SaaS Interviews with CEOs, Startups, Founders
Watch him pivot from $20k/mo consulting to pure play SaaS
03 Jun 2022
Chapter 1: How did the guest transition from consulting to SaaS?
So 2020, and if you're doing about 20K a month today in revenue, what were you doing about a year ago? Do you remember? $700. 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.
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Hey folks, my guest today is Thomas, AI nerd, self-inflicted there, hell frick. He's a B2B technology influencer with over 169,000 followers on LinkedIn. He's the CEO and founder of Instarail.ai and the host of the AI Nerd YouTube channel. All right, Thomas, you ready to take us to the top? Sure, let's do this. Thanks for having me, by the way. It's a pleasure to be on here. 18 million downloads.
I want to be 18 million to one. Yeah, no, that's awesome. I hope you get there. So InstaRail, I hope, am I pronouncing that correctly? Okay. So what came first, like an AI tool to drive engagement or an AI tool to create content? Yeah, well, what came first was falling in love with a problem.
And the problem was it just takes too dang long to create the content, engage with it, and figure out a strategy that works. So that was the first piece. And then you back into the other parts of the technology and the things you need to go build to solve that. Okay. And so help me understand what the product does today. What are customers paying for? Yeah.
So what we do is we save you time and this is how we do it. So we use a bit of AI writing to a technology to help accelerate the content creation process. And that'd be from the writing, from the spell checking to the, you know, the tonality plagiarism, all the things that go into creating any type of content. Uh, we leverage a bit of automation technology and other just accelerators.
I'll say it that way. And, and, uh, and then you draw humans in the loop to drive engagement and, uh, tonality and reality into what you're building and what you're doing. So they get the content, they get all the engagement. Um, I, myself, you know, I, I have 24 hours a day, seven days a week coverage and all my social media accounts.
And, you know, I was like 30 hours a week in social media and I'm only in there about an hour now. And so that's what they get. They get the ability to grow, network, you know, get inbound interest in what they're doing without having to sit there endlessly and, you know, write content, engage with it over and over. So your funnel, when you say like you and they, right, who is the customer?
Is it a blogger? Like, what is your customer profile? The best for us are our startup technology companies that have some type of funding and they need to get to market. They need to get marketing. So if a founder goes, oh, I need a higher marketing person, that's when I want you to go, no, no, no, call me. There's a less expensive, better way to do it.
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Chapter 2: What challenges did the guest face in the first year of business?
What are they paying per month on average? Yeah. So individuals, I mean, you can start as low as $99 a month, right.
For, I get a kick-ass, you know, carousel posts created for you or a handful of other posts up to as a few thousand dollars a month when we're doing, you know, full on, you know, nine by, you know, six coverage, all your social media accounts, you know, 40 posts a month, articles, blogs, video edit. And there are, so it can be,
a range for us to take on any customer we just require two things which is a goal you have to have some type of goal that you're chasing for why you need to create content and go get to market and the second is just a budget we want you to think in in terms of 12 months though we're month to month because that way your mindset's right to grow you're in the mindset of i'm going to have this fixed cost approach to marketing and you're going to get some assets built along the way and as you get more successful you can either scale up
If you find some attrition in your business, we'll help you when you scale down. So you get it month to month. But we need those two things. You need a budget and you need a goal. If you don't have them, we don't take you as a customer.
Chapter 3: How does InstaRail.ai utilize AI for content creation?
Thomas, what's your sweet spot? I understand you have a range of prices, but the average customer today pays how much per month? Yeah. Corporate, like full-on customers pay anywhere between $2,000 and $3,000 a month. And then individuals are probably $500 or less. Okay. Okay. Interesting. So I mean, I imagine most of your revenue comes from the corporates paying $2,000 a month.
Yeah, it's a bit of an actual split because we started doing this $99 carousel post deal where a lot of people started signing up for those because there's such good content that can be leveraged on multiple social media channels. We're getting a lot more of individuals just coming in and saying, hey, make me a post or a couple of those a month.
And so it's de-risking our revenue a little bit by adding more users. And as we build the platform in the background and we get the technology working together, it's nice to do that value add. How many of those $99 sort of, this is really your top of the funnel, right? How many of those $99 packages did you sell last month?
We just started it, but you know, we've had over a hundred customers on the, on the platform in that range already. So, or in our, in our company. So we're only about a year into revenue to be fair. And we've grown to about 20 K MRR already. So we're moving. Yeah. So we're moving fast. We're a technology company actually with a lot more revenue ahead of us than technology.
Chapter 4: What does the current product offering include?
So we're building what we need to build to best serve the customer and allow them to do more acceleration. So Thomas, when did you, when'd you write, when did you launch the company? What year? September, 2020. And by the time you get through cap table lawyers and websites up, it's March. Okay. So 2020, and if you're doing about 20K a month today in revenue, what were you doing about a year ago?
Do you remember? $700. Okay. Got it. So most of your growth has come. So how did you support the business the first 12 months when you were pre-revenue? Well, it's just bootstrapped. I mean, just the pieces. We're in there just building it, funding ourselves. We did a friends and family round. That was one way we did it.
So we did raise this like a small amount, like 135K in the friends and family round. And it was enough to go- What year was that? 2021. Okay. This was last year. Got it. So 135. And how much did you sell for 135 grand? You should actually know those metrics, right? We're less than 3.5%. Oh, wow. Okay. That's pretty good. That's pretty good. So 135, let me just see what that is. Is it times 33?
So there's like a 4 million valuation, something like that. Yeah. It's around there. Yeah. It was a post-money. Actually, I'm probably factoring one piece of a co-founder. So there was a post-money 2.1 million. So my numbers might be off just a bit, but I'm also taking it to the next round. where it's getting diluted a bit. So my mind's on the dilution path right now.
So you raised another round on top of the 135? We just started. We're starting to go through our seed. I'm going to call it a seed round, but it's probably actually a formal pre-seed round where we're going to raise in the 1 million, 5 million pre-money and come in. Bless you. Excuse me. All right. Bless you again. Look at that. Now is a terrible time to raise. I mean, you're a brave man.
Why are you going out right now? You got to do what you got to do to come over and get the company growth, right?
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Chapter 5: Who is the ideal customer for InstaRail.ai?
So we need to get some full-time people lined up on the tech side. And this is the one growth step that we need to do is get them hired and get them building. And then we'll see what the other rounds look like or if we're going to just go cash cow and build it ourselves and do it from there.
Many of you guys have used a tool that requires you to upload a CSV file or spreadsheet, and then you get an error, right? You then have to meticulously find blank rows, delete special characters. It's a pain in the butt. Now, your customers run into this same problem when you ask them to upload data to your SaaS platform. You know, they get frustrated. They don't upload.
Then you have a ton of empty states in your SaaS UI, and the user churns. This is not good. Now, your product is brought to life by this data. You want them to feel this magic as fast as possible. Now, we've tried to solve this at FounderPath by creating downloadable CSV templates and building our own in-house importers and then copying and pasting a long help article to users via email.
It just is not fun work. Nobody gets it. Nobody wants to do that work. This is where Flatfile comes in. Flatfile is the data onboarding platform built to take the acute pain out of importing customer data into your product. The nice thing is enterprises love this because Flatfile is SOC 2 Type 1 and 2 certified, GDR compliant.
super easy to use so no more emailing files back and forth like csvs no more copying and pasting help articles that no one reads just clean data quickly so you can grow your sass company in fact click up bamboo hr and hubspot all use flat file it's one reason they're growing so quickly check out flat file today at nathanlaca.com forward slash flat file that's nathanlaca.com forward slash flat file
Are you profitable today? Yeah, but we put everything back in. So I don't take anything from it because I have other revenue source, so I can put everything right back into it. So every time we make any dollar, we put it back into more content, more creation, and more offerings. How many folks are full-time on the team today? About 10 people total distributed between US, Philippines, and Africa.
