AI cloud startup Runpod hits $120M in ARR — and it started with a Reddit post  

Runpod, an AI app internet hosting platform that launched 4 years in the past, has hit a $120 million annual income run charge, founders Zhen Lu and Pardeep Singh inform Trendster.  

Their startup journey is a wild instance of how when you construct it effectively and the timing is fortunate, they are going to positively come.

The story consists of bootstrapping their option to over $1 million in income; touchdown a $20 million seed spherical after VC Radhika Malik, a associate at Dell Applied sciences Capital, noticed some Reddit posts; and gaining one other key angel investor, Hugging Face co-founder Julien Chaumond, as a result of he was utilizing the product and reached out over the help chat, the founders inform Trendster. 

All of it started in late 2021 when the 2 pals, who labored collectively as company builders for Comcast, determined the pastime they had been doing wasn’t enjoyable anymore. 

That they had constructed setups of specialised computer systems used to generate Ethereum of their respective New Jersey basements. Whereas they did efficiently mine a little bit of the cryptocurrency, it wasn’t sufficient to pay again their funding, they mentioned. Plus, mining was going to finish after the much-ballyhooed community improve referred to as “The Merge.” 

On prime of that, it was “boring” after a few months, Lu mentioned. 

However that they had talked their wives into letting them spend an excellent $50,000 on the pastime between them, they estimated. Lu and Singh knew that dwelling concord trusted discovering a method to make use of these GPUs. 

The devs had been engaged in machine studying initiatives at work, so that they opted to transform their mining rigs into AI servers. This was earlier than ChatGPT, even earlier than DALL-E 2. 

As they repurposed the rigs, “We had been seeing how actually god-awful the software program stack was for coping with these GPUs,” Lu mentioned. As builders, they discovered an issue they needed to resolve.  

Runpod was born “as a result of we felt that the precise expertise of creating software program on prime of GPUs was simply sizzling rubbish,” Lu described. 

A number of months later in early 2022, they had been able to share what that they had constructed. Runpod is a platform for internet hosting AI apps, emphasizing velocity, simply configured {hardware} (together with a serverless choice that automates configuration), and dev instruments like APIs, command-line interfaces, and different integrations.  

Again in 2021, they solely had just a few such integrations (like help for in style internet app device Jupyter notebooks). The following downside: discovering beta testers. 

“As first-time founders, we didn’t actually know how you can market or how you can do something,” Lu recalled. “So I’m like, all proper, let’s simply submit on Reddit.” 

So, they posted in a few AI-oriented subreddits. The supply was easy: free entry to their AI servers in alternate for suggestions. It labored. They landed beta clients, which led to paying clients. Inside 9 months, that they had give up their jobs and hit $1 million in income, they mentioned. 

Bootstrapping progress

However that led to a different downside. “Six months in, enterprise customers had been like, ‘Hey, I need to truly run actual enterprise stuff in your platform. However I can not run it on servers which can be in individuals’s basements,” Lu mentioned. 

It had not occurred to the New Jersey founders to boost capital from VCs. As an alternative they shaped revenue-share partnerships with knowledge facilities to develop capability. However it was demanding. The founders wanted to remain three steps forward. 

“If we don’t have the GPUs, the market sentiment, the person sentiment adjustments. As a result of after they don’t see capability from you, they go some other place,” Singh described. 

In the meantime, their person base was rising on Reddit and Discord, particularly after ChatGPT launched.

VCs had been additionally on the prowl for investments. Malik noticed them on Reddit and reached out, their first VC name. However Lu didn’t know how you can pitch to an investor. “Radhika was tremendous useful, even on the first dialog,” he mentioned. She mainly defined to him how a VC thinks and advised him she’d keep in contact.  

In the meantime, Lu had a enterprise to run that needed to pay for itself. “It was virtually two years the place we actually didn’t have any funding,” he mentioned. So Runpod by no means provided a free tier. It needed to no less than pay for itself, even when it wasn’t throwing off a lot revenue. Not like different AI cloud providers that started as crypto miners, these founders refused to tackle debt, they mentioned. 

By Might 2024, with AI app fever spreading, their fortunate choice to launch AI internet hosting for devs two years earlier was paying off. Their enterprise had grown to 100,000 builders, they usually landed a $20 million seed deal co-led by the VC arms of each Dell and Intel, with participation from large names like Nat Friedman and Chaumond.  

They haven’t raised more cash since however at the moment are planning to, armed with a enterprise that, they imagine, ought to command a wholesome Collection A. 

As we speak, Runpod counts 500,000 builders as clients, starting from people to Fortune 500 enterprise groups with multimillion-dollar annual spend, the founders mentioned. 

Their cloud spans 31 areas globally and counts clients like Replit, Cursor, OpenAI, Perplexity, Wix, and Zillow as customers.

Competitors can also be fierce. Devs have all the key clouds to select from (AWS, Microsoft, Google), plus loads of industry-specific selections like CoreWeave and Core Scientific. 

However additionally they see their place on the earth a bit in a different way — as a dev-centric platform. They don’t see coding ever going away however altering. Programmers will develop into AI agent creators and operators. 

“Our aim is to be what this subsequent era of software program builders grows up on,” Lu mentioned.