TaloFlow Revenue, Valuation & Funding (2024)

hello everyone my guest today goes by l v he's building a very cool company called taloflow which is a y combinator backed company in cloud management prior to that he was in a 3d printable and wearable and auto parts space he's a developer he was in the developer ecosystem team at atlassian and dropped out of claremont mechanic college in 2014 is forbes under 30 in manufacturing at 22 and forbes under 30 all-star based in la and vancouver lv you ready to take the top i am yes thank you all right so you were sort of in the manufacturing space forbes recognized you for that talk to me about the sas company when did you come up with the idea what year uh we came up with i mean we've gone through a few pivots so um you know i started working with my team of co-founders for tail flow roughly three years ago um and uh we've gone through two pivots to get to where we are today um we initially started building low code no code sas integration tools um then realized our customers had a pain point around cloud management pivot to that and then when we we got a bunch of customers for the cloud management product but then realized there was a bigger opportunity beyond helping people optimize um cloud bills on aws and gcp and and saw that um uh really what they were struggling with was picking the right tools um for the use case and so uh we're now kind of building that analytics layer to help develop development teams make those decisions as quickly as possible interesting so so so should people think of this sort of in the same round as as sort of cloud checker or some of these cloud span management tools or different space it's um if there was a venn diagram i would say it's a combination of those and a combination of like g2 and gartner type analysis so so what we really do is we help dev teams find the best dev and cloud tools for their use case and so we built these open standard expert systems that will gather requirements for the use case ingest usage data from their existing cloud infrastructure try to understand their architecture as deeply as possible and then offer very precise recommendations as to what dev teams should be using in their stack um let's say if they're looking for a product or even if they're not we can offer proactive recommendations i see okay so when did you write the first line of code for the business uh well um since the pivot uh i would say a lot of what we were doing was today is relevant to what we're doing roughly a year and a half ago about a year and a half ago when we started in cloud management okay and just to be clear sorry pre-pivot like when was the business filed you sort of said hey you're my founders we're gonna go on this idea i understand you pivot a bunch of times but when did that start the founding team came together um april 2018 2018. okay and and look the pivot is never easy did the pivot happen while you were going through yc is that was that the forcing function um i wouldn't call it a pivot i would just think of you know we of course reposition the product slightly here and there are trying to iterate towards product market fit but um the pivot happened uh solidly around november last year i see okay so you pivot into this new world now did you already have customers lined up for what you're pivoting into and if so how did you get that wait list so um when we launched the cloud management product uh we went viral and hacking news this was about a year and a half ago and about april last year so about a year ago we had about 70 companies using their product quite a bit to optimize our aws infrastructure and a few of these companies actually had uh pretty large cloud footprints and we started having these this monthly cadence with them you know trying to understand how they were using cloud what their dev stack looked like and so on and what kept happening is um we were hearing that they were looking for help to make decisions as to what tools they should use um uh even beyond aws and so we saw this explosion tooling cambrian explosion if you will um in the dev tool space and there's so much complexity when it comes to picking the right api product right cloud product first to the use case and so hearing our customers um we decided to pivot to that because that was white space and a really big opportunity um and we saw that as this market was maturing uh consolidation was less likely and there's just gonna be a lot more niche uh players and specialization and in those kinds of markets you typically want a third-party trust player and we didn't feel that gartner or gta could fill that role given the information content isn't really good enough for developers to make decisions got it and so help me understand um the founding team it looks like there's there's three of you guys right what make what's sort of a makeup between you know what are you handling versus the other two co-founders how do you split roles of course so i'm the ceo i i spend most of my time um in sales calls uh you know strategy fundraising uh that kind of stuff whatever whatever needs to be done uh my other co-founder is um so one of my others is uh todd um i don't know i know todd because he's my best friend's dad so i've known him for a while and um todd is a unicorn in the sense that he's both a veteran cfo and a veteran cto and a lot of these decisions that people make in their cloud stack are multi-stakeholder decisions where you're looking at both finance and engineering having a pretty serious role and so he's able to harmonize the language between those two and he's a pretty great founder himself uh having you know taken multiple companies to 20 30 million arr himself um jason my other co-founder i actually worked with um at my last company weave he was our first