How AtomBeam Technologies Raised $4M and Won POCs With Saab and the Department of Defense (Interview with Co-Founder Charles Yeomans)

Introduction and Company Overview

Nathan Latka

00:00Hey, folks. My guest today is Charles Yeomans. He's the CEO of two technology firms and COO at a financial services firm. He was also a key architect of two of the nation's largest insurance brokerages. He was an investment banker and a naval intelligence officer and has a AB from Kenyon College and an MBA from Stanford now building atombeamtech.com software increases IoT bandwidth by four x. Charles, you ready to take us to

00:24the top? I am. Alright. So just to be clear, your software helps people increase their bandwidth. Is that accurate?

Charles Yeomans

00:31>> Yes. That's absolutely right.

Nathan Latka

00:33How does it work?

How AtomBeam Technology Works

Charles Yeomans

00:34>> So, essentially, it's this, that we take a really old idea, which is the use of code books, and we combine that with some pretty fancy math, that MIT level stuff, along with machine learning. And what we do by doing that, we're able to take advantage of the fact that you see a lot of patterns in these little these little files that machines generate, IOT files. But we see instead of one like compression does, we look in

01:08>> thousands. And because of that and because of our use of code books, we can take we make a piece of software that is small, light, ultra fast, 400 times faster than compression, and it will work on the tiniest little files that you could imagine, like under 10 bytes. And if you were to try to apply compression to that, you would find it will make them bigger. Consequently, because we're super fast and we reduce it on an

01:35>> average of 75%, we get an average of four times more bandwidth simply with software. So we can take your existing network and quadruple its capacity.

Nathan Latka

01:48Interesting. Now, what do people pay you on average per month to use this technology?

Charles Yeomans

01:53>> It varies tremendously because the uses are so varied. If you were to talk about somebody, using it, say to over satellites, they might be if they're, for example, they were paying $10,000 a month, they might be paying us a couple thousand dollars. But they're also avoiding paying $40,000 that they would be paying if they didn't use our stuff. So it's a pretty good deal.

Nathan Latka

02:21So your sweet spot, I know you have a big range, but your sweet spot might be $5,000 a month, something like that.

Charles Yeomans

02:27>> Yeah. But I mean, I got to tell you that the companies that are either using it or considering using it are extremely large. I mean, we're talking Fortune 100 size. And they are talking about, in many cases, deploying it on a huge number of machines. And so

Pricing Model and Per-Machine Economics

Nathan Latka

02:45Is that how you sell? That's why your price was up? So it's based off the number of machines?

Charles Yeomans

02:49>> Yeah, it is. So it's really, you know, on a per machine basis, it's either pennies or a dollar or something. It's really small. But the I'm talking about, like, like, may like, we just won a proof of concept in a in a competition in Sweden with Saab. Saab makes military aircraft. They make all sorts of other defense How many

Nathan Latka

03:15machines would they deploy on on day one?

Charles Yeomans

03:19>> Well, they they are just they're just getting started. But they, you know, they'll probably be hundreds of airplanes, many other machines that it's like, think of it this way. We are how machines can communicate. Any machine can communicate more effectively with other machines.

Nathan Latka

03:37No, I understand that, Charles. What I'm trying to understand is when someone's going pay you over a million bucks a year, is that because they're installing it on over a million machines?

Charles Yeomans

03:42>> Yeah. Yeah. Maybe not a million machines, but yeah. A lot. I would say

Nathan Latka

03:46So so it's a dollar per machine per month. That's sort of where you blend out?

Charles Yeomans

03:50>> Yeah. To say that's a reasonable approximation. Okay. It's gonna vary a lot. Depends on the use, but yes.

Nathan Latka

03:54That's Fair. Fair. Okay. And and so give me the backstory here. When did you launch the company?

Founding Story and Co-Founder Split

Charles Yeomans

04:00>> The end of twenty seventeen.

Nathan Latka

04:02'20 and you were sole founder or no?

Charles Yeomans

04:04>> No. I had a co founder, Ali Ashgar Riyahi, who is a technology founder.

Nathan Latka

04:12And did you guys just say did you guys just say, you know what? We're gonna stick right down the middle and be fair. We'll just split it fifty fifty, or did you split equity differently?

Charles Yeomans

04:20>> Oh, we split it up. It was pretty close to fifty fifty after they consider we the money that came in and and all that.

Funding History and Crowdfunding Round

Nathan Latka

04:30Were you fronting a bunch of the money, the startup capital?

Charles Yeomans

04:32>> Most of it came from private investors, and we've also done a crowdfunding round. So

Nathan Latka

04:39Oh, I see. So it was like maybe you have 40%, he has 40%, and then investors own whatever 20%.

Charles Yeomans

04:45>> Oh, we no. We own much less than that because the investors have come in, you know, for, you know, for over 4,000,000 now.

Nathan Latka

04:52Got it. When did you do that round?

Charles Yeomans

04:55>> The last round we did, the crowdfunding round closed in

05:01>> September.

Nathan Latka

05:02And how much was that for?

Charles Yeomans

05:04>> That was 2,600,000.

Nathan Latka

05:06Just Okay. What platform did you use to do that?

StartEngine Round Details and Note Cap

Charles Yeomans

05:09>> Start Engine.

Nathan Latka

05:09Ah, yeah. We love Howard. Great platform. What valuation did you set? I forget what a structure is. Is there a cap or valuation?

Charles Yeomans

05:15>> It was a cap and a on a convertible note, and the cap was 10.

Nathan Latka

05:21Okay. Got it. Cap was that that's post well, it's a cap. Yeah. So got it. So it'll convert later. Are you looking at raising equity now so that would actually convert or no?

Charles Yeomans

05:29>> Yeah. We are. We we you know, we're we're approaching a point at which we're really gonna ramp. And so the thing is, think of it this way. If one satellite company, we have a big satellite company who's late stage of incorporating it, once they deploy, then satellite data bandwidth is a commodity. If one provider is providing satellite bandwidth at price x minus everybody is at price x and they're at x minus 10, say, then boom, everybody

06:03>> else has to use it or they're way behind because we are the same thing as launching a bunch of new satellites. It's big time dramatic effect of of when you're talking about a commodity, think about selling West Texas intermediate crude. Everybody sells it for price, whatever the price is. But if suddenly somebody sells it for $20 less a barrel, then everybody will buy that.

Nathan Latka

06:25Understood. So just you said you raised 4,000,000. 2.6 was equity crowdfunding. Where the other 1.4 come from?

Charles Yeomans

06:32>> Accredited private investors, wealthy individuals, that sort of thing.

Nathan Latka

06:37So would you call that like your pre seed before the equity crowdfund?

Charles Yeomans

06:41>> Yeah, I think that's fair.

Nathan Latka

06:43Okay, got it. Interesting. How did they feel about the crowdfunding? I mean, that's a lot of extra people you have to deal with in an equity crowdfunding.

Charles Yeomans

06:48>> Yeah,

06:49>> most of them were okay with it. I would say they were all okay with it. I think they were fascinated because it's such a new thing and people aren't used to it and and all that. So, you know, I would say that overall, you know, everyone was very supportive.

Customer POCs and Paying Customers

Nathan Latka

07:06Mhmm. Very cool. So you get going in 2017, you get your first customers on, you get some capital to build the MVP. How many customers are you now serving today?

Charles Yeomans

07:13>> Let's see. Who are well, you know, we're in really in POC mode with with all of them right now, including Department of Defense. So

Nathan Latka

07:23How many POCs do have out? Are they paid?

Charles Yeomans

07:26>> Some are paid. Let's see. One, two, three. So there's about four that are very active, and there's two or three more that aren't as active.

Nathan Latka

07:39Okay. So when you say four are active, four have paid for the POC?

Charles Yeomans

07:42>> No. Two have paid.

Nathan Latka

07:46Got it. How do you get the other two that aren't paying to start paying?

