Coming off three years of “triple, double, double” growth, PROPSTER Co-Founder and CEO Milan Zahradnik sat down with the GetLatka team to discuss what’s next for the high-flying B2B SaaS-enabled property furnishings marketplace. Zahradnik explained his former agency’s role in the development of PROPSTER, his key learnings on-trend adoption patterns and how the DACH region is embracing property tech, and why he believes now is the time to expand globally.
Based in Vienna, Austria, Zahradnik used his 15 years of real estate experience to run an agency with 100% equity before PROPSTER. In 2017, he completed a pilot project for a client for $20,000 that changed the trajectory of his business life.
$20,000 Pilot Program Launches B2B SaaS Business with One Client
In 2017, he was doing approximately $1.7m ARR at his agency. He was looking for “something new, something big.” So when he realized that the $20,000 pilot project he completed could be a SaaS business, he used the experience as the proof of concept to launch PROPSTER, a B2B SaaS-enabled marketplace for real estate furnishings. He closed his agency and spun off PROPSTER into a new company while retaining 100% equity and one client.
- Launched in 2018
- Initially bootstrapped, spinning-off from former agency
- 100 clients with 200 project sites
- Team of 41 people, 12 engineers, and 2 sales reps on quotas
Property Tech focuses on 3 DACH Region Countries
With his headquarters based in Vienna, Austria, Zahradnik focused his B2B SaaS-enabled marketplace on the German-speaking Central European countries of the DACH region: Germany, Austria, and Switzerland. He discovered that PROPSTER’s developer and general contractor prospects and clients in this region tend to be early adopters, and we are eager to embrace property tech possibilities. The PROPSTER proposition offers clients an optimized system that eliminates inefficient processes and execution errors while also delivering upsell opportunities throughout their customer’s lifecycle.
100 Clients, 25 Manufacturers on the SaaS Marketplace
PROPSTER clients are property developers and general contractors. Manufacturers who join the marketplace become a part of package options for the property developer to present to tenants and buyers. Those developers then receive commissions based on the buyer or tenant selections. PROPSTER helps developers showcase their building projects digitally. The SaaS offers end users—buyers, tenants, and investors—exceptional buying experiences that drive incremental client revenue by encouraging off-plan upsells. End users walk through a series of steps, using a data-driven online configurator to customize their choices of property furnishings online. The 3D models allow tenants and buyers to envision precisely what the units will look like with the selected furnishings.
PROPSTER Launches in 2018; ARR Tripled, Doubled and Doubled Again to hit $1.2m in 2021
In the early days of the business, Zahradnik tweaked the revenue model, offering fees plus a subscription. His goal was to bring in revenue early to help fund the ongoing development. He discovered that successful SaaS models rely on the subscription model, which also positively impacts multiples for valuation and is more appealing to investors. So Zahradnik pivoted to the $950 MRR pricing model and saw an explosion of growth.
Key Learnings from Sales Quota Misses Targeting $5,000 MRR
Zahradnik admits that his current sales team of two hasn’t yet met their quota. As time goes on, Zahradnik is beginning to understand the longer sales cycle as a product goes from early adopters to mass adoption. He quipped that “the real estate industry is old-fashioned and slow (to adopt new technologies).” As a result, his team is now investing more heavily in the sales process to educate prospects on PROPSTER’s value proposition and managing expectations with the longer sales cycle.
CAC $5,000, With 5-month Payback
PROPSTER currently spends a reasonable $5,000 on customer acquisition costs. At approximately $1,000 MRR, that translates to a relatively quick 5-month payback.
Targeting $120,000 MRR in 2022
Even with the quota challenges, Zahradnik is optimistic that PROPSTER will hit $120,000 MRR in 2022. The company’s 100 clients are currently developing 200 projects. These projects are creating use cases that support the proof of concept needed for global expansion. In the current model, the property developer or general contractor pays the SaaS license and can offer free access to their prospective buyers or tenants. Nearly 20,000 users have now engaged with the marketplace.
$150,000 Pre-Seed from Angel Investors
Zahradnik explained that their early seed money came from friends in the form of pre-seed angel investments that totaled about $150,000 when the company launched. Another $200,000 in Angel investments came in over the last three years to help support the accelerated growth. This investment enabled the new B2B SaaS to get off the ground and build support in the DACH region with clients and European home furnishings manufacturers.
PROPSTER Closes $3.3m Seed+ Round in May 2021, Selling 25% Equity on $10m post-money valuation
Mid-2021, Zahradnik closed his first significant funding round, bringing in a $3.3m investment from London-based Pi Labs, Europe’s first and most active VC firm investing in early-stage proptech entrepreneurs, and Allinvest Unternehmensbeteiligungs GmbH, an investment firm entity for the Gröller family of Vienna.
Aiming for a $10m Investment in 2022, at a $50m valuation
Even though PROPSTER currently has $1m in the bank, Zahradnik is ready for a major investment. He sees 2022 as a critical year for growth, as PROPSTER looks to expand globally. He recognizes that the company needs to invest in sales to grow faster internationally. Latka noted that a 40X multiplier is a significant ask on this kind of investment, but Zahradnik stood ready to do his homework and make something happen.
45% of Equity Remains with Founder
Zahradnik currently holds an approximately 45% equity stake in PROPSTER. He has sold 25% to investors to date and is holding 35% as employee incentives in an ESOP plan. When asked if he’s still excited about PROPSTER with a 45% share, Zahradnik replied, “The journey has just begun. I am very excited and ready to raise even more so we can grow even faster.”
Founder Milan Zahradnik answers Nathan’s Famous Five
Milan Zahradnik indicated his favorite book is Delivering Happiness by Tony Hsieh. Zahradnik appeared visibly troubled by Hsieh’s untimely death in 2020. Elon Musk is the CEO that Zahradnik most closely follows. His favorite work tool is LinkedIn. Zahradnik says he aims for 8 hours of sleep a night but averages six. Milan is 40 years old, married, with two children. If he could, he would tell his 20-year-old self to listen more to what experienced people tell you. Be thankful for their advice.