How DriveX Reached $360K in Annual Revenue and 15 Customers Helping Insurers Cut Fraud (Interview with CEO Rauno Sigur)

Introduction and What DriveX Does

Nathan Latka

00:00Hey, folks. My guest today is Rauno Sigur. He's the CEO of DriveX, a technology partner for insurers, mobility, leasing, and dealership companies. Drivex leverages computer vision, offers a quick, easy, trustworthy way to remotely inspect a vehicle. Rauno, are you ready to take us to the top?

Rauno Sigur

00:16>> Oh, yes.

Who DriveX Sells To

Nathan Latka

00:17All right. So who Are you selling directly to the insurers? Are they paying or is it somebody else paying?

Rauno Sigur

00:23>> That's a great question. Yes, we sell directly to companies, and we're also launching a product directly to consumers who would like to get help in pre inspecting cars.

Nathan Latka

00:35Mhmm. When you say you sell to companies, name a couple of them specifically.

Key Customers: Vienna Insurance Group and ERGO

Rauno Sigur

00:39>> We're really strong in our in our home region, which is Central And Eastern Europe, and we work with the largest groups such as Vienna Insurance Group, and also ERGO, which is a part of Munich Re.

Pricing Model: Per-Inspection Fees

Nathan Latka

00:52This makes sense. So how do you price the tool? What a big insurer in Estonia pay you?

Rauno Sigur

01:00>> Well, there are two factors to that, mostly, on a general level. Of course, the volume of inspections in a given period, let's say a month or a year, and what kind of features the company wants. Because our competitive advantage is how much the company or client can tweak the solution themselves. So we're looking at between 2 to €7 per inspection.

Nathan Latka

01:26I see. So call it call it like like 6 or 7 US dollars per inspection.

Rauno Sigur

01:31>> Roughly that. Yes.

How the Remote Inspection Technology Works

Nathan Latka

01:33And what I guess help me understand. So how does the technology actually work? I'm an insurer. How do I remotely inspect a vehicle of someone I'm insuring?

Rauno Sigur

01:41>> That's a great question. So in our region, and also in The US, fraud is a very big issue. So that's why insurance companies are pre inspecting the car. That's really important to understand what damages are pre accident and post accident. Now, with our technology, they just need to have the vehicle information such as number plates and BIN code, generate the DriveX link in our system or through API, and send the link to the consumer, usually with

02:14>> an SMS, and it's all web based technologies, you don't need to download or install anything, and depending on the workflow that the insurance company is using that defines the images and validations, then the consumer, the owner of the car, just starts capturing photos. And what is really interesting is that we analyse those images in real time, and also provide feedback to the consumer in real time to ensure the image quality and also the trustworthiness of data.

Nathan Latka

02:43Okay, got it. So, the main way that you're ingesting data is photos taken from the car owner, they send it to the insurer, so the insurer can better underwrite the car owner.

Rauno Sigur

02:53>> Exactly. And they I use those pre inspection photos when there's a claim, so they can go back in time and compare what was the original condition, because in The US alone, over $7,000,000,000 per year is paid out in fraudulent claims, and they could use that technology to

Nathan Latka

03:11Yeah, like, I guess what I'm asking is, there's no way, you're not installing software on these cars, because I mean, part of it is, what if damage occurs if non visible, you can't capture it in a photo, and there's a claim on that. How capture do that?

Rauno Sigur

03:24>> That's a brilliant question again. Thanks. So our vision is to combine different technologies together. So today, we're in roadmap, we're executing the visual inspection, but we also want to incorporate audio diagnostics of the car, and also connected car data we can access over the cloud of the manufacturer, the car manufacturer, to ask fault codes of the car, let's say engine or mileage and so forth. So that brings a three sixty view on the vehicle's condition, but

03:56>> of course, there are some damages that really cannot be seen or even through fault codes.

Nathan Latka

04:02Oh, 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

04:25your 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

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Inspection Volume and Revenue Discussion

Nathan Latka

06:26the interview. And, Rauno, how many inspections did you do total last month?

Rauno Sigur

06:32>> We're still in early stages, so we're talking about 10,000, 20,000 inspections per month.

Nathan Latka

06:39Well, I mean, that's still a ton. So I mean, if you did 20,000 inspections last month, can we multiply times $7 per inspection to get your revenue?

