Flaskdata.io Revenue & Valuation (2020)

hello everyone my guest today is danny lieberman he's a solid state physicist by training serious amateur musician and tech entrepreneur developing automated detection and response for virtual clinical trials danny ready to take us to the top yep absolutely so first explain what a virtual clinical trial is so actually today a virtual clinical trial is any clinical trial because the time of corona everybody is like uh not coming to uh to hospitals and research sites so that means a lot of views of digital channels uh more and more connected devices and uh so maybe two years ago um virtual trials was a big deal today it's like you know everything is practically virtual and so who's typically paying for this big r d firms inside of healthcare providers uh our customers are drug and device companies uh we're working with uh companies like uh striker which is a big medical device company we were very fortunate one of our early um uh stage customers was acquired by them so we got by default we got a big big customer uh google health amgen on the west coast and a bunch of small israeli biomed biotech companies and help me understand how you charge them so we um we're a sas company so basically we do um [Music] until we started we went from zero to one in january 2019 and uh our model was because we want to get our foot in the door was basically charge a setup and a fixed monthly cost between 15 and 2500 a month depending on modules and um just have unlimited usage for that we love that was like a killer model at the time um of course the bottom of our market just dropped out into in february 2020 and things just totally changed and we started thinking about our pricing model and so now we're charging for patient which actually is really great but because for small projects like for 10 20 patients it's really cheap for the customer and for the big ones it it scales well because um a clinical trial um a drug or device company will spend anywhere from ten to twenty thousand dollars for patients so five hundred dollars a patient is not a big deal and is that what you're charging right now 500 per patient yeah so we're actually doing 500 and we're we're bidding on a big 20 000 patient trout right now so we're we've given them like a sliding scale so it's actually paying low numbers for that but for us it'll be like a two million dollar contract over the next couple of years if we get that that's great and how many patients have gone through your system today where brands are paying 500 bucks per patient so uh we just started that like the end of um q3 uh 2020 uh so we're having like um so we did like 287 in our first year 287 patients 287 thousand dollars okay that's like that's like the equivalent of like say 500 so it's like about 600 patients and and to now we've done over almost almost 7 000 um yeah so it's it's scaling up really nicely so just be clear you finished 2019 you did about 287 thousand dollars that year in revenue in 2020 what was total revenue 320 320 and what do you think you'll do uh this year so we have uh our bookings for q1 is 400. so we're going very quickly and you have to understand that in 2020 basically we didn't have a q1 q2 because corona just basically killed our business and it was like end of february i'm coming to work and i'm thinking okay what's going to what's going to happen now so yeah and so is this truly recurring revenue though i mean once someone's put 100 patients through you and they do the trial don't they then stop and turn so that's a really good question um typically life science companies will do a minimum of uh four trials so they will face one pays three phase three pay for and and sometimes many times a pilot a small pilot like 10 20 patients before plays fun um so we've uh we actually um out of 25 customers we've only lost one it was our point we up um uh but they actually came back to us um last week so that's good news um so um really um so danny last month in december of 2020 then how much monthly recurring revenue did you do in that month last month we did about um about 40. that's great okay good so do you think you can break the million dollar run rate this year we work hard yes that's good and have you bootstrapped this or raised capital it's bootstrap totally okay congratulations that's exciting and that includes corona time so i'm like i'm sitting in my office with my partner in the in the end of february and we're saying well what the is going on what's gonna happen now did you put your own capital in the business so i put my own capital into the business and um and what happened was the end of 2019 we had a vp business that i fired his ass because he wasn't doing cold calling and um and i had no idea that uh you know i figured okay you know we'll take some time we're going to get a better person who is happy to call call people and then you know corona happen so we have to think we're between a rock and a hard place and i did probably the most counter-intuitive thing i've ever done in my life was i stopped selling we stopped selling and we just doubled uh double down on the uh on the product development and we started telling people about what we were doing and it turns out that that was an amazing way of marketing the product just to tell people what we were working on and what's your team size today so we have four people four and a half actually so we have a project manager who's like a halftime person uh who came to us from one of the banks and she's actually officially retired but she's not retired with us and danny are you guys are you profitable today are you breaking then so uh we lost money in 2019 and uh q4 we made money so my accountant tells me we're paying taxes so i guess we're pro got it that that is a good way to know if you're profitable or not now you're just listening to your language are you a tough guy to work for am i a tough guy to work for yeah no i don't think so um i'm a tough guy to negotiate with but i think