Tuto Revenue, Valuation & Funding (2024)

[00:00] Hey, folks. My guest today is Ohad Ronen. He's the cofounder and CEO of tuto. He's 30 years old and also father of two little ones. He was member of Techstar's 21 cohort and studied computer science and entrepreneurship at Reichman University. After building several businesses, he's now working on building the next knowledge engine for the Internet. Ohad, you ready to take us to the top? [00:19] >> Thank you. Hey. How are you? [00:21] I am well. So I think the comp for this when people hear, you know, knowledge engine for the Internet, they think Google search engine. They might think like Algolia or something like that. What are you building? [00:29] >> Yeah. So basically, what tuto building is an engine that help SaaS softwares, any web application to be able to teach their user, train them, educate them on how to properly use the software and to grow with the software together. So we understand that the most important thing when we talk about education and learning is to understand what the user doesn't know and try to understand it and provide him with the relevant content and the relevant education [01:01] >> he need in order to overcome his needs. So this what we're trying to [01:06] Is it more software oriented though or more like knowledge based? Is it more like Pendo and Gainsight and Hotjar and these sorts of things or some more like a knowledge base? [01:14] >> So so, yeah. In in some way, with combination of Pendo and Loom, we've been able to understand if user doing something [01:28] >> while using or using a visual content video, we see that a lot of companies invest a lot of money and efforts in creating what's called digital adoption platforms like WalkMe, Pendo, Appcues, and others. But it also invests a lot of money and effort in creating content like visual content tutorials that's going to YouTube and they create the academy that is a separate product from the product itself. And the idea is why not combine these two worlds [01:58] >> together on top of the product itself, on top of the product UI. And to give you in proactive way what you need to understand as the next step in your journey, basically. [02:09] This this makes sense to me. Tell me what customers are paying on average per month to use the technology. [02:15] >> So basically how much they pay is is is very depend on the the usage and and how much customer they have. But we pricing it right now at $79 per seat per month. So it's very, very dependent from company to company. [02:36] What would you that's why, again, we could talk about every customer's individual thing. We don't have time. So if we look at what the average is, what would you say the average company is paying you per month? Two seats, four Yeah. [02:47] >> So average company, it's something around $250 per month. [02:54] Got it. So, call me like four seats, five seats, something like that. [02:57] >> Yeah. Something of that because our tools basically help a lot of different department in the company. We focus on support, customer success, product teams, and also sales. So it's it's can it's can really drive the revenue for the company. So a lot of people are using it. [03:15] And, Ohad, when did you guys write the first line of code for the for the company? [03:20] >> The first time we wrote the code for the company? [03:23] Yeah. When did you start building the business? The first line of code. When did you start building it? [03:28] >> It was like back then, we started to think about that idea, and we got the opportunity to try to get into Techstars. At the beginning, we thought it's a long shot, and it's maybe not in our focus. But when we started thinking about that and sending the application, we try to create a demo for the MVP, something that we can show. So we wrote the first code that was some of the first initial idea of the [03:59] >> company. And it was like in early April twenty twenty one. So our company is less than one year old. [04:07] 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 you log in, you connect [04:30] 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 your SaaS company, you're gonna [04:54] 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. [05:07] >> Right? So [05:08] 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 about 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 [05:32] 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 and 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 [05:57] 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 here 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 [06:22] 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. Alright. Let's jump back into the interview. Got it. I love that. And when you say we, tell me about your team. Is it two of you guys? How many cofounders? [06:36] >> There are three co founders. All of us study together computer science and entrepreneurship at the Reichman University, a private university here in Israel. We had previous startup that tried to solve the return goods in ecommerce in the consumer side. But we left [06:53] How'd that how'd that turn out? Should I shut that one down? [06:56] >> Yeah. After one year and a half, we shut it down. And we backed to ideation, and we came up with with tuto. [07:05] Yeah. And are you guys all you just did the easy thing and said, okay. We'll be even. Everyone gets 33%, or how'd you split equity? [07:13] >> We we totally even. [07:16] >> We really believe in that. We're trying to take decision as a company. We really understand what the everybody, like, strange and and where is the weak ones weak weaknesses and trying to to move forward like a team, like a company, and not as an individuals. [07:35] And have you guys bootstrapped it, or did you decide to raise capital? [07:38] >> No. It it was very far very fast. We got the 120 k from Techstars. [07:45] I forget what do they do to take 10%? [07:47] >> Yeah. They they have, like, a combination of, like, taking give you a safe for the 100 and and and guarantee for the 20% for for the 20 k. [08:02] But what's the cap on I forget. What what what's the cap on the safe usually? [08:06] >> The cap of Techstars is $3,000,000 