Rauno Sigur

06:49>> Yes, you could. And if we're also updating our pricing right now, so the prices I told you was what we have, what we're charging right now, but obviously, we have customers who were early adopters, and then the price of course is a little bit the same difference, I mean, cheaper, because what we're building is really deep tech, and how we are better is that we have customers even before we have the technology. So we're really building

07:17>> it to better customers. I think

Nathan Latka

07:18great you pre sold it. But if you had to look at the average price that these insurers paid per inspection last month on the 20,000 inspections, would that be more like 4 or $5? Something cheaper?

Rauno Sigur

07:31>> It's cheaper. It's around a few bucks, because we launch our product in stages, and the first stage the value we provided was image quality detection and visibility detection. Now we're adding the damage detection, which increases the price of the inspection and the value that we provide.

Nathan Latka

07:50Okay. But just to be clear, earlier you said inspections cost 6 to €7 per inspection. That's obviously a little more expensive than historically what we charge because you've matured Historically, your you said each one's a couple bucks. I mean, can we take 20,000 inspections last month times $3? You're doing something north of 60,000 USD per month?

Rauno Sigur

08:09>> Well, if you make the math, then yes.

Nathan Latka

08:13Well, I mean, it's not just the math. I wanna make sure I'm calculating that accurately. Are you doing more than 60 k a month?

Rauno Sigur

08:18>> Currently not. It's less.

Nathan Latka

08:20Okay. When do you think you can break that?

Rauno Sigur

08:23>> We actually have the plan to break that in the end of this year. So we're currently growing about 20% month over month, if we look at the subscriptions and the MRR we're making.

Nathan Latka

08:37Okay. Okay. So you're closer to like 30,000 a month right now in revenue, with a path to get to 50 or 60 by the end of the year?

Rauno Sigur

08:44>> Yes.

Nathan Latka

08:45I see. I see. And if you were at around 30,000 a month today in revenue, do you remember where you were exactly one year ago?

Rauno Sigur

08:52>> I would have to say that we were like four or five times less.

Nathan Latka

08:57Okay. Revenue. So like 7,000 a month or something, something small.

Rauno Sigur

09:02>> Mhmm.

Nathan Latka

09:02Amazing. Now how did you put this on a timeline for me. When did you guys write the first line of code for this technology? What year?

Company Timeline and First Customer

Rauno Sigur

09:09>> We started we registered the company in twenty nineteen December, but actually, we had the first customer in place in April 2020, and that's where we really started to build the code and the product.

Nathan Latka

09:23So first customer was 2020, and how many customers are you serving now today?

Current Customer Count and Rental Market Opportunity

Rauno Sigur

09:28>> We're serving 15 customers right now, but we're already signing first letter of intent in the rental industry, which will be the biggest market of our business.

Nathan Latka

09:38Yeah, that makes a ton of sense. Of the 15 customers, you know, you do 20,000 inspections across all 15. Does one of them make up the majority of those 20,000 inspections?

Rauno Sigur

09:47>> No, it's actually quite distributed. So, yeah, not a big wheel there.

Nathan Latka

09:54What is the biggest one? How many inspections does the biggest one do per month?

Rauno Sigur

09:59>> I would say they do a couple of thousands of inspections. Per

Nathan Latka

10:04per month?

Rauno Sigur

10:06>> Yes.

Nathan Latka

10:06And that's an insurer or a rental company? Rental car?

Rauno Sigur

10:10>> That's an insurance company, but in the rental markets, the market need is totally different. You have companies who need to inspect thousand cars per day, not per So that's why we need to build the next layer of the technology and make it reliable, precise and fast.

Founding Team and Equity Split

Nathan Latka

10:25You keep saying we, tell me more about the founding team, how it is.

Rauno Sigur

10:29>> Obviously, I'm not the only one. So we have three co founders, and we really have experience in tech before. Estonia is the, we say, the land of unicorns, because we have the most unicorns per capita in the world. So, we did it before in the banking industry, in the governmental industry, and also Lastman Technologies. So I was in sales, and the CTO, he built the product, builds the product, and also the CPO was a sorter analyst.

Nathan Latka

11:01I see, and did you guys all split equity evenly at the beginning?

Rauno Sigur

11:06>> There are two ways to do that. Yes. One is equally, but we did it the other way around.

Nathan Latka

11:12Which is what?

Rauno Sigur

11:14>> I can't disclose the exact equity amounts, but we had to really dive deeper what is the role of each person, and also how much it's worth given the

Nathan Latka

11:27Give me an example. Give me an example. Mean, don't don't share individual equity amounts, but why might you get more equity than the analyst, for example?

Rauno Sigur

11:36>> Well, we analyze the job description, and the CEO really has to overlook everything in the company, including the product area, the development area, and also the sales and business development, plus fundraising. So, yeah, there there really are two schools of thought here.

Nathan Latka

11:55So are you the CEO? Do you own the most equity? I see. And then what? The CTO is the next most, and the third co founder is the next most?

Rauno Sigur

12:04>> You could put it like that. Yes.

Nathan Latka

12:06Alright. Cool. That's helpful because there's folks listening right now thinking about launching their own companies and, you know, just splitting equity equally is rarely the right answer. It's lazy. It just means you didn't have tough conversations.

Rauno Sigur

12:17>> Yeah. And I recommend to have those tough discussions right in the beginning, and there were several because obviously it needs to be well thought through and argumentative.

Nathan Latka

12:27Yep. Yep.

Rauno Sigur

12:28>> A constructive manner, of course.

Nathan Latka

12:30That's right. That's right. And now tell me more about how you guys have funded the business. Are you bootstrapped or did you raise capital?

Funding History and Seed Round Details

Rauno Sigur

12:36>> We have raised to date €1,200,000, which is like 1,400,000 in the US dollars also.

Nathan Latka

12:46Was that one round or multiple rounds?

Rauno Sigur

12:48>> Two rounds. We have done a pre seed, and now the first seed round just closed it. We have Plug and Play Ventures from Silicon Valley.

Nathan Latka

12:56Much was the seed?

Rauno Sigur

12:58>> It was 1,000,000 US dollars.

Nathan Latka

13:00And then there was a 400,000 pre seed last year?

Rauno Sigur

13:04>> Yes. Actually, 300,000.

Nathan Latka

13:08300,000 last year pre seed. Now most folks in their seed, Rauno, are selling like 20% of the business. Were you guys sort in that same range?

Rauno Sigur

13:16>> You could say that, yes. And we really why Estonia startups are so great is first, the amount of money raised versus the actual revenue, there's a good balance between those two, and also really thinking how much equity do we really need to give away, how much capital do we really need. Not taking less, not taking more, so we did a very extensive analysis about that too.

Nathan Latka

13:41Mhmm. Yeah. If you sold 20%, you raise at a 5,000,000 valuation post money.

Rauno Sigur

13:47>> Yep. That's the range is is pretty much true.

Nathan Latka

13:51And was that with an Estonian investor, or did you race from The States or somewhere else?

Rauno Sigur

13:56>> Yeah. As I said before, there were a lot of unicorn and Sunicorn founders who are backing us from Estonia and the region, but the lead investor came from Central Europe, Czech Republic, because that's one of the key markets we want to enter and establish ourselves as dominant players, but and and plug and play ventures from Silicon Valley to bridge us in the next round to the big market we're after, The US market. Name

Nathan Latka

14:27some of the top SaaS unicorns in Estonia.

Rauno Sigur

14:31>> Well, the original unicorn was Skype.

Nathan Latka

14:34Yep.

Rauno Sigur

14:35>> I don't many know that that was Estonian. But then we have Veriff, which is a know your customer unicorn, and we have TransferWise, which is now called Wise for payments. There are, I don't know, 10 unicorns at the moment, actually.

Nathan Latka

14:53Very cool. Alright, tell me more about your team. How many folks are full time?

Team Size and Composition

Rauno Sigur

14:57>> We have 11 people full time, and I would say 50% of those are product people. We have all our core expertise in house, including sales and marketing.

Growth Strategy: From 15 to 40 Customers

Nathan Latka

15:09And last question here as we wrap up. I mean, how do you go now branching and go from 15 customers to 30? It sounds like you're going into the rental car space because there's just more inspections happening. How do you land that first customer there?

Rauno Sigur

15:21>> We're actually doing it right now already, and really having those letter of intents in place, having paid pilots, and developing the product exactly based on the market's needs. So, it's a standard procedure, and the goal by the end of the year is to have 40 customers.

Nathan Latka

15:43Well, Rauno, sorry, you're taking for granted how hard it is to get a paid pilot. A lot of my listeners are trying to figure this out, so it's not I'm trying to help you teach them effectively, right? So when you say a paid pilot, have you mocked up a spec of what the thing will look like for the rental car company and said, pay us now and we'll build this over the next six months? Walk me

16:01through what you sold in the paid pilot.

