Indico Revenue, Valuation & Funding (2024)

hey folks my guest today is slater victroff he's the founder and cto of indigo data solutions an enterprise ai solution for unstructured content with an emphasis on text in nlp he's been building machine learning solutions for startups governments and fortune 100 companies for the past five years and as a frequent speaker at ai conferences slate are you ready to take to the top i'm absolutely ready for it nathan all right so just be clear is indico a sas player it's an agency model you're doing consulting work no no uh so we're we're managed service right so it's a product company uh but not uh hosted as a sas company i see what you're saying so are there sort of folks that use you over and over every month or is that they come in one time you help them and then they leave so uh they buy a product that allows them to drive their own automation right so it's all you know it's 100 error you know they're buying a product right uh you know will usually help get them trained on the product uh but from that point forward right they're basically automating new processes uh and they're kind of getting more and more value out of the product as time goes on but then you know also uh generally upselling and buying new modules and things like that yep that makes a lot of sense so there's a there's a recurring component then you're upselling modules as needed but there's a long-term relationship there yeah yeah exactly okay so tell us what it does tell us absolutely is there a customer is there a customer story you can share and actually use their name or no 100 yes there is uh so we've got one one customer that is a huge of ours uh metlife um and they they did a case study publicly with us pretty recently um and they actually managed to use indico to save over 11 000 hours of effort in uh you know end to end it was about four weeks of time uh a couple of folks to save 11 000 hours and you know at the very highest levels what indico does is we work on document-based automation solutions right so if you've got a document-based process of your enterprise and you need to scale it that's where you plug into code the way our model is very very different than a lot of folks kind of like you said a lot of people in our space they do have this sort of agency model which is you know you want to process invoices pay us a you know 10 million dollars we'll build an invoice box we'll give you the voice box uh we work really really differently we give you a platform that lets your subject matter experts build the invoice box themselves in two weeks right but then the real power of that is instead of just stopping in invoices because organizations you know you don't have one unstructured use case you know you've got hundreds of different kinds of documents you know loan applications right all throughout your business um so it's a really really scalable model that fundamentally empowers for these non-technical subject matter experts to use this very you know kind of complex ai technology uh to productively make make their lives better uh at the end of the day and is that the primary use case or like fintech companies doing loans at scale or documents flowing through docusign you can manage and organize yeah you know it's you know it's uh i'll say it's less than content management right so less on the docusign more you know what are the 200 data points we need to pull out of this loan application for our process right uh yeah you know bfsi is a huge huge focus of ours so you know i mentioned uh metlife but also putnam uh they're they're another customer of ours that's that's boston local um but but it is also broad you know you think any company of sufficient scale they start to have these bfsi use cases internally so cushman wakefield they're another really big uh customer of ours right on the property side um and we actually have another customer that we are processing over 50 million mortgage titles indeed documents for all 3 000 counties across the united states is that your critical usage metric number of documents processed per month that's a really really key one you know there is a trade-off in volume and complexity so you know higher complexity documents you know the numbers don't have to be as high we really focus on time on task time saved right that that's really kind of the roi yeah what is i mean do you have the number for the total number of documents processed for under code last month uh so because we're not sas uh i can't report on all of our customers in aggregate what i will say is our largest customer in terms of raw uh uh volume right is processing a billion items a year with us um item is a contract uh it's not a contract in this case but you know it's a document okay interesting super interesting okay this is great now i think people folks understand sort of where you're playing the space you're in help us understand sort of smb mid-market enterprise what's the average customer paying you like i don't know per month per year totally so we're very enterprise focused right so you know stepping for the the product is you know on the lower six-figure range right annual contract um you know there are there are some some steps there as well we have some spread amongst our customers so i would say it really starts about there and then you know our very kind of highest customers right get into seven figure contract you know three to five year kind of structures yeah yeah no that that that's obviously sort of a healthy spread you sort of see power laws in your revenue because of that when you are sending a multi-year deal do you give up your ability to drive expansion revenue if they fall more in them with the product or are there natural accelerators in your two year three year four yeah so we we've got natural accelerators we tend to do it in a really usage based way so everything for us right now is based around c so the idea is the more you use indico um you know the