SaaS Interviews with CEOs, Startups, Founders
AI tool hits $2.4m ARR Helping Walmart Generate Thousands of Images
05 Jun 2023
Chapter 1: What is the main topic discussed in this episode?
I'm very excited to share this recording with you guys, which happened at our conference, sasopen.com, with over 100 speakers, all founders of B2B SaaS companies. We have a very high bar for what speakers share on stage, so you're going to enjoy this episode where we dive deep into revenue graphs, real tactics, and real growth metrics.
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. For each image, they charge about $25 per image.
The editor or designer makes call it $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 million valuation. So very capital efficient. Their team size is just six people full time.
Hey, folks, my guest today is Eduardo Jackie helps Amazon, Walmart and Sotheby's create images that lift their product sales by using their proprietary data and AI algorithm to determine 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 chrome photos.com. That's chrome with a K at the start. Eduardo, you ready to take us to the top? Yes, absolutely. All right. 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? We launched the company a few years ago. We have done over a million images for over 100,000 customers.
We started creating images for our customers and we moved on to the enterprise two, three years ago. Walmart is using our technology and our images to help their national sellers. Amazon, we're a top-ranked Amazon SPN seller. Sotheby's users are technology and our images for their online auctions. Sassl 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, 100 of their products, 1,000 of their products. And to your point, we will then use the data, AI, general AI, to create images that are guaranteed to lift their sales. So Eduardo, what are these companies today paying on average per month to use your technology?
They tend to pay per image anywhere from $25 to $50 an image. Okay, 25 to 50 per image. And so how do you price? Do you let them just pay as you go? Or do you sort of price in buckets, credits of images? 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.
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Chapter 2: How does the company leverage AI for image generation?
Seed round. We're focusing on our series A this year, likely in Q3. Okay, so $600,000 raised on your seed just now. And most folks today are selling 15% to 20% of their company in their seed round. Were you sort of in that same range? No, no, it was much less. Okay, I was about to say with your revenue, I'm hoping you were able to preserve your equity here.
When you say much less, can we say under 10%? Yes. Okay. So north of a $6 million post-money valuation. Say that again? North of a $6 million post-money valuation then. It was much further north than that. Okay. Founders all the time, there's two school of thoughts. Manage your multiple and who cares? Get the highest you can. Very different. So which boat do you fall in?
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 million round at...
$30, $40 million valuation and go from there. But the good news is that when we do that, we already have the technology that works. We already have customers to your point, and we've gotten up into the right results. So just to be clear then, I mean, you sort of raised it something like a 6 to 10x multiple on current revenue then. Yes. Yeah.
So that would be like something around 24 to 30 million valuation today, the last round. I'd rather not go into the details, but it's more than 10 and less than 25. Okay. Fair enough. Fair enough. So good. So you're managing your multiple, which is great. I guess this begs the question, why do a round at all? I mean, this is good revenue. Why do you need an extra 600K here?
Why not keep all the equity? I think that's a really good point. This is a massive market. We estimate the TAM of this market to be north of $60 billion. It's a disaggregated industry where you've got Fiverr, Upwork, Suna, Snapper allow you to send stuff to their studio or have a photographer come to you. But it's really a disaggregated market. Think about taxis before Uber and Lyft. And
Given the size of the market, we want to capture it. We do need to bring in more data. We right now have 8.4 million data points on product images that sell. We'd like to have that to be in the 100 million 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 images based on the data that we have and what sells. 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 to come in that's going to be significantly better funded and take it over.
We see ourselves as owning that space. How many folks are on your team today full-time? We are very lean. We have six people full time, but we do have a very sophisticated gig infrastructure. So we have 200 editors and designers who are able to create these images that I mentioned. How do you do that? Tell me how that's structured.
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Chapter 3: What pricing model does the company use for its services?
So on $200,000 a month in revenue, you've got about 70, 80,000 of that paying out these 200 editors and designers. Yeah. As I said, our margins are being consistently between 55 and 60%. I mean, isn't that the big question? That's probably what makes it hard for you to get like a SaaS multiple, right? Is your margins are lower than SaaS. Then you know, there 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, right? Or can you do that? Not yet. The Gen AI is not there. But what is happening is we're automating more and more and more of it, right?
And so by the time the editor comes in, the image may be 60% done, 70% done, and eventually it'll be 80% and 90% done, and then that will, again, bring the...
margins per unit cost per unit cost down margins up so 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 chat gbt put in an ugly image and boom it spits out a beautiful one yeah today that is not working um and
Chat to BT doesn't give you perfect text. If you've used it, you've realized you have to go and edit it. But the reason why Chat to BT is so successful, we all know how to edit text. You can take the Chat to BT 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 image. And furthermore, you don't necessarily know what it is that's going to 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.
And that's what people are loving about what we're providing to them because we're making generative AI images work for 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 use a general image as a template and then recreate it with models and settings and so on. So you have a perfect image that you have the rights for as well. What do you think you'll grow monthly recurring revenue to by December this year? We expect it to be two to three X where we are now.
So 400 to 600,000 a month in December revenue this year? Yes. Based on the work that we're doing with Walmart and some of the other companies that we're rolling out. If someone came to you and offered $10 million all cash upfront to buy the whole company, would you sell? No. That was quick.
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Chapter 4: How many images does the company process monthly?
No, not at all. No, this is a massive opportunity. We're talking exits of 100 plus million in terms of results just because of the fact of the opportunity that exists. I'm telling you- A big opportunity attracts a lot of competition, right? There's more people you have to beat. 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 can deploy them in different areas. What we do for Salesforce is very different than what we do for Sotheby's. Sotheby's has an automatic... pre-done assembly line, custom assembly line.
Samsung has an automated pre-done custom 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. Very cool. We're rooting for you. We're out of time for today, though. Let's wrap up here, Eduardo, with the famous five. Number one, favorite book. Well, that's a good question.
I just read Critical Mass, and I really enjoyed it. It's hard sci-fi. I also apologize. I should have said the project Hail Mary by Adam Weir is phenomenal. Number two, is there a CEO you're following or studying? The two of them, which are very contrasting, are Tim Cook and Elon Musk. Number three, what's your favorite online tool for building Chrome?
At this point, I actually, that's a really good question. We use XD. XD is an Adobe product. It allows us to create mockups and then flowing and so on. And then they go right into the editing team. But that's what we do. Number four, how many hours of sleep do you get every night? I read the book, Stay Sharp by Gupta.
And he said, you need to get sleep if you want to be productive and also healthy. So I tend to get seven plus hours of sleep. And what's your situation, Eduardo? Married, singled, kids? I am married with kids. How many kiddos? Five. Wow. Okay. How old are you? Say it again? How old are you? I am 64. 64. Last question. Something you wish you knew when you were 20 years old? To go for it.
You said you're 64 years old? Yes. Wow. You look great for 64. That's incredible. Thank you. All right.
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Chapter 5: What is the company's revenue growth trajectory?
Go for it hard. That's great. Guys, there we have it. ChromeImageLabs.com launched several years ago, now doing $200,000 a month in revenue up from $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 backend, almost like Uber.
For each image, they charge about $25 per image. The editor or designer makes call it $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 million 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. Thank you, Nathan.