Charles Yeomans

07:49>> Yeah. That's a fair point. I think part of it is we need to ask, but part of it is that,

07:57>> you know, we, you know, I mean, part of it is you say, okay, the process we're undertaking with customer x with this big satellite company is they're putting engineering effort in, we're putting engineering effort in. It's not like it's lopsided one way or another. Once it's up and running, we're going to they're going to add a surcharge onto everybody who uses our stuff and we're gonna split the revenue. So it's almost kind of a joint effort

08:25>> to get customers that we both are undertaking. It's different from an end user, say.

Nathan Latka

08:30Mhmm. Talk to me more about your team. How many folks full time?

Team Size and Engineering Headcount

Charles Yeomans

08:34>> Full time is right around 14 at the moment.

Nathan Latka

08:3814. How many engineers?

Charles Yeomans

08:43>> Seven.

Nathan Latka

08:43Seven. Okay. So heavy engineering, which makes sense here. And tell me a little bit more about sort of like next steps, right? So you raised 2.6 on 10. You mentioned you're are you looking at raising an equity round now?

Equity Round Plans and Dilution Concerns

Charles Yeomans

08:56>> We are not officially yet, but we're we're trying to get a couple of accounts closed. Then, yeah, jump into the equity. We're getting a lot of interest from I get called by venture guys a lot. Does it

Nathan Latka

09:10make you nervous, though, that you're so diluted already pre rev in your pre revenue?

Charles Yeomans

09:15>> Of course.

Nathan Latka

09:15I mean, I don't want How

09:16do manage that?

Charles Yeomans

09:17>> You just do the best you can. You do it at, you know, like our next round will be at a significantly higher valuation, for example. And,

09:27>> know, certainly, yeah, I'm not arguing that, you know, you know, took a fair bit of dilution, but, you know, you gotta get the money or you're not gonna get far. Well, it's just

Nathan Latka

09:39a question of who you take the money from investors who require equity or customers who require a great product.

Charles Yeomans

09:44>> Yeah. Right. Now that is absolutely right. And our preference, not surprisingly, is to take it from customers. And we have

Nathan Latka

09:54yeah. You're close, it sounds like.

Charles Yeomans

09:56>> Yeah. Given the number of big customers that, you know, are out there, either using it, confirmed that it works, and now they're in agreement.

Nathan Latka

10:02Sense that you're nervous to ask for big contracts, though. I sort of get the sense that you're winning.

Charles Yeomans

10:06>> Yeah. No. It's it's a good question. Yeah. I mean, I I I think you're right. I think, you know, we need to get over that.

Nathan Latka

10:13You should just look in the mirror tonight, Charles, and just practice looking and saying just practice saying ridiculous. Rare. Yeah. Exactly. Say say say, our full pricing, if you want the full suite of tools is a million dollars a year with a two year minimum contract. Would you like me to send over the DocuSign? Just practice saying it over and over again.

Charles Yeomans

10:30>> Yeah. All right. So are you available?

Nathan Latka

10:33Would be a very bad I'd be a very bad salesperson for your product. I don't know it well enough. But I do think this happens a lot with founders. I think there's a ton of founders that undervalue, the majority of founders undervalue what they've built, and they're so nervous to ask for the contract value that they deserve.

Sales Confidence and the 80% Value Proposition

Charles Yeomans

10:50>> Yeah. I think you're probably right. I think now you struggle and struggle, and then you get to a point and you think, you know, please somebody. And then people start to show up and you think, well, you know, yeah, it is a really good value proposition. I mean, like, you know, we can literally save somebody 80% of what they're paying right now for something. We can do all kinds of cool stuff. And I'm not I'm only

11:15>> scraping the surface here of some of the things that they can do when I talk about, you know, the 75% reduction thing. But, you know, when you when you stand in front of when you sit in front of somebody and you say, okay, this is what I I want from you guys. You know, it's hard to, you know, and so it says, okay, we need to get better at that. And you're absolutely right. And there are

11:39>> things that I've already thought about, but, you know, this is inspiring me to get better about it. You're totally right. Yeah. Yeah. Well, no, this is

Nathan Latka

11:46where I'm just trying to learn from you, get in your head a little bit and understand the growth so far. So equity crowdfunding, you raised capital there, a team of 14. You think some of these four or five POCs hopefully will convert to paid. Do you think you can run them paid by the end of the year?

