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 Yuval Shtokhamer, the co-founder and COO of MiniHotel. They discussed how their hotel SaaS hit $1.3m in ARR and acquired 1,400 customers.

Yuval Shtokhamer, son of MiniHotel’s CEO Yoram Shtokhamer, joined the company in 2020, transforming it into a thriving IT and cloud-based hospitality SaaS. They offer Property Management System (PMS) software for businesses in the hospitality industry, mainly targeting low-market establishments.

About MiniHotel

Mini Hotel, founded by a father-son duo in Israel in 2007, achieved $1.3m in ARR, up from just $1m a year ago. They've achieved this feat by bootstrapping the business entirely. They currently serve over 1,400 customers in 70 countries, specializing in small hotels, guesthouses, vacation rentals, and hostels.

Their customers pay an average of $85 per month, with pricing based on the size of the property. While they did lower their prices over the years, their pivot to focus on the global market, especially emerging markets, has significantly contributed to their growth.

They maintain profitability, except for 2022 when they invested over $100k to open a new office in Serbia, adding to their existing offices in Israel and Argentina. They have an efficient customer acquisition strategy, spending around $4k per month on paid ads, mainly on Google and Facebook.

MiniHotel claims an incredibly low churn rate of less than 3% annually, which is uncommon in the hospitality tech sector, known for its high business failure rates. They attribute their success to their sticky product and excellent customer support.

PS They own 100% of the business. Their CAC is approximately $400 per customer, yielding a payback period of around five months.

Challenges

MiniHotel experienced a drop in revenue during the COVID-19 pandemic.

The hospitality sector's uncertainty affected some businesses, leading to reduced revenue streams. Managing such external shocks and maintaining customer loyalty in challenging times requires a robust contingency plan and adaptable strategies to weather unforeseen disruptions.

Advice to Other Founders

Be open to exploring acquisition offers, but remain dedicated to growing your business.

Although MiniHotel received acquisition offers in the past, they are inclined toward the long-term growth of their business, valuing it at around $15m today. They've expanded their operations to include three offices in different countries, with a total of 25 full-time employees and several part-time workers.

Consider looking beyond your local market.

Their journey from Israel to a presence in 70 countries demonstrates that geography needn't limit your reach. In a digital age, your business can transcend borders and cater to a global audience. Think of the world as your playground, and your startup as the passport to new opportunities.

Organic growth is gold.

While paid advertising can yield quick results, organic growth driven by word of mouth and customer referrals often leads to the most loyal and long-lasting customer relationships. Don't underestimate the power of delivering exceptional value and letting your customers become your best advocates.

Bonus

Yuval’s favorite book is "What Got You Here Won't Get You There" by Marshall Goldsmith.
He also mentioned that he is following and studying CEO Brian Chesky, the CEO of Airbnb.
When asked about his favorite online tool for building MiniHotel, he mentioned Google Calendar.
At 40, Yuval is married with two children.
In response to what he wishes he had known when he was 20 years old, Yuval advised to aim bigger, highlighting that he was too modest back then.

TL;DR

MiniHotel began its journey in Israel in 2007, initiated by a father-son team. Today, they have achieved $1.3m in ARR, showing significant growth from the previous year's $1m. They accomplished all of this through bootstrapping, retaining 100% ownership of the business. They recently attracted an offer with a 6X multiple, amounting to approximately $6-7m, but their focus remains on staying dedicated to building the business. Their primary clientele consists of 1,400 smaller hotel chains and vacation rental managers, each contributing $85 per month. They continue to add around 40 new customers monthly, primarily through a $4k monthly investment in paid advertising, along with leveraging platforms like Capterra to facilitate their scaling efforts.

PS Here is a link to the full interview if you are interested in listening to the full episode: How this Hotel SaaS Hit $1.3m in ARR and 1,400 Customers.

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See you again next week.

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