The Exchanges

Q Okay, and give us a little more about the background here. So, launch year was which year?

A So we launched in December of 2015 with a very alpha product. We officially went live, uh, at the end of the holiday season in 2016. Um, and you know, 2017 is what I call sort of the spaghetti on the wall year. That was sort of when we, when we talked, where we were talking about all the different use cases on how, how people were using it from like, you know, uh, work anniversary gifts to, you know, closing gifts to, you know, what we found out, you know, the prospecting side of things to customer appreciation gifts. Um, and so we've just really tried to double down on one specific use case and that's really what's, what's catapulted our growth.

AI assessment note: “So we launched in December of 2015 with a very alpha product.”

Q Yeah. All right. So let's walk through, let's kind of get more into those details in a second, but take us back, give us some history of the company. When'd you launch it?

A So we launched in super alpha. We launched it in about six weeks, um, on December, 14th of last year. So tomorrow will be actually officially a year. Uh, we, Yeah, it was a quick, quick turnaround. I'm a tech geek myself. So I basically did most of the coding with one of my developers in Russia. And, um, so we basically started off the company then, uh, you know, came up with the idea in, obviously on Halloween of last year and then said, Hey, I think we can pull this thing off for the holiday season. So launch it with the super alpha with just some of my old friends, companies, about 20 of them who actually gifted through the holiday season and actually started to take off then because it's an inherently viral model. Right. Where if you send a gift to somebody now they know about the platform, they've gone through it. And we have anywhere between one in four to one in five people signing up and actually using Alice who received a gift. So, um, what we did is we went through all beta all the way through until about July of this year. And then officially it was still invited only at that time. And then we officially opened it up to the public to be able to use it. And since then it's just.

AI assessment note: “We launched it in about six weeks, um, on December, 14th of last year.”

Q All right. Last time we spoke, if I remember correctly, you were very much in this kind of stage of figuring out if, you know, the revenue stream that Alice was kind of going to grow is going to be, you know, relationships with gift vendors that you'd recommend to these corporate buyers or an actual technology, pure play SaaS kind of company. Where are you today?

A So it's actually evolved a lot, uh, since we talked about a year ago. Uh, so the whole company obviously still makes a lot of money off of the, the gifts itself and the transactions, but a majority of the money is coming in from SAS. So we've actually built this out because the, the product and the platform that we built, we've just learned has a lot more value than just the actual sending the gifts itself. You know, it's evolved since just being, Hey, this is a gifting platform. I can go into more like on the use cases if you want to hear more about that, because that's been one of the big things that we've, uh, we've done. Also, we've raised a big round of funding, um, which you probably saw as well.

AI assessment note: “a majority of the money is coming in from SAS”

Q Yeah. And then, um, what are some of the metrics you're tracking actively internally? Is, is really GMV per month kind of the thing you're really focused on or what metrics matter most to you?

A No, there's, there's different types of, of metrics that we look at, especially at the stage of the company. You know, most people, obviously revenue, you know, that's one, one big one we're trying to see. We're also trying to track, you know, daily and weekly active users internally. Uh, you also want to track how many gifts are going through based on each individual user that's actually, uh, in using the platform as well. Um, but then we also have other, other internal metrics too, just based on like conversion rates, you know, because the conversion rates to us is really the results on how, how the use case is actually performing. So we try and track that very closely with each individual customer. And then, you know, as a whole across the different industries that are actually doing that, doing that as well, because that, that really is And what the SaaS platform is built off of, because if we're able to get you a meeting right now, which, which will happen anywhere between, you know, a third to an eighth of the cost of what it is now, uh, then that's a huge reason for you to be able to pay. And there's, there's a lot of value in that beyond just saying, well, it's a gift. Like to us, we're not a gifting company. We're a software company.

AI assessment note: “there's different types of, of metrics that we look at... revenue... daily and weekly active users”

Q And over what period of time? Is that a month after they receive the card or send the gift?

A Usually we let it go between 45 days and 60 days. And it's actually what happens is, uh, somebody might even accept the gift and then it's not until 45 days later that you actually get the meeting with them. Um, or you might actually say, hey, you get this big, big, what always happens is a big wave up front and then there's this trickle and then all of a sudden there's some of these big pops that happen, you know, a little bit later on. And we're just learning it's all different industries have different conversion rates. Um, it depends on how saturated the market is for this type of, uh, of direct mail. Uh, and, and it's just a very interesting, like we're, we're generating a ton of data around this based on all these different use cases on how people are using it.

AI assessment note: “Usually we let it go between 45 days and 60 days.”

Q Number two, is there a CEO you're following or studying right now?

A Um, it's a good question. Um, There's a few, uh, that I follow, uh, pretty closely. Obviously, you know, the big ones, um, that are up at the top, but, uh, I really like, um, like what Britain Co. is doing right now. Um, I like, uh, You know, I think Tim Cook is doing a really good job, even though people, you know, doubt him a lot. Um, but, you know, there's a few of my friends, honestly, that, that are running companies. So David Cancel is a really good friend of mine. Um, and I really love what he's doing with drift and he's, you know, sold for other companies, including ones to HubSpot. And so, you know, I consider him a mentor and, uh, you know, that's probably one of the ones that I, I, should I have him on the show? He's awesome. Yeah. He's a rock star.

AI assessment note: “I think Tim Cook is doing a really good job... David Cancel is a really good friend”

Q Okay, so you have in a given month, a hundred percent of these invites go out. What percentage of those are What are claimed via the postcard and what percent right now are claimed via lifecycle marketing?

A Well, I think there's a better way of thinking about that, which is, you know, if you, if a hundred percent of these are sent out, um, when it's prospecting, it's cold, meaning like, I don't know this person. And we're starting to obviously experiment with like further down the sales funnel. Um, but when it's a cold prospect, uh, right now we can see anywhere between, let's say six is our lowest, you know, all the way up to what we just had, which is about 30%, um, you know, acceptance rate. And then 50% of those will be by handwritten card or by the branded box and the code being entered in versus, you know, the other 50% Uh, based on the actual gift link.

AI assessment note: “50% of those will be by handwritten card... versus... the other 50%”

Q Okay, good. So, so like what you break five million you think? Yeah, very good. And I'm curious when you went out, and because you just raised, when you were obviously negotiating your valuation, um, how did you try and convince investors to give you more of a SaaS valuation versus a lower margin GMV model valuation?

A Well, I looked at, first of all, we were very lucky. We had 15 investors that wanted to come into the round. Um, so we were, we were very lucky and I did a lot of due diligence, but almost between four to probably closer to six weeks doing due diligence on every one of the funds. And if you look at all the funds that we ended up choosing, uh, I was very mindful of bringing on all funds that had, uh, operators as the folks that I'd be working with. Um, so if you look at like Eric Paley from founder collective, or you look at, you know, Larry bond from general catalyst, um, where you look at, um, you know, Peter Blacklow from Boston seed, for example, you know, all these guys had run businesses before, so they had empathy and understanding for, for what the business was all about. So when you talk about valuation, I also looked at it in terms of, you know, I was optimizing for the investors instead of the valuation. Like we probably could eat out another two to three million dollars on valuation. Um, but we decided not to, um, and I decided to go with the investors for That I wanted based on, you know, what they thought, you know, in the stage that we are in the business, um, to, to go from there. So from my perspective, the evaluation and looking at it from a SaaS business was just like, look, there's a huge opportunity here because of the early indications of what we were able …

AI assessment note: “I was optimizing for the investors instead of the valuation.”