OpenPhone rebrands to Quo and raises $105M, including $96M in non-dilutive General Catalyst CDF funding

have our next guest coming in the TBP and Ultradome. He's in the reream waiting room now, I believe. Let's bring in the phone. Not for long. The company has been rebranded. Introduce yourself. Boom. Tell us the story. Uh, hey guys. It's, uh, great to be here. My name is Mahar.

I'm one of the co-founders and CEO at previously Quo, now Open Fun. Um, so, so that's who I am. Um, how do you say it? How do you say it? Kuo. Quo. Quo. Quo. Yeah, like status quo. Oh, status quo. Like quo. Yeah. So, uh, take us through the story. Seven years is open phone, now you're rebranding. How' the company start?

What did you build? What was the inflection point? And why are you rebranding now? Amazing. Um, yeah. So, let's start from the problem. Um, businesses essentially lose, I don't know, massive amounts of revenue by not picking up the right calls. I don't know, doing the right follow-up. Yeah.

Um, letting conversations go cold. For a lot of businesses in the US, getting customers is a game of speed. whoever is passed there to I don't know get back to you is going to get your business. I'm sure you guys have called I don't know HVAC companies, contractors, all sorts of businesses.

So um the existing solutions on the market just really forced businesses to set up five or six different tools to get a decent communication stack going. Most of them don't do anything. They use their mobile phone for business.

So there is so much opportunity here to like build a much more comprehensive platform and uh solve the problem. Yeah. So uh we built Quo um to be the um the conversation first CRM unifying communication unifying workflows your team into one platform.

So we started with the phone because phone was the most broken piece of software. I don't know like a lot of businesses as I said use their mobile phone they may use Google voice they use ring central. So the space is extremely legacy. Yeah. Um what was the initial product?

Was it uh like phone trees that would be programmed with kind of not even an AI generated voice but just one of those old robotic voices?

Uh or did you ever actually offer hey we will bring a call center uh per hour and you can actually have a human and we'll we'll have that human on our on our balance sheet essentially. Uh was that something that you explored or was it always purely just a SAS product?

No, it was always SAS and the first product was was very simple. It was just um a phone app. Uh you you just just like Google voice and um but we tailored it to businesses. Over time we added collaboration. So now you can have your team it can actually function as a pseudo call center.

We brought CRM features uh phone menu now recently obviously AI. Yeah. What was the uh wheelhouse customer for you? Were you SMB, mid-market, enterprise? Like any particular verticals like you you mentioned HVAC. Is that literally a market that you went after and won or was it very diffuse small operators?

Take me through the shape of the customer base. Um the the vast majority of our are SMBs. From an industry point of view, about 30% of companies on our platform are tech companies. Um 70% are professional services, whether it's like white color, blue color, blue color services.

The vast majority of companies on our platform are 1 250 users, but we do have um I mean companies that go all the way to 800 900 users. So, um we do have um kind of like larger companies too, but the vast majority are less than 50. Yeah. So, you built this SAS product.

Now, you're able to lay over uh conversational, you know, voice generation as well as LLMs to and agents to understand where to kind of go in the tree, how to route people, how to just talk to people.

Um, uh, has that have you been have you been upselling this as a as an add-on or is this just something you rolled out to everyone? Has it affected margins? Is it just a pure growth vehicle? Is it just status quo? Everyone needs it now. So, initially the um, our AI agent is called Sona.

Sona was an add-on and um, it cost about 50 bucks a month. Um, and one of the things we realized is pricing is a barrier.

when you're talking to bigger companies you can and you have like a sales function can go and make a make an ROI case but open phones or close uh customer base 90% is self-s served they sign up they get the system set up so we wanted to give them that magic right away and um the release today the launch the product launch today makes a part of every plan so as you're kind of onboarding into the phone system we actually set up your AI agent for you and um it's taking on your miss calls one interesting stat is companies that use our AI agent go from missing 70% of customers to less than 10%.

So that's an incredible huge improvement. Uh are you seeing any evidence that uh AI agents are on the other line that you're getting calls from AI agents yet? I imagine that in the future I'll be able to go to Chat GPT and say, "Hey, uh find me an HVAC consultant. " It might fire off a phone call if it needs to.

What does the future look like here? Yeah, we haven't run into I mean we don't review every call so maybe it happened out there and we just don't know about it but um no it's not common that consumers use AI to call businesses at this point. Mhm. Makes sense. Uh take us through the fund raise.

I want to hear the numbers. Yeah. So uh we raised about 105 million in funding. Uh 96. Let's go. A massive number. You just had to add the extra five on there. I take Yeah, they're beating down the doors. I I There is a reason I take you growth has been crazy. The extra 5 mil is that for billboards, friends and family.

No, 96 million of the funding is from general catalysts TV fund. Um so this fund really invests in customer acquisition and um we when we looked at the model when we got um when we got to this funding option and and modeled it out, we actually were blown away by how good of a funding um funding option it is.

I don't know if you guys know much about CVF, but it's a non-dilutive um fund that basically invests in customer acquisition. Unlike other non-dilutive funds like denture debt, this one actually gets paid as your customers pay you. Um and in case of a downside, they actually own the risk.

So they only invest in companies that have an acquisition engine that's very efficient with an unlimited amount of u market. So obviously um we have had massive growth this year and um we are going to be well above 100,000 paying customers by the end of the year and this funding option is perfect for where we are. Yeah.

Uh if I if I were to look at your your revenue growth curve over the history of the company, seven years, could I could I pick out uh like a kink in the graph where you launched an AI product or the AI era started? Yeah, I mean it's this year we had uh we are on track to do about 110% year-over-year.

Um and uh we are I guess in mid eight figures now in terms of AR. Amazing. So it's it's been really amazing. Yeah. Well, congratulations. Thank you so much for hopping on the show. Awesome progress. Awesome new name. Yeah, love it. Thank you. We'll talk. Congrats to the whole team. Have a good one. Cheers.

How'd you sleep, Jordy? Did you sleep okay? I I'm going to be Where's my phone? I lost really quite annoyed if you beat me again. And I got a 93. I I I left my phone over there. So, you win by default. But you can win by default. Go to eight. com.

Get a pod five, a 5year warranty, 30 30 night risk-f free trial, free returns, free shipping, and uh get your own sleep score. Optimize your sleep. It's important. Well, what else we got? We have uh another one. Uh yeah, we have a few more guests. We have a post from uh 1 A3 N.

They say, "Sometimes I see people hyping AI progress with quote, "This is the worst LLMs will ever be at X. Uh, they ne they only they only get better, but Anthropic retiring Opus 3 or Sonnet 3. 5 does kind of seem to mean LLMs have just gotten worse at some hard to define X that Opus or Sonnet were good at.

" Tyler, I think you threw this in there. Uh, what's your read on this? Do you think it it actually matters? Do you think it'll matter to actual users of of Claude? Um I I think the amount of people who like use Claude for that like conversational as like an like a friend almost is probably like a super tiny amount.

Yeah. Um but there is like something there like that like friend. com is like going after like something there is some value in like having a companion that like Claude was like actually good at. Yeah. Um and that it seems like kind of hard to like train for.

It seemed like kind of an emergent property of like whoever like the data they use or something like that. Yeah. I I I'm really excited for Dev Day and the new Sam Alman announcements from OpenAI.

I I'm wondering if uh part of what they'll be able to do is like could Avi take his pre-prompt and all the prompting that he's done to create this bizarre friend character and then share that on the GPT chat GPT app store and have people use that. Swinging. The