Birdzirevenue, valuation & funding

hello everyone my guest today is shakar rahman he is uh basically the founder of a company called birdsee which we're going to jump into here today he's got a masters in electrical engineering with a focus on digital signage processing and pattern recognition he worked as a research engineer developing machine learning algorithms for dna sequence classification on the human genome project in the early 90s then as a software engineering engineer at bell labs in the speech recognition group before moving on to data center technologies he founded birdseed to help shoppers find products in a supermarket inspired by an idea that his 11 year old daughter had shakar you ready to take us to the top absolutely all right so you gave your 11 year old 50 equity in the company right we're still negotiating there you go go figure all right so what is birdseed doing how do you make money so first correction uh we pronounced it bird's eye bird's eye okay and the intention was of course uh shoppers find products in the supermarket so give them a bird's-eye view of the store um of course we don't want to confuse it with the frozen food company uh and hence the change in the spelling but bird's eye today uh we started off really funny i uh after my idea from my daughter i sat at lunch one day at uh my previous employer and frank and i were talking and i threw this idea out of him and he says uh shaker let's do it and i was like are you sure and that's kind of how we started down the journey never owned a business in retail never did anything with supermarkets uh technology guy and i just felt that i was solving a problem that a lot of people a lot of shoppers had supermarkets because they always felt that somehow the grocers were placing products so that it was kind of always a puzzle for you to find out where where the stuff was next and we set out to create a platform to solve that so who are you selling to the consumer or whole foods we're selling it to the to the supermarket chains themselves okay so we're kind of a b to b to c model uh so we provide solutions that then finally find their way into mobile apps that supermarkets put out and so we're essentially powering the technology the mapping the product location customer intelligence that are uh being delivered through mobile apps and websites of the supermarket grocery chain so with that in mind on average what are one of these customers paying you you know per per year per month we have a couple of pricing models typically it's a per store per month fee where we charge them for based on the modules that they select from us you know it can go anywhere from uh five to ten thousand dollars per year per store okay you said five thousand per year per store correct okay and then when you launch this company put on a timeline for me we the idea was 2010 uh we really went into market late 2014 we were just fussing around and stuff until then first customer late 2014 today we're in about 400 growing to about 600 stores across about six big regional chains you said six regional chains yes okay and and if i look at kind of 400 locations times 5 000 again per year that puts you at about 2 million run rate right now is it accurate hang on so we're a little past that right now very good and so where were you exact if you're at that today where were you exactly a year ago just so we can understand growth we're at about 129 growth right now year over year uh we're looking to finish this year with about a little over three uh uh 2019 and though next year is looking like another 100 year growth do you think you can hit 6 million by december 2020 that's that's what we're looking at are you doing this all bootstrapped no no i mean initially of course unfortunately i was blessed with a pretty strong network of people so the first couple of million was friends and family close people who knew me and then after that it was really professional investors and uh we have one big banking company in dallas called rev tech ventures who focuses on retail technologies that's a leader investor in our last round okay so how much total into the company a little over seven million oh a little over seven okay good and that was all equity or any of that kind of debt or convertible note some of it was convertible everything is now equity now oh good okay it's all going to have any outstanding yeah that's great all converted and what's the team look like today how many folks so in the us uh it's funny that our team grew organically so it's all people who knew people so people that i used to work with so terrific chemistry and the core team has worked with each other for over 12 years before we started bird's eye so there are eight people full time in the u.s about five moonlighting for us doing uh special specialist jobs and then we have a team in india so totally it's about 26 people okay 26 folks and then help me understand some of the economics on this right so so what does your churn look like annually um and then what does expansion revenue look like across these six logos so our goal is you know you know our goal is to actually help retailers drive personalization to their customers so the retailers are paying for the platform as a sas platform but ultimately it's really being opened up to vendors and manufacturers who want to communicate personalized messages or coupons back to shoppers through our platform and we do a rev share with the retailer so the longer term growth is driving content through our platform that's being sponsored by vendors and manufacturers so we start with let's say 5 000 and for really our trajectory is to grow that five thousand to about 25 to 30 000 per store per year but that remaining remainder incremental revenue coming from brands participating on our plan but if you look at if you look at all the stores that sign up for you exactly a year ago 12 months ago today is their renewal day how many of them on average are renewing versus canceling or downgrading so we've got a pretty good renewal rate i'd say upwards of 90 okay so maximum worst case 10 churn and then that same cohort do you exp you know you lose 10 of them but do you expand others in that cohort by more than 10 absolutely absolutely you know what our customers are constantly always adding new stores or opening