How Krome Image Labs Reached $2.4M ARR and 100% Growth with a Team of 6 (Interview with CEO Eduardo Llach)

Host Intro and Company Overview

Nathan Latka

00:00Chromeimagelabs.com launched several years ago, now doing $200,000 a month in revenue, up from a $100,000 a month just a year ago. They're serving 500 customers. They helped those customers last month process over 15,000 images through their system. They set up of 200 editors and designers on their back end, almost like Uber. For each image, they charge about $25 per image. The editor or designer makes, call it, 10 sorry, 5 to $10 on that. So the overall

00:25margin of the company call it 50 to 60%. They've done this in a very capital efficient way. They just now closed their first $600,000 round of funding at so call it somewhere between a 10 and 20,000,000 valuation. So very capital efficient. Their team size, just six people full time. Hey, folks. My guest today is Eduardo Jacki helps Amazon, Walmart, and Sotheby's create images that lift their product sales by using a proprietary data and AI algorithm to

00:47determine what image elements are lifting sales. They then use generative AI designs and a global team of designers to create listing, lifestyle, and infographic images at scale affordably and faster than anybody else. They do this at chromephotos.com. That's chrome with a k at the start. Eduardo, you ready to take us to the top?

Eduardo Llach

01:03>> Yes. Absolutely.

Company Launch and Customer History

Nathan Latka

01:05Alright. Very cool. So you've got some enterprise accounts here. That must mean you've been doing this for a bit. When did you launch the company?

Eduardo Llach

01:10>> We launched the company a few years ago. We have done over a million images for over a 100,000 customers. We started creating cuss images for our customers, and we moved on to the enterprise two, three years ago.

Enterprise Clients: Walmart, Sotheby's, and Others

Eduardo Llach

01:24>> Walmart is using our technology and our images to help their national sellers. Amazon, we are a top ranked Amazon, ESPN seller. Sotheby's users are technology in our images for their online auctions, Sasol Hotels at Home and a number of others. And we're just launching an ability for people, we have launched it and we're actually creating pilots where they can send us 10 of their products, a 100 of products, a thousand of their products. And to your

01:55>> point, we will then use the data, AI, general AI to create images that are guaranteed to lift their sales.

Pricing Model: Per-Image and Subscription Credits

Nathan Latka

02:05So, what are these cost companies today paying on average per month to use your technology?

Eduardo Llach

02:11>> They tend to pay per image anywhere from $25 to $50 per image.

Nathan Latka

02:17Okay. 25 to 50 per image. And so how do you price? Do you let them just pay as you go, or do you do you sort of price in buckets, credits of images?

Eduardo Llach

02:26>> We do both. You can get a subscription and have credit similar to the way that Audible works, where you have credits that you can use for anything. You can use them for listing, lifestyles, infographics, photography, design sessions, bundles, you name it. But most people are coming in and then using it for the lifestyles and infographics.

Nathan Latka

02:50Interesting. Okay. So in March, the last full month here, last month, how many images did you process?

March 2023 Volume: 15,000 Images Processed

Eduardo Llach

02:56>> We did about, let me do the math here, about 15,000.

Nathan Latka

03:0215,000. Wow. Across how many paying customers?

Eduardo Llach

03:05>> We have consumers, SMBs, and enterprises. And I would say that that was in the order of, you know, 100 customers or such. Some of the customers tend to do a lot more images than others,

03:20>> but yes.

Nathan Latka

03:21500 customers paid at least a dollar last month, something like that.

Eduardo Llach

03:24>> Oh, yeah. No. Much more than a dollar.

Nathan Latka

03:27But I'm just saying I'm just saying these are your pay these are not free users. I'm just saying these are your paid customers last month. Now can we take $25 per image times $15,000 images that would put you at about $375,000 a month in revenue last month?

Eduardo Llach

03:40>> Yes. It's a little bit less than that because some customers are doing simpler images. But yes, that will give you a good idea.

Nathan Latka

03:45Okay. North of 300,000 a month in revenue?

Eduardo Llach

03:49>> It's more north than 200,000.

Nathan Latka

03:51Okay. Okay. So you're doing greater than $200,000 a month in revenue. And help us understand growth. This is a hot space of what are with chat, GBT, generative AI. Where were you exactly one year ago? Do you remember?

Eduardo Llach

04:00>> We were about a 100,000.

