How Foglogic Inc CEO Ashok Santhanam grew Foglogic Inc to $1,000K revenue and 10 customers in 2019.

hello everyone my guest today is ashak santanum he is the co-founder and ceo of fog logic before this company he served as ceo of bristol cone and senior vp of worldwide field operations at epiphany earlier he was founder and ceo and chairman at invented technologies he has a bs from iit madras and an mba from harvard business school a shock are you ready to take us to the top sure all right what is fog logic and how do you guys generate revenue what's your business model uh well we're a sas company and we started three years ago with a vision to transform the way it operations particularly managing enterprise applications happens by leveraging the power of ai and machine learning okay so 2015 was launch date uh 2016 was no launch date was actually end of 2017. no of the company when did you create the company ah well the official start of the company was actually in early 2016 okay uh although we incorporated earlier than that okay great and then kind of try and break down the tech for us what does the fog logic do yes so it's a cloud-based application that uh today talk well we target enterprise applications and our initial use case is the sap application landscape in enterprises and what we essentially do is pull operational data you know log messages uh you know operational metrics you know things of that nature from these sap applications and the related uh uh infrastructure stacks so the databases that sap runs on and the infrastructure that sap runs on we pull all of that send it to send it up into the cloud where we analyze the data continuously using our ai algorithm so the basic idea is that you know in most complex enterprise applications they don't run incident free there's invariably times when systems go down and you know people are all hands on deck trying to react to these things and of course when the system is not available it means business doesn't get done and so the idea here is that rather than waiting for something to go down and then having a bunch of people uh trying to figure out what went wrong by making looking at all of this data and analyzing it manually we do that on the fly in real time okay but is it predictive or is a lagging indicator it tells you why something happened after the fact or prevents it from happening well it doesn't yet prevent it from happening that's where we're going uh actually where we're going is ultimately to automatically fix problems that happen before they occur right okay and give me an example of an application or company that uses this currently uh well variant medical would be would be an example of a company that uses it today and uh so they're a two and a half three billion dollar a year company making cancer medical equipment okay and what's something that you're monitoring for them where if they break it's something you have to do a report on to make sure it doesn't happen again uh well it's you you actually don't have to do a report on it so so it's uh they use sap to run their whole business right and so all their manufacturing plants all their finance systems all all of those systems run on sap and so if something were to go wrong in any one of these sap applications they have a team of people whose job it is to keep these things running they all have to sort of get involved and figure out what happened what why did it happen what went wrong does the cto lead this group of shock uh the cio to see okay so you're selling directly into the cio the cio's organization typically in large companies the reporting to the cio will be a group called the it infrastructure or the iit operations group headed by a vp those are the people that would use what we okay and give me a sense here on average what's the company like this medical company going to pay you per year for access to your technology well it's uh obviously we can't disclose what they specifically pay us i did ask it i didn't ask them i said on average in general a company that's uh well let's just say that uh the annual subscription revenue that we get can range from sort of you know the tens of thousands of dollars at the low end to the hundreds of thousands of dollars per year at the high end okay again just because we don't have time to go to every cohort that's why i'm asking for an average so is it is it fair to say maybe an average might be 100 grand per year between 100 and 150k per year okay okay very good and can you give me a sense of the size of what that that company paying that average might look like you know how many how many apps are they running isolated to a size of company it really depends on the complexity of their sap landscape but it's measured by what uh measured by the number of uh production systems the number of application servers okay so how many do they typically have if they're paying you 100 grand a year depends on depends on their business right because a manufacturing company might have a different setup than a financial service yeah a shock my question is someone paying you 100 per year whatever your pricing metric i don't care what it is it sounds like its number of sap apps so whatever it is if they're paying 100 grand a year about how many apps are they running they would typically be running somewhere in the sort of 20 to 25 production systems roughly okay and is there anything else you're pricing against between number of production systems it's uh it's a it's a formula that's uh that involves the number of production systems the total number of application servers that they that they run on and the number of sap licensed users that they have right so each of these is a proxy for the complexity of the sap system landscape i wish it was as simple as saying it's based on the customer's revenue but unfortunately it's not well no i mean by the way what you just articulated is is very straightforward and simple you have three pricing axes one around number production systems one around number of application servers and one around number of sap license users that's right so help help me understand what your inside sales teams look like because i'm understand how they're driving expansion revenue so what's your team size today total uh we have a team of four people in sales your total team size total team size what is your total what is the total team size of the whole company yeah it's about 32 people okay 32 and four of them are some form of sales marketing or onboarding uh four of them are in sales and then we have a couple of people in marketing as well okay very cool and where's our one we have a customer success team of uh three to four people okay where's everyone based uh about uh well every everyone in sales marketing customer success uh is based here in sunnyvale we have about half the development team in sunnyvale and the other half of the development team is in uh eastern europe okay um quick question this is a big debate right now amongst enterprise applications selling again 100 000 plus acvs are your customer success reps incentivized via quota on the expansion revenue they drive uh no not today they're not okay even as a group they're not there's no bonus pool as a group not not for customer success well you know so so i mean everyone's obviously incentivized by equity in our company and so to the extent that our customers chuck that's nice of you by the way you give everybody equity huh yes we do all right i think you're gonna have a bunch of job apple a bunch of job applications silicon valley isn't it uh no you'd be shocked i know some founders that don't need to use equity to keep talent they have other creative ways to to keep it but by the way i like what you're doing i think it's great to get equity out yeah so um it's too early in the game for us to get into you know sort of uh bonus type incentive programs because we don't know what we do what we what we know and what we don't know yet we're still discovering that as we go along as as things sort of settle down and uh we have some history to learn from then it becomes easier to start putting those how have you capitalized the business bootstrapped or have you raised no we uh re-raised we uh we did a small seed round to get started and then we did a series a in 2017. okay so how much raised to date seven million seven okay and all that was priced equity or any convertible notes or debt the the original seed was convertible note which converted at the time of the series a and the series a was priced yeah and how aggressive are you being today with that capital i mean are you burning capital today or are you at break even or profitable well we yes we are burning capital but uh i wouldn't i wouldn't say we're aggressive you know this is uh uh i've done this a couple of times before as has my co-founder and so we know that uh there are there are you know rapids uh that that we can't see up in front of us and so we were careful about spending cash how do you um what is a smart way to manage runway so right now if you're burning x amount you have y left in the bank how much bigger is y than x uh well i mean that changes from month to month obviously because you have uh uh we we'd like to keep a minimum of uh sort of six to nine months of runway available yep you're talking of net of net of net burn not gross burn yes yeah yeah very good okay good um and when was that last you said the last round was raised what month april of...