Founder Interview
How Strayos Grew from Zero to 22 Paying Customers in Under a Year with Drone AI for Mining (Interview with CEO Ravi Sahu)
- Interview Date
- November 14, 2018
- Interviewee
- Ravi SahuFounder and CEO
Company Metrics at Interview Time
Paying Customers (2018)
22
Total Funding Raised
$650,000
Team Size (2018)
11
Year Founded
2016
Historical Snapshot
These numbers were reported by Ravi Sahu during the interview recorded in November 2018 and are a historical snapshot, not current figures. See Strayos’s current numbers.
Key Takeaways
- 01Strayos had 22 paying enterprise customers as of November 2018, up from zero revenue in November 2017.
- 02The company was founded in 2016 and launched its first product version in July 2017.
- 03Strayos raised $650,000 in a pre-seed convertible note round in 2017.
- 04The team had grown to 11 members split between St. Louis and India.
- 05Sales are driven primarily through a distributor network, with distributors earning 20% of first-year ACV and 5% on renewals.
- 06Strayos had one field sales representative at the time of the interview, recently onboarded; the 22 paying accounts came through distributors and Ravi's own customer visits.
- 07The company had lost only one customer, due to FAA drone compliance restrictions near an airport.
- 08Strayos was planning to raise approximately $1,500,000 in a post-seed round focused on customer acquisition growth.
- 09The platform uses drones and AI to generate 3D models of mining terrain, replacing manual laser scanning.
- 10Ravi Sahu had over 12 years of experience with Fortune 500 companies before founding Strayos.
Company Metrics at Time of Interview
| Metric | Value | Source |
|---|---|---|
| Paying Customers (2018) | 22 | Founder interview, Nov 2018 |
| Enterprise Customers (total, including non-paying) (2018) | about 40 | Founder interview, Nov 2018 |
| Total Funding Raised | $650,000 | Founder interview, Nov 2018 |
| Pre-Seed Round (convertible note) (2017) | $650,000 | Founder interview, Nov 2018 |
| Team Size (2018) | 11 | Founder interview, Nov 2018 |
| Field Sales Reps (2018) | 1 | Founder interview, Nov 2018 |
| Year Founded | 2016 | Founder interview, Nov 2018 |
| Distributor Commission (first-year ACV) (2018) | 20% | Founder interview, Nov 2018 |
| Distributor Commission (renewals) (2018) | 5% | Founder interview, Nov 2018 |
| Base System Price (2018) | $50,000 per year | Founder interview, Nov 2018 |
| Per-License Price (2018) | about $1,000 per month | Founder interview, Nov 2018 |
| Revenue (November 2017) | $0 | Founder interview, Nov 2018 |
Growth Breakdown
Revenue
Strayos was pre-revenue as recently as November 2017: asked where monthly recurring revenue stood a year earlier, Ravi said "We were zero." By November 2018 the company had 22 paying enterprise customers. Ravi did not give a current revenue figure of his own. When Nathan applied the $100,000 average contract he had assumed to all 40 customers, Ravi answered "Not necessarily because everybody's ticket size is like different." Applied to the 22 paying customers, Nathan's math came to about $180,000 a month, and Ravi answered "Yep."
Customers
Of approximately 40 enterprise customers engaged, 22 were paying at the time of the interview. The remaining accounts were still working through long sales cycles, which Ravi described as typically six months to reach a contractual stage.
Team
The team had grown to 11 members by November 2018, split between St. Louis, Missouri and Bangalore, India. It started with two or three people, including a partner from the mining and blasting industry, and later onboarded key executive team members, a couple of machine learning hires and, recently, its one field sales representative.
Funding
Strayos raised $650,000 in a pre-seed convertible note round in 2017. At the time of the interview, Ravi was planning to raise approximately $1,500,000 in a post-seed round to accelerate customer acquisition, targeting a strategic investor from the heavy industry or OEM space.
Growth Strategy
Distributor Network
The primary sales channel was a network of distributors who already had established relationships inside mining organizations. Distributors earned 20% of first-year ACV for bringing in a customer and 5% on renewals, while Strayos retained responsibility for customer success and onboarding.
Founder-Led Direct Sales
Strayos had only recently onboarded its one field sales representative, and he had not closed the 22 paying accounts on his own. Ravi said those came from "a combination of through the distributors, as well as, you know, me going and meeting them personally."
