How WeSoar Reached About $15K a Month, Mostly From Consulting, with 11 Customers in 2022 (Interview with CEO Nisheeth Pathak)

Introduction and WeSoar's Mission

Nathan Latka

00:00Hey folks, my guest today is Nisheeth Pathak. He's on a mission to reimagine HR using technology and drive workplace happiness while helping organizations improve productivity. After a career spanning two decades of which seventeen years were in senior HR roles, he founded wesoar.ai to break the status quo in HR using conversational AI. Nisheeth, you ready to take us to the top?

Nisheeth Pathak

00:21>> Yeah, thank you.

Nathan Latka

00:22You bet. Okay. So who's paying for WeSoar? Is it folks? Any company that's hiring?

First 11 Paying Customers

Nisheeth Pathak

00:29>> Yeah. So we are a performance management platform and employee engagement platform. We have 11 paying customers so far.

Nathan Latka

00:36Congrats on your first 11. That's great.

Nisheeth Pathak

00:38>> Thank you. In about one year of having some form of a product. Yeah. But the product is still getting built out. So we've got 11 paying customers. We've bootstrapped so far. We've got a couple of angel investors.

Angel Funding and Founder Capital

Nathan Latka

00:50How much did you raise on the angel side?

Nisheeth Pathak

00:53>> External funding is 205 k. The founders put together contributed 310 k.

Nathan Latka

00:59What was that like? I mean, is 310,000 a lot for you? I mean, is it a big risk for you or no? It is a huge risk. Are you married?

Nisheeth Pathak

01:08>> Yes, I am.

Nathan Latka

01:09Will your spouse leave you if this company fails?

Nisheeth Pathak

01:13>> She wouldn't leave kind of putting the pressure on me every single day till I succeed.

Co-Founders and Team Structure

Nathan Latka

01:19Alright. And how many founders? Is it you and one other founder? How many founders?

Nisheeth Pathak

01:22>> I have a co founder who's an ex colleague. So we used to work together in our last job for five years. And then we kind of decided to kind of put this up together. We have a third member in the team, a core team who's our CTO. The CTO is based in India. My co founder is based in Dubai. I'm based in London. So we kind of

Nathan Latka

01:41manage But just the two founders that put in 300 k total?

Nisheeth Pathak

01:44>> Yeah. That's right.

Nathan Latka

01:44And did

01:45you guys split equity 50/50 at the start or no?

Nisheeth Pathak

01:47>> So I put in $260k. My co-founder put in 50.

Nathan Latka

01:51Okay. So you got more.

Nisheeth Pathak

01:52>> Yeah. And then I've also been on a no salary structure for two and a half years now.

Nathan Latka

01:58Yep. So you started coding this tool back in what? Early 2020?

Company Origins in March 2020

Nisheeth Pathak

02:02>> Early 2020. March 2020 is when we set up, when we had our first set of engineers exactly three weeks before COVID.

Nathan Latka

02:12Wow. Okay. And the round — you had a 205,000 pre-seed round. What year was that?

Nisheeth Pathak

02:17>> We actually closed around just about two weeks ago. So it was an open round. The first angel investor was my skip level manager in my last job. So the CEO of the bank that I used to work in Dubai, he was the first angel investor. The treasurer of the bank came in second and then we had a partner in PwC who came in third. So we've just got three angel investors.

Nathan Latka

02:41Yeah, love that.

Nisheeth Pathak

02:42>> It's been a kind of constant grind, basically managing a very tight cost ship. Obviously, it wasn't the best time to raise money. It wasn't the best time to sell because we lost like three or four quarters to COVID. So when you lose 50% of your total time to factors completely outside your control, it's a very different ballgame.

Equity Sold and Valuation Discussion

Nathan Latka

03:05I understand. And so that 205,000 you raised, how much equity did you sell to investors when you raised that?

Nisheeth Pathak

03:11>> 2.6%.

Nathan Latka

03:132.6. Okay. That's too bad. So what is that? That's a 205 times 50. That would be what? Like about 10,000,000?

Nisheeth Pathak

03:20>> 10,000,000 valuation.

Nathan Latka

03:2110,000,000 valuation.

Nisheeth Pathak

03:22>> Pre money. Yeah.

Monthly Revenue Detail and Bootstrapping

Nathan Latka

03:23So how are, I mean, that's a big valuation for 11 customers. Do you have revenue? I mean, how much revenue are you doing today?

Nisheeth Pathak

03:29>> So all put together, so we have consulting and we have subscription. So obviously we've got two components and initially it's difficult to kind of ramp up subscription that quickly. So subscription is fairly small. We're talking about without any enterprise customer, we're talking about 15 ks ARR. But with consulting, we've managed an average revenue of about 15 ks per month.

Nathan Latka

03:54Oh, 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

04:17your Stripe account, you see your valuation real time, you can see what it it changed over the past eighty eight days and even set goals for valuation this year. Now the secret to valuation 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

04:41gonna 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 about this is this

05:03is not built off random data. Again, you guys hear these interviews on YouTube. All this data is 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 and the multiple. Maybe

05:29you'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 here in a second,

05:51but 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. Alright. Let's jump back

06:17into the interview. Okay. Got it. So you're doing right now, like, last year, mean, now, last month you did about 15,000 in consulting and about 1,000 in true recurring monthly revenue.

Nisheeth Pathak

06:29>> 14 plus one. Let's put it that way. You know, we've done everything a bootstrapped founder has to do in order to keep the lights on.

Nathan Latka

06:37No, I think it's great. You've managed dilution nicely because you raised it at 10. I mean, real question is how are you able to negotiate a 10,000,000 valuation with only 12 ks of ARR?

Partner-Led Enterprise Sales Strategy

Nisheeth Pathak

06:47>> See, the kind of traction is not so much in terms of existing revenue. The traction is in terms of the partnerships we are trying to build. So our business model is a little bit different. We are not another HR tech startup trying to sell to SMBs. We are looking to sell to the enterprise space and we are trying to do it through our partner network. So in terms of the partner network, we've got Microsoft, we've got

07:11>> Oracle, we've got advanced discussions with SAP, and discussions with Workday going to commence next week. On the consulting side, we've got partnerships with PwC, a regional Middle East focused consulting firm, and we are in discussions with other firms like Aon and Mercer and Ernst and Young. So our kind of traction is more in the partnership board because once you get these partners on board and they understand your value, selling to an enterprise that they are already

07:43>> kind of engaged with is not that difficult.

Nathan Latka

07:46Yep. Yep. Okay. Got it. So 11 customers on the platform today. And how are you upselling them? Is it based off number of employees they have or what's that stat?

Nisheeth Pathak

07:54>> Yes. So the subscription is basically on a per user per month kind of a value. So it's a typical SaaS model. But so far, our lights have been on through consulting, but consulting not in any space, consulting in the space that is adjacent to our product. So we do consulting in performance management and employee engagement in workforce redesign, etcetera.

Nathan Latka

08:17Yeah, that makes sense. Got it. And so today, obviously, you've raised 200 ks from pre seed angels, you've put in 300 ks per se as the founder. How much are you burning per month right now?

Monthly Burn Rate

Nisheeth Pathak

08:27>> Burning about 25 ks a month.

Nathan Latka

08:29Does that make you nervous?

Nisheeth Pathak

08:32>> Not entirely because this is pretty much the lowest we could have gone down to. Maybe we could go down by another 3 or 4 ks, but that would be cutting down into the bones. But what we are excited about is the fact that we've now reached a stage where the product is absolutely ready and tested and mature. So we are not trying to sell a half baked product to an enterprise and it's a different ballgame. If

08:57>> you want to sell to SMBs, they don't ask you difficult questions. They don't ask you to fill a 40 item information security checklist. But when you do want to sell to an enterprise, you have to be ready for that and we are ready for

Team Size and Engineering Headcount

Nathan Latka

09:09makes sense. The team today, how many folks are full time?

Nisheeth Pathak

09:14>> We've got about 11 people full time.

Nathan Latka

09:1611. And how many of those are engineers?

Nisheeth Pathak

09:20>> Seven. So there are four non technical people and the rest are all engineers.

Nathan Latka

09:27Got it. And are they based in India?

Nisheeth Pathak

09:29>> They're all based in India.

Nathan Latka

09:31With your CTO? Yes. Which city?

Indore Development Center and Cost Advantages

Nisheeth Pathak

09:34>> We've got a development center in India.

Nathan Latka

09:36Which city?

Nisheeth Pathak

09:37>> It's a place called Indore. It's in central India. It's a smaller town, but it's a good town. And the reason why we chose Indore over, say, Bangalore is because it's a much lower cost of operations and the workforce is a lot more stable.

Senior Engineer Salaries Compared

Nathan Latka

09:52I just interviewed a founder with senior engineers in Bangalore. He told me that he pays a senior engineer a $100,000 per year, which is really high. What do you pay a senior engineer in Indore?

Nisheeth Pathak

10:03>> About 30% of that.

Nathan Latka

10:05Wow. So it's about 30,000 a year. Yeah. Wow. Big, big difference.

Nisheeth Pathak

10:10>> Okay. Know because I have a lot of friends in Bangalore who are in the tech space and what they pay to a fresher is what we can get a person with five years or six years of experience.

Nathan Latka

10:22Yeah, it's really and why hasn't like, you know, Freshworks, Netcore, Chargebee, why haven't they opened offices in Indore if they're such cheap talent?

Nisheeth Pathak

10:32>> I'll tell you what, I think it is going to become a lot more prevalent going forward with people working remotely because earlier what used to happen was the moment you would hit a certain threshold, you would like to set up your own full dedicated office. You would be constrained by a 10 mile radius in which you hire people and you would always want to be close to where the founder is based. So that was one of

10:58>> the constraints. Now I don't live in Indore and I don't care where my people work. They could be working in Vietnam tomorrow or Ukraine and I have no problems with that. So we have kind of looked at it from a complete remote perspective as well. And the second thing is at this point of time, we are not looking to hire 200 engineers and that may be difficult in a place like Indore if you have to be

Famous Five Rapid Fire Questions

Nisheeth Pathak

11:20>> really picky and choosy.

Nathan Latka

11:21I see.

Nisheeth Pathak

11:22>> If you have to get 15 engineers or 20 engineers, that's fine.

Nathan Latka

11:25I see. Interesting, Nisheeth. We're rooting for you. Eager to see how you grow here as you land more customers and get your next 10 signed up. In the meantime, let's wrap up here with the famous five. Number one, what's your favorite book?

Nisheeth Pathak

11:36>> The Black Swan.

Nathan Latka

11:37Number two, is there a CEO you're following or studying?

Nisheeth Pathak

11:41>> I want to take the best from everyone, but my favorite is Steve Jobs.

Nathan Latka

11:46Number three, what's your favorite online tool for building WeSoar?

Nisheeth Pathak

11:51>> HubSpot right now. Yep. That's the tool I use every day.

Nathan Latka

11:55Number four. How many hours of sleep do you get each night?

Nisheeth Pathak

11:57>> Six.

Nathan Latka

11:59What's your situation? Married, single kids?

Nisheeth Pathak

12:03>> Married with two daughters.

Nathan Latka

12:04Two kids. Okay. And how old are you?

Nisheeth Pathak

12:07>> I am turning 44 in a week.

Nathan Latka

12:09Ah, happy early birthday.

Nisheeth Pathak

12:10>> Thank you.

Nathan Latka

12:11Alright. And last question. What's something you wish you knew when you were 20?

Nisheeth Pathak

12:17>> I was quite happy go lucky. I wasn't I wanted to become the prime minister of India when I was around that age, then I I Still can. And I I found a better pursuit and probably a better utilization of my time.

Nathan Latka

12:32Guys, there you have it. WeSoar.ai launched in 2020 as a consulting business. They still do about $15,000 a month today in consulting, but are building their SaaS now, a thousand bucks a month from 11 customers. They're burning $25k a month from $300,000 the founders both put in and $200,000 they raised out a seed round. Only sold 2.6 of their business though at a 10,000,000 valuation. Super healthy capital management. Again, as they look to break into this

12:56space of employee performance management here rapidly, we'll see what happens next. Nisheeth, thanks for taking us to the top.

Nisheeth Pathak

13:02>> Thank you, Nathan.

Nathan Latka

13:05One 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

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