Nathan Latka

04:02Oh, wow. Yes. Have you done this have you driven this growth bootstrapped or you raised money?

Eduardo Llach

04:08>> We have done a little bit of raising money on the seed side of the equation, but it's definitely been a lot of bootstrapping. I also have put in my own money into the company, but it's definitely been bootstrapped and with some seed funding.

Nathan Latka

04:21When was the seed round?

SAFE Round: $600,000 Led by Evolution VC

Eduardo Llach

04:23>> We just finished a safe round that we did with our lead investor, Evolution VC, Greg Smith, and that it was meant to power the launch that we're doing with Walmart, where basically they are taking our technology to highlight which products in their catalog, they have 50,000,000 products, need to be updated. We're telling them which sellers and which products need to be updated, highlighting those, and then are telling their sellers that, hey, these products are below par.

04:56>> Here is what you need to do. Here is a company that can help you. And we expect to get 20, 30% of those customers to use us. It's How a very

05:04>> much was there?

Nathan Latka

05:05Before I go deeper into the product, though, what was the so how much was the raise for?

Eduardo Llach

05:09>> We raised $600,000.

Nathan Latka

05:14Oh, 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, you connect

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07:38K. 600000 and this would be would you call this like a seed round or series a?

Eduardo Llach

07:42>> Seed round. Focusing on a series a this this year, likely in q three.

Equity Sold and Valuation Discussion

Nathan Latka

07:48Okay. So 600,000 raised on your seed just now. And most folks there are selling, you know, 15 to 20% of their company in their seed round. Were you sort of in that same range?

Eduardo Llach

07:55>> No. No. It was much less.

Nathan Latka

07:57Okay. I was about to say with your revenue, I'm hoping you were able to preserve your equity here. Yes. When you say much less, can we say under 10%?

08:04>> Yes.

08:04Okay. So north of a 6,000,000 post money valuation.

Eduardo Llach

08:07>> Say it again?

Nathan Latka

08:09North of a $6,000,000 post money valuation then.

Eduardo Llach

08:11>> It was it was much much further north than that.

Nathan Latka

08:13Okay. What I mean, I founders all the time, they have there's two school thoughts. Manage your multiple, and who cares? Get the highest you can. Right? Very different. So, like, which boat do you fall in?

Eduardo Llach

08:25>> We have optimizing for bringing the money when we need it at the best value we can get it at, and that has helped. I still have a significant portion of the company. Greg is our lead investor. He also has a significant portion of the company, and that's the way we want it. When we go to the series A, then we'll be doing a more traditional 10,000,000 round at 30,000,040 million dollars valuation and go from there. But

08:49>> the good news is that when we do that, we already have the technology that works. We already have customers to your point, and, you know, we've gotten up into the right results.

Nathan Latka

08:58So just to be clear then, mean, you sort of raised something like a six to 10 x multiple on current revenue then. Yes. Yes. So that would be like something around 24 to 30,000,000 valuation today, the last round.

Eduardo Llach

09:09>> I'd rather not go into the details, but it's more than 10 and less than 25.

Nathan Latka

09:14Okay. Fair fair enough. Fair enough. So good. So you're managing your your multiple, which is great. You're so I guess this begs the question, why do a round at all? I mean, this is good revenue. Why do you need an extra 600 k here? Why not keep all the equity?

Eduardo Llach

09:24>> I I think that's a good really good point. We this is a massive market. We estimate this, the talent is market to be at north of $60,000,000,000. It's a disaggregated industry where you've got, you know, Fiverr, Upwork, their Suna and Snapper allow you to send stuff to their studio or have a a photographer come to you, but it's really a disaggregated market. Just think think about taxis before Uber and Lyft. And given the size of the

Team Structure: 6 Full-Time and 200 Gig Editors

Eduardo Llach

09:52>> market, we want to capture it. We do need to bring in more data. We right now have 8,400,000 data points on products, product images that sell. We like to have that to be in the 100,000,000 data points. And we also need to create models. Right now, we're using existing models, feeding it our own data, but eventually we want to have our own models of data that create generative AI images based on the data that we have

10:17>> on what cells, and then create the flywheel of feedback. And that's a significant ask that, yes, you could bootstrap it, but you're in the risk that someone else is going come in that's going be significantly better funded and take it over. See ourselves as

10:31>> owning that space.

Nathan Latka

10:32Many folks are on your team today full time?

Eduardo Llach

10:35>> We are very lean. We have six people full time, but we do have a very sophisticated gig infrastructure. So we have two hundred two hundred, sorry, 200 editors and designers who are able to create these images that I mentioned.

Nathan Latka

10:50How do you do that? Tell me how that's structured.

Eduardo Llach

10:52>> Yeah. We we built that over a period of time and basically

How the Gig Fulfillment System Works

Eduardo Llach

10:57>> similar to an Uber driver who gets a ride and is told how much they're going to make and where they're going to go. We say, here's an image of a microphone. This is what needs to be done. These are the inputs. You're going to get paid this much. They do it. We then review that, if everything is good, then we send it back to the customer and the customer goes thumbs up or hey, do a minor

11:18>> tweak and goes back to them and fix it. And that is a really sophisticated system using pricing that we know exactly how much money we're making on that image, much money we're paying, what is the margin, and we're able to then have margins that are 55 to 60%.

Nathan Latka

11:33Interesting. So how much of what you do would you say is software versus a really smart organization of humans?

Margins, AI Automation, and Future Unit Economics

Eduardo Llach

11:41>> I would say that everything up to the the actual image creation is software. All the data of what is gonna move the needle for this microphone in front of me, what are the elements, who should be in front of the microphone, What how the images should be photographed? All that stuff is data and AI, machine learning, deep learning, Gen AI and so on. When you finally say, go ahead, give me that image and here's my product,

12:08>> here's my branding, here's my logo, etcetera. At that point, all of it comes into an editor or a designer who then assembles the final image. We give them a whole bunch of preassembled images and ready to go, so they do the final Photoshop work and then create the final image.

Nathan Latka

12:25What is the average? Let's say each photo costs on average $25 for you to process. Of the $25 you charge the customer, how much of that goes to one of these editors and designers that you have on staff?

Eduardo Llach

12:35>> Between 5 and $10.

Nathan Latka

12:37Okay. Interesting. So on $200,000 a month in revenue, you got about $7,080,000 of that paying out these 200 editors and designers?

Eduardo Llach

12:44>> Yeah. As I said, our our margins are being consistently between 5560%.

Nathan Latka

12:49I mean, isn't that the big question? That's probably what makes it hard for you to like a SaaS multiple, Is your margins are lower than SaaS, then you know, it should be around 85. So but you're doing it the right way. The first step is build a human system. The second is can you start replacing humans to drive down your economics? Absolutely. Right? Or Can you do that?

Competitive Moat Against ChatGPT and Generative AI

Eduardo Llach

13:05>> Not yet. The Gen AI is not there. But what is happening is we're automating more and more and more often. Right? And so by the time the editor comes in, the image may be, you know, 60% done, 70% done, and and eventually it'll be eighty and ninety percent done, and then that will again bring the

13:22>> margins up. Per unit cost per unit cost down margins up.

Nathan Latka

13:24So you're trying to replace those folks, but there's also big companies trying to replace you completely. How do you make sure you don't get completely replaced where Amazon or a Walmart seller can just go to ChatGPT, put in an ugly image, boom, it spits out a beautiful one?

Eduardo Llach

13:37>> Yeah. Today, that is not working.

13:41>> ChatGPT doesn't give you perfect text. If you've used it, you've realized you have to go and edit it. Right? But the the reason why ChatTPT is so successful, we all know how to edit text. Right? You can take the ChatTPT text, tweak it, send it to Grammarly, make sure everything is right, and then publish it. And you can do that. Anybody can do that. Right? But you can't edit an image. Majority of people can't edit an

14:07>> image. And furthermore, you don't necessarily know what it is that's gonna move the needle for that microphone that you have in front of you or the bicycle behind me. That is very important. And so we have that data of what's going to move the needle and then we then can take the generative AI images and make them perfect. That's what people are loving about what we're providing to them because we're making generative AI images work for

14:34>> them. Whereas generative AI text, anybody can edit, but generative images don't. And furthermore, generative images are not very good. Now, they're going to get better, don't get me wrong, but they're not very good right now. There's a lot of issues with eyes and fingers and that kind of stuff. And so typically what we'll do is we'll use a generative image as a template and then recreate it with models and settings and so on. You have a

14:57>> perfect image that you have the rights for as well.

Revenue Growth Target for December 2023

Nathan Latka

14:59What do you think you'll grow monthly recurring revenue to by December this year?

