How Birdzi CEO Shekar Raman grew to $10M revenue and 10 customers in 2024.

hey folks my guest today is sheika rahmani he's a ceo and founder of bird z a b2b sas company an industry pioneering customer intelligence platform that helps supermarket retail deliver a true supermarkets retail so i deliver a true 101 automated marketing and personalization platform at scale using machine learning and other data driven technologies shaker you're ready to take us to the top yes i am nathan good to be back on yeah i know it was 2019 last time you're on so this is great but just to be clear for those that are just learning about birdseed are you only selling to grocery stores currently yes we have been asked by a number of other retailers where platform will work for them but uh maybe towards the beginning of next year is when we'll try to transition into maybe c stores okay so i go into a grocery store if they're using birds are they going to get my phone number or email or how do they get that is that the check out when the people go hey do you want to give me your email address to get updated offers and stuff no typically we work with retailers that already have loyalty programs so they already have loyalty programs implemented and our platform kind of goes on top of that so we take first party uh customer identified data where you put in your loyalty number or phone number so we know exactly what you bought in transaction and we use that data to then track customer behavior trends and then figure out what offers to send you i see okay and what what might one of those offers sound like you know 10 off toothpaste if i come back before wednesday yeah so the unique thing with the bird's eye platform is typically the way the promotion industry works is it's cpg driven so the brands will say hey here's what i want to put out coupons on or here's what i want to get deals on and then the retailers essentially will try to identify the audience that works best for that those offers uh what we did is we flipped the equation we said let's start with the chapter let's look at nathan let's look at his purchasing behavior and what will get him back into the store forget about what's on sale let's see what will get him back in the store is it ten percent of sushi ten percent off pizza whatever it is let's create a promotion tailored around his personal experience and interest and then figure out how to get that funded down the road very interesting okay so what are grocery stores paying you on average per month to use this platform well it depends on the number of campaigns that run but it can run anywhere from 40 to 60 000 a month okay what they typically pass so all of your customers are paying more than forty thousand dollars a month some paying much more yeah i'd say the averages aren't 40. average is 40. okay fair enough that you know this is a very much than an enterprise motion right 500 000 acvs do you have a big sales team no not right now it's just a couple of people because you know the industry while it's big from an addressable perspective and the grocery industry is about 750 billion dollars but there's only a couple of 100 supermarket chains that are really in our target market right and so they represent about 400 billion dollars in sales in total and what we're really going after is one percent of that is our truly addressable market four billion dollar market um so we're going after a four billion dollar tab which is really where the promotions industry is right where coupons and sale and your weekly ad items that's about the money money that's spent on that part of the business and that's where we're going after so how many folks are on the team today full-time about 28 and how many of those are sales folks with a quota two two wow okay so so how many deals do you expect one sales rep to close in in a quarter or a half year yeah so we right now we're looking at a velocity around two to three a year that's a long sale they must be very patient right it is yeah it is you know grocery industry is a tough business so what we have been very successful at doing however is expanding revenue and existing customers constantly with innovation right so we've had a fantastic track record of going into the retailer at maybe 10 20 000 a month and expanding that out to 50 60 000 a month in a couple years 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 valuation 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 i was gonna say how many customers are you working with today about 10. okay about 10 yeah i mean i can vouch for this by the way when you came on in 2019 you said the average acv was about 300k now it's 500k so you've definitely expanded there and is that because you're upselling new products or seats or what correct well you know a lot of our roadmap is informed by our customers so we see their pain points and they come back to us and say can you solve this can you solve that and we wind up then building a platform based of it so 50 is coming from pure internal innovation and r d and 50 is informed by the customer i see and can we take 10 customers times that 40 000 rpoo you guys are doing about 400 000 a month in revenue yeah that's about that that would be about right that's great look considering the space you're in right and that pre-code but you were doing about a three million run rate the fact that you sort of grew in your space right almost added almost two million dollars of ar in the past 24 months is pretty darn impressive yeah well you know entrepreneurs are never satisfied everybody wants to be 10x in two years that's right that's right now have you do you have to pursue growth at all costs have you raised a bunch of capital uh not really not since the pandemic we had some just some internal uh note rounds but that's about it for today of course we're cash flow positive so not really looking to raise money until maybe the end of the year we have so that's a big deal too because when you last came on 2019 you told me you were burning 150 000 a month correct correct so right now we are cash flow positive and uh i guess it's a good position to be in but we see a lot of new opportunities come into the market which we think we'll go out and raise some growth capital for so and just be clear including the convertible notes how much have you raised total to date 9.4 million oh well that's a lot wait so these were big convertible notes because when you came on last time you had only raised a million dollar seed round in 2014 right correct and then 2018 we did about three and a half oh and yeah and then in 2020 we we converted some notes and uh did another 1.2 okay okay got it that was in sorry 20 20. 2021 is when we close those notes yeah okay right okay got it so three point so pre-seat of a million seat of 3.5 million 2018 1.2 million notes over the past 24 months correct i see i see okay now when you look at your pre-code evaluation right when you raise that 3.5 million what what did you i mean most people are selling in their seed maybe like 20 of the business were you sort of in that same range yeah about the same okay yeah okay so so what does that mean that means you were at like a uh 25 million value 20 million valuation something like that you got it you got it nathan yeah got your numbers right yeah do you care about valuation right now or no right now no i think we're just putting our and nose to the ground and just focusing on growth revenue growth and we think that we get the right velocity and the right market cap that we're going after the valuation will take care of itself so if you do want to go out and raise some growth equity what do you think you have to get revenue to before you can do a competitive growth equity round i think if we if we get a finish this year with a 5 million realized revenue i think we'll get about 50 to 60 million dollar valuation value yeah interesting so maybe you'd be looking at a round like either late q4 this year or early q1 next year yeah we're thinking more early q1 early q1 interesting and how are you thinking about that i mean would you structure that as a hundred percent on balance sheet or there be a portion of secondary like you know you're into the stage where you can probably pull secondary right yeah you know i think we're thinking about a couple of things you know obviously there's been some investors who've been with us from day one so we're trying to see if we can give them some early exit options liquidity options and to help some of the initial team take some money off the table and maybe raise a larger round as a to a recap plus some growth capital hey one thing you should consider by the way so as you know founder path now we're at 120 million dollar fund one of our big use cases is exactly just described right so you raised a million precedent 2014 they've been around for six seven eight years they're probably going shake her man give me a return here so let's say you have to negotiate what to pay them out at so they're going to say give me 10x and you're going to say i'll pay 2x right right but like let's say you agree on 2x you need 2 million bucks because your revenue is at almost 5 million we could give you up to 50 of your arr so we could give you 2.2 million and go use it and you can use it to go buy out your early investors and buy back 20 equity right ah it seems like a pretty good thing to look into it yeah i'm not pitching you i'm more just telling the story so everyone else can hear it and go oh right i could see how that would work but we should actually talk about that offline we'll see if it works absolutely absolutely all right talk to me about more product right so you've doubled our poo right so what new products are you building for these grocery chains yeah so i think one of the big i think it's quite revolutionary which is typically what happens in like nathan like i said in the promotions business is retailers go out and seek deals from brands like your kelloggs and union leavers and they say okay i'm gonna put i'm gonna give you a dollar off a case of uh cereal and then what the retailer will then go do is go put it on their weekly ad on their front page hoping to move that at that at a dollar off right yeah so they're restricted by the amount of deals that they have to offer back to the shoppers and that i think is a huge constriction on personalization because you don't really care what's on sale not you want a product you know if you go to the store and so what we decided to do is let's flip this equation and i think the challenge that the retailers had was really they didn't have systems that were big enough to figure out if you had a million customers how do you create unique deals for each of those million shoppers yeah that's really the problem we solved is we have a system now that automatically generates for every individual shopper six to eight offers a week that gets emailed out to them and executed wow think about now using the entire store catalog for creating your promotions you're no longer restricted by what's on sale what's on deal i'm creating so i'm able to now manage individual customer journeys so i can i can grow nathan from being a new customer all the way to a loyal customer by driving promotions specifically uh for him him or her right it's very end this is scale so this used to take there are big companies that do this like done humvee which will do it but they have 400 analysts sitting behind with you know systems and they'll do it we managed to do it in one hour for a retailer they can execute these campaigns for hundreds of thousands of shoppers in one hour wow well shaker i'm excited for you i hope you double arpu again before you come on again that would be a big win for you but in the meantime excited we're out of time i'm excited for you too we're out of time here let's wrap up with the famous five number one favorite book i've gotta say recently build by tony fidel number two is there a ceo you're following or studying uh i think uh to me right now the most interesting person in the world is elon musk i don't know if i necessarily follow him but i study yeah number three what's your favorite online tool for building birdie i kind of say hubspot that's become my new favorite let me ask you another question i'm just sort of throwing this in it's a new one um what are you most curious about right now in terms of just like sas in general like you know related to how you grow faster what are you most curious about i think i'm curious about how to widen the reach of our technology that's what i'm really curious about i think a lot of times you get stuck in right thinking and you don't understand where else your technology might apply i'm constantly looking to looking at places that i can apply i love that number four how many hours of sleep do you get by guys by the way if you like that question and you think i should add that to the famous life all the time just shoot me a text 703-431-2709 and you say nathan ask that every time and i'll do it okay i listen to you guys all right shakara we'll see what they say uh number number four how many hours of sleep to get every night how i say it's gone up it's about six and a half say okay that's pretty darn good and situation married single kids married two kids well one is working meals in college that's the way to do it and how old are you i am uh 52 going 26. 52 going 26. i love that all right something you wish you knew when you were 20. yeah absolutely absolutely i'm sorry no no you don't feel good no worries what's something you wish you knew back when you were 20 i can do anything that i want guys they sell to grocery stores it should have been killed during the pandemic they didn't they added another 2 million bucks of revenue now doing almost 5 million in terms of run rate selling a personalization and marketing tool to grocery stores to get shoppers to come back in they help groceries create custom offers for every single visitor to that grocery store over the past caught one two three five 12 months again growing nicely they did a 3.5 million seed round back in 2018 at about a 20 million post money valuation now 20 people on the team two sales reps looking to scale past their current 10 groceries uh grocers that use them but big acvs half million dollar acvs as shaker continues to grow shaker thanks for taking the stop thank you nathan 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 1pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2pm 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 forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode and if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive i am on these shows but i do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya

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