How Produx AI Reached $60K in Revenue with 5 Customers in 2023 (Interview with CEO Tony Tom)

Introduction to Produx AI and Competitors

Nathan Latka

00:00Guys, Product dot ai competes with sort of Productboard and Pendo in that same space. They're doing 5,000 a month today in revenue across five customers that pay on average $1,000 per month. They raised about $500,000 worth of capital at called around a 3,000,000 valuation. Two co founders hustling, total team of five, about the two co founders split equity evenly at the start. Now going through tech stars, learning a lot about the network and growing fast. We'll

00:20see if they can go from five to 50 customers here quickly again at product dot ai. Hey folks, my guest today is Tony. Tommy has been a startup guy since the age of 19. Landed at a startup eventually. Worked in a few startups and enterprises to see the problem and started products AI to solve it. It enables b to b product teams with intelligence. Tony, you ready to take us to the top?

Tony Tom

00:40>> Yeah. Let's go.

What Produx AI Does: Bridging Customers and Product Teams

Nathan Latka

00:42Well, what does that mean? It's very broad. Enable b to b product teams with intelligence.

Tony Tom

00:46>> So, yeah. When when the companies usually scale from a founder led sales or a cross small process or close group to a very process led multiple team sales GTM motion, what happens is the product teams get detached more and more from the customers. At the end of the day, they are, like, very far from the customer end. There'll be teams like customer success support, everybody interfacing with customers. And the context is always coming from those teams

01:14>> mostly. So during that process, the product team is not getting enough context to make all those decisions. What we do is we pick up all the customer data, feedback coming in from different locations, different tools, and generate insights on top of it so that the product team can use those insights to make more intelligent decisions, more smart Should

Nathan Latka

01:35we think of you like Segment or Pendo or who would you compare yourself to?

Tony Tom

01:39>> Pendo is a good example. Productboard is another good one. There are a few new companies that are out there as well doing the exact same thing. So we are we sit in between if if to be exact, we sit in between the customers and the product board so that we bridge the gap between the customers and the product team.

01:59I see.

01:59>> That's the right positioning.

Nathan Latka

02:00I see. And and what are you what are customers paying on average per month to use this technology you've built?

Pricing and Average Contract Value

Tony Tom

02:06>> So somewhere in between $12,000 to 24,000 is is the monthly price. And it it depends on how much data that you're bringing in as well. So if you wanna, like, bring in a ton of data from your past history, historic data from what the customers were talking about, like, two years back, three years back, then then it would, like, scale up as well.

Nathan Latka

02:29So $12,000 a month or about a $150,000 per year is your average contract value?

Tony Tom

02:35>> It no. No. No. $12,000 per year. That's what

Nathan Latka

02:38Got it. That's something that provides about a thousand dollars a month.

Tony Tom

02:41>> Yeah. A thousand dollars a month.

Nathan Latka

02:42Okay. Very cool. Put this on a timeline for me. When did launch the business?

Founding Story and Timeline

Tony Tom

02:46>> It's been super early for us. Like, ten months back, we launched it. So super The

Nathan Latka

02:50launch gen caught late late twenty twenty two?

Tony Tom

02:53>> Late no. 2023, early. So somewhere in March 2023 is the exact timeline.

Nathan Latka

02:59When did you write the first line of code for the platform?

Tony Tom

03:02>> That is probably March first week or second week. Once we break.

Nathan Latka

03:08Of this year?

Tony Tom

03:09>> Yeah. This year.

Nathan Latka

03:10Okay. Interesting. And did you quit your full time day job before that, or were you thinking about this idea for a while?

Tony Tom

03:15>> We've been thinking about this idea for a while, but quit the day job on January 31 took a month off after that and then kind of, like, jumped into it.

Nathan Latka

03:23Okay.

Tony Tom

03:24>> Me and my co founder has been discussing this and a few other ideas, and we landed finally on this.

First Customer: Cold Outreach with Apollo and ZoomInfo

Nathan Latka

03:29How did you find your first customer?

Tony Tom

03:32>> So we we went outbound fully on right out of the bat, and we didn't wanna wait for sales or anything. So it was fully outbound. Cold call was the first customer.

Nathan Latka

03:44You cold called. How'd you get their number?

Tony Tom

03:47>> We use platforms that are providing us data to to, like, target the ICP. So we're like Apollo, ZoomInfo, those kind of tools to actually find out the

Nathan Latka

03:57What what filters were you using in Apollo and ZoomInfo?

