Bootstrapping a Virtual Company to Scale: Lily Stoyanov, CEO of Transformify (Part 5)

Sramana Mitra: What metrics can you provide about how you’ve built your business from 2016 to 2020? How has your business grown?

Lily Stoyanov: Exponentially. Our business grew through very strong partnerships. We have usually more than 100% growth per month. This is happening because we identify the right partners.

I’ll give you an example with WeWork. WeWork is a co-working space. If we refer customers to WeWork, WeWork pays us a referral commission. If WeWork refers their customers to us to use our software, they have double gain. We share part of our revenue. Also the more people are hired, the more desks and space they need. WeWork is actually increasing their member base. That’s how companies are growing; referring customers to each other. We have more than 200 such partnerships at the moment. These are in different industries.

What we have in common is that our customers are likely to need the product or service provided by the other party. The other party refers customers to us because they need our solution. That’s how we manage it without any external funding.

I’m an angel investor myself. I invested in the company, and we were newly-funded. We never raised funding and we are not planning to do that. As an angel investor and a business owner, the biggest problem founders create is spending too much money on marketing that has lower return on investment.

There is always a way to achieve the same or even better result without spending anything upfront because you share revenue when you have a revenue, but not before. 

Sramana Mitra: What is your revenue level right now?

Lily Stoyanov: It’s something I prefer not to discuss as we’re looking at a partial exit and we’re in a due diligence process. We ranked in the top 100 startups in the UK for two years in a row. In 2017, the run rate was estimated at $10 million. The next year, we already forecasted a 25% increase on that. 

Sramana Mitra: In your first year, you were doing $10 million annual revenue run rate?

Lily Stoyanov: Yes.

Sramana Mitra: How did you get to that level of penetration? What did you do to get that level of adoption quickly?

Lily Stoyanov: Partnerships. If you try to sell it and nobody has heard of you, then you can’t have this penetration.

Sramana Mitra: What was the first partnership that started producing that level of revenue for you?

Lily Stoyanov: Our first partnership was a financial services company that was looking to acquire more users. In the financial technology business, everyone is pretty much offering the same services. To acquire users, they need to find someone like us who has a lot of jobseekers.

They were referring businesses to us. The moment they refer business to us, the business starts creating jobs. We use algorithms that are very similar to search engines to serve the information to people looking for jobs using certain keywords. On the jobseeker side, it’s very easy because it’s free. They pay nothing.

Sramana Mitra: What is the scale of your virtual operation? You said you run this as a virtual company?

Lily Stoyanov: Zero. We run only with freelancers-on-demand. At the moment, we have 300 freelancers. No one is full-time because we don’t need them full-time. 

Sramana Mitra: The number you are reporting as revenue is the gross business value of your marketplace.

Lily Stoyanov: You were asking me about employees. I have no employees.

Sramana Mitra: The reason I’m pushing back on that is you’re reporting freelancers doing projects on your platform. How many people help you run your company?

Lily Stoyanov: Zero.

Sramana Mitra: So you run it with a freelance workforce. How many freelancers are helping you run your company versus freelancers completing work for your clients?

Lily Stoyanov: Our own pool is 300. Those who are working for the clients are more than one million.

Sramana Mitra: These 300 freelancers actually help you run your company.

Lily Stoyanov: Correct.

Sramana Mitra: You said you’re doing a partial exit to a private equity firm or a strategic buyer.

Lily Stoyanov: Strategic buyer.

Sramana Mitra: Terrific. Thank you for your time.

This segment is part 5 in the series : Bootstrapping a Virtual Company to Scale: Lily Stoyanov, CEO of Transformify
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