How YellowDog CEO Simon Ponsford grew YellowDog to $5.4M revenue and 30 customers in 2024.

hey folks my guest today is simon ponsford he has over 20 years experience in high growth startup environments working in technical architects cio cto and ceo rose in both europe and north america he spent time in academia working as senior scientists in distributed computing and also has over 20 years cloud computing experience related patents to his name now building yellowdog.co which accelerates applications in the cloud simon you're ready to take us to the top absolutely all right what's that mean accelerate applications in the cloud um really it goes back to the concepts really distributed computing about being able to take an application that runs on on more than one core and being able to distribute that across many cores generally in the cloud and for us it means almost unlimited scaling taking people to hundreds of thousands or millions of cores to get their workloads or applications jobs completed very quickly and so do you sell based off number of cores you're helping manage or what's the sales model the sales model is is all about licensing so it's all about number of core hours that people use that we effectively manage for them okay and is that the only upsell or do you upsell product enhancements number of seats anything else no no we try and keep it really simple so if you know uh what sort of scale you want to run to you know exactly how much it's going to cost this makes a ton of sense so what are companies paying on average per month to use the technology it really depends you get some small companies just maybe paying a thousand dollars running some relatively small jobs where you get others or you know paying tens of thousands of dollars to be able to scale since it says it's tens of thousands of cores and keep those jobs running 24 7. and so would you say maybe a sweet spot for you might be someone paying 10 000 bucks a month um i would say probably the sweet spot for us it's almost like two different two different markets there's a sweet spot in this in the smaller mid market which is generally around about five thousand dollars and then at the upper yeah and then the upper end is probably closer to fifty thousand interesting okay but but you sort of skipped the middle you see either people are lower or higher but very few in the middle there are very few in the middle um it's really it's a really interesting market you're either um yeah essentially you've got two ways of working you're either a place where you could have worked traditionally on premise but you are a new business maybe and you're born in the cloud so you haven't gone for any on-premise infrastructure you've gone entirely to the cloud so those are people that could have run on premise and then you've got the larger organizations are really just looking at cloud to scale and they couldn't achieve that or couldn't achieve it easily on premise and so they're much bigger so you don't find there's too much in in between and so what what without obviously naming the customer what is the largest customer paying you per year and how many cores does that get them the large the largest customers are actually generally paying for um something there were core hours so it's like quite a few million core hours okay and what is the price point they're paying are we talking like million dollar accounts or 500 000 accounts or something else you're talking those accounts are generally more than just about sort of quarter of a million maybe a little bit higher okay maybe 250k or something like that okay cool so big gap here give me the back story when did you guys launch so we actually the business itself started in uh 2015 so we've been going for for over six years and we actually launched our first product uh about six months into the business but that was very different it's just a very small subset of the functionality we have today so we started generating revenue i guess very early on you know in our journey but we are quite different from uh from where we started out um very early on a lot of people coming to you just were people that wanted to make um movies and animation and be able to render special effects etc so that was really a big market for us when we when we kicked off it was really that transition whereby studios needed to move from say hd filming to 4k and they didn't have enough compute and so they chose yellowdog in order to be able to get that compute generally from the cloud they're effectively renting other people's compute power absolutely yeah interesting okay now how many customers are you serving today um the tradition of in the render market we get we had about four and a half thousand customers in the other market is it's much smaller today so you're talking 700 in those other markets in what other market so essentially you've got marketing financial services you've got markets in life sciences a lot of people trying to do growth discovery etc you've also got customers doing things like uh modeling for for thermodynamics those sorts of things so you've got to kind of split across those but by far our largest market to date has been in animation render okay and so 4 500 customers those are all paying customers right they are they're coming but they are those customers are generally customers are very much very bursty workloads so they will come along and they might pay for a month of the year and then they'll go away because that's all they need to use this for those are those customers aren't general subscription ones it's generally the other markets outside of render where people want to come along and just go for a longer subscription so life sciences etc will just be generally set steady through one through the entire year as well as we'll see their financial services so how many are actually paying consistently every month well what's that market that market's only about 30 customers today 30 customers okay cool so you use the one-time revenues from 4 500 maybe coming from animation studios and rendering studios to sort of power your rnd to build a core product that 30 people pay for every month really predictably okay and can i take 30 times that 5 000 a month minimum price point you're doing over 150 000 a month right now in revenue yes you can okay fair enough and bootstrapper do you guys raise um no no we we we raised we raised early on we started a crowdfunding crowdfunding oh crowdfunding how much did you raise so we raised 150 000 pounds initially and then we back out and did another another raise through that and then we also went through angel funding and we've also been through work through vc funding as well when was the last vc round but our first vc round was in uh 2017 and they and they uh we've been continued support ever since then how much did you raise in that round in 2017 i think about one and a half million okay and uh what would you call that your sort of preceded seed round um yeah i i call that uh well i i would say all of these really just being pre series a i really suspect our series a to be going on next year i see okay so the la the 1.5 was in 2017 was there another round you did between then and today between them we did we did various rare uses we we've done about 8 million okay got it so you raised another 6 million in last year or something like that over the last couple of years at the end of 2017 i see okay so so what do you mean by that you sort of like split the things up and sort of raise on a rolling basis as you needed it or what's that model look like we check we've so generally we we raise um essentially product development when we've raised also to go specific markets so to start going into new markets we we've done specific races i see okay so i guess i guess the reason i'm asking is the six million you raised over the past three or four years what like how did you set valuation for that how do we set the valuation um generally from uh from new parties coming in and really just uh agreeing valuations around that our highest valuation was uh about 14 and a half million dollars so 4.5 million and how much did you raise at that valuation you probably raised about a million at that time i see okay and that was your most recent round no actually i i would say our most recent round has been a little bit lower than that um because of uh covered in pandemic um it's generally brought down down a little so uh that was really um 2019 uh very early 2019 and then going into last year slightly down i think as many people well thank for being thanks for being honest about that uh you know down rounds are a real thing in life you have to manage through them how were you able to convince investors to put money in when it was a valuation that was lower than the 14.5 million that's a hard storyline to manage it is a hard storyline potentially for people that have already invested but actually when people see the value and i don't think i think a lot of people have been with us through the right way through the journey um and they see the value in the product and they see what we're able to deliver and they see the results in terms of what we're able to scale so i think people are generally still encouraged to uh see the engines it's too bad and now what does growth look like if you're doing 150 000 a month today in revenue where were you exactly a year ago do you remember no last year was a a really bad year okay so last year because of the the pandemic and because of really reductions in those uh those customers need to do render as soon as live action filming that really stopped there...