How AgentRisk CEO Jon Vlachogiannis grew AgentRisk to $518K revenue and 23 customers in 2023.

you're gonna love this interview just got done editing it i'm glad i got it live for you i'll be in the comments for the next 30 minutes hanging out answering any questions you have in fact leave a comment below about data points or what you think is going to happen to the company and i will respond to every comment additionally if you're just loving the content click the thumbs up and i will go and check out your profile as well and give your videos some love as well in the meantime enjoy the interview hello everyone my guest today is john vlacio giannis he's a serial entrepreneur this is his third startup got acquired for a 17x return to investors on his first company he loves making companies with a little bit of funding tons of freedom in small teams he's an active angel investor organizer of many tech meetups in la and still writes code on his current company agentrisk.com where they let machine learning manage their investments so they can keep building cool stuff john you ready to take it to the top of course yeah all right so first off what was the third startup that you sold so the name was backsense we were doing mobile aero reporting and analytics okay so this plays in kind of the rainforest qa space sauce lab space this kind of automated testing it was mostly aero reporting like when your application was crossing we had an sdk that was collecting data and sending it back to the developers i see okay very good so that company what did you sell it uh we sold it for a 17x the public company that acquired us never disclosed the actual money but the whole team made some pretty good what what year was that when did you sell it uh 98 2014 2014. okay and you had me how much did the did your company raise before you sold that's a very interesting question we only raised one hundred thousand dollars okay so when you say that your startup got a 17x return to your investors that's pretty easy when you only raise a hundred thousand dollars right you've just got to return 1.7 million great return by the way not undercutting you great return but but doesn't necessarily mean that you got really rich from that uh how did you manage you and your your you know your founding team your early employees getting liquidity uh so it was it wasn't that easy because we only gave 10 to the original investors they only put 100k and then we broke even after i think six to seven months so ninety percent of the company was was to us to the founders or to the to the you know to the engineers how many founders were there we were two founders and we were in total nine engineers so the whole team was like 11 people okay so 11 people total and again if you raised 100k and got your investors a 17x return that means their 10 portion of the company they got 1.7 million back from which would imply a sale price of something like 17 million total uh is that basically right yep yep very good so why you should be on a cruise ship somewhere relaxing doing nothing right why not go take a long sabbatical why jump back into the startup space so i went and worked for the company that acquired us for like three and a half years and it was amazing because it was in silicon valley and everything but i got super bored i wanted to build something new so this was splunk by the way right that acquired you oh exactly yes this was planned uh so i got a little bit bored and i decided to do another company sadly i cannot sit in one place and do nothing so i have to keep building stuff that's so funny okay so when did you launch agent risk officially we wrote we started beta testing it in 2015 like with uh some friends of ours and previous investors and we launched it in 2018 like we opened it to the public okay so you write the first line of code in 2015 when did you get your first paying customer the first paying customer 2018 yeah okay got it so 2015. okay so you did three years or how much money did you guys think in the company before you got your first dollar revenue uh because we were doing it mostly part time let's say that nobody was getting paid so i just put like 10k to start the company to do through all the legalities because the thing with with investment is that you have to be regulated so i had to pass the exams i'm a registered financial advisor that took a lot of a lot of time then we had fire the compliance officer through the first two or three years you need a track record in the investment business they don't care if you're a successful entrepreneur they need a track record so what was the number about how much did you guys invest uh originally we started with 10k we put another 50k and then we had the previous investors putting more money and currently we raised more than a million dollars okay but again between 2015 and 2018 how much capital did you spend ten thousand dollars yeah okay how do you support a team over three years with just ten thousand dollars going out got a very successful exits as i said well that doesn't that well that doesn't mean anyone gets money i mean when you hire new employees in the new company they don't get any of that money so we didn't have any new any new employees so the employees from the previous company most of them came to the new company so we they knew that hey we had a successful exit let's keep doing it okay did you have to pay you must have had to pay to go get your broker's license and put yourself through all these tests um no you don't need a broker license we're an investment company so you only need the investment advisor's license and with 10k you can you just you just need to study and just okay so you filed tax returns in 2015 2016 up through 2018. you're telling me if i go look at those tax returns i'm only going to see across all those years a total of 10 000 of money spent yep okay uh then fast forward today you said you raised a million dollars total uh-huh okay and what are so break down kind of like what a customer pays for so can you talk about a customer that's paying you right now of course so a customer he only pays the fee a one percent fee of assets under management he doesn't need to spend anything else okay and give me an example of a customer uh usually customers are from uh silicon valley there are successful entrepreneurs that have also a successful exit or a very successful business and they don't like the traditional wealth managers and they want