How CleanCloud CEO Henrique Vazde Almeida grew to $1.2M revenue and 40 customers in 2024.

hey folks my guest today is enrique vas he's the co-founder and ceo of clean cloud a brazilian cloud security startup he worked for a few years as a corporate lawyer and then became an entrepreneur founding four companies across multiple industries enrique are you ready to take us to the top yeah great to be here nathan thank you for any of my invites you bet okay so so clean cloud who's paying for this help me understand who your customers are okay so we are focused on mid market and small in media enterprises so companies especially on highly highly regulated markets such as financial sector health insurance and things like that and so what might a bank or someone in the financial sector what are they paying you for uh security wise our product to intel score is classified as a csv cloud security fashion management so it's going to connect to your public cloud awls microsoft azure or google cloud and gonna check for and we're gonna check if you are comply with the main regulations and frameworks in the market like for example pci for credit cards and what do they pay on average per month to use your technology on average they pay around two thousand dollars a month we usually sell one annual contract you can pay monthly or upfront and what enables you to get someone to pay you more or less what do you sort of price against is a feature set a usage based model what we charge based on two variables the first one is the size of the cloud how many resources are we checking and the second is the periodicity of the compliance checks we have the option to check daily weekly monthly whatever it works best for the customer so those are the two variables that are gonna change the the pricing and and what how do you measure the size of the cloud number of results resources evaluated by our product number of researchers servers evaluated resources resources yeah and what might a resource how many databases uh servers or whatever this is i see okay got it and then frequency of compliance check so higher frequency and more databases means you're charging more money exactly okay and take me give me the back story here when'd you launch the business so we started clean cloud back in 2017 uh we started looking for uh security performance and cost reductions and what we saw over the first two years that our customers were looking for cost optimization opportunities and there was a big gap and a big need in the market for compliance solutions so with people in 2019 and later that year in december we launched outscore focusing like i said on the main complaints and frameworks and benchmarks from for aws azure and google cloud and sorry you said 2019 2019 yeah okay got it 2019. and have you bootstrapped or did you decide to raise capital yeah we we raised a small round with uh vc here in brazil called bossa nova when we first started then we had a precede with friends and family and then a seat round led by a few major groups in brazil which is the brazil and gv angels so that that seed round that you did in 2019 how much was that for uh you lost a small seed like uh 250 k us dollars okay and how did you do that was that on a convertible note yeah convertible what what what cap do you remember uh on that round we did uh there was like two valuations because at that time we had one co-founder that left the company so we had this uh primary and secondary valuation and the average uh we didn't we don't disclose this number uh but it was around uh two million dollars the yeah well you you bring up a good problem which is there's a lot of people that a co-founder leaves and you have to figure out what valuation do you buy them out at versus then what valuation you go raise at and usually you want to buy them out at the lowest price and then go raise the highest price so how did you manage that exactly a good thing is that we didn't break up or anything he had some personal issues that he liked left the company and he has some experience with startups so he knew that with the percentage he had which was 20 the company wouldn't be able to raise another round or seriously whatever this is so uh it was a good conversation of course it's a difficult conversation to have hey investors are coming in at x and you're living y which is uh three four five ten times slower uh but he understood the issue he understood what was fair and what we did is that we buy out 75 percent of his equity so he kept a little bit because he was the early years of the company and we found this was fair and so we were able to to get to this number and ended up being good for everybody because for the investors they could got into on a lower valuation when you look at the average and for me and my other co-founder jefferson which is our cto we're able to capture more of our equity so just to be clear enrique he owned 20 the co-founder you bought back about 75 of his stock which is about 15 to the business at around a 5x valuation discount to the 2 million so somewhere around a valuation of like a hundred grand 200 grand something like that exactly exactly something between five and 10 x discounts yeah that's great so if the valuation was like 200 grand to buy back his 15 he got like a 10 or 20 dollar check basically to sell back fifteen percent of the business to you guys uh yes it was uh let me remember the numbers yeah but something something like that uh we pay a total of me yeah we pay a total of 200k something like 150k 200 something like that that's what you paid him to get back 15 percent yes okay no no sorry sorry uh this is uh i'm looking at my conversion brazilian conversation yeah uh we paid him like 30 40 000 dollars yeah yeah yeah yeah that makes a lot of sense that's a really good way to do it so okay so you you got through that which is a big deal then your cap table is cleaner you go into 2020 now you do a family round how much did you raise from family and friends uh the family friends was before this seat around 2019 we raised it back in 2017 we were first starting so so in total clean cloud raised like 350 000 dollars something like that we're kind of almost bootstrapped up until we are right now uh we are getting close to a million dollars in ar and we're looking to open a series a round over the next quarter or two okay let me just break all that down so two you raised 350 000 to 800 000 from family and friends in 2017 and 250 000 and one year later in 2019 yeah you're also approaching a million dollar run rate right now what was your mrr last month uh last month in us like three hundred thousand dollars oh sorry uh six hundred six hundred and fifty thousand dollars in terms of arr yeah so divided by 12 you did about 55 000 united states dollars last month exactly and how many customers we have for both products we have like 40 funny customers what are the two products uh team cloud score which is the csvm and we have uh phenox product uh the first product that we