SaaS Interviews with CEOs, Startups, Founders
Revenue Recognition SaaS Hits $500k ARR, Raised $4m at $20m Valuation with 30 Customers
24 Nov 2021
Chapter 1: What is the main topic discussed in this episode?
So the 18,000 was annual recurring annual price, right? Yep. So roughly our annual recurring revenue is in the 500,000. 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.
Chapter 2: What is the annual recurring revenue mentioned in this episode?
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 Ali Dalarup.
He's a customer-centric and data-driven technology leader passionate about putting technology to use to deliver real impact. He's now the CTO and co-founder of DreamData.io, a revenue attribution and data platform. Ali, you ready to take us to the top? Yeah, looking forward. All right. So who's buying this product right now? So behind it is, well, three... tech people.
We just enjoy data and solving problems for customers. Who's buying it right now? Who are your customers? Oh, sorry. Our customers are typically B2B companies in the SaaS space. Often they are VC-backed, and at least they're growing fast. And what are they paying you for specifically? Is it just revenue attribution mainly? So half is probably paying us for revenue attribution.
Half is paying us for data platform, getting more insight into their customers, where attribution can be part of it, but as much it's getting the full overview of their customer's journey. And you have some big customers. Dixa has been on the show. I know they're growing very fast. You also have some other big B2B SaaS companies like Georgia's using you. So you're clearly onto something here.
When did you guys, or what are companies like these paying you an average per month to use the technology? So customers pay us, I mean, it depends of course of size and so, but the range is typically between $6,000 annually and up to $50,000, $100,000. Okay, but what would a sweet spot be? Maybe $10,000 a year? That's in the low end. Our average is around $18,000.
Okay, so you guys are then high mid-market and moving into enterprise then? Yes, exactly. Okay. Now, were you always there? Tell me about your first customer. When did you guys launch the business? No, so we were, of course, not always there. Our first business was...
a kind of a telco but they were half says half telco business a very local business in denmark someone we knew in our network and the ceo was very interested in this kind of space and and this type of problem and we were also very early we didn't I don't think we had a crisp, clear vision of the problems we want to solve.
So the first product or the first prototype, I would more call it, was quite far from what we do. What year was that, Ali? That was in 2018. 2018. Okay. And so that was your first customer. You've pivoted since then. How many customers do you work with now today? Now we have around 30 customers. Three zero? Yeah. Yes. Okay. And how much is it?
Is it no touch or are you putting services on the back end as well? So it's mostly no touch. So our customers connect their data sources, Salesforce, HubSpot, paid media, and the tracking scripts into kind of our product. And that's self-service if you want. And then where it's often a conversation between us and the customers. It depends a little bit on the complexity of a customer's business.
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Chapter 3: Who are the main customers of DreamData.io?
and growing fast into raising our Series A next year. When did you raise the first round? In 2018. 2018. And how much was that for? That was a little bit less than a million dollars. And why did you guys need that capital? Why couldn't you bootstrap? I think, personally, we don't have necessarily much cash. Could we have bootstrapped and built the product ourselves? I think, in theory, we could.
We believe we could have moved faster. And so when we talk about raising money, I don't think we talk so much about... Our conversation was not so much whether to do it or not. It was more, what would it benefit us to get more cash? how could we grow faster?
Chapter 4: What specific services do customers pay for at DreamData.io?
How could we build, what would we need cash for to kind of make a better product for our customers? I think that has been more our focus than whether to raise cash or not. Originally, they actually, so Lars, our CEO, and I, we left a company called Trustpilot And actually, more or less, when we walked out the door, we were offered in the area of the same amount of cash we raised.
But at that time, we turned that offer down, not because it wasn't a good offer necessarily, but because we were not ready to spend the money. We didn't have a clear, how are we going to spend this money? Understood. So you raised a million in 2018, and then you did another round as well. When was that? And how much was that for? That was in the summer of 2020. And here we raised $4 million.
Okay. And what did you spend or what was your thesis, at least? Where were you going to spend that money on? So here, at this point, we have now... So the first time we raised, we had a prototype. And so the money would go into building a small team and building a product and start kind of getting solid proof that this was the right thing to do.
Now, the next money we raised was to start proving that we could build a solid business, that we could build predictable revenue, that we could find the ideal customer profile, that we could scale so that when we move into the next phase, that we could hire a bunch of salespeople and kind of repeat it over and over again. Of course, there's also a lot of product development going into that.
So we needed to figure out kind of whether any features we needed to cover to do this. And today, I think we would call ourselves kind of feature complete on revenue attribution, at least very close to. So we needed to cover that as well. And so you raised 4 million seed and you mentioned you're thinking about raising now. How much are you looking to raise now?
uh so that plan is not ready yet i i think right now we are focusing and drilling down into just delivering the product the best or the most awesome product we can with the team we have and closing customers So that's our focus right now. So we don't necessarily focus so much on kind of how much we want to raise.
How did you, or if I take the 30 customers you gave me earlier times the average annual of 80,000, that would mean you're doing about $200,000 a month right now on revenue or a $2.4 million run rate. Is that about right? That's a little bit high, but yeah. Do you guys care about valuation right now, specifically your valuation? Do you think you might raise soon or sell a portion of the company?
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Chapter 5: What was the first customer experience like for DreamData.io?
That was my fault. That was my fault. Okay, got it. I'm going, these numbers are way off. What am I missing? Now I understand. Yes, right? So that's the kind of spot we are. Yeah. Yep. That makes sense. So got it. And so if you're doing about, call it, you know, 10 or about 500,000 on run rate right now, where were you about a year ago? Do you remember? Yeah. No, but I can see again.
About a year ago, we were at probably more like $100,000. So do you guys think you'll have your first million-dollar year next year? For sure. I mean, that we have to hit next year. If not, then, yeah. Yeah. Oli, are you and your co-founder, you said there's two of you guys, right? We are three. Oh, three of you. Did you split equity evenly at the beginning or no? No, we didn't.
So, Lars and I started the business a little bit before the co-founder joined. So, we didn't spare completely even. I see. So it's like 40, 40, 20, something like that? Yeah, something like that. I see. Well, the reason I ask is because obviously as you raise capital, you're all getting diluted, right? So when you guys did your 4 million seed last year, what valuation did you raise that at?
So that's numbers I don't have in the head. We kind of diluted. Again, that's back to, I think there's two things when we are focused on raising money. It's not so much the dilution exactly, we focus more on building a healthy company and making the company attractive for both employees and investors and so if we dilute too fast too early
It's not attractive by the employees to join for equity, nor it's attractive for investors to kind of join because it become maybe less attractive to keep employees and founders around. Of course. I mean, this is standard stuff though, right? I mean, most people in their seed round are selling 20% of the business. Did you guys sell about the same amount? Yeah.
So every round has been between, I think, 14% and 20% for us. Yeah. Got it. So that seed was then something around a $20 million post-money valuation in that range. Definitely. So we are not special in that way. Where are you? So I assume you guys are hiring engineers now.
Tell me a little bit more about the team and how many engineers and what those engineers are working on product-wise moving forward. Yeah, sure. So the engineering team is... What are we now? We are...
uh six seven engineers plus me we're looking for to hire a couple more so to go to nine right now and then of course after we raise money much more right now the focus is building so being completely feature complete on attribution So we have a couple of lacking features.
One is content attribution, being able to really drill into the content and kind of show our customers what content is driving a strong revenue for you. And then we are looking into doing a few things on the application so customers can drill more deep into the data, which is particularly around filters, adding more complexity there.
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