How Skiff CEO Andrew Milich grew to $451.2K revenue and 1K customers in 2023.

hey folks my guest today is andrew miller he's the co-founder and ceo of skiff a private and encrypted web 3 native collaboration platform previously he was a henry ford ii scholar at stanford university and worked on autonomous vehicles at spacex andrew you ready to take us to the top i'm ready yeah thanks for having me nathan you bet what's the connection between autonomous vehicles and private and then encryption that's a great question so i've done some work you know unrelated on avs uh on security and on privacy before as well but i actually think for a lot of our team and some people also have backgrounds and working on autonomy and space and you know safety critical applications a lot of it is just loving to do engineering that is super intense you know the best testing the best security the best performance and i think that applies you know pretty clearly to working on stuff at spacex and autonomous vehicles and also to you know all the security and privacy work we do at skiff now if someone looked at your website and the screenshots you use they might mistake you for mo for notion right so like when you are in a sort of what a more private version of notion encrypted yeah i would say so skip's vision is to be this kind of web free native own your own data privacy first and encrypted workspace so a lot of that today is collaboration you know writing sharing sending documents and files but actually in a few weeks we're kind of broadening that vision significantly and bringing in kind of more aspects of the typical google work suite so you'll see that in the next few weeks um but yeah i mean we kind of built skiff from the ground up to be a lot like the collaborative products that have evolved today but significantly more private in its kind of foundations and the way the entire software is architected and also more importantly in the way the company is positioned where we don't have access to everything you write and you share and you're the only person who owns your data very interesting and so monetization model here would be what yeah great question so that's pretty similar to sas products you'll pay for a subscription or for kind of the storage and services you use i think skiff also has this option to sign in with a crypto wallet and we're kind of actually announcing some huge partnerships on that front you know in the next month as well but that opens up so many more possibilities for basically like monetizing a lot more in a granular way services that people really want to use you know your identity service is linked to your kind of financial services in this wallet and also to kind of more importantly public key infrastructure which which lets you actually communicate privately and securely with anyone else in the world interesting pre-revenue today or have to have a couple paying customers we have we have some paying customers a bunch of individuals and then um we're kind of we we have some kind of i'd say small to medium-sized businesses up to 100 people paying for skip and they're rolling out a self-serve enterprise option fingers crossed in the next couple days that's awesome it's a great it's a great time to be buildings that's exciting for you um what are folks paying average per month for it uh great question so uh for the individual plan people are paying i believe it's ten dollars a month or maybe there's an annual plan discount and enterprise is anywhere from um depending on the options you choose you know about double that okay got it so maybe 20 30. but you're talking about per seat or for the whole enterprise per person per month yeah per person per month okay um interesting and you know pricing is one of those things it's very tricky uh your boss elon is going thinking about this right now with twitter do you monetize do you not what happens but is 10 bucks a month the right price point how are you testing that how are you trying to get that answer that's a great question uh honestly from a lot of the entrepreneurs we've spoken with you know at this stage in the company you kind of throw a dart on the wall and look at just like the comps the comparables um so i don't know if you have any great pricing resources because we'd love to look at them but you know we've heard companies from evernote to google to you know many kind of um api products just kind of choose a really simple and you know intuitive number that divides nicely and is reasonable with comparables and then kind of take it from there so i don't know if you've seen any good resources on that either 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 gonna get a different valuation a vc is gonna pay a different valuation private equity firm is different if you're gonna 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 well 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 founderpath.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 i mean i don't have any answers here i mean i think what where i do think there's a big gap here is what people never quantify with pricing is what you miss out on when you put up paywall in terms of engagement yeah what the opportunity cost is right and so like i think a lot of people put up a paywall because they want to make money if they've raised vc but ultimately if you have no paywall does your engagement go through the roof and you become the new defacto platform it's a hard balance yeah i totally agree with that i think a lot of the people on the team and you know the way the product is oriented today is to focus on growth and engagement and all that stuff like we specifically don't want to put paywalls on things that will make you kind of have a better experience on day one on skit so for example our templates feature which lets you kind of share and use antenna encrypted templates uh searching through antenna encrypted data which some other products and privacy monetize all of those are kind of just critical in migrating from any other product or you'd expect that and it's in your operating system or in you know all the kind of collaborative products you use today and so it'd be rough for us or kind of you know against our mission to monetize these things that let people on board on to skip and have a good experience so we don't want to monetize that i think a really interesting way to think about pricing but reverse engineering it for both you or anyone listening is to go is to ask yourself the question what percent of your users do you want to be paying and if you decide that it's one percent well then you go okay well what's the activation metric or the usage metric