How SpaceBasic Reached $20K a Month and 160,000 Users Digitizing Student Housing for Indian Universities (Interview with Co-Founder Madhavi Shankar)

Introduction and What SpaceBasic Does

Nathan Latka

00:00Hey, folks. My guest today is Madhavi Shankar. She is building a very cool tool called spacebasic.com or spacebasic.com, digitizing student experience for universities. Alright. Madhavi, are ready to take us to the top?

Madhavi Shankar

00:12>> Yes.

Nathan Latka

00:13Alright. So what is spacebasic doing? Are you selling to the university or the student?

Madhavi Shankar

00:17>> So we are a B2B SaaS platform. What we do at spacebasic is we digitize student campus housing communities. All of the tasks that happen on day to day basis is completely digitized. What we do from that data that we collect from the day to day tasks is we go ahead and kind of, with our analytics, turn that into useful information for universities and students.

Nathan Latka

00:44Very cool. And we'll say happy Diwali, right? That's all the noise in the background.

Madhavi Shankar

00:48>> Yes. You can hear a lot of crackers going off. It's Diwali here in India today.

Nathan Latka

00:53I love that. I love that. Okay. Very cool. So got it. So you're you're I totally understand the use case here. Who's buying it, though? Is it the owner of the real estate that's housing or is it the college themselves?

Madhavi Shankar

01:03>> So it is a platform. It's a B2B SaaS platform. We sell directly to the universities or independent student housing communities. So that's how. And once they onboard, then they go ahead and enroll their student population onto the platform.

Pricing Model: Per Student Per Year

Nathan Latka

01:20I see, got it. Okay, taking you to the backstory here, like what are they paying you today to use the technology on average?

Madhavi Shankar

01:26>> Right, so on an average, it depends. We charge between $4 to $9 per student per year, Since it's still, you know, that's the basic version, but like when we add the AI aspect of it, it kind of customizes. There's an enterprise pricing available as well. But that's the, you know, average ballpark of how a university would pay us here in India.

Nathan Latka

01:46And how many like, when a university signs up, how many students are you just signing up for when they're from their first test? I mean, it's gotta be hundreds. Right?

University Count and Total User Base

Madhavi Shankar

01:54>> Right. So, you know, at the moment, we work with about 65, 70 universities, about 150, 60,000 users in total, and that's our current user base. We want to kind of go 7x or 10x that next year post the COVID situation. But so far, that's what we've been able to achieve in terms of user base and universities that we work with.

Paying Students and Revenue Clarification

Nathan Latka

02:23So just to be clear, 70 paying universities and all of the students under those 70 add up to a 160,000?

Madhavi Shankar

02:31>> All the users. So we have users. When I say users, what I mean is students, staff, educators, administrators, their parents, etcetera. So all of our users in total come up to about one fifty, one sixty thousand users.

Nathan Latka

02:45How many paid seats do the seventy universities currently have on the platform?

Madhavi Shankar

02:49>> We charge per student per year. Yep. Though we have different users using it, at the moment we just charge the students. And we are about around 55 to 60,000 students on the platform.

Nathan Latka

03:02Wow. Okay. Amazing. So, I mean, can I take can I take 60,000 times $4 a seat? I mean, you're doing something like $200,000 a month in revenue?

Madhavi Shankar

03:10>> Yes. That's right. A year.

Nathan Latka

03:12That's amazing. Oh, a year or a month? Oh, a year. Got it. Yeah. Yeah.

Madhavi Shankar

03:16>> Yeah. A year. So you yeah. There's a conversion with the local currency, so I've kind of turned that over. It comes up to 4 to $10 or 4 to $9 a year.

Nathan Latka

03:26Well, this is great. So you're doing about $250,000 a year or about $20,000 per month, right?

Madhavi Shankar

03:32>> That's correct. Yes.

Founding Story and Launch Timeline

Nathan Latka

03:33Okay. This is a great story. Take me back to when did you launch this? When did you get your first customer?

Madhavi Shankar

03:38>> So a bit of a backstory is I started my journey working for startups back when I was in Sydney, Australia. So I joined a product company there, one of the founding employees. Started really early, kind of really my love for startups began there. And learning from that in 2016, I met with my current co founder who's based out of the Bay Area, kind of met casually, then decided we want to start this back here in India

04:09>> because digitization in terms of just student life outside of e learning was very minimal. So we kind of came back, did a lot of due diligence, and what we thought what we saw was the student housing segment was completely unstructured, very pen and paper driven, and that's why we started spacebasic. And we kind of did a pilot run end of twenty seventeen, but we actually went live with the product in quarter one, end of quarter one

04:42>> in 2018.

Bootstrapping and First Funding Round

Nathan Latka

04:442018. Got it. So you've built and built and built. Is great. Have you bootstrapped the business or did you raise capital?

