SaaS Interviews with CEOs, Startups, Founders
1564 How He Makes $180k/mo Selling Drone Tech to Mining Sites and OEM's
05 Nov 2019
Chapter 1: What type of technology does Strayos provide to mining companies?
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 $100,000 ACV, so doing about 180 grand 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 grand is what they've raised so far.
Too early to talk about churn and things like that.
Chapter 2: How much revenue is Strayos generating currently?
However, they 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. Again, founded in 2016, looking for hopefully a strategic investor soon where they want to hope to raise $1.5 million on maybe eight or nine million pre-money valuations.
Hello, everybody. My guest today is Ravi Sayu. He is the founder and CEO of a company called Strayos. Before founding the company, he spent more than 12 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 visual 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? Absolutely. Okay. The top.
Chapter 3: What is the customer acquisition cost for Strayos?
So Strayos, is it a, first off, is it a SaaS company? Is that how you bill? Yes. Okay. Enterprise software as a service company. And you sell directly to the mining operators or the sites? Yes. Well, we sell directly to the mining operators or anybody who is servicing in the mine.
Chapter 4: How does Strayos structure its sales strategy?
So either a driller, drilling OEMs or somebody who is doing the blasting in the mining sites. Interesting. Okay. And on average, what do they pay per year for this tech? It's a $50,000 system per year. Okay. That's a good average. So that's the starting point. Yeah. Well, okay. So that's the starting point. What's the average would you say across your customer base?
Average, usually in this type of workflows, we 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 average starting point. But if they have about 40 or 50 people working in the same mining site, everybody needs to sign up.
Okay, so make that clear for me. The average customer is maybe paying, are you saying 250 grand per year? No, average customer, one license costs about $1,000. So five stakeholders will be paying $5,000 per month. And then usually it costs $50,000 to $60,000 as a starting point. Okay, so base 50 grand plus additional user licenses of call it 50 to 60 grand on top of that.
So about 100 grand is a fair average. Yeah. Okay, interesting. Okay, tell us more your story here. When did you launch the company? What year? So we launched the company back in 2016, about mid 2016. At that point of time, we had just an initial prototype that didn't do anything for the users. And we launched the actual product, the first version in July 2017. And who's we? How many team members?
Um, uh, so, uh, we started with, uh, you know, just initial team members with one of my, uh, partner who comes from the mining and blasting industry. Uh, so we were, uh, you know, two or three team members were there and then later we expanded the team, uh, late. Uh, so how many today?
We onboarded, uh, you know, key executive team, uh, members, and then also, you know, a couple of machine learning. So Robbie, how many today total? We are 11 team members. 11. That's great. And then fast forward over the past two years, how many customers have you signed up? So we have about 40 enterprise customers at the moment. Four zero? Yeah. Okay. That's great.
I mean, can I kind of back into revenue then? 40 customers paying an average ACV of a hundred grand means you're doing about 300, 400 grand a month right now. Is that about right? And not necessarily because everybody's ticket size is like different.
So we're roughly in about and 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 or summer. Summer is still kind of in mode. We have about paying customers. How many? 22. 22, okay. So can I take, same math, 22 times at ACB, you're doing about 180 grand a month? Yeah.
And where were you a year ago in terms of a monthly recurring revenue in November 2017? We were zero. Oh, you were pre-revenue at that point? Yeah. Oh, that's great. How did you sign up 22 people so fast at those contract values? So mostly we sell through distributors.
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Chapter 5: What was the initial growth trajectory of Strayos?
Uh, yes. Uh, so we are, uh, we are looking for kind of, you know, really mostly on, um, growing the customer base. Uh, so that's where kind of focusing more on the growth side. So yes, we will be, uh, raising an additional capital. How much do you hope to raise? Uh, about 1.5 million. So that's another like proceed round, uh, mostly focused on the growth side.
And, and if you raise 1.5 million, what are you targeting in terms of a pre-money valuation? So that's number kind of, you know, still we have not come to the conclusion yet. What would make you happy? Right now, Depending upon the revenue numbers that we are trying to hit, we will be looking into $7 to $8 million valuation.
And then once we hit some more revenue numbers, it will be the range of 10 to 12. Yeah. Have you ever looked, I mean, obviously it sounds like you want to 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 so you don't get diluted? We have not.
We have 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, you know, more focused way. Yeah.
Would you raise venture debt if you like the terms and understood how it worked and you didn't have to take dilution? We might consider, but I think at this stage of the business, it's mostly about accelerating the growth, and we don't see venture debt as a tool for us to propel the growth. Is that because you don't know how to spend money to make more money?
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 you're raising money from somebody from the heavy industries or the OEM-focused investors. you know, that will propel our vote 10 times. Then venture debt is just the money for us, you know, and how do we manage that effectively? Yeah. Very good.
All right, let's wrap up with the famous five one-word answers if you can. Number one, what's your favorite business book? So I recently read a book called The Autobiography of Paramahansa. It's not a business book. Autobiography of a Yogi. Uh, it's not a business book, uh, but, uh, I learned a lot of business kind of, you know, I digested like a lot of business elements from there. Good.
Number two, is there a CEO you're following or studying? Uh, CEO again, um, uh, right now, uh, one of the CEO, uh, that I use, it's a Slack CEO. Uh, so he, um, Stuart Butterfield, Stuart Butterfield. Great. Number three, what's your favorite online tool for building your company?
favorite online tool so we use zoom a lot okay that's a good one zoom number four how many hours of sleep to get every night so usually I get about six hours I'm trying to increase it more I have a you know young year young baby as well so one kid and are you married yes and how old are you I just turned 34 34 last question what do you wish your 20 year old self knew
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