How Xpovi Reached $5K Revenue and 20 Customers on a $3M Valuation Pre-Seed (Interview with Co-Founder and CTO Mostafa Hisham)

Introduction and Guest Background

Nathan Latka

00:00Hey, folks. My guest today is Mostafa Hisham. He's the co founder and CTO of Xpovi. He graduated from Arab Academy for Science and Technology, majoring in electronics and communication engineering. Since then, he acquired multiple certificates in software engineering and AI, has and several years of experience through working in companies such as Ericsson and Lucidia in the fields of data analytics and AI. He developed Xpovi relying on the latest technologies in cybersecurity and machine learning. It's an

00:24enterprise robotic advisory firm. Alright. Mostafa, are you ready to take us to the top?

Mostafa Hisham

00:29>> Sure.

What Xpovi Does: Software vs Consulting

Nathan Latka

00:30Alright. So when I hear advisory, I hear consulting. Is this a piece of software you've built or is it pure consulting?

Mostafa Hisham

00:36>> Yes. It's actually our software. It's based on the traditional concept of financial consulting, which is what we aim to automate through Xpovi, our platform, that we provide financial modelling and business planning, which usually or traditionally is done through physical contact, where you try to pitch, sit with an analytic or with an investment analyst, where you try to show him, illustrate your business as much as you can, so he can build for you your financial model or

01:17>> financial business plan. So it takes, I can say, a lot of time and money that's not always available for startups or entrepreneurs when they're funding their business because you're always budget efficient when you're starting and you're allocating new resources. So, what we're providing is we're automating this whole process.

Nathan Latka

01:41Most often sorry. Can you just be very specific? Can you tell me a customer that's paying you today and what they're paying for?

Mostafa Hisham

01:48>> Okay. For sure. Yeah. So our customer is paying for building his financial business Sorry.

Nathan Latka

01:55Can you name a customer that's currently paying you?

One-Time Purchase Model Explained

Mostafa Hisham

01:57>> Okay. First of all, we're not a subscription based. We're a one time purchase. Okay? So who's paying us, it's for just one time payment. So, one we can one we can name is TGS. Okay.

Nathan Latka

02:14TGS. And what does TGS do?

Mostafa Hisham

02:16>> Yes. They are

02:20>> how do you say it? They provide

Nathan Latka

02:27Are you talking about the energy company, energy data?

Mostafa Hisham

02:29>> No. No. No. No. They deliver grocery. Yeah. It's the grocery delivery shop.

Nathan Latka

02:36Okay. And so they're first treated like like in like Instacart or something like that. And so and so what do they they paid you one time. What do they pay you for?

Mostafa Hisham

02:46>> They pay for the business plan.

Nathan Latka

02:48Okay. So you generate a business file.

Mostafa Hisham

02:50>> Yes. Business plan tailored for them.

Nathan Latka

02:54And and how do you grow the business if these people are only paying you once and then leaving? I mean, you have to sign up new customers every month because you're always starting from zero.

Launch Timeline and Target Customer

Mostafa Hisham

03:02>> Yes. Okay. So, first of all, we we launched last month. Okay. And the approach was is that our product

03:12>> can be used just for one time because we're aiming at startups and or idea stage startups actually. Okay. So usually, business plans should be used or must be used actually by enterprises on day to day basis because you're updating how you're operating your business. But to do that, we have to not enhance our product, but to add ons a lot of stuff that will be needed for the founders to be using our product on daily basis

03:43>> and month to month. Okay. So first of all, we launched with the business model of transactional based one time payment.

Nathan Latka

03:52And how many have purchased the one time?

Customer Count and Pricing

Mostafa Hisham

03:55>> For now, 20.

Nathan Latka

03:5620. Two zero purchased one time. And that one time purchase was for how much?

Mostafa Hisham

04:01>> $249.

Nathan Latka

04:03Oh, 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

04:26your 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

04:51get 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 is

05:13not 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 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

05:38going 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, but

06:00if 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 into

06:26the interview. And so are any of them paying anything else or no? They're all done?

