How Acuant CEO Yossi Zekri grew to $50 revenue and 2K customers in 2022.

hello everyone my guest today is jose calvera he's a product manager with more than 25 years of building enterprise product experience for digital identities detecting preventing uh financial crime payment security network security and application security he's an entrepreneur at heart now building a trusted digital identity company at accuent.com jose you ready to take it to the top all righty all right identity space is super hot help me understand what do you guys do so we create software that allows companies to uh assess the risk of dealing with different identities online and on-premise and so are you selling mainly the large enterprises or is this a small business sort of play um all over actually we have tons of customers that are in the smb space but we have a our most obviously profitable comes from the enterprise when did you launch the business so icon has been in business for a long time over to 10 15 years we in along the line will acquire different businesses i actually came from an acquisition uh through a company called identity mind uh about a year and a half ago um so it's been a while i started in israel long time ago and uh a lot of experience in border security and uh uh very fine and validating documents from all now to all the way to online and how many on average what are these customers paying per month it sounds like you have a big range it's a big range so it depends on the product we have a very broad portfolio given all the different ways that you can do uh online verification of identities and and how you apply then that to say fraud prevention or financial crime crime prevention or anti-money laundering and so forth so it really depends um on on on the client and the services we have services that apply to very small companies and we have services that apply to very large companies right so when you look at 2020 total revenue what percent was pure sas versus uh services revenue oh it's uh mostly sas i would say you know somewhere around 60 70 percent is sas business and then 30 services yeah yeah more or less and on-premise on-premise solutions right oh i see okay great so there's on-prem play here now talk to me and so averages are dangerous but let me ask you a different question what's the most common price point folks are paying you again it really depends on the on the client and the service you know a small a small fintech for example could go from i don't know um ten to fifteen thousand dollars a year right yeah and a lot of enterprise could be multi-million dollars yep so okay it's really depends on the services so you don't but there's no suites i mean if you look at all your customers and then you count the number like the numbers there must be some sweet spot price point um tough to say again i think it really depends on the application it's a very broad portfolio and we don't have specifically i would say a much larger concentration on a particular vertical in a particular market um it's difficult to answer that question again because of of the size of the businesses i think perhaps a better way of thinking about it is how much it costs to validate an identity right and and i think that in general when you look at it from that perspective uh we probably are talking depending on the on the sort of the tolerance of risk of the use case we probably are talking about you know somewhere between a dollar per user to if you go all the way to transaction monitoring and so forth over time you're probably talking about two and a half dollars per user or three dollars depending on on the use case yeah a per per validation per validation yeah per user i would say i would say per user right um what's that i don't understand what's the difference between a validation and a user well so if you say that you're on boarding that you're signing up for your credit card right that is an important situation and that would be one transaction associated with it however over the life of that user in that bank if you are doing monitoring of that identity and behaviors over time then that would be the same user you're just just monitoring the behaviors of that user over time if you needed to right so the bank would be paying you something like two dollars for my account if they're monitoring me over time yeah that's that's about it right that's nice and that would include the cost of the boarding but also the cost of monitoring that user through transaction monitoring over time okay let's talk about growth of a business where are you getting customers today what are the main channels um so we are very so we have a a very large partner um revenue size right and and we're talking very large partners that take an oem our technology and then they sell it all over the world um and and that is a very substantial part of our business um in terms of how we sell through through partners then there is the direct channel um where we go directly to the customer and it depends there it depends on on what applications and what services we're selling um so in general for example if we're talking uh anti-money laundering transaction monitoring franchise we usually go direct um and but if we are selling our document verification and biometrics and um item detail identities concepts those are better solved through our channel through our larger partners in general right now not not in the specifics but yeah and so using these tactics how many customers are now serving today uh so sometimes it's hard because because we oem the technology so the our partners may have thousands of customers so the way we look at it we look at it in in in the amount of identities that we that we solve on a on a on a yearly basis and we're talking in the hundreds of millions of identities um that that we pass roughly probably somewhere between that that we count because there are either the right partners or the right customers you know somewhere between i don't know 700 maybe yeah and what'd you finish 2020 with in terms of total identity is verified you know uh distinct identities i i don't actually don't know the details but i if i were to guess we're talking into the billions by then at least right and is that so if a bank is monitoring me once per month that just still counts as one of the billion that you manage monitor correct correct and then this is worldwide right this is this is this is not just north america or europe or i mean so true or false there's only seven or eight billion people in the world if you're managing and verifying a billion of them i mean you have you know more than 10 coverage of the entire earth based off users being tracked it at any given point in time yes um there is the the so i guess i should say that if you are bank a and you do jose right in terms of authentication and then you go to back b and then you also authenticate jose that counts as two right it's just that on a per client basis so it's not quite a billion unique it would be more about there's some overlap obviously right because i do business with you know bank of america and wells fargo and whatever other fintechs in the world there are mm-hmm and you mentioned again the minimum was a sort of a dollar to validate identity you just had a billion last year i don't think you did a billion in revenue last year so where's my math wrong that's a good point it's actually a very good point it depends uh of of how you contract and obviously when you have and do a lot of volume the price for identity verification goes lower right and the price that we give sometimes to our partners is much lower than the part that the cost that we would go directly right because they are putting money on top of that right on on those so so so it you know a good point in say in saying that i think that that's about the cost of the market to do the type of to use the type of technology validation that we do for our customers now not as i said not all the for example transaction