Mapware Revenue & Funding (2024)

guys he called the email the thousand people at Comcast and said buy my drone mapping technology we can inspect your telephone lines faster than anyone else he got that contract on day one back in 2015 today he serves a lot of government agencies this is Air Force military Etc uh you know doing about three million bucks in Revenue today but highly concentrated looking to expand that to 9 million this year growing he's got 25 on the team to the 6 million series a back in 2019 in addition to a couple million bucks and convertible notes that transitioned over but again scaling nicely here team of 25 High Revenue per employee we'll see if he can triple this year hey folks my guest today is Joel Sullivan he's the founder and CEO of mapware he has previously at offer board which exited and has three little startups now at home he's homesteading a big flannel Aficionado and a Sick Beard game Joe you ready to take us to the top let's do it man all right so what what is what it you know drones are interesting right now you're seeing what's happening in Ukraine I don't know if there's a defense approach to anything you're building but walk us through what map Ware does yeah sure um so mapware is a software company what we do is we take photos and using a process called photogrammetry we transform them into a rich 3D maps right um so what we've uh what we've done is we've built that user workflow in parallel with a drone flight automation workflow to be able to rapidly capture data off of a commercial off-the-shelf drone and to be able to use that geospatial intelligence workflow rapidly in any context um it does have military applications and actually our largest customers tend to be the US U.S Air Force and Army Corps of Engineers those type of government customers are where we focus yeah that makes sense are you working with palantir at all we are not now yeah interesting yeah I watched a big interview that they did on how they're helping the ukrainians and a lot of it has to do with these drone operators Ukrainian drone operators in the middle of forest that go up they do reconnaissance they plot images they triangulate then they push a button they launch the missile and boom the Russians go uh and they seem to say that a lot of their a lot of what's enabling the ukrainians to stay on top of things is there this drone map this real-time sort of drone mapping sort of software um which is interesting but you're not yeah it's cool I mean well so we're oh you know we're open anyone can just go and and buy and so I don't know I see some traffic from Europe but we're also not yeah who knows all right walk to the business model what are customers paying on average per month or per year to use the technology yeah sure so it's a subscription model um so it's 199 a month for um for our software and uh then that's an annually recurring license that people can can grab onto um it's been it's been a bumpy road to be honest and with what's kind of unique about us is again we're finding that most of our traction is within the government space um and so we we wound up saying okay what's the what's the most that you can kind of put on a government credit card and then let's kind of price a package that matches that and now we have you know kind of government Personnel that will go and and swipe and transact that way so I took a lot of user Discovery to be able to realize this is where the product Market fit is and therefore we have to price and package accordingly in order to reach that market well but just you avoided my what's the average customer paying is it 200 per month or that per month per drone per head I know it's per month per user yeah so if one user could have 10 drones and and upload gigabytes and gigabytes of new new pictures but it's still just it's price per seat yeah exactly so it actually winds up being a pretty good deal for them um yeah yeah and so how do you are you typically signing up one person at one agency or are these you know whether it's government or anyone else buying agricultural companies are they buying you know 30 seats at once you know what's the average customer paying in terms of number of seats so it's a land and expand strategy and what we've seen within the the US um drone Marketplace is that it's mostly single owner operators so it's typically one guy buying one license um we're seeing that you know with within the government agencies we're getting like a thousand user orders or like several hundred users at a time which has been great but you know the commercial Market I feel like is still still feeling it around still still getting you know their hands on it oh what's going on there YouTube good to see you guys now imagine this you love watching these interviews with SAS Founders but imagine if we took all of the valuation data out from over 2807 interviews I've done manually saves you a lot of time well we've done this we've built the into the beautiful interface inside of founder path 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forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your valuation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform I hope to see you there all right let's jump back into the interview I mean if you've got one group coming and buying a thousand seats at 200 bucks a pop I mean that's a 200 000 a month contract am I doing that math right yes yeah I mean is that I mean don't obviously name the customer but do you have people paying 200 Grand a month like one entity that's a yes yeah I mean so yeah if you're driving and you can't read Joe's body language that's a yes so it's it's a little bit tricky right because I you know I can sort of talk about some of my contracts um and I can I can go into some details on like the use cases that we've been doing in environmental monitoring um so that maybe is a little bit easier to kind of get our arms around I mean look let's just say let's just let's just ignore the government for a second let's say there was an environmental company right that that had a thousand seats right at 200 sorry 200 bucks a seat per month I mean that's 2.4 million bucks of ARR I don't know how big you are but that feels like a ton of customer concentration risk how do you manage that yeah it's I mean it's an issue it's a real problem um and the way we do that is by being very Hands-On and focused in a direct um outbound kind of sales process right so I'm meeting with the customers we have these this very high touch sales process for that customer segment yeah and then at