How Tomi.ai Reached $1M ARR with 24 Enterprise Customers (Interview with CEO Konstantin Bayandin)

Introduction and Guest Background

Nathan Latka

00:00Hey, folks. My guest today is Konstantin Bayandin. He's the CEO and founder of Tomi dot ai, also ex CMO of Ozon, the largest ecommerce player in Russia. He's an ex Martech senior director of Compass, ex BCG, Stanford MBA, and spotted a 20,000,000,000 opportunity in digital ad optimization and real estate to now build tomi dot ai. 1,000,000 pre seed funding to turn lead gen businesses into ecommerce. He's also an Ironman finisher and theoretical physicist. Constantine, are you

00:26ready to take us to the top?

Konstantin Bayandin

00:27>> Yeah. I'm I'm really happy to be here, and I'm a fan of your podcast, Nathan.

Nathan Latka

00:32Oh, very cool. Why'd you agree you know, people go, Nathan, why do people agree to come on? You ask him for so many data points. Why do why do you agree to come on?

Konstantin Bayandin

00:39>> We just, you know, to hang out with with the guys from the industry, SaaS, enterprise SaaS, and, you know, expand my network in this way.

Who Is Using Tomi.ai Today

Nathan Latka

00:50That's awesome. That's awesome. Okay. Let's talk more about what you're building. So so who's who's using tomi right now?

Konstantin Bayandin

00:55>> Yeah, so we have 24 customers in several industries. We aim at businesses with long sales cycles, and we're solving three major problems for these kinds of businesses:

01:07>> long decision cycles for SMBs or consumer customers, offline conversions and very rare transactions. And the best ICP is a real estate developer or brokerage, a bank, an insurance company or automotive company.

Pricing Model and Tiered Packages

Nathan Latka

01:25And so how do you price for this? What do they pay on average per month?

Konstantin Bayandin

01:28>> We are an enterprise SaaS business, and we charge a fee of $5,000 per month.

Nathan Latka

01:37And

Konstantin Bayandin

01:38>> with them, of 50,000 to $100,000 a year.

Nathan Latka

01:42I see. And so is that your only price point? Or tell me why someone would pay you way more or way less.

Konstantin Bayandin

01:48>> Yeah. So we have a tiered pricing system. So if you optimize your advertising spend to a certain limit of $100,000 on Google and Facebook per month, you pay the starting package of $5,000 per month. If you go beyond that, you get the next level packages with some discounting on the pay per usage price.

Nathan Latka

02:15So, Konstantin, just to be clear, $5,000 a month, that's money to you or that's money they're giving you to spend on ads?

Konstantin Bayandin

02:20>> We are a software, so we don't run the ads ourselves. We provide a solution to do it in a more efficient way to our customers. They run ads by themselves in Google or Facebook, or their agencies do it for them.

Revenue Milestone: $1M ARR in December 2021

Nathan Latka

02:37That $5,000 is they're paying you to use your software. So $5,000 times 24 customers, you guys are about $120,000 a month right now in revenue?

Konstantin Bayandin

02:45>> Yeah. So we are we have some customers that are ramping up. So we have reached 1,000,000 ARR last December this December, like, the December last year. And with 24 customers, it gives us 4 to $5,000.

Nathan Latka

03:01That's great. So I guess if you're at $90,000 it sounds like in January or this month, you're going do about $90,000 right? Something like that.

Konstantin Bayandin

03:09>> Yeah. So we're still growing, adding more customers every month.

Nathan Latka

03:12And if you're doing about 80,000 or $90,000 per month today in revenue, where were you exactly one year ago?

Konstantin Bayandin

03:17>> So one year ago, we had around 250 plus ARR with four clients.

Nathan Latka

03:25250. Okay. Interesting. And and how do you so those four clients, were they all from one specific niche or no?

Konstantin Bayandin

03:32>> No. We we test a lot in the beginning. So at that time, were real estate, two ecommerce companies, and one ed tech company, education technology company.

Nathan Latka

03:42Mhmm.

Konstantin Bayandin

03:42>> And they are still developers. Yeah.

Sponsor Break

Nathan Latka

03:43They're all still with you. Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 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 Founderpath. Check this out. I'll show you how you can access this in a second, but

04:08you log in, you connect your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of

04:32your SaaS 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

04:55about 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 founder share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired the valuation

05:19and the multiple. Maybe you're going out right now and you're raising your seed round. We'll 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 dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. All right, we're gonna go back to the YouTube video

05:43here in a second, but if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link, this link, founderpath.com/products/valuations. 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.

Company Origin and First Paying Customer

Nathan Latka

06:09Alright. Let's jump back into the interview. So what are you I mean, give me a backstory here. You have based off your bio, a lot of different things you've had your hands on. What year did you launch, tomi?

Konstantin Bayandin

06:18>> Yeah. So I had always been a data geek and, you know, sciency guy and turned into a marketer. And I worked for more than five years in ecommerce in leading positions in marketing. And at some point, three years ago, I moved back to The United States, to New York, and worked at Compass in paid digital marketing and marketing technology. And I spotted a huge opportunity because doing digital marketing in real estate is a real pain. And

06:45>> as I said, the key problem is that long conversion cycles offline and very rare conversions that you cannot use for optimization for ads in Google or Facebook. And I grasped the opportunity for predictive marketing approach, where you can score every website visitor in real time and use this scoring, the expected probability to pay later.

Nathan Latka

07:07Tell me what year was this, though? When did you launch the business?

Konstantin Bayandin

07:10>> The first paying customer was on April 2020.

Nathan Latka

07:14And when did you write the first line of code? 2020 as well?

Konstantin Bayandin

07:18>> It was on the go. The first customers used the MVP solution, and right now, wrote the solution completely with the engineers we hired, and now we have a cloud based solution for every customer, the same

Team Size: 19 People

Nathan Latka

07:34What's the total seam size today? How many people?

Konstantin Bayandin

07:37>> So we are 19 people. Half of the team are technology, engineers, product people, and myself.

Solo First Year, First Six Customers and Finding a Co-Founder

Nathan Latka

07:46And tell me and then, Konstantin, you know I'm gonna ask this. Bootstrapped or you raised?

Konstantin Bayandin

07:50>> Yeah, so it's an interesting story. I was alone for the first year in 2020, and I was able to get to the first six customers and

08:02>> 35,000 MRR. And I started to raise money, to hire the team. I got my co founder, Miti, who first was the angel investor and then converted as a co founder.

08:19>> Fast things forward, we are now four times larger than the company was it was alone. Mean Just

Reconciling the Revenue Timeline: $22K to $80K a Month

Nathan Latka

08:27to be clear, asked you earlier, you said today revenue is $90,000 a I asked you what was revenue a year ago? You said about 20,000 or about $250,022

Konstantin Bayandin

08:35>> a month in December last year.

Nathan Latka

08:37Okay. And then go back a year back to 2020. You just said revenue then was 30,000 a month?

Konstantin Bayandin

08:43>> So wait. So December twenty one, eighty plus, and 12/20/2022, I started the business in 2020.

Nathan Latka

08:55Sorry. I know what you just said. I thought I heard you say in 2020, you grew it by yourself to $30,000 a month in revenue. Was that right?

Konstantin Bayandin

09:02>> Yeah. Yeah. By by February, March, and I started to hire people February, March two

Nathan Latka

09:07years ago in 2020.

Konstantin Bayandin

09:08>> I started to hire people in 2021, in February, March.

Nathan Latka

09:14Constantine, sorry. What I'm trying to get to, I'm missing something here, the numbers. You said in 2020, you grew revenue to $30,000 a month. Last year, you said 22,000 a month. So you shrunk your first twelve months in business?

Konstantin Bayandin

09:28>> So I started in April 2020, was running it alone. By December 2020, I had 22,000 a month. I still run it alone and I started to hire people in February March last year, 2021. And by that time, I had 35 ks run rate per month.

Nathan Latka

09:49I see. So you went from sort of $20,000 a month in 2020 to $80,000 a month in 2021. That was a couple months ago. To now, you're doing about $90,000 a month. Is that right? Yep. Yep. I see. I see. That makes sense. Okay. So just to be clear, you can answer my question. Still bootstrapped or you raised?

$1M SAFE on $6M Post-Money Valuation

Konstantin Bayandin

10:06>> So we raised $1,000,000 in pre seed a year ago, closing in April.

Nathan Latka

10:12Mhmm. And what valuation was that at?

Konstantin Bayandin

10:14>> So it was plain 6 mil post money SAFE.

Nathan Latka

10:19Okay. And did that looking back, do you regret that, or was that the right deal for you at that time?

Konstantin Bayandin

10:24>> So we could raise less because our revenue grew really well and we still, you know, didn't spend even half of the money. But I believe you should raise more than you need all the time in order to not be in a position when you strive for new funding.

Nathan Latka

10:42Constantine, how much of that money is still in the bank today?

Konstantin Bayandin

10:44>> More than a 0.5.

Nathan Latka

10:45Oh, wow. So more than $500,000 sitting in the bank today. That's great. Are you looking at raising more capital now?

Current Seed Raise: Up to $5M, Targeting $30M Post

Konstantin Bayandin

10:50>> We are raising money right now. We want to raise a seed up to 5,000,000.

Nathan Latka

10:56Okay. And what valuation? Assuming you get exactly what you want, what valuation would you love to raise at?

Konstantin Bayandin

11:02>> So if I get an offer from a reputable firm for 30 post manipulation, I'll happily

11:13>> So admit the offer

Nathan Latka

11:15five on a 25 per year or 30 post, or you're selling approximately fifteen percent Five of the

Konstantin Bayandin

11:20>> on 30 posts.

Nathan Latka

11:21Yep, five on 30 posts. You'd be selling about, again, 15% of the business. Honestly, what you're asking for is market. Mean, right? You're asking for a 27x valuation multiple above the 1,000,000 you're doing right now. Why not ask for more? Why not go bigger?

Konstantin Bayandin

11:34>> I mean, it's you know, we we have really high interest and we have about a half of the round of gradients of commitments, looking for a lead investor. And if you have competition, it can be higher.

Equity vs Debt Funding Philosophy

Nathan Latka

11:45Mhmm. Would you you definitely wanna sell equity here. I mean, as you know, we have a fund, but it's not equity. It's debt. Would you ever look at funding some of your growth with debt so you can keep equity or no?

Konstantin Bayandin

11:55>> Well, debt debt is tricky. So you can you know, it it it might look better in the beginning, but it can be a drawback in the future. So Mhmm. Equity What

Nathan Latka

12:05are some ways what are some ways it could be a drawback in the future? It sounds like you have some experience with this.

Konstantin Bayandin

12:09>> I mean, with equity, you get smart money. So actually, you not only get the money, you get the connections of investors, some help on the way forward for the future rounds and with debt. You never know how it goes, and equity is more protected from the downside.

Nathan Latka

12:26This is all true. Obviously, just giving them more equity. I like to think of myself as debt, but also very strategic, I. E, the reason you wanted to come on the show. We should talk.

Konstantin Bayandin

12:36>> If you want to invest, you're welcome to

Nathan Latka

12:38I'm just going off metric you've already shared with me. Founderpath would probably spit out an offer for you of which is eventually our capital, right? Probably $500,000, and you're growing healthy with a pretty good profile in terms of expenses, and you have good cash balance of 500 ks already, we'd probably give you 500 ks and let you pay it back over two or three years at a fairly competitive rate. It wouldn't be bank capital cheap at

13:00like 6%, but it wouldn't be like Clearco company expensive at like 30%. It'd be like 15%, something like that.

Konstantin Bayandin

13:07>> Yeah. Thank you for the offer. It's already a great, you know, value from the call, from fifteen minutes call.

Nathan Latka

13:13Yeah. We'll see what happens, but I like what you're doing. I just wonder how you think about preserving equity over the long term. Have you had a company in the past that you've sold where you did raise from VCs?

Konstantin Bayandin

13:22>> Well, no. It's my first company. And before that, I was in executive roles on the large companies, like pre IPO companies.

Churn and Net Dollar Retention

Nathan Latka

13:30Yep. Yep. Well, it sounds like you're doing the right things here, you're growing nicely, which is great to hear. Talk to me a little bit about churn, right? So, what is your net dollar retention over the last twelve months?

Konstantin Bayandin

13:39>> Yeah. So, we had six customers that are more than one year. So, it's really hard to judge what is our churn. And most of the customer base came within the last six to nine months. What's important, so we run a pilot project with our customers to prove the value to them. And we get and expect to get two thirds of them to convert into recurring, permanent customers. And by far, we estimate that our churn should be

14:09>> around 1% to 2% per month for those customers who converted from a pilot to a yearly contract.

Customer Acquisition Cost and Marketing Spend

Nathan Latka

14:18Understood. And then in terms of signing up these customers, right, they're $5,000 a month customers, what are you spending on customer acquisition costs to get them?

Konstantin Bayandin

14:25>> Yeah. So we spent very little on marketing. So for Q4 last year, we spent only $4,000 on LinkedIn, Facebook, Twitter. We invest a lot into

14:36>> outbound called outbound sales. We also believe that our next two channels to chase for are content marketing, for inbound strategy to generate interesting content for decision makers and to get their attention and eventually

14:53>> get them as warm leads. And the second channel that we believe in is the event based marketing. So going to events, conferences and talking to the decision makers, then they are ready to talk. So in our industry, the upper funnel part is really tricky because it's very crowded in the marketing technology space. But whenever we get to a call, whenever we show a demo of our product, we get a conversion into a contract for like 20%

15:20>> of our conversations.

Nathan Latka

15:21Mhmm.

Gross Burn and CAC Target

Nathan Latka

15:22Mhmm. Yeah. That makes a lot of sense. Now, if you look at your total expenses, not just marketing expense, right? Total expenses. If you're adding, you know, one customer a month or something, right? What were your total expenses last month? And could you get into a fully weighted CAC that way?

Konstantin Bayandin

15:33>> Yeah. So, our gross burn is 130 a month. Okay. $130,000 And our target cost on sales is 40% of the revenue.

Nathan Latka

15:46First year revenue?

Konstantin Bayandin

15:49>> Yeah.

Nathan Latka

15:50Got it. So if someone so if someone's gonna pay you $60,000 in the first year, you're willing to spend up to $24,000 to get that customer, but you're nowhere near that right now.

Konstantin Bayandin

15:58>> Yep.

Nathan Latka

15:59That that makes a lot of sense.

Konstantin Bayandin

16:00>> This is

Famous Five Rapid Fire Questions

Nathan Latka

16:01a great story, Constantine. Let's wrap up here with the famous five. Alright?

Konstantin Bayandin

16:03>> Yeah. Let's do it.

Nathan Latka

16:04Alright. Number one, favorite business book?

Konstantin Bayandin

16:07>> Zero to One, Peter Thiel

Nathan Latka

16:09Number two, is there a CEO you're following or studying?

Konstantin Bayandin

16:11>> Yes. Daniel Piekarski, my former boss from Amazon. I I adore his leadership style and customer obsession.

Nathan Latka

16:19Number three, what's your favorite online tool for building, Tomi?

Konstantin Bayandin

16:22>> SimilarWeb. Amazing tool. I was one of the early customers in Russia. I love it. So just to spy on your competitors and many more things.

Nathan Latka

16:31Are you based in Russia right now?

Konstantin Bayandin

16:32>> No. I'm in Palo Alto, California.

Nathan Latka

16:34Ah, okay. Okay. Can I'm gonna ask a sensitive question because it's relevant with events currently happening. Does this impact you at all? Like, Putin, Ukraine mean, does does this impact you at all since you're from Russia? Mean, probably not. Right?

Konstantin Bayandin

16:44>> Well, bugs me a little bit, but we are we are a US based company, Delaware C Corp, and Russia is a really small part of the global marketing technology and online marketing market. So it's not a big deal for us.

Nathan Latka

17:00You're not seeing anyone treat you different because you were originally, like, launched or based from or came from Russia or anything like that. Right? I know that, again, that's a tough question to ask, but I'm I'm curious, you know.

Konstantin Bayandin

17:10>> Nothing like that. And there are a lot of Russian based founders in very well known companies in your list, actually. Miro, Wrike

Nathan Latka

17:18Oh, I love I love Russian founders.

17:21I mean, I think it's great. I'm just curious

17:22I'm just curious how macroeconomic events potentially impact or don't impact you. That's all.

Konstantin Bayandin

17:28>> That's that's an external factor. You know, we just live a bit and, you know, just try to do our thing and do it to the best level possible.

Nathan Latka

17:36That's a good outlook. Alright. And what's your how many hours of sleep are you getting every night?

Konstantin Bayandin

17:41>> I sleep six or less hours during week weekdays. Yeah.

Nathan Latka

17:44Okay. And what's your situation, Constantine? Married, single, kids?

Konstantin Bayandin

17:47>> Happily married with two kids, two year old, seven year old.

Nathan Latka

17:51Oh, wow.

Konstantin Bayandin

17:51>> Today is the birthday of my seven year old daughter.

Nathan Latka

17:54It's your it's her birthday?

Konstantin Bayandin

17:56>> It's the birthday of my two year seven year old daughter. Like, today, literally.

Nathan Latka

18:01Oh, like like you're having another kid today or today is her birthday?

Konstantin Bayandin

18:04>> No.

18:05>> It's her birthday. Yes. Seven years.

Nathan Latka

18:06Oh, very cool. That's so cool. Alright. And how old are you?

Konstantin Bayandin

18:09>> I'm 40.

18:10>> 40.

Nathan Latka

18:11Last question. Something you wish knew when you were 20.

Konstantin Bayandin

18:13>> Oh, yes. Get to the Silicon Valley ASAP.

Closing Summary and Wrap-Up

Nathan Latka

18:18Guys, there you have it. Tomi dot ai growing nicely. 24 enterprise customers paying $5,000 a month, doing $90,000 a month today in revenue, up from 80,000 a month back two months ago in December, and up from $22,000 a month back in December 2020. Healthy growth, they raised a pre seed last year, 1,000,000 on a six post, so a 24X multiple. Hoping to raise, maybe now, frankly, their seed, 5,000,000 on a 30 pre or post would be

18:43something that Constantine would get very excited about. We'll see if it happens. But again, growing nicely, still 500 k cash in the bank, gross burn about $150 a month with a team of, call it, 19 people. Constantine, thanks for taking us to the top.

Konstantin Bayandin

18:54>> Thank you. Have a good day.

Nathan Latka

18:57One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. 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

19:22Central. 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 SaaS world, whether it's an acquisition, a big

19:44fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you wanna take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS 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

20:06for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and 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

20:26got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. All right.

Konstantin Bayandin

20:31>> I'll

Nathan Latka

20:31be in the comments. See you.