How Packetzoom CEO Shlomi Gian grew to $900K revenue and 68 customers in 2017.

he joined in 2016 when it was basically pre-revenue since then they raised six million dollars they have 68 customers they're doing just out of call it a million dollar annual run rate currently his goal is to get that up into the millions by the end of the year it's too early to talk about economics because they haven't really done much on paid spend but their team of twenty is focused in out there and San Mateo on making a mobile experiences better and stronger no matter if you're in a train if you're in an airport that security connection or about internet connection or anywhere else they want to make anything you're doing on your mobile device more efficient for those companies like Eventbrite this is the top where I interview entrepreneurs - our number one or number two in their industry in terms of revenue or customer base you learn how much revenue they're making what their marketing funnel looks like and how many customers they have I'm now at $20,000 per Tov I haven't excited he has happened on global domination we just blow Khan a hundred thousand units full mark and I'm your host Nathan Lakha this is episode 753 coming up tomorrow morning Lewis joins us they've passed 15 million in revenue using breakfast to meetups for growth interesting growth strategy tuned to find out how we did it so you can do the same thing hello everybody my guest today is slow me geonhee it serves a packet zoom chief executive officer since June of 2016 we'll jump into how we entered that role when he wasn't a founder here in a second he joined the company after spending four years at Akamai where he did where he founded really the emerging mobile business unit and served as the head of mobile market development before that he was a general manager of mobile solutions at contend o that invented mobile CDN back in 2011 before it was acquired by Akamai I got a great story show me are you ready to take it to the top things you need yeah I'm ready very good you just drive it really well the journey went through dealing with mobile performance dealing with mobile applications and the challenge is that food the total foot tell us what package zoom does and what's the business model how do you make money well that means mobile application works better especially where networks failed to deliver so think about the wrong part of the building think about the wrong part of the country think about the wrong part of the globe right they're developing countries where mobile networks are not working well we all use mobile devices and mobile applications more specifically more and more and we're seeing this in all the reports right this is our best friends that mobile phone the small screen we're using applications are more more and we're trying to buy we're trying to learn in ourselves often times or in locations where networks do not deliver the right quality and that's for packaging comes in we would like to take away all the hassle has to do with networking because they're just too many networks out there you're like you can look at this is like anyone who's listening right now who's ever tried to like buy a ticket off Eventbrite when their have a spotty internet connection Eventbrite would pay you to like make their system automatically like work for a bad connection is that how it works that's correct we want the right to work on the strain we want events like to work in your test lab we was event wise to watch it on the plane and in India and Russia and Brazil and China where things are not working perfectly right so that's what packaging comes in we eliminated what we call the roadblocks we gave you on the express lane yeah I'd like to do and how do you make money as an assassin mess Isis ask reason we give you an SDK we charge you for daily active users they like doing pretty common you know model anyone who is using this service or people day will give us the function of attaining got it okay so are they is is it a flat SAS feed based off a daily active user number or is it penny per like API call penny per you know use question we started as daily active user being very simple simply defined as anyone is using the system up to certain usage there are cases where we're now getting into the details of how many calls how many gigabytes are believers etc but most of our customers are very comfortable with that the definition of daily active user to simplify things so they're just you've made its way to other vendors and we're trying to make it as easy as possible program and select communing tempo what's the average customer paying you just from the SAS P 400 to 4,000 per application that was really not in the four thousand of course you have to be a very popular game or retail application the four hundred is more reasonable if you have the as of thousands of daily active users you know our cost is not high your cost should not be high we're taking actually the way some of the unleash the other cost you have many of our customers are using traditional web CDLs like Akamai Amazon CloudFront etcetera once you start using packaging this field also goes away and it can replace this with a better service and all that technically they don't have to change they don't have to terminate the relationship with the other CDN box by placing us in problem they'll see a big reduction in the bill and have you bootstrap this company of your age capital or we raise capital so our main investors are baseline in personal capital and how much to lobby race about these okay energy and then tell me is the more the backstory here cuz it sounds like you may have come in through the investor right in an investor round or something like that and you tell me this story when when to the real founders or the original not the real and the original founders found the company and why'd you and how did you decide to jump in huija who started company in 2013 was Google back then and he was very frustrating with the state of mobile data and mobile content delivery so he tries to promote this idea Google of course nor so many things in Pasadena Google and start packaging it is a very complicated technology we mainly basically build mobile networking stack this world