more the more people are going to be using the product the more procedure you're automating right the more value you're getting and then you will you will kind of uh you know increase more so the main leverage for us really are are the volume of documents processing right obviously that's important that's really tight to compute right the number of people you've got plugged into the process right you also imagine you know these are happening in a kind of complex enterprise so we also have a really big developer focus as you kind of plug these into your other processes give me now that we get the product and sort of the customers uh help me understand like day one when did you guys launch total i mean i i so this is um this is actually the second time i've been on this podcast um so we did the first what i'll call indico v1 was back in 2014. um and actually you know if folks go back and and look at the level you said you said 20 you said 2014 2014. yep why do i have 20 i thought last time came on which by the way was back in 2017. so that was almost 2100 episodes ago in terms of what we were recording i love that i thought you said 2011 but i could have been wrong no so that's when i got into the space personally right but indico was founded in in 2014. i see yeah okay so indica was founded in 2014 and i'd call that indico v1 which was that developer focus piece you know uh as in in that kind of because you know we were really trying to get to a million revenue right we couldn't quite do it the developer focus go to market was not working out for us that gave birth to indico v2 which sort of came about very very soon after after conversation so we brought in tom wilde as a ceo right i shifted over to the cto role and that really was the start of our enterprise market right so really really shifting saying instead of being the api really going to make this product that is accessible to the user right um and so that that kind of initially launched we got a gartner cool vendor in 2019 right and you know we've had a really really nice success i would say 2020 really was uh the year that let us know we were on a rocket ship which i think last time making on the show in 2017 you were flirting with this 50 grand a month in revenue did you break a million in arrow the year after that in 27 2018 uh so no we did not that year right so actually it stayed about flat at that level right so and that was a lot of the reason that we had to do the shift right is that you know we had we had some customers that really really loved us but it was just not a big enough market so we were you know pretty much flat you know some wins some misses some ups and downs right pretty much flat um until we got this next product out right and then and that's why i really say you know you know we certainly had progress through 2019 you know as we're doing the product launch that's really why i say 2020 was the year that like redefined our business got it so that's when you broke that million dollar threshold yeah exactly and you know like a lot of really really awesome metrics you know we grew bookings by 10x you know we quadrupled our arr right you know just really really nice uh improvements across the board that's great so so and you had 20 customers back in 2017 how many customers are you serving now today so it's a very different um mix of customers yeah right so it's actually it's probably about the same number right but back then when i said 20 customers i meant 20 you know developers right now you know one of our customers might have you know 50 100 users on it right but you know we're talking uh about 20 you know large enterprises yeah your ac you told me back then three years four years ago was about 30 000. now it's 120 000. right exactly it's actually it's it's creeping a bit north of that even you know it's above 120 but but yeah exactly you know so so the business is changed so it's kind of funny the the number of customers um i guess if you count business units the number is probably higher than that but in terms of like larger price it hasn't changed that much and if we take those 20 customers times that 100 grand 120 grand ac i mean what that you guys are 2.4 2.5 run rate right now you know like i said the uh the acv is maybe a little bit higher than than 120 but but you're in the ballpark you know and you guys break five in arr by the end of this year run right uh so you know when we think about uh about uh growth right so we got the series be uh december of last year right and so the target that was a 22 million series b okay yep and our goal with that right that's a lot of money slater you are on the vc path baby that's a lot of money totally i mean look uh we wouldn't have done it if it weren't for the traction we saw right you know i kind of threw out the numbers right you you've got your own numbers i you know i'm not going to tell you exactly where the financials are of this day right but you know i can help get you in approximately you're i would say i'm being conservative i always argue you're probably slightly larger than the perfect project exactly so and then so our goal really you know a serious c company we want to be around 10 million in arr right to really get that metric right and our timing on that is you know 18 to 24 months you know after that that last december right and you know i'll say we're very very optimistic about about hitting that right and you know you we're not gonna get to uh you know that that ballpark that 10 million error right in you know call it mid to late uh 2022 right without getting to a certain place at the end of this year yep yep no that all makes good sense um talk to me a little bit about capital history here because it's sort of funky right i mean you raised three million yeah it's 2014 and then like a million in 2016 then like 700 grand in 2017 sort of over this is again early days where you're trying to figure out what the model is look look this is this is the indico v1 