How Physna CEO Paul Powers grew Physna to $9.8M revenue and 30 customers in 2024.

hello everybody my guest today is paul powers he's a forbes 30 under 30 award winner successful serial entrepreneur in b2b technology development and sas companies he's got a law degree from the university of heidelberg in germany and a member of the national small business association's leadership council now working on a company called fizna in the cad search engine space paul are you ready to the top all right thank you you bet all right what is a cad search engine what's that mean so fizna is best thought of as like an auto fill for 3d design so if you're in the process of designing something fizma will try to guess what you're designing and search throughout your database um be it through cad or plm or whatever you use to see if you've designed something similar to that in the past so you don't design things from scratch interesting this is kind of like when people use gmail and gmail auto completes your emails when you're typing kind of the same thing absolutely interesting very interesting okay uh walk me through the business model how do you make money sure so we're a sas platform so the way that we work is that you know we work with engineers and manufacturers they pay us an annual subscription fee to use the software typically fsn is either used as an integration into whatever cad software plm software they're using but you can also use it as standalone and we keep it real simple we don't care if it's used on the cloud or if it's an on-prem server that they're using it's always the same fee all the same arrangement so they pay a one-time fee or we have an annual fee per user per year okay and and help me get a sense on average what's the company going to pay you per year to get access to this it really depends on how many people they have so to put it into perspective um we did some uh some studies on what what we were saving the average customer we saved the average customer um thirty seven thousand four hundred and forty dollars per user per year that they're with us um but the average cost per user is gonna be twenty five hundred so it's a fifteen to one ratio of savings to costs okay and how i guess what i'm what i'm really asking is when an org signs up typically how many seats are they signing up with are these is this for teams of three or 300 oh it's all over the place so we have people signing up for you know a couple licenses they're companies that have 30 000 engineers and there are lots of them that we're seeing that have maybe anywhere between 50 and 500 i would say it seems to be the average number but you know it really does scale okay you said 50 to 500 might be a good average i would say that's probably the average size that we talked to yeah okay fair enough good so i want to make sure i got this right so so if you have a team of if i'm if i'm running a team of 50 right now right let's say it's an architecture firm and i sign up for you it's going to be 2500 bucks per user per year correct okay so about 125 grand for the year right okay very good if you look at how much you'd save you'll be savings no no by the way i'm not shocked by that number i get i get i listen i was architect major in in college so i get it i mean there were so many times where i was copying and pasting like groups of lines and symbols i mean i totally get what you're building it makes perfect sense to me um put this on a timeline for me when'd you launch the company what year 2015. 2015. and i mean where were you were you an engine on the engineering side or the architecture side how'd you get the idea i had i was on the the nothing side i was on the legal side i have a law degree from germany my focus is in intellectual property law and i was writing a dissertation about what's the biggest problem we're going to have with technology in an ip law and the answer was 3d you know we had we went through this with the last test but we kind of adjusted the market adjusted we have itunes we have netflix uh when it comes to 3d the problem is that uh no one can really protect intellectual property so we thought okay we can't just track a file down we have to actually know what a file is of what it's similar to what's in it etc so we have to actually understand what 3d models are and we looked at all the technology that was available and we realized uh bless you uh we realized we realized that nothing was actually built to understand 3d from a 3d perspective everything was just a 2d technology like point cloud or whatever trying to understand 3d so we actually created something that would identify ip theft and then we brought it to market 2016 we showed it to a bunch of companies and they came back saying well that's great and all but my god we could use this in engineering we've used this and seeing if we can manufacture something because it's all pattern recognition basically exactly yeah really interesting okay so how many how many users have you scaled to today how many folks using it that's a great question so uh there are quite a few licenses out there being used and the reason it's hard for me to put an exact number on is because we have some institutional agreements with like uh fizna the us based on rocket center nasa spacecam and you know in that the latter's case they have um you know 300 000 people a year coming through who have access to it so i don't know how many people are actually utilizing at any given time in the case of purdue they have 1400 people who can uh use it at any given time too so it's hard to say how many are actually using it any one time i could look it up but maybe okay let's do a simple i was gonna say let's do a simpler number how many organizations not seats but how many organizations are using the tool that's a good question so i would say uh right now we're probably talking around uh if you add between the non-gover governmental and the governmental and the testers versus the actual customers rolling around uh 50. we ruled this out around why do you say only by the way that's totally respectable for an enterprise kind of company well i say only because we started uh selling it about a month or two ago actively we didn't have a sales force two months ago okay okay we got it so we just added one on so the numbers aren't as exactly where i think they'll be in about a couple of months in january february we're expecting to start to see a lot of scaling yeah well i mean if i take 50 organizations and then you just told us a second ago if we assume the lower side of your average of 50 seats at 2 500 bucks a month i mean or 2500 bucks a year i mean that would put you right now i think at what like a 500 grand a month run rate something like that is that accurate well most of those companies i included were ones that were using the or uh they're using fisma some of them are testers like purdue and nasa and stuff we've said okay instead of you paying us we wanted active feedback you know from these people tell us what are your users experiencing what would you like to see differently you know let's have a lot of dialogue going on and we decided not to charge them so you know i see yeah so the paying customers there's uh earl and maybe a third or under a third of that okay and um yeah so i would say that next year our goal for next year is to add on probably about i would think we'd get to maybe another 100 to 200 paying customers that's great so a third of 50 we'll call maybe 15 or something i've converted from free to paid is that accurate sure and i mean is that the model you kind of give them a free usage get them addicted and then they have to pay and if so like what's the what's creates the forcing function to move them from free to paid uh we don't typically go free to paid with companies we do that um those were these are earlier uh deals that we had signed up or alliances that we have formed essentially with these companies who had unique perspective into the software with larger companies sometimes we'll do a trial or they'll be able to try it out for you know 30 days maybe even 60 days or something with some users and see make sure that it does what we say it's going to do and it does but typically um you know it's it is a pay-to-play thing you do pay for receipts um but we have demos we're willing to let people play around with it and make sure that you know it really does have the effect that they think it will that's great that's great okay so i mean 15 instead of 50. that would put your your monthly recurring somewhere closer like 150 grand a month is that is that more directionally correct well we're looking it's not 2500 a month that's 2500 a year um that we charge our users and we have um so the best number for me to give you is going to be that is the 2019 numbers uh because those are pretty well i think we're pretty uh exact with what we're going to have next year we should be at least at about five million uh recruiting annual revenue um by the end of 2019. and how much growth would you have to drive to actually hit that though what are you at today uh we would have to go uh well some of our some of that's from...