Pliance Revenue, Valuation & Funding (2024)

hey folks my guest today is siam chaudhry he's building clients dot io stockholm based founder with background and uh from facebook a cast and many fintech companies his core focus and interest now is around product management but he's grown to learn and enjoy sales during the startup journey at appliance where he's helping combat financial crime sam you're ready to taste the top yeah thanks for inviting me who did you build this for who are your customers today our customers are primarily regulated financial companies and so companies that fall under anti-money laundering registration for their risk for financial crime and money laundering you're talking like kyc know your all this kind of stuff yeah exactly so knowing your customer uh transaction monitoring those kind of things interesting okay and and what are customers paying you on average per month to use this technology what are customers paying per month on average to use the technology um it's quite varied uh our model is a sort of sas volume based model so it can go from a few hundred dollars a month to sort of thousands of dollars per year and what are you pricing off of of active users so active and consumers that need to be screened against for example a sanctions list or sort of a kyc or that need to be done on transaction monitoring so how do you okay let's say that a bank uses you right and they have a thousand new customers sign up in october they obviously have to pay you to scan those thousand people one time but then next month they don't have to scan those thousand people again so how do you deal with churn so actually for the legislation you kind of as an institution you need to do continuous screening on your customer base so as long as you have an active business relationship with a bank for example then they need to know this information about you so for us we basically as long as a customer is active within a bank we monitor them and have that as part of our pricing model which is why we sort of refer to it as a active customer instead of each screening uh i see i see i see okay and what do you i'm sure the seat price varies with volume but on average what do you pay per act or what do you charge for active customer for active customers i'd say it's about maybe 50 cents uh but then we can also scale that as the volumes grow we're at very low volume we also have psu gold models yep fair enough the the what's the largest customer uh that you're working at today how many scans or customer checks are they doing per month they're doing about 250 50k uh active customers per month uh that's great and am i all right with it's mainly banks it's mainly financial institutions so we kind of focus on the smb to mid-market segment within banking and finance also within gambling and insurance uh but it's the i said the smb to mid-market is our sort of key uh customer segment okay interesting and i imagine if someone's doing that many scans per month they're able to get a discount from 50 cents per customer right yeah so that's what we have sort of a volume based stair step where as they go up to higher volumes the pricing scales with them allowing us to grow with them but they can also make sure that their margins improve and they can sort of scale as well and sam how low can that price per scan or price per customer go i mean i'm talking like 10 cents uh it can uh it really depends on sort of what those volumes look like and well that's why i'm curious what the volume example you just gave at that volume can it be 10 cents as a scan uh it'd be have to be higher to get to that level why is that uh it's basically so that we can get a sort of better discount on you know the volumes that we process and we still have scaling effects on these sort of sources that we manage to to get these kind of information okay so that biggest customer then they're they're paying more than 10 cents per act of customer per month you need more volume in order to give them a bigger discount yeah i see okay give me the back story here when did you start writing code for this platform um i actually never did uh so i was more of a product manager and my two co-founders started but i think the first line of code was around late 2018 and that was when we sort of really validated the product the sort of the customer base and we felt that we had something to offer sort of more sort of fintech or techy finance customers that wanted a sort of an api focused solution and did you guys just split equity evenly yeah yo you're nice to each other well we kind of saw each other's strengths and realized that hey we if we want to do this really well we all need to be equally incentivized to sort of put everything into it now did you guys raise capital or bootstrap we boost chat the first three years and also just recently this year end of end of april sort of took in our first sort of seed round and how much was that for uh that was i think in dollars just 500 000 or something around that and why did you need that why couldn't you keep bootstrapping uh for us it was uh we wanted to sort of wait with uh sort of raising funds to show that we have a business that we know how to sell and we can sort of uh recreate all the steps of it and then show that you know with funding we can scale faster and go into other markets and show that there is a model that we can scale in terms of sales in terms of outreach versus uh you know experimenting like being like oh we're trying to figure this out or we don't really know yet and at that stage we really felt that we could take it to the next level we could sort of staff up and sort of go into other markets and siama obviously you want to go to other markets but obviously you need to take care of current customers as well how many current customers are you working with uh we have about 30 current customers and what market are you excited about moving into at the moment it's to move outside of sweden which is where we have most of our customers we also have customers in all the nordic countries and out in europe so our sort of next focus is on being more proactive in our outreach in the nordic countries and in the european countries i see i see and what would you say of those 30 customers on average how many how many customer checks are they doing per month would you say um on average i think you'll be about 15 20 000 and it varies quite a lot from our smallest which maybe has a few handfuls a few hundred to as i mentioned at the largest one which is around 250 000. yup yup but if you're doing i mean 15 000 scans per month and you get a little discount off the 50 cents per scan let's say it's 30 cents per scan these are like enterprise customers right that's like 4 500 a month for you in terms of revenue right yeah it can be yeah yeah interesting very cool um okay that makes a lot of sense so you're looking to expand you mentioned your three co-founders what's the other what's the rest of the team look like today how many people so we're six people today um and then excluding a couple of of interns but the team sort of instructors basically are my two co-founders who are developers we have a designer a product designer and a sales person and are sort of now adding another couple of sales people and another developer and then we have additional help within sort of market pr and um interns within sort of sales and prospecting and it sounds like you guys are with that i mean it sounds like a small team relative to the larger amount of revenue that you're doing can we take 30 active customers times four to five thousand a month you're doing about 130 000 a month in revenue right now uh we're not quite there yet um i think we're still activating customers so we kind of get them sort of signed up and they kind of depending on when they receive their license to go live that's when they sort of start paying when they actually are to have active live customers in the platform how many of the 30 are active about half of them so oh i see i see i see okay so you're more like sixty thousand a month in revenue something like that i'd say it's closer to uh right zero what's the number so it's about like fifteen thousand right now how much fifteen thousand one five okay got it um what so so how do you i mean how where do you think most your growth is going to come from is it getting current customers to do more customer checks per month or have you already penetrated your current base at like 100 no so it's basically around getting new customers we're in a sort of a niche market but it's a quite big niche with sort of as i mentioned banking and finance customers insurance gambling um and our product is sort of internationally viable so we have customers from outside of sweden as well and it's also looking at customers that we can grow so as our summer customers are already small but they're as they're scaling and they're growing we have another opportunity to grow with them so it's sort of a two-prong for us we want to have new customers we also see ourselves growing with our existing customers and speaking of growth if you're at fifteen thousand dollars today in revenue where were you exactly a year ago do you remember a year ago we were maybe in less than a thousand uh that was a really sort of early stage for us we just figured out that okay the product works people are willing to pay for it and we just need to learn how to reach out to customers and sell it so we had three customers i'd say by beginning of 2020 and end of 2020 we had 15. yep uh well at the end of 2020 i had 15 you said he had 15 active customers right now yeah so those were signed customers and then sort of the active actives are essentially just sort of catching up and uh how many new so sorry i think you just said you have 15 active customers today but then you said you had 15 at you know 12 months ago so have you had no growth the past 12 months no so we had 15 signed customers by end of 2020 um and out of those they were like really five customers they were active so i think that triple the sort of active customers and the signed customers as well we got it they were signed but they weren't active yet yeah i got it okay very cool and and then do you know anything yet about cac what's it cost you to onboard a new five you know thousand dollar a month customer at the moment um it's relatively high i think we have around uh let's say uh eight thousand dollars in uh counting sort of our salesperson salaries as most of our sales are sort of outreach based and as we're getting sort of scaling up our sales and getting more and more customers that's going down on a per customer level yep that makes sense do you know anything yet about churn or is it too early um i'd say it's still too early but we've our oldest customer is three years old and we haven't lost a customer yet so our churn is really good sort of there is a stickiness in an api based product and that is a sort of must-have for these kind of customers and and then of course it's useful thinking of zero percent churn forever but we're still pretty confident that we have a product that offers a lot of value and it's only our customers to lose so we kind of make sure that we're on top of their needs and make sure that they don't really want to leave sam on that note let's wrap up with the famous five number one favorite business book oh um i think it's rework i forget the name of the author but um number two is there a ceo you're following or studying uh none really actually okay number three what's your favorite online tool for building clients um it's probably slack uh there's all the communication all the planning is going on there number four how many hours of sleep to get every night eight two yeah seven to eight hours and what's your situation see i'm married single kids uh recently married about half kids oh congrats very cool and how old are you i'm 37 37 last question something you wish you and you were 20. um i think i wish that i had more of a direction when i was 20. i was just figuring out like hey what do i do and what i do guys appliance.io is working with financial institutions to help them make sure that their customer checks are accurate and legally comply uh they have over 15 customers paying today over 30 have signed they bill on a sort of price per check my largest customer scans over 250 000 customers each month again scaling i say 500 000 pre-seed round as they broke fifteen thousand dollars a month in revenue this year looking to scale obviously bigger in 2022. siam thanks for taking us to the top thank you 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 live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a 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