How LogiNext Reached 50 Enterprise Customers and 108% Net Revenue Retention with a Per-Asset SaaS Model (Interview with Founder Dhruvil Sanghvi)

Introduction and Guest Background

Nathan Latka

00:01Hello, everyone. My guest today is Dhruvil Sanghvi. He's played a pivotal role in revolutionizing logistics with the use of data science and machine learning. He's been felicitated by Forbes as one of the top 30 under 30 achievers in 2017. He's also recognized by... As Achiever of the Year in 2017 by Business World as he continues to develop his product, LogiNext. Alright. Dhruvil, are you ready to take us to the top?

Dhruvil Sanghvi

00:25Absolutely. Thanks for having me, Nathan.

What LogiNext Does and Revenue Model

Nathan Latka

00:27You bet. Tell us about the company. What's LogiNext do and how do make money? What's your revenue model?

Dhruvil Sanghvi

00:34Well, we are a SaaS company. We are focusing on optimizing movements for enterprises. So take it similar to how Google Maps optimizes your movements on a daily basis when you go from your work to your home, to your friend's place, and so on. We do a similar thing at scale for large enterprises. We charge them on a monthly basis for the number of licensed users.

Nathan Latka

00:56Okay. Give me a customer example, just so I understand this clearly. You're helping them actually move office locations?

Dhruvil Sanghvi

01:05No. So when we say we help them move

01:09their assets, what we mean is that we help logistics and supply chain companies move their trucking, their shipments, and so on. So, if I were to just spend a couple of more minutes on what exactly we do, we work with one of the largest retailers in The US, and we also work with one of the largest transportation companies in The US. Now, both these verticals, they are pretty much the same from the logistics standpoint, where goods

01:32are moving from their warehouse to their stores, and from stores to their home. And then especially with the advent of e commerce, every customer is wanting faster deliveries. Amazon has changed the world where people want things in four hours, six hours, same day, next day. So having said all this, the market trend has been going more and more towards how do you really fulfill customers' needs by pushing shipments faster? And what our software does, it aggregates

02:00multiple customers together based on their time preferences, location data, traffic information, available truck capacity, and so on. And we put a machine learning layer to it so that the routes become optimized, and these enterprises fulfill their customers with shipments faster.

Last Mile vs. End-to-End Logistics Coverage

Nathan Latka

02:17Is this all the way from kind of the warehouse to the consumer, or is it only kind of last mile?

Dhruvil Sanghvi

02:24It's a lot of different models that we have, and we have different configurations for that. So when we say logistics optimization, to most people, it looks like one word, but honestly, it's a whole complex world behind the scenes. So it could be last mile from a warehouse. It could be last mile from a station, which is a small sorting hub. It could be from store, right? So if you go to target.com, when they ship, they don't

02:46ship it from their warehouse, they ship it from their nearest store. It could be deliveries, it could be food deliveries when the food is coming from the nearest restaurants. So there's so many different models how the shipment arrives to you. Sometimes it's called drop shipping where the shipment comes straight from the merchant and doesn't go to any of the warehouses. A merchant is somebody who's selling on a marketplace, an e commerce marketplace. So we support all

03:12these different models, and we are the only platform which has end to end coverage to make sure every logistics model is covered.

Nathan Latka

03:17And who is typically paying you? Who is your customer? Is it the actual product creator? Is it the shipper? Who is it?

Dhruvil Sanghvi

03:26Two kind of customer base. One is shipper and one is carrier. As we call it, shippers are the ones who are either marketplace companies, retailers, food delivery companies, and so on, which are shipping goods. They may not be owning any assets, which we call it as drivers or trucks on the road. And the carriers are the one who are FedExes and UPSes of the world. There are tons of other trucking companies in The US across the

03:51world where they have their trucks, they have dedicated drivers working for them, and their job is to keep on optimizing their productivity. Just like how Uber's job is to make sure all drivers are busy, and the busier the driver is, the more money driver makes, and the more money Uber makes. We help traditional offline transportation companies become similar to that.

Minimum Fleet Size and Pricing Per Asset

Nathan Latka

04:13Okay, and you mentioned you charge as kind of a, it's a SaaS model. How do you equate all this back to a SaaS model?

Dhruvil Sanghvi

04:21So well, what we do is we charge per asset. That means, let's say if you have a thousand trucks across The US, and you want all these drivers to be routed via LogiNext platform, you want all these drivers to have LogiNext app on them, then you could just pay us monthly for all those thousand drivers, and that would be our revenue model.

Nathan Latka

04:45Well, just to be clear, it's not the driver, I see it's the truck, it's the asset, right? Not the employee?

Dhruvil Sanghvi

04:52It's the asset. So of course, there will always be one driver in one asset, but the user cannot be a truck, right? So let's say if there's a mobile app, it has to be installed into the driver's phone.

