Kiana Revenue & Valuation (2024)

hello everyone my guest today is nader fatih he's a serial entrepreneur and veteran of the big data in iot industry currently the ceo of kiana analytics a cloud-based company that helps brick and mortar businesses to strengthen on-site security and understand visitor behavior his last company was successfully acquired by siemens he's currently on the computer science advisory board of the university of southern california he's also board member of asia america multi multi-technology association and also an executive in residence at the plug-and-play tech center in silicon valley and alley by verizon in palo alto not are you ready to take us to the top yes sir okay so talk to us about kiana analytics what's the company doing and what's the revenue model how do you make money sure so kiana analytics is in the space we call iop internet of persons what we do is that we can basically identify devices and location and we use this technology to basically help brick and mortar to better understand their customer journey as well as use it for physical security uh the way we charge this is a sas model recurring revenue we charge per square footage per month okay and coverage is based off what a signal a satellite a physical installation of something no basically what we do is that we can detect all the wi-fi devices on let's say mobile phone or your laptop or whatnot we also do this with bluetooth and recently we announced uh that we are also working with verizon and 5g as you know 5g is the next generation cell signal and we are doing this for the first responders police firemen and so on and so forth to be able to help first responders to get to the victims quicker and be able to help them now how does it work though do you have a piece of hardware that scans all the wi-fi connections in a certain radio like how does it actually work no so basically what happens if you're walking let's say a cell phone and there's a wi-fi a chip in there and the phone is basically pinging the access point in the building what it does it's emitting signals so our customers they basically open a channel to the wi-fi access point in the building that data comes to our cloud the minimum set of data we look at is the time location and the device id which is called the mac id and based on that basically we can see the foot traffic in a physical location we can see dual time we can see new versus repeat the beauty of our solution is that we do not put any software on the device itself so you don't have to download an app or whatnot on the mobile phone it's just intercepting the signal when it pings the wi-fi access point is it software is there any hardware no hardware at all it's all software yes sas software right yeah okay just uh using uh multiple uh data centers so when you say you charge per square foot per month how do you measure the area you cover that's what i'm asking so basically let's take an office building an office building could be thirty thousand a square foot you know that's the size of the building so that's an area our customers want to cover so they basically pay us thirty thousand dollars at times uh you know whatever uh let's say 10 cents a square foot per month so that's their monthly charge of that area that they want okay i don't we don't have time to go on every customer court i'm sure you have a lot of them but on average what's the customer pay you per month or per year to utilize your technology so it really depends i mean we have uh for example we're working with a very large organization which has 400 sites across the globe we have a smaller place so it could be you know as low as you know tens of thousands a month it could be as high as 250 000 a year so it really depends on how large of a venue you want yeah now there again totally understand that i want to talk about the rest of your story but the pinpoint i'm going to point you a little bit harder on this so i mean is it fair to say be an average customer's going to pay you 10 grand a month is that a kind of a fair that's probably too large no the average customer could be somewhere between you know 5 000 to yeah five to six thousand a month yeah absolutely very good thanks for doing that put this on a timeline for me when'd you launch the company what year so we launched a company roughly about five years ago and we started by a big wi-fi company asked us to build this solution for them which one and we did it's actually the company is called fortinet which is a big wi-fi and a security company and since then we have expanded our solution to cover hp aruba cisco and other uh you know wi-fi manufacturers as well so was fortinet your first paying customer is like essentially a contract to build it for them and then you kept rights to resell the software other people well fortinet basically is a reseller of our product they're wide labeling our product has 40 presents and they still have been selling it and they have been our channel to get out to all the you know worldwide customers so give me an example of a buyer of this like is we work a buyer is that the average kind of buyer or someone like you know a buyer could be an airport actually if you look at an airport they have two major uh requirement number one of course for what they call proximity services they want to make sure you spend time at the airport they want to make sure you go to duty-free they want to make sure you go to the restaurants and so on so they really can think about it as a big mall but the other issue that airports have of course is security right they want to make sure the right place right people are at the right place and so on and so forth so in that case they're using both what we call kiana in gate which is really an engagement solution as well as kiana secure which is used for physical security so this is an example of an airport so your first what do you say your first 10 customers came from the fortinet uh kind of white label yes and how are you outing customers today what's the main growth channel so again a lot of it is done through channels such as fortinet we work with hp aruba as i mentioned they're introducing us to customer but in some cases we sell direct for example we have two projects with the us department on homeland security with their science and technology group which has to do with the airports and with the borders so in that case we actually sold that technology directly to the government interesting okay so you launched in 2014 you get your first 10 customers from fortnite how many customers right now serving today so we probably we are in 50 countries as i mentioned worldwide you know over i would say 200 plus customers with multiple sites across the globe okay fair enough and then have you decided to bootstrap the company or did you decide to take dilution and raise so we actually have raised money we have raised money from investors in silicon valley and uh that's that's and then we also have cash of course from the customers from the recurring revenue so that's how they so how much capital have you raised to date we raised roughly about three and a half million dollars so far into the company okay and we are raising more how much do you want to raise how much do you want to raise now what do you think the right amount