How Shopin CEO Eran Eyal grew to $475.8K revenue with a 12 person team in 2019.

hello everyone my guest today is iran earl he is an investor advisor and award-winning entrepreneur with over 20 years of experience in the crowdsourcing e-commerce and retail markets currently he's the founder and ceo of shopping where he looks to revolutionize the customer shopping experience by putting individuals in control of their own data iran are you ready to take us to the top are you at the top we're going to get there all right talk to us about the company what does shopping do and how do you guys make money so we're a universal shopper profile built on the blockchain what we're trying to do is work with retailers to give you the consumer back all of your purchase data so that you when you go to log on onto their websites or arrive in their physical stores you can either show your app they can scan your qr code or you can log on to their website and then all of your data drives all of your personalization and experiences so what we're trying to do is turning the entire decentralized world of retail who don't have good data on you like an amazon would into a decentralized amazon and to do that we've got our visual artificial intelligence our natural language processing tools and all the tools that the retailers need to interpret your data but never reveal your data so when you log into the retailer even though the ai and recommendation engines that we give them interpret the data and give you the best content the best experiences your data is never revealed and you're always in control so who's paying for this the consumer or the brand the brand would pay for it brands and retailers are our focus customer okay so you have a typical marketplace issue here right you have to have a lot of you know consumers using it for to be valuable for brands and retailers and vice versa so so how did you solve that chicken and egg problem in the first couple months or years okay so first of all we are in the very early stages of this company it is a very difficult product to build what we're essentially building is something called an asymmetrical dht it doesn't exist this is doesn't exist land we're talking about um you know what you know uh you've heard of bittorrent right sure okay so what that's a symmetrical dht we're building an asymmetrical dht where none of the nodes ever have all the data so your data can be completely stored in a decentralized way brought together and protected by a blockchain and then you use open id to log into the retailers website this is not easy technology to build plus we have to build our own visual ai and nlp how much money have you sunk in so far we uh we raised um and i we actually didn't uh sell any equity yet in the business we raised all our money through a token generation event otherwise known as an ico uh last year and so far we you know we spent a few million dollars into the business of the money that we raised hold on for when was launch date do you consider launch date the token issue in state no we haven't launched live to um to customers as yet we're actually working behind the scenes with multiple retailers and busy working with all their data to figure out how to store this data in a compliant way with gdpr standards and also in such a way that we can meet the ends that they require okay so no customers today but started writing code in 2018 we started writing code in beginning of 2018 early two very late 2017. i would say 2018 was really the inception of code writing okay so i want to go back to the token instance here in a second but just to be clear your pre-revenue right now correct that's correct when do you anticipate to put up you know get your first paying customer before the end of this year okay very good so we're close all right let's go back to the token issuance in 2018. so first off what did you do at base was it tied to ethereum or you know bitcoin or would you tie two so we basically tied it to ethereum okay um we uh seemed we we sold our tokens for 10 cents a token um and took our and we took everything in from bitcoin and ethereum so technically we didn't reach ourselves to the uh to ethereum and this is where you've got to learn an incredible story here so um we could have tied our token issuance to ethereum into the value of ethereum on the day or two to a certain value but instead we decided well ethereum's changing as it comes in we'll start changing our capital but there was so there were so many scams there was so much fun in the market in early 2018 what we didn't expect was as the money came in the market crashed so as the market was coming in the market was crashing and we didn't want to take our money out of our ethereum wallets for fear of basically calling us an exit scam so we wanted to do things with integrity and we wanted to keep all our money in the theorem so people could see where it was and unfortunately we got caught in the downward spiral and it smashed us so um while we were basically busy raising and we had a very successful token issue how much did you raise about in the in the upper 30s okay and then when everything crashed what was the you know equivalent value uh around about six or something and how much did you convert to fiat as it was going down so we were converting as we were going as little as possible hoping that we could see a recovery but by the time that we had raised um the market had already hit a low um so we were stuck and basically we did the you know we tried to we were faced with the situation that we didn't have the capital we thought we would need to build this on the long term so what we did is we became a lot more capital efficient we made much smarter choices we cut off things we didn't need later on sorry before you tell us how you survived how much did you convert to fiat in that first period where you went from kind of worth 30 million down to six um not at all very much actually we were converting as it was crashing so we couldn't take the money out quickly enough really at the end of the day so how much did you end up taking though total in total we took it about we took out about three million dollars okay so three million and and how much runaway did that give you at the time were you saying okay three million could cover our expenses for a year two years or more well we started a