Tony Tom

04:00>> We for my ICP, it's basically companies ranging from 10 to $100,000,000 in and hiring product managers, having at least 100 to 400 employees, and a few more filters like location in the North American region, a few of them.

Current Customers and Revenue

Nathan Latka

04:17Interesting. Okay. So you call, you sell them, that was your first customer. How many customers are you serving today?

Tony Tom

04:22>> So we serve approximately five right now. So some are coming on board, going through security and all of that. So we are super small right now.

Nathan Latka

04:31Okay. So it's about 5,000 a month in revenue?

Tony Tom

04:34>> Yep.

Techstars Accelerator and Capital Raised

Nathan Latka

04:35That's great. Now have you self funded this? I see you have a Techstars shirt on. Did you go through Techstars?

Tony Tom

04:39>> Yeah. I'm I mean, in in fact, we are going through Techstars right now.

Nathan Latka

04:43Ah, amazing.

Tony Tom

04:44>> So what is it?

Nathan Latka

04:45I forget what the it's like a 150 k for 7% or something. Right?

Tony Tom

04:47>> 120 for yeah. Somewhere in that range. So the 100 k not is like a separate one on your current valuation. Yeah.

Nathan Latka

04:55I I see. But have you raised any other capital besides a 120,000 from Techstars?

Tony Tom

05:00>> Yeah. We we raised 400 k in additional from different angels and and groups that we work with.

Nathan Latka

05:07Oh, 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 Founder Path. Check this out. I'll show you how you can access this in a second, but you log in, you

05:30connect 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 Founder Path dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company,

05:54you'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 the whole thing outright. Now what's cool about this is

06:16this 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, 1,200,000 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.

06:42Maybe 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 Founder Path. And we're thrilled to bring it to you. Alright. We're gonna go back to the YouTube video here in a

07:04second, 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. I hope to see you there. Alright. Let's jump

Pre-Seed Round, Valuation, and Cap Table

Nathan Latka

07:30back into the interview. Okay. So about 520,000 race today in call your pre seed round plus the accelerator.

Tony Tom

07:37>> Yeah. That that'll be correct.

Nathan Latka

07:39Most folks are selling, you know, 15 to 20%, especially in today's compressed market, 15 to 20% in their pre seed round. Were you in that same range?

Tony Tom

07:47>> Yeah. We we are in the same range. So we are in fact less than 15%. Yeah.

Nathan Latka

07:53So if you saw 15% for 400 k, that mean that puts your valuation at something like 2,400,000 post money?

Tony Tom

08:03>> So our valuation is higher than that, basically. So we sell sold less than 15. And we didn't we didn't actually take

08:12>> the Textas money at this point. We we took outside money at a higher valuation. So we didn't wanna take the Textas money at lower valuation.

Nathan Latka

08:19So Textas lets you not I thought Textas forced you to take their money. So you're in the program, but you didn't take the money. They have no equity.

Tony Tom

08:25>> It's optional. So you don't you don't have to take that money if you don't need it. Tax house today

Nathan Latka

08:30is not on your cap table?

Tony Tom

08:32>> They are on the cap table, but that will be for a lower lower round. So it's basically the program works in such a way that you have a fees, which is by default given. And the 100 k that they are putting in, that comes at evaluation predefined by Techstars. So we Well, what of fees

Nathan Latka

08:52is that? 1,000,000?

Tony Tom

08:53>> That is that is 3,000,000. Okay. And there there is, like, some technicalities in there where if you have three commits at a higher valuation, then you get to, like, match that commit. And we had commits, but the problem was we didn't have enough proof of the committee. It was all friends and family, and we didn't like send any emails back and forth. It was all word-of-mouth that came at that valuation.

Nathan Latka

09:18So you raised 400 k at a 3,000,000 valuation and chose not to take the 100 k from Techstars?

Tony Tom

09:23>> Yep.

Nathan Latka

09:24I see. I guess what's the upside for Techstars? Why why why would Techstars let you in the program if they have no upside?

Tony Tom

09:30>> No. I mean, there is a there's a common stock allotment for Techstars.

Nathan Latka

09:35How is that? Four or 5%?

Tony Tom

09:38>> That that is the 6%, basically. So that comes with optional 100 k as well.

Nathan Latka

09:45Well, if you're gonna get if you're gonna get if they're gonna take 6% anyway, why wouldn't you take the 100 k?

Tony Tom

09:50>> The 100 k is additional than 6%.

09:55>> You said it's

Nathan Latka

09:56optional, but they take 6% no matter what. So if they're gonna take 6% no matter what. True or false? Techstars right now own 6% of your cap table.

Tony Tom

10:03>> Correct. Yeah.

Nathan Latka

10:04Much You've taken $0 from Techstars?

Tony Tom

10:09>> We took 20,000. That is basically by default comes with the 6%.

Nathan Latka

10:14If they were gonna but why would you not take the other 80 k if it's basically free money? Take the 100 k from Techstars.

Tony Tom

10:20>> It is not free money. It comes as a convertible note. So it's not free money.

Nathan Latka

10:24Oh, I

Tony Tom

10:25>> see. Okay. Got it.

Nathan Latka

10:26That makes sense. Okay. So you're going through the program now. What's been I mean, what what's been the you know, some people love Accelerator, some people hate them. What's been the biggest surprise?

Biggest Surprise from Techstars: The Network

Tony Tom

10:34>> It it's the biggest surprise is the the network that we can tap into right off the bat. So basically, it's like huge network that unless you so I come from India. I don't had only a few network that I could connect to easily. So Textiles opens up to a large network within their cohort and their mentors and mentees, basically. So that that helps us move faster than usual.

Nathan Latka

10:56Very cool. And who who is who is we? Do you have a cofounder?

Tony Tom

11:00>> Yeah. We I have a cofounder. He's his name is Jiren.

Nathan Latka

11:03You guys split equity fifty fifty?

Tony Tom

11:06>> Yes.

Nathan Latka

11:07Ah, come on. No one was no one was worth more?

Tony Tom

11:11>> I mean, we we thought about it hardened, like, for a long time. So Mhmm. We decided to plan that.

Nathan Latka

11:19Who's doing the all the engineering?

Tony Tom

11:21>> He's doing all the engineering, basically.

Nathan Latka

11:23So you're the sales guy?

Tony Tom

11:24>> Yes.

Nathan Latka

11:25Alright. How do you go from five customers to 50?

Co-Founder Equity Split and Team Structure

Tony Tom

11:29>> It's right now, we are just focusing only on outbound. So basically, five to 50 would be still outbound, 90% outbound, 10% is brand positioning and marketing. So we're not expecting inbound or any PLT motion at this point. So fully outbound, that's the way we are going.

Nathan Latka

11:45And just the two of you hustling right now or is the team bigger?

Tony Tom

11:48>> Team is five. Three more additional people. So two engineers and one designer at this point.

Nathan Latka

11:52Two engineer. Okay. And interesting. You're the only sales guy though. Right?

Tony Tom

11:55>> Yep.

Nathan Latka

11:56Very cool. Alright. On that note, let's wrap here with the famous five. Number one, what's your favorite book?

Tony Tom

12:01>> Sapiens.

12:03>> Yep.

Nathan Latka

12:04Number two, is there a CEO you're following or studying?

Strategy to Go from 5 to 50 Customers

Tony Tom

12:06>> Yes. We work closely with CEO of docket.ai. So he was the chief data officer previously at Zoom in for Arjun Pillai.

Nathan Latka

12:14Number three, what's your favorite online tool for building products?

Team Composition

Tony Tom

12:20>> Right now it is Google. So it's a very

Nathan Latka

12:24Number four, how many hours of sleep do get every night?

Tony Tom

12:28>> Somewhere in between five and seven.

Nathan Latka

12:30Okay. Situation, married, single, kids?

Tony Tom

12:34>> Married, no kids.

Nathan Latka

12:35Okay. And how old are you, Tony?

Tony Tom

12:37>> 29.

Nathan Latka

12:38>> 29.

12:38Last question.

12:39Something you wish you knew when you were 30 or sorry, when you were 20.

Famous Five Rapid Fire Questions

Tony Tom

12:43>> When I was 20. Yeah. Keep pushing. I stopped a bunch of I wrapped up a bunch of startups and shouldn't have done that.

Nathan Latka

12:50Guys, Product dot ai competes with sort of Productboard and Pendo in that same space. They're doing 5,000 a month today in revenue across five customers that pay on average $1,000 per month. They raised about $500,000 worth of capital at called around a 3,000,000 valuation. Two co founders hustling, total team of five, about the two co founders split equity evenly at the start. Now going through tech starts, learning a lot about the network and growing fast. We'll

13:11see if they can go from five to 50 customers here quickly again at product dot ai. Tony, thanks for taking us to the top.

Tony Tom

13:18>> Thanks, Ben. Thanks for having the time.

Nathan Latka

13:20One 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 one

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14:29saying. Sign 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. 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.

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