How Hover, Inc CEO A.J. Altman grew Hover, Inc to $9.6M revenue and 10K customers in 2019.

hello everyone my guest today is aj altman he's the founder and ceo of hover a mobile app that is transforming home ownership by creating 3d home models from smartphone photos prior to founding the company he was an engineer at intel corporation and served as an infantry officer in the united states marine corps aj are you ready to take us to the top hi nathan yes all right great thanks for the time you bet all right so tell us about this company hover what's the first off what do you guys do and then what's your revenue model is it a pure play sas company uh yes so not not quite uh what we do you know in the boring way of saying is we generate generate property data um i think that the interesting way of saying it and what's truly unique about it there are two things um one you know in a simple way you pull out a smartphone with our app and you take a few photos of your home or any building object and within about an hour you have a complete structured 3d data set of of that building on your phone or in the cloud so cool technology we use computer vision and deep learning to do that to turn grids of 2d pixels into structured 3d why is that interesting well because effectively what it does is it unlocks the 100 to 200 billion dollar exterior property services business that no one's ever been able to sell online right it effectively allows us to create ways to sell products that go on buildings online for the first time ever you're talking whether it's shingles or typically or vinyl that's right yeah any exterior property service or product so when you think products yes it'd be siding roofing paint windows um gutters shutters um etc etc right um when you think services well the biggest service that goes effectively on a property is is your insurance policy right so similarly if you want to scope the work that goes into applying a policy to a specific home you need a bunch of data about it and that's what we generate so how do we get paid that was your second question we get paid transactionally today we effectively every time we generate that data set that data package for our professional customer someone who's working on a building or selling a service or product to that building they pay us some flat fee of um typically in the vicinity of forty or fifty dollars walk me through who that actual customer is is it the homeowner or home depot trying to sell paint like who is it actually yeah today it's it's not so much the homeowner we do have a small number of diy homeowners that that that segment is growing rapidly but the lion's share of our customer base and nearly all of our paying customers are our contractors they're people who are selling those products on and hence the service of labor onto that home for the homeowner at the kitchen table so you sit down as a homeowner and you're buying a new exterior project and a contractor who uses hover will open up their laptop and show you a 3d model of your home that we generated they'll spin it around they'll work through the design interactively with you on the laptop in front of you and put those new products on your home and show you what it would look like and then quickly get to a quote that's based upon the measurement data that we generate so each time that that that that home that contractor let's say you know a painter right is doing that scan they're paying essentially 40 bucks to you each time that's correct interesting um how do you plan in terms of your own expenses related to team or you know the next dev cycle when these are these are kind of a per scan basis or are they pretty predictable they do grow over time and you can count on them yes they're actually shockingly predictable this is a giant market we've touched a small percentage of it but we not only have customers who when they join us they never leave nearly anyone who joins our product and starts to generate this data on a you know once they've done it two or three times they are not leaving this product but aj sorry what does that mean what does that mean never leave they use it once they pay to use it once so what do you how do you measure never leave they they never return to a tape measure right they never stop using our solution in their sales cycle and so you can look at the predictability of our solution in the context of the exterior the exterior home improvement segment and if there are a couple of hundred thousand contracting companies in america and we start to convert them and using our platform every day at the kitchen table they not only don't leave our platform and go back to a tape measure and doing it by hand but they they continue to grow their usage into their total book of business right so they start by using this as a one-off they try us on one property and then they realize it really helps them with their measurements and then pretty quickly they realize oh wow homeowners actually are more likely to buy from me if they if i use this presentation and use this 3d model in front of them and then before you know it they're using us on every single lead that they run and can you give me a sense today in terms of maybe volume you're working with so you know in a given month maybe last month how many total scans are you processing yeah so we're not public about either the the number of transactions or or the revenue um i can tell you we've grown 4x year over year over year but i we haven't exposed actual uh actual numbers there i can tell you how many um how many roughly how many estimates happen across north america every year for these types of projects it's between 20 and 30 million uh that you said that's per year just north america that's correct okay for exterior projects only okay great uh put this on a timeline for me when'd you launch the company what year we launched the company in march of 2011 but we launched this product it took us almost three and a half years to get this product in the market so we launched this product at the end of 2015 so we've had now three full seasons of the product in the market 16 17 and 18. how did you fund yourself for the first three years when you were developing our first four years uh well actually the first product we sold was we sold to dod department of defense um i don't know if you saw my well you did you mentioned it earlier so i i had a brief hiatus from being a software guy um in the marine corps as an infantry officer and uh when i returned from that experience back to the bay here um told everyone i knew i was curious to join a small team or join someone trying to build a new product and be a part of that and met a couple of engineers that introduced me to photogram tree or i guess what you call state of the art 3d reconstruction at the time and um that was the first space that was evident to me you know it was evident to me that this would be a very powerful solution for folks trying to get a sense of a place remotely um before they're about to you know to enter a dangerous situation so we bootstrapped the company off of revenues through that first product as well as of course um and that was just to be clear it was a dod control event it was a number of dod contracts um yes deals we did um selling software to help help uh the us government um in in in tough places just to be to try and really make this ring home for my audience this might be obviously it's very dangerous to go up to the zombie line compound but if they had images of it it makes it easier to recreate what that might look like for seal training or things like that certainly uh you know what we generate today is a scale accurate digital version of that physical building in the real world so you can imagine how that's useful for contractors but of course it's it's useful for people dealing with buildings and other scenarios as well sure yeah so you've raised obviously additional capital since then what's total capital into the company today uh again we haven't just lost the total amount raised um we we closed our series b last december um you can see that publicly it's a 25 million dollar round led by gv yeah uh what do you mean you don't don't disclose that i mean most of you have to file the sec publicly it says you raise about 42 million dollars is that accurate uh it's it's not too far off but it's not accurate okay what um how would you be able to raise where you don't have to do things to file with the sec and make that public yeah i mean look you can look online and see what uh various third parties will say we we've raised but yeah i can just tell you you know you can see that last round was a series b of 25 million yeah no no the re look the reason i'm asking you i mean these are these are not third parties these are government forms that you file i'm just if you've if you found a way to be able to raise capital without having to disclose it via the government forms that's valuable for my audience so is there something you're doing that allows you to bring additional capital without reporting it certainly not okay got it you want to make sure there wasn't something so why would that number not be accurate if we're just adding up the government forms i i i guess i'd have to look at the forms that you're adding up but um what's the numbers so i understood i i guess i can't speak...