non-technical hire helped us get to a million arr then became the head of product out of fintech called grow which is based in canada they had an exit to atp financial but jason um you know helped build some of the first public cloud projects at some of the major fis in canada and in our experience that here's a consistent pattern is we've all sold um you know apis of various sorts um so even at my last company weave i was selling an api to the major cpg firms and health and fitness firms to help them with 3d customization as well and jason was selling fintech apis to the bank so we understand both vendor and buyer pain points very well you mentioned you're spending your time on fundraising so how have you funded the company today well uh fundraising through pivots is tough um you know we've kept the stuff same cap table since the very beginning um we've done a tiny bit of cleanup for sure but i would say this um we've uh just tried to find high value angels that's been our focus um until very recently where we did get the involvement of two firms voyager capital and wonder ventures um nyc continuity also participated in our last round we've raised 2.4 million to date and a million was raised just a few months ago i got it and so what um obviously you did the pivot you then show some traction then you're able to go raise the additional million just a couple months ago right so i want to dive sort of deeper into the product now so when you started the pivot and you started onboarding those first couple customers you said last year 70 customers was it customers or just free users on the platform you were learning from yeah three years on the platform about a lot of them were paying yeah yeah so that's what i'm going to talk about right is this is there's a beautiful time where you go from like learning mode to like okay now you want to earn like and how do you like politely ask these folks to start paying who have helped you really shape the product how did you do that um the first thing was to offer as white glove service as we could um so the way i would pitch it is like anything you need cloud related or dev tool any question you have you know um talk to us and one of the main um drivers for that was actually a shared slack channel between uh you know our our team and their team and we just found that um through these trial periods or extended pilots like people ask questions again and again and again and slowly they learned we were invaluable and that helped us establish a monthly cadence we're pretty much like large swaths of a dev team will be on a zoom call with us um and we kind of do a whole overview of the stack and um when that cadence came into play we started learning what kind of tooling people need in very targeted ways and um the question really became like hey if i built this for you um will you pay us and um that's how we started getting customers to say yes i love that but yeah definitely offered a ton of white glove service before we even got there and how are you pricing what are these customers paying on average per month to use the tech i have no standard pricing model it's i try to get a percentage of cloud usage um uh kind of low digits um overall so like think of it if you're spending a hundred thousand a month on cloud spin i'm gonna try to get one two two thousand dollars of that at least um but i i it really depends i have uh revenue coming from uh two different um size of the market right now i have uh revenue from the demand side i have revenue from the supply side as well we have cloud vendors that pay us as well for buyer intent data and um for data on on how they can better position their product in the market as well interesting okay and how many now customers are you serving today uh less customers but uh more revenue from each so we have um eight paying customers got it so down down from 11 to eight but you've scaled up right which makes sense because if their cloud spend increases and you're taking one to two percent you sort of make more money there so um i guess is that the plan moving forward less customers higher higher volume prices higher acv uh the plan going forward is to really focus our business model on monetizing the cloud vendors and so i expect that we're going to have a painful few years where we're going to be more focused on the flow we can get through the platform for the cloud vendors while we learn how to um monetize them and sometimes you have to meet a threshold similar to like g2 right where they had to meet a threshold before they uh they could really monetize the buyer intent data um at a large enough scale so we're just prepared for that can i ask you how much sort of gmv is you're tracking through the platform from of cloud spend right now do you have enough roots into those systems to actually quantify that yeah so um it's not a perfect representation of what we're doing but we are definitely monitoring um close to 15 million a month um in gmv um but again that's the caveat it's monitoring like i'm i can see that going through um but it's not like i'm i'm helping people make decisions for each dollar of that so uh yeah there's a video so so one to two percent of that one percent would be 150 000 a month it sounds like you're not there yet in terms of business revenue at teleflow but how do you get there right so like you see it you see it it's like teasing you you see it right there and now it's how do i add value to this how do i save my customers money to get one percent of this um so what we learned is that vendors are willing to pay a lot for a great relationship they're going to pay a lot for the data as to how they can better position the market so on one hand after meet a threshold in specific categories where i have insights that vendors will pay for and we did