How Quantagonia CEO Sebastian Pokutta grew Quantagonia to $3M revenue with a 26 person team in 2024.

hey folks my guest today is dirk zakiel he's the ceo of very cool company called quantogonia they're provided they provide a quantum and hybrid computing sas platform for enterprises turkey ready tickets to the top yes all right so what does that mean quantum computing platform for sas uh for enterprises yeah so as you said we're running a sas platform and for us star stands not just software as a service it's more about solution as a service because our platform helps companies make better decisions in less time and these could be these decision problems exist in the current hpc the high performance computing space so we're talking mainly about problems in the optimization simulation and ai space okay interesting and so i guess give me an example can you tell me specifically how a customer is using you have any case studies you can share yeah so for example the big optimization problems in the world exist in almost every industry like for example if you need to schedule airplanes yeah these problems are so big that it's impossible to schedule them by hand and it's even impossible if you take the largest computer on the market to just put it on the computer and think this computer could take all possible solutions and find the best solution yeah and so quantum computing so the promise of quantum computing is that these problems could be solved in the future when these quantum computers will be available so industry availability of these computers would take at least three years we estimate three to five years and then putting these problems on a quantum computer will help to speed up really to solve these problems in less time and you can even yeah solve bigger problems yeah so dirk how do you do that i mean do you guys own a bunch of quantum computers you rent out space or you're using other pieces hardware and people's hardware and processing power yeah so far we have access to quantum computers but all these quantum computers are more in research state because there are currently no real industry um usable quantum computers out there but we are currently so that's our hybrid classical compute way we are going because currently we are able to use these problems and put them on classical hardware and this classical hardware could be cpus or gpus fpgas so that these companies already get to speed up and later on when quantum computers are available we can internally move these programs on a quantum computer and basically the the customer will not see anything but he will get get an immense speed up out of that so just be clear are you using sort of a crowdsource approach someone can say i'm not using my laptop right now give it to guantagonia and let them use the processing power and sort of a mesh network sort of format so that a pilot or delta can use them to schedule airplane tracking yeah no no it's not a crowd thing it will be so we connect to computing centers in the back end like we could rely on services like amazon web services and so on on compute centers uh providing these cpus or gpu stuff and in the future quantum computers as well okay got it so you're not you're not necessarily uh like owning quantum compute right now your your secret sauce is writing and taking complex things like tracking airplanes and enabling that problem to be solved with you know aws right now but in the future easily switch your customers to quantum computers exactly yeah we are we are a software provider uh software guys and we help companies to make these better decisions through software so the thing is because you cannot really you cannot just port existing software to quantum computer in the future because it's a totally different architecture um it's a little bit like the new m1 chip with apple so they have invented this rosetta platform the virtual machine so that you could put in x86 code and run it on m1 chip which is a totally different architecture and we will do basically the same for quantum computing so put your x86 code in and you can run it on the quantum computer in the future i see 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 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development you're pre-revenue today then yeah so yeah um exactly so but we have signed up with 10 11 customers were on on loa basis so we're calculating the first wheel problems with them so we could already proven that we have a speed up uh in solving their problems and yeah we are not yet charging them so dirk let's go back to his 11 customers here in a second but first obviously you have to pay yourselves while you guys are building this if you're not making revenue so you guys have raised capital how much did you raise in december we cannot to disclose that because it's under nda but it's enough for this year to grow up to 20 people now well sorry why can't don't don't i mean most governments hire when you raise most most governments require when you raise your investors that you file government forms to to basically say that and on your crunch base profile it says last funding type precede why can't you disclose the amount it's and investors didn't want to disclose it yeah but but why is that it's your company why would the investor why would you give investors control over that i don't know i need to check with them sorry for that well you work directly with them you didn't ask them hey guys why is it important for you not to like to keep this private not yet sorry [Music] well i guess that's a the reason i'm asking is because your ability to retain talent people aren't going to join you unless they know you have runway and so putting a press release out that says we raised x right gets people confidence it also enables you to bring on customers faster this had to have been a conversation during the race i don't believe this never came up so i'm just trying to understand strategically why you were okay with it yeah i need to check with him so we are not disclosing it so that's that's our point yeah so dirk you're missing my question i'm not asking you to disclose how much you raised what i'm asking is strategically why did you decide not to disclose it it doesn't help you get talent and it doesn't help you communicate to the market that you're going to be around for a long time to get big enterprise accounts on day one yeah it's a strategic decision decision which has been made and that's uh we we are not disclosing that decision yeah sorry for the answer you're not answering about four times now so i'm not going to ask it again uh