How Datanchor Reached $360K ARR and 33 Customers with Zero Churn (Interview with CEO Emre Koksal)

Introduction and Guest Background

Nathan Latka

00:00Hey, folks. My guest today is Emre Koksal. He's the founder of Datanchor and a professor at Ohio State University. He received his PhD from MIT and has published more than a 100 papers on top venues along with having eight patents issued. He's testified to the congress, and among his awards include the NSF Career Award and HP Innovation Research Award, now award, now building anchormydata.com, which enables data to protect itself. Emre, are you ready to take

00:22us to the top?

Emre Koksal

00:23>> Perfect. Thanks for having me, Nathan.

What Datanchor Does: Zero-Trust Data Security

Nathan Latka

00:25You bet. Okay. So talk to me a little bit. When a customer starts paying you or starts using you, what are they getting? What do you help them with?

Emre Koksal

00:33>> So it it is a kind of a move away from the traditional perimeter centric model, which is basically about building castles, fortresses around your network, which we used to presume the activity around data is, right? But in today's world, the activity is everywhere. Data is everywhere. You're accessing your data from home, from your mobile devices, not just from the network. Also, it's in the cloud, IoTs, and so on and so forth. So what they get is,

01:05>> you know, data security in the form of zero trust integrated down to each file. So once you integrate security into data itself as opposed to activity around data, what you get is basically security traveling with the data. You don't care where you, your users, your collaborators are accessing the data. It is secure anywhere, and, you know, as a result, it simplifies your workflows, it simplifies collaboration, and helps you become efficient without sacrificing from the security side.

Nathan Latka

01:43I see. And when when customers sign up for this? Help me understand your pricing. What are they paying on average per month to use your technology?

Pricing Model: $16 Per Seat Per Month

Emre Koksal

01:50>> So our MSRP is just like any SaaS product. It's based on per seat. So they're paying $16 per seat per month right now to get everything. It's unlimited data. Doesn't limit the amount of data they protect. They can protect from, you know, one file all the way to the entire drives or all their data. We don't care the amount of data, but it's a user based model.

Customer Seat Counts and Sweet Spot

Nathan Latka

02:21And, Emre, on average, when a team signs up for you, are they signing up one person, their CTO, or a 100 people? What's the average number of seats?

Emre Koksal

02:29>> Oh, it it it so we have customers with a few thousand users. We have customers with 10 users. So it's highly variable. The value is basically, again, I said, integrating the security to the data, but right now, the fastest growing customer vertical is small to mid sized businesses because it's easy for them. You just switch it on within a matter of ninety minutes, including the user training. So I would say our, you know, the largest customer

03:00>> segment is small to midsize businesses.

Nathan Latka

03:02Okay. But but help put put a seat. I understand you have a small one at 10 seats a big one at thousands of seats, but your sweet spot is what? 200, 300 seats on average?

Emre Koksal

03:11>> That's correct. I would say 100 to 200 seats.

Company Timeline and Product Launch

Nathan Latka

03:14100 to 200 seats is sort of your sweet spot. Okay. Got it. That makes sense. Let's put all this on a timeline. When did you launch the business? What year?

Emre Koksal

03:21>> So the business foundation of the business was 2019. It took us two years to get the product to be very simple, you know, transparent, fully transparent, and integrable to any kind of platform. So we have literally kicked off our POC program, I would say last year, so we have been around distributing the product, signing partnerships, signing customers about for a year right now.

Nathan Latka

03:50Oh, what's going on there, YouTube? Good to see you guys. Now imagine this, you love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 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 Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect

04:14your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna

04:38get a different valuation. A VC is gonna pay a different valuation, private equity firm is different. If you're gonna 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

05:00not 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, 1,200,000 seed round, 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna 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

05:26going out right now and you're raising your seed round. We'll 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 dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. Alright. We're gonna go back to the YouTube video here in a second, but if

05:48you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. 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. Alright. Let's jump back into the

Pre-Seed Funding and Product Development

Nathan Latka

06:14interview. Okay. For a year. That's fantastic. How did you fund the business when you were pre revenue for two years? Did you raise?

Emre Koksal

06:22>> Yes, I did. We had a pre seed round. There was quite a bit of interest. In fact, there were, like, four major VCs that funded our pre seed round, and then we switched to a seed plus, what we call the seed plus

Nathan Latka

06:37Well, how much how much was the pre seed?

