How Buzz Solutions Reached $600K Revenue with 3 Utility Customers in 2022 (Interview with Co-Founder and CTO Vik Chaudhry)

Introduction and Background

Nathan Latka

00:00Hey, 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?

Vik Chaudhry

00:12>> Yes, sir. And thank you, Nathan, for having me. I'm excited to be here.

How Vik Got Into the Power Line Industry

Nathan Latka

00:15Vic, how did you get into the power line industry? Is this a family thing or are you just a passion project or what?

Vik Chaudhry

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.

Nathan Latka

01:04Oh, fascinating. Okay, so who's your customer today? Who's paying you?

Who Are Buzz Solutions' Customers

Vik Chaudhry

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.

Nathan Latka

01:35There'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?

Vik Chaudhry

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.

Pricing and Contract Sizes

Nathan Latka

02:18And 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?

Vik Chaudhry

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.

Nathan Latka

02:50Got it. So 1,500,000 over how many years?

Vik Chaudhry

02:52>> That's five years.

02:54>> Five years.

Nathan Latka

02:55Wow. And how many line how many miles of lines will they manage with you about?

Vik Chaudhry

02:58>> So that's around 2,500 miles of transmission high voltage lines.

Nathan Latka

03:04Wow. Interesting. Okay. So you have a nice usage based upsell here, which is mileage of lines managed.

Vik Chaudhry

03:10>> That's correct. Yes.

Nathan Latka

03:11Very interesting. Okay. And again, ranges cheapest customers 200 k a year. Biggest one is 1.5 over five years.

Vik Chaudhry

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.

Nathan Latka

03:36For someone paying you your lower range, 200,000 a year, about how many miles of power lines are they probably managing?

Usage-Based Model and Miles of Lines

Vik Chaudhry

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.

Nathan Latka

04:10Oh, 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

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Customer Retention and Inspection Frequency

Nathan Latka

06:33interview. 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?

Vik Chaudhry

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.

Nathan Latka

07:20And so how many customers, individual power companies, you working with today?

Vik Chaudhry

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.

Nathan Latka

07:31Mhmm. 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?

Vik Chaudhry

07:39>> Somewhere around that. Yeah.

Current Customer Count and MRR

Nathan Latka

07:40Okay. And if you're doing that today, where were you exactly a year ago? Do you remember?

Vik Chaudhry

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.

Nathan Latka

08:03I mean, can you break a million dollar run rate this year you think?

Vik Chaudhry

08:06>> We are aiming for that, yes.

Nathan Latka

08:08Yeah, very interesting.

Vik Chaudhry

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.

Revenue History and Growth Trajectory

Vik Chaudhry

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.

Nathan Latka

08:34And when did you launch the business? First line of code was written in what year?

Vik Chaudhry

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

Company Launch and Early Product Development

Vik Chaudhry

09:08>> we started seeing a lot of POCs.

Nathan Latka

09:10So 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?

Early Funding: Grant and Bootstrapping

Vik Chaudhry

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.

Nathan Latka

09:36How much was that grant?

Vik Chaudhry

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.

Nathan Latka

09:50So I think you raised 1,200,000 then, correct?

Vik Chaudhry

09:52>> That's correct, yes.

Nathan Latka

09:53And 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?

Vik Chaudhry

09:58>> Yeah, that's correct.

Nathan Latka

09:59Okay, fair enough. And then have you raised any other capital since then or are you bootstrapping?

Seed Extension and Path to Series A

Vik Chaudhry

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.

Nathan Latka

10:15Okay. 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?

Vik Chaudhry

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.

Nathan Latka

10:26And why do an extension versus a traditional series A? I mean, maybe was revenue a little low to go do a traditional series A?

Vik Chaudhry

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

Team Size and Hiring

Vik Chaudhry

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.

Nathan Latka

11:06Interesting. Okay. What's the team size today? How many people?

Vik Chaudhry

11:09>> So, we are currently 12 people, but we are actively hiring for multiple engineering and project management roles.

Nathan Latka

11:15How many engineers today full time?

Vik Chaudhry

11:17>> We have

11:21>> eight to nine engineers and three nontechnical roles.

Nathan Latka

11:24That'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?

Vik Chaudhry

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

How the Technology Platform Works

Vik Chaudhry

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.

Nathan Latka

12:26Is 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?

Vik Chaudhry

12:35>> Yeah. So usually, utilities don't really compete. They are mostly geographical based and

Nathan Latka

12:42Okay. 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?

Vik Chaudhry

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

Famous Five Rapid Fire Questions

Vik Chaudhry

13:25>> and do risk mitigation with that problem with our services.

Nathan Latka

13:28Vic, very cool. Love the vision. Let's wrap up here with the famous five. Number one, favorite business book?

Vik Chaudhry

13:34>> Zero to One.

Nathan Latka

13:36Two, is there a CEO you're following or studying?

Vik Chaudhry

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.

Nathan Latka

13:48Number three is, what's your favorite online tool for building a business?

Vik Chaudhry

13:52>> Let's see. Online tool. Google Sheets.

13:56>> Nothing wrong with that.

Nathan Latka

13:57Number four, how many hours of sleep do you get every night?

Wrap-Up and Key Takeaways

Vik Chaudhry

14:01>> I would say five to six hours. I'll try to optimize. And,

Nathan Latka

14:05Vic, what's your situation? Married, single, kids?

Vik Chaudhry

14:08>> Single.

Nathan Latka

14:08Okay. And how old are you?

Vik Chaudhry

14:10>> I'm 29.

14:11>> 29.

Nathan Latka

14:12Last question. Something you wish you knew when you were 20.

Vik Chaudhry

14:16>> Patience. Being patient and being persistent. That's the key.

Nathan Latka

14:21Guys, 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

14:41date, 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.

Vik Chaudhry

14:53>> Thank you, Nathan.

Nathan Latka

14:56One 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.

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