SaaS Interviews with CEOs, Startups, Founders
Mobile Security SaaS Hits $1.7m ARR, Huge Profits, Growing 100% YoY
11 Apr 2022
Chapter 1: What is the main focus of Appnox's mobile app security testing solution?
Can I multiply that times sort of like a $10,000 ACV average? You're doing about 780,000 bucks a year right now on Runway? No, so we are doing a lot more than 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 Harshit Agarwal.
He's a co-founder and CEO of Appnox and is also a tech enthusiast. He's a serial entrepreneur and is also part of several startup communities. His several years of startup and tech experience set the way for him to co-found the company in 2013. The company focuses on being the world's most powerful plug and play mobile app security testing solution used by enterprises around the world.
Harshit, you ready to take us to the top? So when you say mobile app security testing, is this literally a mobile app that does security testing or enterprises use this to test security of their mobile apps? So it's a later. Enterprises, companies use our platform to secure their apps on regular basis. I see. And so, I guess, help me understand, I guess, pricing model.
What are they paying on average per month to use your technology? Yeah, so it depends on per app. Majorly, we target enterprises that have got offers of 10, 20 or even 100 of mobile apps. And for them, the majority of challenge is that every app is going out for releases and the release cycle is reducing nowadays to even a week.
And with that kind of release cycle, it becomes difficult to test every app. And with that big enterprise, they cannot... Let it go without security testing. That's where we step in. We automate, we speed it up. We make sure that it can be part of their normal development lifecycle and the app can go secure. Well, that makes tons of sense. So I guess give me an average or a sweet spot.
So between 10 and 100 mobile apps, what's the average customer pay you per month to manage whatever the average is, 50 apps, 30 apps, whatever? Average is 20-ish. 20,000? No, so per customer, it's roughly around $20,000. But when I said 10 to 100, I mean number of apps. So there are enterprises who have got upwards of 100 apps.
I'm talking about Fortune 500 companies who have got multiple brands, internal, external apps. Then there are some of the companies who are very much focused on single vertical. For them, it would range from 5 to 10 apps. So pricing for us varies for these companies starting from $7,000 to $8,000 can go up to $50,000. Per year or per month? Per year. Per year. Got it.
So starting point is sort of $7,000 to $8,000 a month, but your biggest customers will pay, you know, or sorry, $7,000 to $8,000 per year. And your biggest customers might pay what over $100,000 a year if they have hundreds of apps. Yeah. Okay. Is that accurate? Do you have customers paying more than $100,000 a year? We have a customer who's paying us upwards of $250,000 a year. Wow.
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Chapter 2: How do enterprises utilize Appnox for mobile app security?
And we have been in business since 2016. So two years to build the MVP, pre-revenue, you've got to pay yourself somehow. Did you have a bunch in savings or did you raise a bunch of capital or how'd you fund your growth or your... So we raised the capital. We had raised our initial round in 2000, around end of 2014 itself.
We had raised $750,000, a pre-seed round from a Singapore-based venture capital. And that's the only round we have raised. Post that, I think we have been revenue positive. We have been growing on revenue. So you haven't raised since then? No. That's awesome. Most folks in their pre-seed round are selling 20% of the business. What valuation did you raise the $750,000 at?
Roughly around 4.3 million valuation. That was roughly around the similar range. Pre-money or post-money? Post-money. Post-money. Okay.
Chapter 3: What pricing model does Appnox use for its services?
So something like sort of a 3.5 million pre, something like that. Yeah. Interesting. And looking back, would you have done the same thing again? Was that a fair amount, a fair valuation? I personally feel that at that time, it was not really, really required for us to raise funds. We could have delayed it a little further and raised that better valuation overall.
Because majorly, I think we had to test our MVP and all of that. We could have done it a lot cheaper and a lot earlier basis. I think that is the learning we had over a longer period. After two years also, once we released the product, it was not really focused on right customer segment.
And that whole thing happened after 2018 when we hit a roadblock where we didn't have funds, we were about to shut down. And we had to go back to our drawing board and go and understand everything again. So from that whole learning experience, if I would have done it again, I would have not raised funding that early.
I would probably have raised a little later when I had clarity on what metrics I could grow on with that fund. How could I use it and get the maximum ROI? Well, tell me what happened in 2018. How low did the bank account get? We only had a one-month runway. How much money was that though? That was roughly around $30,000 in our bank account. And we had a team of roughly around 22 members.
And we were clueless on what we should do. We just went to a blackboard. We had account receivables of around one to two months. But again, that's not in the bank. So next month, we don't know how we'll pay salary. What was revenue in 2018? Do you remember? We're roughly around $220,000. $220,000? Yeah. Per year? Per year. Okay, got it. So doing about $19,000, $18,000, $19,000 a month in MRR.
Yeah. Interesting. So the good point was that we had paying customers who were paying us roughly around that $18,000. So the next good thing, same thing we did was we just had to relook at the team and just have team members who are very, very critical. And we bought down our costs to 17,000, 18,000. From there, we have grown organically. We have made sure that
We are overall not revenue negative. Sorry, the cost negative. Overall, it's on positive side, whatever we are doing. And slowly we have grown. Now we have a decent runway plus everything sorted. Things are really growing. We are investing more than what we should, but all from the revenue. So things have turned. So how many paying customers today? So we have roughly 76 paying customers today.
Okay. And I mean, can I multiply that times sort of like a $10,000 ACV average? You're doing about 780,000 bucks a year right now on Runway? No. So we are doing a lot more than that. So we are currently at 1.7 million. Oh, great. And ARR? in ARR. And I think we are growing at 2X year on year since last three years. So we are focusing on the similar growth pattern.
Well, sorry, just to be clear, Harshit. So if you're doing $1.7 million in ARR today, that means you're doing about $140,000 in monthly recurring revenue. What was your monthly recurring revenue about one year ago? We were roughly at around 65-ish. Wow. Okay. Yeah. And you didn't raise capital double year over year, right? Yeah. We have not raised money. That's great.
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Chapter 4: What challenges did Appnox face in 2018 and how did they overcome them?
I'm married. I don't have kids. Okay. And how old are you, Harshit? I'm 32. 32. Last question. Something you wish you knew when you were 20. Something I wish I knew. I think one of it is like, I always wanted to start a startup, but from whatever journey we had, I think experience was something that I never valued a lot until 2018.
So if I would knew that, okay, learning about how to do things in right way, right format by getting into a good company, learn and then start. would have been really, really great. We did it the harder way by hitting those bottlenecks also, but in that way, it could have been a lot faster and a lot easier compared to what we went through as a general. Guys, there you have it.
Harshi with AppNox launched in 2014. They raised $750,000 at a $4.3 million post-money valuation to get going and build the MVP. They only had $30,000 left in their bank in 2018, doing about $18,000 a month in MR with a team of 22. Almost had to shut down. Then they re-pivoted. They got profitable. They started growing. They did $65,000 a month one year ago.
Now they're doing $141,000 a month in revenue. That's a $1.7 million run rate. They profit $10,000 per month, so super healthy. They haven't raised additional capital. They've got 76 paying enterprise customers that use them to make sure all their mobile apps stay super secure, super tight, no intruders. We'll see what happens next. Arshi, thanks for taking us to the top. Thanks, Nathan.
Thank you.
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