SaaS Interviews with CEOs, Startups, Founders
18 Month Old Startup Already Has 3 Customers Paying $100k/yr. Is AI over valued?
02 Nov 2023
Chapter 1: What is Softbrick and how does it use conversational AI?
Softbrick is customer intelligence with conversational AI. He's got 60 customers today, of which three pay over $100,000 per year. He just launched 18 months ago, doing $30,000 a month in revenue. His last round was a $90,000 pre-seed round last year at a $9 million pre-money valuation, so sold 15%, 20% of the business.
Today, he's got 11 folks on the team looking to scale, six engineers, five sales reps. They all carry a quota of $150,000 per year, targeting a $3.5 million round today, to fuel some of his burn. He's burning $45,000 per month as he tries to force this idea into existence and get new customers. Hey folks, my guest today is Ram Chowdhury.
He has over two decades of experience with Google, AWS, launching proxies by over 20 million people worldwide. Today, he's co-founded Softbrick, a conversational AI company, and also advises European institutions on the upcoming EU Artificial Intelligence Act. Ram, you ready to take us to the top?
Thank you so much for having me, Nathan.
You bet. So you're building software today, customer intelligence, conversational AI.
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Chapter 2: How did the founder acquire three customers paying $100,000 per year?
Are you doing this for anybody or are you focused on a specific kind of customer, a specific niche?
Well, every company in the planet needs customer, right? And we help companies to basically connect better with their customers through voice message and interactive UX without any app, just on the phone browser. So I'm sure you have used WhatsApp voice message or similar messaging methods.
systems um instead of whatsapp imagine that you're a company and within a few seconds you can create a form pretty much like a google form on your phone distribute to your customers they click and they can just talk through their phone browser that's it no app required and we do it in 40 languages so we basically help any company in the planet connect better to their customers understood and what do you charge on average per month or per year to use this technology
We have an annual plan. Typically, we do a proof of concept. Our target customers tend to be in telecom, healthcare, insurance, primarily enterprises. So we have a proof of concept that ranges around 90 days. And then we have an annual plan. And then we have tiers. The full details are available on our website.
Well, Ram, my audience can't see your website right now. They're listening to this while they're driving. What does the average customer pay you per month or per year today?
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Chapter 3: What is the current revenue and growth strategy for Softbrick?
Yeah. So typically we have small customers who are around the $5,000 mark. We have medium range customers around $25,000. And then we have $100,000 for enterprises call centers.
Okay. So what would you say the average customer pays you per month? Is it $5,000 a month? $10,000 a month?
No, it's an annual deal. However, some companies sometimes have projects, especially in healthcare, that ranges from three to six months. In that case, we just prorate it monthly and give it to them accordingly.
Yeah, Ram, sorry. I'm just trying to simplify this. What does the average customer pay you per year for your SaaS product?
$5,000.
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Chapter 4: What challenges does the founder face with customer acquisition?
Okay, $5,000 per year. Great. What do they get for that? What are you pricing against? Is it number of seats, number of conversations?
So we have the number of seats by tier, and then in that number of seats for the 5,000, they will get around 5,000 messages. But for 25,000, they get around 100,000 messages. They get the advantage of scale.
Okay, got it. And you mentioned you have some customers, say, paying more than $100,000 per year? Yes. Okay. How many today pay more than $100,000 per year, and how many messages are they sending on average?
Great question. So we have three such customers who are in the enterprise bracket already.
Chapter 5: How does Softbrick determine pricing for its services?
And we have been around 18 months in the market now. And these three customers, they are individually doing more than a million messages for the 100,000. Yeah.
For a year. Yeah. And you mentioned you just launched 18 months ago.
Yeah.
I mean, that's remarkable. You already have $100,000 customers 18 months after launch. How did you get these customers?
Well, we did a lot of good product market study. So I have worked for technology industry for a long time, right? I know how those typically SaaS companies operate. They go, they raise a lot of funds. They try to go bottom up.
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Chapter 6: What is the team's structure and how are sales quotas set?
Instead of that, we went top down and we started finding product market fit and the value that we bring to our customers. So we have proven that we are helping them literally to save millions of dollars in terms of cost or do better engagement and drive millions of dollars in terms of value. Against that, $100,000 is a fairly simple number for them to pay.
It's all about value, not about the cost.
Okay, how many customers are you serving today?
We have around 60 paying customers and 300 customers have used our product out of that 60 are paying customers.
Okay, six zero are paying customers. Okay. And if I say 60 customers times $5,000 per year, that's $300,000 of ARR.
Is that accurate? Absolutely. We are in that range. I think right now we are slightly more than that, but yes, we are pretty much there.
Oh, what's going on there, YouTube? Good to see you guys.
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Chapter 7: How much funding has Softbrick raised and what are the future plans?
Now, imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of FounderPath. Check this out. I'll show you how you can access this in a You connect your Stripe account.
You see your valuation real time. You can see what it changed over the past 88 days and even set goals for valuation this year. Now, the secret valuation is there's many different ways to value a SaaS business.
So the reason you're going to see three or four different valuations inside of your founder path dashboard, this is all free, by the way, is because depending on who's doing the buying of your SaaS company, you're going to get a different valuation. A VC is going to pay a different valuation. Private equity firm is different. If you're going to do a minority sale, that's different.
Chapter 8: What insights does the founder share about the startup journey?
And if you sell the whole business, that's a different valuation. You can see all those when I hover over here, right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is not built off random data. Again, you guys hear these interviews on YouTube.
All these data are built from real-time valuation data points founders share with us on the show. So Traction, 1.2 million. Seed Round, 3.7 raised. They sold 22% of their business. Go in here and filter by the event. Maybe you only want to see companies that have sold the whole business. Well, here are a bunch that have been acquired, the valuation and the multiple.
Maybe you're going out right now and you're raising your seed round. Well, go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at, and what percent that they sold. There's never been a larger data set of SaaS valuations than what you can get now inside of FounderPath, and we're thrilled to bring it to you.
All right, we're going to go back to the YouTube video here in a second. But if you want to check this tool out, if you want to jump in and sign up, you can check it out for free to get your valuation at this link, this link, founderpath.com forward slash products forward slash valuations.
Or if you go to founderpath.com and hover over products, click on get your valuation here and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. All right, let's jump back into the interview. Like more like $400,000 per year?
No, I think we have somewhere around $350,000 right now.
$350,000. Okay. You mentioned that three customers pay $100,000 per year. So of those 60 customers, it sounds like three customers make up 80-90% of your revenue. Is that right?
Well, not all the three started on the first year, right? It took some time with larger customers. There's a time gap also. The recognized revenue takes time. By the time next year it will be recognized, I think they are around 60% of our revenues are top three and the rest of them make around 40%.
Okay, I'm having trouble. You either have customers today paying you $100,000 per year or you don't have customers today paying you $100,000 per year. Which is it?
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