How Cuvama CEO Alex Smith grew to $673.9K revenue and 4 customers in 2024.

hey folks my guest today is alex smith he's the co-founder and cco at kuvama customer value management has been a passion for alex through his 20-year career in b2b assassin across sales pre-sales delivery and customer success he's based in manchester uk started out as a physicist at oxford university as an avid cyclist as well now building cubana.com to help come connect companies and customers on value alex you're ready to take to the top yeah jump in all right so tell me maybe start off with a customer story uh and and explain why they're paying you and what they use you for yeah so that's a it's a great question um the the world of b2b sas has been transformed by the move to subscription it's uh you know everyone knows that but uh the move to saturn subscription means that the the kind of the customer has so much more choice the customer has so much more power in the in the kind of the business to business environment the way they're operating in they can they can pick from lots of different vendors they can choose to churn um the end customer i should say the customer of our customer so we're we're helping our customers to to really kind of engage with their end customers with an understanding of not just what features and functionalities you need but what are the success outcomes that that end customer wants to achieve and then make sure that that relationship that connection passes through to a delivery team a customer success team so that you end up with a bit more of a focus rather than in the traditional world of of sas customer lifetime value has been the lifetime value of a customer to the company our vision is to try to flip that flip that on its head and actually move it to be more of the the value the lifetime value for the end customer land expand retain ndr above 130 that's the goal exactly exactly so there's loads of great reasons why a sas company needs to do that and there's just been it's just been an area that is it's been a gap for a number of years we recognized it again in my career i started down in software when it was all on-premise perpetual licenses i've kind of been through that move to sas and subscription and i've seen a lot of companies struggle to catch up with the new reality of the new way it works maybe they put a customer success team in place maybe the sales team are in theory selling value but but it's never been a joined up approach and it's never been kind of customer-centric so i think we understand the product that's fantastic give me a general sense of what are customers paying on average month or you guys pre-revenue you're just getting started no we are we're definitely post revenue uh so um it's it's you know in terms of kind of what what are they paying it depends a little bit on the size it at the moment it ranges from maybe uh 50k dollars per year 50k thousand dollars per year up to around two thousand dollars uh per year in that kind of range okay so you largest company paying maybe 200 000 per year help me understand why what how they're getting more value is it number of seats is the number of features turned on what enables you to upsell to 200 grand a year so it's um so honestly the women we're still at the stage where we're figuring out the right way of the right monetization model for this uh so actually my background is i've done a lot of consulting work for sas companies on packaging and pricing so it's i have some experience in it but it's not always there's not always one easy obvious answer so the the model that we're using at the moment is a platform feed plus a user license uh so we're targeting our app to be used by the business development function so be that bdr's sdrs uh sales people the pre-sales team you might have business value engineers and then customer success managers post sale as well so there's quite a lot of different kind of user user types and user roles but at the same time um we you know i've used to have a platform be based on the kind of the scale and the complexity of the solution that's put in place so so our upsell model as we grow will be a combination of the customer growing their their kind of the usage of the tool in terms of users and teams um but also then selling in additional modules to to better support the the end-to-end journey of that uh that interaction 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 a 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 raise they sold 22 percent of 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 evaluation 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 understood so cheapest though four or five grand a month 50k acb all the way up to 200k acvs depending on how many bdrs and sdrs they have okay and put this on a timeline for me when you launch the business so we started out as a consultant company uh so again i know that you you engage with a lot of companies that bootstrap to really get things going i think that's very much kind of part of our our journey we started out in 2017 um still focused on b2b sas companies that is our main target market but initially doing consulting and helping them monetize their offerings through consulting throughout that life cycle um the we won a we had a kind of a passion for this this this topic of the the value management part within the overall monetization problem and um we explored it through lots of interviews and through building out a prototype initial just to design in 2020 in the kind of the summer of 2020 we want a grant from the uk government an innovation grant in um q3 so around october 2021 started to build up code how much was the grant for a hundred thousand pounds and it was kind of linked to covered recovery linked to a few other pieces um so at that point we you know we we brought on some contractors did our first bit of code development sold that to our first customer in uh contracts signed in q2 fully in q2 of 2021 and have grown from there so we're now at uh four we again if you look at our customer base it's around 15 to 20 customers in total that we've worked with over the years and we now have four uh customers that are up and running on the kind of the new technology platform but consulting how many are paying you something per month right now um that's four of them that are paying us per month so why didn't the other 11 stick around well the other 11 was a mixture of consulting words so it's not that they are um no i don't mean to say that they they started on the on solving this problem and then haven't stuck around it's more that i guess i would describe it as a point in the past we've solved the same type of problem with consulting projects and with microsoft excel-based tools and things like that so so we're going to our model this model makes a lot of sense right but going back to the agency's story what year in terms of revenue was your best year at the agency before you started really pivoting to peer play sas oh it's a it's a good question to which i'm not sure i have the answer yeah i'm not sure which would be the the best year in terms of the the kind of the agents and consultancy work but um i mean alex are we talking about like a two-person agency with 500k a year in revenue or like a 50-person agency with like 5 million in revenue