How Coastr Reached £240K ARR and 50 Customers in 2022 (Interview with Founder Biswajit Kundu Roy)

Introduction and the Car Rental Problem

Nathan Latka

00:00Hey folks, my guest today is Biswajit Kundu Roy. He's building a company called coastr, coastr.com. It helps digitize vehicle rental operations. Now he's a software engineer and management consultant by background. He's also an avid traveler. He's faced numerous issues while renting cars, which forced him 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. Biz, you ready to take us to the

00:24top?

Biswajit Kundu Roy

00:27>> Absolutely. Ready to go.

Nathan Latka

00:28Alright. I know there's there's nothing I like less than flying across the country, landing in LA, waiting for the Fox Rent 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 yeah. It sounds like you've experienced the same problem.

How Coastr Got Started

Biswajit Kundu Roy

00:47>> It is exactly the kind of the starting point of where the coastr journey began. I'm quite a regular user of car rental myself. I just stopped to wonder what a kind of totally different experience could look like. And that's where sort of the idea behind coastr really emerged. And what we are effectively doing is taking a step back, looking at what customers really want and providing the technology to their car rental operators to achieve that, so

01:17>> almost making them future ready.

Target Market: SME Vehicle Rental Operators

Nathan Latka

01:20So who are you selling to? Are you selling to Fox Rent A Car and Hertz and these kinds of people?

Biswajit Kundu Roy

01:26>> So, yes, a large part of our kind of proposition is to sell to or provide the innovation and the platform to car rental, vehicle rental operators. Although a lot of our focus tends to be in the more kind of SME sector. So we are trying to almost equip the local car rental businesses. The reason for that is just another of my kind of finding is that a lot of the local players don't have access to really

01:58>> state of the art technology. For them to build something that we can offer is really, really difficult. So we are sort of democratizing the access to such innovation for these and thereby creating an upliftment of the entire industry as a whole so that every bit of car rental services provided to every consumer or every corporate user achieves the same kind of digitization in future. So what So that's kind of the idea

Nathan Latka

02:25of of car rental shops pay you per month to use the software?

Pricing Model: Per Vehicle Per Month

Biswajit Kundu Roy

02:30>> Well, it would vary depending on what they would take, but there's quite a bit of flexibility. So for example, they could just use the software version without any of the kind of connected mobility or connected cars technology. But very, very basic users would pay anything between kind of, you know, 3 to £4 per vehicle per month. That could the 3 to

Nathan Latka

02:56£4 per what?

Biswajit Kundu Roy

02:58>> Per vehicle per month.

Nathan Latka

02:59Per vehicle. What if a vehicle doesn't go rented? It's just sitting on the lot.

Biswajit Kundu Roy

03:04>> No. So, it doesn't matter. So, it's more on the asset rather than on whether they're being booked or not. So we don't charge any commission on the booking. It's more about management of the asset because our platform is an operational platform, right?

Customer Tiers and Fleet Sizes

Nathan Latka

03:20How cars on average do your customers have as an asset base?

Biswajit Kundu Roy

03:26>> It would vary again. We classify them as tier three and tier two. So tier threes are anything between kind of ten, fifteen vehicles to up to, 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 herds of the world are tier ones in our kind of, the way we classify the customer segmentation.

Nathan Latka

03:54Sorry. Tier one is more than 10,000 vehicles?

Biswajit Kundu Roy

03:57>> I would say they are more sort of multinational, global. They could have fleet anywhere from kind of 100,000 plus.

Nathan Latka

04:04100 k plus. Okay. Interesting. 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

04:28you log in, you connect 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

04:53your SaaS company, you're gonna 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

05:15about this is this is not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders 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

05:40and the multiple. Maybe you're 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

06:03in a second, but if 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.

06:29Let's jump back into the interview. So today though, I mean, it's hard to focus on all three of these customer segments at once, right? So on I'm gonna force you to do an average here so we can just move along. What was the average customer sort of pay you pro on?

Biswajit Kundu Roy

06:40>> Is it a thousand vehicles?

Nathan Latka

06:41So $5, you know, $50 a month?

