring messages, you made the Mention journey a bigger success and more enjoyable. 

Finally, I was lucky with Mention but the reality is that I’m even luckier sharing my life with my wife, Pauline. Thanks for unconditionally supporting and trusting me. 

The future

This reads a little like a retirement letter. But it’s far from it! We’re thrilled to continue to grow Mention together with the MyNewsDesk team to become a global leader in digital marketing.

As I said above, Mention is still Mention. Only now we have a powerful teammate to learn from and share with. 

Together, we’re going to help brands be successful online. 

Christian Becquart

consultant en ressources humaines chez frrelance Audit-Conseil organisation des entreprises- Management- Qualité

3y

Très beau parcours ... vous méritez tous de réussir !

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Reply

We will miss you Mat... Thanks for everything!

Ebru Ismailoglu

Senior HR Manager at LUKSO

4y

What a wonderful article and so honest. Loved reading every word!

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Armand Thiberge

Founder & CEO at Brevo (formerly Sendinblue)

4y

Great article Matthieu!

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