How Spyne Reached $3M ARR and 140 Customers with 1000% Growth in 2023 (Interview with Co-Founder and CEO Sanjay Varnwal)

Intro and Company Overview

Nathan Latka

00:00Guys, spyne.ai allows car dealerships, people working on the Ford to take a picture of a Ford with an ugly background, put it into his application, and create a beautiful backdrop that they can use for product images online. They Walmart, Flipkart, all these folks using me, is doing $250,000 per month in revenue today, up from $25,000 a month just a year ago, hoping to scale to $800,000 per month over the next twelve months. His last round raised

00:22last year was a $7,000,000 seed round led by Accel at a 25,000,000 valuation. Team of a 100 people now getting aggressive about scaling in The United States and Europe. We'll see if he can hit that target. Hey, folks. My guest today is Sanjay Kumar. He's a co founder and CEO of spyne, a deep tech visual tech company solving Internet cataloging for the globe. He's a tech entrepreneur taking a shot at transforming professional photography and the content

00:44industry. You can follow along at spyne.ai. Again, digital catalog for Internet commerce. Sanjay, are you ready to take us to the top?

Sanjay Varnwal

00:53>> Yeah. And thanks thanks for the nice introduction, Nathan.

Customer Story: Walmart, Flipkart, and Penske Motors

Nathan Latka

00:55You bet. Tell us specifically about a customer that's paying you today and how they use you.

Sanjay Varnwal

01:01>> Yeah. So we we as as as you described, we are solving cataloging as a core problem. So we are helping Internet businesses create the product visuals for their physical objects using using the mobile application and technology. So what we do is we we convert all those

Nathan Latka

01:19Sanjay, sorry. Can you tell the story of what you do through the customer, a real customer story versus just a generic here's what we do?

Sanjay Varnwal

01:26>> Got it. Got it. So we work with a lot of large Internet companies like Walmart, Flipkart, some of the large companies in The US as well. Penske Motors, one of them shipped. So some of these like very very large companies work with us to create their catalogs. So the product images, the car images, the product images that you see in some of these websites are entirely done using spyne. So spyne has a mobile application that is

01:51>> used by their field staff to shoot their cars and then the app basically guide them how to shoot like a photographer. So there are computer vision models which is deployed on the application that turns a layman user behave like a professional photographer. So they shoot like a car photographer and after shooting, we convert those cars shot in the open ground into very premium studio finish studios, right? Studios of BMW, studios of Mercedes, studios of dealerships. All of

02:20>> these we convert using the AI and we get them published on their website. So this is what we do.

Nathan Latka

02:25Very cool. And are you working mainly with car dealerships? Is that the main user?

Geographic Reach and 140 Customers

Sanjay Varnwal

02:29>> Yeah. Car dealerships is one of the major segments for us. So we have been working a lot of geographies. So US, Europe, Middle East, Southeast Asia, India, of course, because we are based in India. So South America. So we have got about like 140 plus clients all across the globe right now. Some of the names are pretty big names in in these geographies.

Nathan Latka

02:48You said you have a 140 customers?

Sanjay Varnwal

02:49>> Yes.

Pricing Model: Per-Car and Per-Product

Nathan Latka

02:50Very cool. Well, tell tell us more of the backstory here. I guess, me understand before I get you know, when you launched and how you got your first 10 customers, how do you price this? What's the average customer pay per month to use the technology?

Sanjay Varnwal

03:03>> Yeah. So we price it per product. So per car so product could be anything. It could be a real estate. It could be a car. It could be a product like model, clothing or anything, food, dish as well. So we price by the category, by the product. So let's say a car, so price them for anything between a car photoshoot done using our application will cost about 3 to $8 based on the volumes that you commit

03:27>> to us every month. So let's say you are doing about 500 cars a month, we'll give you a price of maybe $5 a car. You do about 30 cars a month, we'll do give you a price of $8 a car. So this is the price range that we give you.

Nathan Latka

03:42Right?

Sanjay Varnwal

03:44>> But large enterprises, we we go as low as low as 1.5 to $2 a car as well. Yeah.

Nathan Latka

03:49Okay. If you take an average though across your entire customer base, what's the average customer paying you per month or per year?

Average Contract Value and $3M ARR

Sanjay Varnwal

03:55>> Yeah. So we we generally target the mid mid mid market segment. So not the very, very large enterprises. So the that segment gives us about, 30,000 to $40,000 a month a year.

Nathan Latka

04:07A year. And that's for something like 500 SKUs shot per month, whether that's a dish for a food company or a car for a car dealership.

