Ziwo Revenue, Valuation & Funding (2023)

hey folks my guest today is reno dagon frively he's an entrepreneur and engineer passionate about building companies around tech solutions he's now building ziwo the first b2b sas platform omni channel integrated integral and ai powered for the emerging markets all right arena you ready to take us to the top yeah hi um thanks for having me so yeah it's um zero is the solution what is uh very specific about us that were specifically focusing on the emerging market who are based in dubai so far as the emerging markets we are looking at at the moment are the middle east african countries where we deploy technology india and pakistan and is this really uh folks in the us might know like front app where you can manage inbound customer communications from sms email marketing integrate it to your crm this is the kind of stuff you're doing right yeah absolutely but what is really different because if you look at the u.s market and the european market you will see a lot of similar solutions just like let's take ring central for instance or nice in contact with you've got a lot of people in in that type of business uh the issue does in the emerging market is that you don't have the layer of the the cloud telephony so if you are in the us for instance you've got a lot of people building their front-end solution on on guys like twilio platform if you are in the emerging markets you don't have this this layer so we have we have been obliged to to build that uh and and then once we have this layer and and that's a very complicated one because you need to go one by one in each and every country and and to put your your hardware and local data centers once you've got that layer of cloud telephony then you can build your your solution on top of that so we are working on solution like a kind of mix of of twilio platform and um ring central on top of it understood and and what are companies paying on average per month or per year to use your technology so big because because the competition is is not that uh fierce compared to other markets were pretty highly priced so a basic uh basic solution for contact center all inclusive is is about 109 um okay if you compare that to equivalent solution that's 110 per month yeah and that's that's what that's what your average customer that's the average business is what that's what they pay you today no it's it's not the average that that's the price tag but we've got some discount based on on the volume and and also there are some markets where we need to be pretty aggressive if like india or or more less developed countries in africa we we try to uh to to to match the the local uh uh reno is the average closer to 50 or 60 a month no i would say it's more about 80 85 okay that's still healthy and put this all in a timeline for me when did you first launch the business what year so we we started business about 10 years ago but we completely pivoted back in 2017 so zero was launched on the market on on the 1st of january of 2017. so it's yeah it's it's it's about four or five years now did you keep the same cap table when you pivoted um no we were we were bootstrapped actually from day one we're able to generate a lot of revenues because initially we are a customized software development company so it's quite easy to develop some revenue and only we we started zero we we we changed cap table only in october 2019 with our first uh financing uh round oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 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 founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to 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 not built off random data again you guys hear these interviews on youtube all these datas are built from real time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 of their business go in here and filter by the event maybe you only want to 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 going out right now and you're raising your seed round well 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 data set of sas valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're going to go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your evaluation 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 all right let's jump back into the interview i see before we get into the first financing round help me understand when you launched that customer software or the custom software development agency you know in 2017 how big did you grow that to what was your best year in terms of revenue uh it it was it was last year i mean on only last year we were in a very tech product and as i said we had to develop all this uh uh telephony layer so sorry just to be clear you're still doing custom development work for for clients and customers no no it's it's completely completely over completely over so when did you stop that oh we we stopped that almost immediately when we launched you i mean it took us about six months to phase this out so uh i would say mid 2017 we stopped completely so my question was how big did you grow that agency so in 2016 how much revenue did just the agency do do you remember well it was for you around yeah maybe one 1.5 million dollars something like that and the reason i ask that is you have to have serious conviction to shut down that revenue stream and go all in on your own software what gave you that conviction uh yeah we i mean it was really a phasing out we we did not completely stop a lot of the customers that were acquired they were on prime basis and and customized so the move to a complete cloud sas solution uh was fairly smooth so we didn't lose too much of revenue uh what did change though is uh we we started to acquire a lot of smbs because because of the sas model that is uh very appealing to the to the smb business and and later on uh we were able to move the bigger customers so so we had a mix of smbs market enterprise companies and it took us yeah about six months to transfer everyone on the same platform understood and reno how many customers are you serving now today today we are we're in the range of 250 customers 350. yeah and you mentioned you have some bigger ones don't obviously say the comp the customer name but what does the largest customer pay you per year oh that's a that's a nice question i would say probably 600 600k oh wow okay yeah yeah um yeah we we've got on one single platform the biggest customers we've got it's and it's in the real estate business which obviously is big in the middle east it's about 900 agents on on one single platform for lead generation for their lead generation process well so how do we how do we back into your like if i take the 80 average monthly price point right times 350 customers that would mean you're doing about 30 000 a month in revenue today is that accurate uh it's 350 customers times times how much times 80 a month on average yeah but when i see customers i mean companies and and in each companies you've got you've got between one agent to 900 agents so oh i see so how many total agents are on the platform today uh to be honest i don't remember it several thousands uh and it keeps on varying uh but if you