What’s a SaaS founder to do when you’ve steadily grown for 3 years from $2.5m to $13m ARR, then the bottom drops out of the economy? While many businesses would have folded, CEO and Co-founder Allan Guiloff of Chilean Shipit.cl instead took the more challenging path of downsizing and living to fight another day. Discover what he revealed to the GetLatka team about his arduous journey from near bankruptcy to profitability as he discussed his biggest entrepreneurial mistake, how he handled the uncomfortable business of downsizing from 110 to 25 employees, and what happened when he raised his prices 40% after the economic collapse.
- $6m GMV with 25% take rate
- 800 customers
- Team of 25 full-time employees plus contractors, downsized from 110
- $500,000 EBITDA
Managing shipping logistics for 800 eCommerce customers
According to Guiloff, most of the 800 Shipit.cl customers are online sellers that allow the company to import their sales information to choose and manage the best available logistics for product fulfillment. “We either send a carrier to pick up, or for smaller companies, we have ‘heroes’ who go to our cross docks, and then carriers pick up there.” The CEO further clarified, “We are responsible for what happens to the parcels, choosing carriers based on the customer’s specifications. We collect the full parcel price, take the profit, then pay to the carrier company.”
25% GMV on negotiated carrier company contracts
In as late as 2022, Shipit.cl operated on an 18% take rate from operations in Chile and Mexico. As a result of the economic crisis in Chile, the CEO increased his take rate to 25% in 2023, which cost a 20% loss of his customer base of 1000, but resulted in a healthier, more sustainable company that turned a profit. That same crisis led to a 50% decrease in annual revenue and nearly cost him the company.
2022 political and economic conflict in Chile wreaks havoc
What happened in Chile? According to the Shipit.cl Co-founder, “The government approved 4 withdrawals of pension funds. That triggered massive inflation and then surging interest rates. As a result, retail sales decreased, which led to my sales decrease.” After growing from $10m GMV in 2020 and doing $13m in GMV in 2021 at an 18% take rate, the CEO’s business plummeted to $6m GMV in 2022. Meanwhile, many retailers went out of business, and the ones who survived did about half the previous year’s revenue.
$10m VC funding withdrawn; existing investors refuse to add $600,000 funding to Shipit.cl
Just prior to the Chilean crisis, Guiloff secured $10m in VC funding at a low valuation of $13m. He planned to use $5m for working capital and $5m to acquire a company in Mexico. However, his existing investors failed to accept for 4 months, at which time the investors withdrew their term sheet. According to the CEO, “I went to investors the day the VCs withdrew to say we have a problem, but I have a plan. I need $600,000 to make the changes, like close the Mexico operation, fire people, and pay severance. They said that’s not going to happen. You should probably bankrupt the company. Then I was like, what? This is a company with over 1000 recurring customers!”
CEO deals with drastic downturn, manages $2m debt
“We had zero cash in the bank. And we had accumulated about $2m in debt. I didn’t realize it, and that was my mistake. We owed our suppliers and credit card companies. I kept increasing the payment terms past 60 days, but the money never came,” the CEO revealed. He continued, “I pushed and negotiated every debt I could. I had been working with our suppliers for 7 years, so I asked them to let me pay daily for what I do and then pay off the debt.”
Cuts Shipit.cl staff from 110 to 25
Without help from his investors, Guiloff had to downsize his staff from 110 to 25 and could not pay employee severance. “It started August 5 of last year,” the CEO recollected, adding, “I had a 50-minute call with 40 guys. August, September, and October were horrible. We had zero cash in the bank and were burning $200,000 per month.” Latka interjected, “Thank you so much for sharing. So many founders are going through this but don’t discuss it. They think they are doing it by themselves.”
Monthly Net Burn goes from -$200,000 to +$40,000, $500,000 EBITDA
After completing his painful cuts and renegotiating his debts, the CEO worked on increasing his profits. “I realized that what’s killing me is the cash flow. I wondered, what if I did a SaaS business? I asked my customers, but they said no way, we like your value proposition. To which I said, OK, if you like it that much, then I will increase my prices. Then I went from 18% to a nice juicy 26%. We went from 1000 to 800 customers, but we increased our revenue.” The CEO explained that since the changes, they have emerged from a monthly Net Burn of $200,000 to $40,000 in monthly profit.
2 failed attempts to buy back his company
After hearing his harrowing business story, Latka queried Guiloff, “Since your investors wanted you to bankrupt the company and wouldn’t give you $600,000, do you turn the tables now and ask to buy back the company at a super discounted price?” The CEO replied, “I’ve tried twice. In August and 2 months ago. The same investor that didn’t want the term sheet and wanted to bankrupt the company said ‘no, I can’t let you do that.” I think it’s some ego, like I have no problem with you failing, but I don’t want you to succeed. Like, what the hell?” He added, “I’m stuck with him now, but it’s water under the bridge.” The Co-founder also shared that he and his fellow Co-founder currently own 49% of the company.
Tips for staying healthy during business crisis
Knowing Guiloff is fitness-minded, Latka queried him about how he managed to stay healthy and fit during this time of crisis in the company. The CEO thoughtfully replied, “Sleep and sports. But my horrible mistake was not talking to my wife enough.” He further explained, “I came home in August and said the company might go bankrupt. She said, ‘What the hell?’ I hadn’t told her anything along the way. My biggest recommendation is to talk to your spouse or partner. Don’t be afraid. Shit happens.” Guiloff finally added, “I work out with my wife after work. And sleep 7 hours. It’s a nice balance.”
CEO he’s following: “I follow you, Nathan Latka, the most,” Guiloff proclaimed.
Favorite online tool: Guiloff chose Slack as the tool his team relies on most frequently.
Balance: Guiloff sleeps 7 hours per night. He’s 33, married, and has no children.
What does he wish he had known at 20? “I used to work in an incubator. I wish I had known to choose your investors carefully. Now I’d rather be alone than be with bad company. And always listen to your spouse. She told me not to take money from this guy. But I didn’t listen,” Guiloff revealed.