Nathan Latka

05:02Okay.

Dhruvil Sanghvi

05:03So then we charge per driver, not per truck. But ultimately, you will have the same number of drivers as the number of trucks you may be owning.

Nathan Latka

05:11I see. And I'm sure this answer is going be very complex. I'm hoping you can simplify it for us. If I have a truck and I'm doing this kind of thing, and I'll drive anywhere in The US, I mean, what's maybe an average of what I might pay you per month to help me be more efficient?

Dhruvil Sanghvi

05:29Well, we usually work with companies with at least 100 trucks in their fleet. So we do not really work with any small or mid scale providers. And hence, our minimum fees are $50 per month per asset, as we call it. And then these 100 trucks can be purchased as minimum. Usually, the range of the customers we have is starting from 100 truck owners to 10,000 truck owners. And when we say truck owners, a lot of times

05:55they do not really own the truck, because owning a truck is an expensive thing.

Nathan Latka

05:58They rent it.

Dhruvil Sanghvi

05:59A lot of times, in fact, all these larger companies, they are aggregated models of trucking. So they really work with other smaller and mid scale companies, like a five truck, 10 truck kind of guys, and they push our software onto them so that they can be optimized, who are dedicated asset providers within the network of a large company. So that's the kind of dream that we would get.

Average Customer Size and Enterprise Focus

Nathan Latka

06:19And what would you say? I know you said you go as little as a 100 up to some with thousands. I'm gonna force you here into an average just to make our conversation simpler. Does the average customer that you have maybe say have a thousand trucks or is it more like 9,000?

Dhruvil Sanghvi

06:33Our current is 500, obviously. So the majority of it is between one hundred and five hundred. And because there are very few companies across the world who would be having more than 1,000 trucks on their fleet. So just to have our statistics, of the entire fleet of The US, 90% of the fleets are less than 10 trucks. So that just directly leaves us with the 10% of the market. And within the 10% also, it goes from

07:0010 to 1,000, which is the majority of it. And then there are very few companies who are owning more than 1,000. The more trucks that you have dedicated and the more trucks you own, the business complexity becomes more and more higher and higher, primarily because it's an offline world. It has always been about calling drivers, making sure they're doing their job well. There's tons of compliance. There's tons of people and services aspect to it. So this

07:26whole world has been more or less offline. And that's when the whole driverless trucks kind of a new vision which is coming up, because the more drivers that you have, the more complexity that you have in the business, and nobody wants that.

Nathan Latka

07:39So Dhruvil, just to be clear, at $50 a truck, and if your average is, call it 500 trucks, I mean, your average customer is paying you, call it $25,000 a month, something like that.

Dhruvil Sanghvi

07:49But yeah, absolutely, yes. And that directly puts it into the enterprise space. And why we prefer to be in the enterprise space is because while you're focusing on SMB with enterprise together in our space especially, the whole selling model, product functionalities, the configurations becomes vastly different. An SMB customer does not really care about complex workflows, integrations, and training, change management, deployment, customization, and whatnot. Whereas an enterprise customer wants all of this and probably 10 more things

08:19beyond it. They also want to talk to, it's just more high touch sales. And in our space, we have become one of the only companies focusing on enterprise, but it also gives us a more greenfield opportunity where we don't have to compete a lot with a lot of other smaller software providers who are offering SaaS, like pure play SaaS softwares, which can be purchased online.

Nathan Latka

08:41When did you launch the company, what year?

Dhruvil Sanghvi

08:46It's been, I would say close to four years now. We started back in the end of twenty fourteen. In 2015 is when we raised our first start of investment. That's when we started having our team, salespeople, marketing, and so on. Before that, we were just more bootstrapped.

Total Funding Raised and Investor Mix

Nathan Latka

09:02Dhruvil, how much raised to date then?

Dhruvil Sanghvi

09:06We have raised $10,500,000 so far.

Nathan Latka

09:06All

09:11equity, or was there debt in there as well?

Dhruvil Sanghvi

09:14All equity.

Nathan Latka

09:15All equity, that's great.

Dhruvil Sanghvi

09:16And then just to kind of share additional details on that, we have an interesting split of financial and strategic investors. I've seen, lately I've been advising a lot of very young entrepreneurs. And I see there's a big trend of a lot of corporations and strategic investors wanting to invest in innovation and startups. And that always becomes a question on should we really raise money from a strategic, or should we stick to financials, and so on. And

09:42I think we have raised from both, so we have a good kind of balance there. So for all the listeners, is interested in talking more about financial versus strategic money, happy to spend more time.

Customer Count and Total Addressable Market

Nathan Latka

09:52That's great. No, I appreciate that. And then as you've scaled over the past four years, again, you raised $10,500,000, how many total customers have you scaled to?