Sanjay Varnwal

04:16>> So majorly 80% of the business is automotive right now. So this is the the ACV that we are driving as of now.

Nathan Latka

04:23Now if I take a $30,000 ACV times a 140 customers, you guys had a $4,200,000 run rate today?

Sanjay Varnwal

04:30>> So we are not not not not all the customers are in that ACV zone right now, but we are roughly at about 3,000,000.

Nathan Latka

04:363,000,000. And what do you hope to grow to by the end of this year?

Sanjay Varnwal

04:40>> So we are targeting about 10 to 12,000,000 kind of a

Nathan Latka

04:43Oh, wow. 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 you log in,

05:08you 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 your SaaS company,

05:32you'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 about this is

05:54this 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 founder 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 and the multiple.

06:19Maybe 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. All right. We're gonna go back to the YouTube video here in a

06:42second. 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. Let's jump

07:08back into the interview. And if you're doing if you're doing 3,000,000 today in revenue, which which is what? About $250,000 per month, what were you doing monthly exactly one year ago? Do you remember?

Sanjay Varnwal

07:19>> Yeah. So one year ago, we were exactly at about one tenth of it, this number.

Nathan Latka

07:23One tenth?

Sanjay Varnwal

07:24>> Yeah. So $25,000 a month.

07:28>> Yeah. So we were at about, 300 k, 250 to 300 k.

Nathan Latka

07:31In ARR one year ago?

Sanjay Varnwal

07:32>> Yeah. Yeah.

Nathan Latka

07:33Oh, wow. So you've had explosive growth. When did you launch the company?

Company Founding and Pivot to Automotive AI

Sanjay Varnwal

07:37>> So we we launched this product in the middle of two thousand twenty one.

Nathan Latka

07:41Why do I have in my research that you launched spyne in 2015?

Sanjay Varnwal

07:45>> No. 2018, we we launched I moved full time to spyne in 2018 mid. First one and a half years, I we worked on a product idea which didn't work out. So we pivoted by the end of two thousand twenty to this model.

Nathan Latka

08:00Tell me the product that didn't work out. You worked for a year and a half on it. How much money did you spend on it before you killed it?

Sanjay Varnwal

08:05>> Yeah. So we we so we we spent almost 200 k on that particular product overall. So we went to a revenue of about like about roughly 3 to 200 ks kind of a revenue, but we realized very early on that this is something that will not scale big. So we figured out that that business can scale to about 3 to 5,000,000 kind of an ARR in roughly three to five years time frame. But beyond that, the

08:34>> market size is not that very good. So basically, were building a content SaaS platform for the photographers earlier. Mhmm. Mhmm. And you see photographers are not that high paying

Nathan Latka

08:45persona. Do you have co founders of the company?

Sanjay Varnwal

08:48>> Yeah. We have one more co founder with the name Deepthi.

Nathan Latka

08:51Okay. So you two founded the company together, two of you?

Sanjay Varnwal

08:54>> Exactly.

Nathan Latka

08:55Did you split equity evenly at the start 5050?

Sanjay Varnwal

08:58>> No.

Nathan Latka

08:59So You got more?

Sanjay Varnwal

09:00>> Yeah. I got more.

Nathan Latka

09:02Smart man. Alright. Sanjay gets more equity. So when you wanted to kill that first project, there wasn't a big debate. You just made the decision and you moved on.

Sanjay Varnwal

09:09>> No. No. No. So that that was actually a big big decision because the startup started with some genesis, which was which was which we completely, like, turned 100 degree away. Right? So so we actually were figuring out which idea to get into and because we wanted to remain the content domain. Right? So photography as a as a content platform, are providing as a SaaS platform, but we decided to focus in the deep photography space itself Rather

09:37>> than helping photographers, we thought, why not start photography as a domain with the competition that which is emerging With AI. With AI.

Nathan Latka

09:45Yeah. Makes tons of sense. Now what did you so you shut that first company down in 2019. It's the same company, but you shut the product on 2019. You relaunched this and get it going in 2020. How did you pay your bills between 2019 and 2020?

Funding History: Pre-Seed and Accel Seed Round

Sanjay Varnwal

09:56>> Yeah. So we we raised a bridge around of about 700 k between that.

Nathan Latka

10:02So Sorry. 7,000,000 or 700,000?

Sanjay Varnwal

10:04>> $700,000.

Nathan Latka

10:06What year was that?

Sanjay Varnwal

10:08>> In the at the early two thousand twenty, we did that bridge.

Nathan Latka

10:132020. Okay. And did you is that the only money you raised to date?

