SaaS Interviews with CEOs, Startups, Founders
1601 If All Content Becomes 3d With AR, VR, This CEO Will Be At The Center Of It
12 Dec 2019
Chapter 1: What inspired Sai Krishna to start Scapic?
launched scapic back in 2017. Today, they've got about 40 customers, they've scaled to just about 100,000 bucks in monthly recurring revenue, again, up from nothing about a year before that they raised 500,000 bucks looking to potentially raise additional capital, but they're ushering in and I love this, they're really creating a new market.
Which is, again, bringing the kind of the easiest platform to build VR, AR and even 3D experiences without coding. So drag and drop like Wistia Wix, you know, for things like social media or even, you know, ad units in the future or virtual tours, things like this.
hello everybody my guest today is say krishna he's often described as an accidental entrepreneur as an engineering undergrad he built his first startup in the education tech space to power thousands of students to better use tablet pcs since then he's founded invested and mentored startups all through particularly in the technology space he's an alumni of stanford university graduate school of business and the founder of scapic a cloud-based virtual and augmented reality content platform helping businesses and users generate ar and vr experiences without coding
The company was part of Y Combinator Startup School and was recently recognized by Facebook as one of India's top VR and AR startups in their School of Innovation program. Sai, are you ready to take us to the top? Good to go. Thank you for having me. You bet. So first things first, people hear Y Combinator or Silicon Valley, they generally assume, oh, pre-revenue, lots of funding.
Do you fall in that category or no? Right. So... Given that we had to start our journey back in Asia, particularly in India, there is a sense of grounding which is sort of brought in, which is business models have to be thought through far more before we are able to have access to institutional capital.
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Chapter 2: How does Scapic enable users to create AR/VR content without coding?
Given that, Skapik today happens to be a revenue-generating startup across the virtual reality and the augmented reality side of the fence. And we've had to think of a couple of novel ways in order to productize as well as get out there to the market and start generating those revenues. So not on the pre-revenue Kool-Aid just yet. That's good.
Now talk to me about some of these unique things that you did to drive revenue. If you can tie into that story, maybe give an example of what you guys do for an end customer. Absolutely. So if you've noticed the way we've interacted with devices or computers have always changed every 10 to 12 years.
There was a guy who wore a black turtleneck, took to stage during 2007 called Steve Jobs, who really changed the world. But even if you rewind about every decade before that, we've gone from desktops, mainframes, laptops, smartphones, so on and so forth. Which means that the ability for us to access computing information has changed.
And now in that arc, we see virtual reality, conversational AI, and augmented reality to be the next frontier. Given that position, What we're building Skapik to be is to be the simplest editor or the simplest visual interface for brands, creative professionals, and businesses to build content.
Because the one thing that's going to make you buy a VR headset over any other computing device out there is perhaps the content and similarly for AR as well. So we think user-generated content is a very important part of this puzzle. And we're building the simplest way for those users to generate the content.
What Weebly and Wix and Squarespace allow people to do in terms of dragging and dropping together the websites you're essentially allowing people to do, but for VR and AR experiences? Absolutely. Interesting. So what's the revenue model? Currently, it happens to be a freemium SaaS link.
And given that our experiences happen to be browser-first and not app-first, imagine over a period of time, clicking on a banner ad opens up an augmented reality application. Or scrolling by your news feed is able to enable through rich, immersive content. And we think the internet will move there, where from an era of interactive content or is 360, 3D, VR, and AR-centric.
Given that, we are a premium SaaS play in that with a licensing fee that ranges between $20 to $200 each month. And what would I get for $20 a month? $20 a month would give you access to an editor, which is similar to your Wix, WordPress, Squarespace, where you can
What makes it compelling is these content pieces are distributed across social media, your own websites, as well as advertising networks over a period of time.
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Chapter 3: What unique strategies did Scapic implement to drive revenue?
A million a month, I think, would be towards end 2019. At this point, we are slated towards trying to achieve that out of the 2020. I'm really glad I asked that follow-up question, by the way, because that would be, you know, eight grand a month would be very different. So just to be clear, the math looks much more like 200 bucks per seat times 30 team members, right?
Six grand a month across maybe about 40 enterprise applications. That puts you much closer to maybe 240 grand a month with eyes at a million a month, maybe late 2019. Yeah. That's the plan. Is that fair? That's the plan that we're running on. Very good. And help me understand a little bit, Sai, more about growth. So if you're at around that 240 mark today, where were you about a year ago?
About a year ago, we didn't exist. Okay, so you were pre-revenue. Yeah, we were pre-revenue even about a year ago. Walk me through the story how you got your first enterprise customer.
The first one was an interesting one at that, which was we were right out of startup school and roughly around then we were given an open innovation program or the application to which from one of Europe's largest automobile leasing divisions.
And what we really wanted through was an easy way in order to have a fleet of 200,000 cars and an ability in order to look at them via an augmented reality layer and annotate them through.
And at some point, things hit a glass ceiling purely because an automobile company or the holding company, which happens to be a bank, are not necessarily experts in the virtual or the augmented reality space, which means more often than not, these companies take too long. If things cost too much, they don't have the right teams and the efficiency takes a hit.
That's really where we were able to jump in and try to paint a story around the numbers rather than the technology. That seemed to stick, which was,
very quickly we realized that the part of VR and AR resonates with the technology world, but right outside to some of the industries that we operate in, what perhaps makes more sense is the math and not the technology in itself, and the value can be derived from the technology.
