The Exchanges

Q Why, why advertising? Why, you know, Wall Street Journal and New York Times are all experimenting with kind of digital subscriptions tied to obviously premium content. Why not just double down on that? Why does advertising have to even be a revenue stream at all?

A Well, so it's actually a great question, and probably a topic for a different day, but I'll give you the quick answer is there is a real share of wallet problem with subscriptions. I mean, pull out your credit card statement at the end of the month. How many subscriptions do you have on there? You know, never mind Washington Post, New York Times, Wall Street Journal, traditional print publications that have now moved into digital. You've also probably got Netflix. You've got Amazon Prime. You may have Hulu. You've got your cell phone bill. You've got your internet. You know, you as a consumer think of subscriptions not necessarily by category. You think, okay, how much am I paying a month? And am I really going to go subscribe to five more magazine subscriptions or legacy magazine properties? Or if NBC has a special offering, am I going to subscribe to that? I mean, you know, whatever you do, there's a real share of wallet challenge, uh, for the winners ultimately make the likelihood that the next media company coming along selling a subscription is going to be that much less likely to be able to get your business.

AI assessment note: “there is a real share of wallet problem with subscriptions.”

Q of your business is transaction-based, the other 70% is pure play SaaS. You're Pure play SaaS business a year ago was doing call at 606 50 per month in revenue, grew 20 to 30% year over year to where you are today, which is about a ten million dollar run rate. Uh, talk to me about the transaction side of the business. Did that come after the pure play SaaS?

A Yes, that, that came to solve the problem, because ultimately, why are publishers, why does the Washington Post want to put a 150 tweets out today? Well, the reason they want to put it out is because that's where the eyeballs are, right? People have their mobile devices, they're scrolling through their Twitter feed, and the Washington Post or the New York Times or any other media company wants to be relevant and get their content in front of where the eyeballs are. Well, how do they actually make money? Well, I tap on the story, I go back to the Washington Post site, they try to serve me an ad, it's typically on a mobile device, it's pretty small, it's maybe not as premium as they would like it. That's historically been the value exchange for media companies. That's not enough, right? I mean, you, you see the media companies sort of lament. They went from print dollars to digital nickels, and that was even before the social platforms came in. So ultimately, you've got to find a way to get them better compensated for their content. It's expensive to produce content. You know that. Uh, and so that, that model is increasingly unsatisfying, especially in an age where the, the platforms change their algorithms. And so the, the reach and the amount of traffic coming back to your website can be quite volatile depending on what the platforms and the algorithms do.

AI assessment note: “Yes, that, that came to solve the problem”

Q Yeah. You were there pretty early though. So, okay, good. And what was the context of you joining? Did they pursue you or did you pursue them?

A Yeah, they pursued me. It's funny when you, uh, when you have a big exit to a company like Oracle, you immediately become smarter in the eyes of venture capitalists, right? I wonder what's up with that. Uh, and so I got a call from a recruiter one day. It was funny. I was in Chicago visiting a client and, uh, you know, I lived in Atlanta at the time. It was this crazy, uh, company in, in New York city. It was sort of, I didn't know anything about it. But the more I looked, I'm like, wow, this is amazing. And so our customers at the time when I walked in the door included the New York Times, the Wall Street Journal, the Washington Post, small outlets, you may have heard of them, you know, publishing their content out to social even back then using social flow. And so we do use algorithms, artificial intelligence. There's a whole lot of interesting dynamics. If you think about it, if you were going to tweet a 150 times today, like say the Washington Post, which tweet should go out and when and how would you manage the distribution of that content? Really very different problem than say what McDonald's or Procter and Gamble or Apple face.

AI assessment note: “Yeah, they pursued me. It's funny when you, uh, when you have a big exit”

Q Interesting. Um, let's, let's round up some of the economics here. Churn's critical in a SaaS business. What's your churn today, and how do you manage it?

A Churn's very low. Our renewal rate is well over 90% on an ARR basis, and it's interesting. A lot of the churn that we do have, A, tends to be skewed on the smaller side rather than the bigger side, and B, a lot of it is driven, frankly, by the economics of the business. People just can't afford it anymore, right? I mean, it's sort of When you're selling into an industry and to publications that face their own headwinds, you know, their economic models are challenged as we just talked about. Maybe they can't get the subscription or the advertising revenue they want. Uh, oftentimes they decide they can't afford enterprise software. So that's really where we focus, but we've got a very high renewal rate.

AI assessment note: “Our renewal rate is well over 90% on an ARR basis”

Q the wall street journal or something. Um, is that really a big enough pain point for people to search and find your ICO and say, yeah, I want to participate. So that next time I hit those paywalls, I don't have to pay. And also, don't you also have to solve the other side of the equation? You have to make sure those guys are on board with that model.

A Absolutely. Well, so to answer your first question, you're right. Nobody's going to search out, and by the way, it's an STO. It's a security token offering, not an ICA. So I don't, I don't expect people to go search that, that out. We've got to find people. I will tell you, increasingly, as more and more publishers experiment with that subscription challenge, you're running into more and more of these paywalls, registration walls, and basically friction in the system. And so, uh, yeah, I think there is enough friction in the system, especially when you have the ability to sort of hone in on the people who are actually Experiencing those paywall problems and say, look, I'll give you a lower friction experience.

AI assessment note: “to answer your first question, you're right. Nobody's going to search out”

Q Yeah, so a hundred percent net revenue retention annually. That's a healthy spot to be. Um, CAC, what's it cost you to acquire one of these new customers?

A It's interesting. It's relatively low. We don't have a, you know, I can't quote you an exact CAC or CAC to LTV ratio and all, because it's sort of interesting that the divergence of our, the size of our customers and the layering in of the transactional revenue sort of makes that a little bit more complicated, but it's actually a reasonable, you know, customer acquisition cost. We don't spend a ton in customer acquisition. Uh, I will tell you, you know, as you're doing the model here, you obviously experienced in all of these SAS numbers here. Our real challenge is ARPU, right? How do we drive, you know, the revenue up per, per user? And the way we typically do that is volume-based, right? The more properties you publish to, the higher The revenue we generate. And interestingly, that's the challenge. That's what leads us back to that revenue challenge because publishers are like, why would I up the volume of what I'm putting out when I find the monetization to be inadequate? So we really have to solve that monetization problem, which will then drive the ARPU up as well.

AI assessment note: “I can't quote you an exact CAC or CAC to LTV ratio”