How SPIDR Tech CEO Rahul Sidhu grew to $2.5M revenue and 60 customers in 2023.

hey folks my guest today is ross uh sudo he's the known as silicon valley's expert on policing currently works with over 50 local law enforcement agencies across the continent on police reform initiatives he's the ceo and co-founder of spider tech spelled s-p-i-d-r he created the world's first automated customer service platform for public safety agencies role are you ready to take us to the top trim all right what does that mean who are the customers of policing agencies well i mean anybody who is interacting with a police officer or deputy sheriff at a local law enforcement level is essentially a customer uh if you're paying taxes or you know you're basically whether you're getting you're calling 911 because you need help or you're a victim of crime or even if you're getting pulled over because you're basically paying for them to keep the roads safe too you're technically a customer of that agency so who's paying you then well the agencies themselves so the cities and counties uh pay spyder tech for the software that allows them to provide better customer service and that customer service comes in the form of automated texts and emails that go out to the customers of that agency to keep them informed let them know what's going on with the status of their case their now one call their traffic collision etc but it also goes out in the form of mobile friendly surveys that are being sent to people who are interacting with those police officers so that those agencies can gather feedback every time someone interacts with them that can better improve their operations and why they need to use you for this versus sort of an instant of twilio's you know sms texting api well in order for this process to be automated you need to have a basically all-in-one system that integrates with the data systems that they're using today for me to be able you know for for our platform be able to send out a survey to someone who just recently interacted with the police officer because they call 9-1-1 or they're a victim of crime whatever the circumstances we need to be able to connect to intelligently connect to the dispatch systems that they have or the records management systems that they have so those messages can go out and that they every single survey that comes back can be attached to an interaction which we have a record of so all those surveys for example we have uh you know a plan of action because we know it's in reference to this officer this now one call this this report whatever the circumstances this traffic stop because we have that integration in place and you can't just do that with like let's say survey monkey or twilio by itself you have to build a platform that works with these configurations and then uses those integrations to do this automatically understood what are these agencies paying uh you per month on average to use the technology uh well we do yearly contracts and in some cases multi-year contracts uh the pricing's based off of how large the agencies are in terms of their sworn size is the term sworn size would be how many you know police officers or deputy sheriffs they have you know work in the fields et cetera to be able to get a sense of how much data is going to go in and out how many customers are they likely interacting with on a daily basis and they pay an annual fee based on that and that covers the entirety of the platform or they can purchase it kind of all a carton module by module they can decide we only want to send messages to 911 callers or crime victims for example they can decide that they want to specifically do you know uh surveys or they want to have a module on their website which allows people to go and track the status of their case directly from the police website they can pick and choose or they can take the old platform and that's what you know basically how we set up the annual fee so i'm going to force you in an average hero just to help us stay focused so what would an average contract be for the year uh well i guess you'd say you know at a smaller agency of 100 folks it could be you know somewhere between 10 000 to 40 ish thousand dollars a year depending on how much of the platform that they wanted okay so you upsell based off number of seats there's also a feature-based upsell and also just utility-based upsell based off number of customers in that jurisdiction yeah and it's not necessarily seat based because you know they can't go oh we're only going to give this to 10 cops or 100 cops it's based on the entire size of their agency so they can't just buy it and test it with 10 cops it has it's all or nothing we do do pilot programs for larger agencies that you know have 500 to 1000 plus cops where we'll do like a three-month kind of custom based trial period at a lower cost but generally speaking no it's based on the size of the agency because the amount of data is going to be the same either way i see i see okay what's the back story here when'd you launch uh well we started the company in 2015. my background is in uh public safety i formerly worked as a paramedic and also a police officer on the east and west coast so i had a better understanding of what it was like to be a police officer and how to provide that type of customer service i also had the technology background having a startup in high school to kind of help pay my way through college so i combined my love for technology and public safety in 2015 with two co-founders one who was also in policing and another one who was on the technical side of things and we launched for our first customer in 2016 and ever since then we've been growing considerably and tell me uh about first year revenue do you remember how much you did in 2016 uh yeah i can tell you uh wholeheartedly it was a big fat goose egg in 2016 because in the beginning we had to have