we'll we'll move on um the i guess uh i guess some of them pivot right so how many folks are full-time today on the team we are now with uh 12 i need to think about it because we're adding people every week yeah 12 foots now yeah okay and how many of those folks are engineers um out of the 12 seven are engineers so far okay and how are you able to recruit these engineers right i imagine this requires like top top to your talent yeah we have a very strong network for example two of our founders sebastian he's leading or he's vice president of the souza institute in berlin which is one of the top hpc institutes centers here in europe so he is also professorship for optimization and machine learning so we could attract through his network a lot of people we have one of our co-founders is sabina yeshke she's also professor two professorships at utu berlin and in ahn and she is a former board member of the deutsche bahn that's a german railway in germany's top company belongs to the top 50 companies here so through that network we could hire a lot of hire and attract a lot of people and um yeah myself i'm in since 25 years in this business of optimization simulations and machine learning and yeah basically mainly through our network we are able to get the people so your title is ceo but it's really curious i mean you two are basically co-founders right yes exactly so my curious i'm a computer scientist i started in technical positions but then i moved pretty fast to sales positions leading whole sales teams and then i was the co-founder of a company gorobi gmbh in germany i was building up the whole operations here for the german market they are the market leader for optimization and software based that company got sold in 2017 to a private equity firm and i also founded a company doing sports scheduling so which is also related to optimization because you cannot imagine but these problems are also really complicated in terms of how many solutions you could find and getting the best schedule out of it yeah like the nfl they are running several thousand notes on amazon for a few months just to get the best nfl schedule in the u.s so what there are three i mean uh uh dr sabina dr sebastian you and philip there's four co-founders yeah exactly okay got it and was this was this i mean based off those backgrounds there's a lot of connections to sort of institutions right was this a ip spin out developed inside of an institution it's not a no not a totally spin-off so we are building our i own ip from scratch okay got it so there are there are no institutions that that you're licensing this ip from you don't have any license agreements like that we are strongly connected to fraunhofer institute here in germany which is a large research organization and because fraunhofer technology funds they are one of our investors so we are strongly connected there and having research connections there and you could say that in some part we are a little spin-off of them yes i see okay so they they true i mean true or false they own equity in the business to some degree exactly yeah okay interesting okay talk to me about uh the first eleven enterprise customers right a lot of people don't they're not always sure how to land at enterprise customers versus a startup some people say you know send them a poc then sign up as a design partner and have them sort of pre-purchase a software license that doesn't exist yet help me understand how you're closing this yeah so those those partners so we we know them from our business network and they already have these kind of problems modded in a way so that they could easily export those problems and ask us if we can make some some benchmark ones and see if we could also solve their mainly scheduling problems like for production scheduling drop drop scheduling for example one we have in energy scheduling it's like the power plant scheduling and then it's quite because we have some import interface we could quite easily put it on our platform and run these first benchmarks okay so yeah so my question is contract wise what are you selling them right now is it a poc is it an rfp is it a prepayment of a software license what are you selling yeah we are selling them a partnership so it's in the beginning it's like an loe so it's an understanding that we are working together on these problems elaborate if our solutions would work for them and the next step would be that they are paying for for the solutions and if we could prove that it's working so as i said we are just releasing version 1.0 of our software and so that will be the work for the next few weeks to really prove that we are bringing benefit to them and then the next step would be that this will turn into a commercial relationship then okay sorry what does loe stand for that's intense oh loi letter of another oh sorry yeah i'm going what's an loe got it you've signed you've signed lois now it does do the loi say something like we're going to deliver x product if x works defined by y then you'll pay z no it's not playing z but it's stating that we have a joint collaboration and if that turns out then we work on a commercial relationship yeah okay how do you define do you define in the loi what success means yeah what success means if we are faster than the current stuff available in the markets then that's defined as a success because we can really pretty easy benchmark how long they need to solve the existing problems on their hardware with the current software there well yeah dirk give me an example of that so a power plant how long does it take them to solve one of their big what's like what the promo power plant has and how long does that typically take them without you yeah for example in germany all the energy is traded within windows or 15 minutes so a big energy companies they make every 15 minutes a decision should we buy energy should we produce energy do we get enough solar energy for the next 15 minutes or wind energy and so they have a time window of these 15 minutes is five minutes data in five minutes making the next the right decision and then five minutes data out and if they could develo if they could solve in these five minutes and more complex problems that's a huge business impact for them because then it's like a trading for in finance yeah and so that's a benchmark how much could we calculate in these five minutes if we could do it faster if we could calculate in three minutes then they could put more yeah but calculate what so like how do you define how much you can calculate is it you know is it end data points like that's what i'm trying to