How package.ai CEO Ziv Fass grew package.ai to $3.4M revenue and 24 customers in 2024.

hey folks my guest today is ziv fosse he's got 15 years of experience envisioning and building customer-centric communication software he's leading package.ai to become loved by customers as a wharton mba ex microsoft and skype guy in seattle specifically silicon valley again now focused on the business turning delivery into a marketing engine ziv you're ready to take us to the top absolutely let's go all right what does that mean turning delivery into a marketing engine so uh package ai is basically a combination of delivery management software and conversational ai platform that basically transforms the last mile or delivery experience into a very customer-centric experience and uh basically what happens is uh through our delivery management platform we give the consumers a real voice in the delivery process and then in turn uh basically produces engagement that turns into glowing reviews and repeat sales for our customers who are the retailers typically so name one or two of your customers when i think last mile delivery am i am i thinking like uber eats or am i thinking like mcdonald's in their internal app for last mile delivery no no so we actually focus on a very specific uh vertical which is uh home furnishings and appliance delivery uh so we work with a bunch of um uh you know small from the smaller to medium-sized and larger furniture and appliance retailers all across the us and canada and we help them with this challenging process right of delivering sofas and and dishwashers and putting them placing them in in people's homes so let's use let's use spencer's tv and appliance logo on your website so i am a consumer i order a tv from spencer's they're going to deliver it now are they using is are these spencer's delivery drivers or is spencer's using someone in between to do last mile delivery yeah so they're using contractors to do it but they manage throughout through our system they manage the entire process of routing you know the vehicles and drivers and then as a consumer you basically have a chatbot interface so uh into the operation where you can basically converse with um the the delivery operation and basically with spencer's tv right as a retailer uh and and um and exchange information in a two-way bi-directional manner about your delivery and that basically relieves like a lot of the micro stress that happens around cody negative deliveries making last minute changes you basically now have a voice that you can um you can sound like you you basically communicate with the operation and we handle most of these communications automatically i see so what does a company or retailer like spencers pay you on average per month or per year to use the technology yeah so the the sweet spot is about sixty thousand dollars a year so that's kind of what we think of as a medium size customer we have some smaller ones and we have a few larger ones and generally as many other sales companies we're kind of trending up in the account values but that's basically the so between let's say 50 and a hundred thousand dollars a year is uh like a standard okay but you'd say maybe 60 000 years sort of your average currently uh yeah it's the let's say it's the average in the in the last like year or so we have uh some again we kind of started from smaller and i've been you know going up the chain tell me tell me more about that so how people that were paying you like smaller plans what are you pricing off is it number of deliveries number of seats feature upsells what how are you pricing so we're pricing um there's basically two kind of two tiers of pricing one is based on how many uh drivers or delivery vehicles basically uh they operate and that's basically a proxy for a number of orders um and how many orders can one driver handle in a month uh so typically it's uh between let's say 10 and 25 a day depending on on the way they operate uh per vehicle um and we and that's basically a subscription you know per vehicle per month and then we also uh charge for uh reviews that we generate and that's by typically by location so the location that you manage we've used for like a kind of a physical store interesting avenues that's that's interesting so across i want to go back to how you got your first customers in because that's always a fun story but how many customers like spencer's are you working with today um so you we're breaking up a bit can you repeat the question i uh yeah i know i want to get the back story on your first customer before we do that how many customers are you working with today like spencer's so we have uh without going into specific details but we have dozens of customers okay america okay got it so fair to say sort of like more than 24 but less than 100 yes okay very cool and are you only focused on north america we are uh at the moment just you know we're we're still a small team um the engineering team is is in israel i'm i'm based in israel and kind of uh uh you know fly a lot what's the total what's the total team sizes yeah ten oh ten okay and so how many engineers are in israel uh so we have uh seven people in israel and uh three in the u.s today seven the seven in israel are all engineers uh it's uh mostly engineers and some you know engineering uh support but uh yeah for the most part it's very heavy very heavy on the r d all right take take me back to early days here you're a seattle skype microsoft guy how the heck do you end up in this kind of space when did you write the first line of code for the platform that's a good question so i yeah i lived in the so i'm israeli you know by origin i uh lived in the states between 2015 and uh sorry uh 2005 in 2015 i got an mba uh worked with microsoft in seattle and then in san francisco in a company called uh fuse which was a zoom competitor so i kind of you know come from the communication space and uh chatbots were kind of you know taking off starting to be interesting and there was a lot of hype uh and then we i was just you know we decided to move back to israel like as a family after a long time in the states and i was looking you know i kind of decided i'm going to do a startup and you know i had a bad experience with ups in silicon valley delivering a computer so that kind of you know it was kind of a personal experience uh and i got to thinking okay like chat bots this can you know communications is really the problem here and that was the genesis of uh you know how we got started what year was that so that was uh the company we formed in 2017 and you know got started a bit before i met you my partner who is the cto and the you know the master uh engineering mind behind us and um the two founders yeah we're two founders did you guys just say we're just gonna you we're just gonna split it 50 50 down the middle or how did you guys have the tough equity conversation yeah yeah 50 50 you know full partnership this is you know like a marriage uh yeah and it's been working well since then now now that the two of you guys still own 100 equity or have you raised capital oh no we've raised uh you know we've raised capital um we still own you know control but uh we've raised about three million dollars uh to date so no vcs you know more kind of friends and family and industry insiders um can you break that down for me ziv what was the first round of funding what year so in 2017 so in 2017 we raised the precede rounds it was around 700 000 and the rest um which i think was our seed round uh is was in kind of multiple you know safe uh safe kind of uh vehicles um and uh yeah and we're kind of gearing up to raise our uh kind of an a round in the next uh six months just starting the process okay i want to dive into that process in a second but first taking back to customer number one in 2017 who was it and how did you find them yes uh the trenches the trenches yeah yeah so our first so we there were two kind of first customers one was in australia which is you know our only customer in australia we we got them we got you know connected to them by by billy chance uh and they they you know they're a furniture retailer in sydney and melbourne actually all over australia and you know they really loved the it was very early days but they loved the vision and uh yeah they're still they're still you know on with us uh and then in the us uh there was a company called stella delivery based in new jersey um and they just took a chance on us how did you find them though was it a linkedin message you you knocked on their door what was it uh yes we it was a an email like uh campaign we did um but we're targeting you a lot of time targeting just you know like appliance delivery furniture and appliance delivery companies um and uh yeah the platform was again very immature that at that time and you know we made a personal connection and ralph who is leading our sales ralph shulberg he's he's the head of sales for us gm north america and he just you know kind of powered it through that's awesome we love that cold emails still work folks what you guys probably sent out thousands to get the one closed customer on the first one right that's how it works all right so so real quick going back to the to the funding story here as if so you raise 700 000 precede in 2017 obviously you're raising that based off...