Eduardo Llach

15:03>> We expect it to be two to three x what we are now.

Nathan Latka

15:07So 400 to 600,000 a month in December revenue this year?

Eduardo Llach

15:10>> Yes. Based on the work that we're doing with Walmart and some of the other companies that we're rolling out.

Acquisition Offer Rejected: Long-Term Vision

Nathan Latka

15:17If someone came to you and offered $10,000,000 all cash upfront to buy the whole company, would you sell?

Eduardo Llach

15:23>> No.

Nathan Latka

15:24That was quick.

Eduardo Llach

15:25>> No. Not at all. No. This is a massive opportunity. We're talking, you know, exits of 100 plus million in terms of results just because of the fact of the opportunity that exists. I'm telling a big

Nathan Latka

15:37opportunity attracts a lot of competition. Right? There's more people you have to beat.

Eduardo Llach

15:40>> It's really interesting. We've been doing this for a number of years and no one is doing this kind of stuff. It's tough. People don't like to deal with people, but we've automated the heck out of it. We're really successful at hiring them. We have an automated process for training them and so on. And we could deploy them in different areas. What we do for Sasol is very different than what we do for Sotheby's. Sotheby's has an

16:01>> automatic, you know, pre done assembly line, custom assembly line. Sasol has an automated pre done customer assembly line. It took us a week or two to create them. We have a really sophisticated system that other people are like, that's a lot of work.

Famous Five: Books, Sleep, and Personal Background

Nathan Latka

16:14Very cool. We're rooting for you. We're out of time for today, though. Let's wrap up here at Eduardo with the famous five. Number one, favorite book.

Eduardo Llach

16:21>> Well, that's a that's a good question. I just read Critical Mass, and I really enjoyed it. It's a sci fi hard sci fi. Also apologize. I should say the project, a Hail Mary by Adam Weir is phenomenal.

Nathan Latka

16:35Number two, is there a CEO you're following or studying?

Eduardo Llach

16:41>> The two of them, which are very contrasting, are are Tim Cook and Elon Musk. Yep.

Nathan Latka

16:45Number three, what's your favorite online tool for building Chrome?

Eduardo Llach

16:51>> At this point, I actually that's a really good question. We use XD. XD is Adobe product. It allows just to Got create it. Mock ups and then flowing and so on, and then they go right into the editing team. But that's what I that's what we do.

Nathan Latka

17:10Number four, how many hours of sleep do get every night?

Eduardo Llach

17:14>> I read the book, Stay Sharp by Gupta, and he said you need to get sleep if you wanna be, productive and also, healthy. So I tend to get seven plus hours of sleep.

Nathan Latka

17:27And what's your situation, Eduardo? Married, single, kids?

Eduardo Llach

17:31>> I am, married with kids.

Nathan Latka

17:33How many kiddos?

Eduardo Llach

17:34>> Five.

Nathan Latka

17:35Wow. Okay. How old are you?

Eduardo Llach

17:38>> Say it again?

Nathan Latka

17:39How old are you?

Eduardo Llach

17:40>> I am 64.

17:42>> 64.

Nathan Latka

17:43Last question. Something you wish you knew when you were 20 years old.

Eduardo Llach

17:47>> To go for it. To go

Nathan Latka

17:49for it. Said you're 64 years old?

Eduardo Llach

17:51>> Yes.

Nathan Latka

17:52Wow. You look great for 64. That's incredible.

Eduardo Llach

17:55>> Thank

17:55>> you. Right. Go for it hard.

Nathan Latka

17:56That's great. Guys, there we have it. Chromeimagelabs.com. Launched several years ago, now doing $200,000 a month in revenue, up from a $100,000 a month just a year ago. They're serving 500 customers. They helped those customers last month process over 15,000 images through their system. They set up of 200 editors and designers on their back end, almost like Uber. For each image, they charge about $25 per image. The editor or designer

18:20makes call it 10 sorry, 5 to $10 on that. So the overall margin of the company call it 50 to 60%. They've done this in a very capital efficient way. They just now closed their first $600,000 round of funding at call it somewhere between a 10 and 20,000,000 valuation. So very capital efficient. Their team size is just six people full time, which is great. Eduardo, thanks for taking us to the top.

Eduardo Llach

18:39>> Thank you, Nathan.

Nathan Latka

18:41One 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 alive. It is fun to watch every Thursday one

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