How Altizon CEO Yogesh Kulkarni grew Altizon to $3.3M revenue and 30 customers in 2024.

hello everyone my guest today is vinay nathan he is the ceo and co-founder of ultazon systems he has 15 years of varied experience across sales marketing engineering and product management before autism he was vp of sales at persistent systems he led that company and the sales activities in the u.s northeast and also set up the apex sales team but he began his career in engineering and rose of the engineering ladder to be a center head for the u.s base for a u.s based captive he holds four u.s patents on work related to usb wireless and code security he also holds a master's degree in computer science from the university of southern california la and a bachelor's degree in computer engineering from the university of pune he's a charter member of the thai pune as well vinay are you ready to take us to the top oh great thank you so much for that introduction hi nathan you bet good to be with you today okay let's jump right in so altaz on industrial iot platform what's the company do and how do you make money so we build a platform that has three parts to it associated with getting the industrial world connected so we get industrial assets in manufacturing factories connected collect data from them and provide applications that are analytics oriented back to them in a sas model so so our core business is around getting factories connected and remote assets on the field uh and giving back sas applications to our customers so this is very much one of those models where it's kind of a sas plus iot model now have you fully subsidized the actual physical hardware or do the consumers or put customers have to pay for that as well so uh our first pass in our entire story so far has been on working with uh situations where the the data is already present in the industrial assets that we are connecting to so there is very little additional hardware that typically is involved in terms of getting uh the industriality solution going so for example uh to get a productivity app going you don't necessarily need to have high-end sensors added that may be providing a new perspective on let's say quality so there's a big emphasis on working with as-is assets and you know very little add-on hardware in our model okay very good so most of the business is pure sas okay what's the average customer pay per month for this product would you say i'm sure you have a lot of different customer sizes but give me an average make it simple for me so um in the sas model for let's say smart manufacturing you're going to have a situation where people want tiers that are associated with getting a cell a line a plant multiple plants and then like an enterprise product so the sas steering is based on this different uh these different models and it varies anywhere from about twenty five thousand dollars per annum at the bottom line till about 150 200 k depending on the scale of the implementation uh associated okay and what would you what would you say is closer to an average the 25 000 or 100 000 a year so what's interesting about industrial iot in particular is that it's a linear scale up model so you don't really have an average point in that sense you have a starting point which may be as low as 25k and over three to four years you kind of keep on adding plants and get to that yeah i totally understand that the nature of a cohort analysis on expansion revenue first-year acv increasing i'm just curious when you look at your entire customer base right now you know an average price point that they might be at i hear you're saying between 25 and 100 per year is it would you say though if i forced you to an average it's somewhere in the middle or the lower end or higher end yeah it's somewhere in the middle so somewhere in the middle okay for the first 18 months or so it would be let's say it would be a number maybe what 800 it will be in the middle so in the middle like yes you're talking like 50 60k something like that yeah that's great um it's by the way a very typical kind of land expand model land at 25 than upsell versus all the linear things you just articulated um put this on a timeline for me when'd you launch the company what year so we started in april 2013. okay and have you uh bootstrapped to date or have you raised we have raised so we did our um i liked you so much until now you've raised okay how much have you raised so um we have we've raised about 5 million so far we are a post series a company and we did that about two years ago um we started our story very much in india and uh you know kind of focused on getting the asian market going so we raised amounts about two years ago when we went international to kind of set up a more global sales infrastructure okay and that means you're raising now that's a long time so are you raising currently uh no not right now actually so we're doing okay it's been two plus years and okay at some point we will in the next year or so but primarily driven by how much of a scale-up we see on the business possible it's really going to be around that yeah now how are you cash flow positive at this point no we are not so you're still using the money you raised right you know so it's a low um burn kind of a model so while we have done the raise we are very low on burn and we're just basically ensuring that we have about a dozen customers which have at least uh you know around eight to ten of their plants connected that's the key metric we're getting to once we do that then we can look at uh you know raising more or operational breakage so how many customers are you at today so we have about 30 plus enterprise multi-year accounts and we have about 120 or active enterprise users on the multi-tenant sas free version that we have and so so just to be clear just to make that just to put make that in english you have 30 paying customers and 120 customers who are using free and paid correct okay and about uh 13 october 30 are you know the large uh billion dollar plus kind of enterprises that's great so can i take the 30 customers times the 5 000 you said 60 grand a year kind of as an average which is 5 grand a month can i multiply 30 times 5 grand a month you're doing about 150 grand a month right now in revenue so we're around there okay that's good and what's growth look like so if you're doing cuddle around 150k today what were you at in october of 2017 a year ago i think one of the biggest thing is that we are seeing it like a 3x year on your growth business um so um you know depending on how the circumstances go we can that can extend to you know maybe 4x or 5x but on a baseline model we you know we do all of our projections on a 3x or on your group that's great okay so but looking at historical data not projections but actual growth you went from about 50k a month a year ago to 150 today that's great where's most that growth come from expansion revenue across the old cohort or new customers all together um so um in the initial year it was of course expansion now we have a pretty significant as i said the 12 13 major accounts that is where almost 60 percent of our growth happens there now so 60 is from the expanded model and 40 percent is from new business that comes in across and again there's like a geographic kind of tinge to it so um europe and asia contribute quite a bit and us is about 30 40 today and when you look at kind of revenue churn per year what is that at today oh churn is zero because uh in industrial uh assets one of the good sides is of this is while the growth may be linear the uh the actual uh machines once you get a machine connected on the platform it never goes away so the first asset we got connected five years ago continues to be on the platform okay but just before that also translate to revenue right you haven't lost a dollar of revenue correct you know we you never once you get set on that chart you just don't lose um revenue so there will be a conversion ratio let's say when you get a pilot done and so the pilot to you know uh full-fledged project conversion ratio is around 60-70 uh depending on you know the nature of the pilot and all that but once you get that past that hurdle it's pretty straightforward and vinay what do you what do you what's the kind of average expansion in the first year so if they start at 25 grand a year in the first year what do you typically expand them to in year two so that's what at least at the minimum you can be assured that you know when somebody starts on this journey they're going to add at least one plant in the next 12 months uh after this is done so three to six months for the pilot and then another within the next nine to 12 months we'll have one more plant that's kind of the bare minimum okay again so what does that mean in terms of actual percentage expansion is that 120 percent expansion 180 100 right 25 just think of it as blocks of 25k and depending on how much how many plants that you're looking at adding you will have that being linearly scaling up uh in some cases you know of course if the data is low and all of that there could be many more plants that show up before you add up to 100k so just to be clear you start off at 25 000 plan you're saying you pretty you pretty accurately predict...