something like is backed by quantitative mathematics by quantitative finance mathematics and machine learning so john i mean are you replacing family offices or like charles swab so family office is no trustworthy okay got it so how many how many individuals have you know have at least called a million dollars with you how many customers you have so currently we have more than 23 customers okay we started uh acquiring customers beginning of 2019 like promoting the service and we also started the b2b service to offer our services to other wealth managers and financial advisors okay what makes you more but they all pay just one percent of aum yep okay so and there's 23 how many of those 23 are directly wealthy individuals versus someone else you've licensed the tech to uh no no these 23 are only the b2c i'm only there actually yeah so you don't have any b2b customers yet we have five but are in the beta version of the product the product is still in like heavy development ignoring all the beta stuff across these 23 folks what's your total aum as a company currently totally um i think is around 25 27 million okay so 27 million and uh so i mean obviously you can take one percent of that's 270 000 that you guys make annually okay so i mean how do you scale this you need to get up to like you know billions in a um and not really because as i said our teams are extremely extremely small and efficient so currently the team is uh has eight people and our break-even points is i think around 100 million which if you do the calculations which i'm pretty sure you're doing right now it's when you say break even so how much are you burning today per month currently we're br we are burning 23 000 okay i mean so not horrible uh you when did you raise that million um like six months ago yeah so you have you have cash you have plenty of runway right yeah yeah now did you have to set up a board when you raise that money um no because the money were raised by previous investors and from customers customers that love the service and like hey i want to put some money in the company okay got it uh what's the team today so eight people how many are engineers uh seven of them are engineers and one compliance officer okay so no one doing sales nope so how are you getting customers today uh through word of mouth and the founders me and alex are doing the sales you know the hand holding and all stuff like that but we don't have an official sales team and the previous company never had the sales team either and we had 40 000 customers in the company that got acquired so i strongly believe in small teams very efficient with a huge sas presence i don't like like the sales that last company though what was the average price point that customers paid per month so the average price point per month it was uh like three thousand dollars something like that and we had plans starting from nineteen thousand dollars so you had forty thousand customers paying three thousand a month yep okay that doesn't make any sense that that would be 120 million dollars in monthly recurring revenue so the thing is that we still get we are getting customers where the average was 3 000 we had some customers for 19 another customer that had a hundred thousand dollars so it was it was a huge long tail and a half and a couple of customers that had a lot of a lot of money yeah but what what do you think the average customer paid per month or per year ah per year per year action is a little bit a little bit easier i could say the medium the medium is a little bit better because the average you know excuse a little bit so i would say the medium would be like i don't know 20 50 bucks something like that 50 bucks a year yeah sorry sorry 50 bucks per month for the medium okay got it so yes about 600 per year yeah yeah 600 per year times 40 000 customers that's a 24 million a year business yep that's about what it was yeah yeah and you you built all that just on 100 raised yeah any debt uh no we only raised uh the one hundred thousand dollars no debt the of course the problem the challenge we had with the previous company is that the space was getting super crowded so we were getting squeezed out by companies that raised hundreds of millions of dollars we had we were the second most uh useful second most used platform after google analytics and google error reporting but we saw that we're getting squeezed out and our goal was to go after the big customers which were more difficult so we had the long tail but it was difficult to break into the bigger sales so we decided to partner with splunk when they acquired us and go and use their sales team to go after the bigger the bigger companies but john is it true to say you were doing about 24 million on a run rate when you sold we hadn't we were closing to that i think we were close to like i don't know 14 16 we had churn rates we had a lot of partnerships and we were giving a lot of discounts at that moment so we have like one year discount we're doing old stuff like that well why did you sell so let's say it was 16 million i mean you told me earlier you sold for about 17 million that's just like 1x ar i mean that's not that great i mean it did well for you guys by the way because you were basically bootstrapped but it's not a great multiple for a sas company why didn't you get a bigger multiple so i was thinking about it the problem is that uh we saw a huge opportunity in the company that we would acquire us we knew that the sellers that we're going to get were huge we're like seven digits we're going we're we're going to be able to be directors in a huge public company and at that point we were like 12 greeks like almost 10 greeks and some people like we needed to come here in the us we needed all the structure we needed you know the uh the big company to take care of us and help us break into bigger businesses so that moment and it seemed amazing and i think we did a very good choice because after that the space was really shaky like other companies like start going down like what name one or two uh so classlytics got acquired by twitter and then twitter sold it to google they had issues with scaling cross crosslytics no i just want to be good i want to make sure it's good okay fair enough so you got out of that business you got some good salaries etc etc you basically are saying you're good at getting customers without raising a ton of capital which is great so let me let me roleplay for a second there's