How Softbrik Reached $350K Revenue with 60 Customers 18 Months After Launch (Interview with Co-Founder Ram Chaudhary)

Introduction and Company Overview

Nathan Latka

00:00Softbrick is customer intelligence with conversational AI. He's got 60 customers today of which three pay over a $100,000 per year. He just launched eighteen months ago doing 30,000 a month in revenue. His last round was a 900,000 pre seed round last year at a 9,000,000 pre money valuations. So sold 20%, 20% of the business. Today, he's got 11 folks on the team looking to scale six engineers, five sales reps. They all carry a quote of a

00:24$100,000 per year, targeting a $3,500,000 round today to fuel some of his burn. He's burning $45,000 per month as he tries to force this idea into existence and get new customers. Hey, folks. My guest today is Ram Chaudhary. He has over two decades of experience with Google, AWS launching proxies by over 20,000,000 people worldwide. Today, he's co founded Softbrick, a conversational AI company, and also advises European institutions on the upcoming EU artificial intelligence act. Ram, you

00:53ready to take us to the top?

Ram Chaudhary

00:55>> Thank you so much for having me, Nathan.

Target Customers and Product Explanation

Nathan Latka

00:57You bet. So you're building Softbrick today, customer intelligence conversational AI. Are you doing this for anybody, or are you focused on a specific kind of customer, a specific niche?

Ram Chaudhary

01:06>> Well, every company in the planet needs customer. Right? And we help companies to basically connect better with their customer through voice message and interactive UX without any app just on the phone browser. So I'm sure you have used WhatsApp voice message or similar messaging systems. Instead of WhatsApp, imagine that you are a company, and within a few seconds, you can create a form, pretty much like a Google form on your phone, distribute to your customers. They

01:33>> click, and they can just talk to their phone browser. That's it. No app required. And we do it in 40 languages. So we basically help any company in the planet connect better to their customers.

Pricing and Annual Plans

Nathan Latka

01:43Understood. And what do you charge on average per month or per year to use this technology?

Ram Chaudhary

01:48>> We have an annual plan. Typically, we do a proof of concept. Our target customers tend to be in telecom, health care insurance, primarily enterprises. So we have a proof of concept that ranges around ninety days, and then we have an annual plan. And then we have tiers. The full details are available on our website.

Nathan Latka

02:06Well, Ram, my audience can't see your website right now. They're listening to this while they're driving. What does the average customer pay you per month or per year today?

Ram Chaudhary

02:13>> Yeah. So, typically, we have small customers who are around the $5,000 mark. We have medium range customers around 25,000, And then we have 100,000 for enterprise call center.

Nathan Latka

02:25Okay. So what would you say the average customer pays you per month? Is it 5,000 a month? 10,000 a month?

Ram Chaudhary

02:32>> No. It's an annual. It's an annual it's an annual deal. However, some companies sometimes have projects, especially in health care, that ranges from three to six months. In that case, we just prorate it monthly and give it to them accordingly.

Nathan Latka

02:44Yeah. Ram, sorry. I'm just trying to simplify this. What is the average customer pay you per year for your SaaS product?

Ram Chaudhary

02:51>> 5,000.

Nathan Latka

02:52Okay. 5,000 per year. Great. What do they get for that? What are you pricing against? Is it number of seats, number of conversations?

Ram Chaudhary

03:00>> So we have the number of seats by tier, and then I think that number of seats for the 5,000, they will get around 5,000 messages. But for 25,000, they get around a 100,000 messages. They get the advantage of scale.

Nathan Latka

03:12Mhmm. Okay. Got it. And and you mentioned you have some customers, say, paying more than a $100,000 per year? Yeah. Okay. How many today pay more than a $100,000 per year, and how many messages are they sending on average?

Average Customer Value and Revenue

Ram Chaudhary

03:23>> Great question. So we have three such customers who are in the enterprise bracket already, and we have been around eighteen months in the market now. And these three customers, they are individually doing more than a million messages for the hundred thousand years they've paid.

Nathan Latka

03:37Yeah. Per year? Yeah. And you mentioned you just launched eighteen months ago?

Ram Chaudhary

03:42>> Yeah.

Nathan Latka

03:43I mean, that's remarkable. You already have $100,000 customers eighteen months after launch. How did you get these customers?