Really interesting. You mentioned you have other projects. What are some of those other projects? Well, YouTube AI nerd channel. So it's a community for founders, startup, startup founders, entrepreneurs, technologists, nerds too. It's a forum. They can, it's a platform for them to come and talk about themselves and do shameless plugs for their technology and talk.
How many subscribers on that YouTube channel? We just did. We started that at the same time we started the it's 4,200 right now, or just under it. We started at the same time we started the company. It was a, It was more of a fun thing just to do because I was missing networking because of- I mean, do you make money over there on the community? I'm on latte level. We're at latte level.
So it does monetize, but I say I can get a latte a month out of it. What are your other projects? Um, besides repairing bathrooms in the house and doing those kinds of home, two things, those are the two things that are, that are there. You're mainly InstaRail then.ai. I mean, that's your main focus. InstaRail.ai is my biggest focus right now.
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Chapter 6: What is the pricing structure for InstaRail.ai services?
Totally. We don't want to be in the business of delivering services. So as soon as we have platform built MVP, our first customers that will come on is digital SaaS customers. How are you getting that built? I mean, break that down. You mentioned Philippines. You mentioned Africa. What's the breakdown in terms of talent splits? So we have two very good senior type of writers and such in Africa.
And then the Philippines is the full operations between leveraging. And they all use the AI technologies. We use every AI writing technology on the planet right now. And Philippines is the other half. Where are the engineers though? Engineers are US based. So that's my, so yeah. Okay. So you have a technical co-founder who's doing all the code. Yep. I see. He has 50% at the beginning or what?
Oh, no, no. He doesn't have 50%. He has 5%. Ah, okay, okay. So you did not... That's a hard conversation. How did you convince him to only take 5%? Because we both know from where we are today and where we are tomorrow, we're going to have to bring in somebody who's more technically probably inclined than him even.
And he'll be the manager of a big technology organization or the technology organization and less so the first driver. So he's bootstrapping us to get us up ready and set up on the e-commerce level and back in. What we'll need to bring in are some probably higher powered technologists that we're going to need some room for equity to give to them.
How many engineers do you have right now besides him? We have him and then some on the design website. So really one, you have really one sort of engineer then. Yeah, truly, truly are. We have a, in any business, right? There's a hacker, there's a hustler and there's a, there's a hipster and we got hipsters in Philippines. We got him as the hacker right now. And me as the hustler.
So, yeah, I mean, how do you, I guess the question is, how do you make sure you don't get stuck selling services the rest of your life? What, what are you doing to structure your services sales to make sure you're learning about what software product to build? Yeah, great question.
My expertise being in intelligent automation is we're offering services I know that are capable of being automated by technology. And it's just a matter of elegantly solutioning the right technology at the right moment and then only grabbing humans in the loop when necessary. And then as technology advances, the humans exit the process.
But the most important part of any of that process is the outcome for the customer. So you do need to bring a human in the loop, and you will for some time for this type of tech. But the idea is we don't want to do that. We want to bring the platform that brings all those things together, the AI writing, the engagement. So what we're building is a viral engagement marketing engine.
that'll leverage things like nfts tokens and coins to drive fire a viral engagement by participating in sharing and commenting and resharing and not from a contest standpoint but from like more of the golden hour so what we're going to build is the piece that you actually get rewarded as being on the install network and as your content goes better and does better you get rewarded for it and the more times you help other people go viral and you have other people share you also get rewarded for it and that motion
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Chapter 7: How does the guest plan to scale the business?
So 20 can MRR up from 700 bucks just a year ago, but he's really focused on how to automate this process. There is 135 pre-seed round at a 2.1 million valuation. Now looking to raise a million on a 5 million valuation to again, add automation to the platform.
10 folks on the team right now, only engineers as CTO, but again, looking to expand that team as they scale up past their first 10 customers. Thomas, thanks for taking us to the top. You're welcome, man. Thank you so much.