SaaS Interviews with CEOs, Startups, Founders
Customer Support SaaS Hits $60k MRR Using On Prem Installations, Raising $1m at $10m Valuation
05 Oct 2021
Chapter 1: What milestone did the company recently achieve in monthly recurring revenue?
This month, actually, we hit the $59,000 monthly recurring revenue. This is the second month this is repeating. And we expect to close the year at $650,000 total revenue.
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Hey folks, my guest today is Seymour Arasalov. He is a UIUC graduate. He had one previous exit in Baku, how do I say this country? Azerbaijan. Yeah. Where the hell is that? It used to be a post-Soviet country. I mean, it is a post-Soviet. It used to be one of the Soviet countries, 15. And after the independence, yes, we were the second one to get independence after Ukraine.
So it's a country with Formula One, with oil, with good caviar and good food, of course, hospitality. So you're always welcome to visit us. Well, you're building Welp.co now. You bootstrapped it for six months, pivoted in 2021. Now you've tripled MRR. You're a Techstars alum as well as 500 startups.
The company, I believe, is playing in the SME space to automate and consolidate customer support using AI and ML. That's correct, yes. We use artificial intelligence and machine learning specifically to provide customer support across 100 languages so that we want to close the gap between the countries and the language.
So even if you are a small and medium business based in Siberia or in South Korea, now you can actually, using our solutions, you can sell to English-speaking or vice versa. And help me understand what customers are paying you for today and what they pay you on average per month. So currently, this month, actually, we hit the $59,000 monthly recurring revenue.
This is the second month this is repeating. And we expect to close the year at $650,000 total revenue. So the customers are currently paying for us specifically for on-premise solution, on-premise installation, because we offer on-premise. And we are the only one in this space offering on-premise. These are financial institutions, insurance companies.
They respect the privacy of the data, so they prefer on-premise solution. So we charge them a one-time fee as well as retainer fee, sort of a maintenance and support fee. And then we also have a cloud-based solution. That's a subscription-based service. Got it. What is the setup fee typically? Setup fee, one-time fee is about $45,000.
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Chapter 2: How does Welp.co utilize AI and ML for customer support?
$13,000. Now you're doing $60,000 a month. Where did all the growth come from? The growth came from expansion, conversion. We started converting the free trials. We also started doing a lot of content marketing and we became partners. We found partners that also started reselling our solution. We did one thing very well.
We also introduced white label solution that companies could take our solution and then resell it. Tell me about that. So if someone white loads your solution, what kickback are you paying them? So we generally offer like $30 per user per month and they can sell it on top of that. They can charge 50, they can charge 60 on top of that, but they will have to pay us $30 per user per month.
So that's fixed fee. But everything is included. So we do not divide the components of the platform like knowledge base or the chatbot or outbound marketing. Everything is in one. Yeah, you know all your numbers. It's like you must listen to the show or something. We love your show. I mean, honestly speaking, Nathan Lutka, Get Lutka has become like a crunch piece for SaaS.
Now, what I'm learning, because I am the second-time founder, but outside the US, outside of North America, the startup ecosystem is gradually, slowly. I mean, there are certain countries that are way ahead of us, but Azerbaijan is an emerging market. So here, we don't have that much data or learnings.
But Nathan Latka and the magazine and the getlatka.com and the Excel sheets that you share, they have become the Bible for us. And literally, we love it. We learn a lot. And we see that there's so much to still learn. And, of course, your book. Your book. I'm going to walk up. You keep going. This is great. I'm just kidding. I appreciate that.
Nathan, you have to name the things with the names, right? When there were no resources that we could learn, the aspiring entrepreneurs, your resources were there and they were freely available. Specifically, those intriguing emails, right? With the specific subject line, it's like you've got to open that email. You've got to check that out. And then you're likeā¦
And what I noticed is that every single email is written as if it's addressed specifically to me. And I'm like, is Nathan emailing to me only? And I swear I had that feeling multiple times. Sometimes it is me. What I would tell you is I email a lot of people. When I get a reply, it's always me replying back. Sometimes I will send you a lot of people at once.
But if you reply, it's always me replying back. So that's great. Anyway.
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Chapter 3: What pricing model does Welp.co use for its on-premise solution?
We appreciate that. We appreciate your hard work. You bet, you bet. Tell me about how you funded the business. Are you bootstrapped or did you raise? So in the beginning, we started in 2018. We started in Baku, Azerbaijan. It's a small country, 10 million people. And being a post-Soviet country, people, investors and companies do not believe in something that they don't see or they cannot touch.
