How Telesense CEO Naeem Zafar grew Telesense to $816K revenue and 400 customers in 2020.

you're gonna love this interview just got done editing it i'm glad i got it live for you i'll be in the comments for the next 30 minutes hanging out answering any questions you have in fact leave a comment below about data points or what you think is going to happen to the company and i will respond to every comment additionally if you're just loving the content click the thumbs up and i will go and check out your profile as well and give your videos some love as well in the meantime enjoy the interview hello everyone my guest today is naim zafar he's a serial entrepreneur and the founder and ceo of a company called telesense naima's a 7x startup entrepreneur and 5x ceo with successful exits he's deeply ingrained in the silicon valley ecosystem and frequently speaks about innovation and entrepreneurship he's authored five books on entrepreneurship and he teaches entrepreneurship at uc berkeley and northeastern and northeastern university the company is called intellisense again an ag tech company using ai to preserve grain name you ready to take us to the top absolutely all right so what's the silicon valley guy that should only be in computers and software doing digging around in grain bins well we figured that what are the industries which have not been touched by advanced software technology and we looked hard and we found construction and ag our two industries which there's a lot of room there to have innovation so silicon valley we know about wireless sensors artificial intelligence so we decided to apply that to the grain industry and we are sort of the first one to get there yeah so so explain i think this is fascinating explain to those that missed your first interview how the product actually works do you have it by the way the iot device yeah can you hold it up i'll hold it up so there are a couple of devices so let me just say a couple of words here so grain once you harvest it and store it never improves in quality it goes downhill the question is when is it going to go bad or not as good so should i sell it now can i hang on to it for another nine months should i sell it next season that's the decision every growth has to make so what problem is to monitor you need temperature humidity what's going on inside my grain so if you make it super simple then anybody can use it so what we have done is we have created a little ball this ball has temperature and humidity sensors and this is the antenna you can stick this ball in a pile of grain and you can pull it out when necessary but even more interesting is this spear okay so this is a two meter long sphere but all you have to do is stick it into a pile of grain and this thing start transmitting data wirelessly so hold on that thing you just held up for those of you listening audio only it's kind of a blue ball on top of about it looks like a three or four foot long metal stick longer than that six six six and a half six and a half feet what does that cost you to make their name that iot device so this device we sell for about four to five hundred dollars depending on the quantity okay and then you know if you put three or four of these in a pile of grain or in a barge going down the river now you know what's going on if there's a problem there's a hot spot there's a biological activity you can take some action okay and that can save millions of dollars of grain every year those two things though for you as a business the yellow one versus the blue one you just showed me what is what do those each cost you to produce uh our cost of production is around 150 dollars for both of them each yeah approximately one is like 110 one is 170 so approximately one for 440. okay and what makes them so expensive to produce because inside there's several interesting things going on there are of course a battery but must last a couple of years there's a wireless communication circuitry which is needs to collect the data the temperature sensors humidity sensors they have to be weatherproof they have to be able to withstand large temperature variation and snow and humidity they have to be intrinsically safe so you can't blow up in a silo so a lot of advanced technology goes into those things if i am a farmer and i have a silo that are is three stories tall and i stick that instrument you just showed me into the top so it only goes down six feet which maybe like one tenth of the total height of the thing how do you know that the grain at the bottom isn't getting exposed to like insects or somethings and it's actually bad grain but your sensor at the top is saying it's all good yeah so that's why uh for tall silos we have a different product because tall silo you can hang temperature cable which go all the way up and down we sense those cables and we start transmitting data wirelessly in shorter things you can hang these things so these things assure you they're ideal for ground piles shallow storage barge or rail cars so for three story tall we have a slightly different technology which i don't have to show you but it's a box which wireless sensor data interesting okay so for some context for you guys so so when you came on last you'd communicated i mean this is expensive to get going you have to not just you have to make software you have to produce a physical object as well you had raised eight million dollars had staffed the team up to about 20 folks it helped me understand the capital structure business today still eight million raised or if you raise additional capital uh no we are going to be raising this year about 15 million okay why is 15 million the right number because our mathematical calculation tells us that will take us to profitability okay so it comes out a financial model well how do you so even though if that's the right number in terms of getting a profitability how do you make sure you raise that in a way that doesn't really dilute you and your other employees that might have equity shares well it will dilute us that's okay how do you minimize dilution though minimize the illusion is by creating the company value higher and higher so when you raise last time the company value was this much this time hoping the company value will be this much so dilution will be you know maybe 20 maybe 25 and not 50 yep so that's what the focus is and to raise your valuation you need to be able to produce half a dozen charts all up going to the right and that's what we have been working on so team is now like 44 people uh we have sales force now and we have dealers selling for us we have found product market fit in two or three markets which we did not know last time when i talked to you so things have really had more momentum than ever before so 44 people how many are engineers uh 28 okay so majority engineer any quota carrying sales reps or no uh any sort of quota carrying sales reps yes yeah absolutely so we have five uh quota carrying sales rep okay and so to back into that you your target what you'd feel like would be a good raise this year would be selling about 20 to the company for about 15 million is it accurate approximately yes so what story do you feel like you have to tell paint some color on those charts that you have to show to get a 60 million dollar pre-money evaluation right so with first of all the story is that there are we did some pilots with the series a initial thing and now we can demonstrate that those people are now proliferating so there's one location now they're in three locations or six locations so we know you can see there'll be a ramp we can see how many people how much time do they spend every week on our website on our using our mobile app it may be there is only using it five minutes a week now they're using 11 minutes a week they plan to use 26 minutes a week so that shows that they're engaging and then ultimately you have to show roi did we detect a disaster and avoid it from happening and the fact is there are several examples now when we detected a disaster which did not happen so as we demonstrate the product has value and the predictive part is working that's what's going to give us the high valuation so when you came on last time you articulated that you were selling 20 balls for about five thousand dollars to to your buyers is that still the same or have you been able to drop that price to get more market share drop that price to get more market share or our own production is more now optimized and we've evolved from just using balls to combination of spears and other form factors so we are founding for example very attractive sil product in hay market hay is food for animals and hay is as expensive product is sensitive product we did not know about that last time we talked so today we are penetrating the hay market so today just to do an apples to apples comparison what do you sell 20 balls for plus the year-long subscription so that has come down slightly not a lot that has come down to maybe i think thirty five hundred to four thousand dollars okay but so idea is not to reduce the price just yet to add more value because we have several software products which will be coming once we have the balls we want to be able to sell people additional products which can give them more value how many how many folks are now paying for the software component uh well everybody's paying for the software component so today we have about 400 customers now okay that's up from...