Modigie Revenue & Funding (2024)

Introduction hello everyone my guest name is ken hopp he's the founder and ceo of modigy prior to this company he spent 20 years in various tech leadership roles with two exits and most recently at google experiencing firsthand the widespread shift to mobile for business communications they built real-time mobile phone verification and enrichment platform on google cloud platform to scale and recently integrated with salesforce so b2b sales and marketing can connect with more of their prospects can you ready it takes the top you bet all right so give us a load on here this sounds like an enterprise related tool for mobile where what am i missing no it's certainly it's certainly um we uh our typical clients are b2b uh that have a lot of front end call center reps called bdrs or business development reps that do business to business outreach with net new prospects and so what we saw back in my time at google is that there was a continual decline of the ability to engage with people that we don't have relationships with and so email has has lacked and and people have shifted to the linkedin channel and we saw that everything was moving mobile in fact um you know sundar pichai the ceo of google at the time all of our advertising was shifting to mobile we looked around the office as sales leaders none of us had desk phones so the epiphany was no no one has a desk phone let's just make that assumption and so uh we stumbled across a a study by idc and then the boston consulting group and they really confirmed what we thought is that eight out of every ten business professionals use their their smartphone as their business phone so we thought okay well let's find a data provider that can provide us mobile business phones for our targets and we couldn't find that and so that way what does that mean ken mobile business phones for our targets uh you know the cell phone number for our prospects yeah yeah so we do two things so one of the the other thing that we wanted to address is um particularly for tech people change jobs a lot faster than our parents did back in the day um and so what we often find is bdr reps that are doing large volume outbound um are oftentimes chasing or pursuing 10 to 20 or more of the prospects that don't even work at the target company and the only way that they would know that is if an email bounced so they're calling landlines and and chasing people and and so we wanted to address that productivity as well i see okay got it that makes sense so what are brands paying you on average to use your technology per month right right and uh so we've been mode modeling a little different way so we're a consumption based uh business so platform fee plus consumption so think of it as if you're using our services so each api call or each each request we charge a credit decrement a credit yeah right now we're we're averaging about a thousand dollars a month per client and the exciting thing for us is that we're starting to see um companies that are legging into our business model are consuming those thousand dollars a month within three to four months break that down for me real quick if someone's paying you a thousand a month how much of that are the platform fee versus the consumption fee only a thousand is the platform fee okay oh so they pay consumption on top of that number of api calls that's right they're buying credits or something yeah absolutely so they pre they pre-buy credits um in in the in the way that we we do a traditional model so we we do a capacity plan how many how many of these uh api calls do they need how many how many phone numbers they need for their outbound on a projected annualized basis and then we come up with a business model um and we do net 30 payment terms or or spread out payment terms and then they consume over time uh over that 12-month period what we're seeing is of course with the pandemic there's a shift no one's really working in the office and studies show that no one really wants to go back to the office yeah so our clients are consuming those one month or those annualized credits in a period of three or four months so they're already re-upping their their contracts so what i mean this would reflect itself in your expansion revenue metric over the past 12 months i mean i assume you're above 100 percent how far above 100 in net revenue retention well we're still it's still early i'll give you some some context so our first line of code uh was really in 2019 okay and we created we wanted to create this automated rule of uh or automated workflow of how to um how to enrich and validate mobile numbers and and so we first did that in google in google sheets it's a wonderful tool and so we first wrote our line of code in late 2019 um so really i look at 2020 as our first really billable year and we came in just a hair under under 300 000. um unfortunately we is that cash collected or run rate in december Monthly recurring revenue uh bookings bookings got it yeah so you were doing something what like 35 40 000 a month last month correct yeah yeah interesting across how Currently serving 29 customers many customers so we we came in at shy of um just 29 customers now we and we've got a range um we're the the company's transitioning right now from um from api so the first so we went from google sheets which we were doing um really batch jobs for marketing and sales so those those are really um not true uh ar contracts if you will they were they were project based and everybody's been waiting for our salesforce managed package so they can consume us within salesforce and set up all these wonderful automation rules that are native to salesforce so for example when new leads or new new prospects hit the crm we automatically make a call to modigy and do two things verify the employment and get a mobile phone number and so um we are in the we're basically finalizing the security review process with salesforce to have that available to our customers so we have about 20 20 um pre-sold contracts for the salesforce managed package of mo digi that's great and just to be clear um you had no revenue in 2019 right we did not so zero to three hundred thousand dollar run rate uh in in 12 months and what do you think you can do at the end of this year what do you think you can grow to well the difference will be um i wish i wish i had a crystal ball i mean i know the following i know the following um when you automate a process uh everything goes smoother so the salesforce managed package through automation is going to dramatically improve um both the ability for our clients to consume modgy and at the same time for us to have a a higher consumption which will mean as i described to you um a higher fulfill rate yeah so i mean we're i'm modeling it for um over a million so it'd be a you know a 3x uh growth but the it's all about the uh the salesforce managed package and and