a lot of very rich people that listen to this podcast actually many people have said nathan i think you maybe have the wealthiest audience in the business space because it's basically a bunch of exited sas founders and investors so if they're listening and they give you a million dollars what are you going to do for them how are you going to make them you know money back uh so we are creating a fully diversified portfolio we deploy option strategies non-speculative in order to hedge for market risk or to give them some additional returns and they have full transparency in what we do when we do it and the reasons of course behind it they have the mobile app the dashboard one day liquidation they can withdraw their money in one day what are we what do we have exposure to though if i give you a million bucks what typically are going to give us exposure to so only etfs uh i need everything commodities energy s p 500 technology real estate bonds municipal bonds and why is this better than me putting you know a million dollars in a vanguard smp kind of index fund um this is a very good question it's not actually better personally i would put the money there but if you want a better diversification you should put your money in many many many eggs just putting it many many baskets uh just putting it in one fan as diversified as it can be it still has a risk you should even diversify between different etf providers so what irr are you targeting um we try we don't try to beat the market because we're not a hedge fund but this year our year to date is 17 percent obviously because the market is doing great numbers pre-tax obviously right pre-tax obviously and yeah we do the tax harvesting rebalancing we do also the standard stuff yeah really interesting okay very good that's helpful to understand so uh doing about two hundred thousand dollars a year today uh where were you last year do you remember i don't remember at all i don't remember what was your aum a year ago um i think a year ago i think we're like 10 million no 8 million billion um okay so you're doing like 80 80 000 basically in that year yep yeah interesting okay very good um so that's good growth so i mean literally the way that you see this scaling for you to get to a billion in aum is you just literally cold calling your wealthy tech friends in san francisco and la and just keep bringing them in i don't think our target does not go to a billion for the b2c product our goal is to use the b2b product to give the product to advisors and then keep growing actually we're using the asset distribution channel instead of going to individuals yep interesting all right very good so talk to me real quick about churn so any of these people has anyone put money in with you and like they put a million in a year ago now they only have five hundred thousand with you has anyone withdrawn money no no okay so the only money you're paying out is the seventeen percent interest or or seventeen percent returns yeah yeah but we're not paying them out they just they roll it yeah yeah yeah yeah very good and are most them giving you this money out of their kind of step by rows so it's kind of tax deferred or are they just giving you you know post tax income oh really why wouldn't they not invest in you via their ira or roth i think they like to select more the aggressive strategies that we have and they want to put that strategy that money they're like i think at that moment they consider as you know something like a novelty like ah this is a machine learning uh platform i'm gonna put some money there and see how it goes yeah interesting okay and it's probably too early to talk about cac right you don't really have a defined go to market strategy so cac is irrelevant right yeah exactly yeah okay very good let's wrap up with the famous five number one what's your favorite business book um i actually have two the one is called masters of doom and it's how the uh id software that creators of doom and quake uh started uh their whole business and it's like eye-opening and the other is uh like a virgin from uh richard branson how he started the virgin barn number two is there a ceo you're following or studying uh i want to say a little bit bill gates because i love the way that he created microsoft uh and i'm following him on his newsletter the books that he proposes and i love the way that he created like a giant from almost nothing like for just an idea number three what's your favorite online tool for building your company um i think intercom have to go within their phone number four how many hours of sleep are getting every night um eight to nine i'm like very religious about getting like eight and how how old are you john how sorry how old are you i'm 38 38 and what's your situation married single kids married any kiddos no no i'm working on these i'm working okay working on it very good all right last question what do you wish your 20 year old self knew uh that's money is not everything definitely money is not everything yeah try to have as much fun as you can and money will come at someone at some point guys there you have it john again sold his first company after raising a hundred thousand dollars to a larger company splunk for call around 17 million dollars they were doing about 16 million in ar at the time but the space was going through a lot of chaos so we got it at the right time got some nice salaries nice insights into how to run a big big company then left in 2015 and launched agent risk to help wealthy individuals manage their money more effectively and more diversified and quite frankly safer today they have 23 individuals and about uh what do you say about 27 million dollars in terms of aum currently uh as they look to scale this up to get you know 100 million a billion where economics obviously get better in this kind of fintech company burning 23 000 per month right now and a million dollars raised team of eight john thanks for taking us to the top thanks thanks you guys know i fight like heck to get these data points for you from these ceos that rarely do these kinds of shows if you want more shows like this make sure you subscribe right now we're trying to get 10 000 youtube subscribers by the end of september here 2019 and it would mean the world to me if you clicked now to subscribe additionally i've got two more great interviews for you if you want more data points from the world's leading sas ceos click and watch one of them right now