SaaS Interviews with CEOs, Startups, Founders
Process Automation SaaS: From $600k Pivot to 300% YoY Growth, How Indico Turned the Corner
03 Jun 2021
Chapter 1: What led to the $22 million Series B funding for Indico?
We got the Series B December of last year, right? And so the target, that was a $22 million Series B. Okay. Yep. And our goal with that, right? That's a lot of money. Slater, you are on the VC path, baby. That's a lot of money. Totally. I mean... You are listening to Conversations with Nathan Latka. Now, if you're hearing this, it means you're not currently on our subscriber feed.
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There, you'll find a private RSS feed that you can add to your favorite podcast listening tool, along with other subscriber-only content. I'll see you next time. Hey, folks. My guest today is Slater Vikroff. He's the founder and CTO of Indigo Data Solutions, an enterprise AI solution for unstructured content with an emphasis on text and NLP.
He's been building machine learning solutions for startups, governments, and Fortune 100 companies for the past five years and is a frequent speaker at AI conferences. Slater, are you ready to take us to the top? I'm absolutely ready for it, Nathan. All right. So just to be clear, is Indigo a SaaS player or is it an agency model? You're doing consulting work. No, no, no.
So we're managed service, right? So it's a product company, but not hosted as a SaaS company. I see what you're saying. So are there sort of folks that use you over and over every month or is it they come in one time, you help them and then they leave? So they buy a product that allows them to drive their own automation, right?
So it's all, you know, it's 100% ARR, you know, they're buying a product, right? You know, will usually help get them trained on the product. But from that point forward, right, they're basically automating new processes. And they're kind of getting more and more value out of the product as time goes on. But then, you know, also generally upselling and buying new modules and things like that.
Yep. That makes a lot of sense. So there's a, there's recurring components and your upselling module as needed, but there's a long-term relationship there. Yep. Yep. Yep. Exactly. Okay. So tell us what it does. Tell us, is there a customer, is there a customer story you can share and actually use their name or no? A hundred percent. Yes, there is.
So we've got one, one customer that is a huge of ours, MetLife. And they, they did a case study publicly with us pretty recently. And they actually managed to use Indico to save over 11,000 hours of effort. End to end, it was about four weeks of time, a couple of folks to save 11,000 hours. And at the very highest levels, what Indicode does is we work on document-based automation solutions.
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Chapter 2: Is Indico a SaaS company or a managed service?
So everything for us right now is based around C. So the idea is the more you use Indico, the more people are going to be using the product, the more processes you're automating, the more value you're getting, and then you will kind of increase more. So the main levers for us really are the volume of documents processing. Obviously, that's important. That's really tied to compute.
The number of people you've got plugged into the process. You also imagine these are happening in a kind of complex enterprise. So we also have a really big developer focus as you kind of plug these into your other systems. Give me, now that we get the product and sort of the customers, help me understand like day one, when did you guys launch? Totally.
I mean, I, so this is, this is actually the second time I've been on this podcast. So we did the first, what I'll call Indico V1 was back in 2014. And actually, you know, if folks go back and look at the, you said, you said 20, you said 2014, 2014. Yep. Why do I have 20? I thought last to me came on, which by the way, was back in 2017.
So that was almost 2100 episodes ago in terms of what we were. I love that. I thought you said 2011, but I could have been wrong. No. So that's when I got into the space personally. Right. But Indico was founded in 2014. Yeah. I see. Okay. So Indico was founded in 2014.
And I'd call that Indico V1, which was that developer focused piece, you know, as in that kind of, you know, we were really trying to get to a million revenue, right? We couldn't quite do it. The developer focused go to market was not working out for us. That gave birth to Indico V2, which sort of came about very, very soon after the conversation. So we brought in Tom Weil as a CEO, right?
I shifted over to the CTO role, and that really was the start of our enterprise go-to-market, right? So really, really shifting, saying instead of being API, we're really going to make this product that is accessible to the user, right? And so that kind of initially launched, and we got a Gartner Cool Vendor in 2019, right? And we've had a really, really nice success.
I would say 2020 really was... The year that let us know we were on a rocket ship. Which I think last time we came on the show in 2017, you were flirting with a 50 grand a month in revenue. Did you break a million in ARR the year after that in 2018? So no, we did not that year. Right, so actually it stayed about flat at that level, right?
So, and that was a lot of the reason that we had to do the shift, right? Is that, you know, we had some customers that really, really loved us, but it was just not a big enough market. So we were, you know, pretty much flat, you know, some wins, some misses, some ups, some downs, right? Pretty much flat until we got this next product out, right?