annually no it's um so while we were doing the consulting there were three of us that were full-time um with um uh contractors pulled in you know we five to ten contractors over the course of a year on different kind of targeted projects are still still small in that kind of scheme of things and when did you launch your first your first like the first agency contract was in what year the first the first consulting contract yeah was in 2017. okay got it so i guess you launched this company as an agency knowing you were eventually going to pivot to sas you just want to use the consulting to learn no i wouldn't say that actually i would say we launched this company as as focused on solving a problem and then based on a passion for the problem based on learning learning partly that consulting can't solve it we've we recognized we we discovered and we spotted an opportunity to build out a sas product i don't think when we started we have a we had a clear plan that this will definitely become a a sas so like what what was agency revenue then in 2017 do you remember first year um i i don't have the number stand i can tell you in in 2021 we were close to close to a million dollars in uh total revenue for the company majority consulting yes the majority consultant and for 2022 it will still be again it's it's it takes it will take a while to transition that across um part of the name part of it is the nature of the um the solution that we're selling it's not it's not a plug and play just turn it on sas app it's very much a a business solution that needs to set up uh needs uh work around the the consultants understand the deployment to get it how many today are full time at the combined entity yeah so right now today we have four full-time employees uh we have around uh five or six people that work with us on a contract um for differing hours per week as part of the so we've just taken on pre-seed investments and we'll be growing to around nine full-time employees uh as the right people are brought on and hired how much did you get weeks how much did you raise in the precede uh 1.1 million pounds so that equates to around 1.4 plus uh million dollars and most folks in pre-seed round are selling between call like 10 and 20 percent of the business were you sort of in that same range yeah okay got it so you're talking like a 10 million cap something like that yeah something okay priced around or was it equity or was it a debt convertible priced it was priced okay great interesting um very cool and why do you need i mean look that's dilution's a real thing right uh your co-founders in that seed round is the most dilute event in the company history why did you need 1.3 million especially when you've already proven you can generate revenue from customers via consulting contracts so it's a really really great question it's um about being able to to accelerate the growth except the growth so we are you know the way that we'll use the money is partly investment in the platform partly investment in the kind of delivery and customer success um function and it's it's all just about being able to do what we want to do faster it's the the market that we're in has the you know has the potential to really take it off take off i think we've we've seen recently uh gartner as a you know your classic technology analyst that's that tracks many many markets they're starting to to really report on this market and i think they're starting to recognize that it will grow and take off i mean someone argued though alex it's already pretty mature i mean gain sight's a billion dollar company and they really started really in customer success which you could define as land expand retain right so like what's the mouse trap you're moving into the market with where you think you can steal market share from these players yeah so gain sight is not a competitor to really what we're trying to do in that um the gain side is just focused on the customer success phase of the customer journey um we are trying to think of what we're trying to do is actually have a platform that integrates with the the upfront marketing activity marketing message um connects and supported by the sales person so that they and integrate with crm and salesforce as part of the sales phase and then integrate with gainsight once once a customer becomes a customer to support the the expand and renew kind of phase and so gainsight has the best way to think about it is within gainsight they have a success plan module that tracks the tracks what does a customer want to achieve and how they're doing and our our vision is that um you know really that that the definition of what success looks like the customer well it has to start where the relationship starts which is back in the sales cycle and that's that's what our platform is supporting so our platform goes across that customer journey and then integrates with the crm the customer success tool at the different points understood okay great well we'll see what happens we're out of time though for today let's wrap up here with the famous five one word answers if you can first one last book you read oh that the last business book oh sorry this isn't one this last box um i'm i'm into my sci-fi so i've forgotten the name of the book but uh okay that's okay number two number two is there a ceo you're following or studying uh yes we um we have a relationship with uh somebody called david politis who is a ceo of better cloud um he's been helping with a bit of advice a lot of kind of experience in building a category what that meant number three what's your favorite online tool for building kubama uh so i have to say jim it's just fantastic in terms of the amount of value that we get out of out of that that platform number four how many hours you sleep to get every night i i'm i'm somebody who needs my sleep i don't know if that's your classic entrepreneur but i i try to be in bed for eight hours eight hours a night do i get all of that asleep not necessarily and what's your situation alex married single kids uh married two kids two boys uh lots of fun and how old are you i'm i'm 42 42 last question something you wish you when you were 20. do you know i had to think about this one i watched your i listened to your podcast in advance and had to think about this one the and you know what mine is kind of play to your strengths i think there's many points in my career i thought oh i need to get better at this i need to get better at this i need to learn how to do this i think i've learned now that no actually you should optimize what you are good at and focus on what you're good at rather than trying to be good at everything else guys there you have it kuvama.com launched in 2017 as an agency did about a million dollars in revenue last year we'll do more than that this year as they pivot to a sas platform to really service this customer need they have four paying customers today that pay between 50 000 a year and 200 000 a year for full time on the team but they're about to ramp up 1.3 million raised on their pre-seed roundup between called a 10 and 20 million valuation as alex looks to scale we'll see what happens next alex thanks for taking us to the top thank you nathan one more thing before you go we have a brand new 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