SaaS Interviews with CEOs, Startups, Founders
$1.4m ARR Furniture Delivery Chatbot Company Growing 200% YoY, Raising $5m Now
04 Dec 2021
Chapter 1: What is the business model of Package.ai?
Well, at this point, the business is proven. We're over a million dollars in ARR. So I think it's an easier process at this point than it is early on.
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
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He's got 15 years of experience envisioning and building customer-centric communication software. He's leading Package.ai to become loved by customers, has a Wharton MBA, ex-Microsoft and Skype guy in Seattle, specifically Silicon Valley. Again, now focused on the business, turning delivery into a marketing engine. Ziv, you ready to take us to the top? Absolutely. Let's go. All right.
What does that mean, turning delivery into a marketing engine?
So Package.ai is basically a combination of delivery management software and conversational AI platform that basically transforms the last mile or delivery experience into a very customer-centric experience.
experience and basically what happens is through our delivery management platform we give the consumers a real voice in the delivery process and then in turn basically produces engagement that turns into glowing reviews and repeat sales for our customers who are the retailers typically.
So name one or two of your customers. When I think last mile delivery, am I thinking like Uber Eats or am I thinking like McDonald's and their internal app for last mile delivery?
No, no. So we actually focus on a very specific vertical, which is home furnishings and appliance delivery. So we work with a bunch of, you know, from the smaller to medium sized and larger furniture and appliance retailers all across the US and Canada. And we help them with this challenging process of delivering sofas and dishwashers and placing them in people's homes.
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Chapter 2: How does Package.ai enhance the delivery experience for customers?
So we have, without going into specific details, but we have dozens of customers in North America.
Okay, got it. So fair to say it's sort of like more than 24, but less than 100? Yes. Okay, very cool. And are you only focused on North America?
We are. At the moment, we're still a small team. The engineering team is in Israel. I'm based in Israel and kind of fly a lot.
What's the total team size?
10.
Oh, 10. Okay. And so how many engineers are in Israel?
So we have seven people in Israel and three in the U.S.
today. The seven in Israel, they're all engineers?
Yes.
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Chapter 3: Who are the typical customers using Package.ai's services?
Or how did you guys have the tough equity conversation?
Yeah, 50-50, full partnership. This is like a marriage and it's been working well.
Now, do the two of you guys still own 100% equity or have you raised capital?
Yes. Oh, no, we've raised capital. We still own control, but we've raised about $3 million to date. So no VCs, more kind of friends and family and industry insiders.
Can you break that down for me, Ziv? What was the first round of funding? What year?
So in 27, so in 2017, we raised a pre-seed round. Um, it was around 700,000 and the rest, um, which I think it was our seed round, uh, is, was in kind of multiple, you know, safe, uh, safe kind of, uh, vehicles. Um, and, uh, yeah, and we're kind of gearing up to raise our, uh, kind of an a round in the next six months, just starting the process.
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Again, both plural founder path.com forward slash products forward slash valuations. Taking back to customer number one in 2017, who was it and how'd you find them?
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Chapter 4: What pricing strategies does Package.ai use for its clients?
I would argue at your stage, you have some metrics you can point to in terms of traction, but it's still your ability to tell a good story about the future value of the company. So what valuation do you think you try and raise at?
Yeah, it's a good question. My philosophy or our philosophy is that we want a good valuation and we want to give away as little of the company as possible. But we also don't want to get into a place where we have a down round after in the future. So we want to keep it sane, I would say. I think the, you know, average multiples, at least like in the past, have been between 30 and 40, right?
Like this growth rate that we're showing, which is, you know, between two and three times 3x like year over year. So that's roughly what we're thinking. But it's again, it's still very early on.
And Ziv, with 24, north of 24 customers paying an average of $60,000 a year, that would put you at about $1.4 million in AR right now, run rate rise. Is that about right?
Yeah.
And if you're growing 30%, 40% year over year, that means about a year ago you were doing, what, $80,000 a month in terms of run rate?
Yeah. Sorry, the... You mean ARR?
Yes. Right now, if you take north of 24 customers at 5,000 bucks a month, you told me the average was about 60,000 ACV, 5,000 monthly ARP, who times 24 is $120,000 a month in revenue. You said you're growing three to 50% year over year. So a year ago, what was MRR?
Yeah. A year ago, MRR was about, yeah, around the 50.
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Chapter 5: How did Package.ai acquire its first customers?
Looking at a Series A now, maybe $5 to $10 million at a $40 to $50 million valuation. We'll see what Zip can get in the next six months here at Zip. In the meantime, thanks for taking us to the top.
Thank you very much.