very private sale in september 2017 and that lasted us all the way till now and we still have enough to go for about 18 months at the current burn rate okay and and how much are you burning like 100 grand a month or more we burn about um we cut off we kind of burned down to about 120. okay not bad so you said you've got sorry how much we left about a year we've got about 18 months oh good so i mean that's what's up put like 1.7 1.8 million in in your bank right now that's about right so you're uh yeah absolutely excellent and no so so you haven't raised any traditional equity correct correct and no debt uh no did against the business either interesting so so and how many people do you have so currently we have about 12 people working on the project at the height of the project we had about 70 people working on the project yeah so 12 people still being fueled off the 3 million you took in fiat in 2018 during the downturn that's right interesting um so what is your best guess right now in terms of like who will be your first paying customer and and the structure they will pay is it going to be like a sas model or excellent question so i went through a lot of um i went through a lot of theories on how we could basically build this and i had to think about scale and assess model was one way we was one consideration uh per seat license all those kind of things we looked at but what we decided to do is api call model the nice thing about an api call model is that an api call model is non doesn't exclude anybody from the market we want to giving groundbreaking technology to people whether they're making uh you know a few thousand dollars a month they can have access for almost for free uh the first thousand first few thousand api calls are free and then if you grow beyond that it essentially scales out so when you get to be an enterprise client sure you get extra services you get you know white glove hand holding you get some customization that you won't get on the lower tiers but we scale with your revenues and the more that recommendations that are made in your sites and in your stores and the more successful that those are lead to conversions the more money we make at the end of the day so let's say i'm wary parker uh and i sign up to use your tool because i want to immediately when i walk into orbit parker for customers to show me their thing and i can immediately go pick out three glasses i know are a great fit for them based off x y and z data points and let's say i'm processing a thousand customers a month and aaron let sam warby parker has a thousand customers a month scanning that code what do you think you'd charge for something like 3 000 i guess api calls or scans a month so we really try to we already charge a few cents at the end of the day we'll make you uh with something like that we charge a few cents for for each api call remember that every recommendation is an api call so you come to one page you look at one set of glasses and there are 10 recommendations below that's 10 api calls every single time every single time that they draw those in every time that they send an email and that email is dynamic and dynamically calls upon our data in order to give you the best and the best email or you see an advert um any time that our data is driving those kind of recommendations for that content to appear that's an api call so i'd like you to to challenge you to think about how many api calls or will be parker will be making in scale and then of course we give sweetheart deals for being for uh for paying for the europe front what do you think like your steps will be like less than a million api calls a month a million to 100 million and then north of 100 million so yeah we're um well actually the steps is we are like we don't we actually don't want to exclude people who've got shopify shops so we will be releasing a shopify app where people can be integrating this as well uh we just we really want to level the playing field and give everybody a fighting chance out there so um that it will start from all the way from 250 dollars to when you get to a midsize retailer to about 30 000 to a really huge retailer about fifty thousand dollars a month yeah yeah very interesting all right let's wrap up here with the famous five number one what's your favorite business book favorite business book right now is not a business book actually it's called the four agreements that's i would consider that a business book i think it's a great book i think it's a phenomenal book it's reshaping the way i look at many aspects of my life number two is there a ceo you're following or studying such a cliche elon musk number four how many number three how many hours of sleep sorry what is your favorite online tool for building your company favorite online tool for building a company today um is really a slack number that's four how many hours of sleep to get every night four to five okay and situation married single kids um i'm single but recently found the love of my life amazing okay not married no kids not married no kids and how are you i'm 44. 44. last question what do you wish your 20 year old self knew absolutely nothing extra um i have no no it's not it's not about a regret it's just something you wish you knew back then here's the thing nathan i know that's a nice question to ask him and i and i could say look um always surround i think my biggest thing is always make sure that you listen to your gut and surround yourself with people that your gut resonates with um but having said that i would never want to deprive myself of the journey of having learned that the way i did yeah no no i think that's fine trust your gut is a great one guys there you have it from shopping again launched an ico back in 2018 at the top of the market called raised about 30 million then obviously the prices sunk you know six million at the end but conveniently as a decline happened they converted about three million to fiat which is giving them enough runway to build the technology that they are trying to build right now a decentralized amazon basically uh they're burning about 120 000 per month of about 18 months of runway left hoping to get their first paid customer here by the end of the year aaron we're rooting for you thank you for taking us to the top thank you very much for featuring me today it's been a pleasure