Dhruvil Sanghvi

10:02We work with about 50 enterprise customers as of now.

Nathan Latka

10:07And how many if you define enterprise customer as someone with more than 1,000 trucks, I bet you know the number. I mean, many logos or companies are there in the you know, in the world or The US with more than 1,000 fleet trucks is your max like 100, know, customers or...

Dhruvil Sanghvi

10:27No. So we would be... The total market size across the world is about 4,000 companies, and we already have made a list of all those 4,000 guys. That's the whole, and when we say whole world, we really focus on Asia Pacific and North America.

Nathan Latka

10:27Okay.

Dhruvil Sanghvi

10:27That's the only two markets we are in. We don't really aggressively sell in Europe, or LatAm, and China, Japan, Australia kind of markets. It's just we are not that big to kind

10:53of have a spread so wide. We do have a couple of customers in all these regions, but we do not really have any sales force or focus on these regions.

Team Size and Office Locations

Nathan Latka

11:01What's your total team size today?

Dhruvil Sanghvi

11:05We are a total of a 100 people.

Nathan Latka

11:08Okay, a

11:08100 people.

Dhruvil Sanghvi

11:08And majority of these are tech guys. So we are a very sales slim company. Roughly split would be about 60 tech, 40 non tech.

Nathan Latka

11:18Okay. And where is everyone? Where is everybody based?

Dhruvil Sanghvi

11:25The tech guys are majority based in Mumbai, in India, and the sales guys are majority based in North America.

Nathan Latka

11:31Okay.

11:32Where do have America in remote?

Dhruvil Sanghvi

11:36No. So we have a back end development center in Mumbai, and our CTO and my other co founder, she is from Mumbai. So she kind of leads the whole development workforce. It helps us be more agile, be more cost effective, and be more flexible from a timing standpoint.

Nathan Latka

11:53Yeah, Dhruvil. Sorry. Totally understand In Northern... In North America though, are you remote or or all in one spot?

Dhruvil Sanghvi

12:01And in North America, we are having a base in Fremont, California. We have an office in Chicago and New Jersey, but these are very small five, 10 people kind of offices. Usually, when we... When you walk into office, you don't find anyone. We are always in the customer. So

12:16that's a good that's a good thing.

Nathan Latka

12:17So so rounding out kind of the economics here in the math, mentioned earlier, $50 a truck, I asked you for an average, you said about 500 trucks, so the you know, you're very much in the enterprise space, average customer paying 50 times 500 or $25,000 per month. You then mentioned you got 50 customers, if I multiply 50 customers, times $25,000 a month, that puts you at about $1,200,000 per month

12:40right now. Is that accurate?

Dhruvil Sanghvi

12:44That's correct, yes.

MRR Growth and Annual Growth Targets

Nathan Latka

12:45Okay, that's great. And what does growth look like? So a year ago in October, call it 2017, what were you doing?

Dhruvil Sanghvi

12:54So we were to, we were doing roughly an MRR of about, I would say, 500,000 back then, or 400K. So That's what our probably MRR was.

Nathan Latka

13:07Really healthy growth.

Dhruvil Sanghvi

13:08Growing about three.

Nathan Latka

13:10Has most of that growth?

Dhruvil Sanghvi

13:11I think we have been focusing on one thing for sure where we want to grow at least twice or thrice every year. That's a strong focus. Everybody in the company knows about it and is busy working on that.

Churn and Net Revenue Retention

Nathan Latka

13:23Churn's critical if you wanna drive growth. What's your revenue churn annually today?

Dhruvil Sanghvi

13:29And that's why we choose enterprise space. Annual churn is less than 5%. And this is more of a gross churn. If you see net churn is positive because we drive more expansion than think

Nathan Latka

13:41How far above 100% are you? Like 110%, 120%?

Dhruvil Sanghvi

13:47I would say 108% right now. Net is 8% positive.

Nathan Latka

13:51That's great. Congrats. Yeah. So if you have less than 5%, if you have less than 5% gross revenue churn annually, and you're expanding five... Those five points to make that up plus an additional eight, right? So you're expanding, driving expansion of about 13% year over year for one zero eight net.

Dhruvil Sanghvi

14:07Absolutely, absolutely.

Nathan Latka

14:07That's great.

Expansion Pricing and Land-and-Expand Model

Nathan Latka

14:09When you are driving that expansion, what pricing axes are you using to drive higher price points? Is it just getting them to add more trucks, or do you upsell products or seats?

