SaaS Interviews with CEOs, Startups, Founders
Genius Founder Hits $10m Revenue With Just $3.2m Raised
16 May 2022
Chapter 1: What is the main topic discussed in this episode?
Just to be clear, that means you did about $830,000 a month last month. Yeah, something like that. You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Hey folks, my guest today is Reno Dagon-Frivilli.
He's an entrepreneur and engineer passionate about building companies around tech solutions. He's now building Zewo, the first B2B SaaS platform, omni-channel integrated, integral, and AI-powered for the emerging markets. All right, Reno, you ready to take us to the top?
Yeah, hi. Thanks for having me. So, yeah, Zewa is a solution. What is very specific about us is that we are specifically focusing on the emerging market. We are based in Dubai. So far, the emerging markets we are looking at at the moment are the Middle East, African countries where we deploy our technology, India and Pakistan.
And is this really, folks in the U.S. might know like Front App, where you can manage inbound customer communications from SMS, email, marketing, integrate it to your CRM. This is the kind of stuff you're doing, right?
Yeah, absolutely. But what is really different, because if you look at the U.S. market and the European market, you will see a lot of similar solutions. Just like, let's take RingCentral, for instance, or NiceInContact. You've got a lot of people in that type of business. The issue thus in the emerging market is that you don't have the layer of the cloud telephony.
So if you are in the US, for instance, you've got a lot of people building their front end solution on guys like Twilio platform. If you are in the emerging markets, you don't have this layer. So we have been obliged to build that.
And then once we have this layer, and that's a very complicated one because you need to go one by one in each and every country and to put your hardware and local data centers. Once you've got that layer of cloud telephony, then you can build your solution on top of that. So we're a dual solution, like a kind of mix of Twilio platform and RingCentral on top of it.
understood and and what are companies paying on average per month or per year to use your technology so because because the competition is is not that uh fierce compared to other markets were pretty highly priced so a basic uh basic solution for contact center all-inclusive is is about 109 dollars um okay if you compare that to equivalent solution that's 110 per month
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Chapter 2: What is the emerging market focus of Zewo's SaaS platform?
That's still healthy. And put this all on a timeline for me. When did you first launch the business? What year?
So we started business about 10 years ago, but we completely pivoted back in 2017. So Xero was launched on the market on the 1st of January of 2017. So it's about four or five years now.
Did you keep the same cap table when you pivoted?
No, we were bootstrapped actually from day one. We were able to generate a lot of revenues because initially we were a customized software development company. So it's quite easy to develop some revenue and only we started zero. We changed cap table only in October 2019 with our first financing round.
I see. Before we get into the first financing round, help me understand when you launched that customer software or the custom software development agency in 2017, how big did you grow that to? What was your best year in terms of revenue?
It was last year. I mean, only last year. We're in a very tight product. And as I said, we had to develop all this telephony layer.
Just to be clear, you're still doing custom development work for clients and customers?
No, no, no. It's completely over. Completely over. So when did you stop that? We stopped that almost immediately when we launched Dewar.
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Chapter 3: How does Zewo's technology differ from competitors in the U.S.?
I mean, it took us about six months to phase this out. So I would say mid-2017, we stopped completely.
So my question was, how big did you grow that agency? So in 2016, how much revenue did just the agency do? Do you remember?
It was probably around maybe $1.5 million, something like that.
And the reason I ask that is you have to have serious conviction to shut down that revenue stream and go all in on your own software. What gave you that conviction?
Yeah, I mean, it was really a phasing out. We did not completely stop. A lot of the customers that were acquired, they were on-prem basis and customized. So the move to a complete cloud SaaS solution was fairly smooth. So we didn't lose too much of revenue. What did change, though, is we started to acquire a lot of SMBs because of the SaaS model. very appealing to the SMB business.
And later on, we were able to move the bigger customers. So we had a mix of SMBs, mid-market, enterprise companies, and it took us about six months to transfer everyone on the same platform.
Understood. And Reno, how many customers are you serving now today? Today, we're in the range of 350 customers. 350? Yeah. And you mentioned you have some bigger ones. Don't obviously say the customer name, but what does the largest customer pay you per year?
Oh, that's a nice question. I would say probably 600K. Oh, wow. Okay. Yeah, yeah. Yeah, we've got on one single platform the biggest customers we've got. It's in the real estate business, which obviously is big in the Middle East. It's about 900 agents on one single platform for their lead generation process.
Mm-hmm.
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Chapter 4: What is the pricing model for Zewo's contact center solutions?
We're kind of experienced people, so we do very carefully. We are trying to go as fast as possible, but we were super cash efficient, fortunately. So we only raised $2.2 million in 2019. In external funding, we did a safe last year of about 1.2 million again. So for 10 million ARR, we have raised only 3.3 million till date, which I think is pretty cool.
It's impressive. It's very impressive. And you should be celebrated for being so capital efficient. I think it's very impressive. When you did the 1.2 million on the safe last year, what cap did you do that at?
What cap? It's kind of confidential, but 25, 30 million.
Did that feel fair to you or did that feel like a low valuation?
We needed that money because we were short of cash. I think it was a very good bargain. This was really to test our sales and marketing tactics and it really kicked up because of that cash. Now, of course, we're more close to 10 million ARR. Obviously, the valuation is much more and I've got people on my cap table that
Purchase at 25 company that is doing 10 million AR, I think it's a good bargain.
What do you think? I totally agree. I mean, I would value your business today at somewhere around 300 to 400 million bucks based off comparables I've seen in the market. That would be like a 30 to 40 X multiple.
Okay, deal.
Hey, easy for me to say that, right? It's not my money, but there's a lot of people listening that might, so we'll see what happens. Now, just to be clear from an equity perspective, do you still own more than 50% personally?
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Chapter 5: When did Zewo pivot from custom software development to SaaS?
They won't literally go for the moonshot. I love the old videos of Steve Jobs about marketing, about product development. They're always a great inspiration. And I follow some blogs like the guy from Winning by Design. I'm sure you know him.
Yep, Jaco is great. Number three here. We're out of time right now, so we're going to go through these quick. Number three, favorite online tool?
Favorite online tool, Zapier.
Number four, how many hours of sleep do you get every night?
Seven to eight.
Okay. And what's your situation?
Married, single, kids? I'm married, four kids. I started very early on.
And how old are you? I'm 52. 52. Last question. Something you wish you knew when you were 20.
How profitable can be a B2B SaaS business? I would have started early on, I think.
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