Buzz Solutions Revenue, Valuation & Funding (2024)

[00:00] Hey, folks. My guest today is Vic Chaudhry. He's the co founder, chief technology officer, and COO at Buzz Solutions, which is helping it's an AI based software platform for power line inspections. Vic, you ready to take us to the top? [00:12] >> Yes, sir. And thank you, Nathan, for having me. I'm excited to be here. [00:15] Vic, how did you get into the power line industry? Is this a family thing or are you just a passion project or what? [00:20] >> No. So actually, I'm originally from India, New Delhi, India. Power has been when when I was growing up, power was was a big, big problem. We had constant power outages on a regular basis, so what I did in my college days was I got involved with a lot of environmental engineering projects and that's what I pursued for undergrad as well, and then I came to The US in 2015 for my grad school at Stanford University, and [00:47] >> that's where I got involved in much more power projects. Was working on a project where we were using drones to inspect wind turbines, and that was sponsored by PG and E, and that kind of segued into the power utilities and helping them prevent wildfires and blackouts and those kind of disasters. [01:04] Oh, fascinating. Okay, so who's your customer today? Who's paying you? [01:07] >> Yeah, so our customers are power utilities and power companies, so major utilities in The US and Canada, and also recently we started working with a few utilities in Australia. So we are growing our customer base, and this is a big need in terms of grid infrastructure, improvement and transformation and modernization. A lot of the electrical components on that grid is, as you can see, 75 years old, which is off their shelf life, so very much needed [01:34] >> right now. [01:35] There's a lot of worry right now about hackers and these sorts of things. Are you doing any anti terrorism related stuff, or can you help Ukraine make sure Russia's not taking down telephone wires? Mean, can you do stuff like this yet? [01:46] >> Yeah, not yet, but we do provide a lot of security on the data that is collected around grid infrastructure, so we provide cyber security for that and that is critical. Everything that is digital, we are a software digital AI company, we provide cyber security on top of that. So hopefully in the future we can provide some risk assessment or risk mitigation around cyber attacks and even anti terrorism initiatives, but for now we are just focused on [02:17] >> modernizing the grid. [02:18] And I'm sure you have a huge range, but what's the average power company pay you today per month or per year to use your technology? [02:25] >> Yeah, so it varies according to the project the power company is using or how big the power company is and how much mileage of power lines they have. But we have seen a range. We have seen somewhere in the range from $200,000 ARR, which is annual recurring revenue, to even $1,500,000. So, we recently won a contract of $1,500,000 with a major utility in The US and it's a multi year contract. [02:50] Got it. So 1,500,000 over how many years? [02:52] >> That's five years. [02:54] >> Five years. [02:55] Wow. And how many line how many miles of lines will they manage with you about? [02:58] >> So that's around 2,500 miles of transmission high voltage lines. [03:04] Wow. Interesting. Okay. So you have a nice usage based upsell here, which is mileage of lines managed. [03:10] >> That's correct. Yes. [03:11] Very interesting. Okay. And again, ranges cheapest customers 200 k a year. Biggest one is 1.5 over five years. [03:17] >> It can go even higher than that for a lot of big companies, especially PG and E, which is one of the biggest utility in The US. We're trying to work with them as well. They're California based. They have around 19,000 miles of power lines, so it can even go above that. [03:36] For someone paying you your lower range, 200,000 a year, about how many miles of power lines are they probably managing? [03:44] >> So on a regular basis, they would, you know, somewhere around, you know, less than thousand miles of lines, but they do have, you know, other sites on there like substations and critical towers that they want to manage as well, it varies. We have done projects ranging from, you know, 200 miles of line inspections to even, as I was saying, 2,500 miles, and it can go even above that. [04:10] Oh, what's going on there, YouTube? Good to see you guys. Now imagine this, you love watching these interviews with SaaS founders. But imagine if we took all of the valuation data out from over 2,807 interviews I've done manually, saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect [04:33] your Stripe account, you see your valuation real time, you can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna [04:58] get a different valuation. A VC is gonna pay a different valuation, private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is [05:19] not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction, 1,200,000 seed round, 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired, the valuation and the multiple. Maybe you're [05:45] going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at, and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. Alright. We're gonna go back to the YouTube video here in a second, but if [06:07] you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into the [06:33] interview. But is this like a one time you inspect it once and they churn or are they paying $200,000 a year for many, many years? [06:41] >> Yeah, so it is a constant process. Power utilities are kind of mandated to inspect their lines on a frequent basis, so they on a monthly basis, they would go out and inspect a certain subsection of the line and that's what they complete in a year and then they have to repeat that again because of a lot of factors, environmental factors, all these electrical components are out in like heat, snow, storms, high winds, so they get damaged [07:06] >> pretty quickly, and as climate change is becoming much more a big factor over here and weather conditions are becoming much more extreme, components are having much more pressure on them. There's constant need for inspection as well. [07:20] And so how many customers, individual power companies, you working with today? [07:24] >> So we're working with three major ones in US and Canada, and we just are starting to work with a few in Australia as well. [07:31] Mhmm. Now can I take three times an average of $200,000 in ACV? You're doing what? Something like $50,000 a month right now in MRR? [07:39] >> Somewhere around that. Yeah. [07:40] Okay. And if you're doing that today, where were you exactly a year ago? Do you remember? [07:45] >> Yeah. So, last year so those revenue numbers are, you know, again, a little bit confidential. We did started generating revenue last year, and those were from our initial customers. And this year, I mean, we have seen we're projecting a big ramp up in our revenue. [08:03] I mean, can you break a million dollar run rate this year you think? [08:06] >> We are aiming for that, yes. [08:08] Yeah, very interesting. [08:09] >> Okay, got it. But just to be clear, so no revenue before last year. Last year was your first dollar and this year you're somewhere, sorry, 40,000, $50,000, $60,000 a month right now. [08:19] >> Yeah, somewhere around that range. So 2020 was when we were doing a lot of proof of concepts with utilities, a lot free POCs, then last year we started doing paid pilots and some initial full projects, and then this year we are scaling up to more utilities. [08:34] And when did you launch the business? First line of code was written in what year? [08:38] >> Yeah, so we launched in 2017, but the first two years we were working on building proprietary data sets for the machine learning and computer vision algorithms we had, so we're collecting a lot of data from partnering with various utilities across geographies and then various electrical organizations like EPRI, so we were partnering with them and working on building the product, and then we launched our first commercial version of the product in late twenty nineteen and that's when [09:08] >> we started seeing a lot of POCs. [09:10] So 2017 to 2020, there's three years where you're basically having to either raise capital or live off your life savings because you're not making money from the company yet. So how did you fund the business and the MVP? Did you raise or was it life savings? [09:21] >> Yeah. So initially, we did win a grant, [09:25] >> it was the TomKat grant. It's called the TomKat Innovation Transfer Grant from Stanford University. So we launched out of Stanford and they kind of scope out companies or startups that are in the company. [09:36] How much was that grant? [09:37] >> That was $50,000. We got grant money for that and then we bootstrapped all the way. And then in mid, I would say mid twenty twenty, June 2020 is when we raised our first seed round of funding. [09:50] So I think you raised 1,200,000 then, correct? [09:52] >> That's correct, yes. [09:53] And most folks when they're raising a seed, it's like a 5 to 10,000,000 cap. Were you sort of in that range? [09:58] >> Yeah, that's correct. [09:59] Okay, fair enough. And then have you raised any other capital since then or are you bootstrapping? [10:03] >> Yeah, so recently we closed another round of funding of 1,200,000, which is again our seed extension and we are moving towards our series A aiming for that going forward. [10:15] Okay. So seed extension, do you raise it up to basically the same valuation or is it more like a 10,000,000 valuation this time? [10:20] >> Yeah. It's an increased valuation, which is we are keeping it in wraps, but yes, it's an increased valuation than before. [10:26] And why do an extension versus a traditional series A? I mean, maybe was revenue a little low to go do a traditional series A? [10:32] >> It was mostly because a lot of the projects that we were running with customers, they were aligning at the same time, and we did need some resources on our side support in terms of engineering and customer support, and we wanted to provide that to our customers. So, we were running a lot of projects in tandem, which were three major utilities in tandem, and we needed some fuel at that point, so we got an extension basically because [10:56] >> of that project based approach. We could have gone for Series A, but those projects were moving at the same time and procurement was happening at the same time, and we just wanted to deliver. [11:06] Interesting. Okay. What's the team size today? How many people? [11:09] >> So, we are currently 12 people, but we are actively hiring for multiple engineering and project management roles. [11:15] How many engineers today full time? [11:17] >> We have [11:21] >> eight to nine engineers and three nontechnical roles. [11:24] That's great. Now before we wrap up, I am I mean, the technology here, right? Are you actually imagine you're using someone else's drone, and then you're embedding your own software in that drone that ties back to, like, a computer UI or something. Is that how it works? [11:36] >> That's right. So we provide a digital kind of software platform that is powered by our proprietary computer vision models to do anomaly detection and asset detection, so a lot of machine vision stuff and also data management and analysis and visualization. We do use data that is captured by utilities, so utilities are already they have drone teams, they have helicopter teams that are going out in the field capturing hundreds of thousands of images and even millions of [12:03] >> images now with much more frequent inspection on an annual basis, So they are flying the vehicles and consider drone like a mobile sensor, so they're flying the drones along the lines, capturing all that data. They are even contracting out drone service providers that are independent drone service providers that are providing those services. So we collect everything that happens in the field comes back, we process it, we make insights out of it, and send it back to [12:25] >> the utilities. [12:26] Is there anything preventing one utility company from buying this and then using it to scan their competitors'lines to look at what their public earnings might look like next quarter? [12:35] >> Yeah. So usually, utilities don't really compete. They are mostly geographical based and [12:42] Okay. Then let's use a hedge fund as an example. Right? If if a if a if a hurricane really knocks out lines for one company, maybe their stock's gonna go down next quarter. A hedge fund wants to know that. Can the hedge fund buy your service to monitor those lines? [12:53] >> So currently, are just selling it to utilities to monitor the power lines. Again, we sell our services as a subscription unit, a standard enterprise SaaS based platform, So, there was a need to kind of we've talked to insurance companies as well, especially in the wildfire domain, and we want to help everyone, especially utilities. We don't want anyone to compete. It's a problem that we all are facing as a society, and we want to kind of mitigate that [13:25] >> and do risk mitigation with that problem with our services. [13:28] Vic, very cool. Love the vision. Let's wrap up here with the famous five. Number one, favorite business book? [13:34] >> Zero to One. [13:36] Two, is there a CEO you're following or studying? [13:40] >> Let's see. I mean, the classic is Elon Musk, again, technology visionary, but recently, Twitter's new CEO, Parag Agrawal. As well. [13:48] Number three is, what's your favorite online tool for building a business? [13:52] >> Let's see. Online tool. Google Sheets. [13:56] >> Nothing wrong with that. [13:57] Number four, how many hours of sleep do you get every night? [14:01] >> I would say five to six hours. I'll try to optimize. And, [14:05] Vic, what's your situation? Married, single, kids? [14:08] >> Single. [14:08] Okay. And how old are you? [14:10] >> I'm 29. [14:11] >> 29. [14:12] Last question. Something you wish you knew when you were 20. [14:16] >> Patience. Being patient and being persistent. That's the key. [14:21] Guys, Buzz Solutions launched from a grant back in 2017 at Stanford. Vic said, know what? I grew up in India. Power outages were always an issue. I need to create software that allows power companies to manage their lines and the breakages and issues and damage much faster. And that's what he's doing now, working with three customers, doing between, call it, 40 and $60,000 a month in MRR, trying to break a million this year. They've raised 2,400,000 to [14:41] date, most recently a 1,200,000 seed extension this year. A team of 12 people actively hiring engineers as they look to scale this product again, which helps power companies manage and monitor those lines. Vic, thanks for taking us to the top. [14:53] >> Thank you, Nathan. [14:56] One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live, the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM Central. [15:21] Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. 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