Emre Koksal

06:39>> The pre seed was close to $1,500,000.

Nathan Latka

06:43And that was in 2020?

Emre Koksal

06:45>> That was in, yeah, 2019. That was in '20 Okay. Correct.

Nathan Latka

06:49Okay. And sorry. I cut you off. Go go ahead. Keep going.

Emre Koksal

06:52>> No. That that supported our product development and getting the product to a level where it is so simple that it becomes a no brainer to deploy. And after two years, we have raised the seed plus round, which is a little north of $3,000,000. Mhmm. And we are currently on that round, on that funding round. And we are we have well the the traction. Yeah. Go ahead.

Nathan Latka

07:15Okay. Got it. So you've raised 1.5 back in 2019. You currently have an open seed round or seed plus round that's around 3,000,000.

Emre Koksal

07:23>> That's correct. Yeah. We we haven't exceeded 3,000,000 already. We are still opening for a few small checks.

Nathan Latka

07:31How how much would you raise at the current valuation? Obviously, you're managing dilution here. So how much room do you have left?

Emre Koksal

07:37>> Correct. So we have, you know, $250,000 more left.

Nathan Latka

07:42Ah, okay. So you're basically and the 3,000,000 is already wired as a done deal? Right.

Emre Koksal

07:46>> Yes. Oh, I see. Okay.

Nathan Latka

07:47So you leave a little bit open for maybe some strategic angels who come along or something like that, but it's pretty much done.

Emre Koksal

07:52>> Absolutely. Yeah. That's that's where we are.

Nathan Latka

07:55Okay. This makes sense. So about 4 point, you know, 4,500,000 raised today, another 250 k left in the current round. That's how you funded growth to date. Talk to me a little bit more about the team. This seems sounds like it should be very heavy, heavy engineering. How many folks are full time today?

Team Size and Engineering Depth

Emre Koksal

08:09>> We have 15 folks full time today and growing. So Mhmm. Again, as you have mentioned, heavy on engineering and development. I'm coming from a tech technical background myself, which helps build a team like I mean, you know, train even the team from my academic background. You know, most of my students either become professors or get positions in Silicon Valley, but a few of them, based on their skills, you know, they're both into our strategy and our,

08:43>> you know, targets, and they stay here at the heartland and contribute directly to us. So majority of the team is on the development side, technical side, but we are also growing on the business side. And we have made some very key hires lately on the business development and go to market side lately.

Nathan Latka

09:02Emre, how many of the 15 are engineers?

Emre Koksal

09:07>> So I would say 11 of them are engineers and four of them on the rest of the business and growth and customer support side.

Landing the First Customer

Nathan Latka

09:16I see. Now, talk us back to the special moment. You start selling in 2021. You get your in '19 2020, 2021, you get your first customer. How did you land that first customer? Where'd you find them?

Emre Koksal

09:28>> Oh, it it was great. So it it is one of the largest, basically,

09:35>> electric car charging organizations in the world, and, you know, they we got the connection, and it became clear that the need that they have is in alignment with our value prop. So we had a few meetings with them, and, you know, like we have integrated to the platform that they are using, the cloud platform that they are using, and they have started using it. It kind of minor customizations, and then boom, they kicked it off, and

10:06>> it was a great moment. It was a great moment. You know? Like, that first check was really special. I mean, to this day, I keep it.

Nathan Latka

10:13What was the size of that check? Do you remember?

Emre Koksal

10:16>> So they were paying quarterly, and they started with, like, a small number of users. So the the first check for that quarter was, I believe, around $2,000.

Nathan Latka

10:28That's awesome. Okay. So that's your first customer. Fast forward to today. How many total customers are you working with?

33 Customers and Partner Go-to-Market

Emre Koksal

10:33>> So we we signed very quickly right now. We are over 30 right now. I believe it's 32, 33 customers right now. We are in the logo generation and quick feedback mode, and by the way, we also sell through partners, that's our main go to market model. These include not just, you know, reseller MSP, MSP partners, but also other tech partnerships as well, and we have more than 20 partnership agreements active to the state.

Partner Revenue Share and Perpetual Commissions

Nathan Latka

11:04And and so how do those work? You're paying them a kickback per $16 seat they sell?

