Ziwo Revenue, Valuation & Funding (2023)

[00:00] Hey, folks. My guest today is Renaud de Gonfreville. He's an entrepreneur and engineer passionate about building companies around tech solutions. He's now building Ziwo, the first B2B SaaS platform, omnichannel integrated, integral, and AI powered for the emerging markets. Alright. Renaud, you ready to take us to the top? [00:18] >> Yeah. Hi. Thanks for having me. So, yeah, it's Ziwo is a solution. What is very specific about us is that we're focusing on the emerging market. We are based in Dubai. So far as the emerging markets we're looking at the moment are The Middle East, African countries where we deploy our technology, India and Pakistan. [00:42] And is this really folks in The US might know like FrontApp where you can manage inbound customer communications from SMS, email marketing integrated to your CRM? This is the kind of stuff you're doing, right? [00:53] >> Yeah, absolutely. But what is really different because if you look at The US market and the European market, you will see a lot of similar solution just like let's take RingCentral for instance or NICE inContact. You've got a lot of people in that type of business. The issue thus in the emerging market is that you don't have the layer of the cloud telephony. So if you are in The US, for instance, you've got a lot of [01:20] >> people building their front end solution on guys like Twilio platform. If you are in the emerging markets, you don't have this layer. So we have been obliged to build that. And then once we have this layer, and that's a very complicated one because you need to go one by one in each and every country and to put your hardware in local data centers. Once you've got that layer of cloud telephony, then you can build your solution [01:50] >> on top of that. So we have our own solution, kind of a mix of Twilio and RingCentral on top of it. [02:00] Understood. And what are companies paying on average per month or per year to use your technology? [02:06] >> So because the competition is not that fierce compared to other markets where we're pretty highly priced. So basic solution for contact center all including is is about $109. If you compare that to equivalent solution [02:26] 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? [02:33] >> No, it's not the average. That's the price tag, but we've got some discount based on the volume. And also there are some markets where we need to be pretty aggressive like India or more less developed countries in Africa. We try to match the local spend. [02:55] So Renaud, is the average closer to $50 or $60 a month? [02:59] >> No, I would say it's more about $80, $85. [03:02] That's still healthy. Put this all in a timeline for me. When did you first launch the business? What year? [03:08] >> So we started the business about ten years ago, but we completely pivoted back in 2017. So Ziwo was launched on the market on the 01/01/2017. So it's yeah, it's about four or five years now. [03:21] Did you keep the same cap table when you pivoted? [03:26] >> No, we were we were bootstrapped actually from day one. We're able to generate a lot of revenues because initially we're a customized software development company. So it's quite easy to develop some revenue and only we started Ziwo. We changed cap table only in October 2019 with our first financing round. [03:54] Oh, 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. [04:13] >> I'll show you how you [04:14] 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 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 [04:37] depending on who's doing the buying of your SaaS company, you're gonna 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 [05:00] 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 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 [05:25] bunch that have been acquired the valuation and the multiple. Maybe you'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. Alright. We're gonna [05:49] go back to the YouTube video here in a second, but 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. [06:15] I hope to see you there. Alright. 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? [06:32] >> Was last year. I mean, only last year, we're in a very tight product. As I said, we had to develop all this [06:42] >> telephony layer. [06:45] Renaud, sorry, just to be clear, you're still doing custom development work for clients and No. [06:49] >> It's completely, completely over. Completely over. [06:53] So when did you stop that? [06:55] >> We stopped that almost immediately when we launched Ziwo. I mean, it took us about six months to phase this out. So I would say mid twenty seventeen we stopped completely. So [07:07] my question was, how big did you grow that agency? So in 2016, how much revenue did just the agency do? Do you remember? [07:14] >> Well, was probably around, yeah, maybe $1,500,000, something like that. [07:21] And the reason I asked 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? [07:31] >> Yeah, I mean, was really a phasing out. Did not completely stop. A lot of the customers that were acquired, they were on prem basis and customized. So the move to a complete cloud SaaS solution was fairly smooth. So we didn't lose too much of revenue. What did change though is started to acquire a lot of SMBs because of the SaaS model that is very appealing to the SMB business. And later on, we were able to move [08:07] >> the bigger customers. So we had a mix of SMBs, mid market, enterprise companies and took us about six months to transfer everyone on the same platform. [08:19] Understood. And Renaud, how many customers are you serving now today? [08:23] >> Today, we're in the range of three fifty customers. Three fifty? [08:28] Yeah. And you mentioned you have some bigger ones. Don't obviously say the customer name, but what does the largest customer pay you per year? [08:37] >> Oh, that's a that's a nice question. I would say probably 600 k. [08:41] Oh, wow. Okay. [08:42] >> Roughly. Yeah. Yeah. Yeah. We've got on one single platform the biggest customers we've got. It's in the real estate business, which obviously is big in The Middle East. It's about 900 agents on one single platform for lead generation, for their lead generation process. [09:01] Well, how do we do we back into your Like, if I take the $80 average monthly price point, right, times three fifty customers, that would mean you're doing about $30,000 a month in revenue today. Is that accurate? [09:15] >> It's three fifty customers times times how much? [09:19] Times $80 a month on average. [09:21] >> Yeah. But when I say customers, I mean companies. And in each companies, you've got you've got between one agent to 900 agents. [09:30] So Oh, I see. [09:31] How many how many total agents are on the platform today? [09:38] >> To be honest, I don't remember. It's several thousands. [09:43] Okay. [09:44] >> And it keeps on varying. [09:45] But if you want to know the revenue, that's more simple. [09:51] >> Today we're on the 10,000,000 ARR. But [09:57] >> Just to be clear, [09:57] that means you did about $830,000 a month last month. [10:02] >> Yeah, something like Okay, [10:04] 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? [10:10] >> A year ago, I think we were at 2021, we grew 2.6, something like that. So we're about 2.4. Traditionally in our regions, the first quarter is a bit slow. Was again some COVID stuff in the- Sorry, [10:30] sorry, just to be clear. [10:31] >> So a year ago you were doing 2,400,000 in terms of annual run rate? [10:35] >> No, 4.5. 4.4 [10:40] 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. [10:50] >> Yeah. More than doubled. That's that's what we're trying to to achieve. That's that's the goal again for for this year. [10:56] That's very impressive. Do you remember what year you passed 1,000,000 in revenue? [11:00] >> It was it probably mid twenty eighteen. We started to pitch for Series A. But our business model is dual. We're a mix of, again, RingCentral and Twilio. So we've got a big part of revenue, which is coming from from the telecom part. So so people are purchasing a license from Ziwo and then they are making calls or they are making SMS or WhatsApp. [11:31] That's like a you charge per SMS sent or something. [11:34] >> Yeah. The big volume is for the calls. Still the telephone is the biggest channels that we are selling. [11:40] I see. Okay. This is great. Now you mentioned you fundraise. So when was the last round? How much did you raise? [11:46] >> So we raised 2,200,000 in October 2019. We are a very lean company. We were bootstrapped from day one. We are kind of experienced people, so we do very carefully. We are trying to go as fast as possible, but we were super cash efficient fortunately. So we only raised 2,200,000 [12:15] >> external funding. We did a SAFE last year of about 1,200,000 again. So for 10,000,000 ARR we have raised only 3,300,000 till date. I love this. It's pretty cool. [12:31] It's impressive. It's very impressive. And you should be celebrated for being so capital efficient. I think it's very impressive. When you did the 1,200,000 on the safe last year, what cap did you do that at? [12:43] >> What cap? [12:48] >> Kind of confidential, but $25 to 30,000,000. [12:50] Did that feel fair to [12:52] you or did that feel like a low valuation? [12:55] >> We needed that money because we were short of cash. So I think it was a very good, very good bargain. And this was really to test for sales and marketing tactics and it really kicked up because of that cash. So now of course, we're more close to 10,000,000 ARR. Obviously, the valuation is is much more. And I've got people on my cap table that purchase at 25 company that is doing 10,000,000 ARR. I think it's a [13:28] >> good bargain. [13:29] What what is I I totally agree. [13:31] I mean, I would value your business today at somewhere around [13:36] 300 to $400,000,000 based off comparables I've seen in the market. Right? That would be like a 30 to 40 x multiple. [13:43] >> Okay. Deal. [13:45] Easy for me to say that. Right? It's not my money. But there's a lot of people listening that might. So we'll see what happens. Now, to be clear from an equity perspective, do you still own more than 50% personally? [13:56] >> Yeah. Yeah. Of course. We're our three founders. We're we're way over 50 just because we're bootstrapped. And also because I think we lost a lot of time at the beginning because we're not focused exactly on the solution we are selling today, but it gave us some time to experiment a lot of things while adding some revenue. So, you know, it's a trade off. We could have started from scratch and sell, I don't know, on the seed [14:24] >> 40% of the company. But instead of that, we got some cash from paying customers, is also very, very healthy. But but the downside of it is that maybe we have lost four or five years doing so. I'm not sure at the same time that the market was ready for products. So I I think it's good. [14:46] It's And how many folks are full time Renaud on the team today? [14:49] >> So at at the moment we're 50 people. Next month I've got a batch of ten ten extra people coming in because obviously what we want to do is now we have tested the market. We're opening new countries. And I think that the market is really ready. In the emerging countries where something like five, ten years, we are five, ten years late compared to the mature market. So the customer experience becomes extremely important for all the companies [15:20] >> to differentiate themselves. So the demand is really picking up. So we want to accelerate, we need some extra cash for that. [15:27] Renaud, we're out [15:29] of time here, but some quick questions. How many engineers? [15:33] >> How many engineers out of 50 out of them? So if I take the R Yeah. [15:40] And last famous five here. First one is the last book you read. [15:45] >> Last book I read, I don't remember, but [15:49] Number two. Number that's okay. Number two, is there a CEO you're following or studying? [15:54] >> I I what? Sorry. [15:55] A CEO you're following or studying? [15:59] >> Yeah. It's it's very classic. Of course, Elon Elon Musk is making a lot of noise these these last days because of Twitter. I'm I'm a big fan of of these type of guys. They are bold. They are crazy. They are they want they want literally go for the moonshot. I love the old videos of Steve Jobs about marketing, product development. They are always a great inspiration. I follow some blogs like the guy from Winning by Design. [16:32] >> I'm sure you know him. [16:34] >> Yep. Jacco. Jacco is great. [16:35] Number three here. We're out of time right now. We're going to go through these quick. Number three, favorite online tool. [16:40] >> Favorite online tool? Zapier. [16:43] Number four. How many hours of sleep do get every night? [16:47] >> Seven to eight. [16:48] Okay. And what's your situation? Married? Single? Kids? [16:51] >> I'm married. I have four kids. I started very early on. [16:57] And how old are you? [16:59] >> I'm 52. [17:00] >> 52. [17:01] Last question. Something you wish you knew when you were 20. [17:06] >> How profitable can be a B2B SaaS business, I would have started early on, I think. [17:14] Guys, there you have it. Ziwo.io launched as a software development shop back in, call it, 2012. In 2017, they broke 1,500,000 revenue, then shut it down and pivoted to Ziwo.io full time. It's basically a way for you to manage all of your inbound communications, especially calls, 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 $10,000,000 run rate with only [17:39] about 4.3 or sorry, 3,300,000 in total capital raised. Very capital efficient with a team of 50. Renaud, thanks for taking us to the top. [17:49] >> Thanks, Nathan. [17:52] 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 [18:17] 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 [18:39] 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 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 [19:01] up for 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 [19:20] got to 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. [19:27] >> See you.