law enforcement agencies to take a chance on us they weren't willing to pay um it was until 2017 that we started seeing any revenue and it was just a couple contracts what was 2017 revenue your first year revenue i was curious uh it was less than 100k a year okay less than 100k and did you what did you learn from that first sort of 100k was your were you too cheap too expensive sales motion longer than you thought shorter what surprised you um well i mean focus on doing a couple things really well i think is that of life i mean just everyone knows this lesson but it was just really you know shown to us doing a couple things really well is more important doing a bunch of things kind of okay just to try and catch as many customers as you can so i wouldn't say that we you know pricing was necessarily an issue uh it was more so just making sure that we found that what we were doing is really good for those particular customers and then trusting that that referral process and the network effects of that especially in regional gov tech will work out as intended and that's essentially what ended up happening so first customers 2017 you learn from them how many customers are now working with today uh we have over 60 different agencies across the united states and canada okay and how many paid seats are there for officers uh i couldn't give you the the the most recent sworn number off the top of my head but i can say it's in the tens of thousands tens of thousands okay and now can i multiply that can i take those 60 customers times call like a 2 000 a month average contract size you guys are about 120 grand a month right now on revenue something like that it's certainly a little bit more than that a little more than that okay i mean have you guys broken a 2 million right at this point or is it something you're focused on doing this year we have you have okay okay so a couple questions on capitalization here there were two years that you were essentially pre-revenue you started in 2015 first customers 2017 how did you fund yourself uh we actually went through the stars program in late 2015 tech stars in new york it was the horizontal program with alex's gold and kj singh from there we uh did a pre-seed round of about a million dollars with winklevoss capital and a couple other folks um buddy greg troy taylor adams no name what year was that million 2016. okay and then in 2017 towards the end we raised a proper seed round of about 2.5 million dollars it was priced with uh alphabet sidewalk labs birchmere ventures stage ventures uh you know heartland and a few other more institutional-sized funds with repeat investors and a couple strategic angels as well and from there we just started raising inside rounds uh to continue our growth in 2017 that 2.5 million that was your first price trend what valuation did you negotiate um i i can't actually uh mention that right now that was like five years ago man come on you can't talk about the valuation from 2017 uh well what i'll tell you this is you know we were recently acquired actually uh about uh a month and a half ago so i'm still constantly figuring out what it can and can't i see okay yeah that explains things okay so you raised okay let's talk pre-acquisition here for a second so the total you raised pre-acquisition was about 3.5 million or you did another inside round before that uh pre-acquisition is about 3.5 plus another about a million so it's close to about 4.5 and total money okay that's a big moment to decide to sell why'd you decide to sell you know we got a couple offers and we didn't really want to sell and i basically told the you know folks that we were talking to um here's the only way we would do a deal it would have to be structured in a way that allows us to have upside to continue moving forward in the business et cetera so that we can all kind of including all of our shareholders can you know can enjoy this growth now that we're at this inflection point uh and lo and behold the uh the buyer of the company said okay and they put something together uh that actually made sense and was what we asked for and then they never changed the goal posts um you know we've gone through processes like that in the past where uh potential buyers you know come up with an interesting deal and then okay we might entertain this and then down the line that ends up changing considerably this was a class act buyer uh you know strategic uh and i can tell you right now it's a public safety company called versa term um and they stuck to their you know their words and said hey this is what we'll do we you know it was what we asked for and that was it now if you were doing or you're north of 160 a month today in terms of revenue where were you exactly a year ago so we can calculate a growth rate um well about a year ago we were in the throes of kind of coming out of the fi like the super scary municipal budgetary impacts of covet um and we're starting to realize okay you know what we can still make things happen and we can still sell we had a major customer come on board um uh you know major city that doubled our revenue almost doubled our revenue overnight uh in q1 of 2020 um and then coming into q3 of 2020 2020 we saw continuous growth that was a little bit more quarter of a quarter than we had seen previously in the year before and we think it would have been better without cobit of course um but then that's when we started realizing that uh you know from a municipal standpoint which is where we make most of our money um you know we we're going to be okay like the these cities are not going bankrupt in fact in some cases they have surpluses in cash they over you know a competent you know from a budgetary standpoint plus the stimulus was coming we realized that in q4 um you know with how the election turned out that some of these cities are going to have a little bit more money than they know what to do with um and that changed things for us a little bit more so we've just been growing a pretty much steadily quarter of a quarter um and i will say that the years prior you know we had 5x year-over-year growth pretty easily uh well yeah i mean those are sort of that was a very long answer it's a very simple question if you're doing 160 like today what were you doing exactly a year ago in this same month right did you double year over year or something different i just can't provide i have to act like a politician i can't provide you a simple question when i'm kind of stuck post acquisition with what i can and can't say on behalf of those numbers well you just share that you're above 2 million bucks in revenue i imagine if you can share that you can share a growth rate you got to pick and choose how much of a range you're willing to give before you get in trouble okay fair fair enough got it so you can share that you're above a 2 million dollar run rate but you can't share what growth was over the past over the past 12 months um tell me a little bit more about capitalization i mean typically once you raise especially that 2.5 million in 2017 you've got to go i mean you're on the vc track if you're not raising every 18 months another institution around it's a bad signal to the market um you guys didn't do another traditional round after that you raised from insiders i mean was this an aqua high or was it a flash sale no no uh in fact we uh we had the potential of competing uh terms we had a term sheet for series a i mean we were um we actually ended up turning things down because we felt like this was a very very rare type of acquisition that we could have easily walked away from uh we had reached profitability last year as well so we didn't necessarily need venture uh money to continue growing um of course we wanted venture money if we were gonna grow at a at a pace that we felt like uh would keep us optimized but um it was a well you have you have no choice that's a problem with raising bc if you're not growing fast you you made that choice the second you took your first dollar outside revenue so even if you're a profitable if you're not growing as a bc back company you're still cooked and you've got to take an exit like this to get out of a bad situation well i think i would push back on that a little bit i think it's a couple a couple of variables that basically make that happen that pressure happen it depends on the type of vc money you took if you take vc money that uh you know from micro vcs and angels and folks that are pretty much reasonable with you know how they expect the return to when they're gonna expect the returns and give you that flexibility then it's a little bit less pressure if you're kind of stuck in this we got you know big institutional vcs and this is what it's going to take to make shareholders happy we've given up this amount of control this is what the expectation looks like then the pressure actually ends up building but for us we got to a point where you know we've taken a couple rounds of funding we had very flexible and uh a reasonable venture capitalists who knew they got into a gov tech company and they were willing to you know kind of go both ways of course the pressure comes to do you want to optimize we didn't have to take an exit we could have gone the vc route and we were growing fast enough with the money that we had that we could have continued to organically grow and still see growth rates of two to three x year over year but if we wanted to spend that money up front um you know to basically instead of double our sales force to triple quadruple it go into like let's say a fire vertical or a court vertical of course there's no way to do that without venture capital and ultimately the other aspect of you know for what we're doing uh you know going organically at the time versus um you know basically going the vc route was some things you can't necessarily do faster and in government we were able to hack the sales cycle quite a bit but there were certain things we just had to wait out with with covet and budgeting et cetera et cetera so uh it did delay when we were gonna raise but it didn't mean it didn't have as much of an impact on our decision uh as you're suggesting got it fair enough let's wrap up here with the famous five number one favorite book uh sapiens number two is their ceo you're following are studying uh there are many but um i don't think i can tell you one that i i find to be more interesting than the others great number three what's your favorite online tool for building the business just your standard google collaboration tools i think get you 80 of the way number four how many hours of sleep did you get last night about seven seven and what's your situation married single kiddos single in the sense that i'm not married but uh happily in a relationship and okay so no kids and how old are you i'm 32. 32. last question something you wishing you when you were 20 that it was gonna take me longer to get to where i am today and i should be okay with that and trust the journey guys there you have it spider tech working with police municipalities to help make sure they stay close to customers i you know the the the folks living nearby that they're protecting launched in 2015 pre-revenue for two years did 100 grand in sales in 2017. also raised a 2.5 million dollar seed that year ended up raising about 4.5 million before exiting here last month in 2021 north of a two million dollar run rate has looked to continue to scale with their new partner so thank you for taking it rahul thank you for taking this stop you got it 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 2pm 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 founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive i am on these shows but i do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya