SaaS Interviews with CEOs, Startups, Founders
EP 531: $5m Note Cap Pre-Revenue? How? With ZeroApp CEO Alex Babin
06 Jan 2017
Chapter 1: Who is Alex Babin and what is his background?
This is The Top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per top. Five and six million. He is hell-bent on global domination.
Chapter 2: What is ZeroApp and how does it generate revenue?
We just broke our 100,000 unit sold mark. And I'm your host, Nathan Latka. Okay, Top Tribe, this week's winner of the 100 bucks that I give away every Monday is Kim Dust. She's in the entertainment industry and is currently working a full-time day job and doing her side hustle on the side. Kim, congrats.
Chapter 3: How does ZeroApp differentiate itself in the corporate email market?
For you guys' chance to win 100 bucks every Monday, simply subscribe to the podcast on iTunes now and then text the word Nathan to 33444 to officially enter. Again, text the word Nathan to 33444 after you've subscribed. Folks, many of you reach out to me and you say, Nathan, so many guests on your show talk about the importance of batching. But whenever I try and batch, you tell me this.
You go, Nathan, they don't book back-to-back times. Or they don't show up after they book. It's frustrating. The answer is, guys, you have to use smart tools. I use a tool called Acuity Scheduling at NathanLatke.com forward slash schedule. I'll tell you specifically how I use it later on in the episode.
Chapter 4: What challenges does ZeroApp face in market penetration?
Nathan Latke here. This is episode 531. And coming up tomorrow morning, you'll learn from Steve Richard. They've raised $1 million. They just passed 70 grand in monthly recurring revenue to record sales calls and coach sales executives with his company, ExecVision. Top drive. Good morning. Our guest today is Alex Babin.
He's a serial entrepreneur who has more than 10 years of expertise in innovation, product development, and artificial intelligence. He started his first hybrid vehicle company at the age of 24, funded by DFJ.
Chapter 5: What is the significance of the $5 million convertible note cap?
Is that Draper Fisher, Alex? Yes. Yep. Good. He also founded an interactive video software company. Now he's running an artificial intelligence communication startup, building a device centric, secured corporate email client called Zero. Alex, are you ready to take us to the top? Yes. All right. Yeah.
Chapter 6: How does ZeroApp plan to support itself while being pre-revenue?
Thanks for coming on. And it was funny in the pre-interview stuff. You said you found the podcast. What was it a few weeks ago or a few months ago or when? No, I wasn't in a podcast. I was just listening to podcasts and I really enjoyed your podcast. And as I was telling you, I was listening to almost all of them. Really, really great podcast. It was great. One of the best startups I ever heard.
Chapter 7: What are the pricing strategies for ZeroApp's services?
Oh, that's really nice of you. Yeah, you said you listened. I love it when I get feedback where you say, oh, I listened to one and then Nathan, I just couldn't stop. I kept listening to it. So that made my day. I appreciate that, Alex. So tell us about the business. So you're running zeroapp.email. What is it doing? How do you generate revenue?
Chapter 8: What advice does Alex Babin have for aspiring entrepreneurs?
Actually, it's free revenue right now, but we have a list of pre-sales customers who are waiting for us to roll out the next version of our platform so they can start using it. And the difference about Xero is that we're focusing on corporate market. There are email apps, there are a dime a dozen, and all of them are probably the same, different with some features.
We're focusing on productivity, and we help people be productive with the help of AI. And our main focus is in corporate. So with a corporate market, you just charge per user per month. Okay. This is our plan. Okay. So how are you guys support if you're pre revenue? Well, first off, when did you launch the business? We launched the company about two years ago.
We've been in a stealth mode for about a year and launched the first version a year ago. Okay, so 2014. You're in stealth now. And how are you supporting yourself if you're pre revenue? We have a seed round closed in May, 700K, mostly from angels. We have great, great investors from Google, ex-Googlers, ex-Amazon, Skype, all of the communication companies. So we have angels from this company.
We had, and I think Tim Draper invested, right? No, no. Oh, he didn't? No. Oh, what was the DFJ investment from? Oh, it was a, it was a long ago. It was my first company in Russia and it was a hybrid vehicle technology company. Got it. Okay. So Tim invested in that one. Yep. Got it. Okay. Very good. So you raised 700 K seed around how many founders do you have?
We have three founders and we have a great team of six total. Um, so, um, Well, our work is a guy who was working previously on image recognition, AI for cancer, skin cancer detection through images. There's a really, really great experience in algorithm and AI technologies. So while this space is an interesting one, it's crowded. And I'm wondering who's going to win.
I mean, you have Superhuman, you have Polymail, you have you guys. I mean, I imagine there's a bunch that I don't even know about that you guys are looking at. Who's going to win this space? I guess not the best one, but the one who will penetrate the market with the most convenient way for the user, for the customer.
Because what we experienced is that when we started targeting customers, specifically corporate customers, we saw that they just don't want to change anything. Exactly. They can't for some reason. For example, if we're talking about corporates, Um, they have the security policies, right?
They, right now, um, just to clarify, we're targeting specific niches like, uh, law firms, healthcare, financial institutions, because those guys, they use outdated software. Uh, sometimes it's so outdated. I mean, like when you look at it, you just start crying because it's, and the most important thing for them is productivity and time, especially if we talk about lawyers. Right. So, um,
But they have strict security policies and all other companies, they actually, they claim they have AI, productivity features, but mostly they use cloud infrastructure to run this, right? And those companies that we target, they cannot use cloud software. Because of privacy? Exactly. They cannot violate their own privacy and security policies, internal policies.
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