monitoring right it's a very different cost center than than what a user validation and verification is so so there is there is some checks and balances in terms of how you you know you you put down the monetization on a per identity basis yeah so let's go back and se instead of talking about per identity model let's go back and talk about 700 customers right if you you know 700 customers right at a minimum of sort of what you said arpu would be monthly rpu let's say it was 1500 or 2 000 per month i mean that puts you like you know 1.4 1.5 million per month in revenue is that more more in line with what you actually are um we were doing well um some of the numbers i can't disclose private companies i'm not allowed to disclose that um but but we're doing well that's not helpful it isn't but it's something i can't talk and details about uh talk to me about the team how many folks total uh about 180 okay and how many engineers uh about 80. okay okay so you are i mean this is a tech this is a hardcore tech product with that much teaming and engineering yes yes how many now do you guys employ a sales strategy that requires quota carrying reps or is it really the oem strategy it's both um and so so we do have sales with uh you know the carrier quota um and we have how many how many carry quota oh i would say about two-thirds even even the ones that work with partners two-thirds of what two-thirds of our sales force probably carry a quota yeah but i don't know what what your sales force is uh probably about 40 people got it okay got it so you've got people yeah okay interesting and and and you know managing a sales team especially and really what this is i believe it's probably a devops tool i imagine you're selling to ctos to some degree uh what um like how are they selling bottoms up or top down um it's a good question i would say that that the the stakeholders that we sell into is is more diverse than just the ctos right um the the application of of digital identities and application of monitoring really has a broad use case set um so so stakeholders can change and the owners of the budget if you will can change depending on organization there's a lot of operating budget that that doesn't usually assign to cto more to the either the cio or the finance department sometimes depending on the on the type of application i understand so what about funding history have you guys bootstrapped the company or raised so we are uh we're private owned uh by a pe firm uh at this point which one um audits auto okay and that what happened in 2018 i believe right correct correct the um that happened uh a couple of years ago um a little i thought it was uh well it could be designed to um yeah so before that obviously that it was different races and different stuff but um but as of 2018 is owned by audix and what did i mean why did you get involved right i mean it sounds like you had did you found a company that that they bought the acumen bot um yeah i was one of the co-founders of identity mind um i didn't mind was uh founded in 2010 we went really to marketing 13. and then we became part of the akin family at the summer of uh the year before 2018. did your investors make money on the deal well you know i'm not i'm not i'm not moving to tahiti anytime soon fair enough yeah i mean you guys raised what 20 21 million identity mind yeah there are abouts yeah what i mean you wouldn't you wouldn't sort of exit you know unless there was something about your vision that just you believed and then it didn't happen right it's like what what happened identity mind where he said you know what the best deal is to go ahead and join this larger company i think we have a lot of synergies with acumen and the way that we we collectively think about what we call trusted detail identities eventually in in one of the the reasons why we put together identity mind was to uh is because of understanding that that in order for you to do business you have to understand who you're doing business with and whether whether it's safe for you to do business with that whoever that individual is so the premise of identity mining in creating identities was really to solve that problem and and you know i think it's a it's a vision in my mind rather than something that that that you that you can achieve very quickly right and i think we still have a lot of work to do to get to that vision and attain that so when when we started working with acunt um it was very clear that it was a very uh we were very much um in the same vein as to how do you build in a platform that allows you to do that so are we finished with that no we have a lot of work to do and market has a lot of work to do and so it's we're still we're still working on this you can't disclose the actual sales price obviously but whatever the total deal size was what percent of that was you know incentivizing you and the team was stock in accurate um i can't disclose any details obviously um but uh the you know it it was it was it was good for us it was a good incentive to continue to work with uh both the acumen team and the audience team are fantastic to work with so i think um i think we are all continue most of us continue to be heavily invested in the ideas and and the pursuit of what we want we believe that we need to build to to facilitate uh safety in the marketplace where does your earn out end my my earnings yeah you're going to leave in 13 months aren't you no uh uh i'm not very passionate about what we're building and uh um and uh we have we have work to do yeah talk to me about um the but before we wrap up here um expansion revenue opportunities like you know owning this relationship identity management there's usually a lot of ways you can upsell additional products in the future what does your expansion revenue look like year over year just from upsells to historical customers um it's it's pretty open i mean it's it's pretty large um we we have consistently been able to to continue to penetrate use cases within our client base so you know if you think about a bank for example or uh that you go and say okay i i'm going to do the validity information or or the document verification the biometrics of a particular user right when they're opening their bank account right so but then you have uh you have credit cards you have loans you have other things right and then you have yeah jose sorry i'm gonna cut you off but we're out of time i know the opportunity is big i'm just asking are you capitalizing on it yet so was your net revenue retention over the past 12 months greater than 110 the growth of the network net revenue retention so the ability to upsell historical customers net revenue retention greater than 110 um i don't know if you created but but certainly most customers have continued to buy from us was i don't know was it great i mean was it greater than 100 if your turn's more than your expansion you're going to have obviously not not a good churn profile you have a very small turn very small okay does the expansion revenue and the upsells more than make up the gap of the churned revenues absolutely absolutely got it so you're above 100 net revenue retention oh yeah i see i see very cool okay uh let's uh last question here in terms of growth obviously you're owned by private equity for me what are you targeting year over year in terms of revenue growth percentage-wise it's fine percentage-wise i think we're looking somewhere between 40 and 50. got it so you think you can break 40 million bucks in ar this year it's a good year i'm sure it's going to be a great year i take 180 employees you know when i look at jumio and others in identity management space the average revenue per employee is about 120 grand 120 grand times 180 customers puts you about a 24 million run rate today uh maybe it's a little low we'll see but listen i hope you hit your 50 mark and i appreciate you coming on all righty all right jose all right thank you 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