Emre Koksal

11:08>> Yes. Based on licenses that they sell, you know, depending on how they wanna join the support model, they some of them are highly sophisticated, meaning they cannot just deploy and sell, but also support the customers subsequently, so that's a different model. That's more like an alignment to MSP, MSSP model, but some of our partners are resellers, help with the sales, and say maybe take the first call, but the support is on us in that situation.

Nathan Latka

11:41I see. So the folks that are reselling, if they sell, you know, a $10,000 a year contract, what are you paying them? 30% or something is pretty standard?

Emre Koksal

11:48>> Correct. Yeah. Between 30 to 40%. That's right.

Nathan Latka

11:51Okay. And are you is that 30 to 40% every year in perpetuity or just for year one?

Emre Koksal

11:58>> So for it's in perpetuity. So for resellers and MSSPs. So that's an interesting question because we also have here and there some referral partnerships. For referral partnerships, it's like, meet this guy, I think they solve your problem, and that's it, we handle the rest of it. It's not perpetual, but for the rest of our partners, it's perpetual.

Nathan Latka

12:21I see. I see.

Emre Koksal

12:22>> Because there is some effort also needed to kind of renew the contracts and so on and so forth. So they are helpful in every stage of the way.

Nathan Latka

12:31I see. I see. And and you mentioned earlier, so the average the average team is signing up a 100 seats. I mean, is that true of your 33 customers today? On average, there's about a 100 seats per customer?

Emre Koksal

12:41>> On average, yes. But there's high variability as I have mentioned. You know?

Nathan Latka

12:45Yeah. Yeah. But there's about 3,300 paid total paid seats, though. It sounds like something like that.

Revenue Estimate and Zero Churn

Emre Koksal

12:51>> Correct. That's correct.

Nathan Latka

12:52Yeah. Yeah. It sounds like, again, there's a lot of concentration because you mentioned some of your customers have over a thousand sign ups. So one customer makes up more than a third of your total business right now.

Emre Koksal

13:02>> That's good. So there's there's indeed, like, there's elephant, there's there are mice, and, you know yeah. Depending on the size, they have heavy tailed heavy tailed distribution as you have mentioned.

Nathan Latka

13:12That's awesome. If we take 3,300 paid seats at $16 a seat, it would put your revenue at about $50,000 a month right now on revenue. Is that about right?

Emre Koksal

13:21>> So that's about right. But, again, as I said, we are, like, a partner based model. And early on until we came up with the current pricing model, we had tried different pricing models. So it's a little lower than that amount right now.

Nathan Latka

13:36I see. So maybe more like 30,000 a month, something like that.

Emre Koksal

13:40>> Perhaps. Yeah. I mean, on average, we are at that, you know, I would say lower six digits ARR level right now. And again, the current round has been about the or the former round. And as we move on to the current round, we have been more about additional logos, getting feedback, and, you know, establishing traction, which we have achieved. I'm also proud stating that we have zero churn thus far.

Nathan Latka

14:07Mhmm. That's fantastic. Now if you're help us understand growth. If you're at about 30,000, 40,000 a month today in revenue, where were you exactly one year ago?

Growth from Near Zero to $30K MRR

Emre Koksal

14:15>> Oh, very close to zero. Right? Very close to zero. So we have literally kicked off our POC program and started maturing it last year. So it's like 2021, so we were very close to zero at that point. Maybe one or two customers were onboarded at the time, but we really kicked things off in, I would say, at the end of summer twenty one, all the way to here, like this And third

Nathan Latka

14:47Emre, before we wrap up with the famous five, last question here. Most folks today raising seed, you know, they're selling somewhere around 20% of the business. Are you sort of in that same range?

Convertible Note Round and Cap Table

Emre Koksal

14:56>> Correct. Yeah.

Nathan Latka

14:57It's fairly typical.

Emre Koksal

14:59>> I mean, one thing to note about that though is the current round that I'm raising is convertible note based. So, you know, we are definitely targeting that percentage.

Nathan Latka

15:11Or is it uncapped is it uncapped or capped? It's capped. Okay. So it's capped around around a 15 around a 12 or 15,000,000 cap, something like Right

Emre Koksal

15:21>> now it's $8,000,000.

Nathan Latka

15:22Okay. 8,000,000 cap. So, I mean, you're selling a you're selling a very large chunk then. I mean, you're selling 30 to 35% of the that's a lot of dilution.

