How Penny Software CEO Iyad Aldalooj grew Penny Software to $2.8M revenue and 70 customers in 2024.

hey folks my guest today is muhammad ibrahim he's a distinguished engineer with a demonstrated history of driving technology transformation high scale and high growth organizations he's now building penny.co a procurement software and b2b marketplace platform muhammad are you ready to take us to the top yep definitely welcome uh uh everyone hey thanks thanks for joining so should we think about you sort of like like vendor you're helping people save money on their sas purchases that's definitely right so our our main goal is basically help uh companies or firms uh uh streamline their procurement processes through different offerings uh of ours the goal the main goal is basically for the companies to have or oversee their spendings and their procurement processes in general okay and and what are you doing differently than some of the folks we've already talked about well what we're doing uniquely and what differentiate us from competitors is how we basically positioned our software offerings as well as services we combined uh different arms first is basically the software offering that we're doing second is the logistics and ability to reach out to multiple or different suppliers on the ground uh we combine that in a streamlined fashion so that companies can reach out to different suppliers as well as manage their internal and external communication in a very streamlined uh fashion so that's what we're doing differently at penny okay and give me give me an understanding of what customers are paying you to use your technology is it a percent of what you save them that's definitely right i mean this is one of the proposals we offer to our customers which basically is how much you save i mean how much you actually spend on overall bell in the company and we offer them a direct return in terms of uh cutting of their cost spending cost and which translate that as a value to the company and based on this we take cuts as a revenue sharing model what's the range of the cuts that you would take like two percent or 10 or 30 percent or what well it depends actually from industry to another uh we work with our clients to basically quantify this but it ranges from uh sometimes some cases actually 0.5 to all the way to 15 percent by just employing uh uh our software uh technology stack as well as best uh uh industry practices in terms of uh procurement processes and mohammed what would you say your average take rate is is the average mp seven or eight percent yeah some yeah something between uh uh seven to ten percent okay fair enough very cool share with me a little bit more uh i guess so so when you look at all your customers and all your all your product offerings what's the average customer going to pay you per month well uh to be honest uh we i mean the way we position our product is to be valuable depending with different different modules on the shelf uh we somehow package our offering to our customers depending on how customers uh uh have been delivering on the customer requirement and this differs from industry to another so sometimes i mean for example customers come and say well i want i mean to use your software uh stack from procure all the way uh to pay some of them now i want to basically focus partially on that so depending on the customer need and the number of users we basically offer our software as a package to customers i mean i work with them throughout the process i mean for standard offering um uh we use i mean for just general users we offer something around 1 000 uh per uh barrier as a license uh licensed software so customers are paying you is about a thousand dollars per year as an average correct that's across your that's it that's across your entire base about a thousand bucks per year as an average better user 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 it into the beautiful interface inside of founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to 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 not built off random data again you guys hear these interviews on youtube all these datas are built from real-time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 percent of their business go in here and filter by the event maybe you only want to 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 going out right now and you're raising your seed round well 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 data set of sas valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're gonna go back to the youtube video here in a second but if 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 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 per you okay and how many users are companies usually signing up we're talking teams of two or teams of 300 average yeah on average it is like i mean we target like small i mean we focus mostly on medium to large companies uh so this can actually range from 20 all the way to 100 users targeting people who work in procurement department for big corporates and companies okay so muhammad these corporates you're landing with 20 on their team paying a thousand bucks a c your sweet spot is more like 20 or 40 000 bucks a year something like that i see tell me more of the backstory here what year do you launch your first customer blend your first customer well um we we basically worked up initially with a few firms we called them design partners that helped actually shape our product the way it is right now right so what we did we shut out their procurement department and we covered what is basically called the general practices in their procurement processes so based on this we basically formulated uh something called the mdb which is the minimum viable product this is how we initially designed it we worked with a few like around 10 10 early adopter customers to basically help us shape and design our early product offering and then we started first with something called the happy scenario which is basically the most straightforward business workflow that can satisfy their need and from there we basically started offering a few customization by adding more and more customers over our user base we realized that some customers require this customization some customers require different uh workflow depending on how they do their internal procurement processes and based on this we came up with something called customization um uh business mapping uh muhammad sorry before we go too far down this rabbit hole my question was just when did you land your first customer what year uh well this was uh sometime back in 2000 late 2020 which is around four months from uh when we started okay so 2020 you get going and now fast forward to today how many customers or companies are using you paying you well um i mean um i mean i'm not sure if i can disclose this number but i would say intense tense is basically reasonable we have to like a year and a half from the start date we have tens of customers currently active and paying customers are we talking like 40 though or like 90 well um i mean on the upper side i would say okay so like next month can you pass 100 customers when you think you pass 100 customers well uh to be honest i can't uh uh i mean estimate that what we have been targeted this year is by the end of this year is uh way beyond 100 customers per share now can i take like you know 60 or 70 customers today times that sort of acv you gave me earlier to guess you're doing something like 110 000 bucks a month right now on revenue in terms of run rate well i mean uh that uh i mean uh i don't think i can disclose that to be honest i'm not asking you to disclose anything new i just know you have more than 40 customers which you already told me and you said the higher end so i'm guessing 70. and you said the average acv was like 20 000 bucks so i'm just multiplying uh that's correct i mean not all of the basically goes by the...