How SAWO Reached 56 Million Monthly Authentications and a $65M Valuation in Under Two Years (Interview with CEO Prabhat Sahu)

Introduction and Background

Nathan Latka

00:00Hey, folks. My guest today is Prabhat Sahu. He's crunching data and chasing targets since 2016. His vocation in the last half of the decade has been driven by statistics, structures, and stories from founding an e commerce company in 2016 to working for the government with a special focus on the agriculture department, assisting farmers to move beyond the middleman lobby. He then founded Sahu, that's sawolabs.com, in 2020 to be the one stop solution for all your authentication

00:25needs. Prabhat, you ready to take us to the top?

Prabhat Sahu

00:28>> Sure. Yeah. Sure. Nathan, excited to be with you.

Nathan Latka

00:30Yeah. I'm excited you're here. So tell us, who's paying for the software, and and and how do you structure? How do they use you?

How SAWO Works and Who Uses It

Prabhat Sahu

00:37>> Sure. So I realized around 2020... August 28 is when I realized that we should go ahead and solve the aspects of having passwords or one time codes to log on to applications. And, you know, we... The idea was to smoothen the overall journey. We ended up building a plug in SDK, which could plug plug on to any mobile or web application and eventually let users come on work. So... Yeah. Essentially, right now, we have 41 odd

Enterprise Customers and Use Cases

Prabhat Sahu

01:11>> enterprise customers who pay for the application, and it's been it's been around for a while now. Yep.

Nathan Latka

01:18Can you can you name some of those customers just so we get an idea of who's paying you?

Prabhat Sahu

01:22>> So the customers are very geographical here. So we have

01:28>> around the top three cryptocurrencies out of the top five in India. Our cryptocurrency exchanges out of top five in India are a part of the SAWO's community. Apart from that, we have approximately 36 really large ecommerce clients who basically operate out of India geographically, and we are doing a lot of business with the with the, you know, one of India's largest banks as well.

Nathan Latka

01:55Okay. Got it. So they're all using you to authenticate users when they sign up, whether it's for a cryptocurrency exchange, a bank, or an ecommerce platform?

Prabhat Sahu

02:02>> Yes. So I see. We do

02:03>> 56,000,000 on the...

Nathan Latka

02:04What do they pay you per month on average?

Pricing Model and Authentication Volume

Prabhat Sahu

02:08>> Average... Essentially, we do 56,000,000 authentications a month, and we charge $0.0006 per authentication.

Nathan Latka

02:15Prabhat, say that say that a little bit slower.

Prabhat Sahu

02:18>> 56,000,000 authentications a month is what we do, and $0.0006 is average we charge for authentication. So the ticket size lies anywhere from $10,000 to $12,000.

Nathan Latka

02:31A month or a year?

Prabhat Sahu

02:33>> A year.

Nathan Latka

02:34A year. Okay. Got it. So you've got essentially 41 customers paying you about a thousand to $2,000 per month. So you're doing about 40 to $50,000 a month right now in revenue?

Monthly Revenue and Total Paying Customers

Prabhat Sahu

02:44>> We do approximately upwards of $130,000.

Nathan Latka

02:50Oh, okay. I did the... I did that math wrong. So so what... Are you selling something else besides authentications or is that all authentication?

Prabhat Sahu

02:56>> We don't essentially, but the point is the 41 are just enterprise. Right? We have a... We have really small ticket size customers as well who pay anywhere from $18 to a $100.

Nathan Latka

03:06So that also comes up. I see. And if you're doing a 130......

Prabhat Sahu

03:09>> Total of 9,000 customers in in total, which includes premium as well.

Nathan Latka

03:14How many are paying at least a dollar?

Prabhat Sahu

03:21>> Upwards of upwards of 300. Around three and twenty odd.

Nathan Latka

03:25Three twenty?

Prabhat Sahu

03:27>> Yep. Yep. Yep.

Nathan Latka

03:28Three twenty. Interesting. Okay. Very cool. And if you're at a $130,000 a month today in revenue, where were you exactly a year ago?

Prabhat Sahu

03:35>> A year ago, we were not operational in business itself. We started this February to be operational. Monetization started around May.

Nathan Latka

03:43When did you write your first line of code?

Prabhat Sahu

03:48>> July last year.

Funding History: Pre-Seed and Seed Rounds

Nathan Latka

03:49Okay. So 2020 is when you started coding the tool. And help me understand how you've grown this. Did you guys just choose to raise capital or bootstrap?

Prabhat Sahu

03:56>> We have raised capital. We have raised a substantial amount of capital, upwards of — I'd say about a million dollars in total.

Nathan Latka

04:03Okay. And it... I think you did that in a pre seed round and then a seed round. Is that right?

