How Austin Artificial Intelligence CEO Robert Corwin grew to $2.5M revenue and 7 customers in 2024.

hey guys recording this here on what is it friday the 19th maybe you're seeing this on monday at the latest but want to let you know we are almost sold out for founder comp sorry founder 500 in austin texas here in about a week uh it's gonna be an amazing event 500 b2b sas founders i'm looking at the attendee list there's almost um there's almost 60 founders with more than six seven million bucks in arr it's an incredible group of group there's over uh there's over a hundred over 150 with more than a million uh more than a million revenue it's an incredible group you don't want to miss it uh grab your hotel grab your flight grab a ticket right now i'll put the link in the bio um in the description here on youtube and i think there's only about three tickets left okay about three tickets left i'd love to see you guys there don't be bashful grab your ticket now hey folks my guest today is robert corwin he's got a wide array of data science experience in many industries today's the co-founder of austin artificial intelligence a data science machine learning and ai joint venture service client which services clients in the technology financial and industrial sectors before this he was co-founder of eva capital quant hedge fund which traded long short factor strategies in u.s equities all right rob you ready to take us to the top yes sir all right man how did you get out of the you know the hedge fund space just sounds so cool and fun now you're sort of more in traditional sas huh but what made you walk away from hedge fund world uh well to be perfectly honest uh i started my own hedge fund and we didn't raise enough capital to make it work so that's i could spin it but that's the honest answer uh but you know what i realized at the time was that uh um the same type of work i've been doing in quant finance for so long is now very prevalent outside the finance industry right so i would say finance and defense have been doing this kind of work for 20 30 years there's kind of a head of the game those two industries uh but you know the rest of the world is now finally catching on to data science to quantitative analysis and it's not to say they didn't do it before but they're taking it a lot more seriously now i think the younger generation is also taking it a lot more seriously so i think there's a huge opportunity here you know i think we're the inflection point of this type of work uh computer power is definitely no longer a a bottleneck right i mean in amazon web services you can open a computer that with a click of a button that 20 years ago you know would it cost you a lot of money so yeah what uh just there's people listening that are maybe thinking about opening their own hedge funds right what do you mean when you say you didn't raise enough money how much you have to raise to have a hedge fund uh so we had somewhere between 50 and 100 million but uh that's not sufficient in a long you know the minimum you need 500 million to a billion to make it a long-term business sustainable business and so that's hard you know for every it's kind of like the music industry or tech startups right for every huge success you hear of there are many that don't make it for various reasons and um it was also easier 15 years ago right anyone with a bloomberg terminal could start a hedge fund 15 years ago but things uh it's a competitive place it's a brutally competitive place and markets are tougher right they're also no longer going straight up right now so um yeah i say go for it when you say when you say 500 million plus what you mean really is like for you to have the peace of mind to play a long-term game and make it through the dips and then celebrate the you know the peaks you've got to have that much capital behind you i mean that you need that much to pay your own bills so you know that's not your money that's the client's money they're giving you 500 million to manage from that you will take a negotiated fee right what did you take like one or two percent uh i won't disclose that but it was typical hedge fund fees you know typical headquarters yeah so what you're arguing is that the fee on 100 million is not big enough for you to cover just basic hedge fund expenses you really need like two percent on 500 million to have enough admin you know expense yeah i mean if you think about it you know you can do the math what a percentage of a hundred billion is a million bucks and so but you're paying for a lot of uh databases and computers and uh employees right are expected in that industry so um yeah you need a substantial amount of aum assets under management oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 interviews i've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when i hover over here right so the teal is what a vc would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on youtube all these datas are built from real time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 to their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of sas valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're going to go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your evaluation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform i hope to see you there all right let's jump back into the interview so enter austin ai so what's austin ai yeah so uh austin ai is a data science uh ai and ml services firm and we have a real focus on practicality and getting real business results for our customers so as you know there's no plethora of ai frameworks and products right that purport to do x or y and i have nothing against those things but oftentimes right these things are sold as panaceas where you just install this in your company hit a button and then it comes up with all these wonderful predictions right uh that's rarely the case right because at the end of the day the devil is really in