So we were able to completely stitch together the conversation around numbers and how we would have a positive net impact on a team as well as a fleet of cars. And that I think at some level had them to bite. And you mentioned you're kind of shifting your model a bit more, or it surprised you how people are using this more for social media.
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Chapter 4: What challenges did Scapic face in its early stages?
There's a little bit of funding there. Have you raised additional capital? We've leased additional capital. We did a seed run of half a million dollars close towards the end of last year, exactly, to be precise. So about 500 grand total into the company? 500 grand in total into the company. That's great. That's great.
So it's actually still pretty efficient considering where you're at based on that amount of money. I assume you're cash flow positive than today? In the trajectory, too. We have only in the recent months started to notch some of our numbers through, which is bear in mind that the product has been live for a little under two quarters just yet.
So the enterprise or the business version of the product, which is sort of having a clear sass tier. So we are in the trajectory in order to run through there. The run rate definitely seems to be pointing towards enough. What's the team size today? How many folks? Team's currently 18 members strong. One eight? Okay. So am I a little bit higher than when I said 240 grand a month earlier?
I'm high on that. Absolutely. Because it's a ramp up, right? So we didn't begin with 40 on day one. So I think we were able to layer that on and then subsequently drive forward. So I think you would be looking more towards about 50 to 60% of that number. And then subsequently from there, the ramp up is sort of right. Yeah. Got it. Got it. Have you broken 100 a month yet? We are almost there.
We're close to about 100 a month. I mean, you got 30 days left.
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Chapter 5: How is Scapic positioning itself within the VR/AR market?
Knock it out before the end of the year, right? Yes. So we were able to manage that in November. Now it's really interesting to see whether we can sustain that through the period of December. Yeah. Are all 18 folks based in California or where are you guys from? Oh, so interestingly, we like to call ourselves California by DNA and India by geography.
So we're a team that's entirely based out of India. And we sort of shuttle between the Bay Area as well as head back to India more often than not. Because today we think customers as well as users happen to be significantly across three regions of USA, Europe, and when I say Europe, just particular parts of it and India in itself. of course, because of the geographical ability that we have there.
But given that USA is such an important market for us, we happen to shuttle back and forth between them. Sorry to cut you off. Is it too early to talk about some of the economics around churn and CAC? Are you tracking that stuff yet or no?
I think it's a little early for both from an organization standpoint as well as from an industry standpoint, which is web-based augmented and virtual reality is perhaps so new that the market in itself would not be exactly what you're looking at now, three months from now, six months from now, and a year from now.
And that's really where it's fascinating, but also some of the traditional ways and means by which we are able to look at churn growth rates as well as matrices that we hold ourselves near and dear to might necessarily take a little longer for it to gestate out purely given the nascency of the space that we operate in. Yeah, that's great. Any plans to raise capital soon? We're in it.
We're sort of doing an institutional series eight days and looking to... looking to perhaps go between the months of Jan and then northwards from there to try closing that out. Would you ever look at doing venture debt so that you don't have to take dilution? I think it is a necessary proposition for all founders to keep an eye towards.
But for Skapix specifically, I think the difference would be that given that the space is an evolving one, we'd always like to associate with venture firms who have a strategic value or who are able to bite it through with us over a longer period of time. I think DEC makes a ton of sense if you have more than a few variable that have already been answered to.
And you only require growth capital in order to just fuel the rocket and drive it forward. For us, I think it's, as much as it's growth capital, I think a good part of it is also towards ensuring that we're able to find that product market fit. As much as we have early signs of it, I think it is still a search given every company in our industry.
And that's really where I think an instrument such as a price round might still make just as much sense, if not a little more sense, given the association with the venture industry as well as what a VC brings to the table. Very good, Sai. Let's wrap up here quickly because we're out of time with the famous five. Number one, what's your favorite business book? Zero to one, Peter Thiel.
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Chapter 6: What is the revenue model for Scapic and how does it work?
Zoho, okay, very good. Number four, how many hours of sleep do you get every night? I clock in at six and a half. That's pretty good in a situation, married, single kids? Single, the freedom is something that I still love. Not kids, no kids running around that you don't know about? I'm married to my laptop as much as I can. All right, and how old are you? I'm currently 24. 24, last question.
What do you wish your 20-year-old self knew? some of these things generally require a layer of perseverance and good leaders are often boring. What I mean by that is or a path to predictability on how your days go, how organized you are, and necessarily what makes you ritualistically good about the things you do. That might be considered less flamboyant or you might not have the zeal in it.
But I definitely think a little more of that mundane structure to a day goes a long way to make you productive. Good leaders are boring. It's a book title coming out. It sounds interesting. Coming from Cy launched scapic back in 2017.
Today, they've got about 40 customers, they've scaled to just about 100,000 bucks in monthly recurring revenue, again, up from nothing about a year before that they raised 500,000 bucks looking to potentially raise additional capital, but they're ushering in and I love this, they're really creating a new market.
which is, again, bringing the kind of the easiest platform to build VR, AR, and even 3D experiences without coding. So drag and drop like Wisty Wix, you know, for things like social media or even, you know, ad units in the future or virtual tours, things like this. So look out. Sai, thanks for taking us to the top. Thanks for having me again, Nathan.
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