Kudwa started life as Numu Cards, which was a different thing entirely. Can you walk me through what you learned building that first product that led you here?
So basically, Numu Cards started off as expense management. Right before the expense management boom in the region, it was like, okay, this seems interesting. It was validated in the US, it was validated in Europe and London, and then, okay, what about our region, especially where more than 95% of transactions are done using cards already. So it seemed like the natural choice after talking to a lot of companies.
But when we started, we looked around and we saw literally everyone and their mothers building expense management tools. So we were like, okay, this is a game of very high volume, very thin margins. You need to move extremely fast and extremely aggressive. And you have to have a very big TAM. Because we're a fragmented market by nature in the GCC, you need a lot of legal structures, different legal structures for every country. So we were like, okay, this will have a lot of challenges for hyper growth.
So let's go back to our customers, talk to them, understand really who's facing which problems. And that's where we identified the problem that Kudwa is solving, which is everything post-accounting. You have pre-accounting: transactions, expense management, AR, AP, whatever. Then you have accounting, which is traditionally bookkeeping, writing, structuring, putting the transactions in the accounting software. But then after that, people still pull everything out and work in spreadsheets.
We were like, okay, this is a problem where every single month you have to bring in data from, on average, eight different data sources, put them in one spot, and then you have five to ten days, up to two weeks, of working on that. It's usually very high pressure, very manual, people are always bugging you for answers. All of these things led us to push for Kudwa.
Globally, the financial planning and accounting software market is pretty crowded. When I looked into the space to find comparables, companies like Datarails came up, and most of them seem to target mid-market to enterprise. You're going after SMEs, roughly 2 to 50 million in revenue. Why is that a better wedge than starting upmarket?
I love that you noticed that. Not everyone does. So effectively, to win properly in this market, you have to go for mid-market to enterprise. That's the hypothesis, that's what we're going for. But to achieve a proper enterprise-level offering, and I'm talking proper mid-market, above $80 million, above $100 million in turnover, you need a lot of offerings, a lot of structure, a very great product.
And finance people have this thing where they want everything perfect now. They are the single source of truth of companies. They are the most frugal, in a way. They hold their cash dearly and they want to lead by example. So we needed to take all of that into account.
The offering started for SMBs, but it grew to mid-market more than we expected. We started doing automated reporting, automated analysis for smaller companies, because the offering by nature was smaller. And the more we added pieces of the puzzle, the more it became a complete solution, the more it became ready for mid-market. Our typical target now is 50 to 500 employees, up to $80 million in turnover. We service smaller companies in a more product-led way, but the focus for us is mid-market.
One of the things I'm interested in, and I think we're seeing it in public markets and to a certain extent regionally as well, is incumbents who have been around for years and have spent the last two years building AI onto architectures that were fundamentally built around something else. HR is the example I always take. Have you been able to start with AI at the foundation in a way those companies haven't?
Really interesting question. The base of our offering is AI. And the reason is, intrinsically, when you look at a company and you want to analyse it, you need brains. We always say we're building the financial brain of every single business. That's what we're heading towards, and that's what we're building bit by bit.
So we're utilising AI, and not just LLMs. Machine learning models, statistical models, all things we've built internally. Now the trick is we need proper data. Unlike HR, which is more structured, it's more about how we get data, consume it, clean it, and make sure the data models speak to each other. This is the biggest trick, the most difficult part.
If you zoom out, I mentioned eight different data sources on average per company. You have accounting, you have bank data, you have their own database, you have payments like Stripe, you have HubSpot and the likes, you have forecasting models, budgeting models. These things do not speak to each other.
So how can you be clear to the model that revenue in my accounting software is linked to my Stripe payments with this client list, and my future revenue is linked to my performance on HubSpot? So that we're able to analyse and forecast the company's performance and give proper analysis. It's not just slapping on an LLM. It's about how do we connect all of these things.
And presumably a product like this gets better with more customers and more data?
I couldn't agree more. It's not just more customers, but more customers equals more data. Today, part of our offering is giving comparables, industry benchmarks. We have our ways to manage that now. But imagine we're at a point where we have 10,000, 15,000, 100,000 customers. The accuracy of that is going to be extremely higher. Being able to predict what is going to come next will be extremely higher as well.
These are key points that are not available today, neither in the region nor for the small to medium market. Data is only available for enterprise-level companies or multinationals on the public market. Everything else is still safeguarded.
I want to ask about trust. You mentioned comparing the product to Google Maps, in that it doesn't just show you where you are, it tells you there's traffic ahead. That's a great line, but the hard part of the analogy is getting a CFO in Riyadh or New York to trust AI-generated financial recommendations when the stakes are so high.
There are multiple ways we look at this. Trust is within our values. We go by BOOST, B-O-O-S-T. The T is for trust. So just for you to understand, it's deeply rooted.
Finance is numbers. I'm not talking vague strategy. I need proper structure. I need to be able to forecast. I need to be able to understand my performance. Hallucinations have to be zero. It's not 99%. It's zero. It's black or white. There's no grey.
There are multiple layers. Number one, the trust of the data. Am I getting the data correctly from the sources? This is the most basic thing. And we noticed that if the data is not being pulled correctly, the customer is dead. So the first level of trust is validation. We have a validation layer when we pull the data and push it to the client. In between, we do our checks, we compare to the initial software, and we say we are 100% equal.
Something we noticed is that whenever clients come in, the first exercise they do is check if the data is accurate. So we remove that burden and give them the confirmation upfront.
Second, now that the data is accurate, is it secure? We brought in all types of external parties to audit us. QuickBooks Intuit audited us, validated us. Xero validated us. We have SOC 2 compliance. We have external auditors that come in and make sure we're good. We're on AWS and going on their marketplace. So all of these parties validate that our infrastructure is secure, our encryptions follow best practices. The only way to access your data is by having your username and password, and those are encrypted.
And you're serving clients across so many geographies at a relatively nascent stage. US, UAE, Saudi, India. Multiple regulatory environments, multiple accounting standards. How do you manage that without snapping? Logic would say focus on one.
I couldn't agree more on that statement, and as nice as it is, it's also problematic. We are a very small team and we have clients everywhere. So how do we manage that?
This is a decision that we took in a tough way. We said, let's look at the data. We sell intelligence, so let's look at the data. Which customers have the biggest hair-on-fire problem? Which customers need us and are converting faster? Which market is more ready for us? Competitors, no competitors? And this is where we decided to keep serving whoever comes to us, but our deeper focus is on one market for outbound.
Now when it comes to existing clients and the technology, the technology is ready for any geography. We don't have that as an issue. We wanted to make sure we were borderless from the start, and this was a key thing for us. So we don't have any issue from a product perspective. It's more the go-to-market strategy that is the bigger concern.
You spent time in the Bay Area. A lot of MENA founders go to San Francisco and never come back, or move the whole company there. You haven't. What did you learn over there, and why build from here instead of there?
I'll start with the last question. Build close to your customers. This is the number one focus for me. This is the number one big learning.
Now being in the Bay Area is the best experience we've ever had as a company. And I really urge anyone who wants to do something like this to be at some point in the Bay Area. The reason is the people. You're having dinner, you're having a drink, you're walking, and you talk to people that either are in the same boat as you, or have done it before, or have failed numerous times and are still going, or have exited their companies for billions of dollars, or are in the process of raising a Series B at $150 million, $200 million. You learn from all of them.
This is something that our ecosystem today, because it's more nascent, naturally has less of. You learn everything from focus, to go-to-market, to how to move very fast, to fail fast and fail cheap. To say, okay, I need to risk it. If I don't risk it, I'm not doing anything. A bang or bust mentality. You learn all of these things way more than anywhere else.
There's still a stigma surrounding failure regionally, whereas in San Francisco it's almost a badge of honour.
I love that you mentioned badge of honour. There, when you fail, it's considered correct. And that's what I always tell people around me. A no is a failure in some sort of way. You're always experimenting, always searching for the no to get closer to the yes. Every no is a closer step to the yes.
Can we talk about the business model? What does a typical sales cycle look like? And once someone is on Kudwa and running their finances through the platform, how sticky is it?
I'll tell you the smallest sales cycle, the longest, and the average. Smallest was same day. It's mind-boggling, really. We really hit it, perfect timing, perfect structure. The longest was about two and a half to three months. You always have these random delays. A typical one is three to five, six weeks from initial interaction to closing. You need to demo, they evaluate, have a trial period, and then close.
Now the second part, how sticky is the product? I would say extremely sticky. And I'm not just saying that. I'll explain why. If there is one problem, someone forgot their password, or an integration got interrupted because they didn't pay their Xero or QuickBooks subscription, people go crazy. And I don't mean normally. It's like, I don't sleep because I need to answer them and support them in fixing the problem.
This is how you know it's sticky. It went into their workflow. It's a workflow they do daily, that they now rely on. It's not something they will change. They've become set in their ways. It's a real hair-on-fire problem. This is how we know.
You bootstrapped first, deliberately, before raising. That runs counter to what a lot of founders in the region do. Why did you do it the other way around?
It's a refreshing journey, let's preface with that. Naturally, we want to make it work. But we don't want to make it work haphazardly and at the expense of other people first. We wanted skin in the game. We wanted to prove three things before doing anything. Number one, can we build the product? Second, can we build a product that people want to use? Not just build a product for the fun of it. And third, can we get people paying for the product?
When we reached these three things, after talking to a lot of people, we noticed there was a missing piece. Which is: can we distribute this product to more people? This was the unlocking factor. We bootstrapped, we validated these three things, and then we identified the best distribution channel and said, okay, let's go. We were more comfortable with the team, the problem we're solving, how we're solving it. We'd de-risked everything initially, and then we were ready.
And another thing, on a personal note. It's always stronger to go to an investor and tell them I'm as much an investor as you are.
The cap table is pretty eclectic geographically. Lebanon, UAE, Iraq, The UK, The US. Is that geographic spread deliberate, or does the round just end up reflecting your own story?
I would say it's a mix. We were looking for investors that are grade-A investors, people that intrinsically can add value and help us.
Our investors from the UK have UK knowledge, European expertise. The people behind the fund are great people. They were operators that became investors, so they know the struggle, they know how to manoeuvre the struggle. They think outside the box, and they're good people. As simple as that. And they have a focus on the MENA region.
Then we have the Saudi and GCC focus. Having someone there, the partner we dealt with, is amazing. Very high expertise in the finance tech stack space, a very good investor and a very good operator who we pick their brain every single day.
On top of that, we have the US focus because we know that eventually, for us to succeed the way we want to, we have to be a global solution. So we need US investors. And then Lebanese investors, it's also our story. And UAE and Iraqi investors, they were there, they're good people that can introduce us and always try to help and push us.
Having the right people, the right mentality, the ones that think globally, that push, push, push mentality, all of that is very important. Having the right mix is extremely important.
Last question. You're sitting in Beirut, building through another regional crisis. Does operating in this part of the world make you a more resilient company, or does it just make everything harder?
The easy answer would be a bit of both. The thing that pains me about this region is I feel like we're always pushing against the wind. We're not being supported and we're not floating. We always have these little struggles that we need to get through.
However, I think it's not the thing that will be against us. Yes, it makes it harder, but everything's hard. Opening a lemonade stand is hard. So just do it. Head down, focus, put your structures in place, focus on you, block the noise, create your own bubble, and just keep growing. That's the way we do it in the company, that's the way we grow, and that's the way we always think about it.
And we shield ourselves by being very close to each other. Sam and I, my co-founder, we've been close for more than eleven, twelve years now. And that's how we want everyone to feel. Being extremely close, supporting each other, leaning on each other whenever it's needed.