Prabhat Sahu

04:08>> Yeah. Yeah.

Nathan Latka

04:08We've a lot The

Prabhat Sahu

04:11>> pre seed round was around $34,000 plus an extension of 60,000 more, and then there was a $860,000 seed round.

Nathan Latka

04:21Okay. And and most people in their seed round are selling between 1020% of the business. What valuation did you raise that at?

Prabhat Sahu

04:30>> Around 13%.

Nathan Latka

04:32You sold about 30 per... Three zero percent?

Prabhat Sahu

04:35>> Thirteen. One three. One three.

Nathan Latka

04:36One Okay. That's great. And did you feel that that valuation was fair? Did you raise from... What... Where were the investors from that you raised from?

Prabhat Sahu

04:44>> They're they're a VC fund. They're a really large venture capital fund based out in They are... It's it's run by the ex cofounders of Infosys.

Nathan Latka

04:53Okay. Good group. So you raised $860,000 at a... About a $6,000,000 valuation selling 13%. And are you raising capital today? Are you still gonna... Still using that capital you just raised?

Series A Round and Use of Capital

Prabhat Sahu

05:04>> We are almost about to close on on a $9,000,000 round. Mhmm. That's going to be our Series A.

Nathan Latka

05:12And why do you need the 9,000,000? Where do you plan to invest that?

Prabhat Sahu

05:15>> Yeah. Essentially, the the whole product was built on product led growth and company led growth. So the idea is to spend at least 40% of it on accelerating the product's vision and increasing the speed at which the product operates and the product the the product is growing. And around around 30% of it goes into expansion of the community and the rest into human resource and other expenses.

Nathan Latka

05:38What does that mean when you say expansion of the community? I mean, how do you grow a bigger community to then turn into more freemium users?

Prabhat Sahu

05:43>> So right now, we have an open and closed community in total of 12,000 odd developers. The the idea is to...

Nathan Latka

05:51Where is it? What's... Where where can people go visit the community?

Prabhat Sahu

05:55>> Discord and Slack.

Nathan Latka

05:57What's the... What's the name of the Slack group?

Prabhat Sahu

06:00>> The name of the Slack group is called the Product Led Gem.

Nathan Latka

06:05Can you spell that?

Prabhat Sahu

06:06>> The product led gem.

Nathan Latka

06:08Oh, the product led gem. Yep. Interesting. And why why are people in that Slack group good fits for authentication? I mean, are there banks and ecommerce brands hanging out and cryptocurrency just hanging out in that group?

Prabhat Sahu

06:21>> So, essentially, the top of funnel, the idea was to bring bring a lot of developers and product managers in in a group together, provide them a lot of value, make sure they engage, and then eventually profile them and ensure that the product seeps into their daily habits in itself. So that's something that we did. We did not bring ecommerce brands or banks to the platform to start with. We just brought everybody. We saw who's taking the

06:47>> product, and that's how the brand grew into itself.

Nathan Latka

06:50That makes a lot of sense. Now when you raised the $94,000 seed round, what cap was that at or what valuation?

Prabhat Sahu

06:58>> It... I diluted approximately 7%.

Nathan Latka

07:00Seven? Yep. That's fairly low. You did a good job managing dilution in your early rounds. Have you had experience raising capital before?

Prabhat Sahu

07:08>> Yeah. This is my second time raising capital.

Nathan Latka

07:11Oh, tell me about your first company. What would you work on there?

Prabhat Sahu

07:14>> I I... We were running a ecommerce SaaS brand. The idea was to build scalable SaaS to increase the hyper local ecommerce market in itself. So I I raised approx... I raised approximately $120,000 around six years back.

Nathan Latka

07:31And what happened to that business?

Prabhat Sahu

07:33>> That eventually fizzled off. The market wasn't... The... Thought we were too early. Yep.

Nathan Latka

07:39Okay. So you... So you sort of shut it down?

Prabhat Sahu

07:41>> Yeah. We we eventually, you know, diluted overall business, sold the product to one of the clients itself, recovered the principal, and shut it.

Nathan Latka

07:52That's a great way to recover your principal, return it to investors, and then sort of move on to your next thing. Now we blink. Twelve months later, you're building a great business. You're looking to raise a $9,000,000 round. What valuation are you targeting?

Prabhat Sahu

08:04>> We've... I can't announce it as of now, but, yeah, we have already closed on a 65,000,000 valuation. I'm done done with the basic paperwork.

Nathan Latka

08:14You're you're base... I mean, the round you're doing now, series a, 9,000,000, 65,000,000 valuation, something like that?

Prabhat Sahu

08:20>> Yep. Yep.

Team Size and Structure

Nathan Latka

08:21And and talk to me a little bit how you've built the team. How many folks are full time today?

Prabhat Sahu

08:26>> Sure. There's a time when we start... When I started off coding, we were... Me and two more interns. And then right now, we are 53 people in total, 49 being full time.

Nathan Latka

08:38How many are engineers?

Prabhat Sahu

08:41>> 34.

Nathan Latka

08:4234. Okay. What's everyone else do?

Prabhat Sahu

08:46>> We... I have a community team, then I have a content and a growth team.

Building the Developer Community

Nathan Latka

08:50How have you... There's a lot of listeners building SaaS companies trying to structure their own communities. How did you structure your community team?

Prabhat Sahu

08:58>> See, the the idea is to essentially understand that people who advocate in communities, who build communities are not popular people. They are more operational and functional. The mistake that SaaS clients make is they tend to hire an influencer thinking that that will that will drive community growth, but that's not how it works. What I did was I got a really operational strategic person who had insights into how to handle developers in itself. We we end up

09:25>> grow... We we start off with 80 developers around twelve months back, and right now we're at 12,000.

Nathan Latka

09:31That's amazing.

09:33And and so you're getting customers there. Are you spending any money on CAC?

Customer Acquisition Cost

Prabhat Sahu

09:38>> Nope. Not at all. I've spent approximately 10,000 rupees in total to to build the whole thing. So that would be approximately what? $150?

Nathan Latka

09:50Pretty cheap. You're pretty pretty efficient there. Alright. When you raise this 9,000,000, I mean, you gonna try and do paid ads against anything or or paid acquisition or you're gonna keep focused on community?

Prabhat Sahu

09:59>> Will definitely get... We we will definitely expand into inorganic methods growth. Of course, there is there is a a cost to organic growth, and that's slow speed. Right? So Yep. The idea is to the idea is to spend more on inorganic growth and ensure that we catapult the business itself.

Churn and Net Dollar Retention

Nathan Latka

10:14Yep. And and talk... Obviously, you can catapult the business, but you can't lose customers. Right? So churn, expansion are critical. What's your net dollar retention today?

Prabhat Sahu

10:24>> We... In our business, in the kind of business that I've built here, in authentication itself, it's a very security-driven business. So churn isn't a problem anymore. The the issue is slow growth. Churn isn't an issue. So I've I've barely had, what, a point 3% churn, and that... The churn went... Will never happen because if somebody, you know, adopt... Adopts a passwordless authentication method, they can't move back move back to passwords because, you know, that'll cause

10:50>> consumer behavior to shift. Right? Consumers will face issues. So churn isn't something that we're facing, and that's that's surprising the business itself.

Famous Five: Books, Tools, and Habits

Nathan Latka

10:58Very cool, Prabhat. Heck of a story. Let's wrap up with the famous five. Number one, favorite business book?

Prabhat Sahu

11:05>> Shoe Dog.

Nathan Latka

11:06Number two, is there a CEO you're following or studying?

Prabhat Sahu

11:10>> Yep.

11:12>> To be very precise, in India, I have Bhavish Aggarwal.

Nathan Latka

11:16Which company?

Prabhat Sahu

11:16>> In the US, I have, you know, Naval Ravikant.

11:21>> Yep.

Nathan Latka

11:22Number three, what's your favorite online tool for building SAWO?

Prabhat Sahu

11:26>> Favorite online tool? Slack. I love Slack.

Nathan Latka

11:28Number four, how many hours of sleep do get every night?

Prabhat Sahu

11:32>> Four and a half, five.

Nathan Latka

11:34Five. Okay. Not a ton, but I guess enough. What's your situation? Married, single, kids?

Prabhat Sahu

11:39>> Single as fuck. Yep. Very single.

Nathan Latka

11:42Very single. Alright. No kids. And how old are you, Prabhat?

Prabhat Sahu

11:46>> I just turned 25.

Nathan Latka

11:4825?

Prabhat Sahu

11:49>> Yep.

Nathan Latka

11:50Okay. 25 years old. Last question. Something you wish knew when you were 20.

Lessons Learned and Closing Thoughts

Prabhat Sahu

11:55>> The fact that growth isn't fund... Fundraising. I didn't know that as as a... When I raised my previous previous round. I didn't know that. Yep.

Nathan Latka

12:06Guys, SAWO Labs is supporting ecommerce brands, banks, and cryptocurrency exchanges to validate users in a passwordless fashion. They went from nothing to a $130,000 a month in revenue over the past twelve months. They've raised to date about a million dollars. Their last seed round was $860,000 at a 6,600,000 valuation, sold 13%. Now closing on a $9,000,000 round, which is very exciting at an even higher valuation. You'll hear it live in the interview. Prabhat, thank you for

12:28taking us to the top.

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