SaaS Interviews with CEOs, Startups, Founders
1609 How This MarTech Tool Got First 8 Customers , $40k in Monthly Revenue
20 Dec 2019
Chapter 1: What inspired Tal Zohar to launch R2Data?
He's had some success being employee number three, four at some companies that have had some success. Now he's doing it on his own. R2Data launched in 2017. Customers paying about four grand a month. They've got between kind of seven and 10 POCs out there. Many of them call it seven, eight, nine have converted to paid accounts. So about 30 grand a month right now in revenue.
That's up from obviously nothing a year ago because it just launched using conferences and other tactics to drive obviously those initial sales. Nine people right now on the team between London and India. raised about 500 grand to get the thing going. Obviously not profitable because they're investing in growth, willing to spend up to three months of lifetime value on acquiring the customer.
So call it maybe 10, 12 grand for a three or four month payback period. Hey, hello everybody. My guest today is Tal Zohar. He's the founder and CEO of a company he's working on today called R2Data. He successfully exited many companies, one of them being $100 million plus exit, one unicorn IPO on the NYSE, all in the tech space. He's also established the AI division at FT,
TSE 250 FinTech Enterprise, valued at $300 million by Barclays, and was a member of management and led digital transformation at the London Stock Exchange. Tal, are you ready to take us to the top? Yeah. All right. So you're in a hot space. You know a lot about FinTech, it sounds like. What's R2D2 do and how do you make money? What's your revenue model?
We're a SaaS company. When we help our company grow, we grow with them. And basically for marketing, we are charging a usage fee and for the sales optimization tool, we're charging a few cents per lead.
Okay. And so, so I was going to say, what are you pricing around?
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Chapter 2: How did R2Data acquire its first customers?
Is it, is it, is it number as you basically people can pay an X amount per month and get X number of leads at all around leads or is it contacts or other valuables?
So we have two products. One is for the sales cycle. Basically, we help mainly FinTech companies finding, predicting who would be their high value clients from tens of thousands of leads that they get every month. And for those, we're charging a few cents per lead. And for the marketing side, we're charging basically a percentage of the budget spent through our platform.
So only if our clients choose to use our technology, then they pay. And in those case, we are allowing companies to run super targeted campaigns in Edwards.
So think about moving from fishing with a net when you buy some fish, but you also buy water and the water costs as much as the fish does, unfortunately, to moving into fishing with a hook next to the right fish at the right time with the right bait in the right way with the right message.
This is account based marketing, right? Sorry? It's account based marketing, essentially.
Correct. All of these are powered by several layers of quite sophisticated and patent-protected AI.
So I want to understand, just so I can kind of dive in here, I mean, this sounds like this is not an SMB kind of approach. Give me a general sense of what people are paying you per year to get access to this technology you've built.
It's actually an SME approach. So one of the things we're doing and our vision is that we're democratizing AI for customer acquisition. We're bringing tools that Google and Facebook and Amazons are using today in their B2C areas, and we're bringing them to the rest of the market. And we're allowing to do that.
What allows us to do that is the combination of the fact that our technology allow us to reach a high accuracy from just 4,000 records, comparing to millions of records in the regular AI environment.
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Chapter 3: What revenue model does R2Data use for its services?
And since then we've grown 12 weeks and only in the last two months we have doubled our size of the company.
I hope you've grown really fast. It should be infinite growth going from zero to wherever you're at now, right?
Oh no. In January we also, yeah, we already had some.
It's easy to go from a dollar to $2. It's a hundred percent growth.
Yeah, that's true. That's true. But also, if you just look at the last few months, we have again, just in September, October, we have doubled the size of the company. Well, congratulations.
Congratulations on that. Let's break that down. I understand kind of how you're doing that. So how many customers have you scaled to today? 10 to 12. Okay, 10 to 12. Great. So I mean, can I take the 10 times that 4,000 you're doing about 40 grand a month right now?
Some of them are still in POC, so they're paying slightly less. Okay. But we're around 25, 30.
Fair enough. And again, this is up from zero a year ago, correct?
Zero a year ago. Yeah. Zero in December. Yeah.
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Chapter 4: How does Tal Zohar define success for his company?
Do they have the attitude that will allow them to convince an executive who is super busy and managing a lot of people to give a chance to a new product, which is, in the eyes of many companies, is kind of ā visionary because from their perspective, we're foreseeing the future and many people don't believe in it.