v2 right you can see it immediately in the capital history right so you know we had a really strong technology you know in that first three million dollar seed round right you know like strong strong entry right really nice response from customers and then sort of over the course the next couple of years we sort of realized okay we can't quite get this business model figured out right and you know so that's that's sort of where that 1.2 that bridge came in we're like all right you know maybe we can you know just finagle this a little bit and we're just not executing well enough then we sort of came to the realization no actually we're executing fine that's not the problem the problem is that this business model fundamentally you know we need to shift that to the enterprise and then when tom came in that was when we did the the next raise right which was another four right um and then uh actually then we had probably the easiest raise in the world after that so literally we were kind of looking like uh you know do we want to go out and raise a full uh because at that point it would have been like a full a and we just had so much stuff to do and you know this was 20 20 so you know like the the dynamics that were kind of scrolling around so we just took a smaller inside round so we did uh um you know approximately another another four then and then and then again we sort of hit these metrics and they're like wow you know this is really a rocket ship and then we went out for the series b almost so we sort of skipped a step in going for the series b um but you know we we've kind of had a long history so you know we've really got that uh experience packing this up so just pick up in 2018 you did the four million dollar round and then the next round was the 2020 four million another one yes yeah that's correct i see so about 35 million total raise today yep yep okay cool and look i mean when i look at the cap structure and i look at like some of the things you've described you you have a new ceo you came in which by the way that's a whole discussion right on how we can have a whole episode on that but how are you managing your personal dilution i mean you're doing what you love you're working with developers but you also want to make sure you still some equity left at the end i mean are you diluted like crazy i mean look anyone who gets to a company of this size is going to be diluted right i mean i've got you know honestly i've got enough equity for me right it's always hard to say right you know exactly what metric i should be using um what do you think most about your stage are like do you think you know it's a win for them if they still have 20 equity i think most founders at this stage aren't at the company anymore um is my honest answer right and and so i will say that you know of the founders that get to you know a successful series it also it really really uh i think if it lessens me personally and more what do the founders own in advocate right because you know it also just varies a lot how many founders do are there we've got three founders okay got it yeah yeah yeah uh so yeah so i i won't tell you exactly what percentage i own right my fundamental view is that as a first-time founder um you're going to get diluted as you go through the rounds right you should expect to get diluted you know call it 30 you know with each round you know there will be variation there but really my goal is to make this company as successful as possible and make the pie bigger for everyone right and yes you know i always do do the math okay you know assuming indico gets you know kind of a part of this you know am i going to make enough money but frankly if you're making the company big enough you know you should be growing your value at least 30 round over round so really i look more like is my my chunk of highs of worth more or is it worth less so i don't even know honestly what the exact percentage is um i just know like in an exit scenario i'm going to be fine yeah yeah yeah so is that how you thought about the 22 million you sold about 30 of the business uh it's it's it's super complicated honestly in a series b right and so i don't want to introduce it to just like oh you know we sold xxx trunk of the business because you know there's the option pool and all that right but you know i'm sure in like in net dilution you know somewhere around that yeah yeah well the reason being is what i'm trying to go is okay you know they launched in 2014 15 16 17. they sort of had to pivot a couple times you know revenue was around two ish two and a half ish million maybe a little north of that when you did this round so i can sort of back into evaluation multiple that you were seeing during covet i see yep right yes like crazy right so it sounds like a 40 40 to 50ish pre and something much higher than obviously with the 22 million added post and you saw about around 30 all in yeah yeah so again you know i'm not gonna confirm any specific numbers but yeah you're in the right ballpark yeah you know i think you're thinking about the numbers uh about the right way how do you go from 3 million to 10 million by mid 2022 to set yourself up for a good series c right so a huge part of it is actually our customers have been been giving us such incredible feedback right so a large part of that is upsell driven we've got a really really successful partner program we announced with cognizant and we're also with the major rpa vendors so uipath automation anywhere blue prism we've got offerings in all of their their areas right but really what we see is our main gap is awareness you know we're all engineers and so the problem is that our tech is really really good our customers love it you know they want more they want more and people haven't really heard of us frank how many years later on the team uh we could debate about exactly what the definition of an engineer is but i'll call it 30. yeah and how many are on the total team everybody uh