that the team is um it was a small team and um i wrote a post about this about the importance of speaking softly and um that has to do with the fact that i'm a jazz musician and i play um in a large jazz ensemble so if you play very loud people can't hear you can't hear themselves and you can't hear other people so in a small tech team any size tech team really but today four or five people can create great software um you need to speak really softly and listen that means paying attention to other people and not just yelling because you think you have the the best uh the best idea in the block you did 297 000 in your first year in business across 500 patients it's not easy going from zero to 500 patients how did you do that well it's like uh i mean we went from zero to one in in like um actually went from zero to three customers in uh in two months it was just word of mouth so no danny come on it's not worded if it was word of mouth any company that ever launched would just magically by word of mouth get through their first three customers that's the answer i'll give you the real answer the real answer was that i was doing uh medical divide security consulting for several years and um and i already had um i already had a number of customers and this the idea for doing automated uh detection is basically a cyber idea and uh we had a customer who was like spending six months cleaning data and i said what what the are you doing they need data because they said well there's a lot of data so give me a break you have 180 patients you have 25 research sites in the u.s that's not a lot of data a lot of data is my mobile operators in central europe with 10 10 million mobile subscribers right that's a lot of data okay and they said but you know we're doing it with paper and it's very hard so and i had like this like you know light bulb moment that we could automate detection of anomalies and that's what we did so i went back to two or three of my medical customer i said look we have an idea and this is a great idea um so we'll we'll work with you and we'll help you develop this idea if you give us like a really great deal on collecting data so i said fine so we got it got an open source system for collecting data and we brought we you know worked hard and we put it online and open source that open source uh sort of package was your first foray into building flask data are you still using a lot of open source code at fast data we are actually and uh it was actually our foot in the door because if we had not had that we probably would have never gotten started how do you think about supporting the open source community do they hate the fact that you're monetizing open source software that a bunch of people contributed to and are you contributing code back to the open source plan so we're contributing code back for that product and now we're on that project and we're on another project on an amazing project started by some people from facebook which we really love um and um so we're talking about improving we're beginning to contribute back to that project and and the the quote you know the uh maintainer of the code is i think is excited about our ideas and um and we believe in open source i mean coming from the security community uh more eyeballs is better right how do you how do you make sure that relationship stays good i imagine it's someone that builds open source code it's really important for us to do that that's part of our i think that's part of our our philosophy danny how do you keep a good relationship though with whoever created open source code i imagine they can look at you they listen to this podcast they go wow he's making 300 000 per year on open source code we got a bunch of people to commit to and donate sort of for free how do you make sure you balance that relationship uh so first of all by um by giving back um second of all from a customer perspective by giving them a good solution because uh most of the time when you're working with a closed source system it's it's very hard to support uh with open source you um you can find problems and fix them and when you fix the problems you you fork it and you put a pull request back into github and you send it back and people are grateful for that i think danny this is good stuff let's wrap up with the famous five number one favorite business book excuse me favorite business book favorite business book ah favorite business book um um god it's not luck it's not luck number two is there a ceo you're following or studying um [Music] well i i was in the grove i work for intel so i i'm like a big fan of bendy grove number three what's your favorite online tool for building flask data github number four how many hours of sleep are getting every night hours of sleep yep seven and what's your situation danny married single kiddos i'm married uh married plus four four kids wow and how are you how old am i yep i'm 70. 70. love that okay last question what's something you wish you knew when you were 20 what was i wishing when i was 20 something you wish you knew when you were 20. i thought i wish i knew when i was 20. good question um [Music] uh i wish i knew that it was more important to speak softly to people and treat them well guys there you have it flask data he was doing medical device security consulting for three years and said you know what i see an opportunity here data clinical trials launched with a price point ultimately now charges 500 per patient that these big companies like amgen want to put through flask data when they're doing large clinical trials they did 287 thousand dollars in 2019 revenue across 500 patients in 2020 to 320 000 across 600 patients doing 40 000 a month right now hoping to break a million dollar run rate by the end here of 2021. danny we're rooting for you thanks for taking us to the top thank you thank you for talking to me nathan have a good one [Music] one more thing before you go we have a 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