Scapic Revenue, Valuation & Funding (2018)

hello everybody my guest today is say krishna he's often described as an accidental entrepreneur as an engineering undergrad he built his first startup in the education tech space to power thousands of students to better use tablet pcs since then he's founded invested in mentored startups all through particularly in the technology space he's an alumni of stanford university graduate school of business and the founder of escapic a cloud-based virtual and augmented reality content platform helping businesses and users generate ar and vr experiences without coding the company was part of y combinator startup school and was very recently recognized by facebook as one of india's top vr and ar startups in their school of innovation program so are you ready to take us to the top good to go you bet so first things first people here white combinator or silicon valley i generally assume oh pre-revenue lots of funding do you fall in that category or no right so given that we had to start our journey back in asia particularly in india there is a sense of grounding which is sort of brought in which is business models have to be thought through uh far more before we are able to uh have access to institutional capital given that sk today happens to be a revenue generating startup across the virtual reality and the augmented reality side of the fence and we've had to think of a couple of novel ways in order to productize as well as get out there to the market and start generating those revenues so not on the pre-revenue kool-aid just yet that's good now talk to me about some of these unique things that you did to drive revenue if you can tie into that story maybe do an example of what you guys do for an end customer absolutely so if you've noticed the way we've interacted with devices or computers have always changed every 10 to 12 years there was a guy who wore a black turtleneck took to stage during 2007 called steve jobs who really changed the world but even if you rewind about every decade before that we've gone from desktops mainframes laptops smartphones so on and so forth which means that the ability for us to access computing information has changed and now in that arc we see virtual reality conversational ai and augmented reality to be the next frontier given that position what we're building skating to be is uh to be the simplest editor or the simplest visual interface for brands creative professionals and businesses to build content because the one thing that's going to make you buy a vr headset over any other computing device out there is perhaps the content and similarly for ar as well so we think user generated content is a very important part of this puzzle and we're building the simplest way for those users to generate the content what weebly and wix and squarespace allow people to do in terms of dragging dropping together the websites you're essentially allowing people to do but for vr and ar experiences absolutely interesting uh so what's the revenue model currently it happens to be a freemium sas league and given that our experiences happen to be browser first and not app first imagine over a period of time clicking on a banner ad opens up an augmented reality application or going through uh scrolling by your news feed is able to enable through rich immersive content and we think the internet will move there where from an era of interactive content or multimedia centric content we will move to immersive content which is 360 3d vr and ar centric given that we are a freemium sas play in that with a licensing fee that ranges between 20 to 200 each month and what would i get for 20 bucks a month 20 bucks a month would give you access to an editor which is similar to your wix wordpress questions what makes it compelling is these content pieces are distributed across social media your own web your own websites as well as advertising networks over a period of time and here the roi which is customer engagement the number of eyeballs which are drawn to it and the amount of time they spend on this content is significantly higher than what a traditional piece of media such as a photo or video is able to bring to the table interesting when did you launch the company this uh we got started with kpik at about january of 2017. okay and since then we got we had the first version of our product out at uh about july okay very good and then over the first i guess it's just been kind of 12 18 months how many customers have you scaled to right so today we serve more than 40 customers across brands and in large enterprises these include customers such as airbus viacom sony and the likes of which given this we've been we sort of have optimism that vr slash ar is not more like a party trick but it is something that is going to be of meaningful value addition over a prolonged period of time how many are on the free so 40 are paying how many have tried it the once we've tried it out is from a consumer side we're close to 100 000 users at this point oh wow interesting um are you has anything surprised you about usage patterns that's affected your future roadmap social media marketing the one thing that we didn't quite anticipate is the amount that the tool would be used specifically for ensuring that content pieces in social media networks particularly across facebook instagram messenger are going to be ones that are 3d based 360 based or the likes of which now that that sort of took us a little by surprise because we were thinking that the market is going to point us towards directions of education training standard operating procedures and deep enterprises in some of their use cases but there's been a little bit of a realization curve there which is tools of simplicity perhaps are as important for a marketer as much as it is for a business sure oh and you see a lot of times basically the thesis you just described you know consumer things that become very popular eventually you become adopted by enterprise right and so potentially that still happens which will be interesting um just to kind of put some ranges on this though so you mentioned 20 to 20 20 bucks a month 40 customers that puts you about kind of 800 bucks a month so you're just kind of getting things going is that is that accurate not quite so the 40 customers that i just described to you are enterprise customers who pay close to 200 per person per in the team and bc's are typically about 20 to 30 members strong which means that the the revenues that we generate are significantly towards the six digit mark and uh inching towards 17. yeah have you have you i was going to say so from our revenue perspective i mean have you when you break a million a month do you think that happens this year or next year or 2020 uh a million a month i think would be towards end 2019 at this point we are slated towards trying to achieve that out of the 2020. i'm really glad i asked that follow-up question by the way because that would be you know eight grand a month would be very different than so just to be clear the math looks much more like 200 bucks per seat times 30 team members right six grand a month across maybe about 40 enterprise applications that puts you much closer to maybe 240 grand a month with eyes at a million a month maybe late 2019. that that's the plan is that fear the plan that we're running on very good and help me understand a little bit say more about growth so if you're at around that 240 mark today where were you about a year ago um about a year ago we didn't exist okay so you work for revenue yeah we repeat that video about even about a year ago walk me through the story how you got your first enterprise customer the first one was an interesting one at that which was we were right out of uh startup school and roughly around then we had we were uh given an open innovation program or the application to which from one of europe's largest automobile leasing divisions and what we really wanted through was an easy way in order to have a fleet of 200 000 cars and an ability in order to look at them by an augmented reality layer and annotate them through and at some point things hit a glass ceiling purely because uh an automobile company or the holding company which happens to be a bank are not necessarily experts in the virtual of the augmented reality space which means more often than not these companies take too long it things cost too much they don't have the right teams and the efficiency takes a hit and that's really where we were able to jump in and try to paint the story around the numbers rather than the technology and that seemed to stick which was very quickly we realized that the part of vr and er resonates with the technology world but right outside to some of the industries that we operate in what perhaps makes more sense is the math and not the technology in itself and the value can be derived from the technology so we were able to completely stitch together the conversation around numbers and how we would have a positive net impact on a team as well as a fleet of cars and that i think at some level had them to write and has you mentioned you're kind of shifting your model a bit more or it surprised you how people are using this more for social media so moving forward in terms of growth channels what channels are proving to be most effective for you nathan uh my apologies could you hit me on that one no problem that story about the car manufacturer in europe right out of y combinator is a good one but you mentioned you've pivoted a bit as well in terms of surprises from your use your users so what is the growth where where what are the growth channels today working well for you as you go after more of a consumer market from a consumer standpoint we see the market to be a cascade of three specific segments social media marketing web-based advertising as well as the concept of embedded content onto websites themselves what i mean by that is today social media marketing happens to be the primary driver with a clear increase in specific matrices that a marketer has over a period of time we have seen advertising networks some and some of the most popular ones out there open themselves up to 3d ads 360 ads as well formats again you require a simple tool in order for you to author or build these ad units and then deploy them into your networks we again fit the bid there third is as i call as creative storytelling inside websites themselves which is right inside a webpage what if the ability for you to go through a narrative or an engaging immersive story using layers of augmented reality is going to be far more compelling think of it as a small button that exists right on your webpage if you are selling a product and if i'm selling a roomba to you tapping on that button immediately showcases that rumor right here you know minute reality in front of me and has the ability for me to interact with it yeah this should replace essentially every you know there are huge businesses right now built around taking photographs of of e-commerce shop like you know the h m t-shirt right i mean this tool should essentially replace every single one of those companies absolutely to a point of personalization as well as interactivity which traditional static media does not bring to the table either yeah uh walk me through kind of how you've capitalized so obviously you went through y combinator there's a little bit of funding there have you raised additional capital we breathed additional capital we did a sea drop of half a million dollars uh close towards the end of uh last month last year but exactly to be precise so about 500 grand total into the company 500 grand into the game that's great that's great so it's actually still pretty efficient considering where you're at based on that amount of money are you i assume you're casual positive than today uh in the trajectory too we have in the in the recent months started to notch some of our numbers through which is uh bear in mind that the product has been live for a little under two quarters just yet so the enterprise or the business version of the product which is sort of having a clear sash here so we are in the trajectory in order to uh run uh uh run through there the run rate definitely seems to be pointing towards enough what's the team size today how many folks teams currently 18 members strong one eight 180. okay so so am i am i a little bit higher than when i said 240 grand a month earlier my i'm high on that absolutely because it's a ramp up right so we didn't begin with 40 on day one so i think we were able to layer that on and then subsequently drive forward yeah so you i think you'd be looking uh more towards about 50 to sixty percent of that number and subsequently from there the ramp up is foreign have you broken a hundred a month yet that's we we're almost there we're close to about 300 a month well i mean are you got 30 days left knock it out before the end of the year right yes so we were able to manage that in november now it's it's it's really interesting to see whether we can sustain that through the period of december yeah are all 18 folks based in california or where are you guys oh so interestingly we'd like to call ourselves uh california by dna and india by geography so we're a team that's entirely based out of india and we sort of shuttle between the bay area as well as head back to india more often than not because today we think customers as well as users happen to be significantly across three regions of usa europe um and when i say europe just particular parts of it and india in itself of course because of the geographical ability that we have there yeah but given that usa is such an important market for us we happen to shuttle back and forth between are you attracting sorry to cut you off are you is it too early to talk about some of the economics around churning cac are you tracking that stuff yet or no i think it's a little early for both from organization standpoint as well as from an industry standpoint which is web-based augmented and virtual reality is perhaps so new that uh the market in itself would not be exactly what you're looking at now three months from now six months from now and a year from now and that's really where uh it's fascinating but also some of the traditional ways and means by which we are able to look at uh look at churn growth rates as well as matrices that we hold ourselves uh and dear and dear to might necessarily take a little longer for it to just cheat out purely given the nascency of this piece that we operate yeah yeah that's great uh any plans to raise capital soon we're in we're in it uh we're sort of doing an institution series 80s and uh looking to looking to perhaps go between the months of jan and and then northward from there to try closing that out would you ever look at doing venture debt so that you don't have to take delusion i think it is uh a necessary proposition for all founders to keep an eye towards but for sk pick specifically i think the difference would be that given that the space is an evolving one we'd always like to associate with venture firms who have a strategic value or who are able to bite it through with us over a longer period of time i think that makes a makes a ton of sense if you have more than a few variables that have already been answered to and you only require growth capital in order to just fuel the rocket and drive it forward for us i think it's as much as it's growth capital i think a good part of it is also towards ensuring that we are able to find that product market fit as much as we have early signs of it i think it is still a search given every company in our industry and that's really where i think an instrument such as a priced round might still make just as much sense if not a little more sense given the association with the venture industry as well as whatever we see it brings to the table very good side let's wrap up here quickly because we're out of time with the famous five number one what's your favorite business book zero to one pdp number two is there a ceo you're following or studying right now uh maybe not for you but program number three what billing tool do you use uh zoho invoices zoho okay very good number four how many hours of sleep to get every night uh i clock into six and a half that's pretty good in situation married single kids finger uh the freedom is something that i still love not kids and no no kids running around they don't know about i'm mad at my laptop as much as i can all right and how old are you i'm currently 24 24 last question what do you wish your 20 year old self knew uh some of these things generally require a layer of perseverance and good leaders are often boring wow what i mean by that is ability or a path to predictability on how your days go how organized you are and necessarily what makes you uh ritualistically good about the things you do that might be considered less flamboyant or you might not have the zeal in it but i definitely think a little more of that mundane structure to a day goes a long way to make you productive good leaders are boring it's a book title coming out it sounds interesting uh coming from psy launched escapic back in 2017 today they've got about 40 customers they've scaled to just about 100 000 bucks in monthly recurring revenue again up from nothing about a year before that they raised 500 000 bucks looking to potentially raise additional capital but they're ushering in and i love this they're really creating a new market uh which is again bringing the kind of the easiest platform to build vr ar and even 3d experiences without coding so drag and drop like wistia wix uh you know for things like social media or even you know ad units in the future or virtual tours things like this so look outside thanks for taking us to the top thanks for having me again