How SAFA CEO Aarik Gulaya grew SAFA to $644.2K revenue with a 4 person team in 2024.

hey folks my guest today is arc goliath he's the ceo of sappa a b2b sas company automating the safety analysis process for safety critical software are you ready to take it to the top yeah yeah most definitely what's an example of safety critical software yeah so safety critical software uh you know specifically we can look at a few different industries uh the automotive industry robotics industry medical devices and aerospace essentially you know these are exceptionally complex systems uh and they're dealing with humans in many cases either in the transportation of them or they're working around them so in any case where a failure can happen in the operation of that software that may harm a human we can consider that a safety critical software so you might sell to delta airlines and the software that runs the planes that they have to check right before every every takeoff yeah yeah in theory delta airlines could could use our product for for any of their safety case development around their planes interesting okay and so how do you price this thing what's the average customer paying per year yeah so currently you know we're pre-revenue and very early stage so when we're looking at pricing we're typically using uh you know competitor pricing uh so we we're looking at ibm doors jama software these are very large requirements management software's in the space for reference there ibm doors can start at fifty thousand dollars for an enterprise application uh then they'll charge uh you know any additional user seats typically this ranges from 500 to 1600 and then any additional functionality and add-ons coming in for you know whatever price they may put that at and arc so you're you're building your building you're building what when do you write the first line of code this year last year sometimes yeah so i mean i guess to give a little background uh you know we've been working with a professor at the university of notre dame uh her name is dr jane cleland huang and she's been working on traceability specifically automating that process for the last 20 plus years so if she was here she'd probably say she started in early 2000s trying to figure this problem out you guys though joining a team was last year yes i was brought on specifically to commercialize this technology into a standalone spin out from the university yeah so this is always we get this a lot with founders i remember when i was at virginia tech trying to spin ip out of the university's research lab it was a nightmare because they just had very archaic terms around ownership and all this kind of stuff so is notre dame friendly here how much equity does notre dame own in sofa yeah so we're we're working directly with the idea center at notre dame they're their uh you know entrepreneurship center uh they've typically the the classic process is sort of just to license ip out uh to larger corporations and then you know in some cases that research may or may not come to light uh in this case we were attempting to build a startup within notre dame so currently uh we are 100 notre dame wholly owned uh but in the next month month and a half we will be spinning out the company and notre dame will have you know a 20 stake in terms of the idea center and then we'll also be playing paying a nominal license fee uh to the university of notre dame yeah okay got it got it plus license v and then what does that leave for you the professor and any of their co-founders yeah yeah so you know we've sort of set aside for now in terms of first round uh first round investment uh you know in a seed round or something like that as well as an employee options pool around the 40 to 50 percent uh of that equity table or that cap table in terms of what goes to everyone else you know jane is going to be keeping like about a nine percent equity stake um alberto who is our lead engineer another nine percent uh myself will be at ten percent uh and then we have um we have our our ai engineer jin fang who will have two percent as well interesting okay so between jane the lead engineer you the lead ai engineer you guys all together around 50 percent right just a little bit under yeah a little bit under which we've gotten pushed back on 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 we'll 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 founderpath and we're thrilled to bring it to you all right we're going to go back to the youtube video here in a second but if you want to check this tool out if you want to 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 founderprep.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 yeah and then an investor put some capital on the own some above that notre dame will keep 20 and that's how you're planning yeah okay interesting um i guess why do i like you you're bright you're sharpening commercialized why get in a mess like this why not just launch something yourself from scratch and own 100 yeah yeah so i mean it really was uh i guess a happy accident or whatever you want to call it a an event of chaos uh where i happen to interview for a random position looking at founder associates for for this university research right do you have the skills or the background to essentially commercialize this technology um for me it's just quite a phenomenal piece of technology the the natural language processing models and deep learning models that we're applying to this problem are exceptionally generalizable um so you know for on my own end i've looked at starting separate companies around natural language processing and it just seemed like a better fit um for me and my skills for something that you know we can expand into many industries for so you're in charge of commercialization who's going to be your first customer yeah so right now uh you know we're finishing up our mvp and i know that term is used very broadly but but this will be somewhat of a more put together uh first product offering if you will uh we're currently looking at two to three development partners that we're going to be starting with in the next month to month and a half one of those is lhp engineering we're currently in talks about you know what will that potential partnership look like how can we add to their process they work specifically with an automotive industry and will be helping us with some you know implementation for for some of our more advanced features and then we're looking at two other smaller companies that work in the robotics field specifically within agritech and uh mobile robotics what was lhp engineering going to be paying you for this so lhp engineering's actually gonna right now we're discussing them coming in on our safe round uh so they would come in for potentially they've self-committed to twenty-five thousand dollars and so [Music] you know i guess technically they we won't consider that payment we may have them pay us a nominal amount in order to say it's a paid pilot um but moving forward the other pilot partners will be paying us and so when do you think you can get your first paid customer spun up right you refresh the bb t or chase bank account whoa there's 50k there yeah yeah yeah so right now uh at least the way that the product roadmap is is turning out um we're looking at a beta program in about q2 or q3 of 2022 and then we're looking at a full release in q1 of 2024 uh or 2023 sorry my mistake um so we'll probably be looking at that first paying candidate within that beta program obviously that'll be a discounted fee in terms of what a full license fee or licensed customer will look like we'll probably probably see that in q1 of 2023. what are you learning right now as you talk and have commercialization conversations what can you price against is it sort of number of software runs or tests completed in a certain month or what's the metric yeah so that that's an option it's an option that we're sort of open to uh the the traditional way we've seen pricing in this industry is how many users are actually on the platform so within an engineering team do you have 10 people who would be interacting with this platform 20 people uh and typically that's how ibm doors and jama software price their price they're offering as well and why what are you guys doing uniquely different than than uh than those two ibm doors and jama software yeah yeah so they're i mean the the biggest and most obvious is the machine learning and deep learning aspect of it so i mean these are great tools right we're not going to knock against them but essentially they provide a blank slate for companies to come into and create all of their documentation link all of this documentation together and provide change analysis that way where safa is differentiated is within that application of deep learning and natural language processing so as opposed to having an engineer having to manually go through and link all of these things together we can automate that process partially automate it so that we can speed that up in terms of change analysis we're able to better understand uh how one change in a part of a complex system affects a top level requirement or something like this and then finally we're also looking at integrating safety standards directly into the platform uh sort of native standard support which ibm doors and gemma they don't provide this uh engineers typically need to know this like the back of their hand uh but if we can provide them uh this type of support within the platform we can increase that speed to safety certification very cool how many folks are on the team today full time yeah so full-time uh we currently we technically don't have any full-time employees uh at the company uh but we do have uh our lead front-end engineer our lead engineer uh we have two so i guess how many are how many are part-time total yeah yeah so for uh about six six people six yep and so because you're still waiting on mep to get done are you in charge of raising a safe round as head of commercialization yes yes that is i i handle all of the business side in terms of setting up the websites getting all of the product market fit uh validation into place um any infrastructure we may need and then finally uh also interfacing with vcs and getting that funding and so how much are you going to raise so currently uh we're looking at 200 000 uh in a 2 million dollar cap 20 discount uh we have 125k of that hard committed 25 soft committed so we have 50 000 outstanding currently very cool and so when do you think that'll close uh we're looking to close that at the end of next month uh that we should have everyone in and i'm currently meeting uh weekly with with people to to to drum up interest so well you're you're off to the raises arc it's gonna be fun to watch you have to come in six months and uh 12 months give us an update okay yeah yeah all right before we wrap up let's uh chat uh through the famous five here number one favorite business book favorite business book um it's it's kind of a cop-out start with why number two is there a ceo you're following or studying um masayoshi-san even though i wouldn't really consider him as much of a ceo but more of a holdings um actually softbank's more of a holdings company now but yeah number three what's your favorite online tool for building the business um notion number four how many hours of sleep to get every night uh five to six okay and what's your situation married single kids um sing or well i'm not single i'm i'm in a relationship long-term marriage nobody's not married yeah no kids all right how old are you i am 27 years old 27 last question something you wish you when you were 20 um something i wish if you give your all to something it will work out don't don't stress out about it guys there you have it stop with that ai notre dame's spin out and in case you're not familiar with how those spin outs work you know they're anticipating notre dame will own about twenty percent of the ip the professor that developed it on about nine percent arc in charge of commercial commercialization owned call it 10 and then some key engineers other employees own 20 to 30 percent in addition to the investors coming in on their 200 000 safe right now that they're closing on a 2 million cap we hope they can get it done they're building software that helps security critical infrastructure manage and make sure testing is working commuting with direct with ibm doors and drama software we'll see what happens next ark thanks for taking us to the top thank you nathan 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 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