Hey - Marc here.

Happy Saturday morning, motivated B2B SaaS Founders!

Here's at least one tip to keep in mind as you grow your B2B SaaS company:

Today's issue takes about 5 minutes to read.

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In today's issue, I share some key takeaways from a recent interview between Nathan Latka, the host of Daily Interviews with SaaS Founders, and Antti Nivala, the CEO and founder of M-Files. They discussed his document management SaaS that hit $90m ARR recently and took $30m secondary in the last round.

Antti learned how to run a business by watching his father run his AEC consulting company, doing software as a hobby, and being interested in finding ways to apply his software development skills to real-world problems. That’s how he landed on this idea of how to make document management more efficient.

About M-Files

M-Files is a global leader in information management, helping manage documents and share files internally and with your customers, so you can collaborate. They’ve got over 5,000 paying customers, some of which pay over a million dollars annually.

They’ve grown 25-30% year over year for the past several years and broke $90m in ARR today, up from $75m a year ago when they closed their series. They now have 600 folks on their team as they move forward conservatively and break the $100m run rate early next year.

The M-Files meta driver document management platform enables knowledge workers to instantly find the right information in any context, automate business processes, and enforce information control. M-Files started with a long history — starting with his father’s architecture and engineering business. In 2002 was when they started developing the software.

P.S. Now serving over 5000 customers in total. Revenue-wise, ⅓ are from resellers, but in terms of customers, it’s much higher — at least 80% are probably through partners.

Challenges

Resellers sell their products for a lower price.

But they try to take upon the first approach, so if they are working on the same prospects, they give way to the partner and rather support them in winning the deal. The market is huge, and so many companies need M-Files and benefit from them. Their direct sales teams will have other prospects to work on.

They’ve never been what they think is a super-growth company.

It’s been more of a 25-30% growth in the past years. But sustaining that and doing it efficiently and not burning cash, he thinks that’s the profile of who they are. The funding of something he created a little bit earlier allowed them to be bootstrapped for the early years.

Advice to Other Founders

Get to know your customers’ true business problems better.

It has been a fairly natural evolution for them, but part of it has been understanding where they offer the most value. They continue on the journey of becoming more specialized and knowledgeable about their customers' needs to continue providing excellent solutions.

You have to deal with potential downsides.

If you’re after something important, it’s not necessarily easy. For a company to succeed in raising money at the peak of the valuations, you must be prepared for potential downsides, which means thinking about what could go wrong.

Don’t just go and hire new sales reps for your company.

Instead, focus on figuring out how to invest more in marketing and how to be smarter in increasing your brand awareness in the US market to help sales. It’s not so much about scaling the team size. It’s about getting to larger deals and ensuring that the time the team spends with the prospects is well spent.

There’s nothing wrong with being conservative.

Antti was conservative when it came to raising money. He didn't try and raise at a 50x multiple—instead, he raised at a more realistic 20-30x multiple. Today, he looks like a genius because all the people that raised it 40-60x multiples are down while he's growing his valuation.

Bonus

The business book entitled “Good to Great” by Jim Collins appealed to Antti the most.
There is nothing that beats the environment like a visual studio. Maybe not the traditional online tools you would get as announcers.
He was very product and engineering-focused, so he wished he had known that there’s so much more than just building the product you need to do.

TL;DR

M-Files helps you with document management, like sharing files internally and with your customers so you can collaborate. They’ve got over 5,000 paying customers, some of which pay over a million dollars annually. They’ve grown 25-30% year over year for the past several years and just recently broke the $90M in ARR, up from $75M a year ago when they closed their series C. He was nice enough to show that $30M was secondary, which is great for liquidity for early employees and investors. Now with 600 folks on the team as they look to build conservatively moving forward and break that $100m run rate early next year.

P.S. Here is a link to the full interview if you are interested in listening to the full episode: This founder hit $90m ARR last week, took $30m secondary in last round for document management SaaS

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See you again next week.

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