The Exchanges

Q Interesting. Okay. So the 300,000 seed you guys raised back in 2019, um, usually founders are selling like 10 to 20% of the business in the pre-seed round. Is that sort of where you guys came in at?

A Um, I'd probably say a little less. Like what we worked off of was essentially like we did the whole YC safe model. So we kind of followed suit in terms of traditional. We were really lucky, like both Swish and I have a lot of mentors and kind of advisors that have kind of been through the startup Uh, startup world a lot, and they kind of helped us navigating those early, early ages, but we kind of pegged closer to around what most kind of YC companies signed their, um, signed their deal with YC, which is around, I think, I can't remember if it's changed, but when we were looking at it, it was like six to seven million, um, on, it was the cap of the safe.

AI assessment note: “I'd probably say a little less. Like what we worked off of was essentially”

Q Yeah. Yeah. Yeah. So walking through how you came to that, because that's a big negotiation, right? How do you do evaluation there? Most are selling again, 10, 20% of the business in the seed round.

A Yeah, absolutely. I think for us, it was just, you know, looking at what revenue was that, you know, growth potential. Um, you know, we had signed some, like this year for us was a really big year in terms of proving out we can sign customers north of a 100,000 dollars a year. We've been able to do that with two or three different customers. So that was like a big proving ground for us is like, can we increase ACV? Cause the beginning of the year, ACV was only about 800 dollars. Uh, now it's about 1800. So, um, that was a big, uh, proving ground for us. So really it was just kind of sitting down and saying, Hey, You know, what do we think is a fair multiple that we're seeing? You know, we have friends that have raised on 40 X multiples. We have friends that have raised on five X multiples. So we, we, you know, we sat down with our, our lead investor. They kind of pegged what they thought was fair. You know, we, we agreed and kind of moved from, from that, from that space.

AI assessment note: “we sat down with our, our lead investor. They kind of pegged what they thought was fair”

Q Okay. Okay. Fair enough. Cool. So, so what, talk to me a little bit about this other thing you're working on, which is surf. How did this sort of come out of true fan? Are they related?

A Yeah, absolutely. Um, I think, you know, really to be, to be honest with you, Nathan, a lot of what we've done over the last couple of years is really just try to understand where consumer data is going. I think, you know, if you say like, well, what am I obsessed with right now? I really, you know, outside of like, you know, probably like skiing or diving, which are like passions or hobbies. Um, I'm really obsessed with consumer data and like, what is the future of consumer data look like? And the last couple of years, whether we were building true fan, we were really just trying to understand like, what does that look like? And What we realized is we believe that the future of consumer data is opt-in and it's a value exchange, meaning that if a consumer is going to give data to a brand, they need to get something in return. Long gone are the days where, you know, your privacy and your data was the admissions price for entering the internet. We don't believe that that's what the future of the internet is going to look like. And thus, you know, all of the last couple of years and working with these different customers, we started to understand that, we started to understand that, you know, brands wanted Better data on their audience, but they also wanted data that they could use, you know, moving forward and, you know, that they would actually be able to use with GDPR CCD anywa…

AI assessment note: “SURF was our way of saying, we want to reward consumers for their data”

Q Yeah. Why do you need them? I mean, why does this, why do you need so much capital? I mean, obviously you get diluted every time you do this. Why do you need money here?

A Yeah, I think for, for us, the main thing was, you know, and it's a great question, I think, because actually for about a year of the business, we were cashflow positive. And that was actually when we were sorting out, you know, what did we want to do? We had some really great customers, you know, growth was good. It wasn't crazy fast, you know, VC scale, but it was good because we were just focusing on staying profitable. Um, you know, what we decided is that, you know, both my co-founder and I realized that, and again, this kind of goes into the longer story of why we even came to surf was we started to Figure out slowly, but surely different things related to consumer data. And we wanted to kind of push our hypotheses and see if they would end up being true. And for us to be able to do that at the scale that we wanted to, we, we thought it would be best to bring in venture capital. So that's kind of what our decision was. Again, like I said, there was a close to a one year period where we were, uh, we were, you know, cashflow positive and we, we had no intention of fundraising, but as we came along and different customers wanted more and more, we realized that we were kind of at a crossroads and Both my co-founder and I are young and thought it'd be, you know, we might as well see what we can do.

AI assessment note: “for us to be able to do that at the scale that we wanted”