differently was designed just for mobile applications and when you look in a while to build it with a small team of engineers bootstrap and then I was at Akamai bigger than hundred acquisition of pretend oh I was looking for who cutting-edge technology to bring into occupied and we were looking at everyone out there packaging seems to be the only technology that work but didn't have much commercial traction and it was very interesting at the same time the investors were looking for steel with more of a business background to come and lead the company really finally go to market when I mentioned in the team I realized that they go to market how long how did you meet them I met in just through headhunter so basically they invited me to see there was a year ago exactly to see a warrior game we were playing to meet for an hour we stayed for seven hours I fell in love with the product and the technology and I decided to leave my comfort question as cushion as a Kamali I favor this reason so if they found you through a headhunter they had intention on their side they were looking for somebody like you to bring in that's what I hired the headhunter exactly someone that understands giving my big one contained Akamai I mean they bailed and the right the right guy I was looking and I'm you know I was looking for a long time for the right technology to solve this problem and they were you know just right the product was working everything was right it has the type of people we they were going after did not have the budget to pay for it so we have to tweak the story little bit we started with enterprise selling we were able to attract customers like simple blue mobile and after work in now we're going back to the core we're going to shoot with small more than and yes with him yeah that makes good sense now did you what was them bringing in that headhunter tied to a funding round they did where the investors said hey you need to go hire a headhunter and bring in a CEO today what called seem seem to investors really wanted to see traction on the business side acronyms great everything was promising but there was a CDMR are going so well that's why I joined and luckily things are working really well and we're just losing a so very excited about that well we'll talk more about that in a second I'm curious what was mor when you joined I was close to none oh really okay so they were really pretty revenue yeah okay got it got it and how much have they raised at that point already that boy was Wesley okay got it well I mean so clearly very talented kind of technical thinkers for the newly raised three million you know pre revenue is quick yeah this product is not just well let me put it this is a very difficult product to build it takes time it is not just time to build the problematic five univer time because it has to work on 800 networks worldwide so it just takes a lot a lot of I yeah how many customers are you serving now today we have about sixty eighty I talked about 68 got it and then take me back it like I'm curious to the CEO like you that's coming in obviously your goal setting every year what's like a number that you and the technical co-founders on the team like well what's the what's the number at the end of this year where if you hit it everyone's celebrating it could be a revenue number or customer number or usage number what's the number well we have word recognition API we're tracking you know number of is the game stalls that that indicates how many people trust our SDK how many people were able to get it into their app into production and you know a good number for us will be in the tens of millions and we're for making good progress stories number there's a lot of TV Aiko Bailey Activision which is basically it is very closely to mr our million viewers again our goal is to the you know where me were going to be that anything between 15 to 20 million daily active users there and what do i what do I now yeah we're almost halfway through oh well okay so you can pretty good then I mean it's time talking about since you've been there which has been less than twelve months you've gone from very little to about halfway to ten or fifteen million to call you're at seven or eight million now you think you be able to double it by the end of the year oh yeah yeah we're doubling our activity every quarter since I joined well it's easy when the numbers are small and it's getting more than a challenge but but you know we were able to double every quarter and we're not letting delude ourselves these business is relying heavily on partnerships so I expected a comeback back in Yahoo like Oquendo back in the days like other stars I work within the space sixty percent of the revenue is going to have to partnerships together already maybe ways progress there we have one large partnership with China cash a large CDN public company filling up exclusively in China we're working on the initial model with other CDN but most importantly resellers so we have already three European resellers telling us in countries like first in Spain and you gauge and we're spending to Asia and Latin America what cut you give those European resellers so these are all three centers we work with in the past you know I've been in companies like he knows distance device anywhere endo and Akamai these are the same old retailers that are selling performance they're selling update why are they incentivize though you're giving them something oh yeah I mean listen for all these partners we are a perfect fit because there it is telling in promoters you're selling to a specific audience in a specific company all they have to do is pull another deck their shows another problem that is very people when you give them some it you give them a colic you a 10% cut or do you not cutter is that not the model we okay friend friend honest commitment you know someone like China cash is not only are telling us they're actually running the service in their territory Saadat they're taking away the cost of operation they're taking away the cost of sales obviously the percentage there is higher don't address insider someone we just telling doesn't bring any customer support of the bring any sales engineering doesn't make any commitment and over please