Ram Chaudhary

03:49>> Well, we did a lot of good product market study. So I have worked for technology industry for a long time. Right? I know how the typically SaaS companies operate. They go they raise a lot of funds. They try to go bottom up. Instead of that, we went top down, and we started finding product market fit and the value that we we bring to our customers. So we have proven that we are helping them literally to save

04:11>> millions of dollars in terms of cost or do better engagement and drive millions of dollars in terms of value. Against that, a $100,000 is fairly simple number for them to pay. It's all about value, not about the cost.

Nathan Latka

04:25Okay. How many customers are you serving today?

Ram Chaudhary

04:28>> We have around 60 paying customer and 300 customers have used our product. Out of that, 60 are paying customer.

Nathan Latka

04:35Okay. Six zero are paying?

Ram Chaudhary

04:37>> Yeah.

Nathan Latka

04:38Okay. And if I say 60 customers times $5,000 per year, that's $300,000 of ARR. Is that accurate?

Ram Chaudhary

04:46>> Absolutely.

04:47>> We are in that range. I think right now, we are slightly more than that, but, yeah, we are pretty much there.

Enterprise Customers Paying Over $100K

Nathan Latka

04:53Oh, 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

05:16connect 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,

05:40you'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

06:02this 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.

06:27Maybe 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. All right. We're gonna go back to the YouTube video here in

Customer Count and ARR Breakdown

Nathan Latka

06:49a 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. I hope to see you there. Alright. Let's

07:16jump back into the interview. Like like more like $400,000 per year?

Ram Chaudhary

07:20>> No. I think we have somewhere around 350 k right now.

Nathan Latka

07:23350 k. Okay. You mentioned that that three customers pay a 100,000 per year. So of those 60 customers, it sounds like three customers make up 80 to 90% of your revenue. Is that right?

Ram Chaudhary

07:34>> Oh, well, not all the three started on the first year. Right? It took some time with larger customers. There's a time gap also. The recognized revenue takes time. By the time next year, it will be recognized. I think they are around 60% of our revenue, the top three, and the rest of them make around 40 percent. Yes.

Nathan Latka

07:51Okay. I'm having trouble. So you you either have customers today paying you a $100,000 per year or you don't have customers today paying you a $100,000 per year. Which is it?

Ram Chaudhary

08:00>> Yes. They are paying 100,000. But, Nathan, the thing is that this company's invoice. Right? And the invoice doesn't hit your bank account on day one. So it's not a monthly. It's not they're not paying by credit card. You have to understand that. So the it will come in 2024, then we are going to recognize that. That's why I'm saying they're around 60%, not 80%.

Nathan Latka

08:19Yeah. But if they're paying $100,000 per year and you're billing an annual plan, that's $8,300 per month. Right? They're paying some portion upfront, imagine. Correct? Not the whole thing, but something.

Ram Chaudhary

08:28>> Absolutely. Absolutely. That's why

Nathan Latka

08:30I I don't necessarily care when the cash is hitting, but if you're doing about $300,000 per year right now, that means you're doing 30,000 per month. And you have of the 30,000, there's three customers paying 8,000 per month. Those 8,000 add up to about 80% of your total monthly revenue today. Is that accurate?

Ram Chaudhary

08:45>> No. It is slightly off the record off the mark simply because they paid a portion of it, so it's around 60%, not around 80%. So the setup fee the setup fee is around out of that 100 k, we take a percentage of that as setup fee, around 50% of it. So net net, the portion that these three customers are bringing is around 60% of the total revenue. That's how the math set up.

Nathan Latka

09:07Okay. I'm not following that, but it's not valuable. Think my audience, we're gonna move on.

Ram Chaudhary

09:11>> Typically yeah. Typically, enterprise enterprise do tend to be a bit complicated. It's not like a simple SaaS model. Right? Yeah.

Nathan Latka

09:20Sure. I mean, no. I don't know what's complicated about it. They're paying you a $100,000 per year. It's $8,300 per month. They get 5,000 or 25,000 messages or a million messages per year. You're billing it. There's a setup fee upfront. It's usually pretty straightforward. So but we can skip over that for now. It's it's it's no big deal. How do you are are your is your focus moving forward? You've got 57 customers that are not paying

09:40a $100,000 per Can you upgrade them to that, or are they already at full capacity? So to grow, you need brand new customers.

Ram Chaudhary

09:47>> Excellent question. Most of them will not be upgradable as they're already in the full capacity. Some some of them around I would say around 30% of them have the potential to go to the full capacity, and that's where our engagement comes in. We focus on customer success, trying to help them to do more adoption.

Nathan Latka

10:05I see. And, Ram, how many folks are full time on your team today?

Team Structure and Sales Quotas

Ram Chaudhary

10:09>> Right now, we have around 11 people full time on our team.

Nathan Latka

10:12Okay. 11 and how many are engineers?

Ram Chaudhary

10:15>> Out of them, six are engineers, five are are in sales.

Nathan Latka

10:18Six engineer. And the five sales folks, do they carry quota?

Ram Chaudhary

10:23>> Yes. They have they have a KPI.

Nathan Latka

10:25How did you set up a quota? Founders always ask me, Nathan, I'm making my first sales hire. How do I set up a quota?

Ram Chaudhary

10:31>> That's a great question. We work with these guys, and they are all industry experts, very senior advisers. And we discussed and we mutually agreed to a quota. They have a very high amount of incentive. So if they hit the quota, then they get incentive both in terms of cash and in terms of equity.

Nathan Latka

10:49What is the quota?

Ram Chaudhary

10:53>> Typically what typically, the advisers pay each of them have to bring at least 100 k customer per year, and they bring around 10 paid smaller tier customers per year.

Nathan Latka

11:06So what is the ARR quota that you expect these sales reps to hit each year?

Ram Chaudhary

11:11>> Ideally, around 150 k. Some of them have hit the 150 k and gone above it. Some of them are below it. But, yeah, ideally, the median ranges are $1.50 k.

Nathan Latka

11:22How do you make the math work on that? I mean, most sales rep that carry a quota will make 30 or 40,000 base plus commission. So if you're paying your sales reps that carry a quota $60,000 all in per year, but they're only bringing a $150,000 of revenue, there's not enough margin to go around.

Ram Chaudhary

11:38>> That's a good question for the first year. That's why we have raised some funds. First year, when you are operating, you tend to be a bit more aggressive. We have been a bit aggressive. So we have made margin. It's not a very good margin in the first year, but upcoming model, when we are raising further rounds and hiring more people, then the quota will be higher. That's the exact math right now which we are going through.

12:02>> We have not finalized Why do you wanna hire

Nathan Latka

12:04more people? You've gotta make your current math work on your current employees. Are you planning to increase the quota for the current sales team?

Ram Chaudhary

12:11>> That is also a discussion we are having right now. We haven't finalized that yet.

Nathan Latka

12:14Mhmm. Okay. How have you so you mentioned fundraisers. How much have you raised to date?

Ram Chaudhary

12:20>> We have raised close to 1,000,000. We have reached around 900 k. So and now we are going for a 3,500,000 round.

Fundraising History and Equity

Nathan Latka

12:27When did you raise the 900,000?

Ram Chaudhary

12:29>> We raised it in October 2022.

Nathan Latka

12:34Okay. So that was your seed, call it your pre seed round. Most folks are selling, you know, 20% of their company in a pre seed round. Were you in that same area?

Ram Chaudhary

12:43>> Pretty much right now the founders have around 80% of the company.

Nathan Latka

12:46Okay. So sorry, 900,000 raise on like a 9,000,000 post money, something like that. And you still own, are you the only founder?

Ram Chaudhary

12:54>> No, I have another co founder.

Nathan Latka

12:55Okay. So two cofounders each own 80 well, they own 80% together right now. Now did you guys split the company evenly at the start or did you get more because it was your idea?

Ram Chaudhary

13:04>> No. We did it evenly. He was actually my colleague. We ensured that both of us have the exact same incentive.

Nathan Latka

13:10Okay. So investors today own 20%. No ESOP pool?

Ram Chaudhary

13:15>> There is an ESOP pool. Only one engineer till now has got ESOP. No one else.

Nathan Latka

13:20Okay. And you're raising today, you said you're targeting 3 how much?

Ram Chaudhary

13:24>> 3,500,000.

Nathan Latka

13:25And and what valuation do you hope are you hoping to hit?

Ram Chaudhary

13:29>> We are discussing around 20,000,000 valuation in that range. The challenge, as you know, valuations have really gone down in the last few months. So that's been a bit of a sensitive discussion as of now.

Target Valuation for Next Round

Nathan Latka

13:41Mhmm. And the trickier part is you're doing $350,000 a year in revenue. A 20,000,000 valuation represents a 57 x multiple, which is a very high multiple. So how do you get there?

Ram Chaudhary

13:53>> We are not there yet to be candid till now because the idea has a very high global scalability potential team, the other nontangible part. We have got first pre seed valuation that's very good. But right now, getting the seed evaluation to be honest is not that easy. We are still getting in the high rate at almost a 48 multiple. So, we will potentially end up negotiating that. I'm not very willing to discuss anything more about this

14:21>> right now because it's a sensitive discussion. So, it's a bit tricky which comes out on the public domain as you want.

Nathan Latka

14:27What do you need the money for? Why is this so expensive to build?

Ram Chaudhary

14:31>> We need we have that's a fantastic question. We will have a usage of funds in primarily two components. First is that we have worked in health care, and we see some fantastic opportunity. That is also where we are getting a good acceptance from the investor community. They do genuinely see the potential. But to build those those specific features that we would need to hire a few more top quality engineers, especially AI scientists, and that will not

15:01>> be too inexpensive. Plus, we also want to keep some buffer learning from the last round. That's the reason we need the usage of fund.

Use of Funds and Healthcare Opportunity

Nathan Latka

15:08Ram, how much capital are you burning today per month?

Ram Chaudhary

15:13>> Per month, our burn rate is around 45 k.

Nathan Latka

15:19Does that make you nervous?

Ram Chaudhary

15:22>> You bet it does.

Nathan Latka

15:25Why?

Ram Chaudhary

15:28>> The runway isn't too great. And while we are bringing in revenue, you know, it's always a bit of a you can call it almost irrational anxiety, but there is always a bit of anxiety. So that's why also we are raising a bit more this time. We have kept some buffer to not have that anxiety in the future round. But from all the discussions with other entrepreneurs, I realized anxiety is a part of the entrepreneurship team. Yeah.

Nathan Latka

15:52Makes sense. Alright. Well, this is a great story. We're certainly rooting for you. In the meantime, though, let's wrap up here with the famous five. Number one, what's your favorite book?

Ram Chaudhary

16:03>> From zero to one, Peter Skill, one of the books I enjoy.

Burn Rate and Runway Anxiety

Nathan Latka

16:06Number two, is there a CEO you're following or studying?

Ram Chaudhary

16:10>> Satya Nadella.

Nathan Latka

16:12Number three, what's your favorite online tool for building Softbrick?

Ram Chaudhary

16:20>> I code and understand Python a lot. It's not really a tool, and I use for designing Canva.

16:26>> Yep.

Nathan Latka

16:27Number four, how many hours of sleep do you get each night?

Ram Chaudhary

16:30>> I actually sleep decently well, seven to eight hours. I try to, yeah, put in seven hours.

Nathan Latka

16:35That's great. And what's your situation? Married, single, kids?

Ram Chaudhary

16:38>> Single.

Nathan Latka

16:39Okay. And how old are you?

Ram Chaudhary

16:42>> I'm 41 year old.

Nathan Latka

16:44Last question. Something you wish you knew when you were 20 years old. I

Ram Chaudhary

16:50>> would have taken the risk of building, doing entrepreneurship even earlier simply because when you're young, you are left burdened with other other stuff in life. So it's just easier that way to fly faster.

Famous Five Rapid Fire Questions

Nathan Latka

17:03Mhmm. Softbrick is customer intelligence with conversational AI. He's got 60 customers today, of which three pay over a $100,000 per year. He just launched eighteen months ago doing 30,000 a month in revenue. His last round was a $900,000 pre seed round last year at a 9,000,000 pre money valuations. So sold 20, 20% of the business. Today, he's got 11 folks on the team looking to scale six engineers, five sales reps. They all carry a quote of

17:28a $100,000 per year, targeting a $3,500,000 round today to fuel some of his burn. He's burning $45,000 per month as he tries to force this idea into existence and get new customers. Ram, thank you for taking us to the top.

Ram Chaudhary

17:41>> Thank you so much, Nathan, for having me. Pleasure.

Nathan Latka

17:44One 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

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18:53for 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, but I do it so that we can all learn. We have to counter those people. We

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