Paid Pilots and the Sales Process

Rauno Sigur

16:02>> Sure. Well, it all starts doing a bunch of interviews first, like really listening to the customer and doing the mom test. We have to learn that too. Not to sell too early, not to sell your idea, but to learn their process and their problems and their ideal product that they're looking for. Have they even looked into solving that problem before? And then building the mock up, like the clickable prototype, and showing combining that together with a

16:30>> live demo of the product and the clickable prototype. That's what we're doing right now.

Nathan Latka

16:34What did you use for the mock up prototype? You're talking like Figma?

Rauno Sigur

16:38>> Yes. Figma is a great tool for that. We use that as well. So, yeah, the clickable prototype

Nathan Latka

16:43is You're you're you're selling with the clickable Figma file.

Rauno Sigur

16:47>> Yes. Exactly. Okay. Exactly.

Nathan Latka

16:49And then and then let me just play devil's advocate. The car company is going, wait, I'm not paying for this. You don't have anything built yet. And you're saying, no, you've gotta pay us this amount upfront. Like, do you negotiate that?

Rauno Sigur

16:58>> Mhmm. That's that's that's where the skill comes in. But I guess the key thing here is how to find and identify the early innovators who really want to develop this with you, and they're ready to maybe just put a small monetary commitment there.

Nathan Latka

17:15What is small on you? What's the size of it?

Rauno Sigur

17:18>> We could do a pilot where they just inspect, I don't know, 100 cars and pay, I don't know, €500, $500 for that, but that shows that the customer is serious, they want and they invest their time to provide feedback and, you know, measure the KPIs, because then we can do the next iteration and build even the best product, because

Nathan Latka

17:43But this most paid products pilot, they're not paying for like a SaaS fee up front. They're paying a one time fee, $500 to do a 100 inspections, and you're hoping you can get them into a more recurring fee later on.

Rauno Sigur

17:54>> There are clear KPIs. So if we deliver those KPIs, then there's Maybe a couple

Nathan Latka

17:59of those KPIs.

Rauno Sigur

18:01>> Well, definitely the speed of the service SLA, like how fast should we detect those damages, then the precision rate, how many damages should detect, what are the false positives, false negatives, then the customer satisfaction ratings, how much that the people loved the inspection process, how easy it was, and of course the savings. I can't go into details here, Like, the monetary savings compared to the old process.

Famous Five Rapid-Fire Questions

Nathan Latka

18:32Yep. That makes a ton of sense. Okay. Very cool. Let's wrap up here with the famous five. Number one, what's your favorite book?

Rauno Sigur

18:38>> 48 Laws of Power.

Nathan Latka

18:40Number two, is there a CEO you're following or studying?

Rauno Sigur

18:45>> I think Elon Musk.

18:47>> Yep.

Nathan Latka

18:48Number three, what's your favorite online tool for building DriveX?

Rauno Sigur

18:52>> Online tool for building DriveX? I think Unlock, it's like a tool for connecting remote teams together and having fun activities together.

Nathan Latka

19:02Number four, how many hours of sleep do you get every night?

Rauno Sigur

19:06>> This night.

Nathan Latka

19:08On average?

Rauno Sigur

19:08>> Or a second night. Average. Eight. Yeah. Okay. I I need to rest well.

Nathan Latka

19:14And, Rauno, what's your situation? Married? Single? Kids?

Rauno Sigur

19:17>> I'm in a relationship, and I hope to take it to the next level soon.

Nathan Latka

19:22That's awesome. And how old are you?

Rauno Sigur

19:24>> I'm 31.

19:25>> 31.

Closing Thoughts and Wrap-Up

Nathan Latka

19:26Last question. What's something you wish you knew when you were 20?

Rauno Sigur

19:31>> Can you repeat, please?

Nathan Latka

19:32Something you wish you knew when you were 20 years old.

Rauno Sigur

19:37>> That I can make it. I just have to believe in myself.

Nathan Latka

19:41Guys, there you have it. Drivex.io, helping insurers help consumers do more reliable car inspections to decrease fraud. He processed 20,000 inspections last month, which generated 30,000 of monthly recurring revenue, up from 7,000 a month just a year ago. Healthy growth rate. Team of 11 today, they raised 300,000 pre seed last year, just raised a million seed round on a 5,000,000 ish post money valuation. Now scaling 50% of their team are engineers focused on building the next

20:06gen iteration of the product for rental car companies. More scans, more revenue, more accuracy problems, they'll figure it out. Rauno, thanks for taking us to the top.

Rauno Sigur

20:14>> Thanks.

Nathan Latka

20:17One 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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