have which we call click cloud we don't have any names for it so basically uh when we pivot in 2019 we look at our customer base and so they're looking only for cost optimization so we decreased the product and created a team cloud inspects which is a phenoms product for aws cloud they're going to look for cost optimization opportunities and we have like 40 35 percent of our revenue is coming from this product and the other two thirds 65 percent coming from cloud's car i see and help me understand growth if you're doing 55 000 a month today what were you doing a year ago i have a 3.2 x uh we grilled 3.2 wax 3.2x a year year to year got it so you're doing about 16 000 about a year ago exactly per month yep that's nice growth now why is now the right time to go raise capital you mentioned a series a i think a few reasons uh first of all latin american market is really booming right we have a lot of funds that raise a lot of money so there's a good opportunity there uh second uh cloud security is a sector that companies that pcs are really looking to because of those ransomware attacks that we're seeing across the market and all the exponential growth that fall had over 2020 so combining those things and our growth our moment i think is a really good good moment to go race around and so you're raising a series a now how much do you want to raise uh we're looking to raise around 45 million dollars okay 4 to five million dollars at what valuation uh we are still not discussing right just in the early days we are not not really uh talking to to front or anything i just you know starting those conversations sending acquiring the decks to so to show where we are going what are our plans we should open officially open this round i think later this month or or next month but how much equity do you want to sell on your series a meaning you don't want to sell above x amount usually we look for usually a series a round is around 25 equally right 20 to 25 so uh let's look to to be on that percentage uh maybe we'll be able to get uh maybe some of the early investors we want some some liquidity on that early investment so uh valuation is still cloudy you know i think there's a really big gap that we could we could go uh in in terms of of how much the company would be valued right now sure yeah so if you raised five million you only want to sell 25 percent you'd be looking at like a called a 15 million dollar pre-money evaluation something like that yes i i think it'll be something between 10 and 15 yeah which would be a 15 to 25 x multiple on your about a million dollar run rate yeah yeah yep it feels pretty market it's exciting now you mentioned cap table in earlier investors you already told us about your co-founder how much do early investors own uh around 30 including the founder that left the company so on our sit round we created an slp stock option tool so we have 70 percent on let's call insiders me my co-founders and some employees and 30 percent on investors break down the you guys the co-founders versus your e-stop how much do the co-founders own just you two alone uh the esop is like uh 30 13 i see and the reminder uh 37 uh 27 30 each right yeah 33 five percentage got it so you guys as co-founders own about 62 percent your esop pool is 13 and early investors own still about 20 percent exactly okay that makes a lot of investors 30 right 30 got it cool uh very cool that makes a lot of sense um let's uh let's move forward here there's a lot of investors that listen who would be like your perfect investors or anyone strategically you're looking for uh i think uh those investors that know the space the cyberspace i think is a really exciting moment for for this market and anyone with experience i think could bring a lot to us we also have a product we have a add-on that we are mapping that would have a product growth strategy so someone with that kind of strategy some companies with plg strategy on their portfolio would be interesting as well and enrique what's the team size today how many people uh we are with 22 people right now uh we are here in brazil uh working on a hybrid model uh sales and product coming a few times a week to the office and the development team 100 and how many engineers are there uh we have six engineers six engineers any sales reps that carry a quota uh carry code three three uh chew and uh ahead of sales their quota is 100 30 60 000 a year usd what does that mean 60 000 usd a year uh 60 000 in if they only close 60 000 a new ar each year that barely covers their their base compensation not really like their compensation their fixed compensation like many confidential it's like a thousand dollars a month got it so you pay them twelve thousand dollars fixed per year their goal is to close five thousand dollars of new ar per month and if they close that you pay them some percentage of that commission exactly they will pay commissions we make commission for every sale and pay bonus with a quota and power super quota if they have 50 50 all over their quota they'll have uh twice their their bonuses so if i do hit my 60 000 quota target how much commissions will you pay me we pay up to five percent depend on the seniority of the the sales rep so got it ten percent would be six grand so five percent would be half that or about three thousand dollars in commission on a 12k base so my full on target earnings as a sales reps at clean cloud would be about fifteen thousand dollars yes okay interesting we interested to see how that scales over time let's wrap up enrique with your famous five number one what's your favorite business book uh hard things about hard things i need to go with the obvious here number two is there a ceo you're following or studying uh i really like amir from netapp from sorry from spot that was bought by netapp he's a mentor and i really really love what he's doing number three what's your favorite online tool for building the business notion number four how many hours of sleep to get every night six hours okay and what's your situation married single kids uh i'm leaving with my fiance so hopefully in a few months i'll be married okay and how old are you i'm 34. 34. last question what's something you wish you knew when you were 20 oh i wish i work as hard as i do now guys there you have it clean cloud is a security firm based in brazil they've got 40 enterprise customers paying average 2 000 per month they're doing 55 000 a month in revenue right now up from 16 000 a month just a year ago they've scaled this up to about a 750 000 ar company raising just 350 000 so pretty capital efficient with their team of call 22. they're looking at opening up a series a round here shortly aiming for a 45 million dollar raise and are happy to sell 20 to 25 of business we'll see what happens enrique thanks for taking us to the top thank you for having me david one more thing before you go we have a brand new show every thursday at 1 pm central it's called 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