How Coastr CEO Biswajit Kundu Roy grew Coastr to $1.7M revenue and 50 customers in 2024.

hey folks my guest today is biz condo roy he's building a company called coaster c-o-a-s-t-r dot com it helps digitize vehicle rental operations now he's a software engineer and management consulted by background he's also an avid traveler he's faced numerous issues while renting cars which force them to think about finding a disruptive solution for the industry to ensure fellow travelers can benefit from a truly digital car rental experience of the future busy ready to take us to the top absolutely it's ready to go all right i know there's there's nothing i like less than flying across the country landing in la waiting for the fox rent-a-car bus to pick me up at the airport stop then waiting in line at fox rent-a-car for an hour and then not having the car available that i booked because it wasn't actually confirmed and then i it sounds like you've experienced the same problem it is exactly the kind of starting point of where the coaster journey began because i'm quite a regular user of current for myself and you know i i just stopped to wonder what what a kind of you know totally different experience could look like and that's where sort of the idea behind coaster really uh emerged and what we are effectively doing is really you know taking a step back looking at what customers really want and providing the technology to their car rental operators to achieve that so almost making them future ready so who are you selling to are you selling to fox rent a car and hurts and these kinds of people so um yes a large part of our kind of proposition is to settle to or provide the innovation and the platform to car rental vehicle rental operators um although a lot of our focus tends to be in the more kind of sme sector so you know we are trying to almost equip the um local current businesses and the reason for that is um which is another of my kind of or our founding finding is that a lot of the local players don't have access to really state-of-the-art technology for them to build something that you know we can offer is really really difficult so we are sort of democratizing the access to such innovation for these and thereby creating an uplifting upliftment of the entire industry as a whole so that every bit of car rental services provided to you know every consumer or every corporate user achieves the same uh kind of digitization in future and so what about the idea of sort of car rental shops pay you per month to use the software well it would vary depending on what what they would take but there's quite a bit of um you know flexibility so for example they could just use the software um version without any of the kind of connected mobility uh or uh connected cars technology but very very basic users would pay anything between kind of you know three to four pounds per vehicle per month uh and that could uh that as the three or four pounds per one per vehicle per month per v what if a vehicle doesn't go rented it's just sitting on the lot i know so we it doesn't matter uh so it's more on the asset rather than on uh whether they're being booked or not uh so we don't charge any commission on the booking it's morally more about management of the asset because our platform is a operational platform right so how many cars did how many cars did on average do your customers have as an asset base uh it would vary again um a what we classify them as tier three and tier two so tier threes are anything between kind of 10 15 vehicles to up to uh let's say a thousand vehicles and then tier twos are the slightly larger volume players so anything with a thousand plus vehicles effectively is a tier two and then your hearts of the world are tier ones in our kind of um the way we classify the customer segmentation sorry tier one has more than ten thousand vehicles i would say they are more sort of multinational global uh they could have fleet anywhere from kind of 100 000 plus 100k plus okay interesting oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 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 founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to do a minority sale that's different and if you sell 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larger operator side it's about um on an average of the 3000 vehicles and the reason why i'm keeping them separate is the customer concentration is different so if if i find an average it's going to be a heavily uh weighted average which would not make any sense so we we have to treat it as two separate segmentation and different averages that's fine how many are on tier three right now paying customers on tier three um so we currently we are obviously focused on the uk market so we have about 50 plus customers and so these have been largely acquired in the last 12 months and on the tier two side we have about um three or four of them um who are just coming operational and then um by end of this year we are looking to bring some more which are on the early conversation or in the pipeline so we'd expect to get about kind of 10 or 12 of them um hopefully by the end of this year okay but those tier two folks paying you for 2000 vehicles at four bucks a pop i mean each of them are paying you something like 8 000 bucks a month something like that um i i um so the map doesn't work exactly um on volume players so the pricing for volume players would be there would be heavy discounts um well how heavy though you just said the average tier two is paying three to four bucks a car if i take four bucks times two thousand vehicles that's eight grand a month uh yeah so uh i was quoting you the price which you offer as a retail to tier three operators uh with volume players there would be a discounted offering of anything between uh 25 to 30 percent um so they would pay maybe a smaller amount um anywhere from kind of two pounds to three pounds per meter per month on the software only i see i see i see so converting to usd maybe like is three bucks per vehicle per month across two thousand vehicles which is the average you said that's like six grand a month in revenue instead of eight grand yeah okay but still i mean we can take six grand a month times three or four of those that you're on boarding right now i mean that puts you like 18 20 grand of revenue plus you've got 50 with 200 cars each right 200 cars at five bucks a pop what is that a thousand bucks a month so there's like 50 000 bucks a month in your tier 3 segment uh yeah well i mean um on an average if you put it at at 100 yes so around about that figure so we earn about kind of 750 to a thousand per uh smaller tier of customer and then there's the upsell piece so as they take more of their connected mobility solutions like telematics keyless nb um that figure jumps three times um as well in terms of the price i see but mrr today is about a hundred thousand bucks a month something like that um we are not there yet uh so um i think you know you're quoting on on the pipeline but by end of this year i think we will be at 100k um mrr and so what are you at today like 10k 20k a roughly about 20. okay got it so when you told me that you had 50 cust 50 customers on the tier 3 plan and 3 or 4 on the tier 2 those are not cut paying customers those are people that are in your pipeline and so out of the 50 that i mentioned all of them are paying customers but their fleet would vary so i've given you an average i think if you are looking for a more accurate figure you have to ask me an accurate figure um but um the whole idea here is um they they pay per use so as their inventory changes you know sometimes they start off with hundred they could go up to 200 they pay per use so um as as you said that you said they were paying per asset now you're saying they pay per use as the asset goes up and down they would pay based on the increase in decrease of the volume of the asset so it's not a fixed amount what i'm saying is if they have 20 cars today in month one and 30 cars in month two they would not pay for um you know 30 cars on on month one they would pay only for 20 cars on month one and as they increased they would pay for 30 cars in one too if they then go down into back to 20 cars then they would pay for 20 cars so it's sort of follows the asset volume of them do people go down a lot why if someone goes from 30 cars down to 20 are they selling off 10 cars in a month i think you probably haven't heard about the major crisis in this industry with supply um so a large part of the asset going down as a result of lack of supply from vehicle manufacturers so effectively what has happened is a lot of rental companies small and big both they have to have to deflate but they don't have the same volume of in incoming vehicles effectively there why do they have to deflate uh if you don't deflate at the right time then effectively you are losing out money so the revenue is on on um the way the rental model work and i'm sort of going back and going to the basics here so rental income or rental companies on income from two ways one is buying and selling of the vehicle at the right time so they buy in bulk at a reduced cost and then sell their assets at the right time to optimize the value of that asset so defleting is essential um and in the meantime then they are sort of earning through the depreciation of the vehicle by putting it out on rental so they would have to sell the fleet at certain point um some of them do it within six months i think enterprise and some of the larger operators uh the smaller operators sometimes take it up to 18 months but most of them you will always see them selling between six to 18 months effectively i see i see so put all this on a timeline for me biz when did you launch the business what year uh we started well i officially registered the business in 2018 and we sort of started training um 2020 august that's when our beta platform or the solve beta version of the platform went out live with three or four customers uh they're paying some minimalistic revenue earning some minimalistic revenue but from january 2020 we really sort of increased our user base so that's where we just kind of jumped to about 40 uh 50 customers and the tier three space by end of 2021 and we also onboarded a few of these larger operators which are just becoming operational as well so if you're at 50 customers today doing about 10 000 a month in total revenue where were you exactly a year ago do you remember um we were about um one two i'm quoting in pounds so we're earning about maybe um thousand two thousand pounds revenue how many years how many customers back then um it was just kind of four four or five customers beginning of the year and how did you fund the business for those two years when you were building without any revenue and we bootstrapped quite a lot um so you know first a couple of years um up until uh i think august 2019 we were just bootstrapping with a few of us um we got we applied for a few grants as well i got a lot of support from from various kind of universities in terms of uh developers and resources we raised our kind of pre-see seed round uh back in august 2019 which was a small capital from the family and from friends which then kind of gave us the capital to hire some engineers how much did you raise in the precede um again in pounds it's about 200 000 i think dollars it would be about 350 or so got it so 300 000 pre-seed and most folks in their seat are selling about 20 percent of the business is that about what you sold no um we gave about eight percent how did you make how did you make that happen that sounds like a great deal for you uh i mean it's part of how much we had bootstrapped our knowledge further we had been so um you know we did we followed some first principles in in the whole journey which is you know get get a customer so we had almost like three or four customers where uh we were working to sort of you know pro uh test the prototype and um they had sort of signed a letter of intent so if you build it they would buy it effectively that kind of model so when we showed all of the attraction it helped to negotiate a better kind of valuation with the people coming in early we didn't raise a lot either i mean you know given the the kind of um capital we need that's a very small amount or how much we've raised since then it's it's it was a small amount so we we raised only what we needed and then that we utilized to gain further ahead in terms of traction launch a early version of the product again you know uh evidence that kind of product market fit early with more customers desiring their product and incidentally at that point in time um we had the pandemic and the kind of lockdowns as well starting so um what we did was we started offering the platform for free trials uh sort of three months four months free trials um and there were a lot of operators at that point in time under huge cost pressure but also you know they were pretty much not doing anything because of lockdown so they had time and and and time on their hands to look at new software new understood and so to fill out the rest of the funding story just because we're running short on time here so 300 000 bucks raised back then at a 3.7 valuation you sold 8 percent in 2019. have you raised additional capital since then yeah we have had two more rounds since then um one was a 1.4 million pounds which is roughly about 2 million dollars i think or just a little bit shorter so this was completed in june 2021 um which is again mostly private individuals and we gave up another 25 percent um um as as part of that and then i'm just completing around now which is going to be another 1.2 million uh which should hopefully i mean yeah i'm hoping this will be confidential for a bit um so i'm not going to disclose um the investors but we do have 30 days we're recording on february 9th this will go live somewhere in the middle of next month so okay so we're still kind of completing a transaction with a uh vc investor so um but if that completes then we'll be having why do you need the money though i mean if you raised 2 million on an 8 million post money evaluation last year you sold 25 to the business where'd that 2 million go why do you need more money now um well it's a tech business first of all where uh we are sort of um you know we're not running against time but we're also fulfilling a gap in the market by bringing together various pieces of functionality in one which means we are building very fast but we are building a lot how many people are on the team full-time um we are based between india and you and uk so in india we have about 50 of the team around 15 16 people and uh uk has about similar 15 people as well and so 30 people total how many engineers um well i will call it product team so product team is about um 70 the remaining 30 is marketing sales administration or could be about 75 percent okay so about 21 of them are engineers and then seven or eight are sort of marketing sales and other things yes got it okay cool great this makes sense so so um growing raising now um so residential capital the 1.2 million raised now whatever you raise what revenue do you hope you can grow to with that capital um so that's where we are able to get to our uh you know 100k per mrr and so effectively this is being fun utilized to fund all our sales and operational growth so we have to invest a lot in obviously building up the team in the sales but also customer success which is a key part of yeah we have got you know great number of users but we have to you know increase our adoption increase and our support around them so all that infrastructure and spend plus all the new development so that's what it's funding so by end of this year we hope to utilize this fund to get to our 100 kmrr which sort of gets us to break even revenue we're rooting for you biz but we're out of time for now and let's wrap up with the famous five number one favorite business book um the lean startup number two is there a ceo you're following or studying um i usually follow jeff bezos because of his innovation um spirit number three what's your favorite online tool for building coaster um it changes but right now it's something called a product board number four how many hours of sleep to get every night i sleep plenty um about seven hours and what's your situation married single kids uh married any kids uh none yet but we have a dog okay fair enough and how old are you i'm about 36 36 last question something you wish you knew when you were 20. sorry something you wish you knew when you were 20. um uh well i i think when i was 20 i would wish that um i knew that you know growing old would be so exciting guys there you have it coaster.com launch in 2018 they help smaller car rental companies digitize to make the friction uh less relevant when they're trying to onboard new customers get vehicles out the door doing about three thousand bucks in revenue a year ago now 10 000 bucks a month in revenue today 50 customers team of about 30 people did a 2 million dollar seed round at an 8 post money valuation sold 25 last year sold 8 before that now raising an additional amount of capital we'll see where that flushes out but biz we're rooting for you thanks for taking us to the top you very much nathan appreciate it one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and 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 1 p.m central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m 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 i wouldn't want you to miss breaking news in the sas world whether it's an 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