Sanjay Varnwal

10:17>> No. No. No. After that, we raised about 7,000,000.

Nathan Latka

10:20And when was that?

Sanjay Varnwal

10:22>> 7,000,000 we raised early two thousand twenty two.

Nathan Latka

10:257,000,000. Okay. So that was like your series, your seed your seed round?

Sanjay Varnwal

10:29>> Yeah. So we did it from Accel Partners.

Nathan Latka

10:32Oh, great. That's a great great form. So most folks in their seed round, especially if doing with Accel, Accel is gonna want 20% of the company in that round. Is that about how much they purchased?

Sanjay Varnwal

10:40>> Yeah. Yeah. Exactly.

Nathan Latka

10:41So what Sorry. That wasn't that wasn't the seed, the 7,000,000 seed. Right?

Sanjay Varnwal

10:44>> Yeah. Yeah. Okay.

Nathan Latka

10:45So that's what? Like a 40 or 50,000,000 valuation, something like that?

Sanjay Varnwal

10:49>> 25. We call

Nathan Latka

10:5125. Pre money, I guess, then. Right?

Sanjay Varnwal

10:54>> Yeah. No. Post money, it was 25. So there was some secondary which also happened.

Nathan Latka

10:58Oh, okay. Explain how that works. There's a lot of folks that think they can't do secondaries until it's like a series b, c, d. How did you negotiate a secondary so early? So there there were some of

Sanjay Varnwal

11:07>> the angel investors which Accel wanted slightly more percentage in the company. So but they didn't want to dilute the primary equity of the founders like us. Right? So they offered an exit to some of the earlier angel investors.

Nathan Latka

11:21Oh, so you didn't sell any secondary, just early investors?

Sanjay Varnwal

11:24>> No, the early investors.

Nathan Latka

11:26See. What multiple do the early investors get? Like a 2x or 3x on their money?

Sanjay Varnwal

11:34>> 13x.

Nathan Latka

11:3513x? Was that painful?

Sanjay Varnwal

11:37>> For them? For you.

11:39>> Yeah, so I can make like more money than thirty minutes.

Nathan Latka

11:44That's fair enough. Then I guess that 700,000 pre seed round, how much of the company did they own? Like 20%? Who? Accel? The pre seed. No, the pre seed, 700

Sanjay Varnwal

11:53>> Yeah. They they they own about 15%.

Nathan Latka

11:56But but some of 15. Okay.

Sanjay Varnwal

11:57>> Some of them exited in the Accel round.

Nathan Latka

11:59Yeah. Yeah. Yeah. Yeah. That's great. So that's pre seed round in '20 early twenty twenty was at, like, a 4,000,000 valuation or something like that.

Sanjay Varnwal

12:06>> $3.03 and 4.

Nathan Latka

12:07$3.03. Yeah. Interesting. This is a great story. Okay. So you're scaling now. Walk me through how you're getting customers today. What's your growth growth strategy?

US and Europe Go-to-Market Strategy

Sanjay Varnwal

12:16>> So we we are setting up a very strong GTM for The US. We are targeting about 45,000 auto dealerships that are there in The US right now and almost near nearly the same number in the Europe geography like Germany, Italy, UK, Sweden. So some of the top geographies in the Europe region. So entire US and entire Europe. So if you combine both the geography, there are close to 90,000 to 100,000 dealerships in these two places. So

12:43>> the ACV that we are targeting with this product is about 10 k right now because we are now going slightly down. Mean, slightly smaller dealership segment as well. So there's a huge opportunity even if we get to about like three to 4,000 dealers in the next two years that will give us a very practical crack at about 30 to 40,000,000 ARR.

Nathan Latka

13:04And you said there's 90,000 dealerships in The US and The UK?

Sanjay Varnwal

13:07>> Yes.

Nathan Latka

13:08US and Europe. US and Europe. So how do you let's say, like, I'm in Austin, Texas. There's a Ford dealership down the road. How are you gonna get in front of that Ford dealership?

Sanjay Varnwal

13:16>> We are setting up local sales teams in the in the various states in The US.

Nathan Latka

13:20Oh, wow. You're gonna set up local teams in every state?

Sanjay Varnwal

13:23>> So we we already have, like, one person in in Texas and one person in LA right now.

13:28>> So we're doing this,

13:29>> you know, four to five people, and then we have our inside sales team back here in India, which is also closing bigger deals right now.

Nathan Latka

13:35How many folks are full time today?

Team: 100 People, 60 Engineers, 12 in Sales

Sanjay Varnwal

13:38>> Full time, we are about 100 people in the company. 100 people.