that initially in object storage where we built a lot of data on how people are using object storage enough where like vendors would pay us money to understand how they can better position their product we have a leading object storage defender that actually is entirely repositioning their pricing in the market based on the insights we provided um so and that's highly valuable and we get paid quite nicely for that uh on the other hand um i we're still proving this out but i have to be able to show the vendors that through the flow we provide on our platform they can convert these customers and at a higher clip and that our our prospects are way are very highly qualified by the time they get to the vendor and so as you can imagine we work with like let's say series a series b vp of engineering engineering manager level person um we kind of gather the use case requirements for a specific product let's call it like an apm so they might be evaluating data dog versus new relic versus app dynamics and so on and um we'll do a very very use case based analysis as to which tool they should buy and then the buyer is ready to make a buying decision at that point i want to make the referral to the vendor and and get um uh basically a reward from the vendor and and the model we've been trying with vendors is to actually get a percentage of usage in perpetuity which can be very lucrative for us because the net revenue retention rate of um these cloud customers is quite high especially in the segment we're focusing which are growth stage um [Music] and the big p word perpetuity forever is a long time that'd be a helpful negotiation if you can get it done so can you give us a sense of scale today you're under you're under 150 000 a month what did you do last month in revenue uh so we're way under that in monthly revenue so um we are roughly yeah this month or 17k that's great hey you know what uh going from zero to a dollar is the hardest part so when you raise the 1.5 million dollars recently and you were talking about to the continuity fund and some other super angels what did they see in your story your deck your financials that they really liked how are we able to lock down that additional 1.5 million well i think the story first first off is quite powerful right which is that like you you about a year ago this was not i mean sophisticated investors would have said all multi-cloud might not really happen you know these cloud runners are going to consolidate and it's going to be ahccp versus azure and and but but really talking to our customers we learned that there's going to be a lot more competition and that's why i see successful firms like snowflake datadog you know like these decisions are everywhere and there's not there's never like a de facto answer we're learning like there's a lot of analysis that goes into these decisions and no one was powering that so i used to give a couple of analogies i used to say look like you know you're not going to buy a car without a carfax report we want to kind of be that that player in the space for cloud where every decision has to go through us and we're that hub where decisions happen for cloud and over time the vision is that we're going to automate a lot more of those decisions right now they're more static and sticky but as cloud commoditizes and as certain parts of cloud commodities and as vendor lock-in gets lesser and lesser with standards like kubernetes and istio taking shape um we'll probably be able to um uh be a much more active decision making tool um than we are today and i think that's a very big vision where uh you know even the cloud vendors that are at our mercy when it comes to uh getting their deal flow if you if you get enough volume then yes you certainly have pull there we'll see what happens as we wrap up here talk to me it was quickly about team size how many folks full time we're five five okay and i assume burning capital as you drive growth how many engineers uh three engineers um who had a product and myself yeah that's great very good all right lb let's wrap up with the famous five here number one favorite business book uh think and grow rich number two is there a ceo you're following or studying uh yes um i would say that would probably be um i mean of course i like to reporter feel a lot so that would be one number number three what's your favorite online tool for building teleflow oh uh google sheets number four how many hours of sleep to eat every night uh i had a baby a couple weeks ago and i have a toddler so it's been so maybe like two or three uh to say i heard him in the background i was gonna ask you how many so married and how many kids two kids yeah married with two kids one two and one just a few weeks old my wife's water broke uh two hours after i pitched on demo day so it was crazy oh my gosh that is wild okay and how old are you i'm uh 28 28 last question what's something you wishing you when you were 20 um to spend more time thinking about what i want to do before i go ahead and do it guys there you have it taloflow.ai launched call it back code written in team form back in 2018 pivoted a few times majorly really about 18 months ago now helping folks understand what tech they should be using based off their specific use cases they're working with eight enterprise customers right now have vision directly into 15 million dollars a month of sort of cloud spend the question is can they get a percent of that cloud spend as their revenue stream currently doing 17 grand a month about uh two point uh 2.4 million dollars raised to date lv thanks for coming on and thanks to the top thank you take care 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 1 pm 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 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