Mostafa Hisham

06:33>> No. They're all done. Yes. Because they pay on their checkout after finishing the questionnaire, the the concept that we've developed is that we've made around 30 questions questionnaire that is very easy to understand and answer. And through these answers, we instantly generate your business plan and it's instantly delivered to you, but you can use it with also another user manual that helps you navigate this business plan because it's not for sure that you are how do

07:06>> I say it? Excel efficient to navigate how to navigate the business plan.

Nathan Latka

07:11So the deliverable is you're giving them a big Excel file?

Mostafa Hisham

07:14>> Yes. Exactly.

Nathan Latka

07:16Okay. And so how many of these do you think you can sell? And, like, how much revenue do you think you can do this year?

Mostafa Hisham

07:22>> Okay. We can sell actually a lot because in Egypt okay.

07:25>> With Egypt, at least so in Egypt, there is around 3,900,000 enterprises from small to SMEs and large enterprises. Okay. So the market is actually huge, and it's growing year by year with an exceptional rate exponential rate, sorry, around 60 k per year. We're aiming at this year at serving around

07:52>> 400 to 500, yes, by the end of the year.

Nathan Latka

07:57But that's I mean, you have three people on the team. That's too small a business. 500 paying 249 each is a $120,000 in revenue. There's three of you working at the company today. That's that's not enough.

Team Size and Hiring

Mostafa Hisham

08:09>> No. We're actually three founders today. Okay. We are three founders, but we started hiring and the team is actually we are eight now. And

Nathan Latka

08:19That's a bad I'm saying that's a bad thing. They're only generating I know what you're saying.

Mostafa Hisham

08:23>> It's even yeah. Yeah. But what I want to stress, it's that it takes time because we have to actually educate people about our service and how essential it is for you as a founder to have a good model and a good business plan model and forecast for your upcoming five years. Because if you look it up, actually, from the three top reasons that startup fails, number three is not having a financial business model.

08:57>> And Okay. Yeah.

Nathan Latka

08:58But I'd I can also say every single company that has failed probably also had a financial model. They just couldn't execute. I just I guess I don't understand the focus. Like, why would you sell something that only happens once? Your maximum LTV from a customer is $250. Why would you spend your energy?

Mostafa Hisham

09:17>> We're selling at a huge extra discount. Like, if if you actually want to make a business plan, it will cost 2,000. But we but that's the traditional way where

Nathan Latka

09:26How many of those have you sold?

Mostafa Hisham

09:28>> We're aiming at volume. No. No. No. No. I'm saying that we are automating the process. If you are making there is no other platform that provides what we provide. Okay? So that's why

Nathan Latka

09:38But maybe but most often, maybe there's a reason for that. Maybe it's because it's a bad business.

Mostafa Hisham

09:42>> No. Because I think the the main reason was that it's not executable. Not that the business model is not. Like

Nathan Latka

09:50I mean, the main thing is when I launched my company, I never said, you know what? I wish I had a great business plan to make sure I don't fail. Never once did that cross my mind. Right? Like, that is not the success indicator of a business. It's can you go execute? So I guess, I just don't understand. I don't And know if this is a huge I also don't understand what like, how do you grow

10:09this? Because you can only sell it one time for $249.

Planned Transition to Subscription

Mostafa Hisham

10:13>> Okay. Within the next couple of months, we're actually transferring to be subscription based. But to do that, we have to do a few iterations on the current product to be actually usable on day to day basis. What do

Nathan Latka

10:27you think that product will look like? The the one where you you can charge monthly for?

Mostafa Hisham

10:31>> Okay. Perfect. How it will look like? It will be the same process, okay, of answering a questionnaire and generating your business plan. But your business plan will be on the platform and a dashboard where you can access and edit on daily basis your number and update your number. And you can, depending on let's say you want to pitch your numbers to an investor or to a VC or angel investors. So you want to share what you

Future Product Vision and Dashboard

Mostafa Hisham

10:59>> what your numbers are with them. So you send them an invite to your company profile on Xpovi to show them these numbers. Okay. So second of all, you have to visualize your data. Right now, we'll give you the Excel sheet where you can see all your numbers. But to visualize this data and to actually be able to download reports depending on what you need from the business model. So let's say your marketing budget or your marketing

11:29>> plan. So you can download this report. So it's not only used by you as a founder, but let's say for your finance team.

