How Trueface CEO Shaun Moore grew to $1M revenue and 17 customers in 2019.

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 sean moore he is making sense of video data via his company trueface.ai his journey to create the company began in 2012 leaving merrill lynch in chicago and booking a one-way ticket to casablanca morocco to pursue his entrepreneurial vision make technology accessible personable and trustworthy sean you're ready to take us to the top i am yes all right so talk to us what is true face doing and is it a pure place like a sas model in terms of how you're making money i it was and we've transitioned out of that into a couple different ways of making money one is through proof of concepts or just general proof that the technology works in the environments in which we're seeing demand for uh the second then is production licensing and a third is professional services so one of the interesting things to note about computer vision right now is it's still very early on in the industry's adoption and so a lot of these fortune 500 companies or governments that we work with don't have the capacity or engineering talent to take this technology implement it quickly and show roi and so you know we are having to do a lot of that hand-holding and it's becoming helpful for us because then we can dictate our it helps us dictate how we build our products based on the demands of the actual customers okay so so when you came on uh i guess it was probably four or five months ago um it sounded like it was kind of a more pure play sas model why are you moving away from that is it just because they can't implement it even if they buy it exactly so you know we thought that's what would be the the easiest kind of least friction point to make the sale and it turns out that ended up being significantly harder and you know a lot of the times we're deploying this technology on local infrastructure to our clients to ensure data and privacy you know that is upheld by our clients and so the sas model just doesn't always work for them they would prefer to buy an annual license or a per camera license and so you know we've had to listen to what our customers said versus what we thought they were going to say when annual license is still i'd consider sas it's still recurring it is but there's there's always some mechanism of support or professional services that we've got to tack on to it so i would say it's becoming a hybrid from a traditional you know purely you could sign up buyers solution and deploy it to now there is that hand holding or three to six months of work with them to get it up and running so if you look at all the revenue you've made in 2019 so far what do you think the split is between one time stuff first truly annual recurring uh when you would ask me this six months ago it was probably eighty percent one time uh that's now flipped it's probably about seventy percent recurring now so so you're more of a sas company than you were six months ago yes but just in a different dynamic okay so yes in terms of the way that we book the revenue now okay so i'm not quite sure i understand right so you said you're kind of moving away from cesc it's not working but then you told me your revenue's been 70 sas and 30 one time so what's really the story line here it takes more consulting than you thought it does it takes more consulting to get to that point where it is truly sas so we initially assumed that we could just put documentation on the internet people would come sign up pay through stripe and it would be off the races uh that wasn't the case and so you know yeah you're an enterprise sale by the way you told me your arpu earlier last episode was five grand a month that's 60 000 a year people aren't just gonna put a credit card on a website and pay 60 grand well we thought they would yeah is your is that still your your kind of target annual contract value they're paying about 60 000 a year uh it's gotten higher this year uh we've booked just uh just over seven figures and so going from about 200 000 in revenue last year to over seven figures this year you know we're starting to understand that that cycle a bit better okay and of the of the of last year in 2018 the 200 grand how much of that was consulting versus true recurring annual contracts uh about 80 was consulting consulting concept work so yeah it's definitely flipped and we're you know i think that the hardest part about the the enterprise sales cycle especially with computer vision is it's a new purchase it's a new line item and it's either going to marketing it's going to security and so finding that the budgetary line item for us has been uh has been somewhat of a mission but i think you know having an internal champion is what helps get us to that point where we're understanding how we drive roi for those customers so how many customers are you now working with the annual contracts uh about 17 to 20 right now okay 17 folks that's good and obviously founded in 2013. now have you raised any capital since we last spoke we have yeah so we secured a seed round 3.7 million from some investors on top of the four uh no so the the total the total amount raised to date from inception is just over five million um but the seed round is 3.7 okay you do a note there or safe or what uh yeah we we actually priced out some we priced out half of it did it on half of it you probably so you priced out equity and you did debt on the other that's correct who did you get debt from like a silicon valley bank uh no no it was it was convertible notes okay got it that's interesting what i mean usually you do a convertible note when people can agree on valuation but you had people agreeing on valuation because you did part of it as equity so why not just put everyone under the equity yeah convertible note first uh rolling into the equity round got it okay got it what was the spread in terms of the time between the two uh about three months so not not a whole lot of time we we weren't planning on writing raising the equity round um and then an opportunity came up for us came up to us with a great partner and we decided to move forward with it so you know at that point for us we had the cash uh that we needed but the partnership and and the doors that were open from that investor was was more appealing to us interesting okay so what how much of it was equity uh two two million out of the three point seven okay got it so 1.7 convertible note wait three months another two million that is pure equity correct okay and how did you have the valuation conversation around that two million in equity did you they kind of value like an agency or more like a consulting company at four or five x uh they they it was kind of a mix of things so projected revenue uh they did a lot of customer calls a lot of customer references for projected future contract value and so we based it on a multiple of projected future contract revenue okay and last time you were on you'd articulated your team was about 13 folks is it still the same size today uh 16 so higher three more and how many engineers uh she's about i think it's nine now nine okay and how many quarter carrying sales reps uh two two okay so that went down you had four last time you fired two people uh we let one go and i'm well i'm the third got it i'm not caught at carrying but i why'd you you're equity carrying uh why'd you let one go i just wasn't a fit like missing quota or what uh it just wasn't wasn't what we needed uh we thought they were you know gonna come in and take a senior role and and we were wrong so interesting what was general profile of that person so other stars don't make the same mistake yeah you know i think the the mistake there is is we were excited about the past resume of the person and uh referenced reference calls checked out with some high profile people in the valley and uh you know came from the the kind of late 1990s early 2000s days of sales or enterprise sales and it just wasn't a fit with our culture mm-hmm interesting my advice there would be to to you know for us now we always look at culture first and foremost and the ability to execute it it comes in parallel there but it's more important that we get along as a team and that we're cohesive and and that you know everyone is comfortable in the office yep that's good now i assume you're still burning capital you just raised a bunch about how much you're burning per month uh you completely cut out there yeah i was just saying last time you were on you said you're burning about 150 000 a month to drive growth i assume you're probably burning that or more because you raised more yeah it's it's about that though um on average just a little bit higher than that and what are most your expenses going towards is it just engineering headcount or something else yeah that's uh yep that's it yeah yeah that's the big one are you doing meaningful kind of paid stuff yet facebook ads things like that or that's not a fit for this no oh you know we're testing or a b testing a few things and on a different you know a couple different mediums um we have found that kind of following the news and then targeting those geographic areas based on need um what is that which helped us filing the news so uh to give an example there's a country down in south america that is mandated by metrics as part of their security for one of their industries the the financial services industry and so you know being able to to attach ads or attach campaigns to that type of news where the market is already looking for that solution helps us get in there a lot faster so you know following the trends around the world is pretty important to us there are places we want to work in um but for the most part you know that's that's how a lot of the the demand arises is it's around regulation or a need for this type of technology is the air force still a customer for face access at bases they are yes um so we've gotten our second contract with them uh everything's is going well so we're very excited about working with the dod so like china calls and says we want to implement this all over china but like you don't like their social policies do you take the deal no um how do you draw that line uh you know we have our internal protocols there and everyone knows that we don't do work in china internally so we we just blankets say no to it russia's the same way we won't do work in russia um and so you know we've got our policy about using this con using computer vision in a responsible way and what that means to us and not powering things like mass surveillance um you know it's really important to the advancement of of society but also the the adoption of this technology the accelerated adoption of technology people need to trust it and we need to be transparent so uh we've turned deals down we'll turn more deals down um you know at this stage we want to empower the right use cases not not ones that lead to surveillance of a group of people over in china so 17 customers 5 000 a month rpoo that puts about 85 000 a month right now in revenue or that million dollar run rate is it accurate uh it's a bit higher than that but yeah it's and where were you exactly a year ago do you remember i don't but i mean in 2018 we only booked you know just under 200 000 in revenue so significantly less yeah yeah you're trying like 10 20 grand a month back back a year ago yeah uh good growth um okay how are you getting new customers today uh referrals a big one for us uh like i said the need versus the want you know we were chasing fortune 500 companies earlier in the year even 2018 that we're just trying to or we found out we're just trying to understand more about what they could do not what they needed and so you know we've had to really refocus our kind of our blinders on on shiny objects um so shiny companies big brand names that aren't as meaningful to our revenue growth as we once thought they could be and so you know referrals are big for us we still do a lot of outbound um a lot of in-person meetings and and it's really just you know networking around the industry for things like security or access control where there is a significant need but we went from sending i think it was about 10 000 plus emails a month um you know directed targeted emails a month to a fraction of that that are way more focused on on people that we know need the technology so what are you targeting you're sending out cold emails what's the job title we're getting the email is it linkedin or what uh yeah it was linkedin they've clamped down on some of those different tools that we used to use um so now you know linkedin lead feeder is a big one for us um but yeah i mean finding the email one way or another or even asking in our network people that know but it's typically an executive level or an innovation director head of business development had a new product uh that we know has an interest in this technology interesting okay good so when you back into your fully weighted cac to get a new 60 000 a year contract what would you kind of put that in put that out you know it's it's difficult to answer that question and i don't have a good answer for you right now um we're still figuring that out so if a sales person closes 60 000 your deal what do you pay typically in commission uh it depends on if they're hitting their yearly our quarterly quota uh okay so anywhere from you know single digit percent up the dot very low double digit percentages okay so let's assume ten percent right kind of in the middle that's that's 60 grand or sorry that's six thousand dollars right there about ten 10 right of the of the first year acv any other big cost besides commission no no okay i mean so you could argue you're spending about between six and ten grand to get a new six out sixty thousand dollar at your customer right correct interesting uh okay yeah cause the lead feeder stuff you just pay for the software there obviously uh which isn't a big fee and then you just use those and it goes to your two sales reps correct yeah interesting any doing any like content stuff speaking thought leadership yeah you know we were doing a lot of that earlier this year and i still do some of it um i've we're testing that right so we're testing is it bringing in true roi and for us i mentioned earlier it takes months for us to close a client uh that we start talking to and so we're just now seeing some of the these speaking gigs translate into me having meetings and then into those customers being interested and then now paying us so we're in the process of analyzing that as part of our 2020 strategy if we're going to continue to do that but yes you know i spoke in london i spoke in berlin earlier this year on and really for me it's about understanding that the markets overseas and you know london's a hot topic right now for the use of facial recognition uh they had a court case that was uh the judge ruled in favor of facial recognition which was a surprise to everyone and so you know i i think it's important for me to stay on top of the ball here internationally speaking when it comes to regulation on facial recognition and how public the public is perceiving it so speaking is important to me um thought leadership is very important to us and we are continuing to push things out but we want to make sure we're making the best use of our time so we're analyzing that of all the customers that were paying exactly one year ago did any of them downgrade or cancel completely no okay so you have no gross revenue churn annually none on average what do they expand their accounts by we haven't seen it we're not we're not to that cycle yeah it's too early yeah very good sean all right man let's uh let's wrap up here with the famous five number one favorite business book uh connecting the dots by john chambers recent book but uh i really enjoyed reading it number two is there a ceo you're following or studying uh him you know he did a great job at cisco and he's been very vocal and active in the digi digitalization space over in france i think is his big initiative so you know taking what i've learned from from him and his ability to lead at cisco seeing how he views the world as this big digital marketplace definitely trying to learn a lot from what he's done number three what's your favorite online tool for building a company uh notion number four how many hours you sleep to get every night between seven and eight eight very quick right good all right and uh what's your situation married single kids i will be married in march okay no kiddos and how old are you i am 31 31 last question what do you wish your 20 year old self knew uh to build genuine relationships quicker guys there you have it true face uh playing in the facial recognition space they were doing just 200 a year in 2018 they'll pass a million bucks this year they've got about 17 paying customers paying about 5 000 a month right so run rate north of a million bucks per year uh growing nicely burning capital they're burning about a hundred thousand dollars per month but they raised about five million bucks to drive that growth 16 people on the team nine engineers two sales folks too early to talk about uh churn and things like that but spending caught between seven and ten grand to get a new sixty thousand dollar a year contract as they look to continue to scale sean thanks for taking us to the top yep thank you so much you guys know i fight like heck to get these data points for you from these ceos that rarely do these kinds of shows if you want more shows like this make sure you subscribe right now we're trying to get 10 000 youtube subscribers by the end of september here 2019 and it would mean the world to me if you clicked now to subscribe additionally i've got two more great interviews for you if you want more data points from the world's leading sas ceos click and watch one of them right now