Bootstrap an AI Startup First, Raise Money Later: Sean Minter, Founder CEO of AmplifAI (Part 3)

Sramana Mitra: Let’s focus on that phase. I just want to go from that zero to $1 million ARR phase. Where did the customers come from and were you building the product with customers or did you build something and then go to customers, how did you navigate that first phase?

Sean Minter: I had a good idea of what was needed because I would have been a customer. We built most of it on my vision of was needed in the market. There was no customer involved. But for any B to B business, the only way to get your initial customers is through relationships. To be honest with you, it’s hard. That’s why it’s always good to have experience working in an industry if you’re going to do B to B.

Sramana Mitra: Yes, absolutely. Domain expertise and domain relationships matter.

Sean Minter: Otherwise it’s hard to get started because you’re a company that doesn’t have a lot of resources. Nobody’s heard of you. Who’s going to take the risk? You’re basically selling your own personal brand and relationship when you sell to your initial set of customers. If you don’t have existing relationships, it’s hard to go sell your personal brand because nobody knows you.

So the initial customers are all people that you somewhat know or familiar with and industry people that you would have previously met.

Sramana Mitra: So, how long did it take you to get an MVP out?

Sean Minter: We were building Amplify for probably a good year before we got our first beta customer and started working with them to get it implemented and going. It’s probably another good six months or so to get them launched and running.

Sramana Mitra: And when was that?

Sean Minter: That was the 2015-2016 time frame.

Sramana Mitra: So around 2015-16, you’re developing the MVP for a year. Then you took another six months of implementing it to your first beta customer that came out of your relationship.

What are the economics of a first customer in the kind of business model you were pursuing?

Sean Minter: Our business has recurring revenue. There’s a per user fee. Our customer was pretty large, but we obviously didn’t get all of it. We got a portion to kind of test things out with.

So I think our revenue was fairly limited. It was probably $5,000 a month or $60,000 ARR for that first client for the pilot and getting an operational working model and showing the benefits.

Sramana Mitra: And this $5,000 ARR POC was rolled out for how many users?

Sean Minter: The rollout in the pilot was probably for around 200-300 users.

Sramana Mitra: What was the full scale of potential of the customer that chose to do this with you?

Sean Minter: Well, that was a large customer with fifty thousand users. They’re an outsourcer, right? So they can’t decide on using it on every user. It’s kind of client by client for their perspective. So it’s not like if you were successful at one client, all of the clients would use it because it’s a decision that’s made client by client.

So the potential was large. But in the end, it was really just about getting a customer so that you could prove the use case and then grow from there.

Sramana Mitra: So, you start with this $5,000 MRR and $60,000 ARR deal, how does this evolve from there? How do you get to the next few customers or how did you get to upsell on this account? How did this evolve?

Sean Minter: You obviously have lots of relationships, not just one. So this is the first one. But as you continue to work other relationships, you land other accounts and all the initial accounts are all relationship based through somebody you knew that found you. So, essentially many different customers ended up in the same bucket. They were all initial POCs.

Sramana Mitra: And they were all in that range of $60,000 ARR deals.

Sean Minter: We pretty much went out to the market saying, no matter what number of users you have, the minimum to work with us is $5,000 MRR. You could put one user on it or you could put 100 users on it. Our base price would be about $10 per user on a large scale. But we came in with a minimum just to be able to support the infrastructure necessary to get a customer work.

Sramana Mitra: This is an important point that you just made for people who are in the MVP stage, trying to get the first paying customers. Because $10 MRR is not exactly something you could work with.

Sean Minter: Exactly. You can’t do it at that price point. So, you’ve to get the customer to commit to a minimum to pilot this out. If you try to sell per user and they want to pilot twenty users, it would be impossible to make that worthwhile from a revenue and cost perspective.

Sramana Mitra: So, how long did it take you to get to $1 million ARR? You said you bootstrapped to $1 million ARR.

Sean Minter: It took until 2019. We raised our first round of funding when we got to around a million ARR.

This segment is part 3 in the series : Bootstrap an AI Startup First, Raise Money Later: Sean Minter, Founder CEO of AmplifAI
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