pre money. [08:12] Yep. So you raise a $100 k on a $3,000,000 note with another 20 k of upside. Yeah. [08:18] >> Yeah. Exactly. Okay. And and we get into Techstars, like, just with a deck. We doesn't have anything, and we get in with companies that, you know, live for one year, two years, and it was very weird for us. So we this is what starts the journey for raising capital for us, you know. So Putrapp that was one of the the the option of after we raised the first money. [08:43] So have you raised additional capital or just the $100 k? [08:49] Oh, and have you raised more money? [08:51] >> No. After yeah. After a few, like three months that we've been in in Techstars, it it was very hard for us, like, rollercoaster because we're very young with not validation. Then we focused on creating product that we can test. We do a product on. And then we raised more money. We wanted to raise 500 ks. In the end, we raised more than $700,000 from a lot of angels and legit investors. Have in the cap table Justin [09:29] >> Mateen, he's one of the founders of Tinder that's investing in feature deal money. And we also have Aaron Harris that was partner in Y Combinator and a lot of like great people in the cup table that help us to grow. And I'm very happy for this round. [09:51] >> And very, very excited. So [09:55] you would call that sort of your $700,000 seed round. Correct? [09:59] >> Press it. [10:02] Well, okay. So what is so there's the Techstars round, which is what what's that? Like, the pre pre seed round or what? [10:08] >> Yeah. Yeah. Every They [10:13] >> they get the same the same round. [10:17] >> And and from here, we, like, working to get some traction and get some numbers, and we will start doing soon the seed round. [10:28] So the $700,000 you raised on top of the 100 k from Techstars was all at that 3,000,000 cap? [10:33] >> Yeah. [10:34] I see. I see. Okay. So and that's that was pre money or well, I guess it's a cap. So it's sort of pre. So you sold basically 25% of the business. [10:42] >> Pre. Yeah. [10:43] Yeah. Okay. Interesting. Tell me more about customers. Right? So so you have a theory in terms of who's going to use this and how they're going to use it. How many customers are you working with now today? [10:51] >> So right now we have five customers that we are working in in design partnership. We have signed up with a company for the product, almost 70 other companies that we have like the difference between our self serve product and the sell oriented customers that we are looking after. So it's different approaches for these companies and these companies. [11:18] >> And yeah, so we're most focused on the company that we are working to work at. We build with them the flows and give them insights that we can't right now give to the other 70 that registered to the company. In terms of persona, most of them are ABC round companies that mostly do SaaS, AI, some analytics tools, cloud computing, and these areas of companies that creating something that is complex but for, like, non technical people. This [11:59] >> is our go to when we talk about customers. [12:02] So you have 70 on the waitlist. Five are on a paid plan of some sort of about $250 a month. So you're doing about $1,250 a month right now on revenue, something like that? Yeah. And tell me more about the product launch. You did this back in October 2021. You got about 442 upvotes. What was the outcome of that? Did you see a bunch of sign ups? If so, how many? [12:24] >> It's interesting. It was like our, like, official launch. We learned a lot of that from from the people, from from sign ups, from like, the first week was like, I don't know, twenty, thirty, 20 companies. But the waves that Product Hunt gave us, it was much more than that. We tried to get PR. People wrote about us in different places. We featured on magazine in French that until now give us traction to the company and get [13:00] >> a lot of French companies registered to tuto. So I highly recommend to anybody that have product that he can launch in product time to do that. It gives a lot and you can talk with your customers. And we really believe in customer first. We are customer facing and it's very helpful for any product manager or founder to talk with the customers and what they want, what they need, and what the problem with the current product. [13:31] Mhmm. And tell me more about the team today. How many folks are full time? [13:35] >> So right now we're six full time and we grow to seven. [13:42] >> So yeah, it's very exciting. We moved to new offices and there is a lot of new energy in the team. Very, very exciting times. [13:51] How many engineers? [13:54] >> The company is basically split for fifty fifty. So it will be four people on the engineering team and three people on, like, the business side. [14:08] Yep. Sales, marketing, all that stuff. What do you believe the path how are you gonna go from five customers to 500 customers? What's like the growth channel you're most excited about testing? [14:20] >> So right now, the company, we have like a grow engine that's focusing on account based marketing and sending like cold emails. And we have like 30% reply rate, and we have more than 90% open rate. These are amazing numbers. And the goal is to hit 30 companies that we are working in design partnership to get some insight about the analytics capabilities of the tool. And from there, after we do our next round, basically we will put [14:53] >> the [14:56] >> infrastructure to do scale. Because some of the processes today is not scalable because we need to build the datasets and then we will be able to grow. And the way we will do it is basically I want you to do more product led growth strategy or mindset on the product as a self serve product and everybody can install tuto on their software and start getting insights And the engine will be automatically suggests to the users the [15:31] >> next step in the knowledge that they need to understand in the product in order to get more value. [15:38] I guess so sorry. Let's go back to what's working so far, are outbound emails. You said you have an 80 to 90% open rate. What subject line are you using in those emails? [15:48] >> So it's it's depend we have like different sequences. It's it's all the sequences is LinkedIn and email combined. So we start all the process from like sending a connection request with no like any, I don't know, any ask. So it's not it's just that the connection, hey, I really impressed with what you are doing. And I would Yeah. [16:14] Oh, I get LinkedIn requests all the time from people saying, Nathan, I'm really impressed with what you're doing. Your job title looks really important. We should connect. I ignore all of them. If you have an 80%, 90% success rate, you're doing something very specific in your connection request. What text are you using? [16:31] >> I can say that we're trying to be as much conversational, like like how I talk with you. [16:38] Can you read me an example? [16:40] >> Yeah. Sure. Let's let's do it. Like, I I opened, like, one of the sequences, [16:47] >> and let's see. So we start with, you know, your profile caught my attention, I was very impressed with the experience. I give a line of what we are doing, tutoit's creating a tool for, and it's dedicated for the the different role that we're targeting. I love to connect with you fast, but with no like, we do like this and that. No. And then, basically, the email, the subject line is the first name and my name as [17:19] >> a connection between them. [17:23] >> And then, you know, it's a couple sentences like your role has caught my attention. As a product leader myself, [17:32] >> I wonder how few questions and is that or that interesting you. [17:40] And you send that via email. [17:42] >> Yeah. And we try to create this conversation and it's it's it's [17:49] it's Well, so then what? You you go from LinkedIn connection request to their email, and then what are you trying to do from the email? Get on a Zoom call or what's the call to action? [17:58] >> Yeah. So basically, what we're doing now, we add like ABM campaign on LinkedIn. So all the people that get the email also will see us on the social platforms. [18:10] >> And and then we basically booked a meeting. So we talk a little bit on on the email and and I say, hey, I will be happy to get your opinion on what we're doing. And also maybe there is a potential to work with you. And from there we do conversation like that. I show them the product, I understand [18:31] >> their needs, I try to tell them how to talk and revolutionize and change the way that they use today, like, their processes with talking and connecting with their with their users. [18:48] >> And then we go from there, sign up the documents and everything that that's important to to start a design partnership and go for And [18:57] is the design partnership paid? [19:00] >> Yeah. Of course. We really believe in in paying. [19:02] How much? [19:03] >> I think that as the number that we talked earlier, it's the same money as the $250, 79 per month per seat. This is what we're talking with everybody. I really believe that even design partnership needs to be paid [19:30] >> because you want to see that money. And second, basically it's make them more committed to the process, I think. [19:40] Understood. So you're calling it a design consultation or whatever, but really it's they're signing up for your SaaS product. You're putting a lot of touch on them to make sure it works as you go from five customers to 10, and you'll sort of scale from there. [19:51] >> Yeah. I tell you what is the partnership inside that. We want to get from their side metrics. And we want from their side to create an AB testing [20:05] >> their platform. And this is the partnership. More like, you know, hot relationship, close relationship. Make better connection with them, talk with them on a regular basis, weekly basis to get more understanding and how they experience our product. This is what the most important thing in the partnership aspect. [20:27] Understood. You're optimizing for learning. We're out of time though, Ohad. Let's wrap up here with the famous five. Number one, one word answers if you can. Number one, favorite business book. [20:36] >> In my top of my mind, Shoe Dog. [20:39] >> Shoe Dog. [20:40] Number two, is there a CEO you're following or studying? [20:44] >> I really like Zeb Evans, the CEO of ClickUp. I think he do, like, amazing job. [20:50] Number three, what's your favorite online tool for building tuto? [20:55] >> Best online tool? [20:59] >> I I can say, not for tuto, but me personally, I really like AccuFlow. It's it's really making a difference. [21:08] Number four, how many hours of sleep do you get every night? [21:12] >> With two kids that are very young. [21:15] >> Five, six. [21:17] Okay. And how old are you? 30. 30. Okay. So married with two kids, 30 years old. Last question. Something you wish you knew when you were 20. [21:27] >> That I can start earlier and the life is can educate you much more than any other thing in your life. [21:38] Guys, three friends who went to school together, launched a brand to help with ecommerce returns. It failed. They learned a lot. They launched instead in 2021 a company called tuto, which has effectively helped think of it like Loom plus Pendo put together. They've got nine six people on the team today. They've raised 820,000 in total capital on a traditional, say, 3,000,000 cap. Five customers out of 70 who are sort of on the wait list are already [21:59] paying $250 a month. So $1,250 per month right now in revenue as they look to keep scaling. Just getting started, but exciting vision. We'll see what happens next. Ohad, thanks for taking us to the top. [22:09] >> Thank you, Nathan. Thank you very much. [22:12] One 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 [22:37] 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 to miss breaking news in the SaaS world, whether it's an acquisition, a big [23:00] fundraise, a big sale, a big profitability statement or else. I don't want you to miss it. Additionally, if you want to 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 [23:21] for 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, I do it so that we can all learn. We have to counter those people. We got [23:41] to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.