if you want to know the revenue that that's more simple uh it's uh today we're on 10 10 million ar but uh that means you did about 830 000 a month last month yeah something like that okay this is great and if that's where you are today just so we can understand your growth rate where were you exactly a year ago do you remember a year ago i think we were at uh 2021 we we grew 2.2.6 something like that so we're we're about 2.2.4 uh tradition in in origins the first quarter is a bit slow there there was again some covida stuff in internet sorry sorry just to speak clear so a year ago you were doing 2.4 million in terms of annual run rate uh no uh 4.5 4.5 4.5 okay so that means you effectively grew from 375 000 a month in revenue a year ago to 830 000 a month today more than doubled yeah more than double that's that's what we're trying to to achieve that's that's the goal again for for this year that's very impressive do you remember what year you passed a million in revenue uh it was uh it was probably be mid 2018 mid 2018 we we started to pitch for series a uh but but to our business model is is your one mix of uh again ring central and prelio so we've got a big part of revenue which is coming from uh from the telecom part so so people are purchasing a license from zero and then they are making calls or they are making sms or whatsapp you charge per sms cent or something yeah the big volume is is for the calls still the telephone is the biggest channels that that were selling i see okay this is great now you mentioned you fundraise so when was the last round how much did you raise so we we raised uh 2.2 million in october 2019. uh we we are very lean company we were bootstrapped from from day one uh were kind of experienced people so we we we do very carefully we are trying to go as fast as possible but we we were super cash efficient fortunately uh so we we only raised 2.2 million um in uh in external funding we we did a safe last year of about one 1.2 million again so so for 10 million ar we have raised only 3.3 million uh till date which i love yes it's pretty cool it's impressive it's very impressive uh and you should be celebrated for being so capital efficient uh i think it's very impressive when you did the 1.2 million on the safe last year what cap did you do that at well it's kind of confidential but 25 30 million did that feel fair to you or did that feel like a low valuation uh we we needed that money because uh we we were short of cash so i i think it was a very good very good bargain and and this was really to test for or sales and marketing uh tactics and and it really kicked up because of that of that cash uh so so now of course more close to 10 million ar obviously the valuation is is much more and i've got people on my cap table that purchase a 25 company that is doing 10 million er i think it's a good bargain i i totally agree i mean i would value your business today at somewhere around uh uh 300 to 400 million bucks based off comparables i've seen in the market right that would be like a 30 to 40 x multiple okay easy for me to say that right it's not my money uh but there's a lot of people listening that might so we'll see what happens now just to be clear from an equity perspective do you still own more than fifty percent personally yeah yeah of course we're well three founders were were way over 50 just because we are bootstrapped and and also because i i think we lost a lot of time at the beginning because we are not focused exactly on on the solution we are selling today but it gave us some time to experiment a lot of things while having some revenue so you know it's it's a trade-off we could have started from from scratch and and and sell i don't know on the seed 30 40 of the company but instead of that we we got some cash from from paying customers which is great so very very healthy but but the downside of it is that maybe you have lost four or five years uh doing so but i'm not sure at the same time that the market was ready for products um so i i think it's good but how many folks are full time reno on the team today so at at the moment where we are 50 people uh next month i've got a batch of 10 10 extra people coming in because obviously what we want to do is now we have tested the market we are opening new countries uh and and and i i think that the market is is really ready in the emerging countries where something like five ten years were 5-10 years late compared to to the metro market so the customer experience becomes extremely important for all the companies to differentiate themselves so the demand is really picking up so we want to accelerate we need some extra cash for that marina we're out of time here but some quick questions how many engineers how many engineers out of 50 half of them so if i take the rmd yeah great and last famous five here first one is the last book you read last book i read i don't remember but uh number eight number that's okay number two is there a ceo you're following or studying i i what sorry a ceo you're following or studying yeah it's it's very classic of course even elon musk is making a lot of noises this last days because of twitter i'm a big fan of of this type of guys they are bold they are crazy uh they are they they won't literally uh go for the moonshot uh i i love the the old videos of steve jobs uh about marketing about about product development they are they're always a great inspiration and i followed some some blogs like the guy from winning by design uh i'm sure you know him yep yaakov's number three here we're out of time right now so we're gonna go through these quick number three favorite online tool favorite online tool zapchar uh number four how many hours of sleep do you get every night um seven to eight okay and what's your situation married single kids uh i'm married four kids i started very early on and how old are you i'm 52 52 last question something you wish you knew when you were 20. um how profitable can be a b2b sales business i would have started early on i think guys there you have it zwo.io launched as a software development shop back in call 2012 and 2017 uh they broke 1.5 million revenue then shut it down and pivoted to z-i-w dot io full-time it's basically a way for you to manage all of your inbound communications especially calls and right now focused on the middle east based in dubai they grew from 375 000 a month in revenue a year ago to 830 000 a month today so 10 million run rate with only about 4.3 or sorry 3.3 million in total capital raised very capital efficient with a team of 50. uh reno thanks for taking us to the top sec stanton one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas 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 1 p.m central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m 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 sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something 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 sas 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 for that at nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode 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 but i do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya