Salad Technologies is a crowd-sourced cloud computing SaaS platform that empowers users, especially gamers with powerful computers with GPUs, to turn their downtime into digital currency. This open-source platform appeals to individuals with powerful hardware but little or no interest in mining or other complex compute endeavors. The company offers users a way to earn rewards for their compute power without needing technical knowledge: no significant setup, configuration, or know-how is required to use the Salad platform. Salad simply uses GPU power when the user isn’t, and rewards the user with a Salad balance, which can be cashed out for gift cards, subscriptions, and other digital services.
The company has seen tremendous growth in its short three-year history and is currently raising funds, seeking $15m at a $70m valuation.
The company, at a glance:
- Salad is like Airbnb for computer processing power, allowing PC owners to share unused GPU to earn gift cards or other digital spend.
- Combined, Salad comprises the 4th largest computer measured in teraFLOPS (70 petaFLOPS at time of publishing).
- Founded in 2018, the company has already reached $3m ARR (up from $150k in June 2020).
Bob Miles, CEO and co-founder of Salad Technologies, sat down with Latka for this November 2021 interview to discuss this innovative SaaS company. Previous to founding Salad Technologies, Miles has been a serial entrepreneur with a history in startups ranging from IoT-connected car platforms, Netflix TV shows, consumer drones, and distributed computing platforms.
These are the high-level takeaways and observations based on the conversation between Miles and Latka.
3 Years in and Already the World’s 4th Largest Supercomputer
What Salad Technologies has created has a proven appeal to users. The company has been in existence for just three years, and in that span, it has amassed a user base large enough to comprise the fourth largest supercomputer in terms of single-point teraFLOPS. The Salad network produces an impressive amount of computing power: over 70 petaFLOPS at the time of publishing, and that figure continues to scale as the user base grows.
To put that computing power in terms that humans can understand, Miles offers this illustration. Seventy petaFLOPS is on par with a particular supercomputer in China that cost $273 million to build — to say nothing of operating costs and power consumption.
Salad Technologies has managed the same processing power with far lower expenses — and it distributes power consumption costs to the user in the form of nominally higher home electric bills.
2 Primary Revenue Streams Driving $3m ARR
With complex SaaS platforms like Salad, revenue streams can be complex and not immediately visible. Miles explains that Salad has two primary revenue streams. The first is abandoned balance.
Salad controls a network with tens of thousands of nodes, and the company acts as a custodian of the value associated with those nodes. When a user initiates a spend, Salad offers back to the user 100% of the value of their computing resources. But a notable percentage of users abandon their balance (e.g., churn from the platform without cashing out), and Salad retains the revenue associated with those users’ computing cycle contributions.
The second and more significant revenue stream is on the redemption end. Users cash out their Salad rewards through Salad’s proprietary marketplace, where Salad takes a percentage of that spend. For example, $50 in Salad balance delivers a $40 Amazon gift card, with Salad cashing in on the remaining $10 value from that computing power.
When asked about the take rate on these rewards, Miles reported that on average, netted across all the various rewards offered on the Salad marketplace, Salad achieves a 23% take rate.
While the marketplace is a revenue driver, Miles views it as a means to an end, not the end itself. He remains focused on driving value as an aggregator of compute power. In his words:
“Our vision is not to become another eCommerce marketplace. We want to be the easiest and most trusted way to share your computer, . . . the experts at extracting that value.”
Distributed Computing 1/5 the Cost of Leading Providers; Avenue for Revenue Growth
Distributed computing on the surface might appear to be inherently inefficient. Yet despite these appearances, Salad Technologies manages to keep computing costs significantly lower than other commercially available instances. For example, compute cost via the Salad network lands at 1/5 the cost of an Amazon AWS spot instance (per teraFLOP per hour).
Miles remarks that, in the future, this significant cost margin has the ability to deliver additional revenue streams through workload aggregation and other methods.
$3.1m YTD Spent Through the Salad Marketplace
Salad.com lists a regularly updated figure outlining how much value its users have cashed out year to date. As of publishing time, Salad users have spent roughly $3.1m through the Marketplace, resulting in around $700k in marketplace revenue YTD.
The remaining company revenue is through gift card breakage, unrealized revenue from the 18% of gift card holders that have not logged in in the last 6 months.
Seeking $15m in Series A Funding with a $70m Valuation
Salad Technologies is currently raising $15m in Series A funding, targeting a $70m valuation. This round comes on the heels of a seed-plus round in November 2020, where the startup brought in $3.2m, of which $2m remains in the bank.
When asked why the leap to a much larger funding round, Miles mentions that, while the company has operated lean for the past year, it’s secured promising opportunities that require scaling the team. Significant Fortune 500 companies have approached Salad to run workloads across their network, which would require growing the internal engineering and support team. Of course, these significant contracts would also contribute to significant revenue gains for the startup.
20,000 Currently Active Users (Suppliers) Supporting Web3 and other Compute Customers
Salad’s business model can be described as a two-sided marketplace with a related reward mechanism. The company currently attracts 20k active users on the platform — that is, individual computer owners who allow Salad Technologies to use their unused GPU cycles to mine compute power.
Those 20k users aren’t the customer, though. The customer for that compute power is, theoretically, any business or entity that needs large-scale compute power along the lines of an Amazon AWS spot instance. At present, the primary end customer for Salad Technologies is Web3.
Web3 uses Salad’s distributed network of compute power to generate computational resources for its own end customers. Its own business model looks quite similar to Helium network, though the latter relies on its own proprietary devices, while Web3 receives compute resources from a variety of sources, including Salad.
Additionally, as mentioned earlier, Salad Technologies is poised to move into new markets with multiple Fortune 500 companies interested in direct partnerships with Salad. This step would broaden the true customer base and diversify income streams for the company.
Alongside this two-sided marketplace, Salad runs its own rewards marketplace, an incentive mechanism for its users. While this offering is crucial for growing and maintaining the user base, it isn’t the core purpose of the business. It’s merely a means to an end, a way to incentivize users into joining the network and providing the computing resources that Salad’s customers need.
Team Size of 25
Salad Technologies currently operates with a lean team of 25 employees. Eight of the 25 are engineers and six are support, with the rest making up sales, business development, and the like. Miles sees the need to expand this team aggressively to support new revenue streams and direct clients, which is a driving factor in the current round of funding.
$150k to $3m ARR: Rapid Revenue Growth, Continued Opportunities
With revenue scaling from just $150k in 2020 to a projected north of $3m in 2021, Salad Technologies is already experiencing rapid revenue growth. And with the prospect of workload aggregation, new contracts with Fortune 500 companies, and the ability to operate at 1/5 the cost of competitors, Miles believes the company is well-positioned to continue its rapid scaling.
It remains to be seen whether investors will see the company’s valuation at the $70m mark that Salad is targeting. Still, regardless of the outcome of this upcoming funding round, the future looks promising for Salad Technologies.