the same time we have this like super low touch automated SAS thing so it's been a weird growth trajectory to try to do both of those yep um and what we're what we're finding is like sometimes we'll actually get that traction from the inbound and then go wait a minute I need to do this as like more of an outbound higher touch sales process put this on a timeline for us when did you launch the business what year 2015. okay yeah and were you like and we've been hobbyist in the space or how does this tie to your story so we've been in um yeah we went through some pretty serious pivots um I've always been interested in you know I've kind of like had that startup itch and so in college I actually like started this notebook that I aspirationally titled 100 startups and I would just like write down my ideas as it was gone right and I'm now at like 750 ideas right and I'm sure you probably get this a lot like guys just like hey I got ideas I just write down ideas I have Apple notes things like that yep yeah yeah and so this one really took hold for me because I could see okay well the market for um Robotics and and drones in particular is going up it's clearly like there's tremendous demand for Automation and you could actually structure I I kept saying okay how can I structure an annually recurring contract that takes advantage of robotic Automation and um we pivoted through a bunch of different answers to that question it originally started as okay maybe I can do subscription crop dusting um and we looked at all the different ways that that could work then realized wait a minute trying to bang my head against two Regulatory Agencies would be a total nightmare um and um within the first year of our business we had kind of said okay we'll structure this more as like a solution get our arms around it and we um we started with kind of a fully integrated Disaster Response um package so um right out of the gates well Joey here we got to go faster because we only have five minutes left here so you Disaster Recovery 2015 and then you eventually pivot into space now just I guess maybe walk me through who your first customer was how did you get your first customer yeah um so our first major customer was Comcast and we got that customer by emailing a thousand employees at Comcast and then oh God I don't even remember it was something like you know drones are awesome and we could save you guys a ton of money online why would Comcast need drones so I had worked the numbers on what it takes for them to do an inspection of telephone lines and realize that drones could do it at like a tenth of the cost and we figured that out and we actually ran a prototype and we did it and it was awesome that's smart yeah yeah that makes a ton of sense okay so that's Comcast and fast forward today how many customers are you working with um so the bulk of our customers are concentrated in the US government like we basically have we basically this year made a decision to almost ignore the commercial Market in order to satisfy the government Market oh so you have like three or four it's like Comcast the U.S Air Force and one other one yeah it's like U.S Air Force and U.S army and maybe U.S Navy this year and that's good interesting so so you've totally turned off sort of a hobbyist market they've won one person from their home paying you 200 bucks a month for one seat you've sort of you're not you're not going out yeah that part of the business is kind of on autopilot and we're just saying hey look if you self sign up that's cool but how many there are curious I mean it's a small part of your business but how many are like single operators paying 200 bucks a month um I'd have to check the stats I'd say we're probably about off the cuff uh 5 000 users how many of those are we have a lot of free yeah small 30 40 something like okay okay so you found a niche you're a little scared that you're so concentrated but it also seems to be printing money for you so you're sort of okay with it how many folks are full-time on your team today we're at 25 25 okay and have you done all this bootstrapped or did you decide to raise money we raised a pretty significant amount of cash um so we've done about 10 million in equity and another 12 as like a line of credit okay when did you do the equity deal uh 2019. okay and was that all one 10 million series a in 2019 or was it split up I was also like some convertible notes that flipped and things like that okay but just the equity portion of the round that you did in 2019 was how much foreign it was 10 million that's what kind of what I'm saying okay so when the notes converted I'm not understanding if you had if you had raised pre joke the way convertible notes work if you raise previous convertible notes and they're converting into a round some people might include that conversion in the 10 million others would say the extra 4 million convertible notes go on top of the 10 million so I'm asking what the 10 million inclusive of historical convertible notes or not yes it was okay so that's why I was asking how much was new Equity raise not control notes of the 10 million in 2019 that's what I was curious about yeah sure um got it uh six million I want to say okay and looking back to my memory here we're going in I mean come on that's not something you forget uh I mean that that's a lot of dilution I assume you care about Equity right yeah I mean Joe do you care about do you care about keeping Equity obviously I assume there's a negotiation there on the 6 million to make sure you had as little decision as possible Right yep yep fair enough Looking Back Now would you change anything was that the right move for where you were at the time um I I think yes I would change some some things I'd probably want to have a more comprehensive plan and I think you know if I'm being honest we went kind of piecemeal convertible note but you know kind of just one step in front of in front of the next um and if I could do it all over again I probably would have said here's a comprehensive plan on how we would spend 10 million not here's something that gets me to next quarter so yeah yeah so yes there are lots of things I would have done differently yeah well guys a big lesson you can take from Joe is how we got Comcast on day one that's a big Enterprise account look Joe I'm sort of I'm sort of guessing do they do they only they don't assume they don't need one seat right they probably buy one seat for every geography or something well yeah and our pricing model was totally different there we were doing by a square mile at the time and so we basically said hey we'll map an entire city for you for like a quarter million dollars oh interesting and then they just said we want to buy all these GEOS and then boom you have the price yep exactly yep interesting well talk to me about growth where do you want to get by the end of 2023 yeah I mean I think we're on track to Triple in size um which is that's in terms of Revenue or head count or what uh Revenue yep so we're trying to keep head counts still really really lean yeah but you know we're talking about putting a Target up there of 9 million yeah I was gonna say I'm doing math 25 employees now at an average revenue per employee of 140 000 put you at about a 3 million run rate today you think you can break a 9 million one right by the end of the year that's based on our current deal pipeline yeah wow that's incredible I mean look Landon expands a powerful strategy especially when it's the US government and they can sort of print money that's a nice customer to have uh Joe is your it is if you're at a three million run rate today where were you exactly a year ago so we can calculate your historical run rate oh man uh yep 1.5 you're making me spill all the beans here Nathan I know man that's the name of that that's the name of that game brother um that's still Healthy Growth you didn't raise any new Equity last 12 months so that's all just expanding into current accounts correct yeah interesting how do you manage your Equity investors from 2019 you know I assume you have board meetings and they say Joe how do you grow faster you only double this year you should be doubling like way faster how do you manage that yeah I mean I've been very fortunate to have pretty chill investors that are like hey look we trust you and you know we understand the plan um but that also comes with needing regular Communications right so we put forth you know an annual budget we do a weekly status update we're doing uh quarterly check-ins on our fork and reforcasting and so all that kind of helps to to keep that level of trust High yeah who who what I mean what's the who buys you does the US government buy you how do you get how do you make money off I mean do IPO how do you make money off of this yeah what's the exit strategy um well I hate asking you it's tough you love what you're doing you don't want to exit right but like how do you how do you make money I found her I don't know man I it's a great question I think there's a very small number of uh investors who would like who would potentially buy this at the PE so okay within the government space there's maybe like 70 investors okay that are willing to take on this type of company so it's a pretty small pool all around and I think actually um you know a16z has been doing a lot around American dynamism that's really interesting and worth watching um but there's there's only a very small number of players here so you're either gonna jump the chasm into system integration and say okay you know the lockheeds of the worlds or the boeings need our need our product and they're going to bolt Us in or you know some drone manufacturer wants this as an at kind of value add add-on um or PE or IPO but you know it's not it's it's kind of a weird Niche yeah um yeah yeah I mean isn't there I mean aren't there a ton of companies that sell the governments that could see this as a way to increase RP across their accounts start up selling drone mapping software I mean palantir is a buyer I mean there's I imagine there's hundreds probably that sell to DOD right oh absolutely yeah and so part of our strategy for the coming years is like bolting our mapping software into drone systems and kind of doing a bundled sales strategy yeah if I was a hedge fund can I pay you to go put a drone above the McDonald's on the corner and tell me how many cars go in and out every month to try and predict McDonald's next earning call maybe that's that's a tough use case I think you'd be better off using satellite data interesting do you have any hedge fund clients today uh no interest have you pursued it or no you wanna don't don't want that market nah it's well so hedge funds are tricky right because if if you actually develop a truly unique signal they're gonna be super greedy and Gobble that up right so your Market is basically one hedge fund and then if you sell to all the hedge funds then there's no strategic advantage to the hedge funds no Alpha value goes way down yeah right so it's like how do you price a product with one customer it's worse than selling to the government yeah yeah yeah at least if you have four branches you can sell into at least right it's very cool Joe this is a hell of a story congrats let's wrap up here with the famous five number one your favorite book oh man uh off the cuff uh high output management number two is there a CEO you're following or studying um well I do love Andy Grove quite a bit so I'll put Andy Grove for that one yeah number three what's your favorite online tool for building mapware um [Music] lately chat GPT number four how many hours of sleep do you get every night um I am a steady eight hour kind of guy that's good and what's your situation married single kids married three kids busy guy how old are you so I am 36 36 last question something you wish you knew when you were 20. um Majors don't matter what doesn't majors like the school school major yeah yeah I think it's very fair guys he called the emailed a thousand people at Comcast and said buy my drone mapping technology we can inspect your telephone lines faster than anyone else he got that contract on day one back in 2015 today he serves a lot of government agencies this is Air Force military Etc uh you know doing about three million bucks in Revenue today but highly concentrated looking to expand that to 9 million this year growing he's got 25 on the team to the 6 million series a back in 2019 in addition to a couple million bucks in convertible nodes that transitioned over but again scaling nicely here team of 25 High Revenue per employee we'll see if he can triple this year Joe thanks for taking us to the top yeah pleasure talking to you Nathan take care one more thing before you go we have a brand new show every Thursday at 1pm 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 back-end dashboards their expenses their revenue our poo 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 p.m Central additionally remember these recorded founder interviews go live we release them here on YouTube every 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