How Kiana CEO Nader Fathi grew Kiana to $5.2M revenue and 200 customers in 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...