fdes yeah um so sorry accepted or working because we're growing very fast however you define it all right we're rounding the corner on 60. okay got it got it yeah and it sounds like hiring fast you have to deploy this 22 million drive growth yeah and you know we we've just got a lot to get done right so you know we've just scaled up our sales and marketing team you know honestly all of those numbers you were talking about right until you know three months ago we did not have a sales team right it was me and tom and we drove all of that right um that's not totally fair we do have like mike borum is absolutely incredible right but from like a sales leadership team like there were there was pretty much how many quota carrying reps today today we've got three quotations and who's the person sort of deciding okay the year one ramp period for that first quota carrying rep is actually we just issued this quota by this date etc so we just hired a really really awesome head of sales mike minelli um so he he's someone that we grab from automation anywhere right i mean he was in charge by cuba so we actually this is what i'm so happy about we actually just did the round of our competitors frankly right is we've got a lot of competitors in our space they're selling a lot of stuff that doesn't work uh folks have seen our stuff they see that it works and so you know we just basically went around to every single one of our major competitors we're like you know that sales rep they've got a great book of business right i want them uh and you know again they saw the technology and they're like oh my goodness you know i've been trying to sell something that does this but like actually worked for so long so i'm i've got a lot of i'm very optimistic about the website that's churn's critical in any sas company how do you think about it uh so uh sorry employee turner customer churn sorry customer return rev revenue chart from festival so yeah sorry so so we again we we really look at net revenue retention right so i think that yes you know churn is really important you never want to lose a customer like it always hurts but i think just as importantly there's so many things that you've got on your your docket right so for us sometimes we have to say hey you know yeah that customer you know if we if we you know bend over backwards we'll probably save them it's not worth it we've got better stuff to do right like we would much rather let them go than the way we think about it and why we really focus on net revenue look we've got this customer you know they've got a much larger asp they're really using us like crazy you know let's take the time we take making this customer is not a great fit happy really put it into the rest of our customers make every every one of them sort of a screaming reference and then you end up making it up in themselves anyway because again they're using it more they're seeing more value so how high above excuse me 100 is your net dollar retention today uh so it's it's tough for me to give you like a specific number today just because you like track it in cohorts right so we don't have one universal number what i will say is like our you know high performing target there right and what we've got you know good historic evidence that we can hit is sort of this uh 125 like net on a 12 months uh which because we're growing so fast comes out to about like 10 rolling 12 months yeah if you catch that distinction yep that makes sense yeah 125 net so what that means is like obviously keep the gross turn low get the expansion high and hopefully the difference between those two numbers is about 25 exactly right and that that's what we're hoping right and again we think of it in cohorts just like you know if we close you in q4 we're not going to try to you know slap you with a 50 upsell you know a month later right yeah now that all makes good sense let's wrap up later with famous five number one favorite business book um or bookings of happiness by bertrand russell it doesn't sound like a business book but it is all right number two is there a ceo you're following or studying tom michael all right number three what's your favorite online tool for building the company calendly um every single time someone clicks a calendly link i save 30 minutes a time number four how many hours of sleep do you get every night uh six on the weekdays seven on the weekends right and what's your situation married single kids i am married and in a new house very exciting okay and how are you i'm 29 as of five days ago nice happy late birthday man thank you all right take us home here what's something you wish you knew nine years ago when you were 20. you are not when i was 20 i thought being an entrepreneur was a euphemism for being unemployed uh and so i would tell him you're going to be an entrepreneur and it's so much harder than you think it's going to be guys there you have it indico it's harder than a harder than you think it'll be and look it's going for experience 2014 launched the business pivoted for a couple years still around about a 600k run rate and even in 2018 then things started to change new ceo different product line more enterprise customers today north of 2.5 million bucks in arr they raised 35 million bucks total altogether serving about 20 enterprise accounts helping them understand how to not just manage their documents pull critical pieces of data out so they can scale their businesses up team size 60 today 30 folks on the engineering team we'll see what happens next later thanks for taking us to the top thanks for taking me one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares backend 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 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2pm central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathan laca.com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive i am on these shows but i do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya