Mapware Revenue & Funding (2024)

[00:00] Guys, he cold 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 the air force, military, etcetera, You know, doing about $3,000,000 in revenue today, but highly concentrated. Looking to expand that to 9,000,000 this year, growing. He's got 25 on the team to the 6,000,000 [00:21] series a back in 2019 in addition to a couple million bucks in 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 Joe Sullivan. He's the founder and CEO of mapware. He is 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. [00:46] Joe, you ready to take us to the top? [00:49] >> Let's do it, man. [00:50] Alright. So what what is what is you know, drones are interesting right now. You're seeing what's happening in Ukraine. I don't know if if there's a defense approach to anything you're building, but walk us through what mapware does. [01:01] >> Yeah. Sure. So mapware is a software company. What we do is we take photos and using a process called photogrammetry, we transform them into rich three d maps. Right? So what we've 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. It does [01:36] >> have military applications, and, actually, our largest customers tend to be, the US US Air Force and Army Corps of Engineers. Those type of, government customers are where we focus. [01:49] Yeah. That makes sense. Are you working with Palantir at all? [01:52] >> We are not. No. [01:53] Yeah. Interesting. [01:55] 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. They go up. They do reconnaissance. They plot images. They triangulate, and they push a button. They launch the missile, and boom, the Russians go. And they seem to say that a lot of their a lot of what's enabling the Ukrainians to stay on [02:15] top of things is their this drone map this real time sort of drone mapping sort of software, which is interesting. Mhmm. [02:23] >> But you're not selling It's cool. I mean well, so we're ope 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? [02:36] Walk us through the business model. What are customers paying on average per month or per year to use the technology? [02:42] >> Yeah. Sure. So it's a subscription model. So it's $199 a month for for our software, and then that's an annually recurring license that people can can grab on to. It's been it's been a bumpy road, to be honest, and with what's kinda unique about us is, again, we're finding that most of our traction is within the government space. And so we we wound up saying, okay, what's the what's the most that you can kinda put on [03:12] >> a government credit card? And then let's kinda price a package that matches that. And now we have, you know, kinda government personnel that will go and and swipe and transact that way. So, it 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 to reach that market. [03:34] Well, but just so you avoid my what's the average customer paying? Is it $200 per month, or is that per month per drone per head? [03:42] >> No. It's per month per user. Yeah. [03:44] So it's that user could have 10 drones and and and upload gigabytes and gigabytes of new new pictures, but it's still just it's price per seat. [03:53] >> Yeah. Exactly. So it actually winds up being a a pretty good deal for them. Yeah. Yeah. [04:00] 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 agriculture companies, are they buying, you know, 30 seats at once? You know, what's the average customer paying in terms of number of seats? [04:12] >> So it's a land and expand strategy, and what we've seen within the The US drone marketplace is that it's mostly single owner operators. So it's typically one guy buying one license. Okay. We're seeing that, you know, with within the government agencies, we're getting, like, thousand user orders or, like, several 100 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 [04:44] >> know, their hands on it. [04:46] Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders. But imagine if we took all of the valuation data out from over 2,807 interviews I've done manually saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect [05:10] your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna [05:34] get a different valuation. A VC is gonna pay a different valuation. Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is [05:56] not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction, 1,200,000 seed round, 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired the valuation and the multiple. Maybe you're [06:21] going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at, and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. Alright. We're gonna go back to the YouTube video here in a second, but if [06:43] you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. 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. Alright. Let's jump back into the [07:10] interview. I mean, if you've got one group coming and buying a thousand seats at $200 a pop, I mean, that's a $200,000 a month contract. Am I doing that math right? [07:19] >> Yes. Yeah. I mean, is that [07:21] I mean, don't obviously name the customer, but do you have people paying $200,000 a month, like, entity? [07:27] That's a yes. [07:28] >> Yeah. I mean, so [07:32] If you're driving and you can't read Joe's body language, that that's a yes. [07:37] >> So it's it's a little bit tricky. Right? Because I, you know, I can sort of talk about some of my contracts, [07:44] >> and I can I can go into some details on, like, the use cases that we've been doing in environmental monitoring? So that may maybe it's a little bit easier to kinda get our arms around [07:54] 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 a seat per month. I mean, that's $2,400,000 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? [08:12] >> Yeah. It's I mean, it's an issue. It's a real problem. And the way we do that is by being very hands on and focused in a direct, outbound kinda sales process. Right? So I'm meeting with the customers. We have these this very high touch sales process for that customer segment. Yep. And then at the same time, we have this, like, super low touch automated SaaS thing. So it's been a weird growth trajectory to try to do [08:40] >> both of those. Yep. 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. [08:52] Put this on a timeline for us. When did you launch the business? [08:54] >> What year? 2015. [08:57] Okay. Yeah. And were you, like And we've a hobbyist in the space, or how does this tie to your story? [09:04] >> So we've been in [09:07] >> yeah. We went through some pretty serious pivots. I've always been interested in you know, I've kinda, 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 I was going. 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 [09:35] >> down ideas. [09:35] Apple notes, things like that. Yep. [09:38] >> Yeah. Yeah. And so this one really took hold for me because I could see, okay. Well, the market for, 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 we pivoted through a bunch of different answers to that question. It originally started as, okay, maybe I [10:13] >> can do subscription crop dusting. 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. [10:29] >> And, within the first year of our business, we had kind of said, okay. We'll we'll structure this more as like a solution, get our arms around it, and we we started with kind of a fully integrated disaster response package. So [10:50] >> right out of the gates [10:52] Well, Joey, here, we gotta go faster because we only have five minutes left here. So you disaster recovery 2015, and then you you eventually pivot into space. Now just, I guess, maybe walk me through who your first customer was. How'd you get your first customer? [11:03] >> Yeah. So our first major customer was Comcast, and we got that customer by emailing a thousand employees at Comcast. And then finally getting in touch. [11:17] >> Oh god. I don't even remember. I it was something like, you know, drones are awesome, and we could save you guys a ton of money. [11:24] On what? Why would Comcast need drones? [11:26] >> So I had worked the numbers on what it takes for them to do an inspection of telephone lines and realized 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. [11:42] That's smart. That's smart. [11:44] Yeah. Yeah. That makes a ton of sense. Okay. So that's Comcast. And fast forward today, how many customers are you working with? [11:52] >> So the bulk of our customers are concentrated in the US government. Like, we basically have we we basically, this year, made a decision to almost ignore the commercial market in order to satisfy the government market. [12:04] Oh, so you have, like, three or four cut. It's like Comcast, the US Air Force, and one other one. [12:10] >> Yeah. It's like US Air Force and US Army and maybe US Navy this year, and that's good. Interesting. [12:20] So so you've totally turned off sort of a hobbyist market where they've won one one person from their home paying you $200 a month for one seat. You've sort of you're not you're not going out that route anymore. [12:30] >> 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. [12:36] 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 a month? [12:44] >> I'd have to check the stats. I'd say we're probably about off the cuff, 5,000 users. [12:51] How many of those are paying? [12:52] >> We have a lot of free yeah. Small. Thirty, forty, something like that. [12:56] Okay. So you found a niche. You're a [12:59] 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? [13:06] >> We're at 25. [13:08] 25. Okay. And have you done all this bootstrapped, or did you decide to raise money? [13:12] >> We raised a pretty significant amount of cash. So we've done about 10,000,000 in equity and another 12 as, like, a line of credit. [13:20] Okay. When did you do the equity deal? [13:24] >> 2019. [13:26] Okay. And was that all one 10,000,000 series a in 2019, or was it split up? It was also, like, [13:33] >> some convertible notes that flipped and things like that. [13:36] Okay. But just the equity portion of the round that you did in 2019 was how much? [13:45] >> What it was 10,000,000. That's what kinda what I'm saying. [13:48] Okay. So when the notes convert Maybe I'm not understanding. If you had if you had raised pre Joe, 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 10,000,000. Others would say the extra 4,000,000 convertible notes go on top of the 10,000,000. So I'm asking, was the 10,000,000 inclusive of historical convertible notes or not? [14:07] >> Yes. It was. [14:09] Okay. So that's why I was asking, how much was new equity raised, not convertible notes, of the 10,000,000 in 2019? That's what I was curious about. [14:15] >> Yeah. Sure. Got it. 6,000,000, I wanna say. [14:19] Okay. And looking back now my memory here. We're going in I mean, come on. That's not something you forget. I mean, that that's a lot of dilution. I assume you care about equity. Right? [14:32] Yeah. I mean, Joe, do you care about did you do you care about keeping equity? Obviously, I assume there's a negotiation there on the 6,000,000 to make sure you had as little dilution as possible. Right? [14:40] >> Yep. Yep. [14:44] Fair enough. Look looking back now, would you change anything? Was that the right right move for where you were at the time? [14:51] >> I I think, yes, I would change some some things. I'd probably wanna 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, kinda just one step in front of in front of the next. [15:11] >> And if I could do it all over again, I probably would have said, here's a comprehensive plan on how we would spend 10,000,000, not here's something that gets me to next quarter. So Yeah. Yep. So, yes, there are lots of things I would have done differently. [15:28] Yep. Well, guys, a big lesson you can take from Joe is how they got Comcast on day one. That's a big enterprise account. Look, Joe, I'm sort of I'm sort of guessing. Do do they do they only they don't I assume they don't need one seat. Right? They probably buy one seat for every geography or something. [15:40] >> Well, yeah. And our pricing model was totally different there. We were doing by square mile at the time. And so we basically said, hey. We'll map an entire city for you for, like, a $250,000. [15:51] Oh, interesting. Yeah. And then they just said, we wanna buy all these geos, and then boom, you have the price. [15:57] >> Yep. Exactly. [15:58] Yep. Interesting. Well, talk to me about growth. Where do you wanna get by the end of twenty twenty three? [16:03] >> Yeah. I mean, I think we're on track to triple in size, [16:08] which is That's in terms of revenue or headcount or what? [16:11] >> Revenue. Yep. Okay. So we're trying to keep headcount still really, really lean. Yep. But, you know, we're talking about putting a target up there of 9,000,000. [16:20] Yeah. I was gonna say, I'm doing math. 25 employees now at an average revenue per employee of a 140,000 puts you at about a 3,000,000 run rate today. You think you can break a 9,000,000 run rate by the end of the year? [16:30] >> That's based on our current deal pipeline. Yeah. [16:33] Wow. That's incredible. I mean, look. Land and Expand is a powerful strategy, especially when it's the US government, and they can sort of print money. That's a nice customer to have. [16:40] >> It is. Yeah. [16:42] Joe, if you're If you're at a 3,000,000 run rate today, where were you exactly a year ago so we can calculate your historical run rate? [16:48] >> Oh, man. [16:49] >> Yep. 1.5. You're making me spill all the beans here, Nathan. [16:53] I know, man. That's the name of the that's the name of the game, brother. That's still healthy growth. You didn't raise any new equity last twelve months. So that's all just expanding into current accounts. [17:02] >> Correct. [17:03] Yeah. Interesting. How do you manage your equity investors from twenty nineteen? You know, assume you have board meetings, and they say, Joe, how do you grow faster? You only doubled this year. You should be doubling, like, way faster. How do you manage that? [17:13] >> 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 we understand the plan. 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, quarterly check ins on our forecast and reforecasting. And so all that kinda helps to to keep, that level of trust high. [17:42] 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 of it? I mean, do you IPO one day? How do you make money off of this? [17:51] >> Yeah. What's the exit strategy? [17:53] Well, I hate asking that. It's tough, you love what you're doing, you don't wanna exit. Right? But, like, how do you how do you make money on the person as a founder? [18:01] >> I don't know, man. I it's a great question. I think there's a very small number of investors who would, like, who would potentially buy this at the PE. So, 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, you know, a sixteen z has been doing a lot around American dynamism that's really interesting and worth [18:28] >> watching. 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, know, the Lockheed's of the world or the Boeings need our need our product, they're gonna bolt us in. Or, you know, some drone manufacturer wants this as an add kind of value add add on. [18:51] >> Or [18:53] >> PE or IPO, but, you know, it's not it's it's kind of a weird niche. Yeah. Yeah. Yeah. [19:00] I mean, isn't there I I mean, aren't there a ton of companies that sell to governments that could see this as a way to increase ARPU across their account, start upselling drone mapping software. I mean, Palantir is a buyer. I mean, there's I gotta imagine there's hundreds probably that sell to DOD. Right? [19:12] >> Oh, absolutely. Yeah. And so part of our strategy for the coming years is, like, bolting our mapping software into drone systems and kinda doing a bundled sales strategy. [19:22] 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? [19:32] >> Maybe. That's that's a tough use case. I think you'd be better off using satellite data. [19:38] Interesting. Do you have any hedge fund clients today? [19:42] >> No. [19:43] Interesting. Have you pursued it or no? [19:44] You wanna don't want don't want that market? [19:46] >> 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. [20:08] No alpha. [20:09] >> Your 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. [20:16] Yeah. Yeah. Yeah. At least you have you have you have four branches you can sell into at least. Right? Right. Cool, Joe. This is a hell of a story. Congrats. Let's wrap up here with the famous five. Number one, your favorite book. [20:27] >> Oh, man. Off the cuff, high output management. [20:31] Number two, is there a CEO you're following or studying? [20:39] >> Well, I do love Andy Grove quite a bit, so I'll I'll put Andy Grove for that one. [20:44] Yeah. And number three, what's your favorite online tool for building mapware? [20:52] >> Lately, ChatGPT. [20:54] Number [20:56] four, how many hours of sleep do you get every night? [21:00] >> I am a steady eight hour kinda guy. [21:02] That's good. And what's your situation? Married, single, kids? [21:07] >> Married, three kids. [21:09] Busy guy. How old are you? [21:11] >> So I am 36. [21:13] >> 36. [21:14] Last question. Something you wish you knew when you were 20. [21:21] >> Majors don't matter. [21:23] What doesn't? [21:25] >> Majors? Mhmm. [21:27] Like the school. School major. Yeah. Yeah. Yeah. I think that's very fair. Guys, he cold 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 the air force, military, etcetera. You know, doing about $3,000,000 in revenue today, but highly concentrated. Looking to expand that to [21:50] 9,000,000 this year, growing. He's got 25 on the team to the 6,000,000 series a back in 2019 in addition to a couple million bucks in convertible notes that transitioned over. But, 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. [22:06] >> Yeah. Pleasure talking to you, Nathan. Take care. [22:08] One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. 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, 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, 1PM [22:33] Central. 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