Feedsauce Revenue & Valuation (2024)

hello everyone my guest today is omar chaudhry he founded feed sauce in 2018 after running an agency to 600 000 bucks in annual revenue with nine people and then noticing that all their customers were always interested in content more than anything they accidentally had built a speedy system for creating product photos in their agency and used this model to pivot to feed sauce and provide custom product photos for brands in 72 hours now they're building a marketplace to open the platform to all creators around the world omar you're ready to take us to the top yeah of course all right so what did you be here thanks for having me what did you very few people have the courage to shut down an agency doing six hundred thousand dollars a year to go all in on a marketplace sas product is the agency still running today no it's not we we ran it uh for about another six months before i realized that it's too difficult to try and focus on two different things that just went all in on food source uh around around 2019 early 2019. okay so all in on feed source so what i mean did you literally just shut the agency down just told all your customers sorry we're shutting down yeah um it was a bit of both to be honest um we had some accounts i would do for renewal and we thought you know what it's not worth us kind of renewing those contracts and secondly we started to gain a bit of momentum with what we were doing with feed source so it made it a bit easier for us to kind of make the shift as well and a bit um because that we still created content in the agency um it facilitates facilitated us a bit better in terms of our team as well so 2019 is when you got this thing going and how many people are on the team today uh there are about five of us five and how many engineers yeah uh two two and any quarter carrying sales reps or no uh so we have a sales and support person who works remotely for us um still in the uk as well but she works full-time for us remotely quota or no quota are they on a quota do they have a sales target oh i got you okay uh no so she works she has an employee but then she works on a commission structure as well so we incentivize her on kind of sales she manages to close too i see okay let's dive into the product because first off a website is gorgeous your product shot one million ways so is this really a metadata play you're creating the image and then and then sticking it on these metadata feeds so it shows up good on amazon on shopify and wherever else they publish uh well every photo is actually handmade so that's one of the kind of the key anchors of this is literally created by photographers wow um yeah so we we kind of when we say speedy system um if you think of it like mcdonald's like a drive-through you go through window one you say hey this is my product this is the type of photos i want this is the style i like which we call recipes and you go to window two you drop off your product and window three you collect your photos so it's that kind of kind of concept but in a digital format okay well so explain this to me right because you you've sort of you've done this in a very unique way to make this thing modular it has to be very visual and you've sort of said hey does your product shop want to look like an influencers bedroom doesn't want to look like our block concept where it's like triple layer could be different colors you've got some sort of other concepts as well walk through sort of how this works right so um effectively there is it's very simple what we've done is we've created these pre-made recipe styles because what we learned very early on is that brands themselves don't know what they want and especially our target consumer is your smb so it's people that you know standard consumer good products by people that might be drop shipping or you know your average shopify seller that started a product and wants to launch it um and a lot of times these people first of all creating a product is new for them but on top of that it's very unlikely that they'll have many creative talents and be able to actually create the content that competes with your l'oreal and yours of the world and we have that background so you'd come on you'd find a recipe you like it you tell us how many photos you want you send it and then from there you can select the sizes you want and then one thing that's really worked well for us is we actually pick up your product the next day so we're offering that in the uk right now but we'll be expanding it globally now too where we come and collect your product it comes to our studio and you have your photos within 48 to 72 hours after that so what i see right now i'm looking at you with the feed sauce logo and your thing you guys have a studio there in that office somewhere and you actually have to get all these products if someone pays you they have to get the product to you somehow physically that's correct so right now we've had the entire infrastructure built here um but this we really wanted to make more of a concept for us to test the model because as you know when you're starting something out and especially pivoting you know everything's high risk so we wanted to make sure we can control as much of the the input and output as possible but now that we've got our model completely refined we're now scaling this out into a marketplace where creators from all around the world will be able to sign up and use the platform a bit like you know being a host on airbnb for example and then brands from around the world will be able to tap in and get their content done too got it so you know the the way i would argue that this is currently done is a brand like glossier might find a bunch of influencers on instagram who already take great images and just send them free product and then have the rights to use that content ugc themselves your model is hey gloss here listen just ship us your product we'll take these professional shots and you can use them on billboards or your own marketing any way you want but you're paying us a fixed price per image is that accurate that's correct and that's so interesting you mentioned that right now as well because one of our advisors runs one that runs one of the most successful influencer agencies here in the uk and what we learned from them is that 30 of the influencer content transactions that are happening now are actually just for your standard kind of pack shots or or flatly type shots like that influencer bedroom yeah because brands don't know where to go and they're paying on average fourteen hundred dollars per shot to an influencer not for any exposure these are people with less than 2 000 followers or people that could just create good content um and we're really you know a huge fraction of that price you know so um that's why it's becoming a lot more attractive to them bring those brands into our ecosystem instead of having to go to influencers so okay couple questions your pricing page is very simple almost too simple simple like simple scary so let me just ask a couple questions can a brand pay you just to do one image can they pay you just 30 30 euros for one image um so we have a minimum of three photos that you can order uh however we are just launching tomorrow the ability for brands to get a sample one sample photo for free so if you want you send your product in and we just create this shop for you and if you like it you can order more if you don't there's no cost to you okay so um i guess let me ask you on average how many images are you creating per customer that signs up so on average brands will order anywhere between nine to fifteen photos our kind of average order value is somewhere around 400 pounds okay and do they do that consistently like is this a sas play can you rely on them paying you 400 bucks or 400 pounds every month so we actually started off as a subscription model uh so very early on we did that and we noticed this kind of concept called ad fatigue or content fatigue what happens is brands tend to over purchase so what happens is you say hey i need 30 photos because i'm going to put one a day on instagram that's their method of thinking and what they realize is they can't actually do that they then have too much content sitting there and now we look like the bad guy yeah like we've almost taken too much money from them but when we switch the model into a pay-as-you-go model we had huge retention so we saw that anywhere between 40 to 60 of our customers were coming back and they're coming back because they're now ordering at their leisure and they are then ordering photos based on their business needs and now we've made our experience a lot more of an intuitive experience for them hence the platform where they can kind of plug in and buy as they need and the photos just appear on their dashboard so omar in july let's take full month of july how many unique brands paid you at least a dollar oh wow ah july uh i'd say around 50. okay around 50. got it and and so they are paying on average you said for like 9 to 15 photos so what does that translate like last month total top line revenue was about what so total top line revenue last month was probably around six thousand okay six thousand so yeah got it so so what does that come out to that's like they're paying you like 150 160 well 100 150 bucks a month um so yeah it averages out the thing is the how we work on the model we work on right now is we we're just very early revenue as well by the way because we've been iterating the product for a while so we were really testing different different pricing structures so the key right now for us the goal over this next year is to get to 3 000 transactions across the board from customers which would take us to around a million in revenue by next july so that's kind of our target right now we're working towards that and a large part of that is actually implementing the the platform ecosystem as well which allows the content to be scalable right now it's a very manual process where the product has to come here and be shot here but as soon as we can start bringing in creators from around the world it becomes a lot more interesting for brands too you look you're and this is a compliment your website you look way bigger and more mature than what you actually are in terms of revenue have you guys invested a crap ton into this thing like did you raise a bunch of money for this oh thanks so much uh no i am a designer myself so my actual background yes i'm a ui ux designer kind of by trade so what i did is i was freelancing since i was at 18 and then put a bunch of money into the agency around the agency and obviously when we pivoted the agency like you mentioned we were doing around a million dollars in uh in revenue in the agency and then we flipped it into this model which gave us some cash to run through into this so up to date now we've probably invested around a quarter of a million pounds uh probably 400 thousand dollars into the platform over the last two or three years just to be able to have it running at this level in terms of you know could be the the infrastructure the the the physical space as well yep but no no outside capital no no we actually actually we're actually raising right now it's funny you say that we're in the middle of fundraising at the moment so we're in talks with various investors uh trying to you know raise our first round so it's a very interesting time because post pandemic we've had a huge influx of businesses that are coming to us because they have funds and grants to use and and of course e-commerce has surged and on the other end on our supply side creators are are really available because a lot of them i've either been furloughed they're out of work um or they just have no way of getting work and they can't open up studios and go to weddings and things like that so there's lots of revenue being missed out from them and the greatest thing is they have all the inventory they have the cameras they're set up and ready to go so if we can just plug in an order system they can literally just accept work on then that works really well with what we're doing so we've got a huge advantage in that because we've been building this for two years without even knowing a pandemic was coming and other pandemics hit and all the indicators are are working in our favor so we're really trying to raise now and start scaling this very quickly how much are you hoping to raise so we look to raise a million dollars right now okay that is current state you have to obviously sell like help to make sure you raise that evaluation where you guys don't get diluted like crazy what would be like your dream valuation to raise that well we're raising a five million dollar valuation right now okay okay got it so a million five five free six million posts so you're selling caught a little less than twenty percent of the company that's right so the reason we're doing that as well is we've got a few you know things are really working our favor we've we've got a great relationship with facebook we've had a relationship with the head of ecosystem and partnerships there for the last two years they've been really interested in what we're building and uh they see a tremendous opportunity with what we're doing and their ad product uh because if you think about facebook's ad product that's a huge part of their revenue but when you actually go to their interface for uploading your creative there isn't a way for you to just have your content plugged in you know they have all the partnership deals with your stock companies your shutter stocks of the world which is no use to anyone in this modern economy and we've come in and we're like look if we just actually in let's say we implemented our interface ideally within that structure and you give brands custom content to now use for their ads that's a tremendous kind of value add for them so they're super interested and one of our uh co-founders is um the the head of marketing at apple as well so we've got tremendous asset there from a growth perspective so we're just trying to bring that all together now be able to hire um and start scaling this out now do you have creators that you've paid at least a dollar to already on the platform or is that still but you're still working on that very few very few like less than less than five okay so let me let me just like let's fast forward a year let's say there's a crater in in nashville tennessee or here in the united states who has his home studio you've sent them like the boxes template so they can get the background like they have everything inventory uh somebody like procter and gamble says i want shots of this new toothpaste and they get do it through your platform this crater in tennessee says i'll take those toothpaste shots you then basically have to make sure that procter gamble sends the actual physical product to the tennessee location so that studio can take the shots and upload is it accurate that's correct and and so like again i know this isn't built yet but like let's just walk through that model for a second if procter gamble is paying 30 per toothpaste shot what margin do you think you'll be able to give the creator so creators are working on a 60 margin of the actual co sorry excuse me or the actual uh order order value so sorry uh creators are working on a 60 model so it's a 60 40 model in the in the favor of the creator so they would get 60 of the total order value um so whatever they order in terms of photos um they can literacy in their ecosystem what their commission is and their the platform will actually allow creators to manage their own income as well so they can work and get paid when they want and everything's done on their terms it's really allowing them to be self-serving rather than having to work for us like an independent contractor or something like that but they're not going to be full-time no yeah they can work on those times yeah yeah so they'll be a con they'll be an independent contractor oh yeah yeah but in terms of uh not from a formal sense of them invoicing us is what i mean like they can kind of use the platform as they want just the way a driver about an uber you work on and off as you want make as much or as little money as you want as well so let's say that that that photographer in tennessee that has the inventory let's say her name is shelley and she does the procter and gamble toothpaste shots she could basically upload those to her uh feed sauce portfolio and then procter gamble could actually select her for their next product shots because they look at her historical work is that is that how it works or are you gonna do the matching so uh how it works is on one end we do have a portfolio uh system and that comes around from the concept that the way a lot of brands discover uh creators right now is by going to instagram finding them and then having to literally message them negotiate and what we learn both from brands and creators and especially from creators is they hate doing the business side of it a lot of them are introverts they don't know how to negotiate what to negotiate and they can kind of be quite daunting for them so by building this internalized system we're now going to have a portfolio area where let's say shelly can show all the photos that she's done which are associated to specific recipes that we offer and then brands can say hey i just want more of this and straight away she can get that request to do that that work but she can also accept work on her terms so if she goes into our platform she can see all the shoots available based on an algorithm so we know how we can uh match her best how can get products to her quicker and serve best to the customer and then they will have their own rating system and everything as well can she set price can she say i'm not doing a shot for 30 bucks a shot it's got to be 300 i'm that good and then proctor and gamble can decide if they want to pay 300 bucks or not not at this stage so at this stage how we're doing it is we have standard recipes and then we'll be bringing bringing in premium recipes so standard recipes will just be the kind of things that we offer generally like those block styles premium will be for instance let's say shelly has a nice rustic kitchen in her house and that's a style that is unique to her because her home she can then sell that as a recipe and that will be a premium style so there'll be a bigger incentive for her because she's put down the platform and she can make money from it as well um but also what we know through our economics and the modeling that we put out for this is that creators on average will be able to earn four times more than what their their average salary for a photographer is right now as well so we know there's tremendous kind of upside for them on that end just because we know that creators just want to create and if we can get them to just enjoy the process of outputting content as opposed to doing all the menial tasks behind it and let us handle that as an ecosystem we really speed up that process both for brands and creators so are you guys profitable today are you kind of break even you're reinvesting everything uh we are reinvesting heavy reinvesting heavily but we are profitable as well so we're working around a 20 margin at the moment but once it scales out we see this growing to around 60 margin so you guys aren't paying yourself then if you're doing six grand a month right now in total revenue you have a team of five people there's somebody that's not taking salary if you have a thousand in profit left every month that's correct so our team works in a way where for instance this girl that works with us remotely she works on a contract basis plus commission um and then for instance our photographer that works here as well he he's on a salary i don't take a salary at the moment so i'll just be you know we've been reinvesting back into the business our co-founder doesn't either um so you know we're quite well uh laid out to be able to get us to a certain point but that's exactly why we're at a point where we need to finance ourselves now because we need to really bring the team in a lot closer and incentivize them a lot more to really build this out faster all right omar let's wrap up here with the famous five number one favorite business book wow um i'll say the one by intel's high output management high output management that's the one yeah yeah i love that book number two is there a ceo you're following or studying uh i love bob iger he's not a ceo anymore but i really really really love his story well didn't he he came back in didn't he um i think he's a chairman right now is he did he come back in a scene i don't know i thought he came back and i could be wrong though but yeah obviously disney ceo for a long time a lot of growth facilitated the disney plus launch and then uh took a leave as chairman but good yeah good great guy number three um is there a favorite online tool that you use to build feed sauce uh onboarding tool any tool actually let me ask you a specific question envision or figma oh good question uh i'm actually a sketch user yeah so neither but i do appreciate all of them i used to use envision a lot uh but sketch is going to be my go-to for a while now number four how many hours of sleep to get every night eight i've got i have i have children i've got two children now and i've got another one on the way wow um and you know pregnant wife so yeah um you know gym is very important to me so i'm normally up any time between five and six in the morning at the gym play with the kids have a whole day and then bed any time between nine and ten thirds summer i have to ask yourself you're not paying yourself from this your wife is pregnant there's two kids at home i mean how the hell are you putting like food on the table and paying rent you have a bunch saved up from the agency yeah so what from the so i can do a bit of consultancy from my design kind of background on the side as well so i have one client that i kind of consult with to kind of just keep things sticking along a little bit as well which kind of helps um and my wife is she's actually a a beauty influencer on instagram she's got half a million followers herself oh wow so she's got a yeah she's got a great little following and a great little branch is built up so she manages to have a nice little income stream going for her as well that's me yeah you mean you see all these people that says like tick tocker can charge 50 grand per tick tock and i go i wonder what like a micro i wonder someone like your wife right like what she could probably pull in a grand per post right something like that man a lot more you'd be surprised really yeah yeah yeah yeah yeah it's a lot more than that man yeah it's maybe we'd be surprised people sign endorsement deals as well now so you'll get brands that will sign you for a hundred thousand dollars for a year man just to be just to not use any other product you know so let's say it's a haircare brand they say for the next year we only want you to use our haircare product and that comes out price and they're willing to pay it man so but those are bear man is tremendous returns for them if you see their revenues uh and and what it does for influencers just to give you an example like a brand back in february would have paid a let's say around ten thousand dollars for for a month's worth of exposure and they would have made a hundred thousand dollars on the back end from that one expo uh channel of exposure so yeah they do really well and it's also great for the influencers because they can then build up uh lucrative cost and incentive models for themselves as well where they can take equity and brass of course yeah all right and so how old are you i'm 28. 28. last question what do you wish your 20 year old self knew oh how to engineer right now i think guys definitely help me and save a lot of money guys there you have it feed sauce helping big brands get photography and product shots done in a very modular way they're also allowing creators with studios all around the world to sign up on the platform to take these product shots create their own galleries and make money without having to go out and shoot weddings in person these days which you can't really do with coba they're raising a million bucks on a five million dollar pre-money evaluation doing six thousand dollars a month right now in revenue omar thanks for taking us to the top thanks so much and nathan if anyone wants to get in touch my email is omar feedsource.com my inbox is open so i'm more than happy to to invite anyone for a conversation thank you sir 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 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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 are saying sign up for that at nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 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 those people we got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya