#StartupsEverywhere: Michael Hoy, CEO and Co-Founder, Atlas
This profile is part of #StartupsEverywhere, an ongoing series highlighting startup leaders in ecosystems across the country. This interview has been edited for length, content, and clarity.
Fixing Product Market Price Fit
Tell us about your background. What led you to Atlas?
Atlas is the third company I’ve started. The first was acquired, while the second ultimately failed. Both of those experiences led me to work at the first go-to-market software company in Raleigh, North Carolina, called Pendo. When I joined, the company had about $300,000 in annual revenue and roughly 10 customers, it was very early-stage.
I spent about ten years at Pendo and had the opportunity to launch our European business, run North American sales, and build out our market, operations, and enablement teams. I left when the company had about $250 million a year in revenue and over 10,000 customers.
I’m incredibly grateful for that experience, but it was always meant to be a front-row seat, to watch and learn from incredible people who had successfully built companies before. Then, I’d take what I learned and start another business.
What is the work you are all doing at Atlas? Who are your users/customers?
We’re building software for SaaS and AI companies, focused on helping them price and package their applications efficiently, while also providing the billing infrastructure to invoice and manage paying customers. We wrote our first lines of code for the product in July and started selling in January. We have about twelve customers and about $115,000 in revenue.
The process of pricing and packaging a product—and then deploying it—is lengthy and involves many stakeholders. We chose not to bite off the entire process at once and started by building a flexible billing infrastructure comprising two engines.
One is an event ingestion engine that we can hook up to third-party data providers such as product telemetry tools, billing customer relationship management, or sentiment analysis solutions. Our software can soak in the information and make sense of it. Our second product is an invoicing engine, which takes the output of the first to generate invoices and guide payment processing.
Essentially, we take events happening inside people’s products, allowing companies to charge for them. The most recent part of our application builds on top of our event ingestion engine while using more generative AI to create, predict, or create pricing and packaging suggestions. The system can also forecast how proposed changes will impact revenue.
We take all the data we’ve collected and search the web, creating a data lake to act as reference information for our models. The models are then able to take what they know about our customers, business, and their products to suggest optimized business models, pricing, and packaging for them.
How have varying rules about data privacy impacted your business?
We dealt with it daily at Pendo. We are cognizant of the compliance, acknowledgment, and permissions we need from our customers to be able to use data in a certain way.
We’re a relatively small team, and it’s incredibly hard to keep up with the constant changes when you’re just starting. Varying state compliance requirements around data privacy were a challenge during my time at a larger company, and something I’m tracking as we grow Atlas, even if it's harder, given our limited amount of resources.
The bulk of the challenges we've faced with regulation are mostly related to our European customers. General Data Protection Regulation in Europe creates several additional hurdles for businesses to navigate. What we are being told now by potential European customers is that every time they sign with a new vendor or introduce a new way of collecting data inside the application, whether personally identifiable information is included or not, they must alert all their customers and give them the option to opt-in. We have certainly lost deals with European customers because no one is looking to provide more friction for their customer base.
Historically, countries have not imposed “customs duties on electronic transmissions,” but that position is increasingly under threat. How might that impact you?
When it comes to tariffs on electronic services, it would certainly hurt our business. We recognize that, in our position, we’re ultimately at the mercy of government decisions and we’ll have to adapt no matter what happens. Services revenue is 25 percent of our business, which includes pure human consultation services and software services. There could be very impactful results of any tariff, regardless of size, placed on a software-based service.
For us, being so small and early-stage would prevent us from selling in Europe and other markets abroad. Anything off the top is extremely challenging, even in a high-margin business like software. Digital tariffs would certainly impact how we prioritize our investment and think about where to scale.
Have you considered any intellectual property strategies for your company?
Transparently, I’m not super well educated in IP, but I’ve had some experience. When I worked at Pendo, we had one of our biggest competitors sue us over software IP infringement. We won, as my understanding is that it’s difficult to claim ownership over how software is written. From that standpoint, such laws are typically only enforceable when someone steals base code verbatim to produce identical outputs.
I do think there is an opportunity for our business to utilize IP when it comes to the complicated prompts we feed into our AI models. The models themselves are not IP; the data we are collecting from our customers is their IP, but the way that we have written the prompts to sift through, organize, and represent the data may be our IP.
From my understanding, such a model of IP would be very enforceable, similar to the way that software is enforceable. If someone comes along and verbatim steals your prompt, it’s theft. But if someone else also creates a prompt that helps people determine their pricing and packaging and delivers something similar, it’s not an infringement, it’s competition.
What are your goals for Atlas moving forward?
We believe in the power of small teams growing efficiently, with the flexibility to pursue a range of opportunities. We've built a business model and a plan that allows us to stay small in terms of headcount, but mighty in terms of what we can produce.
Our goal is that we're no larger than a 50-person company, and we continue to make more than a million dollars per head. That gives us ultimate flexibility and optionality if we want to raise money or even sell the company.
All of the information in this profile was accurate at the date and time of publication.
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