Hey - Marc here.

Happy Saturday morning, motivated B2B SaaS Founders!

Here's at least one tip to keep in mind as you grow your B2B SaaS company:

Today's issue takes about 5 minutes to read.

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In today's issue, I share some key takeaways from a recent interview between Nathan Latka, the host of Daily Interviews with SaaS Founders, and Eduardo F. Llach, the CEO and founder of Krome Image Labs. They discussed how his AI tool hits $2.4m ARR, helping Walmart generate thousands of images.

Eduardo has brought to Krome the experience of 3 previous companies with two successful exits. His expertise includes AI, crowdsourcing, 3D modeling, ad technology spanning a contextual advertising marketplace, and SEM campaign creation, management and optimization.

About Krome Image Labs

Since 2015, Krome specializes in analyzing product images within the e-commerce seller's category, offering valuable market data for optimal image optimization. These designs define the product photography and final image editing to increase their customer’s product sales by an average of 49%.

Renowned companies like Amazon, Walmart, and Sotheby's have benefited from their expertise. With the aid of generative AI designs and a global team of skilled designers, they leverage their proprietary data and cutting-edge algorithms, and identify the key image elements that contribute to increased sales.

Companies pay them $25 to $50 per image. They offer both pay-as-you-go options and subscription plans. Similar to how Audible works, subscribers receive credits that can be used for various purposes, including listing visuals, lifestyle images, infographics, photography, design sessions, and more.

Their aim is to achieve a valuation of $30-40m during the series A round. This would involve raising capital at a six to ten times multiple of their current revenue. Not disclosing specific details of their previous funding rounds, he assures that their valuation is more than $10m and less than $25m.

PS Krome currently serves 500 customers. Their MRR is comfortably north of $300k, surpassing their impressive milestone of $200k.

Challenges

They had humble beginnings with around $100k in revenue.

To overcome this challenge, they adopted a hybrid approach. While they did raise some seed funding, the majority of their progress has been driven by bootstrapping. Eduardo personally invested his own funds into the company, aligning his commitment with their vision.

Advice to Other Founders

Strike a balance between lean operations and scalable capabilities.

With a network of 200 editors and designers, they have created a system similar to that of an Uber driver. Each individual is assigned specific image tasks, along with clear instructions and compensation details upfront. This ensures transparency and clarity for everyone involved.

Accurately calculate your earnings and expenses.

What sets their system apart is the meticulous pricing strategy they have in place. By accurately calculating their earnings and expenses for each image, they can determine their precise margin. This approach has enabled them to achieve margins ranging from 55-60%, ensuring healthy profitability.

Optimize for bringing in the right amount of capital when needed, while ensuring the best possible value.

Greg, their lead investor, holds a significant stake in the company. This arrangement ensures a balanced ownership structure that aligns with their goals. As they prepare for the series A funding round, they have the confidence that their proven technology and existing customer base will further solidify their position.

Bonus

Eduardo recently read "Critical Mass" and thoroughly enjoyed it. He also mentioned that "Project Hail Mary" by Andy Weir is phenomenal.
There are two CEOs whom he finds particularly intriguing: Tim Cook and Elon Musk. They have contrasting styles and approaches, but both have made significant impacts in their respective industries.
Currently, they utilize Adobe XD, which allows them to create mock-ups and seamlessly collaborate with their editing team.
Eduardo prioritizes sleep for productivity and overall well-being. Following the advice from the book "Keep Sharp" by Gupta, he aims to get at least seven hours of sleep each night.
At 64, he’s happily married and have five children.
If there's one thing he could tell his 20-year-old self, it would be to fearlessly go for it. Take risks and pursue your aspirations with determination and perseverance.

TL;DR

Krome Image Labs, which was launched several years ago, has experienced significant revenue growth in a capital-efficient manner. They now generate $200k per month compared to $100k per month just a year ago. The company serves 500 customers and assists them in processing over 15k images per month through their system. They have a team of 200 editors and designers who work on the backend, operating similarly to Uber for each image. Their pricing is approximately $25 per image, with the editors and designers earning around $5 to $10 per image. This results in an overall margin of 50% to 60% for the company. They recently concluded their first funding round, raising $600k at a valuation estimated to be between $10m and $20m. The company currently has a small team of just six full-time employees.

P.S. Here is a link to the full interview if you are interested in listening to the full episode: AI tool hits $2.4m ARR Helping Walmart Generate Thousands of Images

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See you again next week.

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