that's gotta be lower but we're aiming to work with larger partners that are willing to make higher commitments and you talked about two of your goals here in 2017 in terms of daily active users and SDK connections what's a revenue goal where you all be celebrating well we're in like any other Avon company we are starting to talk much millions of dollars in AR yep and it's going to be ready for serious via this USB and we're just starting so again we're moving from seeds today in the goal is to get everything shiny and ready for a degree have you passed the magical $88,000 per month mark which is the 1 million a hour Marquette are you close well the quarter we already counting the days for the end of the quarter so uh that's pretty much where we are yes I was I was doing quick math where you said earlier you had about sixty eight customers and you said they'd pay you anywhere between four hundred and four thousand so the low end of that would be twenty seven grand in mr the high end would be two hundred seventy two grand in mr so it sounds like you guys are making good progress it's higher than four hundred but less than four thousand in terms of monthly revenue from each customer and you guys are getting close to that magical eighty eight thousand dollar mark what do you want to get that to by like the end December 2017 like are you thinking about trying to double that to one sixty or triple it to 240 or well again my message to the team I asked my team I know it's a pretty high bar you keep doubling every four times you won't get into serious numbers and all Kayleigh as you look at the installation you look at the daily active users you look at em RR that's what you want to do now we're getting to a point here single numbers you know started up and we want to get some help we're getting some help we're opening we just opened our office in Asia start to hire some people there and very soon we're going to announce our presence in Europe and that's going to help us so far those numbers everything I mentioned we were able to accomplish it with in a very small sales engineer sales team well how big how about your team right now what's the size with remonster three sales guys and you know the most senior guy is being with us for seven months what's your whole team size though there's opening 20 ok 20 ok so 3 into what I imagine the rest are engineering engineering sales engineering a support operation we had some guys there but this is pretty lean in terms of resources and where most of us are here in San Mateo California we have some people outside the office in the US but we're building up an offshore development support being indicted or what did you spend I'm curious what you spend last month and in like paid marketing in marketing yeah really very little I'm talking about less than what thank you I would know okay got it and that I work with that time is here I mean this whole thing is going to change very soon yeah are you yeah cuz you're raising capital right so you got to figure out that model are you that 10,000 dish that you're spending I mean are is that conference sponsorship so when you do spend money where you spend it what's included in my marketing budget is actually conferences some VR and you know it's deals basic at that yeah we're going through a new change here in terms of everything everything you do much for marketing messaging positioning we're launching the product in three months and that is going to make it easier for us what is some of the other economic salvation has not come by things like churn what's your gross customer turn per month no loser zero you haven't had anyone start paying you and leave yet no one does that mean you're charging too little that means they're happy and come on Tommy it means you're charging too little right in some cases I am but I'm happy too because I love losing money on anything what if you double the price do you think no one would leave some of them will the small ones will use the right density they're starting working with us because they see an opportunity to get a better service at a lower price meaning they're cutting costs on amazon.com and other CDN so they see there's a nice way to start a visit if they grow to some of our customers that promote it on our website please stick around they stay with us because they see the value so it will be not very smart be double the price at this point I don't think we should because we're making money from video one of the dangerous things about like you have 68 customers so it's just it's like a small cause it's a small cohort or an analysis on but if you assume zero percent churn it becomes dangerous when you try and figure out lifetime value because you can get super inflated numbers how do you think about lifetime value in terms of dollars and and or months I think they'll be sure you know logical terms are certain people who shut down the business people will find a more attractive or nicer salesperson to work with but I hope that I know that the product we have is very unique actually the following product that is working with millions of daily active users so I hope that you know this advantage will translate into a commercial advantage that will be hard to close by any competitor so change the fact that it takes a long time to develop this product the fact is we have the market leadership and we're distraction the momentum I think will eventually end up being a Jew advantage only only game in town decks yeah for for though I mean you're raising all this capital and you talk about kind of a Series A Series B etc the important thing is how you're going to send that money in and and figuring out what you want to spend to acquire customer usually folks tied up to a payback period or a lifetime value metric what I mean what it's obviously very early but what do you assume the lifetime value is of one of your customers different question the right number for you but I know from my experience in the CDN space that you know once once you mean especially in the form of an SDK switching costs are very high yeah as long as you deliver the right services longest you know you're you're you're sensitive to the fact that you're actually a big part of the business you're delivering oral