And then, and that's why I really say, you know, you know, we certainly had progress through 2019, you know, as we were doing the product launch. That's really why I say 2020 was the year that like redefined it. Got it. So that's when you broke that million-dollar threshold. Yeah, exactly.
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Chapter 3: What customer success stories highlight Indico's impact?
And a lot of really, really awesome metrics. We grew bookings by 10x. We quadrupled our ARR. Just really, really nice improvements across the board. That's great. And you had 20 customers back in 2017. How many customers are you serving now today? So it's a very different mix of customers. Right. So it's actually it's probably about the same number. Right.
But back then when I said 20 customers, I meant 20 developers. Right. Now, you know, one of our customers might have, you know, 50, 100 users on it. Right. But, you know, we're talking about 20 large enterprises. Yeah, your ACV, you told me back then, three or four years ago was up 30,000. Now it's 120,000, right? Exactly.
It's actually, it's creeping a bit north of that even, you know, it's above 120, but yeah, exactly. You know, so the business has changed. So it's kind of funny, the number of customers, I guess if you count business units, the number is probably higher than that. But in terms of like larger, it hasn't changed that much.
And if we take those 20 customers times that 100 grand, 120 grand ACV, I mean, you guys are 2.4, 2.5 run rate right now? You know, like I said, the ACV is maybe a little bit higher than 120, but you're in the ballpark. And you guys break five in ARR by the end of this year run rate? So, you know, when we think about growth, right? So we got the Series B December of last year, right?
And so that was a $22 million Series B. Okay. Yep. And our goal with that, right? That's a lot of money, Slater. You are on the VC path, baby. That's a lot of money. Totally. I mean, look, we wouldn't have done it if it weren't for the traction we saw, right? You know, I kind of threw out the numbers, right? You've got your own numbers.
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Chapter 4: How does Indico differentiate itself from competitors?
I, you know, I'm not going to tell you exactly where the financials are of this day, right? But, you know, I can help get you in approximately. I would say I'm being conservative. I always argue you're probably slightly lower. Exactly. So, and then, so our goal really, you know, a series C company, we want to be around 10 million in ARR, right. To really get that metric. Right.
And our timing on that is, you know, 18 to 24 months, you know, after that, that last December. Right. And, you know, I'll say we're very, very optimistic about about hitting that. Right. And, you know, we're not going to get to, you know, that that ballpark, that 10 million ARR right in, you know, call it mid to late 2022. Right. Without getting to a certain place at the end of the season.
I'm very picky with sponsors I have on the show. Usually I use the show and you guys, the audience as leverage to ask for a great deal. And I simply won't take on the sponsor unless number one, I love the product. And number two, they're giving us a special unique deal for our audience.
Well, Zendesk reached out recently and you know, me personally, I've watched other tools in Zendesk, the customer support space, increase price. They try and upsell you 20 different products. It's expensive because they want to move to the enterprise to make their investors happy.
Well, Zendesk is publicly traded, and that means they have a lot of cash to throw around, which means they can afford to give startups a great discount. In fact, all these enterprise tools, I convinced them to say, you know what? We'll give it to your audience, Nathan, for free for six months. So here's the caveat. If you're pre-series B,
or you have fewer than 50 employees, you're eligible today. Go to nathanlaca.com forward slash Zendesk to get their best customer support tools totally free for six months. Again, that's today, nathanlaca.com forward slash Zendesk. Talk to me a little bit about the capital history here because it's sort of funky, right?
I mean, you raised 3 million in 2014, then like a million in 2016, then like 700 grand in 2017, sort of over. This is, again, early days where you're trying to figure out what the model is. Look, look, this is the Indico V1, V2, right? And you can see it immediately in the capital history, right? So, you know, we had a really strong technology, you know, in that first $3 million seed round, right?
You know, like strong, strong entry, right? Really nice response from customers, right? And then sort of over the course of the next couple of years, we sort of realized, OK, we can't quite get this business model figured out. Right. And, you know, so that's that's sort of where that that one point you came in. All right. You know, maybe we can just finagle this a little bit.
We're just not executing well enough. Then we sort of came to the realization, no, actually, we're executing fine. That's not the problem. The problem is that this business model fundamentally, you know, we need to shift that to the enterprise. And then when Tom came in, that was when we did the next raise, right. Which was, uh, another four. Right.
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Chapter 5: What metrics define Indico's growth and success?
So I won't tell you exactly what percentage I own, right? My fundamental view is that as a first-time founder, you're going to get diluted as you go through the rounds, right? You should expect to get diluted, call it 30% with each round. There will be variation there, but really my goal is to make this company as successful as possible and make the pie bigger for everyone, right?
And yes, I always do do the math. Okay, assuming Indico gets kind of a part of this, am I going to make enough money? But frankly, if you're making the company big enough, you should be growing your value at least 30% round over round. So really I look more like, is my chunk of pie, is it worth more or is it worth less? So I don't even know honestly what the exact percentage is.
I just know like in an exit scenario, I'm going to do it. Yeah, yeah, yeah. So is that how you thought about the $22 million? You sold about 30% of the business? It's super complicated, honestly, in a Series B, right? And so I don't want to reduce it to just like, oh, you know, we sold X chunk of the business because, you know, there's the option pool and all that, right?
But, you know, sure, in like in net dilution, you know, somewhere around. Yeah, yeah. Well, the reason being is what I'm trying to go is, okay, you know, they launched in 2014, 15, 16, 17. They sort of had to pivot a couple times. You know, revenue was around two-ish, two and a half-ish million, maybe a little north of that when you did this round.
So I can sort of back into the valuation multiple that you were seeing during COVID. I see. Yep. Right? Which is like crazy. Right. So it sounds like 40, 40 to 50 ish pre and something much higher than obviously with the 22 million added posts. And you saw about around 30 all in. Yeah. Yeah.
So, again, you know, I'm not going to confirm any specific numbers, but, yeah, you're in the right ballpark. Yeah. You know, I think you're thinking about the numbers about the right way. How do you go from three million to 10 million by mid 2022 to set yourself up for a good series C? Right. So a huge part of it is actually our customers have been giving us such incredible feedback. Right.
So a large part of that is upsell driven. We've got a really, really successful partner program. We announced with Cognizant and we're also with the major RPA vendors. So UiPath, Automation Anywhere, Blue Prism, we've got offerings in all of their areas. Right. But really what we see is our main gap is awareness. You know, we're all engineers.
And so the problem is that our tech is really, really good. Our customers love it. You know, they want more, they want more. And people haven't really heard of us, frankly. How many engineers later on the team? We can debate about exactly what the definition of an engineer is, but I'll call it 30. Three zero? Yeah. And how many are on the total team, everybody? FTEs? Yeah.
So, sorry, accepted or working? Because we're growing very fast. However you define it. We're rounding the corner on 60. Okay, got it. Got it. And it sounds like hiring fast, you have to deploy this 22 million to drive growth. Yeah. And, you know, we've just got a lot to get done. Right. So, you know, we've just scaled up our sales and marketing team.
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Chapter 6: How did Indico pivot from V1 to V2 and what changes were made?
If you catch that distinction. Yep. That makes sense. Yeah. 125% net. So what that means is like, obviously keep the gross turn low, get the expansion high. And hopefully the difference between those two numbers is about 25%. Exactly. Right. And that's what we're hoping. Right.
And again, we think of it in cohorts, just like, you know, if we close you in Q4, we're not going to try to, you know, slap you with a 50% upsell, you know, a month later. Yep. That all makes good sense. Let's wrap up later with famous five, number one, favorite business book. Um, or book of happiness by Bertrand Russell. It doesn't sound like a business book, but it is. All right.
Number two, is there a CEO you're following or studying? Tom, my CEO. All right. Number three, what's your favorite online tool for building the company? Calendly. Um, every single time someone clicks a Calendly link, I save 30 minutes of time. Number four, how many hours of sleep do you get every night? Uh, six on the weekdays, seven on the weekends. Right. And what's your situation?
Married single kids. I am married and in a new house. Very exciting. Okay. And how old are you? I'm 29 as of, uh, five days ago. Nice. Happy late birthday, man. Thank you. All right. Take us home here. What's something you wish you knew nine years ago when you were 20? When I was 20, I thought being an entrepreneur was a euphemism for being unemployed.
And so I would tell him, you're going to be an entrepreneur, and it's so much harder than you think it's going to be. Guys, there you have it, Indico. It's harder than you think it'll be. And look, it's going from experience. 2014 launched the business, pivoted for a couple of years, still around about a 600K run rate. And even in 2018, then things started to change.
New CEO, different product line, more enterprise customers. Today, north of 2.5 million bucks in ARR, they raised 35 million bucks total altogether, serving up 20 enterprise accounts, helping them understand how to not just manage their documents, but pull critical pieces of data out so they can scale their businesses. Team size 60 today, 30 folks on the engineering team.
We'll see what happens next. Slater, thanks for taking us to the top. Thanks for taking me.
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