Long Sales Cycle Management
Strayos's enterprise mining customers usually took about six months to reach a contract. Ravi said it was "too early to say" how sticky they were, but the long evaluation, in which customers were "constantly using it" and "getting the accurate data from it", kept them on: Strayos had lost only one customer, at a site where drones were not allowed because it was close to an airport.
Strategic Investor Targeting
Rather than pursuing venture debt, Ravi was focused on raising equity from investors with networks in heavy industry or OEM markets, believing that a strategic investor would accelerate growth far more than capital alone.
Content Marketing
Asked about sales and marketing spend, Ravi said "It's mostly on the field sales side" and that Strayos "did some content marketing". The main sales channel remained the distributor network.
Best Quotes
“Enterprise software as a service company.”
“It's a $50,000 system per year.”
“So mostly we sell through distributors. So we have distributors who have existing relationships in these mining organizations or to their network, dealer network, those who are already present in the sites. So most of the selling that happens is through the distributor network, and then we take on to the direct, you know, customer success as well as onboarding part and then, you know, taking them into our entire product journey.”
“We raised pre seed round back in 2017.”
“So we've not lost customer yet, except just one churn we have is mostly because, you know, in their side they were not allowed to use drones because it was very close to the FAA compliance or, you know, airport area.”
“The renewals are 5%.”
“We might consider, but I think at this stage of the business, we, it's mostly about, you know, accelerating the growth and we don't see venture debt as a tool for us to propel the growth.”
“It's mostly about we are looking for an investor not just coming from the money perspective, but also a network as well as if some... If you're raising money from somebody from the heavy industries or the OEM focused investors, you know, that will propel our growth 10 times. Than venture debt. It's just the money for us, you know, and how do we manage that effectively.”
What Happened Next
At the time of this interview in November 2018, Strayos had 22 paying enterprise customers and was planning to raise approximately $1,500,000 in a post-seed round to accelerate growth. Ravi Sahu expressed a preference for a strategic investor from the heavy industry or OEM space over venture debt. This page captures the company as it stood at that moment. Visit the Strayos company profile for current figures.
View Strayos’s current profile and metricsFull Transcript
Chapters
- 0:00Introduction to Strayos and Ravi Sahu
- 0:33Business Model: Enterprise SaaS for Mining
- 0:58Pricing and Average Contract Value
- 2:09Company Founding and Product Launch
- 2:44Team Size and Customer Count
- 4:56Customer Retention and Churn
- 5:39Sales Team and Distributor Channel
- 6:51How the Drone AI Platform Works
- 8:57Fundraising Plans and Target Valuation
- 9:55Venture Debt vs Strategic Investment
- 11:13Famous Five Rapid-Fire Questions
Introduction to Strayos and Ravi Sahu
Nathan Latka
00:00Hello, everybody. My guest today is Ravi Sahu. He is the founder and CEO of a company called Strayos. Before founding the company, he spent more than twelve years working globally with Fortune 500 companies like AT&T, Verizon, British Telecom, and various other roles from product management to building teams for large digital projects. His area of expertise in artificial intelligence and data analytics drove him to launch Strayos, which is essentially a tool that helps with 3D
00:22visual intelligence, platforming and mapping using AI and drones to reduce cost and improve efficiency in mining job sites. Ravi, are you ready to take us to the top?
Ravi Sahu
00:32Absolutely.
Business Model: Enterprise SaaS for Mining
Nathan Latka
00:33Okay. To the top. So Strayos, is it a... First off, is it a SaaS company? Is that how you bill?
Ravi Sahu
00:38Yes.
Nathan Latka
00:39Okay.
Ravi Sahu
00:39Enterprise software as a service company.
Nathan Latka
00:40And you sell directly to the mining operators or the sites?
Ravi Sahu
00:45Well, we sell directly to the mining operators or anybody who is servicing in the mine. So either a driller, drilling OEMs or somebody who is doing the blasting in the mining sites.
Pricing and Average Contract Value
Nathan Latka
00:58Interesting. Okay. And on average, what do they pay per year for this tech?
Ravi Sahu
01:01It's a $50,000 system per year.
Nathan Latka
01:05Okay. That's a good So that's a starting point.
Ravi Sahu
01:06Yeah.
Nathan Latka
01:07Well, okay. So that's a starting point. What's the average would you say across your customer base?
Ravi Sahu
01:11Average if usually in this type of workflows, have to have four or five stakeholders, drillers, blasters, quarry manager, and someone who is doing the compliance. So at least a typical system looks like five or six subscriptions. So that's the, you know, average starting point. But if they have about 40 or 50 people working in the same mining site, everybody needs to sign up.
Nathan Latka
01:36Okay. So make that clear for me. Average customers may be paying, are you saying $250,000 per year?
Ravi Sahu
01:42No, average customer, one license costs about $1,000 So five stakeholders, they will be paying $5,000 Per year. Per
01:52month. And then, you know, usually it costs, you know, 50,000 to $60,000 as a starting point.
Nathan Latka
01:57Okay, so base $50,000 plus additional user licenses of call it $50,000 to $60,000 on top of that. So about a $100,000 is a fair average. Yeah. Okay, interesting. Okay, tell us more of your story here. When did you launch the company, what year?
Company Founding and Product Launch
Ravi Sahu
02:09So we launched the company back in 2016, about mid-2016. At that point of time, we had just the initial prototype that didn't do anything for the users. And we launched the actual product, the first version in July 2017.
Nathan Latka
02:25And who's we? How many team members?
Ravi Sahu
02:29So, we started with, you know, just initial team members with one of my partner who comes from the mining and blasting industry. So we were, you know, two or three team members were there, and then later we expanded the team late.
Team Size and Customer Count
Nathan Latka
02:44So how many today?
Ravi Sahu
02:45About two or 28, we onboarded, you know, key executive team members and then also, you know, couple of machine learning candidates.
Nathan Latka
02:53So Ravi, how many today total?
Ravi Sahu
02:55We are 11 team members.
Nathan Latka
02:5711, And that's then fast forward to the past two years, how many customers have you signed up?
Ravi Sahu
03:02So we have about 40 enterprise customers at the moment.
Nathan Latka
03:07Four zero?
Ravi Sahu
03:07Yeah.
Nathan Latka
03:08Okay. That's great. I mean, can I kind of back into revenue then? 40 customers paying an average ACV of $100,000 means you're doing about $300,000 or $400,000 a month right now. Is that about right?
Ravi Sahu
03:18Not necessarily because everybody's ticket size is like different. So we're roughly in about,
03:27and not everybody is kind of at the paying moment because the sales cycles are very long to get to the contractual part, which is basically it's usually six months. Some are still kind of in billing mode, but we have about paying customers.
Nathan Latka
03:45How many?
Ravi Sahu
03:4522.
Nathan Latka
03:4622, okay. So can I take same math, 22 times that ACV, you're doing about $180,000 a month?
Ravi Sahu
03:50Yep.
Nathan Latka
03:51And where were you a year ago in terms of monthly recurring revenue in November 2017?
Ravi Sahu
03:58We were zero.
Nathan Latka
03:59Oh, you're pre revenue at that point?
Ravi Sahu
04:01Yeah.
Nathan Latka
04:02Oh, that's great. How did you sign up 22 people so fast at those contract values?
Ravi Sahu
04:06So mostly we sell through distributors. So we have distributors who have existing relationships in these mining organizations or to their network, dealer network, those who are already present in the sites. So most of the selling that happens is through the distributor network, and then we take on to the direct, you know, customer success as well as onboarding part and then, you know, taking them into our entire product journey.
Nathan Latka
04:34And have you raised capital or are you guys bootstrapped?
Ravi Sahu
04:37We raised pre seed round back in 2017.
Nathan Latka
04:42So how much total have you raised today?
Ravi Sahu
04:44Yeah, it's about $650,000
Nathan Latka
04:46$650,000 bucks. And that was a convertible note or equity or debt or what?
Ravi Sahu
04:49Convertible note.
Nathan Latka
04:50Oh, great. Very good. Well, congrats there. Talk to me about stickiness. Have you lost any customers?
Customer Retention and Churn
Ravi Sahu
04:56Yeah, it's too early to say, but, you know, we have not lost any customer yet. And the reason is because, like I mentioned, the longer the sales cycle is, you know, it takes a lot of time to get them comfortable. And the more they invest on the time, a time period where they're constantly using it. So they are not only testing the product, but also, you know, they're getting the accurate data from it. Yeah. So the
05:20timing is the key part. So we've not lost customer yet, except just one churn we have is mostly because, you know, in their side they were not allowed to use drones because it was very close to the FAA compliance or, you know, airport area.
Nathan Latka
05:35Sure.
Ravi Sahu
05:36So that's the only one churn that we have. But other than that
Sales Team and Distributor Channel
Nathan Latka
05:39Got it. Are you spending any money on sales and marketing?
Ravi Sahu
05:44It's mostly on the field sales side. We know money on the marketing. We did some content marketing.
Nathan Latka
05:50How many people on the field sales team?
Ravi Sahu
05:53Just one at the moment.
Nathan Latka
05:54Okay. So one person has closed all 22 accounts?
Ravi Sahu
05:58No. It's kind of, you know, we recently onboarded him. So all 22 accounts.
06:05It's a combination of through the distributors, as well as, you know, me going and meeting them personally, the field sales guy will be sent to hire.
Nathan Latka
06:12So what kickback do you pay the distributors if they bring you a customer?
Ravi Sahu
06:15Usually it's 20% commission.
Nathan Latka
06:17Okay, it. Basically your customer acquisition cost is 20% of first year ACV?
Ravi Sahu
06:21Correct, yeah.
Nathan Latka
06:22Okay, so a $100,000 account, you'd spend about $20,000 to acquire that customer. Oh, interesting. Okay, and only in year one or do you keep paying the distributor every single year?
Ravi Sahu
06:31The renewals are 5%.
Nathan Latka
06:32Oh, that's smart.
Ravi Sahu
06:33They're not spending money on the... They are not spending any time in kind of keeping that relation there. Usually then falls back to us.
Nathan Latka
06:41Yeah. No, that's smart. And where's the team based?
Ravi Sahu
06:45So we're in St. Louis and also we have team members, the development team in India as well.
Nathan Latka
06:50That's great.
Ravi Sahu
06:50And we're in Bangalore.
How the Drone AI Platform Works
Nathan Latka
06:51St. Louis and India. And then we didn't spend a ton of time on the tech. So tell me how this actually works. A drone flies over the job site and maps all the tunnels underground. I mean, what's the value there? What do they do?
Ravi Sahu
07:01Yeah, so we are not doing anything underground yet. So typically in the mining or any aggregate or quarry industry, if you see, you you need to build highways, you need to build roads, and the first thing you need is materials, right? And when we think about mining, we usually think about metals or any other precious metals in the mine. But this is an activity that happens on a daily basis, which is drilling and blasting. So, you
07:30drill holes and you blast material, and you're basically generating material, rocks. But the current process which they use is very tedious and unsafe. So you're using a laser scanner, putting in different areas, and walking around the high walls and the cliffs. So what we are replacing that with is with drones, a low cost drones, as well as the drone flies in ten minutes, captures the data, and we have an automated processing engine which turns them into
08:013D models. So now, we are generating a report about the geometry of the terrain and the geotechnical attributes, so now they can make accurate decisions about where to drill holes, how deeper it needs to be, what's the diameter should be, and then how much amount of explosives is required to blast it so that the accurate energy distribution would be there and the accurate size of rock will come out. That has a downstream effect about the
08:24supply chain of transportation of those materials, because if you have an accurate, balanced sized rock, you're not spending more money on breaking those rocks into a crushing plant. And that's how it gets distributed to any other job site of your, if you're building highways or if you're building houses, you need those material.
Nathan Latka
08:43Interesting. Are you planning right now on raising any additional capital?
Ravi Sahu
08:46Part here is computer vision and machine learning platform, which basically gives them the ability to make accurate drilling and blasting design decisions.
Fundraising Plans and Target Valuation
Nathan Latka
08:57So Ravi, are you planning right now on raising any additional capital?
Ravi Sahu
09:02Yes. So we are looking for kind of, you know, really mostly on growing the customer base. So that's where kind of focusing more on the growth side. So yes, we will be raising an additional capital.
Nathan Latka
09:14How much do you hope to raise?
Ravi Sahu
09:17Roughly around 1,500,000. So that's another, like, post seed round.
Nathan Latka
09:21Okay.
Ravi Sahu
09:22Mostly focused on the growth side.
Nathan Latka
09:24And and if you raise 1,500,000, what are you targeting in terms of a pre money valuation?
Ravi Sahu
09:29So that's number kind of, you know, still we have not come to the conclusion yet.
Nathan Latka
09:34What would you happy?
Ravi Sahu
09:37That's,
09:41right now, depending upon the revenue numbers that we are trying to hit, we will be looking into 7 to $8,000,000 evaluation. And then once we hit some more revenue numbers, it will be in the range of, you know, 10 to 12.
Venture Debt vs Strategic Investment
Nathan Latka
09:55Yeah. Have you ever looked, I mean, obviously it sounds like you wanna go raise equity capital, but you take dilution on that. Have you ever looked at using like venture debt to fund some of the growth, you don't get diluted?
Ravi Sahu
10:04We have not. We've not looked at the venture debt as a model yet, especially because we don't have, you know, really good understanding about, you know, and the part that we are looking is some strategic fit. So someone coming from this industry and where we can expand the business, in a more focused way.
Nathan Latka
10:26Yeah. Would you raise venture debt if you like the terms and understood how it worked and they didn't, you know, didn't have to take dilution?
Ravi Sahu
10:33We might consider, but I think at this stage of the business, we, it's mostly about, you know, accelerating the growth and we don't see venture debt as a tool for us to propel the growth.
Nathan Latka
10:45Is that because you don't know how to spend money to make more money?
Ravi Sahu
10:48It's mostly about we are looking for an investor not just coming from the money perspective, but also a network as well as if some... If you're raising money from somebody from the heavy industries or the OEM focused investors, you know, that will propel our growth 10 times. Than venture debt. It's just the money for us, you know, and how do we manage that effectively. Yeah. That's what kind of...
Famous Five Rapid-Fire Questions
Nathan Latka
11:13Right. Let's wrap up with the famous five one word answers if you can. Number one, what's your favorite business book?
Ravi Sahu
11:19So I recently read a book called The Autobiography of Paramahansa. It's not a business, Autobiography of a Yogi.
Nathan Latka
11:28Got it. Very good.
Ravi Sahu
11:29It's not a business book, but I learned a lot of business kind of, you know, I digested like a lot of business elements from there.
Nathan Latka
11:40Good. Number two, is there a CEO you're following or studying?
Ravi Sahu
11:45CEO again, right now, one of the CEO that I use, it's Slack CEO. So he...
Nathan Latka
11:45Stuart Butterfield?
Ravi Sahu
11:45Stuart Butterfield.
Nathan Latka
11:56Great. Number three, what's your favorite online tool for building your company?
Ravi Sahu
12:00Favorite online tool. So we use Zoom a lot.
Nathan Latka
12:04Okay, that's a good one. Zoom.
12:05Number four, how many hours of sleep do you get every night?
Ravi Sahu
12:08So usually I get about six hours. I'm trying to increase it more. I have a, you know, young year, young baby as well.
Nathan Latka
12:16So one kid and are you married?
Ravi Sahu
12:18Yes.
Nathan Latka
12:19And how old are you?
Ravi Sahu
12:21I just turned 34.
Nathan Latka
12:2234, last question. What do wish your 20 year old self knew?
Ravi Sahu
12:26I think take it a little bit slow. Mostly because, you know, once you are in 20s, your mind kind of races in a different direction and you don't know what. So it's kind of, you know, taking it like a little bit slow about, you know, what what's the future you want to build and what's the impact you want to have rather than just kind of, you know, jumping into it.
Nathan Latka
12:51Guys, take it slow. From Strayos, they sell again drone AI technology to drilling OEMs, folks in the blasting industry, anything related to mines. They've got 22 customers today paying about a $100,000 ACV. So doing about a $180,000 per month right now. They were pre revenue a year ago, so healthy growth quickly. They've been efficient with the capital they've raised. $650,000 is what they've raised so far. Too early to talk about churn and things like that. However,
13:14they are spending about $20,000 to get that $100,000 ACV account, and that's a kickback to a distributor who's driving a bunch of their sales. They've got about 11 people right now based in St. Louis and India. And again, founded in 2016, looking for hopefully a strategic investor soon where they want to hope to raise $1,500,000 on maybe a 8 or 9,000,000 pre money valuations. Ravi, thank you for taking us to the top.
Ravi Sahu
13:37Thank you, Nathan.