the the um the the market for for sales for so the clients that we're servicing are ken how did you get those first 20 clients walk me through that process yeah old school it's brute force so a couple things um again when i was at google i ran a team of hunters and so what i recognized back then i applied today so we use we absolutely incorporate mobile into our omni channel outreach uh and we basically we are our business target our marketing operations sales sales operations chief revenue officers vps of sales and so it's just it's just primarily we started in silicon valley and uh the beauty is our first wave of customers were our own doing and then word of mouth spread so we've got we have some luxury of having um reference customers so this this first 20 29 it was really you know cold outbound basically get their cell phone numbers of the cro column and close them 100 interesting and some of the network nathan um but no no one was gifting um you know no one was giving me a freebie yeah yeah of course now have you bootstrapped this or Bootstrapped raised 100 bootstrap oh i love that very cool now that that's surprising i mean if you were high up at i mean you probably had all kinds of people saying we'd love to give you a check whatever you do ken next if you're leaving google we want to do it we have a lot of people that want to give us checks so um i have a business partner uh keith leclaire and he founded a company and our our ethos out of the gate was listen the environment we work in today you can actually build something um for a tenth of what you did in the past so our application all in probably is just under three hundred thousand um if you five years ago that might have been able to build it yeah that might have been a three million dollar um build um our capital expenditures are low we don't have to lease office space so we looked at we said let's prove out a a model let's control let's control the company um keith's former company he grew from himself to 120 million in revenue wow with zero funding um i think the opportunity is big enough to will eventually take some vc funding um but uh how much of the two of you put in Profit together so far a minimum 300k it sounds like yeah the beauty is it's a very profitable uh it's a very profitable business so we we rolled in we had co-founded another company prior a company called first dfx and we rolled some of the money in so we probably only put in about 100 grand total and what's the team size today so we have four full time and we have um with with the advent of of fiverr and upwork we have on you know but because we're at google cloud and salesforce and python it's really easy to add and subtract contractors so at the peak when we were doing full-blown gcp development uh platform development in gcp google cloud and full-blown development in uh in salesforce we had 10 10 full-time got it how many engineers oh 10 10 developers oh sorry so so sorry there's 14 people on the team 10 developers yeah at the peak and then and then we rolled off people as as we as we hit milestones on the product so how many engineers today uh we we have six that are full time okay got it so ten total people working four full-time six engineers that are part-time yeah i've got one head of head of uh technology who is full-time and then we have um six he's 100 google cloud and then the salesforce development team is six and do you have enough history yet to know what like gross revenue term and expansion looks like it's it's early for that it's early for that i mean we we lost some customers due to we lost some forward customers due to um having a delay in the salesforce managed package so we submitted our manage package back in october uh to go through a security review and with kobit everything was delayed um so what normally would take two weeks has taken almost four or four months yeah interesting and and if i ask so ignoring revenue for a second how many api calls hit your system last month we don't track it on api calls on on on a month but but on our on our run rate business we're looking at um so for example on a daily basis we can see anywhere from a thousand to ten thousand across your 29 customers but it it's it's if i get it's a cosine curve right point being though you have somewhere between thirty thousand and three hundred thousand api calls going through your system each month and that's important because you bill based off consumption across the 29 customers right i would not say it's 300 000 yet it's closer to it's closer to um 20 20 000 30. yeah yeah and that really reflects um a request i want you know i want a prospect's mobile phone number yeah yeah interesting and one api quest is one mobile phone number it's well it's a ver we have we have some micro services so the primary two services that people are coming to us for our employer verification and um and the validated mobile phone number we also i have a text earlier today from a large company um it's about a 30 billion dollar company that has um they want to they want us to look at the totality of all the phone numbers that they already have in their crm yep to determine are they landlines or or mobile phones so they're they're positioning it as we can't reach anyone on landlines so let's understand the landlines and and then fill everybody else with mobile phone numbers yep makes sense ken let's wrap up here with the famous five number one favorite business book geez i'm old um it used to be across the chasm but it's it's it's it's horror which is uh harder things yeah number two is there a ceo you're following or studying big fan of jeff lawson twilio uh number four how many hours of sleep are you getting every night you know my fitbit says about uh seven seven i skipped three what's your favorite online tool for building a business so anything collaboration um uh i'm gonna narrow it so the the google uh g suite of tools has been phenomenal yeah number uh oh and what's your situation married single kids uh married with two daughters two kids okay and how old are you 52. no big old guy yeah that's prime prime time baby uh last question what's something you wish you when you were 20 oh um it's just solving a a you know finding a business problem and just um just taking action sooner on an obvious business problem makes sense guys modigy helping especially teams doing outbound make sure they've got accurate mobile information on their prospects he did this because he learned he was doing himself inside of google kenhob's going from nothing to 300 000 bucks in arr in a little under 12 months 29 customers right now they look to scale bootstrapped which we love and profitable 10 on the team four full-time six or sort of part-time engineers they look to scale ken thanks for taking us to the top thank you david 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 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