Stitchedinsights Revenue, Valuation & Funding (2024)

hey folks my guest today is dmitry pavlov he's the founder and ceo of stitch insights the silicon valley deep learning pioneer and predictive and consumer insights he's a guest speaker and emerging tech trends cross-functional team building and science in marketing do we treat you ready to text the top been ready for a while let's go nice so hey last time we spoke man it was back sort of middle of covid give everyone a quick reminder what are customers paying you for yeah for sure so we're creating ideal experiences for consumer brands and helping them understand how their customers think and feel against their competitors in their entire category and so we're charging uh at a base ten thousand dollars a month per channel things like amazon as a channel or an internal support request channel or like twitter is another channel and so we've been working with predictive innovation teams sustainability teams across luxury groups fashion retailers leading consumer electronics companies and essentially understanding working with their predictive innovation teams and sustainability teams and e-commerce teams helping them really measure at a really granular level what their customers care about at the attribute level of each product versus their competitors so they can actually start measuring what is the size of the opportunity in the entire market for their products for their consumer segments basically is there your segment that's really really happy with a dimension of a product how it's performing or is there a consumer segment that really hates a specific dimension of a product your competitor has that maybe you have a really huge opportunity to to hit on 10k per month per channel is significantly different than i think when we last spoke you had i think nine customers paying on average sort of a grand a month so have you really moved up market intentionally oh yeah we've completely shifted sort of the the kind of the entire go to market strategy what we've realized is basically and before it was really like mrr and really early poc revenue that we had now we have actual arr revenue we're actually nearing um a little over a million arr this coming year um and so what does that mean you mean like you take today this month's revenue times 12. uh no we we actually have some some new engagements coming in so we have a little less than 10 customers at this point basically we have now engagements that are annual contracts as opposed to um just a month by month or a poc just non-recurring revenue contracts and so you've switched years completely and kind of how we're we're monetizing this a little bit well so help me understand so you use in 2020 you said you had nine customers so you still have nine customers to say but they're different customers and paying you way more is that right we were running pocs in 2020 with with a number of folks like sephora's of the world um trying to understand basically what we are deploying and what we are solving for them and what we realized is really where the real pain point is across all these brands is they're running surveys on all of their customers but what they're not doing is they're not serving all of their competitors customers at that same scale so when they make product changes or estimate market opportunity they're really only uh estimating in a bubble in a vacuum they're estimating what they're doing what we realized is by actually looking at the external data we can actually measure the size of the opportunities for these brands and what we found is who specifically is using these insights so what we were initially doing is just exploring with you know so a year ago those nine were not customers they were they were pilots and so now today you have nine fully onboarded paying customers and it's true arr we've lived under 10 we'll have over 10 fully true ar customers by early this coming year yeah four for annual agreements i see icic so so what when you just look at booked revenue today what would you say mrr is uh we're we're sharing arr essentially so we're gearing up for our series a this coming year um in the new year so we're basically our target is a little over uh 1.3 million in are is is basically from our existing contracts and their expansion revenue that's coming in from those contracts when you want to hit 1.3 a year and like an arr yes correct and realize no before q2 of this coming year okay so that so 1.3 and are calculated by you know that month's revenue times 12 forward-looking would mean you need about 110 000 bucks a month in revenue to get 1.3 in a r so you think by q1 of next year before your series a you'll break 110 000 a month in revenue oh for sure for sure yeah and where are you today and and so we're we're on our way to that today we're we're not there yet but we have really really large contracts coming in right now and what we've realized is there's expansion revenue with um with our with our software especially especially where we are sharing these insights with one team like the predictive innovation team i totally i totally get all that like i understand the upside i'm just trying to get a sense of how much you have to grow between now and your series a to hit that mark so so are you not sharing on purpose sort of revenue today or where if not like where are you what's the range yeah so we're actually right in the middle of a fund raise right now of of a small like c plus round so we're not sharing externally those numbers but it's it's well on the way to it uh got it so i mean can we so let's put a big range on it can we say you're above 50 grand a month in revenue right now uh i could do rate well i could tell you that we're under uh we're under 700 000 arr still and you're calculating ar we're taking last month's revenue times 12 right annual recurring yeah it's it's anything that's signed contracted for recurring revenue moving forward from 2020 to 2021 on [Music] got it still a little confusing but we'll move on so we can learn other stuff got it so signing enterprise accounts um you mentioned seed plus does that mean you already raised a c did you raise a seat earlier uh so there's not really a name for this round yeah we raised a small chunk uh the previous year we raised a little over a hundred thousand dollars basically just to help us commercialize some of this platform um and we've used that essentially to to