Emre Koksal

15:31>> That I mean, one would think that way, but, you know, everybody is on board right now for the long run, and we are here to make the team successful, make the organization successful. Everybody is on board, and as we onboard highly strategic, very important investors, Everybody is ready to take the proper haircut as we move forward with the plan.

Co-Founder Relationship

Nathan Latka

15:56Are you the sole founder or you have a co founder?

Emre Koksal

15:59>> I have a co founder. So

Nathan Latka

16:01Okay. Yeah. And were you guys just you split it evenly at the beginning or was it lopsided?

Emre Koksal

16:06>> No. It's it's different. I'm the main founder. He's the cofounder, so he was my former student. We started building the technology together. Then, you know, I have moved forward to, you know, found a company, and he joined us a few months later. But so yeah. So it's it's like a founder, co founder kind of a separation.

Nathan Latka

16:30Understood. So you own, you know, 70% the majority, you know, he owns less, and then you've been diluted with the two rounds so far.

Emre Koksal

16:37>> That's that's absolutely Very

Nathan Latka

16:39cool. Impressive no churn. You're 33 customers. You're on you're on a tear here. We're excited for you. Let's wrap up with the famous five. Number one, favorite book.

Emre Koksal

16:47>> Favorite book is actually There are many favorite books. I have been pleasantly surprised with David I haven't I don't know if you have heard of David Lindley. He's a physicist from UK, and, you know, basically, he's authored a fantastic book on, you know, the universe, the seek the the dream universe is the name of the title of the book by David Lindley. And, you know, like, I love what brain minds have gone through toward understanding, like,

Famous Five Rapid Fire

Emre Koksal

17:25>> the mechanisms of the universe, and that's my new favorite book.

Nathan Latka

17:30Great. Emre, we're out of time here, so rapid answers if you can. Number two, is there a CEO you're following or studying?

Emre Koksal

17:37>> CEO that I'm studying. So, I mean, there are some classical answers to that. I mean, I the answer would be no, but Okay. Elon Musk basically lately said, know, like, hey, you should you know, what you should focus on as a CEO these days have shifted, you know. He's basically rightfully saying it's mostly on spreadsheets and, you know, finances. You should focus more on more on building the best product that's out there. And I have been,

18:07>> I mean, you know, sympathizing with that position quite a bit.

Nathan Latka

18:11Got it. So I'm thinking that as a motto to my opinion.

18:16Makes sense. Alright. One word answer on this one. Favorite online tool?

Emre Koksal

18:20>> Favorite online tool? We are using Miro quite a bit.

18:25>> Miro.

Nathan Latka

18:26Good. Number four, how many hours of sleep do get every night?

Emre Koksal

18:29>> Say it again, sorry.

Nathan Latka

18:30How many hours of sleep every night?

Emre Koksal

18:33>> Oh, that's a very tough question. I would say around five and a half hours.

Nathan Latka

18:39Okay, fair. And what's your situation? Married, single, kids?

Emre Koksal

18:42>> I'm married. I have two daughters, eight That's and awesome.

Nathan Latka

18:46And how old are you?

Emre Koksal

18:48>> I am 46.

Nathan Latka

18:50Last question. Something you wish you knew when you were 20.

Emre Koksal

18:54>> Something I wish I knew as oh, it's a long journey. It's a long journey. So it's never too late for anything. So it's a long journey. Take your time, digest, and basically, you know, a year if you have a task, it lasts for a year longer, it's not a big deal. Just make sure that it's done perfectly.

Nathan Latka

19:18Guys, anchormydata helps keep you more secure. He has many patents. He's ex MIT. He's got the engineering chops, 15 folks on the team, majority, 11 of them are engineers. They passed $2,000 a month in revenue about a year ago. Now over $30,000 a month across 33 logos that pay on average $16 per seat. They on average sign up with, call between a 100 ish seats, but biggest customer has over a thousand seats on the platform. Their

19:40first customer he landed was back in late twenty twenty, which was an electric car charging effectively company. Now scaling nicely with a $3,000,000 seed round. They're closing right now at an $8,000,000 cap so they can hire some key additional hires and continue to drive past 33, fifty, sixty, a 100 logos. Alright. Thanks for taking us to the top.

Emre Koksal

19:59>> Thanks, Nathan, for having me. My pleasure.

Nathan Latka

20:03One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. 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

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