Thought Leaders in Artificial Intelligence: Sonny Tai, CEO of Actuate AI (Part 3)

Sramana Mitra: What about the first customer? Was that a managed service provider or was it an end-user?

Sonny Tai: The first customer was an end-user. Our first employee attended a private school in Chicago called Francis Parker School. They’re very forward-thinking about how they want to deploy security technology to help protect their students. This school was our first customer. We started working with them on a pilot basis in mid-2018.

As we’re able to prove our performance, they signed the contract with us. They’re still with us today. That’s our first-ever customer. The first managed service customer was also a pretty interesting story. When the pandemic hit, people weren’t thinking as much about gun detections. That forced us to pivot our business model and expand into other capabilities.

There’s a security company that monitors 800 schools. They were monitoring for intruders after business hours. The AI that they were using wasn’t working well enough. They were bombarded with false positives. We did a pilot with them that lasted a month. After a month, they immediately signed every single camera to us.

Today, they pay us almost $500,000 a year. They just renewed about six months ago for a three-year deal. That was pretty cool. That was what catapulted us to be able to raise our Series A.

Sramana Mitra: When you didn’t have live customers, how did you fund the company?

Sonny Tai: I went to the University of Chicago for business school where a lot of my peers landed high-paying corporate jobs in consulting and investment banking. I’d go out to lunch with them and it was the poorest I’ve ever felt in my life. They’d buy me lunch because they’re very kind. Initially, it was all self-funded. I was paying engineers out of my PayPal account.

My best friend gave me $10,000. My mom loaned $10,000. It really wasn’t easy. By the end of 2018, we were out there trying to raise some angel money. I also got some money from an accelerator. We raised $285,000. A piece of feedback I often got when we pitched to VCs was, “Why don’t you raise a friends and family round?” I’m like, “What kind of family and friends do you think I have?”

It’s very frustrating. Not everyone comes from that kind of privilege. Eventually, I was able to get some business school classmates to write some more checks, but that was a very small percentage of what we raised overall.

After that, we got introduced to a VC in the Bay Area – Bling Capital. Ben of Bling Capital invited me out to coffee. After a 45-minute conversation, he goes, “Are you raising?” We just closed our pre-seed round, but we were open to taking more. He says, “I want to back you.” Four days later, a big check shows up in our bank account. By May of 2019, we closed $2.2 million. That was our first money.

This segment is part 3 in the series : Thought Leaders in Artificial Intelligence: Sonny Tai, CEO of Actuate AI
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