How Authenticating CEO Steven Ward grew Authenticating to $3.1M revenue and 8 customers in 2024.

hello everyone my guest today is stephen ward he's the most widely known expert he's the most widely known for being an expert on love dating and relationships as the master matchmaker host and executive producer of vh1's hit show tough love where he gained worldwide notoriety today he's building buildingauthenticating.com which helps identity verification and fraud prevention activities inside of a much larger company stephen you're ready to take it to the top yeah happy too how do you go from like love maker to like authentication well as a matchmaker we have to make sure our customers are who they say they are they're not lying about their age or their background and that we can represent them to other people in good faith so when we developed our own homegrown technology to do that online more efficiently and effectively we saw a bigger opportunity spinning that out to be more industry agnostic yep so you built did you build this for the show originally to verify profiles and then you spun it out well so because of the success of the show we started being contacted from people all over the country at first we were just a small mom and son team in philadelphia and so i needed to create a way for people anywhere in the country to quickly prove themselves and to pass our qualifications before we could start setting them up online okay and so when did you actually when was the first line of code written for this company uh i would say well this business authenticating.com uh i'd say last year november of last year okay november last year and when was the first a dollar of revenue when did that come in november of last year okay so all the same month yeah we already had the apis working for a mobile product that we created called love lab which was meant to be like the car fax for dating and once we had the apis working to support third-party integrations then we just needed to find a customer who wanted to use the tools and fortunately we found a company out of canada uh that was a publicly traded cannabis company they were interested in using us for identity verification age verification and so we started doing a pilot with them uh proving uh photo id for individuals in canada okay interesting how much did you put how much did you invest in cash wise in the mvp before your first dollar revenue uh probably about a hundred thousand dollars okay so where'd you get that money from did you guys just put it in yourself or what it was it was more or less uh seed capital that i had from love lab which was the original company that i founded with uh angel money friend and family money uh before we decided to to make authenticating a project uh that we wanted to spin out of that business so are they all still on the cap table or no you shut that company down and launch new no i brought everybody along for the ride because i wouldn't have been able to build this business without that ip that's the right answer you would have gotten neutered on twitter if you said anything else all right so how much have you raised today total uh 1.45 okay 1.45 and was that all equity or any debt uh it was originally the 4-5 was originally debt which converted to equity when i raised a million okay so no doubt on the balance sheets today and when was the million raised uh we closed on that in december of 17. okay december 7th so are you raising now i am okay how much are you looking to raise what's the right amount about it i have a team of guys that i've got that i've recruited from top management consulting firms other companies in the background check industry other uh proven sas uh sales executives and they want to come along and help me build a business behind these products and so i have to figure out how much cash burn i need even assuming i'm not making any sales just what would it take to build the service oriented architecture behind these products so that i could facilitate enterprise size contracts so i'm i believe that all i would need is about two million but i'm probably going to raise closer to three yep and what valuation do you hope to get obviously have to negotiate it but what valuation do you hope to get um effectively i'm looking to get at least six because i want to have enough of an option pool for these guys to incent them to stick around for you know eight to ten years if that's how long it's going to take but i also want to make sure that the new money investors have a sizable chunk as well so you're gonna sell like 25 35 percent of the business then 2 million on six pre uh it would be two million on eight pre but a 20 option pool when we're all done got it okay yeah so eight eight pre so ten post means you're selling call 20 of the company plus then adding an option pool on the back end yeah yeah interesting okay very good now you mentioned burn i mean are you burning a lot of capital today no i mean unfortunately you can see from my surroundings i'm in a uh nice co-working space i have my own set of offices in our own little corner and um you know i have made a strategic partnership with a customer who wants to leverage the apis that we have they they're very rich in development resources so they've taken some responsibility to do a lot of the client-side application work that needs to be done for our solutions which has fortunately saved me a lot of money so my burn right now is without the team that i want to bring on board and without giving them discretionary for just today what's burn less than 10k a month i mean that's great yeah that's not bad at all uh very good all right so launched you get going 2018. now help me understand how you price this thing is it pure sass yeah so it's a paper utilization model right my my idea is that the real value we added is that we kind of did all the deep dive product capability testing for you my my vendors that i've integrated are some of the world's best you know twilio sendgrid amazon google equifax transunion lexus nexus other companies that you you know can handle these types of calls at scale and so what we've done is we've managed to decompose their apis and then build our own apis where as a more or less custodian of the pii we're not reselling any of the data that we're buying from our vendors we're using that second party and third-party data to compare to the first party data provided by the consumer and we're essentially saying this we can verify this we can't yep interesting okay so when you say pay per utilization what is the actual utilization like if i used one of these credits what is that credit getting me if you wanted to verify the front and back of a government-issued id that was issued in north america it would cost you a dollar got it okay so then i guess break this down the average customer pays you about what per month so so our smb customers are gonna spend about 1500 a month our enterprise customers are spending around 100 000 a month okay and what do you think of fair averages well i'm looking i mean in my projections for next year it's going to be about 20 smbs i'm really focused on in about three or four enterprises what about today though so look at your total revenue divided by total customers today what's what's the average paying per month about a thousand a month okay about a thousand a month that's fair and how did you get your first obviously it sounds like you found one great first customer how'd you get your second and third um believe it or not my parents suggested people to me that they thought could use this technology and i just cold called them and i guess because they really you know they like the brand name authenticating.com and once i pitched us as a a way to add trust and safety to save money uh on the the fees that you're already using to manually review every applicant every new registration um we we save people a ton of money on overhead expense in the form of facility cost and head count and compensation and all that by really allowing them to quickly onboard people that they can so we reduce that manual process by by factors of two or three or sometimes up to an order of magnitude depending on how they're currently doing that so my my first customer was the cannabis company the owner of that company lived across the street from my mom the other second customer was a a contractor that my dad had done business before and he said you should call them as well and then i started going through my angel investors and asking them for referrals before i know it i started getting organic traffic through my website and people started finding me on their own and so so how much how many total how many total eight eight right now eight okay that's great okay so eight customers and what's the team size today well i'm i'm a solopreneur one of them yeah it's just me i'm the only one on the team officially as of now that's good so eight customers paying a grand a month about eight thousand dollars a month right now in revenue yeah and where were you a year ago do you remember uh i mean the the funny thing is i i do these proof of concepts so i have customers that'll pay 000 25 000 for credits and then they'll want to build and use the product and sometimes i actually have people that have paid me and then just disappeared they their companies didn't could go off get off the ground or their blockchain project or whatever they wanted to use me for and then you know i just don't hear from them again because they they can't deploy right so i mean in...