Path to Revenue and Year-End Goals

Charles Yeomans

11:59>> I think, you know, at least a couple will be. I don't know. It's hard to say because sometimes they're stop and go and plus you have, you know, the holidays and stuff like that. So I would hope so, at least two.

Nathan Latka

12:11Mhmm. How long do you have you set any end date on this? In other words, if this define what would what this company would look like if it is still not working a year from now where you'd say it's time to shut it down.

Investor Commitment and Company Outlook

Charles Yeomans

12:22>> It's not going to be that way. It really won't be. We have committed investors who are saying that they will continue to support it. If we don't get out of our own way and really get some sales rolling, then yeah, then we've got to look at all sorts of things, but we're not going to be sitting here a year from now with things not working and no money and we're shutting it down. That won't happen.

Famous Five Rapid Fire

Nathan Latka

12:50All right. Well, on that note, Charles, let's wrap up with the famous five. Number one, what's your favorite book? I

Charles Yeomans

12:57>> think I would have to say Master and Commander by Patrick Master

13:03>> and Commander.

Nathan Latka

13:04Number two, is there a CEO you're following or studying?

Charles Yeomans

13:07>> Yeah. That's a good question.

13:11>> Most of the CEOs I followed in the past was back when I was a banker and I had some CEOs that I thought were just terrific. And I still consult with them occasionally.

Nathan Latka

13:24Name one.

Charles Yeomans

13:25>> Sure. Mike well, I call him Shooter. Mike Shute is his name. Mike Shute.

Nathan Latka

13:32Very cool.

Charles Yeomans

13:33>> S h u t e. S h u t e.

Nathan Latka

13:34Good. Number number three, what's your favorite online tool for or the one that you use the most?

Charles Yeomans

13:42>> Oh, that that I use personally?

Nathan Latka

13:49Yep.

Charles Yeomans

13:50>> I use it's pretty mundane. I use a compression for PDFs. It's called Sage. I mean, it's like, I mean, you've said the most frequent and that's it, you know, because it's

Nathan Latka

14:03Number four, how many hours of sleep do get every night?

Charles Yeomans

14:06>> Well,

14:09>> real sleep or just, you know

Nathan Latka

14:11Sleep. Average sleep.

Charles Yeomans

14:13>> Yeah. It's probably I probably get a good seven plus. I mean Okay.

Nathan Latka

14:17And Charles'situation, married, single, kiddos?

Charles Yeomans

14:21>> All of the above except single, but, know

Nathan Latka

14:24How many kids?

Charles Yeomans

14:25>> Two. One is a senior in college and the other is a senior in boarding school in New Hampshire.

Nathan Latka

14:31And, Charles, how old are you?

Charles Yeomans

14:33>> I'm 65.

Nathan Latka

14:34Last question. Something you wish you knew when you were 20.

Charles Yeomans

14:39>> There's a long list. I think

14:45>> the most important thing is to go in with your eyes open and associate yourself with the best possible people and be honest with them and make sure they're honest with you.

Nathan Latka

14:56Guys, there we have it. At atombeamtech, again, helping you do do compression more effectively. They got four or five POCs out there right now, plenty of capital to work with. They've raised they just raised a bunch on a crowdfunding campaign, again, with the goal here of increasing your IoT bandwidth. Team of 14 people looking to scale, bring on some more engineers. We'll see what happens next year. Hopefully, they can convert some of these POCs into real

15:18paid customers as they price per machine. All right. Thanks, Charles, for taking us to the top.

Charles Yeomans

15:23>> Yep. Many thanks, Nathan. Thanks for your time.

Nathan Latka

15:27One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM

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