And software as a service was something new to them. So when we went to companies and banks and travel agents in 2018, they were like, this is strange to me. Instead of paying... 200 to you. I will hire someone who will do the job for me. So the mindset was different. So in 2019, we decided to take the company to the US. We got incorporated in the US as a C Corp delivery.
And then we got our first accelerator program and startup ventures in New York. And after that, it started taking off. So we started offering the platform and we got customers from the Middle East. The question is, have you raised capital? And if so, how much? Yeah.
So far we have raised half a million dollars and we have about, we did the 500 startups and tech stars and 500 startups gave us about $50,000. It was a safe note. And then tech stars gave us a hundred thousand safe note, but then it's the rest is bootstrapping and our own investment. Okay. So the 150 that you raised, so there's $500,000 raised basically at what valuation?
Right now, we are raising $1 million at $10 million valuation as of now. Okay. What I'm asking is what you already raised, what valuation was that at? That was at $3 million, $3 million valuation. I see. Okay. So what does the cap table look like today? How much do you own? Right now, cap table is very clean. We have 500 startups and tech stars and then two co-founders. We keep it clean.
How much do the two co-founders own? Each co-founder owns 40%. And then we have 40%. And then how much does 500 Startups own? 500 Startups, it's a safe note. They have about 6% and Techstars is 7%. They are safe notes for now. Got it. So 80% plus 6% plus 7%, where's the other 5% of the business? They are unallocated pool of shares for the future employees. So we keep it for the employees.
Really, really smart. Interesting. Okay. So what are you seeing in the market? Do you think you're going to raise one out of 10 per week? It's a very busy space, Nathan. Honestly speaking, it's a red ocean. But at the same time, customer from New York got acquired by Facebook for $1 billion. Message word from Amsterdam, Netherlands became unicorn. Intercom is a unicorn.
And many companies are growing very fast in this space. The biggest competitive advantage that we have is offering on-premise, being a white label available right now, and at the same time having an advantage of Chatbot that works across 100 languages. We actually have close to 250 out of that 1 million. So we're looking for partners to finish the rest of the... We just started raising, actually.
We started raising in late August. We got 250 already committed from an investor in Ohio, and we're looking for the rest. And what's your team size today? How many people? 32 people, two co-founders, 25 engineers, the rest is marketing, content marketing. And then we have about five specifically dedicated salespeople and they are working closely. Say it again. We have a quota. We have what?
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Chapter 4: How does Welp.co convert free users to paying customers?
No, everything is fine. Like I said, we are raising 1 million at the 10 million valuation. We already got 250 commitment and we're looking for partners that want to join us. It's an exciting space. It's a 400 billion total addressable market. And I think being on the show at Nathan Latka, it's the greatest thing that has happened to our company.
So looking forward to working and meeting great people from your network, Nathan. And again, you have been doing a great job for entrepreneurs. So thank you for that. Appreciate that, Seymour. Let's wrap up with a famous five. Number one, favorite book? Favorite book, Alchemist. Love it. Number two, is there a CEO you're following or studying? CEO? He's a bit Travis Palanchik.
I mean, from the Uber, Travis Uber. He's a bit cocky, but I like his style. Number three, what's your favorite online tool for building the business? My favorite tool for building an online business, I would say calendar. It helped me big time. Number four, how many hours of sleep do you get every night? Four, that's it. What's your situation, married, single, kids? Divorced, unfortunately.
If you're building a business, you have to let something go. How many kids? One kid, six years old, Daniel, yes. Very cool. And how old are you, Seymour? I'm 37 right now. Last question. What's something you wish you knew when you were 20? I wish I had started way earlier. I wish I had started way earlier and wouldn't spend much single minute in the corporate.
The only regret I have while doing this is that I didn't start earlier. Guys, there you have it. Wealth.co. It's an on-prem installation of traditional customer support software. They help you manage that support with machine learning and AI. Financial institutions love this. It's private. It's on-prem. They've got over 300 customers right now doing $60,000 a month in revenue from $13,000 a month.
Just a year ago, they raised $500,000 in a pre-seed round at a $3 million valuation in 2018, now raising a million bucks at a $10 million pre-money valuation. Right now, team of 32 is a look to scale, growing just exponentially year over year. We're at a million-dollar run right here very, very soon with our team of 32 and 25 engineers. Seymour, thank you for taking us to the top.
Nathan, we're waiting for you in Baku, Azerbaijan. You're always welcome here. Thank you so much.
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