the details of this stuff um there's no substitute for good experimental design there's no substitute for uh good data engineering and good pipelines and good coding and all this kind of stuff um a lot of companies we've talked to have installed these spent you know seven figures or multiple seven figures on these frameworks and they do unify things and they add a layer of abstraction you know so the whole company is kind of centralized but they don't solve your data science problems at the end of the day by themselves right you still need data scientists you still need very smart people uh running your analyses and this this is where we step in we fill that gap i like to say that we come in with a swat team a very a data science pod if you will right of a mix of seniorities of people and we're very empathetic to your business what are your business goals where are you going to save time where you're going to save money how can we help you do that and we come in on a very efficient manner and just solve problems what does that mean when you say efficient so if i'm going to get a data science pod from austin ai that's maybe four or five people strong what am i going to pay you per month for that on average um so contact me for the exact pricing but let me put it this way i would what we tell clients is think of your data science problem think of how many data scientists you're going to need to go higher to do that go look up the market rate okay now add taxes and now add benefits and you'll get you'll come to a number right i can almost guarantee you that we will be significantly below that number uh significantly below that number and faster in the way in which we operate um and that's due to our operational efficiency and it's also due to uh the structure of the pod right may have one very senior person on it working only part time but they may be made what is this what is the structure like if you had a name like name the titles of the people and maybe like the last party deployed sure so a typical pod would be a senior data scientist uh working probably half time managing a mid-level data scientist and or engineer full-time and then also two to three junior resources who are you know a mix of engineers and data scientists both in the u.s and abroad we find that formula to be very effective and um full-time the two to three juniors yeah yeah yeah uh provided you have the right people that the secret to all this is making sure you have the right people to make this work right the team cannot have any bad players so so how many how many folks are full time at austin ai today uh yep so in the us we have five i would say full-time people dedicated to the effort um abroad we have about the same and then we also have uh we actually took an investment from a big consulting firm in california and they have opened up their resources to us so we frequently use their resources and or you know for example legal or things like like payroll things like that so that has helped a lot in a lot of ways but anyway all that is to say the number of people who are involved in this thing is is more like 20 yeah right but there's really a core of five in the us and then kind of you know associated support staff so yeah i mean so so is this really like a service model where you've got these folks abroad and you have to sort of spin them up or down based off what your client volume looks like we like to think of it as a package services model so somewhere between pure services and and products right so we don't like to just say services because that invokes ideas of you know here's a guy hourly uh or here's a fee to place you this person here we also do that by the way so if anybody out there needs just staff augmentation we can do that but really our bread and butter is coming in and saying with that pod right we have a packaged service that's been successful on a repeated basis we have business processes in place we actually have core code in a library that we will license to you as part of all this too so we can just be really efficient when we come in with this pod and it's more than just services because we're really trying to solve your problem right we're trying to get to know the business we have industry experts we don't have industry experts and speak to them so it's very empathetic to the business side of things how would i use either right so like we just we just raised 145 million bucks right which part was equity but 135 million is effectively a debt fund that so we are lending off balance sheet and so we built our own credit scoring algorithm specific to b2b sas companies right i mean i would be i what you're describing sounds fantastic but the second you said like license me code well that's such a core part to what we do that is ip that we would want to own like a hundred percent how do you get around that yeah so the ip discussion with every client is different when i say license you code by the way i meant give you a perpetual license for for free for simple like utility functions i don't need oh okay okay um every iep discussion is different uh the things that you need to be uh work for hire which as you know is the term for you keeping the ip fine but we'll we'll let that be and then we would ask in return that you give us the opportunity to work with you know like other clients in the same maybe not the same industry but maybe you know other other clients right we can't be prevented from never working with clients again but all that is to say the ip discussions are almost always you know workable right so yeah what about like i mean look going from hedge fund world to urine now i think like obviously what you're doing now is fine you're learning a ton you're getting exposure to a lot of clients and a lot of problems but like i mean the most successful software founders that i've interviewed i'm talking the ones doing you know going from zero to whatever you know 100 million 200 million in revenue fairly rapidly they almost all start off as an agency just like you're doing and they get unique insights into multiple customers and then they start seeing the same thing pop up and they go we should build a sas tool for that if i'm a betting man like i predict that's where you'll be in five years but tell me i'm wrong uh so you are completely right that isn't that is an age-old formula right that's been done since you know the people who advise me say that that's been done for for many many years um right now we're focused on being a services firm with some product ideas in our back pocket right i don't mind being a services firm nathan right now um i'm we're really comfortable we're profitable we're helping people we're having fun uh every vc i talk to will say what's your product idea and i say i have some but i'm gonna tell you in a few years because yeah i just it's good business is growing as it is we're growing like a startup a sas startup anyway for the time being uh i'm not naive enough to think that that will continue i know that there's limits to scaling the services business but how many can you work with right now how many customers actively i said yeah and is that your limit you think right now um we're fortunate to have this partnership with our investor uh as well as a really good hiring pipeline so i think we could scale up very quickly for new customers yeah how did you convince i mean i don't know it's you're you're you you specifically have gone around sort of mentioning the name so i'm assuming it's private information but how did you convince an investor to write a check into this thing which is it doesn't have the margins of a sas company and you know it doesn't look like it's an agency really you rarely hear about like sort of vc deals into an agency this was all about relationships so i happened to know vc uh here in town pretty well and they knew this other company they had invested in this company it's called the silicon partners you can put that out okay and they uh they're about a four to five hundred person consultant firm also growing super big uh they wanted data science they didn't have it um i i met the founder a bunch of times we really get along all really good people also which sounds i don't want to sound naive from a business perspective but it really makes a difference if you can find people you like to work with in my experience and so it's just one big family and so it's been really just you know it's been good luck in a lot of sense that we yeah i'll stumble into this and and what year do you do the deal with them uh there's just last year 2041. oh 2021. okay and uh are you able to share how much you raised from them um so i won't share the exact details but i will share that it's a think of it more like an angel deal as opposed to series a okay it was a smallish amount for you know a small to a small percentage of the equity but again we didn't actually need to do it right it really wasn't about the money it was about the relationships um they are we also serve as the data science unit of this company and so they feed us business we share business uh yeah how many of the seven customers you're working with today came from them uh yeah yeah yeah there you go there there's good that's a good reason to bring it on angel yeah and um yeah i have to say this because today i mean you see angel rounds and they can just be i mean used to used to be it's always you know 100k to 500k you're selling 15 to 20 business and sometimes you see today it's like this just silly angel deals but i imagine you started something standard under a million you're selling 10 to 20 percent of the business and it's a great partner something like that yeah that's right fair enough very cool okay so anything oh thanks yeah yeah yeah well that was a different i mean we we uh we lend money right so we we we had a choice to make either we become a marketplace or we pass founders off to other people with money to do the loan but then that makes getting cash hard it takes longer we we need our own money to get it out quicker so we just said we got to go get this done it's like a revolving instrument or something it's like yeah i know the way it works is um it's it's a hundred and it's 135 million dollar facility which sits in a bankruptcy remote spv which founder path sells b2b sas loans into we fund out of there we put up 10 of participation capital ourselves and we go it out so so we did that because it was a big bank that came in for bright bank and it drove our cost capital down significantly which means we could pass the savings off to b2b sas founders gotcha awesome yeah yeah but but it's fun i mean we're spending a lot of time now thinking about how do we get our underwriting algorithms working and humming faster and better uh we have done one of our clients that's the project we have done before so if you want to talk about it we should definitely we should definitely talk that would be great is it also in sas landing or was it like e-commerce lending or something uh this is actually uh construction writing oh there you go okay but but i bet it looks you know very similar i mean i see a i've interviewed a couple companies like build.bild.com that's come on that basically that's something you worked with was it uh i would say exactly who it was but it was it was yeah it was in that exact yes oh so you know you know bill though yeah oh amazing yeah i mean he came on the show and i'm going your numbers are what that's insane i mean he was like selling software like as a marketplace model like bro your business in five years is going to be a billion dollar lending product where you're making 10 points a spread yeah yeah they've been they've been one of the more successful players i think to my knowledge in that that industry yeah yeah yeah yeah i know i would agree with that um very cool okay so i was going to ask you about product ideas but you're keeping those close to the best so i'll stay away from that let me ask you a different question um of the current sas player sort of playing in your world in your space who do you think is doing sort of the best job who are you most interested in um i haven't really looked at the sas competitors at sas people ask competitors in our place because a lot of times we come into clients and they have these sas again frameworks or whatever you want to call it and we augment them right so um i don't know that there's probably at the moment the best direct competitors to us are things like a country out of here in town and you know take a lot of other similar consulting firms of similar ilk right uh and of course well we also run into the big you know big consulting firms accenture and oliver wyman have these units right we're just trying to kind of outrun them so um what happens cool and hey what what year did you launch the business uh officially 2021 yeah 2021 and and if people listening right now are going man i need these sorts of services you sort of probably have a minimum so just like let's let's let's get your focus or get the filtering right in here you know you mentioned earlier take a four person you know if you're gonna hire them full time like my answer to that question for a five-person pod with really good mlai data science it would be like you know 150 to 250 grand a pop so that's like a million dollar deal are you basically saying hey guys if you don't have a million dollars to spend on this stuff don't don't call me uh no we have deals smaller than that i would say in the long run it's probably going to make sense to do deals closer to that than smaller but please call us we do all kinds of things you know as long as it's not like i need 10 hours to do this excel spreadsheet or go make me a random forest model and spent 20 hours on it like we can't do that kind of work but if it's a legitimate project spanning i would say at least three months plus and you need say two resources on that i that's completely we have those deals too so and they've got you know 50 to 200k worth of capital to put against the project something like that yeah something like that you need to think of it at least like you know at least comparable to hiring an employee right so if you were to hire an employee you'd spend that much right so realistically we're going to come in below that but it's not going to be like it's not going to be 30 grand you know it's got to be some number that makes sense fair enough robert good stuff here let's wrap up with the famous vibe number one your favorite let's do your favorite sort of data science machine learning ai book uh right now i'm reading super intelligence uh by nick bostrom so that's that's been pretty cool uh that's that's uh philosophy philosophy as well but um i'm increasingly kind of reading less technical stuff and more philosophical stuff but um yeah number two is there a ceo you're following or studying right now uh let's see um think about that i mean all i hate to give a generic answer like um famous ones um let's see who i like quite a lot maybe someone's doing a really good work in ai machine learning space yeah um gosh i hate to blank on this no you're good we can skip it we can skip it no worries number three what's your favorite online tool for building austin ai uh online tool um i would i would say the the you know grand collection of tools that are in aws are pretty amazing and that's a very generic answer again but you know there's just so much there that i mean there's just so many little services and we're using so many of them and it's so amazing compared to 10 years ago you know everything's changed deployment strategies uh to some extent ml workflows although we do a lot of that ourselves scaling up and down for performance things like that so number four how many hours of sleep to get every night i try to get seven so okay that's good and situation married single kids married uh two children here in austin uh yeah sixth grade in fourth grade just yes as of today sixth grade in fourth grade that's amazing i was looking at the pictures behind you i'm going he's got kiddos um and uh and robert how old are you i'm 46 46 last question something you wishing you knew when you were 20. uh i wish i did when i was 20 gosh so probably um okay off the top of my head i actually uh i do a lot of water sports so i i wing foil on my windsurf and so i wish i started a little bit earlier just because i do and the other thing i guess i would say from more of a career perspective maybe um yeah maybe become entrepreneur a little bit sooner i kind of to make a long story short i kind of went silent for a long while and i think that in retrospect i could have recognized that earlier and be like hey you know let's uh let's snap out of this and go do something drastic i think i would have been fine right i think i was a little bit scared to do it before i think it would be fine guys austin ai dot io he started cutting his teeth in the world by raising a you know called fifty hundred million dollar hedge fund and said you know what man gotta be much bigger than this to really survive this in terms of just the admin cost of actually just running a hedge fund but so you know let me take this talent and launch a tool that can help brands right maybe in the lending space um go from a to b easier data engineering process automation predictive models explanatory models et cetera that's now what he's doing working about seven customers raised a small amount of equity from a great strategic partner out on the west coast he's now scaling nicely with his team of five here in austin texas rob thanks for taking us to the top thank you so much we appreciate it one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas 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 1 p.m central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathan lacka dot com 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