Whelp Revenue, Valuation & Funding (2024)

[00:00] Hey, folks. My guest today is Seymur Rasulov. He is a UIUC graduate. He had one previous exit in Baku, Azer how do I say this country? Azerbaijan. [00:09] >> Azerbaijan. Yeah. Azerbaijan. It's it's Where the hell [00:13] is that? [00:15] >> It used to be a post Soviet country. I mean, it is a post Soviet. It used to be one of the Soviet countries, 15. And after the independence, yes, we were the second one to get independence after Ukraine. So it's a it's a country with Formula One, with oil, with good caviar, and good food, of course, hospitality. You're always welcome to visit us. [00:37] Well, you're building Whelp now. It's boots. You bootstrapped it for six months, pivoted in 2021. Now you've tripled MRR. You're a Tech stars alum as well as 500 startups. The company, I believe, is playing in the SME space to automate and consolidate customer support, right, using AI and ML? [00:52] >> That's correct. Yes. We use artificial intelligence and machine learning specifically to provide customer support across 100 languages so that we want to close the gap between the countries and the language. Even if you are a small and medium business based in Siberia or in South Korea, Now you can actually, using our solutions, you can sell to English speaking or vice versa. [01:15] Mhmm. What like, help me understand what customers are paying you for today and what they pay you on average per month. [01:22] >> So currently, we're this month, actually, we hit the $59,000 monthly recurring revenue. This is the second month this is repeating. We expect to close the year at and $50,006 total revenue. The customers are currently paying for us specifically for on premise solution, on premise installation because we offer on premise and we are the only one in this space offering on premise. These are financial institutions, insurance companies. They respect the privacy of the data, so they prefer [01:56] >> on premise solution. So we charge them we charge them one time fee as well as retainer fee, sort of a maintenance and support fee. So and then and then we also have a cloud based solution. That's a subscription based service. [02:10] Got it. And what is the setup fee typically? [02:14] >> Setup fee, one time fee is about $45,000, and then on a monthly basis, they pay about $2,500 to $4,500 on a monthly basis to support and maintain. Then we also build new integrations for them on a monthly basis and that helps us to have this lump sum stream of revenue and then continuously supporting these customers. They stick with us. It extends a lifetime value, but at the same time, it brings additional revenue to us. [02:43] And how many customers today? [02:45] >> Today, we have more than 800 customers in 16 countries. Not all of them are on premise. On premise, about 20% of them. [02:55] Hold on. What are those 800 customers pay on average? [03:01] >> Totally? They are on separate plans. They are on different plans. So some of them are on premise, some of them are monthly based. [03:08] On average, what do the customer the 800 customers, what do they pay per month on an average, just recurring? [03:13] >> On average on average, it changed from 250 to 450. [03:18] A month? [03:19] >> Yes, a month. [03:20] I see. Got it. I can take 800 times $250 a month. That equals $200,000 a month. We write about $60,000 a month, right? [03:30] >> Yes. Right now, we offer a lot of free trials as well. And then not all of them not all of the 800 customers are paying actually to us. Right now, there are we also offer one free account so that they can start How new [03:45] many of the 800 are paying customers? [03:48] >> About 30%. 35% of them are paying customers. [03:52] Okay, so call it like 300 ish are paying customers. You have 800 users. [03:57] >> Converts someone from a free user to a paid usually? [04:01] >> In the beginning, we were actually doing seat based pricing, but this year we switched to volume based pricing. When they hit a certain volume of 10,000 messages, just like Slack, they need to convert. Otherwise, they will not have the previous messages or the message history, so many companies either will stay within 10,000 or convert with us. We also introduced revenue per message, revenue per conversation, so we offer free chatbot and free unified inbox. The moment chatbot [04:30] >> closes a ticket or an agent closes a ticket using our solution, we charge them 10¢ per conversation. So on a monthly basis, then we send an invoice to them. [04:39] I see. And if you're doing $60,000 a month today, what were you doing about a year ago? [04:44] >> A year ago, it was very low. I would say 2020, we were doing about 5,000 to $6,000 per month. Then we reached about $12,000 and this year, we actually went up. After Techstars, we've got tons of customers. [05:01] Seymur, sorry. I want to try and calculate the growth rate. In September 2020, how much did you do that month, one year ago? [05:08] >> In September 2020, we were doing about $13,000 [05:12] >> $13,000 Now you're doing $60,000 a month. [05:14] Where did all the growth come from? [05:17] >> The growth came from expansion, conversion. We started converting the free trials. We also started doing a lot of content marketing and we became partners with we have we found partners that also started reselling our solution. We well, we did one thing very well. We also introduced white label solution that companies could take our solution and then resell it. [05:40] Mhmm. Tell me about that. So if someone if someone white owns your solution, what kickback are you paying them? [05:47] >> So we generally offer, like, $30 per user per month, and they can sell it on top of that. They can charge 50. They can charge 60 on top of that, but they will have to pay us $30 per user per month, so that's fixed fee. But everything is included, so we do not divide the components of the platform like knowledge base or the chatbot or outbound marketing. Everything is in one. [06:10] Yep. You know all your numbers. It's like you must listen to the show or something. [06:14] >> We love your show. Honestly speaking, Nathan Latka, GetLatka has become like a crunch base for SaaS. Now, what I'm learning because I am the second time founder, but you know, like outside The US, outside of North America, the startup ecosystem is gradually slowly. I mean, are certain countries that are way ahead of us, but Azerbaijan is an emerging market, so here, we don't have that much data or learning resources, but Nathan Latka and the magazine and [06:44] >> the getlatka.com and the Excel sheets that we share, they have become the bible for us. And literally, we love it, We learn a lot, and we see that there's so much to still learn. [06:55] Yeah, well, I'm [06:56] >> gonna And of course, your book. [06:57] Your book. [06:58] >> Right? Keep going. I'm gonna walk you keep going. This is great. [07:02] I'm just kidding. That. I [07:04] >> Nathan, Nathan, you have to name the things with the names, right? Like, when there were no resources that we could learn, the aspiring entrepreneurs, your resources were there and they were freely available. Specifically, those intriguing emails, right, with the specific subject line, it's like you gotta open that email. You gotta look, check that out. And then you're like and what I noticed is that every single email is written as if it's addressed specifically to me. And [07:31] >> I'm like, is Nathan emailing it to me only? I swear I had that feeling multiple times. [07:38] I I sometimes it is me. What I would tell you is I email a lot of people. When I get a reply, it's always me replying back. Sometimes I will send you a lot of people at once, but if you reply, it's always me replying back, so that's great. [07:48] >> Anyways, back We appreciate that. We appreciate your hard work. [07:51] You bet. Bet. Tell me about how you funded the business. Are you a bootstruck or did you raise? [07:55] >> So in the beginning, we started in 2018. We started in Baku, Azerbaijan. It's a small country, 10,000,000 people. Being a post Soviet country, people, investors, and companies do not believe in something that they don't see or they cannot touch, And software as a service was something new to them. So when we went to companies and banks and travel agents in 2018, they were like, this is strange to me. Instead of paying $200 to you, I will [08:21] >> hire someone who will do the job for me. So the mindset was different. So in 2019, we decided to take the company to The US. We got incorporated in US as a c c corp delaware, and then we got our first accelerator program and startup ventures in New York. And after that, we just it started taking off. So we started offering the platform and we got customers from Middle East. [08:42] The question is, have you raised capital and if so, how much? [08:46] >> Yeah. So far, have raised $500,000 and we did the 500 startups and Techstars, and 500 startups gave us about $50,000 as it was a safe note, and then Techstars gave us $100,000 safe note, but then the rest is bootstrapping at our own investment. [09:04] Okay. [09:05] >> So the 150 [09:06] that you raised, so there's $500,000 raised basically at what valuation? [09:10] >> Right now, we are raising $1,000,000 at a $10,000,000 valuation as of now. You're asking [09:18] about Seymur, what I'm asking is that what you already raised, what valuation was that at? [09:23] >> That was at $3,000,000 $3,000,000 valuation. [09:26] I see. Okay. So what does the cap table look like today? How much do you own? [09:30] >> Right now, table is very clean. We have 500 startups and Techstars and then two co founders. We keep it clean. [09:37] How much do the two cofounders own? [09:39] >> Each cofounder owns 40%. [09:41] 40 And [09:42] >> then we have Yeah. 4%. Yes. [09:45] Then how much does 500 startups own? [09:47] >> 500 startups, it's a safe note. They're about 6% and Techstars is 7%. They are safe notes for now. [09:55] Got it. So 80% plus 6% plus 7%, where is the other 5% of the business? [10:01] >> They are, what do call, unallocated pool of shares for the future employees, so we keep it for the employees. [10:07] Really, really smart. Interesting. Okay. What are you seeing in the market? Do you think you're going raise one out of 10 pretty? [10:13] >> It's a very busy space, Nathan. Honestly speaking, it's Red Ocean. But at the same time, Kustomer from New York got acquired by Facebook for $1,000,000,000 MessageBird from Amsterdam, Netherlands became unicorn. Intercom is a unicorn. Many companies are growing very fast in this space. The biggest competitive advantage that we have is offering on premise, being a white label available right now, and at the same time having an advantage of chatbot that works across 100 languages. Right? [10:43] >> We actually have closed two fifty out of that 1,000,000, so we're looking for partners to finish the rest of the we just started raising, actually. We started raising in late August. We got two fifty already committed from an investment in Ohio, and we're looking for the rest. [10:58] And what's your team size today? How many people? [11:01] >> 32 people, two cofounders, 25 engineers. The rest is marketing, content marketing, and then as we have about five specific dedicated salespeople, and they are working closely. Say it again? [11:14] They have a quota? [11:17] >> We have what? [11:18] Do the five sales reps, do they have a quota? [11:21] >> They are working on, yes, on the numbers, on the metrics quota. And by the next year, end of next year, we're expecting to reach total revenue in 2022 of $4,000,000. So that's their specific target. [11:33] Sales reps, what is their quota target? How much revenue do they have to close? [11:39] >> I don't wanna measure my team with the numbers. We do have the numbers, but I, honestly speaking, I always tell them that you are not numbers to me. If I needed numbers, I would get a calculator and do the work myself. What I want my employees, my staff, my team to do is to solve the problem for the customers, so and then, of course, bring the value. But I think what we have done right now, we [12:00] >> are also putting the quotas in terms of the metrics to the employees, I mean, to the staff, they have about 15,000 to $20,000 per month to bring in each of them. [12:11] The $240,000 in new ARR per year, something like that. Interesting. Okay. And talk to me a little bit more about the churn. What's churn over the past twelve months? [12:23] >> We keep it very low. The customers that actually come to us stick with us and stay with us. There's one reason for that. We do a lot of customizations for customers. We do so. I'm getting away from the question. [12:36] Just to be clear, you have no churn over the past twelve months. [12:38] >> Right. In the last two years, we have 4% churn. [12:43] Total or monthly? [12:45] >> Total. Yeah, total. No, no, no. Total. In total. Only 4% of the customers left. There was one specific reason. When they left, WhatsApp had not introduced the Business API. Since we got WhatsApp Business API, we are an official partner for Facebook for WhatsApp Business API. We actually offer it for businesses. Once we got that, customers would stick with us. One reason, again, we do a lot of customization for them at no cost, so they stay with [13:10] >> us. [13:11] Mhmm. Got it. That makes sense. And then what are you spending to get a new customer? What's your fully weighted CAC? [13:17] >> It used to be $18 We have been able to bring it down to about $8 with content marketing. We write a lot of blog articles. We use LinkedIn heavily. [13:26] More $8 to get a customer to get a lead? [13:29] >> To get a lead. To get a lead. [13:31] How many leads per customer? [13:33] >> So we we do about 60 40 to 60 leads per month, and then some of them convert for free users. And then then we get about 18% conversion on on a we do 18% conversion out of these free trials on a six month basis. So every six months, we bought paid ads. [13:56] Say it again? How much did you spend last month on paid ads? [13:59] >> Last month, we spent zero on paid ads. On a monthly basis, we tried not to spend a lot of money on paid ads. I want the team to do a lot of content marketing, a lot of educational articles so that they can lead traffic, and also we do a lot of webinars. So we're planning to spend more on ads and paid marketing, specifically in October, November when many people are back to office. [14:24] Mhmm. That makes sense. [14:26] >> Anything I missed [14:28] that you want to make sure you add on before we wrap up? [14:31] >> No. Everything is fine. Like I said, we are raising $1,000,000 at a $10,000,000 valuation. We already got $250 commitment, and we're looking for partners that want to join us. It's an exciting space. It's a $400,000,000,000 total addressable market and I think being on the show at Nathan Latka, it's the greatest thing that has happened to our company. Looking forward to working and meeting great people from your network, Nathan. And, again, been doing a great job for [14:59] >> entrepreneurs, so thank you for that. [15:00] I appreciate that, Seymur. Let's wrap up with a famous five. Number one, favorite book? [15:05] >> Favorite book, Alchemist. Love it. [15:07] Number two, is there a CEO you're following or studying? [15:10] >> CEO? He's a bit he's a bit Travis Kalanick, I mean, from the Uber. Travis, Uber. He's a bit cocky, but I like his style. [15:20] Number three, what's your favorite online tool for building the business? [15:24] >> My favorite tool for building an online business, I would It say helped me big time. [15:30] Number four, how many hours of sleep do get every night? [15:33] >> Four. [15:34] That's What's your situation? Married? Single? Kids? [15:38] >> Divorced, unfortunately. If you're building a business, you have to let something go. [15:42] How many kids? [15:44] >> One kid. [15:45] Years old, Daniel. [15:47] Very cool. And how old are you, Seymur? [15:49] >> I'm 37 right now. [15:51] Last question. What's something you wish you knew when you were 20? [15:56] >> I wish I had started way earlier. I wish I had started way earlier and didn't wouldn't spend much single minute in corporate. The only regret I have while doing this is that I didn't start earlier. [16:08] Guys, there you have it, Whelp. It's an on prem installation of traditional customer support software. They help you manage that support with machine learning and AI. Financial institutions love this. It's private. It's on prem. They got over 300 customers right now doing $60,000 a month in revenue, up from $13,000 a month just a year ago. They raised $500,000 in a pre seed round of $3,000,000 valuation in 2018, now raising a million bucks at a 10,000,000 pre [16:30] money valuation. Right now, a team of 32 as it looked to scale, growing just exponentially year over year, break a million dollar run rate here very, very soon with a team of thirty two and twenty five engineers. Seymur, thank you for taking us to the top. [16:41] >> Nathan, we are waiting for you in Baku Azerbaijan. You're always welcome here. Thank you so much. [16:48] 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 [17:13] 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 [17:35] fundraise, 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 wanna 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 for [17:57] 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 to [18:17] 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 [18:23] comments. [18:23] >> See you. Hey.