we're tracking yeah and how high does it have to be to only hit one percent of our power users so like for you might what that might be templates it sounds like or something like that yeah so one of the things we can monetize pretty easily is storage space people are probably paying for storage space in their life already whether it's on google or it's on dropbox or something else um and so that's something that's pretty common also it's you know it scales linearly with what you'd expect like you pay for more storage and you get more storage for your files so that's pretty simple um i think for us also enterprise and teams is really natural to monetize too of course one because like every business has expects to pay for their collaborative products and two just because they also might want you know either in their compliance process or they might want us things tweaked for them or something like that so that's you know that's a big area we'll work on too interesting yeah storage is one of those things that's nice if they use you more and you require uploads and templates it's a natural upsell naturalness our attention we'll sort of see what happens there that's exciting okay put this on a timeline for me when did you write the first line of code for the platform great question um so actually in late 2019 so november december 2019 by myself that's amazing okay so are you so founder on 100 on day one no well i no um so i kind of was writing code in my free time basically after work you know eight or nine hours which is exhausting for four you know four months or so in that process i started working with jason our co-founder and cto jason is awesome jason was one of the only designers that i knew at stanford and he studied electrical engineering as well um and so we started collaborating he was kind of across the country finishing a masters started working together and then the company was founded coven was also starting and so you know we kind of took it from there you guys just split 50 50. uh yeah roughly that i mean i i kind of set up a lot of the structure in those interim few months and so then we kind of we wanted to work together as equals all right 55 45 something like that well i think it is really important to have a co-founder who's not you know like not a 595 split or you know a really unequal split just because there are so many rough and grinds you know grinding moments in that first few years that i think just having a co-founder was one of the only ways we got this far yeah and not that we're anywhere close to success yet just gonna yeah yeah but you're saying so i mean the flip side would be if you only if you have one founder you can move much quicker because two people don't have to agree on everything that's true that's true i think we found that for 90 of the time or more like we just agree on everything we don't even make decisions and then there are a few you know tough moments where you need to have a better process or agree on priorities or stuff like that yeah okay i love that all right so 2019 you're coding with jason how many customers are you know so rings today paying seats uh good question so that's probably in the we don't really it's a small number right now we're not really kind of you know really like it's lower like a hundred no no no it's it's orders of magnitude more but the overall metric you know used on the platform is in the tens of thousands oh tens of thousands of seats used free and paid yeah exactly okay and would you consider like five percent of them paying a good conversion rate i think one to five percent is uh you know what we see as good comparables okay so i'll keep i'll keep this vague in a big range fair to say you have between a hundred and a thousand paid seats something like that uh it's more than a thousand folks okay it's more than a date number it's likely it's definitely well above a hundred i don't i don't really know exactly what that number is i could just be direct and ask the question i'm trying to reverse engineer which is your mrr today is something like 10 or 20 grand a month something like that don't really know the number yet i mean oh come on come on you have to know your monthly recurring rabbit it's got to be in something in that range no it's it's super important for the business we haven't even launched self-serve subscriptions and so honestly the most important metrics for us are like our seven-day retention our you know month over month now and dow growth uh that kind of stuff that's what we really like grind towards every day what's your what's your month over month malgrowth so it it's been pretty substantial it's been i think over 30 for the last few months there are things that change that a lot like we had a youtube video released about skiff in china on friday that probably bumped our growth up 30 in three days so well it's unclear how sustainable those events are but um you know we're kind of aiming to do 30 month-over-month growth for the next year or so and mal monthly active users right a big question besides just growth how do you define a monthly active user right so is that a login is that more engaging good question again yeah so we've gone with the most honest definition today which is just you've logged in you've created an account anything you've done any single action so that's in the five digits right now on five digits meaning like more than a thousand people doing that monthly more than more than nine thousand ten thousand um but that said uh i also know plenty of like i'd love to know if you have any comparables on that because i know plenty of companies that define it as like much more strictly no no i have no idea i have no absolutely no idea everyone's different right everybody metrics get better the more you know strict that definition is so yeah yeah what i can tell you is i i there are i know plenty of stories where founders have really healthy mau metrics when you dig deeper they define it as something very easy like a login which is not a real indicator of product value uh and then they they think they're stronger than they are and they end up collapsing so i mean you obviously figure this out as you go along yeah so skiff is super privacy focused we you know really collect as little information as we can so like there's no client-side tracking anything like that the stuff that matters to us is like you know do you have like are you creating documents are you you know coming back to the platform that kind of stuff and so really basic like stuff like that how do you define seven go ahead how do you define seven-day retention we look at two options one is like you know in the last seven days what percentage of users came on or after day x so we'll look at that retention curve and then also the day the on day x retention curve so they sign up today how many times they log back in in the same day versus over the next seven days after sign up yeah so basically like after seven days what percentage of users came back on or after day two after day three et cetera interesting interesting where day zero is always sign up date exactly yeah interesting okay um but but you're unable to tell why they might log in on day two three four because they uploaded they want to upload a template because you're not able to go and track a template upload uh we have super basic stuff that's helpful for us to just also like track our kind of monetization metrics so like if they you know end up using a lot of storage on skip that could be something that would lead to higher attention and we'll see them monetize et cetera um but beyond that we don't really track like you know are they using this specific feature excessively or are they doing something else like that we can know is like what percentage of users are downloading our mobile apps and are those people coming back you know those for those who opt into tracking on ios etc you know we can get some information like that and obviously stuff like mobile apps desktop apps leads to much higher retention in products like ours yeah that makes sense okay uh you've mentioned i think well have you bootstrapped or raised we've done a seed round in a series i ah okay got it so when was the seed round what year so started writing code end of 2019 the seed round was about june 2020 june july maybe john and how much did you raise there so we raised i think two and a half million initially and then we ended up adding about one and a half million in from angel investors right after that so it ended up being about four four on your pre-seed round right yeah traditional safe uncapped uh no we had valuation caps i don't think we've shared that externally but we kind of had done two pretty i think um you know reasonable evaluation caps at the time i'll tell you from what you're looking at medium seed valuations today it's probably 50 percent less or more uh 50 okay so let me tell you what i'm seeing and then you tell me what by when you say 50 less or more um so like what i'm seeing today is traditional seed round is like a million on a five cap if you're really good maybe two million on a 10 cap or something like that got it it was about that i mean i'm reading in the news things have gone up in the last few months but it was it was about what are you seeing what do you mean like 2 on 20 or something yeah i've seen that kind of stuff i think for you know more experienced founders or with you know a lot of engineering experience and that stuff i've seen it go into the 20s more and more and ours was well below that i see i see so total today you raised four or just in 2020 you raised four million so in the seed round we raised about four four point one or two um then in the series a we raised ten and a half i see okay guys so if you've scaled this is starting to make sense when you talk about your user numbers uh and where the growth is coming from so you raised 10.5 that was this year uh that was late last year late last year end of last summer like uh uh july august september yeah okay so what makes this so expensive to build we just hire engineers honestly we spend almost no money in marketing we spend a little money on an office although we're mostly remote uh it's really just really good engineering i think basically we're building a product that hasn't been built before that said we also want to look and feel like the products you use and love today and so it's just a lot of upfront costs on building something that's anti-encrypted much more decentralized and then making it really really really good yeah how far like what revenue do you think you need to hit to actually go on raise a competitive series b at some point that's a great question i think we want to have at least 10 times or more as many users we'll see what that looks like i also think we don't need to kind of grow our team significantly we have an incredible engineering team today like with amazing experience in you know security blockchain autonomy all sorts of different stuff and so i think like we just need to keep making our product better over the next year and you know not grow our team a huge amount so really just start to kind of lead into that hopefully continuing 30 month over month growth you didn't use the word revenue in that answer so do you think you can raise a competitive series b without focusing on revenue as long as you double triple the user base yeah it's a great question um so i think we've more we want to do much more than double or triple also by the way of the kind of 14 million we've raised like more than two-thirds is still unspent so we're we're trying to be cautious on that 10 million in the bank still exactly um so we also definitely want the revenue to kind of match that 30 month over month growth but the kind of most important thing is like we just cannot we'll never generate significant revenue if we don't reach millions of users and so the most important thing will be reaching millions of users why do you say that i mean i mean now you could see a playbook here where this is it becomes an enterprise-focused tool very encrypted very secure uh and it becomes totally just you know what i mean i mean you can do 50 000. that's a great point um that's a great point i think we also want to leave that option open and so i don't think we need to kind of double our burn in the next six months fair fair fair okay and most what i'm seeing in series a is you're great founders are selling between maybe 10 and 15 of the business were you sort of in that same range yeah exactly okay so you broke 100 million valuation then on the last race um we're we're not revealing that much but it was between that's a yes i'll give you that that's a yes uh i i i couldn't say i it really might not be but it was between 10 and 15 percent solution uh fair enough fair enough fair enough um yeah well i mean people can do them you you give us all the numbers we need to do the math right 10 15 yeah you'll come up with you'll come up with a you know a comparable range yeah you could you could argue you know 99 post something like that who knows but anyways congrats on getting that done um talk to me more about the team how many how many folks are on the team today full time yeah so we're about 15 15 to 20 um all over the world sponge in the bay area some in new york some in france some in israel some in uh hungary and egypt and you know the rest of the world that's one in taiwan 15 full-time that's great so how i guess this is a you wouldn't be able to raise what you're raising unless you're mau your dau your seven day all that was very very healthy right so this is very much like a product like growth function here right how are you how are you just finding you i understand when one user finds you how you expanding the team was that first totally find you so honestly we uh product like growth i think is very difficult and also very time consuming as in like you will not see thousands of users immediately signing up like the whole point of like compounding growth is you know it'll look flat and then you look back and it looks flat and you look for and it looks you know vertical and the whole you know like compounding exponential growth so honestly we just grinded a lot of privacy communities that we could and like many of us are just members of those communities either like you know security conferences or slack communities on privacy or privacy name a couple of those like the conference name the slack group name yeah absolutely so like security conferences um like defcon you know locomocosec is one we're working with right now you know all the ethereum conferences devconnect nft new york you know nft miami all those you know a lot of crypto people are also very kind of interested in privacy like we've been on all the twitter profiles that are like suit anonymous nft people many of those people also really believe in privacy and owning their own data so those conferences like our slash privacy our slash privacy tools lots of subreddits on this lots of telegram and discord channels on privacy and privacy tools um you know just really getting into the communities like that and many of them gave us really critical feedback as well like rewrite your privacy policy you know look at this product security model et cetera and so i think in this product like growth it was like a lot of tuning in the first eight months to kind of get uh ideological clarity from these people and now it's kind of picked up a lot in more sustainable growth so department of justice calls you 10 years from now you're a billion dollar company they say one of your pseudo-anonymous twitter users we've decided they're hiding money in puerto rico and we need access to their private skiff thing do you open up a back door for the department of justice or no that's a great question i think definitely not and there's no legal precedent that we would do that um yeah i just put it to you right that's the question well that said we also you know in a more decentralized platform it'd be like there's no way you could get some person to just release their wallet private key or something and worst case you know they may get rid of it so i think that's all you know the awesome crossover between privacy and crypto here like at a bare minimum every crypto wallet is a private key and so you could do all sorts of things with that private key like communicating and sending messages and sending documents and collaborating yep yeah very cool okay before we wrap up do you think you ranked three million dollars in terms of run rate this year i have no idea i i look i just pray i never speculate about the future i'll only you know look at the past all right let's wrap up here with the famous five number one favorite book uh or last one you read might be a better question yeah i read uh uh i honestly read really non-fiction focused books and so i've been reading a book about why germany chose to declare war in the united states in world war ii that was just revealed in the new york times do you know the do you know the name of the book yeah it's called hitler's american gamble hitler is america interesting okay number two is there a ceo you're following or studying uh good question uh hmm i mean i don't want to jump on the spacex tesla twitter you know fan train or anti-fan train um but i look at that i think also just we have some great angel investor ceos like alexander the ceo of scale and um you know i think he's been a great role model too too also david to see a retool how did you get the former president of stanford university john hennessey uh uh on your on your right how much equity you have to give him uh good question honestly we just asked him if he'd be interested and you know he's extremely technical and understood skiff quite well so we would take any check from him uh also both jason and i grinded as much as we can both tried to give as much and get so much from being at stanford could not be more grateful for that that's awesome okay so he may be small angel check in that that was that four million u.s back in 2019 okay exactly exactly number three besides duron what's your favorite online tool for building skiff um wow okay i have a deep answer on that i actually am really enjoying github co-pilot i don't know if you're familiar with that but it's basically this like gpt3 based ai code writing solution that github built and i don't just use it for writing code i actually use writing comments too and it's not always perfect but it just like saves a lot of the annoying you know bracketing for loop while loop commenting stuff too yeah i've heard great things about copilot number four how many hours of sleep to get every night um probably six to seven okay fair and what's your situation married single kids single all right no kids and how old are you 25 25 last question something you wish you knew five years ago when you were 20. um i think i had wish i had much more clarity that probably an amazing use of my time with just to continue becoming a better engineer guys there you have it skiff.org he's noodling on it back in 2019 raised 4 million bucks in terms of pre-seed rounds sold 10 to 15 percent of the business uh sorry 10 to 20 of the business then raised another 10 million in 2021 as his monthly active user started taking off again for effect i would call it he wouldn't call this but i would call it a very heavy privacy focused version of notion which there's a massive market for uh sold on that series a between sort of 10 and 15 of the business now 15 engineers all remote as they continue to scale again focusing on those core mau dau metrics signing people up from security conferences reddit uh profiles telegram and discord channels we'll see where it goes next but andrew in the meantime thanks for taking us to the top my pleasure thank you so much 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 central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas 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