How Daisy Intelligence CEO Gary Saarenvirta grew Daisy Intelligence to $14.6M revenue and 25 customers in 2024.

hello everyone my guest today is gary saranva he's the former head of ibm canada's data mining and data warehousing practices and is passionate about ai and its ability to transform how retailers grow their businesses and establish an edge in an increasingly challenging and competitive environment under gary's leadership daisy intel it's daisy intelligence.com has established a track record for delivering verifiable financial outcomes for a rapidly growing list of global clients gary ready to take us to the top absolutely so obvious question when we talk about anything retail is is kovac good or bad for you i think in the short term it was bad we had some you know uh you know big pause on the sales but you know so enterprise sales big acv you know our acvs like half a million and up and so you know sales slowed a few retailers had trouble and paused services so our kind of revenue this year was flat slightly down compared to last year but i think overall the market the va our value proposition will be stronger post covet as uh you know companies will look for more automation it's going to be more competitive than ever so having kind of you know pricing better pricing better promotions uh and being able to automate more of the work that human beings do retail merchants are overloaded with work so i think given that e-commerce has gone up dramatically so i think for us i don't well i wouldn't wish it on anybody i think in the long run it's a good thing for us so how many enterprise accounts are you working with now today i know last time you came on in april you said you're working with about 25. yeah we're still the same number of banners like this year as i said has been flat i think sales is now starting to come back you know we expect to close you know some counts for the balance of this in q4 here and then get back to the plan was to double in size this year we didn't do that just because of that covet i think really pop it a bit it was like a big pause button well so what was monthly recurring revenue last month now last month recurring revenue was uh 500k a month 500 okay yeah so you're i mean flat to like a slight decline when you came back on in earlier this year you said you're doing about 600 000 a month yeah a slight decline with a few losses uh customers that went out of business like a couple customers really struggled so well so walking through you just told me pre-show that you went out and raised another round how were you able to raise another round where you weren't getting crazy diluted considering the company had shrunk a bit um because uh you know our existing investors believe in the company and canada there's government matching programs to help uh companies you know we're in a hot space ai we're one of the for the fat one of the fastest growing companies in canada even though this year was been a slight decline we're still in the top 100 fastest growing companies so between the space the belief in our value proposition um our existing investors put some money in it and the canadian uh kind of government-backed vc funds put a couple so we raised like five million a couple weeks ago so that's what it only extends our runway you know for another 18 months five million total that includes the government and the vc stuff yeah okay so that means what total raise today is about 20 million yeah we've raised yeah about 20 million in total yeah interesting and is the is the money that the canadian government puts in are we talking like shred financing or no they actually have a program that's equity the program yeah matching it's like so so this round was convertible debt so it's like so it's nice it's very good because it won't it'll convert into the b round we have three years to convert into it's it's a three year term and convertible into a b round so they've been doing it with a lot of tech companies uh you know who've been burning cash vc backed really extends our runway given that sales is kind of slow for the year you know and just picking up now and what did you use as the cap on that convertible that there's no cap on it so it'll just be a discount to the next round so i see and is that you know typically unsafe so we'll see like a 20 discount is that similar to what you got yeah yeah i'll be about a 20 discount to the next round and we expect you know like we expect to do a b round within 12 to 15 months so the goal is you know to cross the 10 million arr threshold this year or next year you know i think that that's the plan we build we feel the market coming back a lot more sales activity in the last month i think companies are realizing that the new normal is going to be you know the old normal is never coming back and everyone's come to grips with they got to get back to business so feeling the momentum picking up again actually significantly in the last 30 days so did you change anything gary about your burn i mean again back in april i think you told me you're burning about five hundred thousand dollars a month and net burn uh 65 people on the team did you have to trim anywhere to get more runoff yeah we trimmed i mean we lowered burn we let some people go i think it was you know an opportunity to you know make sure we have the right people on the bus you know i'll throw us a bit of that and then just you know cut back burn to extend the runway and uh you know even though we raised we're still gonna make we have 18 months of runway that's that's the that's the worst case scenario and so that's that's that's the plan we have in place so we're really being very very diligent on making sure whatever we spend generates roi so we're focused on spending on things that are sales marketing customer success so new customers and keeping existing customers that's the that's the focus of the investment capital and so what's the total team size today the total team size today is like 55 okay so down about 10 from pre-covet or during coveted times and do you still have all 22 engineers or did you let any engineers go uh the engineering team is still 22. got it and quota carrying reps is that where you trimmed we trimmed a little bit on i mean there's something some reps we trimmed a few sales reps we trimmed that because we changed we also took this time to re-trench like a six-month pause we kind of you know updated our sales process and our sales team and changing the way we go to market a little bit so so there's some changes and that's with a couple of direct sales positions that we eliminated getting different kind of people involved in sales some more of the senior leadership team being involved in sales and trimmed a few client client people and a few kind of uh general and administrative staff really you know kind of you know trimming the access really but didn't uh take away any staff that's directly contributing to customers or bringing new sales so how many quota carrying reps do you still have today then so today we have i'd say we have like uh you know three quota carrying wraps but we but the process now but we've added with the leadership team being more of mold sales i'd say our before our sales team was about uh eight in total now it's like 11 in total with a different mix of skills right so i think we sell enterprise software the realization was that we're selling a partnership wrapped around a product not just a product and so getting the people who deliver to our customers more involved in selling that's been the big change and so that mix of quota carrying rep versus subject matter expert that's where we really brought in more subject matter experts and gave them you know a role to participate in sales more so let's dive into the product here because what you're doing is interesting now from what i understand your theory of retail product which is for rio again retail solution you're actually managing and looking at transaction data and sorting it in a way that these retailers can use ai to make better sort of product you know and urgent decisions do you consider yourself sort of fintech platform i mean are you like second measure you're reading statement descriptors yeah i mean we deliver the goal is net income growth and we do have an insurance fraud solution which is more traditional fintech so in the same way that we help retailers make smarter merchandising decisions we help insurance companies with fraud detection and underwriting and claims automation so our system it says what are the best operating decisions you can make to grow net income that's really the deliverable and although retail and insurance sound wildly different at the core it's if i make this decision what's going to happen and these are the core decisions in retail merchandise planning is the core kind of weekly promotions prices inventory allocations and also you know you know what to promote what not to promote that important mix and then in insurance it's underwriting claims processing you know fraud detection and gary you saw your audio sort of trailing off just make sure your microphone's plugged in nice and strong for me um in terms of the retail side of things what what data is the retailer feeding you so they can you can help them make better decisions around what to promote yeah we get their transaction log receipt so literally every item and every transaction bricks and mortar and e-commerce so the glory glorious detail i know every single item in every transaction for several years and then around that is all what promotions they did what were the prices they charged you know all of the kind of operational details so obviously once you swipe...