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 TechCrunch.
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 solution to over $1 million in income; touchdown a $20 million seed spherical after VC Radhika Malik, a companion 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 assist chat, the founders inform TechCrunch.
All of it started in late 2021 when the 2 buddies, who labored collectively as company builders for Comcast, determined the passion they had been doing wasn’t enjoyable anymore.
They’d 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 high 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 passion between them, they estimated. Lu and Singh knew that dwelling concord relied on discovering a approach to make use of these GPUs.
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The devs had been engaged in machine studying tasks at work, in order 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 wished to unravel.
Runpod was born “as a result of we felt that the precise expertise of growing software program on high of GPUs was simply sizzling rubbish,” Lu described.
Just a few 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 pace, 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 a number of such integrations (like assist for common internet app software Jupyter notebooks). The subsequent downside: discovering beta testers.
“As first-time founders, we didn’t actually know learn how to market or learn how to 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 trade for suggestions. It labored. They landed beta prospects, which led to paying prospects. Inside 9 months, that they had give up their jobs and hit $1 million in income, they mentioned.
Bootstrapping development
However that led to a different downside. “Six months in, enterprise customers had been like, ‘Hey, I wish to truly run actual enterprise stuff in your platform. However I can’t run it on servers which can be in individuals’s basements,” Lu mentioned.
It had not occurred to the New Jersey founders to lift capital from VCs. As a substitute they shaped revenue-share partnerships with knowledge facilities to develop capability. However it was irritating. The founders wanted to remain three steps forward.
“If we don’t have the GPUs, the market sentiment, the consumer sentiment adjustments. As a result of once they don’t see capability from you, they go some other place,” Singh described.
In the meantime, their consumer 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 learn how to pitch to an investor. “Radhika was tremendous useful, even on the first dialog,” he mentioned. She principally defined to him how a VC thinks and instructed 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 supplied a free tier. It needed to at the least pay for itself, even when it wasn’t throwing off a lot revenue. Not like different AI cloud companies that started as crypto miners, these founders refused to tackle debt, they mentioned.
By Could 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 massive 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 prospects, starting from people to Fortune 500 enterprise groups with multimillion-dollar annual spend, the founders mentioned.
Their cloud spans 31 areas globally and counts prospects like Replit, Cursor, OpenAI, Perplexity, Wix, and Zillow as customers.
Competitors can be fierce. Devs have all the most important 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 planet a bit in another way — as a dev-centric platform. They don’t see coding ever going away however altering. Programmers will turn out to be AI agent creators and operators.
“Our purpose is to be what this subsequent era of software program builders grows up on,” Lu mentioned.