we're raising about six to seven million dollars to really boost our sales and marketing organization and do you believe are you gonna do that on a kind of a priced equity round uh it is going to be a price equity round yes we already have a couple of leading investors that we're working with in this round correct well obviously you're still negotiating it but what what valuation would make you really really happy to raise that at so i mean at this level of the company we're looking for roughly about uh 20 to 25 million dollar pre uh that's what uh that's what the uh the plan is at this point yeah so you'll sell something between like 15 and 20 percent of the company got these quick cool yeah very good um okay and then um talking about kind of historical metrics right churn is really critical in a sas company especially if you're going to pour money on sales and marketing with this raise what's your churn look like today and how do you keep it low so the churn is pretty small i would say it's less than five percent and the way that's monthly or annually that's annual and revenue based or logo based uh this is a logo based and the way you do this is that you make this uh you know mission critical so the customers rely on this of course having good customer support is really important to make sure the customers are happy and they're getting the value on the dollar amount i mean you understand the big issue with sas is you don't sell it once you have to show value almost every month as you go forward yep what do you know that a new signup has to do in the first year to like definitely renew in the second year what are some of the activation metrics so basically uh well first of all one of the things that we start seeing is that customers are now signing multi-year contracts actually we start seeing a lot of three-year contracts from customers but usually what happens that we start with a 30-day trial showing the value again remember we are really in a data analytics business so i'm really asking what is the value so is it x number of installs and tracking x number of wi-fi pings per week like what's the actual activation metric so the customer is really looking to see how many people are in the physical location and are they going to the right places that they want to and that is very important having that real time visibility you know they call it you know we are turning uh invisible to visible and being able to see this in real time that's what's really important to them and they wanted to see day after day right that's the big bad and for someone to pay you five thousand dollars though per month about how many like foot traffic per per day would you would you need to be tracking for it to give them real value so it really depends i mean we're working with a very large mall that they are seeing you know close to uh 60 to 80 000 visitors per day right so that's one example but we're also working with a pharmaceutical company which they are very concerned to see make sure the wrong people don't you know end up in their factories right so in that case they're not really looking for the numbers but they're securing sure that people exact security and geofencing right make sure the right people are in the right place and yeah nobody from outside getting there for the cohort of customers you signed up one year ago so five percent of the revenue were churn how much do you upsell them what percent do you upsell them uh i would say you know so we started with where kiana engaged which was really the commercial proximity services product and then we have gone and now selling kiana secure which is on top of that right so i will say today we probably about 10 to 15 percent of our customers are being upselled we hope to do more of that going forward especially now that not only wi-fi will be also covering bluetooth as well as 5g down the road okay so when you just look at revenue right annual revenue from the court a year ago five percent of the revenue churned 15 percent of it expanded so net revenue retention is at 110 that is correct from the existing customers i'm only talking about existing yeah yeah very good and then talking about team size how many people so we are about 20 people uh half of the companies here in silicon valley the other half is in germany outside of berlin the reason for that is as you mentioned in my intro we were able to exit our last company to siemens and we were able to hire some of those key people back to help us with the data analytics machine learning and ai work that we are doing um i imagine you're driving growth which means you're burning capital how aggressive are you being are we talking 100 grand a month or more in terms of burn yeah it's about 100 grand is what the burn is today at the moment correct right and remember we are covering worldwide and so on economics around burn relative to your fundraiser working on i always like to understand how much buffer you ceos have built in for themselves so how much runway do you have left in the bank to give yourself enough time to do the raise oh yeah i mean you know in our case we have about nine months plus uh you know revenue again we have some large contracts also coming in so yeah that's not an issue there okay so nine months of runway and you're burning 100k i mean that means you're saying you got about 800 grand in the bank right now i think that's that's correct yes okay the other thing i want to touch on which is very important is that we also have built a very nice patent portfolio some of the which have been granted by the way by the u.s patent have you defended them they're francis uh we haven't defended them but again the patents have been issued and i think one of the reasons customer to us because of those are some of the key differentiations we have versus some of them come on there we know patents are worthless until you defend them right then you know they're really worth something oh yeah well what we are doing is pretty unique nobody has been able to do actually what we are doing in those cases there and let me just talk about this number one is that we see all connected and detected devices it means if you have a device which is on without you logging in we can see all those devices and then the second thing that we do is to fuse this data with cameras uh let me quickly talk about this if there is an armed robbery and the bad guys are wearing a mask your facial recognition is useless but what we do is that we take the picture from cameras and fuse that with the device ids that we see right so we can go back in time and say oh do we have a picture of anybody with the same device although he's not wearing a mask at that time and that's some of the unique differentiation that we have and that's assuming he doesn't have a stolen cell phone or anything like that exactly right if he doesn't have a phone or the phone is off or somebody else's phone that is correct and assuming you happen to have coverage in that other spot like the airport or something where he or she was yeah i mean most of our coverage are per sides like for example uh we had an example in a mall where the bad guy shows up with the mask and they went they stole some uh good material they had there but they were also there last week at the same mall without the mass you know checking out the place right so in that case we were able to identify who they were that's very cool um how many unique um kind of ids are in your system at this point are we talking hundreds of millions in the 495 millions we have seen so far and now those are individual humans because maybe there's two devices on average per person right two devices some of them could be equipment remember your printer also has a device id right so yes so one of the actually provisional patents that we are working on right now is how do we associate multiple uh devices to the same person right for example my headset and my laptop and my phone maybe traveling together right so how do you know all those three belong to one person yeah yeah interesting okay very good and then um talk to you about how you're getting new customers so for five thousand dollars a month or are you willing to spend kind of full first year acv to get the customer in terms of cac sure so we get customers three different ways today so number one is that of course social media like what we're doing today really helps because a lot of people don't know this technology exists that's number one uh the second one are channel remember we have three channels that we're working on the hardware manufacturers the people who build wi-fi and cameras they want to make those smarter so they resell our product we also have system integrators which are interested in our product and the last one of these is uh carriers you know i mentioned you know the work we are doing with verizon and others so those are channels that we use and in some cases you know we attend events we were just at iot ward and so on and so forth so that's how people learn about air you're about to raise and you're you want to double down on sales and marketing you have a built out pro formas around cac because that's how you come up with sales person like onboarding time their quota attainment their ote's et cetera so what do you assume it costs you fully weighted to get a new sixty thousand dollar a year customer um i would say it's going to take us you know probably half of that initially so you know twenty to thirty thousand to really get the six month payback period something like that that is correct okay that's great again this is a b2b you know enterprise sales so it's not you know it's not an app that people just download right so yeah sales cycles could be long and then last thing here fix my numbers here i think they're wrong you said earlier you have about 200 customers you said average was about five grand a month but i think this is too high when i multiply those together that would put you at a million dollars a month which of those numbers is too high the average or the customer count well again as i mentioned the customers you know they are all over the map we have customers who have you know very small location we have customers well yeah but nader that's what average means right right so is the average of five thousand probably too high probably too high okay got it got it good point no it's okay it's okay that happens all the time by the way because see you're probably focused more on your enterprise deals that's why that's what comes to mind i guess so so let me ask you a question i mean what's the next big revenue target for this year uh okay so we're doing two two major things this year number one is that as i mentioned we're getting a lot of interest from airports worldwide both in asia as well as u.s and north america and that is a big interest for us and then the other one the work that we're doing with the dhs we want to be able to take that and actually apply it to the corporate campuses as well so those are good sorry what's the big revenue target for this in other words if you break 2 million in aor by the end of this year you're going to be really happy what's like the stretch goal target for this year 3 million is what we are talking okay and what are you at right now um you know we are we are we are halfway there okay so you're at about 1.5 million run rate right now is it realistic to think you can double over the next six months yes i mean we have a whole bunch of uh interesting work which is now converting into contracts correct okay got it so 1.5 million in terms of run rate right now would mean you're doing something more like 130 000 per month right so across 200 customers that means the average is more like 600 per month i just want to make sure that that is actually those numbers i'll check out that's a way lower acv than five grand a month it's it's it's it's lower than we we think we have but yeah you know based on your math looks correct and then where in terms of historical growth rate so if you're doing call at 1.5 million in error today where were you exactly a year ago do you remember so so basically you know our plan has to be three three and two two that's really what we want to do right so you tripled over the past 12 months that's correct so you're doing about forty thousand dollars a month about a year ago that is correct that's healthy yeah and we expect the following year to to do the same and then you know eventually flats on right you go 2x and 2x after that that's very good of course good stuff let's wrap up with the famous five number one what's your favorite business book uh favorite book is actually um the book that uh horowitz wrote which is the hard thing about hard things hard things about hard things ben ben number two is there a ceo you're following or studying well definitely you know i have looked at steve jobs i like uh you know uh ellen mosk and of course the key ceos in silicon valley number three what's your favorite online tool for building your company i love linkedin linkedin is great it's really you know helps to get to the right people understand who the customers are and i found it to be very powerful much more than other social number four how many hours of sleep to get every night uh i get actually a good seven to eight hours a night that's very important and what's your situation married single kiddos i am married two kids one at apple one at google oh how fun and how old are you i'm i'm sorry how old are you i am 59 59 last question what do you wish your 20 year old self knew um i would have started the company much earlier i would be an entrepreneur much earlier than when i started when i was in my 40s guys kiana helping making all those wi-fi devices you connect with the airports more valuable by helping the airport airports understand location-based data based off wi-fi pings they have over 200 customers with some of them with many many locations they're doing about 1.5 million bucks in aor right now hoping to double over the next six months they tripled over the past 12 months from 40 000 a month just a year ago they're burning about a hundred thousand dollars a month right now do i raise about 3.5 million dollars team of 20 annual revenue turn about five percent expansion 15 for net revenue retention of 110 spending 30 grand to get a new 60 000 customer so call it again quick payback period there they're hoping to raise about six million right now on call of 20 to 25 million dollar pre-money evaluation now there we're rooting for you man thanks for taking us to the top thank you so much really appreciate