Nathan Latka

13:40And and how many are in sales?

Sanjay Varnwal

13:43>> Sales, are about 12.

Nathan Latka

13:45Oh, 12. Okay. And how many are engineers?

Sanjay Varnwal

13:47>> So we we are heavily r and d focused company. So we are closely close to what is 60 to 65 in product, tech, AI, design, all things all

Nathan Latka

13:57all And are most of your engineers in in Chennai or Mumbai or Bangalore? Where are they based?

Sanjay Varnwal

14:01>> All of them are in Gurgaon.

Nathan Latka

14:03Oh, okay. New Delhi. Okay. And so what's like I'm just out of curiosity since you're on the ground there. What is a what is a senior front end engineer in New Delhi cost these days?

Sanjay Varnwal

14:13>> I mean, senior engineer at about, like, four to six years of experience Yeah. Would cost about

14:21>> roughly 35 to $40,000 here as well.

Nathan Latka

14:24Per year. Yeah. Yeah. Really interesting. Do do do employees in India care as much about equity as employees in The United States?

Sanjay Varnwal

14:32>> Oh, sorry, I didn't get this question.

Nathan Latka

14:34Do employees in India, do they do they want option grants? Do they care a lot about equity as much as the people in The US?

Sanjay Varnwal

14:42>> No. So, yeah, so that culture is setting up here in India as well. So people also are valuing equity, especially the person especially the people who are joining slightly at the later stage of their career. I mean, after six to eight years of experience, then they value the equity because some of the exact have happened in India as well in the recent past.

Monthly Revenue Target for 2023

Nathan Latka

14:59Interesting. Okay. So you've grown the past twelve months 10x, 25,000 per month up to 250,000 per month. What do you hope to finish this year with in terms of monthly revenue?

Sanjay Varnwal

15:09>> This year we should get to about in terms of monthly, we should get to about, like, maybe 700 to 800 k.

Famous Five: Books, CEOs, and Tools

Nathan Latka

15:17Yep. 800 k per month. Very cool. We're rooting for you. This is a great story, and it's a very slick product. I just checked out the website. Sanjay, we're out of time though for now. Let's wrap up with the famous five. Number one is, what's your favorite book?

Sanjay Varnwal

15:31>> I'm I'm these days, I'm reading Hard Things About Hard Things written by Ben Horowitz. Number founders of a sixteen z.

Nathan Latka

15:39Number two is there he's a great guy. Is there a c number two is there a CEO you're following or studying?

Sanjay Varnwal

15:44>> The CEO, of course. So I admire Elon Musk for his work ethics.

15:49>> Yep.

Nathan Latka

15:50Number three, what's your favorite online tool for building spyne?

Sanjay Varnwal

15:54>> Favorite online tool? I think,

16:00>> I mean, I have plenty, but these days I'm just figuring more more through chat GPT, but Google Google like all the way.

Nathan Latka

16:07Number four. How many hours of sleep do you get each night?

Sanjay Varnwal

16:11>> I sleep not not very it's six hours average.

Nathan Latka

16:15Oh, okay. That's not bad. And what's your situation? Married, single, kids?

Sanjay Varnwal

16:19>> Married, with kid.

Nathan Latka

16:20How many? One kid? One. Seven Oh, wow. And how old are you?

Sanjay Varnwal

16:25>> I'm I'm 38.

16:26>> 38.

Nathan Latka

16:27Last question. Something you wish you knew when you were 20 years old.

Sanjay Varnwal

16:31>> Yeah. I mean, the that the risk reward ratio is really, really high. And and then I sometimes think I should have taken this step much, much early on. So I took this step at 34 years of age, maybe 20 early twenties would have been a bit of a better stage for me as well.

Advice to Younger Self

Nathan Latka

16:50Guys, spyne.ai allows car dealerships, people working on the Ford to take a picture of a Ford with an ugly background, put it into his application and create a beautiful backdrop that they can use for product images online. They Walmart, Flipkart, all these folks using me is doing $250,000 per month in revenue today, up from $25,000 a month just a year ago, hoping to scale to $800,000 per month over the next twelve months. His last round raised

17:12last year was a $7,000,000 seed round led by Accel at a 25,000,000 valuation. Team of a 100 people now getting aggressive about scaling in The United States and Europe. We'll see if he can hit that target. Sanjay, thanks for taking us to the top.

Sanjay Varnwal

17:24>> Thanks a lot for inviting me, Nathan.

Nathan Latka

17:27One 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 1PM

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