How Blocknify CEO Chris Cowles grew Blocknify to $60K revenue and 10 customers in 2019.

hello everyone my guest today is chris cowells he's passionate uh passionately curious to make business simpler while we uh while respecting context he's ex-amazon where he redesigned the purchasing process within aws and former management consultant specializing in business and technology strategy he studied economics and has an obsession with behavioral economics now building a company called blocknefi.com a sas digitalization platform without private data chris you're ready to take it to the top yeah all right so what does that mean sas digitalization without private data yeah so what we're really doing is changing how sas works typically what you see in technology is first comes the functionality setting comes security what we're doing is pushing that part in stats where we're able to provide the same benefits of sas with the security privacy of on-premise so so what do you mean are you selling to people selling sas companies and then they can tell their customers that their data is more secure no so we provide a full-size solution for signing documents and managing approval processes liking it to like docusign but the problem in europe is that this data is very sensitive if you think of contracts that's pretty much everything that comes in and out of your business and so companies here can't do it what we do is we process the same sas solution that they have but we never can see your data we can't view it we can't modify it we can't delete it okay got it so docusign but more secure version used around that can be used around the world yeah yeah and the difference is it's not just more secure but it's absolutely like tighten up to the point where we actually can't do it yeah okay what help me understand kind of like pricing here right so what's an average company gonna pay you per month to use the technology yeah so it's based on uh usage for the documents going through so we look at like i don't know 150 to two dollars uh per document going through our system okay and then take that to actual customer level for me right so i have to do the math an average customer is gonna pay you what per month yeah so we average out to be a hundred and twenty thousand dollars for uh enterprise customer with a approval process running through our subs uh at a yearly um revenue okay so the average customer look at your current paying customer base they're paying about ten thousand dollars a month on 120 thousand dollar acv accounts exactly our contracts okay great um and then put this on the timeline for me when you launch what year uh we launched last year and march almost yeah 2018 and then how many i mean how many how much money did you spend before your first kind of dollar in revenue building the mvp uh how much should we spend uh about like 50 000 i guess okay we we're lucky to be uh we're in prague i relocated from seattle to prague because the cost of living here is very cheap and uh we also have a team in kosovo okay very cool so your first dollar revenue was in what month uh that was in august august august of 2018. yeah that's great okay so um tell me about early customers right first 10 customers are the hardest where'd you find your customers yeah so luckily uh my co-founder uh had a you know he's been in blockchain applications for a long time and so we had a connection into a bank and so our first customer was a bank here in europe um and then from there we went into this swiss stock exchange accelerator which allowed us to have access to those type of customers and mostly that's been very difficult uh financial services is super hard to actually bring into production bring into a sale um so now we're looking and where most of our growth is actually coming from like uh software uh startups okay well how i mean how are the software startups paying 120 000 bucks a year no no so that's what we did we pivot um for the initial traction to go towards the signature service and then we have an approval process but approval process is really the heart of the thing we have customers um like i said in the financial services um but the problem is is that closing those are very hard so there are very few we have a lot of conversations open but closing them is very difficult so to diversify our pipeline we added just a signature service which allows uh software services or like individuals to sign documents okay and what does that cost per month on average uh it's about well that's just a dollar uh per signature so let's say you have you know a thousand customers coming in like a tokenization of real estate it's probably around 500 um so it's 500 a month okay yeah but so again i don't have to do the math in terms of your customers your self-serve ones how many signatures they're getting every month so again in your self-service cohort it's 500 a month yeah yeah that's probably that's what it is right now in our card i see okay got it that makes sense and is it actually mostly real estate or was that just an example you gave uh tokenization of real estate is actually popping up mainly because we're a blockchain company as well so it's kind of defensive it like separates the competition from us but uh yeah it's been pretty beneficial and so how many customers are you serving now today uh we've got 10 customers okay 10 customers and that's across the self-serve plus the enterprise deals okay got it i mean can i take 10 times 500 bucks you're doing about 5 grand a month right now in revenue uh i wouldn't say that but yeah sure well those are the two numbers you just gave me you said 500 rpu and 10 these companies are not necessarily always in production so we're it's not so much recurring revenue all the time so so i mean when do you think you'll break five thousand dollars a month in revenue like consistently consistently yeah so our hope is probably within the next two months uh right now we have the platform going we've onboarded our customers um and they're using it in production and then now it's just expanding that out and getting them in there paying and actively using it at a time yeah uh that's been the difficult thing you know you work with these companies and you startups they have their own you know release cycles and their own production issues and then uh yeah you have the banking side which is even more difficult okay good so the first ten customers came from banking than a self-serve model you opened up now did you do a token issuance to race capital no i'm not a big fan of uh i'm definitely not a big fan of the icos i'm i'm a fan of stos but we haven't gotten that ever yet so have you raised any capital in the company to date uh we've raised some friends and family and we're actually looking to close around here soon okay so how much have you raised from friends and family just 55 000. well more than that 80 000. okay so kind of 80 000 friend and family around and then you're trying to do what is it a cd series a now uh no a c um about 610 okay and is that you think you'll do that on like a note or would they be a priced round do you think uh it's a little bit yeah we're trying to go note it's a little bit difficult here notes are very common in in the u.s here it's a little bit more difficult with the pcs they don't necessarily like it and that's been a pain point right now yeah um the i mean how when you have conversations with them right you're basically still pre-revenue right what story are you telling them to try and convince you to give them or them to give you 600 grand yeah so we have really good traction within our corporate clients it's more getting into production so we tell that story about the conversations we have the the fact that they want our products it's more about getting them into production it's the more difficult thing so that's a really good story to have in itself and then secondly it's where the market's going privacy is just becoming more and more of an issue inside the us but it's already an issue here and then the e6 e-signature market's huge um and the biggest competitor we have is in-house solutions and that's a pretty good selling point that's a sas solution what do you mean in-house wouldn't your biggest competitor be like a non-private or like a docusign no uh well no so out of eight out of the ten banks that we've talked to they can't use docusign the only way they can use docusign is to use on-premise these these are like swiss companies these european banks yeah but that docusign i bet docusign sells an on-prem solution exactly but the price point at an on-premise solution not just for the price of the software but also maintaining it is significantly high at the point that these banks are like this is not worth it unless we move all these processes onto the on-premise and they're not willing to make that jump nor do they want to so they build so instead they try and build their own version of docusign in-house that's private isn't that just as expensive no because what they're doing is they're building for particular use cases so they're only doing it for this and so they can they can digitize one process but they're just nearsighted they're not really looking at the long-term cost of actually doing that for each one and that is just a typical consulting project that they outsource got it what's your team says today how many folks we have five people five folks very good and then do you have any churn anyone i mean look this isn't in my opinion like you said earlier your revenue is extremely lumpy which is not what a sas company should be which tells me you haven't figured out a way to get people...