You know that in our tech industry, everybody's talking about AI and how cool it is. But if you go, especially in Europe, to the mid-market companies, it sounds like fiction for them, the fact that we can predict the future. And therefore, we need to gain their trust beforehand. And initially, we did some very low-cost POCs. Now, our POCs are already priced well.
But in the beginning, when we had to gain trust, we said, okay, we'll do it slightly cheaper. But On the other hand, once it works, you agree to have a proof of concept, a kind of a case study with us. So we built one pager about what we did and how it went and how well it grew.
So and are you bootstrapping this or have you raised capital? We have raised pre-seed money. OK, how much have you raised to date? About half a million. Okay, half a million. So my next question is, I mean, you have quite a history in terms of exits and especially in the fintech space. You know, they say once you make somebody rich, it's hard to motivate them.
Why aren't you on a yacht sailing in the ocean somewhere enjoying life? Why jump back in the game so quick?
So first, although I don't have much hair, I think I still feel quite young. And the second thing is that in most of those startups, I was employee number three or four. So I'm not a poor person, but I'm not a multi-billionaire yet.
You don't have private jet money yet, right?
No, exactly.
All right.
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Chapter 5: What strategies does R2Data employ for customer acquisition?
All our clients are still there. And the important thing about we have kind of anti-churn. What I mean is that all the clients who completed the POC and are working with us for more than three months, at least doubled, if not tripled, the scale of working with us.
Specifically, the amount of money they're paying you.
Yeah. So our biggest client today started with less than a thousand pounds revenue a month. And now we're making 9,000 from them. And it's not because we're nice people. It's because they like the product and because they're making money, more money than they thought.
That's great.
And we have, we have five clients like this. So almost all our clients who completed the POC have grown more than double and all of them, a hundred percent of them may increase their activity.
All over the past six months. Correct. Okay, that's great. We're out of time here, but last few questions I want to sneak in. CAC, what are you willing to spend to get a new $3,000 a month customer?
Can you please repeat that?
Sure. Yeah, no worries. CAC, fully weighted, what are you willing to spend to get a new $3,000 a month customer?
Probably $3,000 to $5,000.
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Chapter 6: How does R2Data differentiate itself in the market?
Yeah, that's great. Very good, Tal. Let's wrap up with the famous five. Number one, what's your favorite business book?
Uh, I, that, that, that's, um, actually my favorite, my favorite business book is not a business book. It's, uh, about, uh, um, it's the Einstein, uh, book about how he takes, uh, uh, physical models and implement them on, on, on people. Number kind of like taking science and I don't remember the name. I think it's, uh, we'll look it up.
No problem. Number two, is there a CEO you're following or studying right now?
There are a few.
Just pick one.
I'm looking at the CEO of Google.
Google, Zaya.
I think, and the CEO of Microsoft. I think that the Microsoft one is much more interesting because he took a company which weren't trending very well, and he took basically the same product and repacked it, both in terms of taking it into the cloud and changing the business model behind it to bring the company back to growth, together with a very aggressive M&A strategy like buying LinkedIn.
And also a company that, unlike the younger companies, their workforce have been there long before him. And I think that's... Very good.
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Chapter 7: What challenges has R2Data faced in its growth journey?
How many? Probably around five. Okay, and what's your situation? Married, single kids? Sorry? Married, single kids?
Yes.
Married with two kids. Two kiddos.
Wonderful daughters.
How old are you, Tal?
One is nine and one is four.
Not the kids. How old are you? I'm 40. Just turned 40 a month ago, actually. Congrats. Last question. What do you wish your 20-year-old self knew?
Um... be less concerned about the next year and be more concerned about the next five years.
Guys, there you have it. Have a little bit of a long-term approach. He's had some success being employee number three, four at some companies that have had some success. Now he's doing it on his own. R2Data launched in 2017. Customers paying about four grand a month. They've got between kind of seven and 10. POCs out there. Many of them call it seven, eight, nine have converted to paid accounts.
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Chapter 8: What advice does Tal Zohar have for aspiring entrepreneurs?
So about 30 grand a month right now in revenue. That's up from obviously nothing a year ago because it just launched using conferences and other tactics to drive obviously those initial sales. Nine people right now on the team between London and India raised about 500 grand to get the thing going.
Obviously not profitable because they're investing in growth, willing to spend up to three months of lifetime value on acquiring the customer. So call it maybe 10, 12 grand for a three or four month payback period. Tal, thanks for taking us to the top.
Thank you. It was a pleasure. Thank you.