Madhavi Shankar

04:50>> Bootstrapped the business. In 2020, we were cash flow breakeven, and we raised, you know, our first round of funding, you know, more of an angel round this year in May.

Nathan Latka

05:01In May. Okay. How much did you raise?

Madhavi Shankar

05:04>> So we raised a small amount. We have not disclosed the dollar amount for the funding amount. We raised a really small amount just so to build the technology platform and to kind of also scale up sales and marketing. But we plan to raise about a million, million and a half coming coming this year.

Nathan Latka

05:22Madhavi, I wanna know the first I wanna know the first capital. This is an important part to your story. It's how you build your MVP. You hire your first people. I mean, are we talking like a $100,000 raised or 200 something like that?

Madhavi Shankar

05:32>> We're talking between 250 k to a $500,000.

Nathan Latka

05:36I see. I see. Got it. Okay. And what did the $250,000 enable you to do? Was it hires, marketing, something else?

Madhavi Shankar

05:42>> Yes. The key areas where, you know, why we're just, 250 k to 500 k was for marketing, to get more feet on the street for sales, as well as to invest in technology. We really wanted to build out the AI part because we had all this data, but, we really wanted to turn that into valuable information. And that was one of the key kind of takeaways from this year's learning as well. And we plan to kind

06:13>> of now expand to the entire university population and not

06:20>> just the student housing segment. So we've learned a lot process this year.

Nathan Latka

06:26And you mentioned, are you sorry, you're raising now or you're gonna raise next year?

Madhavi Shankar

06:30>> Next year. So the plan is to raise next year.

Team Size and Composition

Nathan Latka

06:32I see. I see. Got it. Very cool. Okay. So $250,000 to $500,000 rate on a pre seed round. It's helping you guys to grow, make some hires. What's the team size today? How many people?

Madhavi Shankar

06:41>> Today, we're about 15 on and off. That's our total team size. But if we take in our advisers and all of our, you know, consultants, we're a team of about 21 people.

Nathan Latka

06:52How many just full time?

Madhavi Shankar

06:54>> 15.

Nathan Latka

06:55Oh, the 15 is the full time. Got it. How many of those are engineers?

Madhavi Shankar

06:59>> So we're about six engineers. We have about seven sales marketing, and the rest are customer support.

Sales Strategy and University Acquisition

Nathan Latka

07:09Tell me more about the sales and marketing folks. They can't go and sell student by student, but I guess they can go sell university by university, right?

Madhavi Shankar

07:16>> Right. That's right. So we sell directly to universities. Every university has an average ticket size of about 800 to 1,200 students. That's an average size. So what we do is we do mostly referral. Word-of-mouth works a lot, and we've also kind of directly reached out to customers. We've had some amount of inbound come in this year as well. But it's been a very kind of a still figuring out phase for sales and marketing, but we really

07:44>> want to expand and be aggressive about that in 2022.

Revenue Growth and COVID Impact

Nathan Latka

07:49Mhmm. Oh, I love that. Now, it sounds like, again, growth is nice. You're doing about $20,000 a month in revenue today across 70 universities. Do you remember where you were exactly a year ago?

Madhavi Shankar

07:58>> Yes. So, we have grown about 35% in terms of new customer acquisition. Also, here in India, the COVID second wave kind of gave us like about four, four and a half months of complete shutdown. Universities have started opening up now over the last one to two months. But regardless of that, we've still done about 35% of new customers'sales. And I feel like a lot of, in terms of existing student population, it's not 200% capacity because

08:30>> of COVID. But I definitely see that increasing, you know, around now, which is enrollment time, October, November, December.

Nathan Latka

08:41I see. So last year at this time, were doing about 13,000, 14,000 a month in revenue and you grew that 30% up to 20,000. Yeah.

Madhavi Shankar

08:48>> Uh-huh. Right. So

Nathan Latka

08:49During last COVID, pretty impressive.

Madhavi Shankar

08:52>> Yeah. We actually broke even during COVID. I I I was surprised myself that, you know, that kind of happened, but we also pivoted a little bit. So I think that really helped us achieve that.

Equity Split and ESOP Pool

Nathan Latka

09:02Tell me about the equity splits on the founding team. Do they split it equally or no?

Madhavi Shankar

09:07>> So we we have, you know, we have ESOPs. We have since, you know, we are two co founders. It's not split equally, but it's kind of split in a way where there's some for investors, future investors, ESOPS, and the two founders.

Nathan Latka

09:25How did you, when people set up their first ESOP pool, a lot lot of people don't even know what that means. Employee stock option pool, it's basically equity for you to recruit talent in the future. But everyone, there's no real art or science to how you set that up. How did you guys choose to set that up at the start? I mean, imagine you do that with a seed round and how big did you set aside?

09:4010%, 5%, something else?

Madhavi Shankar

09:43>> You cut out.

09:45>> Yeah. We cut out 10%. Again, you know, with ESOPs, the thing is we wanna kind of really we want, you know, employees who are really passionate about the product to or the company to really have that skin in the game and not just

10:01>> have a conversation in terms of salary. We've seen ESOPs to be a great option. And I've personally seen that work with my previous organization as well. And I really wanted to bring that to spacebasic as well because I see, you know, that could be really helpful for people who are passionate about startups or at some point want to start their own later on. I think it gives a lot of learning. So personally, it was important to

10:25>> me and I wanted to bring it here.

Equity Sold and the SAFE Note

Nathan Latka

10:26No, I think that's smart. 10% there. And then most founders'SaaS based, when they're doing their pre seed or seed rounds, are selling about 15% to 20% of the business. Were you guys in that same range?

Madhavi Shankar

10:36>> No, we were not. We

10:40>> were around 5% to 6% or less than But,

10:45>> know, again, it was a very, as I said, it was a very small round and we want to kind of save up equity once we reach our major milestones so we get a better valuation when we raise the next round.

Nathan Latka

10:57Yeah. I mean, raise you raised that 250,000 seat at a cap of, like, 5,000,000, something like that, five to 6% of the business. That's that's pretty impressive, actually.

Madhavi Shankar

11:05>> Thank you.

Nathan Latka

11:06How are you able to do that? You you guys were pretty early there there still in revenue.

Madhavi Shankar

11:11>> Right. But, you know, what we also have is not just revenue, right? We have the potential revenue, our market size, our team, and all of those factors considering. So more of a it was more of an angel around which is you can look at it as a, you know, bridge note or not even a bridge note, what was the word? Safe note. You know so we didn't, that's what it was. It was more of a you

11:35>> know early, safe note round, but we will convert that next year. You know, a proper fundraising round.

Future Fundraising Plans

Nathan Latka

11:43Very cool. How much are you targeting next year, you think?

Madhavi Shankar

11:47>> You know, we're still yet to finalize on the math, but I'm thinking maybe a million or so is what we're looking to raise.

Nathan Latka

11:54At what? A $10,000,000 to $20,000,000 valuation?

Madhavi Shankar

11:58>> Well, you know, it'll be good to get a 10, but we'll have to see.

Nathan Latka

12:02Yeah. Yeah. Very cool. Okay. Anything else we missed? Obviously, folks can check out the company at spacebasic.com. Anything else, Madhavi?

Madhavi Shankar

12:09>> No. Well, thank you so much, Nathan. It was great chatting with you.

Famous Five: Books, Tools, and Personal Background

Nathan Latka

12:12Let's wrap up here quickly with the famous five. Number one, favorite book?

Madhavi Shankar

12:19>> Lean In.

Nathan Latka

12:20Number two, is there a CEO you're following or studying?

Madhavi Shankar

12:23>> Yes. I I I actually kind of read recently, you know, a book about Elon Musk, and I also read a book about Bill Gates and how he founded Microsoft. So that was pretty interesting.

Nathan Latka

12:33Number three, what's your favorite online tool for building spacebasic?

Madhavi Shankar

12:38>> You know, I use a lot of tools, but my favorite being Canva, super handy. And apart from Canva, I use also use a tool called Pitch for my presentation. So I've really gotten fond of that off late.

Nathan Latka

12:52Number four, how many hours of sleep do get every night?

Madhavi Shankar

12:56>> More than I used to before, but about six to seven these days.

Nathan Latka

12:59Okay. And what's your situation, Madhavi? Married? Single? Kids?

Madhavi Shankar

13:03>> Single.

Nathan Latka

13:04Alright. No kids. And how old are you, if you don't mind me asking?

Madhavi Shankar

13:07>> Sure. I'm 31.

13:09>> 31.

Nathan Latka

13:10Last question. Something you wish you knew when you were 20.

Madhavi Shankar

13:13>> Oh my gosh. If I were 20, I wish I studied entrepreneurship as a course, you know, which was not even an option. You know, startup was not a buzzword when when I was studying. So I wish I wish I had exposure to that. I would have started off much sooner than I did.

Nathan Latka

13:28Guys, spacebasic helps universities in India manage the student housing experience. They had $14,000 a month in revenue a year ago, doing $20,000 a month. Pretty impressive considering the second wave of COVID in India shut down most of these schools. 70 universities worked with them. They're now growing very quickly. 250,000 raised in their pre seed round, sold five or 6% of the business. Now looking to scale out to more students. Currently, have 60,000 students on the platform,

13:52160,000 users across those 70 universities. Madhavi, thanks for taking us to the top.

Madhavi Shankar

13:57>> Thank you so much for having me.

Nathan Latka

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