Biswajit Kundu Roy

06:45>> Yeah. So, think our average consumer base on the tier threes would be about 150 to 200 vehicles. And then on the larger operator side, it's about on an average, it's 3,000 vehicles. The reason why I'm keeping them separate is the customer concentration is different. So if I find an average, it's going to be a heavily weighted average, which would not make any sense. So we have to treat it as two separate segmentation and different averages.

Customer Base: 50 Paying Tier Three Operators

Nathan Latka

07:16That's fine. How many are on tier three right now, paying customers on tier three?

Biswajit Kundu Roy

07:23>> So, currently, we are obviously focused on The UK market. So we have about 50 plus customers. So these have been largely acquired in the last twelve months. And on the tier two side, we have about three or four of them who are just coming operational. And then 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

07:51>> or 12 of them hopefully by the end of this year.

Nathan Latka

07:54Okay. But those tier two folks paying you for 2,000 vehicles at $4 a pop, I mean, each of them are paying you something like $8,000 a month, something like that.

Biswajit Kundu Roy

08:03>> I I so the math doesn't work exactly on volume players. So the pricing for volume players would be there would be heavy discounts.

Nathan Latka

08:13The How heavy though?

Biswajit Kundu Roy

08:14>> You just said the average tier two is paying 3 to $4 a car. If I take $4 times 2,000 vehicles, that's $8,000 a month.

08:22>> Yeah. So I was quoting you the price which you offer as a retail to tier three operators. With volume players, there would be a discounted offering of anything between 25 to 30%. So they would pay maybe a smaller amount anywhere from kind of £2 to £3 per vehicle per month on the software only.

Nathan Latka

08:43I see. I see. I see. So converting to USD is maybe like it's $3 per vehicle per month across 2,000 vehicles, which is the average you said, that's like $6,000 a month in revenue instead of $8,000. Yeah. Yeah. Okay. But still, I mean, we can take $6,000 a month times three or four of those that you're onboarding right now. I mean, that puts you at like $18 to $20 grand of revenue, plus you've got 50 with 200 cars

09:02each, right? 200 cars at five bucks a pop, what is that? A thousand bucks a month? So it's like $50,000 a month in your tier three segment?

Biswajit Kundu Roy

09:10>> Yeah. Well, I mean, on average, if you put it at 100, yes, so around about that figure. So we earn about kind of 750 to 1,000 per smaller tier of customer. And then there's the upsell piece. So as they take more of the connected mobility solutions like telematics, keyless NB, that figure jumps three times as well in terms of the prices.

Nathan Latka

09:34I see. But MRR today is about a 100,000 a month, something like that.

Biswajit Kundu Roy

09:39>> We are not there yet. So, I think, know, you're quoting in on on the pipeline, but by end of this year, I think we will be at 100 k MRR.

MRR and Revenue Today

Nathan Latka

09:49And so what are you at today? Like, 10, 20?

Biswajit Kundu Roy

09:52>> Roughly about the 20.

Nathan Latka

09:54Okay. Got it. So when you told me that you had 50 customers on the tier three plan and three or four on the tier two, those are not paying customers. Those are people that are in your pipeline.

Biswajit Kundu Roy

10:05>> 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. But the whole idea here is pay per use. So as their inventory changes, sometimes they start off with 100, they could go up to 200, they pay per use.

Asset-Based Billing and Fleet Fluctuations

Nathan Latka

10:32The- Hold on, you said that they were paying per asset. Now you're saying they pay per use?

Biswajit Kundu Roy

10:39>> As the asset goes up and down, they would pay based on,

10:45>> the increase and 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 thirty cars in month two, they would not pay for 30 cars on month one. They would pay only for 20 cars on month one. And as they increase, they would pay for 30 cars in month two. They then go down into back to 20 cars, then they would

11:12>> pay for 20 cars. So it's sort of follows the asset volume of them.

The Vehicle Supply Crisis and Defleeting

Nathan Latka

11:17Do people go down a lot? Why if someone goes from 30 cars down to 20, are they selling off 10 cars in a month?

Biswajit Kundu Roy

11:22>> I

11:24>> think you probably haven't heard about the major crisis in this industry with supply. So, a large part of the asset going down is 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 deflate, but they don't have the same volume of incoming vehicles effectively there.

Nathan Latka

11:50Why do they have to deflate?

Biswajit Kundu Roy

11:53>> If you don't deflate at the right time, then effectively you are losing out money. So, the revenues on 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 earn 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 optimise

12:19>> the value of that asset. So defleeting is essential. 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 a certain point. Some of them do it within six months. I think enterprise and some of the larger operators, the smaller operators sometimes take it up to eighteen months. But most of them, you will always see them selling

12:47>> between six to eighteen months effectively.

Company Timeline and Early Trading

Nathan Latka

12:49I see. I see. So put all this on a timeline for me, Biz. When did you launch the business? What year?

Biswajit Kundu Roy

12:55>> We started well, I officially registered the business in 2018 and we sort of started trading twenty twenty August. That's when our beta platform or the beta version of the platform went out live with three or four customers. They're paying some minimalistic revenue or running some minimalistic revenue. But from January 2020, we really sort of increased our user base. So that's where we kind of jumped to about forty, fifty customers in the tier three space by end

13:30>> of twenty twenty one. And we also onboarded a few of these larger operators, are just becoming operational as well.

Nathan Latka

13:38So 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?

Biswajit Kundu Roy

13:46>> We were about one to I'm quoting in pounds, so we're earning about maybe thousand, pounds 2,000 revenue.

Nathan Latka

13:54Okay. How many?

Biswajit Kundu Roy

13:55>> Around two and a half.

Nathan Latka

13:57How many customers back then?

Biswajit Kundu Roy

14:00>> It was just kind of four, four or five customers beginning of the year.

Nathan Latka

14:06And how did you fund the business for those two years when you were building without any revenue?

Bootstrapping and Pre-Seed Funding

Biswajit Kundu Roy

14:14>> Bootstrapped quite a lot. So, first couple of years up until, I think, August 2019. We were just bootstrapping with a few of us.

14:26>> We applied for a few grants as well. We got a lot of support from various kind of universities in terms of developers and resources. We raised our kind of pre seed round back in August 2019, which was a small capital from sort of family and friends, which then kind of gave us the capital to hire some engineers going-

Nathan Latka

14:48How much did you raise in the pre seed?

Biswajit Kundu Roy

14:51>> Again, in pounds, it's about £200,000. I think in dollars, it would be about $350,000 or so.

Nathan Latka

14:59Got it. So $300,000 pre seed and most folks in their seed are selling about 20% of the business. Is that about what you sold?

Biswajit Kundu Roy

15:07>> No. We we gave about 8%.

Nathan Latka

15:11How did you make how did you make that happen? That's sounds like a great deal for you.

Biswajit Kundu Roy

15:17>> I mean, it's part of how much we have bootstrapped and how much further we had been. So, you know, we did We followed some first principles in the whole journey, which is, you know, get a customer. So, we had almost like three or four customers where we were working to sort of test the prototype and they had sort of signed letter of intent. So, if we build it, they would buy it effectively, that kind of model.

15:45>> So when we showed all of that traction, it helped to negotiate a better kind of valuation with the people coming in early. We didn't raise a lot either. I mean, given the kind of capital we need, that's a very small amount or how much we have raised since then. Was a small amount. So we raised only what we needed and then that we utilized to gain further ahead in terms of traction, launch an early version of

16:12>> the product. Again, you know, evidence that kind of product market fit early with more customers desiring the product. Incidentally, at that point in time, we had the pandemic and the kind of lockdowns as well starting. So what we did was we started offering the platform for free trials, sort of three months, four months free trials. And there were a lot of operators at that point in time under huge cost pressure, but also they were pretty much

16:40>> not doing anything because of lockdown. So they had time time on their hands to look at new software, new products.

Nathan Latka

16:46Understood. And so, tell us the rest of the funding story just because we're running short on time here. So $300,000 raised back then at a 3.7 valuation, you sold 8% in 2019. Have you raised additional capital since then?

The £1.4M Round and Equity Sold

Biswajit Kundu Roy

17:00>> Yeah. We have had two more rounds since then. One was a £1,400,000, which is roughly about $2,000,000 I think, or just a little bit shorter. So this was completed in June 2021, which is again, mostly private individuals. And we gave up another 25%

The Round Still in Progress

Biswajit Kundu Roy

17:22>> as part of that. And then I'm just completing around now, which is going to be another 1,200,000, which should hopefully- I mean, I'm hoping this will be confidential for a bit. So, I'm not going to disclose the investors, but we do have

Nathan Latka

17:38thirty days or according on February 9, this will go live somewhere in the middle of next month, so.

Biswajit Kundu Roy

17:44>> Okay. So, we are still kind of completing a transaction with a VC investor. So, but if that completes, then we'll be raising

Nathan Latka

17:52a Why do need the money, though? I mean, if you raised 2,000,000 on an 8,000,000 post money valuation last year, you sold 25% of the business. Where did that 2,000,000 go? Why do you need more money now?

Biswajit Kundu Roy

18:03>> Well, it's a tech business, first of all, where we are sort of, you know, how do we get we're not running against time, but we are 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.

Team Size and Structure

Nathan Latka

18:24How many people are on the team full time?

Biswajit Kundu Roy

18:28>> We are based between India and U and UK. So in India, we have about 50% of the team around fifteen, sixteen people, and UK has about similar 15 people as well.

Nathan Latka

18:40And so 30 people total. How many engineers?

Biswajit Kundu Roy

18:44>> Well, I will call it product team. So, product team is about 70%. The remaining 30 is marketing, sales, administration, or could be about 75%.

Nathan Latka

18:56Okay. So about 21 of them are engineers and then seven or eight are sort of marketing sales and other things?

Biswajit Kundu Roy

19:03>> Yes. Got it.

Nathan Latka

19:04Okay. Cool. Great. This makes sense. So growing, raising now, so raising capital, the 1,200,000 you raise now, whatever you raise, what revenue do you hope you can grow to with that capital?

Growth Plans and Use of New Capital

Biswajit Kundu Roy

19:18>> So that's where we are able to get to our 100 ks per MRR. So effectively, this is being utilized to fund all our sales and operational growth. So we had to invest a lot in obviously building up the team and the sales, but also customer success, which is a key part of, yeah, we have got a great number of users, but we have to increase our adoption, increase our support around them. So all that infrastructure and

19:45>> 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, sort of gets us to breakeven revenue.

Famous Five

Nathan Latka

19:58We're rooting for you, Biz, but we're out of time for now. Let's wrap up with the famous five. Number one, favorite business book?

Biswajit Kundu Roy

20:04>> The Lean Startup.

Nathan Latka

20:06Number two, is there a CEO you're following or studying?

Biswajit Kundu Roy

20:11>> I usually follow Jeff Bezos because of his innovation spirit.

Nathan Latka

20:17Number three, what's your favorite online tool for building coastr?

Biswajit Kundu Roy

20:23>> It changes, but right now, it's something called product board.

Nathan Latka

20:29Number four, how many hours of sleep do you get every night?

Biswajit Kundu Roy

20:33>> I sleep plenty. About seven hours.

Nathan Latka

20:36And what's your situation? Married, single, kids?

Biswajit Kundu Roy

20:39>> Married.

Nathan Latka

20:40Any kids?

Biswajit Kundu Roy

20:41>> None yet, but we have a dog.

Nathan Latka

20:44Okay. Fair enough. And how old are you?

Biswajit Kundu Roy

20:47>> I'm about 36.

20:49>> 36.

Nathan Latka

20:50Last question. Something you wish you knew when you were 20.

Biswajit Kundu Roy

20:55>> Oh, sorry?

Nathan Latka

20:56Something you wish you knew when you were 20.

Biswajit Kundu Roy

21:02>> Well, I think when I was 20, I would wish that I knew that, you know, growing old would be so exciting.

Nathan Latka

21:13Guys, there you have it. Coastr.com launched in 2018. They help smaller car rental companies digitize to make the friction less relevant when they're trying to onboard new customers, get vehicles out the door, doing about $3,000 in revenue a year ago, now $10,000 a month in revenue today. 50 customers, team of about 30 people, did a $2,000,000 seed round at an eight post money valuation, sold 25% last year, sold 8% before that, now raising an additional amount

21:37of capital. We'll see where that flushes out. But, Biz, we're rooting for you. Thanks for taking us to the top.

Biswajit Kundu Roy

21:43>> Thank you very much, Nathan. Appreciate it.

Nathan Latka

21:47One 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 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 one

22:12p. M. Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at two 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 SaaS world, whether it's

22:33an acquisition, a big fundraise, big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you want to take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people

22:55are saying. Sign up for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode. If you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter

23:15those people. We got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.