traffic you're doing the right thing there is no reason to switch you people wish against the gays or Sharia a CDN because you know it's easy and you know they're trying to optimize for speed and cost in our case again the fact that were the only game in town there are so many options out there as long as we provide good service is the right price I think that will stay with us and you guys are all based out there in San Mateo most of us are here with a few guys sales guys outside the office you in the US and slowly surely were aiding in other countries we are starting a big activity in the regular India with more engineers support and some some sales activity for the region makes a lot of sense do you guys have like the average gross margin for a SAS company or is it different what is your horse margin right now your early days where we haven't even optimized for our own cost we're using lots of Ivan mentioned if we don't have our own infrastructure for a reason we don't see ours over the TV and we don't have what's called pops point of presence we are relying on us relying on the original ocean or any other cloud infrastructure and we're being retail yeah that's why I'm asking I imagine you probably were pretty like your gross margin is actually lower than average just because you're just starting a new FF picks cost structure only don't mean what do you right now we're you know we're anything between 63 yeah it will be very different exporter is we're becoming worthy and AW spot a partner we're going to become an AWS reseller we're going to get this price down and we're with some great ideas about how to get to the 95 and up and that business should not be a the gross margin I just mentioned but you know we were not thinking revenues and now I will start asking about margins person many of you listening right now don't have time to listen to every b2b staff the year that I've interviewed if you want to get access to the database that created with the year where your growth rate customer counts margins and many many other data metrics and data points you can go to GDP lhp ka kaam here's the thing though this is that database I keep it to myself it's so freakin valuable and to preserve the quality of the data and make sure that the people that have access to it have a true advantage I'm only letting ten companies on each month they were full this month I'm going to get Latka comm to get on the waiting list for next month and look there's big people on the waiting list I mean the biggest leap C's you've ever heard of you've probably heard of them they're big private equity billions and billions under management so an impressive waiting let's go get on now it gets calm guys big news last month was a huge month for the company I recently acquired which was WWF inbox calm I liked the company so much when I met the person who created it it lets you send emails later on Gmail set up reminders like snooze almost to keep your inbox clean do things like send Auto follow-ups and do open tracking so you know when your emails get opened it's great if you're in sales or CEO or trying to be more productive so listen I bought the whole company on this plot and I want to tell you how I did it I've showed the deal by the way too big smart people private equity firm is VC and they're dumbfounded tickle Nathan how did you do this we've never seen a deal like this how did you do this so I did an unbelievable deal and I want to show you the income report so for me to send you the income report go to WWE topic and voxcom click the red button that says install this on gmail and when you do that my email will appear it'll appear in a little Gmail popup window send me an email and I reply immediately with the income report and you can see how I'm buying and growing small b2b staff company that's WWE top inbox comm totally free to try and use WWE top inbox calm very cool let's wrap up saw me with the famous five number one with your favorite business book yeah that's a good one number two is their CEO you're following or studying right now not specifically I'm reading a lot of us you know folks that the original businesses I can name one top my head writer that's okay number three is their favorite online tool you have like a QT scheduling for all Angela really yeah I like company coke dick strength they're reading through the data that helps me understand what's happening out there who's using who I was kind of educate or be installing apps what kind of SDKs are being removed from that then supreme antastic data a dictate advantage over number four how many hours of sleep date every night okay that's pretty good and what's your situation married single you have kids there is plus three Wow three kids okay and how old are you ah myself yeah I'm 40 okay last question take it back to 28 years what he was your 20 year old self no ah how exciting it is to do your own baby you would have done your own thing earlier Oh much earlier much earlier but you know good things come in basis so I'm very happy we're here now everything I've learned in the last 28 years is coming to fruition there you guys have it from a Swamiji on love again a lot of success in the startup world works as small companies that have been acquired and bigger ones like Akamai before starting at packet zoom the company was founded in 2013 he joined in 2016 when it was basically pre-revenue since then they raised six million dollars they have 68 customers they're doing just also call it a million dollar annual run rate currently his goal is to get that up into the millions by the end of the year it's too early to talk about economic because they haven't really done much on paid spend but their team of twenty is focused in out there and San Mateo on making a mobile experiences better and stronger no matter if you're in a train if you're in an Air Force that security connection or about internet connection or anywhere else they want to make anything you're doing on your mobile device more efficient for those companies like Eventbrite Xiaomi thank you for taking us to the top thank you if you enjoyed salami today go back in with a dream yesterday Adrienne thinks retailers will want their own version of Amazon and he is truly making Bank from the concept