Creating and managing an image library is a pricey endeavor for all Internet e-commerce businesses. Yet, image quality is critical to driving online sales. CEO and co-founder Sanjay Kumar Varnwal launched Spyne.AI, a deep tech AI company, to make the process better, faster, and cheaper.
Varnwal recently discussed Spyne’s meteoric success with the GetLatka team. He shared how Spyne 10X’d the company in 12 months, what drove the pivot from a different concept 18 months before Spyne’s launch, and why they closed secondary funding at the seed round.
- Team of 100, with 65 engineers and 12 salespeople
- $250,000 MRR, up from $25,000 1 year ago
- 140 clients globally
- Launched in mid-2021
$250,000 MRR by turning layperson users into professional photographers
The CEO and Co-founder explained the problem his SaaS solves: turning subpar catalog images into premium photographic images using AI technology.
As a result, businesses that rely on quality catalog images can skip expensive photoshoots, which lowers costs while accelerating the time to launch. In just 12 months, Varnwal indicated that his business exploded 10X as clients and usage increased.
Spyne customers pay $3-8 per SKU
Varnwal explained that Spyne’s pricing model charges customers a flat fee per unit to use their app, “A car photo shoot would cost between $3 and $8. If a customer does 500 images per month, they may pay $5 per unit, while 30 images per month might cost $8.”
He added that while their core audience is mid-market, enterprise customers like Walmart, Flipkart, and Penske Motors may pay $1.50 to $2 per unit based on monthly volume.
Mid-market segment delivers $40,000 ACV
While most e-commerce brands can benefit from Spyne’s SaaS app, the CEO revealed that they chose to target the automotive mid-market segment. “About 80% of our business is currently automotive,” revealed Varnwal.
“The average automotive customer is doing 500 SKUs per month for about $40,000 per year,” he calculated. The Co-founder reiterated that Spyne allows car dealerships to put their automotive photos with beautiful backdrops so that they can create studio-finished product image catalogs.
Local sales teams target 90,000 auto dealerships total in US and Europe
Varnwal’s GTM growth strategy targets roughly 90,000 dealerships in the US and Europe (45,000 each) with local sales efforts. “We are setting up local sales teams in the US now. We’ve started in Texas and LA,” shared the CEO.
He added, “If we can get in the door with 3-4,000 dealers in the next two years, we are looking at $40m ARR.”
Initial Spyne concept scrapped after $200,000 investment
In 2018, Varnwal and his co-founder embarked on a journey to create a similar product. “We thought we wanted to create a platform for professional photographers,” explained the CEO.
But after 18 months and a $200,000 investment, the two founders agreed to let the concept go and pivot to what became Spyne. “Our concept worked, but it wasn’t scalable past $5 million or so,” detailed Varnwal.
So he and his Co-founder decided to stay in the content domain but worked to transform professional photography, not just targeting the photo pros. Although he owns a majority interest, Varnwal indicated that it was a big decision that both parties agreed to.
$700,000 bridge round in 2020 at $3m valuation
From the failed product, Varnwal raised $700,000 in a bridge round, giving up 15% equity at a $3m valuation in 2020 before officially launching Spyne in mid-2021.
This funding provided the resources needed to get Spyne up and running. The new company was doing roughly $25,000 in MRR in that first year.
$7m Seed Round from Excel Partners at $25m valuation in 2022
In 2022, Varnwal closed a $7m Seed round from Excel partners. Additionally, Spyne was able to close early secondary funding.
“Excel wanted slightly more percentage but didn’t want to dilute the primary equity of the founders, so they offered an exit to some of the early angel investors. They got a 13x multiple payout,” explained the Co-founder.
When Latka asked the CEO if he was bothered that they got 13X back, he laughed and said, “I can make that back easily.”
Growing team of 100 with 65 engineers
The Co-founder shared that Spyne is a “heavy R&D company,” so roughly 2/3 of the team are engineers in product, tech, AI, or design, primarily headquartered in New Delhi.
The current team of 12 salespeople is a mix of those in local markets and India, where the larger enterprise deals are closed. Latka asked Varnwal to share his cost for a senior-front end engineer, to which he replied, “With 4-6 years of experience, we are looking at $35-40,000 per year.”
To further the employee compensation conversations, Latka asked the CEO whether employees in India are as interested in equity as their US counterparts. “Yes, they do care about it,” Varnwal answered, adding, “They value equity even more later in their careers.”
Favorite Book: Varnwal chose The Hard Thing About Hard Things by Ben Horowitz as his favorite book. “He’s a great guy,” quipped Nathan.
CEO he’s following: Varnwal chose popular CEO Elon Musk as the one he follows, noting, “I like his work ethic.”
Favorite online tool: After giving it some thought, he chose ChatGPT and Google as the two tools he relies on the most.
Balance: The 38-year-old CEO gets an average of 6 hours of sleep per night. He’s married with a 7-year-old child.
What does he wish he had known at 20? “The risk/reward ratio is very high. I sometimes think I should have taken this step (to launch a business) much earlier on. Instead of 34, early 20s would have been a better stage for me,” lamented the CEO and co-founder.