quantify yeah it's basically their problem so they can what they currently calculate in five minutes so they have yeah maybe ten thousand data points and an objective function if we could solve the same in three minutes so then it's comparable okay got it so you'll say cur your current thing in the lo your current solution solves 10k objective functions over five minutes we can solve 10k objective functions in 2.5 minutes if we do that during the loe then we set ourselves up for a commercial relationship exactly ah very interesting okay that's very helpful and then okay so next step is how do you think about pricing let's say you have successful plois right how do you decide what to price the thing at yeah so that's what we're currently working on so it depends so because our customers they just won a problem twice a year because it's a strategic decision yeah how do we build up our supply chain network so that's a decision you make once every few years yeah or like if you do password delivery big company for example like ups so they make a decision for their network once a year so then it might be more expensive to create this one solves this one uh once in a time solution instead of companies like i said the electricity power plant companies doing that every 15 minutes so they might buy more subscription which allows them to do yeah calculations all the time for example and um that's where we are currently working on to make a price model which adapts to to everybody so we have benchmarks because from our previous experiences how how much we could charge for that and they as i said they are saving a lot of money if they get to the best solution and they're easily willing to pay in the six digits [Music] us dollar space per year for example do you tie the price point to number of objective functions you're solving over a standard period of time like what's the utility-based thing you price against yeah so a number of objective functions doesn't make sense because networks the number of variables because some some people have a small problem which brings a lot of business value and some have mathematically speaking so yeah so what do you tie pricing to utility wise is it an amount of data computed over a certain period of time like what are you quantified by yeah it's it will be more related to the value we could bring to their solving their problem that's that's what we okay so that's hard right because then you have to prove attribution right so that is basically custom pricing every single time it's it's very very high touch it's a but you know you need to hire a bunch of aes etc we will have uh in the in the future some standard pricing for example if you you if you utilize our um service for for the like for the whole time you need that kind of speed up you need that kind you have that kind of model size then we could uh put a price tag for it uh like i said something 100k here if you have a powerpoint scale power plant scheduling for example but yeah if you have just if you need to because you cannot make a pricing based on um on time as i said because one customer is running it for 10 minutes once a year having high value another needs to run it's a whole year and having low value and a high value but low value per time yeah so that's not comparable well we'll see what happens the question is is the funding you raised give you enough time to prove these things out to drive some revenue to either get profitable or get into your next round and we can look at blemish ventures and fttf their typical deal sizes are anywhere between 500k and and 2 million euros so we can assume you sort of raise something in that range how much time do you think you have to start proving out contracts before you have to think about raising again so plan is that so we we might have time for another year but the plan is maybe to raise um end or end of the year but we are not currently raising fi all right we'll see what happens in the meantime jerk let's wrap up here with the famous five number one favorite business book what's your favorite business book dirk oh my my favorite business book is um it's an old book it's a lot it's called lamp large account management process so when i started to to become from a technical person a salesperson um i bought this was my one of my first sales books i bought and because i saw sales not like an art but it was more like in process and to understand the accounts so that gives you a pretty good perspective on how to understand large accounts how to uh deal with the sales from the state point of view how to identify the objectives and the goals of this account and make account management in a really structured way so that's uh that's the business book it's old i guess 20 years but it's still current like i think very cool number two is their see is there a ceo you're following or studying uh ceo i'm following uh studying so it's a good question not not a single one i'm following a lot on on linkedin not a specific one um i could name a single person okay number three what's your favorite online tool for building the business we have severals but i liked a lot to work with notion in the past but that's that's pretty helpful for bringing information for the team together and that's number four how many hours of sleep do you get every night six and what's your situation married single kids married three kids wow busy guy how how old are you dirk how old are you dirk i am i'm 47 and great 47 last last question something you wish you knew when you were 20 years old i wish i had that's a good question i thought about it yesterday already and i wished to meet my wife earlier i met my wife when i was 30 and i would wish to meet matt mitter 20 already that's a good answer i've never heard that one before over 3000 episodes never heard that one that's a really good one all right guys there you have it quantagonia.com helping big corporations enterprises power plants uh delta right plane companies understand big problems that need quantum power but how to solve those problems today using things like aws they sort of sit in between with the idea long term to move those problems onto quantum power when quantum is more available quantum computers are more pervasive we'll see what happens they raised a precede uh last year to fund their growth they're at 12 people today pre-revenue but 11 enterprises in lois right now we'll see what happens next as they launch pricing dirk 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 deal live it is fun to watch every thursday 1pm 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