How Polyteda-Cloud CEO Alexander Grudanov grew Polyteda-Cloud to $132K revenue and 100 customers in 2019.

hello everyone my guest today is alexander gurdanov he uh graduated from kiev polytechnic university in 2007 with a magister degree on instrumental building he's got 15 years background in microelectro micro electronics and eda first ceo of the startup company from ukraine which won the h-2020 sme instrument phase two from ec which is a lot of technical stuff we'll jump into it today today he's building polytechnic cloud which again we're going to focus on today alexander you ready to take it to the top yes hi everyone hi nathan nice hello everybody yeah so so make this the risk here is we lose people because this is very technical so break this down in kind of terms that i can understand what does polytata cloud do and what's your revenue model how do you make money okay first of all i would like to give you a quick jump to our background because it's very specific so um well tell alexander just to be clear tell me what the product does first and then fill it in with your background uh our product does uh the thing which is called physical verification physical verification on our ic design so it's very uh specific task that it's performed of the class of the tool which is called electronics design automation software tools okay and name just name a customer and how the customer uses you such customers as bosch for example sensortech uh different ic designers in europe and what does ic mean i see design integrated circuit integrated circuit design very good okay so so and then uh is there is there a customer that you could name that we might know or are they all pretty technical companies uh i would like to skip the exact names because of their privacy and well i mean you have just to be clear alexander you have websites streaming across your website logos okay so cogenda techstart netflix yes cadre semicolon partner yeah it's our partners uh because it's quite hard for the single ada software company to distribute their tools so the company you name they help us to promote our our products over the market they don't use our tool for internal purposes these are like our distributors or iam partners something like that okay i understand here's the thing i don't want to move on from from this yet because i feel like i don't have a grasp on what it does which means my audience won't right so advanced cloud-based physical verification um if this tech was built into the mac that i'm using right now to record this interview uh i mean one is that an actual use case and two what would that mean for my computer what are you doing okay uh let me explain uh because without the explanation it would be hard to understand so we've got microchips everywhere agreed yes smartphones laptops uh car computers so um before starting the actual manufacturing of the devices each layout of the design has to be checked to find and fix the errors made by ic ic developers ic designers on the stage before starting uh of actual manifest manufacturing on semiconductor plan which is called fab yeah so it's quite important that the check that is performed by such a class of ide tools is stated to see whether the layout meets certain very specific requirements and limitation provided by the selected process nodes and as a result any error overlooked at this stage may result in loss of multi-million dollars name an example yeah where you might lose millions of dollars okay uh typical typical examples you know the famous stories where for example top smartphone manufacturer recalls the shipment of 100 000 plus devices due to due to uh back in uh battery control controller okay or another story where famous japanese car manufacturer recalls the same amount of cars due to let's say airbag uh defect or some problems with so so then work backwards from there how do you make sure that japanese car manufacturer doesn't have to recall those cars for airbag issues we don't stay we don't stay for sure that it's uh physical verification related but even if a dozen of of such cases uh related to to errors overlooked on pv stage it uh it cost serious money so uh each chip inside uh any device uh passes through the verification stage before it uh it goes to the manufacturing on the semiconductor plant okay so you're just to be clear these chips that you're putting in alexander then and sorry i keep cutting off but we're short on time so i want to move through this quickly these chips you're putting in these machines are basically a way for you to test them before they go out at scale to reduce things like you know callbacks and drawbacks yes you're right but not cheap chips as a hardware chips but they're they're layout uh representation okay are you selling a physical are you selling something physical or is it software software it's a software to check the the specifically a specific file formats that goes to the foundry okay so your and then your sales model is it a sas based model yes it's sales based model uh in some way combine it with a classical desktop model but uh now we're introducing the pure sas model okay and which means which mean between paper use for using the tool or pay as you go it's actually the same so help me understand kind of what kind of company you're targeting are these people going to pay on average 100 bucks a month or 100 000 per month uh we have roughly calculated and it was pruned by numerous of cases that typical needs uh in pv for sme companies our tool is actually to to decrease the market entry for the sme companies specifically small and medium companies so it's about [Music] 60 70 hours per tape out which means uh up to three thousand of dollars for tape out while the so just because alexander just make this simple for us so each month one of these smes is gonna pay you how much how much per month for your software three thousand uh i think per month it would be less uh we we calculated per tape out actually but we don't know how many we don't know how many tape outs your average customer does per month so it's useless for us so on average typically it's it's typically from one to three tape outs per year due to manufacturing implementation okay so anywhere between three and kind of ten thousand dollars per year is what an sme might pay you for three tape outs sorry again lost connection so someone will pay you between three and ten thousand or nine thousand dollars per year for one to three take outs yes yes correct interesting all right put this on a timeline for us when did you launch the company um [Music] we established our company in 2015. okay it's some in something like a spin-off from from another politeda which was present on the market since 2009 but was represented the classical uh outdated let's say desktop-based model it's very hard to compete with the top players using this did you acquire this or were you inside the company that owned it and you led this spin out no we uh the the another bigger palette is among the shark holders of our new startup spin-off company and uh the storyline is that uh from from our from from our another company we have received the the quite quite market adult quite ready a physical verification tool for further development uh with cloud-based model okay so so how many how many uh are sorry how have you capitalized the company how much have you raised to date we raised 1.2 million euro from european union to execute uh horizon 2020 uh grand projects yes so just be clear that wasn't dilutive that was a free money essentially a grant what do you mean free in other words they're not sitting on your cap table the european union doesn't own percent of the company no it doesn't the company so they're not on the count is there is there any equity money you've raised not grant money but any equity you've raised space speaking specifically on political clout not yet but in plan okay got it so the way you funded the company today is via a grant from the european union for 1.5 million us dollars or about one point two euros 1.2 1.2 well that's your that's euros which is about 1.5 million us dollars yes yes correct yeah okay very good good and then um so you launched in 2015 you love the spin out now how many customers have you scaled to today uh [Music] now it's unfortunately less than 100 customers but we are quite happy with the with the scalability we have last few months so depends on our primary partners uh foundries and they are they open doors to a wide list of customers so uh we are happy to see uh more and more founders uh connected uh to our you're saying you're saying foundry is correct founders yeah yes and just repair when you say less than 100 customers i mean you guys have are you are you still pre-sales at this point you're pre-revenue or no you do have some paying customers yes we have uh some part of the customers are already pay for our tool on on sales model okay and a year ago were you pre-revenue then not yet no so let's say today you have a hundred customers paying three thousand dollars a year minimum a year ago did you have any revenue or were you pre-revenue then [Music] it's it's it's hard to answer because uh we do not charge them for the fixed uh for the fixed part of the money they prepared a certain amount they see it it makes sense before starting the tape out yeah alexander sorry my ques sorry miscommunication a year ago today so in january in february of 2018 did you have any paying customers on the sales process i'm sorry sorry for me the student last uh last year the same day we were at the stage of uh executing the project and implementation of the solution yeah it was not the stage of uh commercial exploitation in the whites got it okay good so pre-revenue and then and then today i mean can i...