SaaS Interviews with CEOs, Startups, Founders
1589 How This Pilot Using Freemium To Get First 300 Drone Software Customers
30 Nov 2019
Chapter 1: What is iDronect and how does it serve drone operators?
Founded iDronect, which is management software for drone operators to make sure they're compliant. Founded it back in 2015. They have 1,500 free users, 300 customers paying $24 a month. So $7,200 per month right now in revenue. That's up from $2,400 a month just a year ago. So healthy growth.
Chapter 2: How many users and paying customers does iDronect currently have?
They're burning about $3K per month right now as they look to scale. Only raised about $50,000. They've got a team of four people based in Belgium. 5% logo turn annually for about 95% net revenue retention because there's no expansion. Spending $40 to get a new $24 a month customer. So two-month expansion. payback period as they look to expand internationally. Hello, everybody.
My guest today is Tom Verbruggen. He is the founder and CEO of iDronect. He's 44 years old. He's obviously an entrepreneur and active airline pilot and has a master's in aviation science. With his company, iDronect, he wants to unlock the huge potential the drone industry has by making it easy to fly safe, legal, and in a fun way. Tom, are you ready to take us to the top?
Yeah, thank you for having me, Nathan. You bet. Okay, so drone management software. What does this look like? And is the revenue model a pure play SaaS company? Well, it looks like a digital tool to help people enable the... enormous potential that drones have.
So a lot of people see a lot of opportunities in drones, but they are faced with a lot of challenges, legal, how to fly safe, how to be legal, where to fly, etc. And we give them a digital tool that makes it intuitive to follow those rules and regulations. So in a way, it's really a SaaS platform, software as a service platform,
Where the basis is given for free and then there are premium features that need to be paid. I see. And I want to obviously put this on a timeline in a second. Before we do that, though, I mean, describe the kind of average customer. What's the perfect customer for you? The perfect customer for us is a recreational to serious recreational drone user.
So anybody that buys a drone that is about with a decent camera where they either do it for fun or start making money. It can go up all the way up to a business to business. So where we provide services for airports, drone schools, etc. But the typical customer for us is somebody who is serious recreational to beginning professional who wants to get rid of the entire administration.
So we focus on that so he can focus on flying. And Tom, for that kind of user, you're kind of your average user, what are they paying per month on average, would you say or per year? Well, it depends a little bit country to country, but we are market leader in Belgium and there our customers pay 20 euros. So let's say $24 a month. Okay, got it. So 24 bucks a month.
And then how do you charge people more? What are the pricing axes that you maybe upsell against? Is it like number of drones managed or number of seats? What are some of the utility metrics? It is per pilot account, so an administration account does not pay, but a pilot account pays a monthly fee.
and then the uh the axes that go up are when premium features are being unlocked and premium features are for instance we also provide a complete ensuite invoicing tool and quoting tool so drone pilots can get in touch with their customers quote a drone flight and get already access to that through that customer in the platform and in order to unlock that they pay an additional fee an additional premium fee for that
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Chapter 3: What is the revenue model of iDronect and how does it work?
When did you launch the company? So we started in 2015 when Belgium had his first drone rules being drafted. And I saw, because I come from this aviation background, that there's a lot of rules and regulations. And even for professionals, it's not easy. So we decided to launch in 2015 a helpful tool that made it easy. And since then, yeah, we've come a long way.
We've just launched our fourth version of the platform last week, actually. Congratulations. Thank you. We're going fully international now. And we are able to cast to cater for any drone regulation anywhere in the world right now. This is great, Tom. And how many customers have you scaled to today? Well, at the moment, we are at 1500 users, they are all in Belgium.
And we want to reach as soon as possible to 10,000 users. And of those 1500, because I know you have a free plan, how many of those have converted to paid? We are about 20% upgrade to paid. Okay, that's pretty good. I want to learn more about that. You're kind of a unique industry doing this, but a lot of people try freemium models and they only get 4% or 5% free to paid trials.
You have 1,500 free users. You've converted 20%, so call it 300. Is that right, to paid? Yes. How have you done that? And specifically, when do you introduce a paywall? How do you decide what to get for free versus what to keep as paid? Well, we started completely for free in the first year because we thought it to go full free and then monetize it after.
After a while, we figured out that the users really get value when they communicate to the authorities, so the drone authorities. In the US, it would be the FAA. In France, it would be the Direction de l'Aviation, etc. So whenever they start communicating through our platform to the authority, then we provide really the value. So whenever they do that, then we introduce the payment.
All the rest, like charts, like aeronautical charts, weather information, a logbook, all of that is for free. That is the content that we provide for free. And actually, we try to also build a community. And that's why it's important to give a lot away for free, actually. So $24 a month on average, 1,500 users, 300 customers. I can multiply 300 times 24.
It sounds like you're somewhere around $7,000 per month right now in revenue. Is that right? Yeah, something like that, yeah. And where were you exactly a year ago so we can get growth rate? Well, a year ago, let's say that we were about at 100 paying customers. Okay, so $2,400 a month? Yeah. Okay, so look, healthy growth. So let me ask you a big question here. You have some early success.
You still have your full-time job, it sounds like, though. When do you cut the safety net and go all in on the company? Well, I would say that I'm already all in in the company. You're still flying though, right? I'm still flying. I'm lucky enough that I don't fly a lot, let's say. So I can spend quite some time on the project HydroNect.
To go all in would require though a serious internationalization growth where we need to manage a bigger team. For the moment we are still quite limited.
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Chapter 4: Who is the ideal customer for iDronect's services?
We do everything ourselves. We are about four people now. All in Belgium? All in Belgium, yeah. That's great. We have partners in other countries. So we have country managers. So we are looking actually for country managers that want to be the specialists for that country for iDronect.
So because we are not the specialists, of course, in France, in Canada, in the U.S., when it comes to drone regulations. So we are looking for ambassadors in each country for us. can help us.
So we have a specialized, let's say, it's very trademarked at the moment, we have this specific rule editor that makes it very easy to transform any complex regulation into an intuitive flow into HydroNect, done by the HydroNect country manager. So 2015 founded, four people today, based in Belgium, you know, scaling nicely. Have you gotten this bootstrapped or have you raised capital?
No, we are, well, mainly we are bootstrapped. We got some initial funding through an incubator program in Belgium where we were one of the innovative projects. They gave us a beginning capital. How much, Tom? It's 50K, 50,000. And which program was this? This is the iMac iStart incubator program in Belgium. Interesting. Would you recommend it? Definitely, definitely.
Not only for the funding, it's also a lot of coaching. There's a lot of things that go besides that, social media growth, etc. So yeah, definitely, definitely. And so then you've raised some money in the past. I mean, today, as you look at the business, are you operating kind of cash flow positive for now? Or are you still putting money in the company to help it stay afloat?
We have been putting some of our own money in, so of course our fixed cost at the moment can be covered by our revenue. We have put in, though, some extra investments when, for instance, we are one of the only companies that really use what we call aeronautical data quality compliant charts, which means that drone pilots that use Idenect use exactly the same information than airline pilots use.
It's really highly professional. In order to get that database, we invested some money. And Tom, how much of your guys' own capital, the founder's capital, have you guys put in? We've put in for at this moment, we've put in about 75K. OK, so not a huge amount, but something that's still meaningful. It is meaningful, of course, but we tend to keep it low profile.
So just to be clear, though, you're burning like today because you're putting in some of your own capital. You're burning a little bit of cash, maybe two, three, four grand per month above the 7,200 in revenue you're bringing in. Yes, yes, exactly. Yeah, which is fine as you drive growth. So what, I mean, how do you, how does this thing go from seven grand a month, Tom, to 90 grand a month?
Well, it will go through the international growth. In Belgium, we have reached a little bit our limit. There are only so many drone pilots that are there in Belgium. So it will be international growth. And in order to do that, we've unlocked the potential to transform any regulation
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