How FunnelAI CEO Sridhar Kamma grew FunnelAI to $2M revenue and 84 customers in 2019.

hello everyone my guests today are suja and sri kama the co-founders of funnel ai suji is a zealous strategic leader and design thinker by profession and passion sri is robotics and ai specialist by professional passion who want to be a front runner in creating novel and efficient solutions both of them are strong advocates for futuristic technologies and technology adoption for efficient solutions and both believe that bold moves and mindset change may not always go our way but are critical behaviors for success now building funnel a i sujo3 you ready to take us to the top sure all right very good so suji maybe kick us off what does funnel ai do and how do you guys make money what's the business model so from layout is a revolutionary customer acquisition tool so what we do is we find the customers who are looking for a service out of product right now we don't do predictive analytics not when people are thinking about it or browsing about it when people really need a product our service we use ai algorithms to um piece up the and then find the customers and then show it to the businesses that the customers are looking for okay and pricing wise i mean are we talking enterprise mid market or smb you're targeting what are customers paying on average per year would you say so we are a b2b a sas model uh and our order dealers should spare anywhere between two thousand dollars to five thousand dollars a month oh what and they pay about two thousand dollars to five thousand dollars a month a month got it good okay and now i assume you have enterprise at five thousand maybe a long tail at two thousand but would you say a fair average is about two thousand a month something like that absolutely yeah okay put this on a time for me guys when you launch uh june 2017 2017 and i mean where were i was going to say where were you guys at like what was happening in 2017 yeah so we joined an accelerator called realco here in san antonio so i'm from austin my sister suture came from calgary uh we were just starting off in june and we joined accelerator here in san antonio so in 2017 what we are doing is actually got this idea and to look for the customers for his previous startup called atmosphere which is a crm tool similar to salesforce but in much more low-key small-scale app and so we were ideating just about june july and then we got so much feedback from the investors at that rather than just focusing on the crm idea maybe focusing on funnel ai idea would be great so we thought about it we moved to she moved to san antonio and i started helping him with his business on the operation strategy side of things we raised a small seed fund the early how much how much total raised weed is just about 1.9 million okay on a note or a priced equity round uh so the first 375 was on a price uh equity round but then 1.5 was uh on a price well equity and price are the same thing do you mean the first 375 was debt and the second was equity that is right convertible now yes sorry yes okay very good and then okay so 1.9 into the company to date you launched in 2017 and how many customers have you scaled to today so we have 84 paying customers right now okay and the first you know two are the hardest right how did you guys get the first two customers so uh being in the background so we went with order dealerships and i used to be part of the communities and i used to be a car guy and so i realized that communities are talking about looking to buy a new used car so that's how we harness that community sites first to understand the real-time internet and i walked into the dealership that i knew and told them how we could connect them with real-time customers so you walked you just walked and called to a car dealer that you kind of knew because you were in the space that is correct yes okay i mean would you tell them so i told them how they can connect with community members much quicker in real time and if they were actually doing anything like that and the answer was new and when i showed them the demo it was clear that how they could connect with prospective customers in real time yeah so one of the questions we asked is how much do you spend in marketing and sales and how are you reaching out to your customers and most of the response is we are spending anywhere between 80 000 100k a month and the reaching out to the response is through legion companies are passing through emails cold calling or sending them campaigns and events notifications so she said by the way everyone on car forums and also on social media sites are actually asking about so-and-so model and then zones of color do you actually have staff to look at these and then the gm's response was no we never we don't have time to sit down and the school through social media sites are also the social platforms trying to look for customers who need a product now and got it so did you sell was that first sale at 2000 bucks a month you convinced them to spend right on the spot two grand a month for this and so we initially started with like a thousand dollars trial because that's still pretty good though for a company where you're convincing them to totally miss you know redirect their ad spend that's pretty good all right so 84 customers today 2000 bucks a month minimum you're doing north of 168 000 a month right now that is correct yes and and where were you guys a year ago uh a year ago we were just about 50k mrr okay so kind of three x year over year obviously small numbers but still something you should brag about right yeah and as most of that growth coming from expanding old customers getting them to pay you more or landing new customers all together we actually landed new customers um so it's all about organic growth so founders we sold the product and then so what is uh uh what is kind of expansion revenue year over year just ignore new customer editions just how much you expand old cohorts by 30 30ish yeah it's back in the napkin by the way very few people actually measure this hard quartz usually back in the napkin but if you generally think you take someone from a 24 000 acv right up to a 30 000 ac so 2 grand a month up to three or four grand a month yeah you got about 30 you know 30 30 40 percent expansion all right and what about churn why don't you fill that out for us what's your revenue churn on that same cohort annually so right now uh with order dealerships we don't have any chip and initially when we first started we did try with like fitness company or a real estate company but those are the ones that we couldn't build ai models i know we wanted to focus on auto so we from the order perspective we don't have any children okay but if you look at your entire a year ago the entire customer base you had so include everyone i know some of them churned because they were customers you didn't want i'm asking you to quantify that so are we talking ten percent churn thirty percent churn or more uh even uh less than ten percent actually okay so ten percent turn on the court thirty percent expansion net revenue retention one twenty yeah exactly is that right yes see i love when there's two people because i can play you guys i can play you off each other i was looking at sri and then i was just like you know do we call it a churn when we strategically made a decision that we are not going to serve other verticals like real estate and fitness just because we are diluting ourselves and we are not providing any solid solutions well yeah it's churn but it's intentional right there's voluntary churn there's intentional churn right and then there's churn that you really didn't want to churn right they were the kind of right customer return so this happens all the time by the way when people move up market right they churn off a ton of lower paying customers as they go out market which is fine but the the trick is logo churn will be high but revenue churn should actually be very low because the the price points are so much higher where they're moving that's right yeah yeah that's great on our pricing model we are uh we're building more from the feedback that we got we actually building other modules uh products and expansion for them so our pricing point per month will also increase as well for going forward for new york customers that's good what's your guys's team size today oh we are 10 right now okay 10 and are you guys still burning capital investing in growth are you cash flow positive so we've been cash flow positive since november of last year okay what's this 1.9 million just sit in your bank or what exactly you guys go on family vacations you buy extra extra you know pina coladas because you got extra money we are looking to become investors all right so so in all seriousness you still have what one five in the bank something like that we have 1.9 that's great okay good so so profitable today now are you taking are we talking like 10 to the bottom line monthly 20 or break even uh we are thinking about 10 more like profit okay that's good that's good so 10 profit uh which is great um how are you driving growth so like when you look at adding new customers what's your guys's fully weighted cap to get a new customer paying two grand a month so today we've been doing opt-out right now so we just started doing outbound we got referrals from existing customers we do get that as well but now we're doing more...