Understandbetter Revenue, Valuation & Funding (2019)

hello everyone my guest today is pankaj arita she built a company called understand better a couple years ago and then it took a turn last year they iterated the product with their user and market research results and launched it as a fresh product they've been growing exponentially in their customer base and market acquisition her partner swathi have invested over uh their time and efforts in building and growing this company's success and ours and their experience is working uh is working together comes to help everybody all right uh gosh tell us about the company what are you guys doing how do you make money yeah so uh we was this uh product like a couple of years back but we were just using it uh internally uh but what happened like a year back was uh we were getting quite a bit of traction for our product and the idea of it so me and swati went uh put our heads together and like started working on the idea of how to get it to the market and like how to improvise it so uh to be hon to put it uh straight uh i think a year ago is when we actually built the product because we scraped whatever was there and then we will the product from scratch and um we uh got actually we actually received our seed funding and uh with the seed funding we uh connected with a lot of people through our investors and like you know we received a lot of mentoring and we started connecting with people and we put our product to trial actually and it's been a year now and we have close to um you know uh wonders and customers using our product and we have customers spread across different regions and um we've been receiving quite a bit of good feedback and uh recently uh is when we uh launched our new ui as well so i think product growth is pretty good and and what are the customers paying per month on average oh sorry what the customers pay you per month on average uh so uh it's basically the use of a basis uh price so uh for every uh employee that uh is there in the company they pay like a five dollar per user but now we have gotten something called the crowd uh pricing as well so uh for a margin of like you know uh 100 to 150 users you pay just like a whole price of 300 per month and you get the product and all the features and uh under it so what would you say in averages if you look at your total customer base divided by your current revenue what's the average customer paying per month uh so on an average our customers are paying close to uh 200 uh per customer okay so i mean can i take 200 times if i take 200 times a thousand customers i mean that would put you guys at 200 000 per month right now in revenue uh we are actually just uh in a very early stages and we are like i said i uh we have only like you know one dozen customers using a product right now so we have uh close to half a dozen customers paying us right now okay so when we use the word customers customer means they're paying you so you have a thousand free users 12 of which are paying you uh no so when i mean customers our customers are basically organizations so organizations use the products to uh their employees uh so um every customer is one bunch one company that i'm talking about so uh six customers are paying us close to thousand two hundred dollars our revenue okay so six customers are paying and you're you said you're doing how much per month [Music] two hundred dollars sorry your total revenue right now is how much per month [Music] uh thousand two hundred dollars okay got it so six organizations paying two hundred dollars per month an hour which is twelve hundred dollars per month uh you say you have about about another thousand customers that are on the free plans is that accurate uh yeah close to where did you get those customers so walk me through how you got your first 100 free users and your first couple customers uh so uh first hundred customers where uh when i started like cold calling people and like you know when we started connecting with them to understand what is the product market pick like and i wanna you know uh ask them to try the product so then you know we will understand how they're using it and how the user base is going to be so that's how we got our first hundred uh customers so we were like you know um connecting with people through our inbound leads outbound leads let's take a step back here for a second um i i guarantee my audience still has no idea what you do well what does the company do and then let's break down how you got your first couple customers okay so uh we uh when i talk about understand whether our product is actually an employee engagement tool it's a sas product so what we provide is a platform uh that will help uh management level people like managers admins uh you know and uh ceo kind of people to connect with their employees to understand how things work inside the company to listen to their voice and like you know it will allow the employees to actually give feedback on a lot of key drivers which we call uh so we have close to 10 key drivers in the platform and how our platform is built is that it actually has an ai engine which we call the ub engine so uh the ub engine actually builds user model for every uh employee that is on board say that we are talking about a organization which is which has 200 people and like uh 50 people are in the management so 150 employees will be added to the platform and each 150 people will have a different user model and they will get like a set of questions which we call as the pulse survey so pulse surveys are um specific questions based on a specific set of key drivers which will capture the pulse basically the feedback and how they feel about a certain point about their employees so these responses are collected and like you know analyzed and metrics and insights are given to the management people they can analyze it and take action so these actions are recommended by the platform we have like uh uh hedgehogs and like you know we have phd holders and we have like a lot of experts from deloitte helping us build these insights and like how to uh absolutely so just to just sorry and i'm gonna cut you off you're helping yeah teams on board new employees faster uh we are actually helping uh management level people understand their employees better by providing a platform for them to voice out their feedback and voice out how they feel about major key drivers in a company like so you're a platform for employees to tell their managers you know how they're feeling today at work exactly yeah okay so when you said you got your first 100 customers by cold calling walk me through the targeting you used so how did you get their phone numbers and who were you targeting uh so it was not phone numbers that we called to be we connected with them over online like i emailed them and uh uh half of them were like through network connections from my investors from our previous how much have you how much have you raised uh so we have raised thirty thousand dollars okay thirty thousand dollars and when what is the title of the person you're selling to uh sorry what's the title of the person that is typically buying your product inside these companies okay so our our hero generally in an organization will be a manager so basically our chros and then uh sometimes ceos who are really concerned about their organization and who are directly involved with people culture and everything and now we are targeting the uh you know people like people and culture manager and um what they call a sculpture shepherd and some companies so these are the people that we immediately targeted okay and again those first 100 so you got some introductions from your investors but the ones that you looked up yourself where did you get their emails where did you get the emails of the ceos and the hros and how did you pick which companies to cold email yeah so uh i i started connecting over linkedin i started acting over linkedin and i um i started looking at people who are already uh having like people and culture managers and who have like ceos and who have like you know direct connections with employee relations or everything did you look at like team sizes at all before you reached out because there are millions of companies that fit the profile you just articulated yes yes so when we started out we were looking at uh smb so small medium business is what we were targeting uh we were looking at companies which have like 100 to 250 uh employees in a company okay 100 to 200. okay great um and that's good okay so you that's how you got kind of your first thousand users you've converted six of those to paying 200 per month um are you guys profitable today are you burning cash uh we are profitable get uh but uh we we will be there uh with uh in like three to four months because uh we are looking at closing another 10 to 15 customers uh in the next couple of months how much or how much are you burning right now are we talking five thousand dollars a month ten thousand dollars a month uh we are burning close to four thousand dollars a month okay and what does that say what is what are most your expenses going towards uh it's mostly uh in uh people uh so uh people and uh administration are the major experts that we are standing up and the next one will be uh sales and marketing so what's the team size today how many people uh the team size is um five full-time employees and we have close to uh four interns working and then close to uh four uh freelancers helping us out has anyone any customer started paying and then stopped paying do you have any churn no okay it's too early yeah all right very good and then 12 months ago did you were pre-revenue correct yes okay that's great and um how did you go up with your initial price point why was 200 a month or 300 a month the right number uh so initially when we started we we price it at uh five dollar per user so uh the number of users that they have no matter what the company says it's gonna be five dollar per user but we came uh up with this crowd pricing after uh uh you know some of our customers started requesting so out of the six customers that we have four customers requested that you know they we give them a batch pricing so we came up with this batch pricing model which uh we work for uh you know companies which have more than 100 people but for companies who have less than 100 we stick with the per user price okay very good all right let's wrap up here with the famous five number one what's your favorite business book uh my favorite book will be the uh decision that was written uh by google designers sorry what's the name of it uh design sprint design sprint number two is there a ceo you're following are studying uh i follow uh claire lou and catherine winslow i spelled the last name catherine minshew oh minge got it at the muse yeah yeah yeah she gave a great interview on the show a while ago that's very good uh number three what is your favorite online tool for building your company uh online tool for building my company i think um [Music] right now we are just using uh whatever collaborative tools that we can get so not uh i i can't think of anything right now number three how many hours of sleep do you number four how many hours i sleep to get every night um six to seven hours and what's your situation married single kids single okay no kiddos and how old are you uh i am 23 right now 23. last question take us back three years what do you wish you knew when you were 20 uh when i was 20 i wish i had known how to do um marketing and sales and how to do the proper market fit research because it took me quite some time to do that guys understand better six customers paying 200 bucks a month 1200 a month right now in revenue 30 000 raised just launched helping managers understand what their employees are feeling and basically a quick way to get feedback on a daily basis launched again in late 2017 early 2018 team of five people full-time thirty thousand raids burning four thousand dollars per month right now no churn yet as they look to scale pankaj thank you for taking us to the top thank you so much nathan it was nice coming back on the show