How Aquabyte CEO Bryton Shang grew to $1.7M revenue and 3 customers in 2024.

hello everybody my guest today is brighton shang he's the founder and ceo of aquabyte a silicon valley and norway-based venture-backed company applying machine learning and computer vision to aquaculture fish farming for biomass estimation sea lice counting and feed optimization and formulation brain was named to the 2019 forbes 30 under 30 in machine manufacturing and industry all right brent you ready to take us to the top absolutely how do you land in this niche that's my biggest question it's a bit of a uh non-direct story i had as i studied machine learning at princeton and had worked in a number of machine learning companies in the past my first company was an algorithmic trading firm so similar to flash boys we were buying and selling stocks automatedly then i was involved in another company a series of startups and the last company i was involved with we were doing computer vision modeling on cancer tissues that that company ended up going through the y combinator program moved out here from new york and then ended up incubating this company out of a vc firm out here the whole idea for aquaculture came out of my old co-founder one of his business school classmates had owned a seabass farm in mexico and it had been really interesting to me and ended up traveling all around and everyone kept on talking about norwegian salmon and long story short ended up living in norway for a couple of months with the fish farmers investigating the industry they have an amazing industry out there but then developing this thesis of being able to use similar machine learning computer vision technologies putting a camera in the fish pen and being able to monitor a lot of different things so over time just learned a lot more about it and so what's the model today is it a pure place sas kind of revenue stream so we have a camera the the camera goes in the fish pen from that using computer vision we can do a number of interesting things we can determine the weight of the fish the number of sea lice as you mentioned and we do sell it as a monthly subscription feed to these farms what's the feat i guess on average just the software component of this what's the average customer paying per month or per year to use the tech it's it's in the hundreds of thousands uh for like an entire farm um and it like it we charge by the pen each fish pen okay so i guess um totally understand that that's what you price against but what i'm actually asking is the average kind of how many pens on average you know per you know company you're selling to so are we talking like 100 000 average kind of annual accounts for five pens or something different uh something in like the hundred to two hundred thousand dollar range for an average farm okay and the average form has how many pens uh four to six pence okay four to six pounds very good and get just help my audience visualize that so how big is a pen is it like the size of a typical commercial swimming pool or so you can take a 737 plane dangle it by the nose and completely submerge it in one of these pens so we're talking about the diameter of a pen being the size of half a football field that's huge massive how many so for a four to so okay for one pen how many pieces of hardware these these kind of cameras do they have to put in that one tank it's a single camera okay and the camera navigates throughout the pen watching the fish so it's almost like when i was growing up and had a pool and we had this little automatic thing that cleaned the bottom of our pool that just moved around in the morning it was a little alien you kind of work like that yeah something like that okay so it's on a it's not a rope winch system and the the winch moves it all throughout the pen that's pretty cool okay so i'm always fascinated by iot plus software plays especially in niche verticals i've seen a lot of kind of ad tech doing this where there's like orbs and feed grain relative to like how much cows are eating or you know you know sensors on the back of target dumpsters and walmart dumpsters to help the you know dumpster people know when to come pick up things like that and i'm always fascinated by how people are subsidizing the hardware to get as close to free to their customer so they can drive more growth so i'm curious about that for you how do you handle the cost structure of the physical installation the camera is actually quite expensive now the farmers they already have cameras in the pens not as sophisticated as the ones we have but they're already used to having that type of hardware what we do is we're actually a pure place software company in that we partner with these camera manufacturers so from a farm's perspective they're buying a complete package of the software plus the camera on the back end we're actually passing part of that cost directly to the hardware manufacturer and that's not even that that we're not even a part of that so we're not buying the camera and reselling it on a sas model they're they they just buy that separately what's it cost it's it's like 20 to 30 000. okay we'll call it 20 000 for one of these cameras and so what you're saying is you will essentially sell your software so your sales on something like this hey farmer with four to six pens it's gonna be between a hundred thousand and two hundred thousand dollars per year for the software and on top of that you need one camera per pen they're 20 grand a pop you have four pens it's another 80 grand so they're looking essentially it's showing out at least 180 grand for the 80 on the hardware plus 100 on the software first year right but then these cameras they last for five six years and also they already have cameras in the pen so they they can potentially retrofit their camera upgrade it and and so they don't have to buy a completely new camera is that like your sales people or you when you're going out and selling this is that 20 000 per camera cost a big friction point have you have you lost deals because they don't want to pay for that hardware no i think that they're that actually ironically the farmers they're more used to buying hardware than software and so they'd rather pay a large amount for the hardware and a less amount for the software because they're just not used to that they're they're used to buying nets and barges and the the bigger the better not not so much stuff so they're not used to the sort of sas model all right and put all this on a timeline for me when'd you launch so we i started the company two years ago we started selling at the beginning of this year okay and i always like to ask this question so how much did you sink into your mvp right before your first dollar of revenue we're talking a hundred grand a million or more probably uh one to two million dollars part of this is that we raised uh three and a half million dollar seed round we just closed a 10 million dollar series a so 13.5 total right why'd you need the extra 10 so that 10 million dollars we just raised is now going to be used to accelerate our go to market and as well as our international plans so aquaculture is fairly international starting in norway expanding to other countries and then to build out the next couple products brighton do you have a good sense so to get a new hundred thousand dollar or you know or two hundred thousand dollar per year customer year one are you comfortable spending that whole first year acv to get the customer or what payback period are you optimizing for currently so because we don't take the ca the camera on our books from a financials perspective we're making money from day one because we're selling the software that said um the aquilter is very interesting it's not a traditional industry where you have to do the complicated ltv calculation a lot of the industry is very word of mouth and so we know a lot of these farmers personally and we're selling to them based on one-on-one relationships and and and so we can acquire a customer on the order of a month or two because we've been chatting with them over the past past year versus of being along so what is that like you're talking like maybe twenty thirty thousand dollars that covers flight costs maybe a meal here or there or past meetings and that's essentially what you cost to get a new customer well so so actually uh even though i'm based in san francisco most of our team is in bergen norway and so we have local sales people there that already have relationships with the farms so i i think it's even less than that well brian i mean just the reason i'm asking is i'm talking just be quiet i'm talking fully weighted cats you just mentioned sales people i mean there's a commission structure built in there otherwise they wouldn't be called a salesperson and they'd be at another company where they can earn more money right so i mean you have modeled some sort of cac even though you're not doing any direct paid like you know you're not finding fishermen on facebook ads right so so i mean are you generally talking like a four month payback on these things or 12 months or more uh if i had to just estimate off the top of my head it's probably a couple months okay but definitely less than a year you think right okay fair enough uh and most that it sounds like it's gonna go towards actually the salesperson compensation and maybe a flight here or there right mainly travel costs and uh yeah yeah having our sales team very cool okay so 2017 you start you know building this thing you put in one or two million to get to mvp and then now today 20 early 2019 you started kind of your first sales onboarding your first customers over the past six to seven months how many customers total have you scaled to so we just started selling we're still in the r d phase and transitioning to scaling so right now we have three customers okay and by the way why do you hedge that so much it's almost like oh my gosh i don't want to share we only have three but like you got to start somewhere and three is a great number to start why not well i think the the thing is there's a lot of demand for this product part of it is that we've been throttling the amount of customers we have actually in the next month or two we're going to go to eight customers and then by the end of the year we want to have almost 100 of these pens deployed yeah so what does that mean in terms of revenue what's your revenue target by the end of this year in terms of run rate i think we're looking between three to five okay and does that feel realistic or like a stretch goal i think that's realistic it depends on our ability to deliver on the technology yeah and it sounds like today if you got three customers and the minimum acv is called 100 grand i mean you're doing like 30 grand or something like that per month right now yeah so it's it's not all immediate like there's a trial period and then they convert but but yes that like when once they convert yeah so let me ask you a question when you model and maybe you don't model this but when you model lifetime value early on on a company like this do you do you have an idea of what you think a customer is worth to you over the life that's an interesting question uh certainly i mean i i i think uh i mean we have a model where we've modeled out revenue and churn and things like that um but uh yeah i mean it's something i i haven't extensively modeled um to give a reason a reasonable answer on that yeah and i mean the re the reason i'm asking is because i've seen so many of these hardware companies where they they actually model the software ltv and it actually is so worth it for them to even give away a 20 000 piece of hardware for free right just to grow distribution super fast uh because they know the lifetime values make sense now you have to bridge the cash gap on that you raise capital it sounds like to you know do that partly but i'm just curious if you ever think about that no i think that's a good point i mean i i i see your point and i think uh it could be a similar thing here i think it only works though if it's a land grab situation right it worked for bird and lime because that is truly a land grab situation get more scooters out give the hardware away essentially free uh but do you are you competing with anyone else is there a land grab for cameras and fish tanks the other thing is i mean we're in an industry like it's all it's like once you get the once you get a cable at your home you're not going to get a second cable provider and so it's a similar thing once you put a camera and a pen you're not getting a second camera in the pen so it is a land grab first in i mean first person to the tanks wins i i would say so um the the thing is uh i mean we're still a year or two ahead of any other competitor that's in the space who's closest would you think there are some camera companies that are out of the subsea oil and gas industry in norway and they they've been making these uh fairly expensive cameras uh so i'd say like they're second closest uh to us what's the name of one of them uh for example uh stingray or optiscale optiscale interesting okay very cool um it talks to me a little bit more you know when you do a big raise obviously you're raising to cover some amount of burn so you obviously just completed a raise in your mind when you were raising what are you projected like you want to cover and raise for burn for 18 months or 24 months or what 18 to 24 months okay interesting okay so you raise 10 million to cover 18 months that means what you're burning like 400 500 grand a month right now something like that right so we're we're projected to raise at the end of 2020 okay yeah which is about 18 months from now i guess my question is and then you want to add in uh like like some cushion at um like at the end so um but but your numbers are roughly correct okay so you're calling say burning somewhere around 400 grand a month right now though and you're 10 million more than covers 18 months of runway right and mozart is on engineers or what it's primarily head count yeah what's the team look like today how many folks so we have 30 people okay yeah 12 12 in san francisco 18 in norway very good all right let's wrap up here with the famous five number one what's your favorite business book high outfit management number two is there a ceo you're following or studying [Music] yeah that's a great question uh c ceo uh i have to come back to you on that i i don't have an answer that's okay number three what's your favorite online tool for building your company um you know i it's not an online tool but i use evernote religiously number four how many hours of sleep to get every night i get uh seven to eight hours and what's your situation married single kids uh single girlfriend okay and how old are you 27 last question what do you wish your 20 year old self knew yeah i wish i knew to come out to san francisco earlier to learn what it's like to start a company and and yeah just live and breathe the startup life so guys aquabyte.ai is serving three customers they serve again these fish farms but they have anywhere between four and six massive tanks they deploy twenty thousand dollar cameras in these tanks and then help these fisher uh these fish pens essentially manage things like sea lice and other critical elements of uh the kind of fish health right as they bring them to market again 2017 launch date they've raised 13.5 million today burning call it 400 000 per month team of 30 folks too early to talk about churn and things like that but they spent about 2 million bucks to get their mvp built launching their first paid plans early this year in 2019 now looking obviously to scale up from there brighton thank you for taking us to the top yeah thank you