Dhruvil Sanghvi

14:20Right, as of now, are focusing purely by selling more licenses of the same business unit that we had sold to. Because typically when our customers go live, we are more into a land and expand model, where they start with a couple of cities, a couple of warehouses or regions, and then they will scale up into multiple cities, multiple countries. Being an enterprise space, again, a lot of these logos are multinational organizations, so they also can scale

14:43up to multiple countries. So, I think for the next couple of years, we want to be super focused just on selling more licenses and expanding by geography. And beyond that, we would be having more upselling, cross selling kind of opportunities.

CAC, Payback Period, and Path to Profitability

Nathan Latka

14:56And talk to me about CAC. So what will you spend to acquire a new $25,000 a month customer?

Dhruvil Sanghvi

15:03We usually spend about $10,000 That's our minimum spend. We don't have a very formal calculations, but $10,000 is something that we do, including the sales and marketing spend. And the sales and traveling expenses are over and above that, so we haven't really encountered that. So I think if put all together, it would come about $20,000 of CAC.

Nathan Latka

15:28Sales, marketing, spend How much?

15:3120,000?

Dhruvil Sanghvi

15:32Salaries, time, travel, everything. 20,000. Yeah. And this is a rough estimate.

Nathan Latka

15:38Yeah. This isn't... The reason I'm asking is, like, that that's, you know, a one month payback. Right? If you're if you're spending $20,000 to acquire a $25,000 a month customer, a one month payback tells me that you actually haven't figured out a way to spend money to drive like additional growth. Because if you have, you would drive your your payback period up to six months or twelve months or something like that.

Dhruvil Sanghvi

15:58Right, absolutely. And that's one of the best parts about our model where we are not at all capital intensive. And we are almost right now reaching profitability. And when I say profitability, not the net, the gross profitability, we are gonna be EBITDA profitable very soon. So yeah, this whole model is pretty efficient from the capital standpoint.

Famous Five: Books, Tools, and Habits

Nathan Latka

16:19That's great. Very good. Let's wrap up here with the famous five. Number one, what's your favorite business book?

Dhruvil Sanghvi

16:27The Hard Thing About Hard Things.

Nathan Latka

16:29Number two, is there a CEO you're following or studying right now?

Dhruvil Sanghvi

16:36Jack Ma, who also happens to be our investors investors.

Nathan Latka

16:40That's a clever way to say that. Alright, number three, what's your favorite online tool for building your business?

Dhruvil Sanghvi

16:49Wow, I don't remember that name, but there was a website which has a lot of business tools available. I kind of forgot the name. I go there, I have it bookmarked, but I forgot the name of that obviously.

Nathan Latka

17:01The nature of the question is you should know it immediately because you would be using this tool every day. So like, what's the tool you use every day to grow the business?

Dhruvil Sanghvi

17:13House park.

Nathan Latka

17:14Okay, number four, how many hours of sleep to get every night?

Dhruvil Sanghvi

17:20Eight hours.

Nathan Latka

17:21It's pretty good, especially because you're coming to me live, I think, your hotel room in Austin after your after your conference. Right?

Dhruvil Sanghvi

17:28Yes. But I always make sure I have to sleep.

Nathan Latka

17:32That's great. And what's your situation? Married, single, kiddos?

Dhruvil Sanghvi

17:37Married, no kids.

Nathan Latka

17:38Married, no kids. And how old are you?

Dhruvil Sanghvi

17:42I am turning 30 in next six months.

Advice to Younger Self and Closing

Nathan Latka

17:45Ah, very good. That's exciting. Alright. Last question. What do you wish your 20 year old self knew?

Dhruvil Sanghvi

17:53You said what would my 20 years old self do?

Nathan Latka

17:56What do you wish your 20 year old self knew?

Dhruvil Sanghvi

18:00Okay. Well, I wish I knew the value of starting up early. We had an opportunity when I was in Carnegie Mellon, and we had got selected in one of the incubators. We didn't even know back in 2010 what a startup really means, and we gave up that opportunity because we wanted to work for a corporate bank in New York. So the the group of friends, we went to New York, we did an internship in in in

18:24in Barclays and IBM and Ernst & Young, and we gave up that opportunity. And I I wish I knew the value of that, the opportunity cost of that that lost opportunity.

Nathan Latka

18:33Guys, jump into a startup faster. LogiNext launched in 2014. Today doing $1,200,000 per month, that's up from $400,000 per month. Just about a year ago, they do this by serving 50 companies that manage fleets of trucks on average, these fleets are about 500 trucks, they charge $50 per truck or per asset. So that's about $25,000 per customer per month, they've raised $10,500,000 to scale to where they're at today. Economics are healthy, less than 5% gross churn

19:00annually, 108% net revenue expansion annually. They've got a team of about a 100 people based between Mumbai, California, and other remote locations as they look to keep scaling two or three x year over year. Dhruvil, thanks for taking us to the top.

Dhruvil Sanghvi

19:16Thank you so much, Nathan. Thanks for having me. Goodbye.