figure out what is this platform that we can start expanding out and that was in 2018 you raised the precede uh that was about a year and a half ago i'm getting lost in what year we're now honestly okay so 110 and sort of an early round and you're closing sort of a seed plus right now how much are you looking to raise right now about 3 million is this is what we're looking at and we already have uh some really really great investors that we're working with right now in in middle middle of the conversation with or so why do you need to raise right now like what what what why do you have to you know have that kind of money to grow yeah so i've actually this past year i've just switched gears from anything other than sales and i've had the opportunity to speak with dozens and dozens of cdos ctos cso cmos ceos across these fortune 100 brands and i've literally spoken with 30 or 40 like 14 100 c-level executives and what i found is that we can actually we can launch this pretty easily because we are offering something really different than than what's in the market we're not looking at sentiment we're not looking at overall what's happening for your overall brand we're understanding each individual dimension what matters and i've been able to get a um so and we have a new subscription process that we go through it's an annual agreement that has a 30-day trial that's attached to an annual agreement already and so because of all these conversations and this easy piloting process i've actually created a pipeline of way too many way too many active engagements basically that i'm realizing we can hit all these if we have additional revenue if we have additional funding why why can't you just go close them now and you get them to pay up front and use that money to drive growth so we we will potentially do that starting starting next year is to leverage the money up front um the easiest way has been to say you know we give you like for ten thousand dollars we'll give you a snapshot analysis of your of one of your products against the competitive category set and then at that at the end of that month it turns on into a 10 000 a month subscription and then we start expanding to additional channels so that process to get to get paid like large amounts from these brands is a longer process so right now we're still we're not getting enough revenue in to catch essentially all the opportunities that are coming in so we're trying to accelerate this on the three million now what valuation are you targeting yeah so that's also we're not sharing that exactly we raised under four million dollar valuation previously um and we're up up ahead of that now basically uh how much i guess what's a range of how much percent of the company do you think you'll have to sell to raise three million we're trying like 10 to 20 the standard stuff 10 to 20 percent uh probably less than that uh we're so one of the one of the investors is with the spv um and they're actually like a very very very friendly terms so far um you're looking at debt you're looking at debt or equity i'm safe we're looking at a safe okay as you said the the one of the partners is that svb spv like a special purpose vehicle that oh spv i think i said silicon valley bank got it uh okay so you so got it so you're raising three million at greater than a 30 million valuation so you can sell less than 10 percent of the business that would be a great deal for you that's what you're targeting uh yes basically and i guess why if you're planning to go raise a big round like when you hit the 1.3 ar mark in q1 like why spend a bunch of time right now trying to raise three million uh well actually we got preemptively reached out to by by number of investors uh i i was not going out and raising right now i thought actually let's just focus on these contracts um get them to expanded revenue between each contract and then next year go out and raise a larger round but the advice has been we can bring on additional folks i can bring on sales support i'm doing sales myself right now like i can bring on how many are on the team right now um it's essentially my oh we have we have folks that are part-time and full-time we essentially have the same team that we started with still and it's just not true we don't know how many is that we have nine people still basically the same same participating folks that were part-time and full-time and what we've started doing is bringing on some of those folks full-time but that's still not enough capacity so how many right now are full-time full-time uh we have literally about three full-time right now and by the end of november we'll likely have probably six or seven full time so i guess what happened because like back in april i mean obviously kobe hit but like like in april last year you told me you had six full-time employees did you let three people go no we we just we built out the platform what we were building is data pipelines and we're engineering these these flows and now these systems work relatively hands-off so the pilots and the subscriptions that we're launching are through channels that we're already we already have full analysis of so we're just deploying our platform right now so there's zero development happening basically at this point so the three engineers grow basically they're they're actually so one of my one of my head data scientists just started his own company also um and he's just part time helping us now basically but my yeah my take is up until we need development time like we don't need to develop anything else new up until after november basically and we're deploying just with with our existing platform so we're focusing on sales 100 and so i need sales people and i need like support folks got it interesting how do you like manage dilution i mean this is a lot of capital in an early stage you know you don't want to you know blink and only own 20 of the business no for sure i mean i honestly delusion is like it's important and i don't want to kind of dilute myself too much but you know if the value that the investors etc bring in is more than what we're giving up i'm happy with that right do you have co-founders uh i have a co-founding team i was the original founder by the time i realized what this market could look like and by the time we became a portfolio company of one valley previously gsv um that's when i realized oh we actually have a much larger technology play and that's why i brought on board dr hannah zeiss dad dr andrew schwartz um and since by the way i think i've mentioned that johannes is now at stanford's human artificial intelligence lab at the tip of the spear for linguistic and ai research and that's actually been really really useful for us to really deal with these ctos and cdos because they're really actually excited about these you pay him a bunch of money uh johannes he got paid a ton of money to help develop these systems he's now he's now basically from you you paid him that we actually we actually were the founding so we put in money ourselves we put in about a quarter million from the founding team to develop these things um and a bunch of that went to this doctor that's teaching at stanford honest was also one of the folks with the founding team that put money in originally he himself did not take a salary for the first like year and a half and they actually had like a three and a half million non-dilutive government grant to help develop this technology um so we we took that open source tech that johannes and andy created to create a proprietary version commercial application and they basically put in all of their sweat equity and additional money in there so how many how many founders are there then three so myself and two two co-founding teams did you split a third or third or third or no no no no they have well they came in once we already had a product um they're really what they're what they're adding to this is technology that really separates us from anything else got it so you still on the majority of the business more than 50 percent for sure i see i see okay cool um very cool what else anything i'm missing before we wrap up uh yeah so i've what i found is honestly that there's there's a lot of there's a lot of really interesting shifts going on right now right in in the industry and i'm really excited about that it's being recognized by by these brands so all these brands have been talking about we really care about customers we really want to focus on what customers care about but what i found is that really none of them have the resources or tools to look at all of their customer feedback they actually don't know what all of their customers care about and on top of that they have no idea what their competitors customers care about they're not looking at any of that and i think that's such a huge missed opportunity for folks to not just for the brands but for customers to have companies really listen to them and start fixing stuff and so that's where we're kind of trying to wedge ourselves in is to really unders help these brands understand what are the things what are all the things that are top of mind really the most important things to your customers to drive loyalty and adoption and to drive sustainability and like we're working with these luxury brands they're thinking they're building multi-year strat multi-billion dollar strategies to like we have sustainability initiative we want to fix animal welfare and carbon emissions but they don't know what about animal welfare what about carbon emissions is important like do they do their customers want more sustainable leather wrist watches for the animal welfare do they want plastics that are more sustainable right they don't actually know they're just moving all these things and where we're coming in is we're actually measuring across all their my zones across other brands what are those things that matter to your customers the most what will move the needle to your customers on sustainability and then after you launch these initiatives what of those things have impacted you positively have you increased sales because of these changes and have you increased over the category or is the category itself shifted and you just moved to the category these brands are blind in this space right now they're just they think they're performing well or underperforming and they're not really taking into account the whole thing so we now finally have tools to look at all this massive data and i'm just really excited that now it's actually getting recognized by these brands and i don't know if it's a shift of you know covid or or just ai's becoming more understood in general but it's it's such a great trend i'm really excited about it we'll see what you move what moves you make next in the meantime let's wrap up with the famous five number one favorite business book uh favorite business book oh man um you know gilgamesh number two is there a ceo you're following or studying uh yeah since i read bob iger's book right of a lifetime i think i've been following him closely it's been really interesting yeah number three what's your favorite online tool for building your business honestly like google slides have been really awesome number four how many hours i sleep to eat every night at least seven and a half once in a while i get like three hours just if i'm up all night but then i'll sleep in later and what's your situation to me you're married single kids no kids not married and how old are you i'm i'm 34 i think 34. last question someone wish you and you were 20. oh man that was 20 to learn how to prioritize things correctly and to prioritize experiences and things that shift your perspective more because that's really how you grow right so i that new experience like traveling like reading new authors like mentors like those things really that shift your perspective is kind of that that the most important thing to really prioritize i think guys stitched inside sounded in 2018 finally helping you know large luxury brands understand what their customers really want customer feedback they have nine paying customers today call it you know five six thousand dollars a month in terms of our poo so flirting with forty fifty thousand dollars a month hoping to break the one point three million dollar ar mark by q one twenty two so they're going to do another raise they're currently raising call it three million we'll see what happens there they raised 110 000 bucks back last year the middle pandemic got a four million valuation team of three building this bad boy out he's looking to hire sales folks reach out if you're interested dimitri thanks for taking us to the top please awesome thanks 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 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 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