Nathan Latka

11:39Yeah. Mostafa, I understand it. It's just Finmark. Mean, there are hundreds of companies that do finmark.com. Pry just was bought by Brex for $90,000,000. They do this. I mean, what you're basically saying is like, it's financial model. Give it to your boards. Give it to your marketing team to plan CAC. Like, what's unique about this? What's your special sauce?

Mostafa Hisham

11:56>> Generating and ensuring the quality of what you're getting. Because it's it doesn't depend on the quality of the user. What I'm not telling you to enter your data so that I can present a deal. I'm only telling you to answer simple questions so that I can provide you with this data, provide you with actually the data that you need. Like you said, it didn't cross your mind that I need a good business plan. It's always about

12:21>> execution. And that's true. It always comes down to the founders themselves or the entrepreneur, but you have to have the right guide. And then the execution is definitely on founders.

12:35>> But having a great roadmap on where we're going and how to allocate these resources, I think it's more than essential in succeeding with your business.

Nathan Latka

12:43I mean, look, I just don't think that's actual secret sauce. I think your secret sauce, if you start to like take off is because you're focused on Egypt. And companies like Finmark and Pry don't exist in Egypt yet. And so if you can focus on getting Egypt founders signed up or Egyptian founders signed up for your product and do this, maybe that's your wedge and you ultimately pivot to something else that's more defendable with a bigger

13:03moat, something more interesting and compelling.

Mostafa Hisham

13:06>> Okay. Well, actually, what we're planning to do after that, that's our first model. Of course, generating a pitch deck, that will be something goes without saying as a complementary product to have a

Nathan Latka

13:18But it's also a one time thing. You know, you do that once every 18 if you decide to raise.

Mostafa Hisham

13:23>> Sure. And when you decide to raise, you will have raise.

Nathan Latka

13:27Most never raise. If you decide to raise.

Mostafa Hisham

13:30>> Okay. But why do the most never raise?

Nathan Latka

13:32Because they're out of money and they burn too much. They have too many people on their team.

Mostafa Hisham

13:36>> Okay. So managing your cash flow is one of the top reasons of also of businesses. This is one of the top three. And having a financial model that's executable.

Nathan Latka

13:48Yeah. But how are you gonna be better than QuickBooks? Why how why would people rip out their whole system and use your tool over QuickBooks? There's plenty of tools that do this already.

Mostafa Hisham

13:55>> Okay. QuickBooks is an accounting software. It doesn't provide I it doesn't

Nathan Latka

14:00provide that's what we use to manage our cash flow, which is the problem you say you're trying to solve.

Mostafa Hisham

14:04>> Okay. But how will you allocate your resources on your hiring or your marketing plan or your revenues and costs? This is not something that's provided with any of the companies that you've mentioned right now. And it's a one

Nathan Latka

14:18stop But, Mostafa, I'm just telling you. I'm just I'm prepping you for what the comments on this are gonna say. Everyone's gonna say what I've just said, which is this exists. Like, Mostafa has not said anything that's proprietary. What I thought you were gonna say on the interview, because your background is machine learning and data science, was something that was like heavy heavy on technical stuff. But what you've told me is it's a survey people fill

14:38out. You're giving back an Excel model. You haven't mentioned data, you know, like machine learning or AI or or or data science or anything since the intro. So I'm surprised you haven't talked about that.

Mostafa Hisham

14:51>> Okay. Because this definitely comes after our launching phase because we need our because having data analytics and using machine learnings, we need our data points that's provided by our actual users. And as I told you, trust this is the plan going on. But we just launched last month, so we don't have enough data actually to do, like, when you're answering the question.

Nathan Latka

15:19I I understand.

Mostafa Hisham

15:20>> Yeah. So you have to build your own Yes. We we need to build our own data to to do this.

Nathan Latka

15:25Yeah. But you're you're never gonna have more data than QuickBooks. Right? Like, you you you're never gonna all these other people have a flywheel here already. So it's like, you you either have to have a genius arbitrage mouse trap to get data faster than any incumbents so that you can train your models better than them. Right? Or you're not gonna able to compete with on machine learning and AI and data science.

Mostafa Hisham

15:45>> Yes. For sure. Yes. Yes. Yes. Of sure. But that's what the need for the product, at least here in Egypt, will make us capable of doing something like that.

Nathan Latka

15:56We'll see what happens. This is great. Are you bootstrapped or have you guys raised?

Fundraising: $300K Pre-Seed at $3M Valuation

Mostafa Hisham

16:01>> Yes. We've raised.

Nathan Latka

16:02How much did you guys raise?

Mostafa Hisham

16:04>> $300,000. Okay. Pre seed.

Nathan Latka

16:08Pre seed. And what was that at? Like a 5,000,000 cap or something?

Mostafa Hisham

16:13>> 3. 3,000,000.

Nathan Latka

16:14And was that who who were the investors? Are these family and friends? Or

Mostafa Hisham

16:18>> Yeah. Yeah. Angel investors. Mainly friends.

Nathan Latka

16:21Okay. Very cool. Well, I'm certainly rooting for you. I I love that you're sort of using the one time fee to learn about what you could build and then to drive like a monthly recurring fee. I'd love for you to come back on in a year, give us an update. But in the meantime go ahead. Do wanna say something?

Mostafa Hisham

16:35>> Yeah. No. No. I want to thank you so much. And I just want to add one more thing very quick, that when we launched, we knew that we need to have a lot of improvements and to have our subscription based platform. But we've decided to launch because we've always said that having an MVP and actually going live with the product will give us real feedback from real users, and we are very agile to move in another

MVP Philosophy and Agile Approach

Mostafa Hisham

17:03>> way that's more how the market can use.

Nathan Latka

17:06I love that. I love that you're getting something out there and charging for it. I think that's fantastic. That'd be fun to see how you pivot and grow over time. In the meantime, though, let's wrap up here with the famous five. Number one, Mostafa, what's your favorite business book?

Mostafa Hisham

17:18>> Favorite business book? Definitely, Grinding It Out, which is by Ray Kroc about the founding of McDonald's and how they managed to automate the food industry.

Nathan Latka

17:31Number two, is there a CEO you're following or studying?

Mostafa Hisham

17:35>> CEO? I think mainly Jeff Bezos.

Nathan Latka

17:39Number three, what's your favorite online tool for building Xpovi?

Mostafa Hisham

17:45>> Atlassian for sure.

Nathan Latka

17:46Number four, how many hours of sleep to get every night?

Mostafa Hisham

17:50>> Oh, I always aim for eight, but it always comes down to, I think, from six to seven.

Famous Five: Books, CEOs, and Tools

Nathan Latka

17:56Okay. And what's your situation? Married? Single? Kids?

Mostafa Hisham

18:00>> I'm engaged.

Nathan Latka

18:01Congratulations. No kids?

Mostafa Hisham

18:04>> No.

Nathan Latka

18:04Okay. And how old how old are you?

Mostafa Hisham

18:07>> I'm 30.

18:08>> 30.

Nathan Latka

18:09Last question. Something you wish you knew when you were something you wish you knew when you were 20?

Mostafa Hisham

18:16>> That I think that sometimes things just don't go according to plan.

Nathan Latka

18:23Guys, there you have it. Xpovi.com. Right now, they're selling a one time solution for $249 to build your business plan. Over the long term, though, they're using that revenue and those customers to learn about what they can do from a machine learning and data science perspective to help you manage that business plan over time, manage your cash flows, allocate expenses. We'll see if they can pivot into pure play SaaS model as they continue to grow. But

18:45again, learning quickly now with MVP. Mostafa, thanks for taking us to the top.

Wrap-Up and Closing Thoughts

Mostafa Hisham

18:49>> Thank you, Nathan.

Nathan Latka

18:51One 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

19:17Central. 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

19:39fundraise, 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

20:01for 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

20:20to 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.