SaaS Interviews with CEOs, Startups, Founders
1508 With $1.2m in MRR, They're Making Truck Fleets More Efficient
10 Sep 2019
Chapter 1: What is LogiNext and how did it achieve $1.2 million in MRR?
Loginex launched in 2014 today doing $1.2 million per month. That's up from $400,000 per month just about a year ago. They do this by serving 15 companies that manage fleets of trucks. On average, these fleets are about 500 trucks. They charge $50 per truck or per asset, so that's about $25,000 per customer per month. They've raised $10.5 million to scale to where they're at today.
Economics are healthy, less than 5%. Gross churn annually 108%. net revenue expansion annually. They've got a team of about 100 people based between Mumbai, California, and other remote locations as they look to keep scaling 2 or 3x year over year. Hello, everyone. My guest today is Dhruvil Sanghavi.
He's played a pivotal role in revolutionizing logistics with the use of data science and machine learning. He's been facilitated by Forbes as one of the top 30 under 30 achievers in 2017. He's also recognized as Achiever of the Year in 2017 by Business World as he continues to develop his product, Lodgy, next. All right, Drew Ville, are you ready to take us to the top? Absolutely.
Thanks for having me, Nathan. You bet. Tell us about the company. What's Loginex do and how do you make money? What's your revenue model? Well, we are a SaaS company. We are focusing on optimizing movements for enterprises. So take it as similar to how Google Maps optimizes your movements on a daily basis when you go from your work to your home, to your friend's place and so on.
We do a similar thing at scale for large enterprises. We charge them on a monthly basis for the number of licensed users. Okay. And give me a customer example, just so I understand this clearly. You're helping them actually move office locations? No.
So when we say we help them move their assets, what we mean is that we help logistics and supply chain companies move their trucking, their shipments, and so on. So if I have to just spend a couple of more minutes on what exactly we do, we work with one of the largest retailers in the U.S., and we also work with one of the largest transportation companies in the U.S. Now,
Both these verticals, they are pretty much the same from the logistics standpoint where goods are moving from their warehouse to their stores and from stores to their home. And especially with the advent of e-commerce, every customer is wanting faster deliveries. Amazon has changed the world where people want things in like four hours, six hours, same day, next day.
So having said all this, the market trend has been going more and more towards how do you really fulfill customers' needs by pushing shipments faster? And what our software does, it kind of aggregates multiple customers together based on their time preferences, location data, traffic information, available truck capacity, and so on.
And we put a machine learning layer to it so that the routes become optimized and these enterprises fulfill their customers with shipments faster. Is this all the way from kind of the warehouse to the consumer, or is it only kind of last mile? It's a lot of different models that we have, and we have different configurations for that.
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Chapter 2: How does LogiNext optimize logistics for truck fleets?
They may not be owning any assets, which we call it, as drivers or trucks on the road. And the carriers are the ones who are like FedExes and UPSs of the world, There are tons of other trucking companies in the U.S. across the world where they have their trucks, they have dedicated drivers working for them, and their job is to keep on optimizing their productivity.
Just like how Uber's job is to make sure all drivers are busy, and the busier the driver is, the more money the driver makes and the more money Uber makes. traditional offline transportation companies become similar to that. Okay. And you mentioned you charge as kind of a, it's a SAS model. How do you, how do you equate all this back to a SAS model? So what we do is we charge per asset.
That means, let's say, if you have a thousand trucks across the US and you want all these drivers to be routed via Logitech's platform, you want all these drivers to have Logitech's app on them, then you can just pay us monthly for all those thousand drivers. And that would be our revenue model. Well, just to be clear, it's not the driver, it's the truck. It's the asset, right? Not the employee.
It's the asset. So, of course, there will always be one driver and one asset. But the user cannot be a truck, right? So, let's say if there's a mobile app, it has to be installed into the driver's phone. Okay.
Chapter 3: What is the revenue model of LogiNext?
So, then we charge per driver, not per truck. But ultimately, you know, you will have the same number of drivers as the number of trucks you may be owning. I see. And I'm sure this answer is going to be very complex. I'm hoping you can simplify it for us.
If I have a truck and I'm doing this kind of thing and I'll drive anywhere in the U.S., I mean, what's maybe an average of what I might pay you per month to help me be more efficient? Well, we usually work with companies with at least 100 trucks in their fleet. So we do not really work with any small or mid-scale providers.
And hence, our minimum fees are like $50 per month per asset, as we call it. And then these 100 trucks can be purchased as minimum. Usually, the range of the customers we have is starting from 100 truck owners to 10,000 truck owners. And when we say truck owners, a lot of times they don't really own the truck because owning a truck is an expensive thing.
A lot of times, in fact, all these larger companies, they are of trucking. So they really work with other smaller and mid-scale companies, like a five truck, 10 truck kind of guys, and they push our software onto them so that they can be optimized who are dedicated asset providers within the network of a large company. So that's the kind of range that we work at.
And what would you say, I know you said, you know, you go as little as a hundred up to some with, you know, thousands. I'm going to force you here into an average just to make our conversation simpler. Does the average customer that you have maybe say have a thousand trucks or is it more like 9,000? Our current is 500. So the majority of it is between 100 and 500.
And because there are very few companies across the world who would be having more than 1000 trucks on their fleet. So just to have our statistics right, out of the entire fleet of the US, 90% of the fleets are less than 10 trucks. So that just directly leaves us with the 10% of the market. And within the 10%, it goes from 10 to 1,000, which is the majority of it.
And then there are very few companies who are owning more than 1,000. The more trucks that you have dedicated and the more trucks you own, the business complexity becomes higher and higher, primarily because it's an offline world. It has always been about calling drivers, making sure they're doing their job well. There's tons of compliance. There's tons of people and services aspect to it.
So there's a whole world has been more and more or less offline. And that's when the whole driverless trucks kind of a new vision, which is coming up because the more drivers that you have, the more complexity that you have in the business. And nobody wants that.
So Drewville, just to be clear, at 50 bucks a truck, and if your average is call it 500 trucks, I mean, your average customer is paying you call it 25 grand a month, something like that. Absolutely, yes. And that directly puts it into the enterprise space.
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Chapter 4: Who are the typical customers of LogiNext?
And beyond that, we would be having more upselling, cross-selling kind of opportunities. And talk to me about CAC. So what will you spend to acquire a new $25,000 a month customer? We usually spend about $10,000. That's our minimum spend. We don't have a very formal calculations, but $10,000 is something that we do, including the sales and marketing spend.
And the sales and traveling expenses are over and above that. So we haven't really encountered that. So I think if we put all together, it would come about $20,000 of CAC. Including sales, marketing, spend, salaries, time, travel, everything. 20,000, yeah. And this is a rough estimate. Yeah, this isn't, the reason I'm asking is like that's, you know, a one month payback, right?
If you're spending 20 grand to acquire a $25,000 a month customer, a one month payback tells me that you actually haven't figured out a way to spend money to drive like additional growth. Because if you have, you would drive your payback period up to six months or 12 months or something like that. Right, absolutely.
And that's one of the best parts about our model where we are not at all capital intensive. And we are almost right now reaching profitability. So we are also, when I say profitability, not the gross profitability, we are going to be a bit profitable very soon. So yeah, this whole model is pretty efficient from the capital standpoint. That's great. Very good.
Let's wrap up here with the famous five. Number one, what's your favorite business book? The hard things are the hard things. Number two, is there a CEO you're following or studying right now? Jack Ma, who also happens to be our investors' investors. That's a clever way to say that. All right, number three, what's your favorite online tool for building your business? Wow.
I don't remember that name, but there was a website which has a lot of business tools available. I kind of forgot the name. I go there. I have it bookmarked, but I forgot the name of that. The nature of the question is you should know it immediately because you would be using this tool every day. So what's a tool you use every day to grow the business? House park. Okay.
Number four, how many hours of sleep do you get every night? Eight hours. That's pretty good, especially because you're coming to me live, I think, from your hotel room in Austin after your conference, right? Yes. I always make sure that I have a sleep. That's great. And what's your situation? Married, single, kiddos? Married, no kids. Married, no kids. And how old are you?
I am turning 30 in the next six months. Ah, very good. That's exciting. All right, last question. What do you wish your 20-year-old self knew? You said, what would my 20-year-old self do? What do you wish your 20-year-old self knew? Oh, okay. Um... Well, I wish I knew the value of starting up early.
We had an opportunity when I was in Carnegie Mellon and we had got selected in one of the incubators. We didn't even know back in 2010 what a startup really means. And we gave up that opportunity because we wanted to work for a corporate bank in New York. So the group of friends, we went to New York, we did an internship in Barclays and IBM and Austin Young, and we gave up that opportunity.
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