new stores acquiring new chains so for instance this year we've had a couple of our customers who've added uh in the course of this year over 25 stores okay uh so what's average expansion look like like 50 year over year more yeah we're looking at about 50 to 75 percent year over year okay so we just revenue retention then is like that one 140 something like that yeah a little over yeah a little over i mean you're obviously terrific with your numbers yeah yeah well i mean it's a nice business right because you land six logos and then it's just become it because like actual you could argue that you could build a 10 million business without signing up any new customers you just need to have a machine to get all of their stores on you exactly exactly exactly and then you know and you know you're absolutely right you know our longer longer-term strategy of score is of course to onboard more and more shoppers on our platform that we get insights into their purchase history and customer intelligence and ultimately the data has tremendous value from a syndicated perspective for people who want to understand purchase behavior across the market how many how many monthly active users do all of your apps combine have across all the stores so we do a couple of things nathan apart from just apps we also deliver emails on behalf of these customers uh so we're also doing personalized emails and today we deliver somewhere over six million personalized emails and when i mean personalized every email has got unique content for that shopper specific to their purchases are six million unique shoppers or you hit some of them four or five times no it's about it's about four million unique shoppers across our network okay that's very good yeah yep cool that's very good all right um and then talk to me about kind of how aggressive you're being i mean are you still burning capital today are you back at breakeven we are really close to break even so next quarter will be our first positive quarter okay so like you're burning you're talking like 10 grand a month you're burning or 100 grand or what um closer to between 150 and 200. okay that's fair enough so you think you can close that 150 right now and in the next quarter be at basically break even that's right which brings me to my next question if you're optimizing to get a door to break even it means you're preparing for a fundraise so that you have maximum leverage so how much are you looking to raise we're looking to raise five okay and why is that the right number uh well two things we've got a pretty aggressive growth roadmap based on our understanding of the market now we've obviously deeply embedded with our customers we understand their pain points and we've identified some key growth areas that we feel we can invest in to expand our offering and i mean you obviously have to negotiate this but in an ideal world do you hope you can raise this on what like a 15 20 pre minimum we're looking at the 25 free okay fair enough so you know you want to sell like less than call it 15 of the company that's right yeah fair enough do you think you'll get it i think so i think we have some really exciting things that we're working on right now that we're planning on releasing we're working on a concept called personalized wellness where we feel today people go into the grocery store with an intention of self-care of they think that food is medicine and i think that concept is the catching a lot of steam people are careful about what they eat and i think the biggest problem that people have when they walk into a grocery store is they don't understand what kind of products they're buying they want grocery guidance in terms of am i buying the right stuff is this going to be good for me and so we're developing an ai-based platform which is going to be a mobile app which allows users to essentially scan a barcode and will tell you that product is good for you based on your intolerances dietary needs and your health conditions or medications that you're taking interesting all right very good let's wrap up here with the famous five number one what's your favorite business book uh stephen covey uh seven habits of highly successful people number two is there a ceo you're following or studying yeah and some of them are the usual suspects i'd say the elon musks and the steve jobs of the world but i think you know one of the ones i really got inspired by which is the zoom video that you i saw on your youtube channel was uh was was the zoom video it was the zoom founder all right i just find it's uh amazing that you had an industry that was already saturated that somebody came in and disrupted yeah and i just find yeah and he can't buy his own tool by the way like he created the first market which is kind of fun number number three what is your favorite online tool for building your company um i'd have to say uh linkedin and twitter yeah number four how many hours i sleep to get every night it used to be three to four about two years ago but i've realized that i do much better on seven hours of sleep what's your situation married single how many kids a single two kids of course i know both my kids now are founders of different companies with me one with uh and burst on another is a social media app that we just launched last month with another daughter i love that all right and how are you i just turned 50. 50. very good last question what do you wish your 20 year old self knew i wish they knew that the world was massive and there's opportunity in every corner you just got to be looking and curious and you can make the life you want guys look around stay curious bird's eye again they are helping shoppers understand where products are in any grocery store working with six major brands across 400 of their locations doing about 150 000 per month in revenue that's up from 68 000 a month a year ago so 129 year-over-year growth they're burning about 150 000 per month right now but have profitability or break even at least insights in the next quarter they raise seven million dollars 26 folks on their team 10 gross revenue churn annually worst case 50 expansion so 140 net revenue retention as they look to scale now hoping to raise a 5 million round on hopefully a 25 pre we'll see how he does shakar thanks for taking us to the top thank you sir