The Exchanges

Q You take a percent of the increase, or are you a flat, kind of, SaaS model only?

A We're, we're, uh, we're, we're a flat SAS kind of shop, uh, but we, we, we'll typically do, uh, three or four month initial terms of pilots, which is very unlike most of the market companies who require one or two year initial terms. And based on, um, there'll be a price, a monthly price there, but, uh, we'll have a tier pricing approach where based on how much increased revenue it will roll, it will automatically go into another 12 month agreement at a certain flat rate SAS. So based on, based on basically our identification rate and how we perform during that pilot period, it will, It could lock into a higher rate. Um, so that's, uh, that's how it goes, but it's flat rate test.

AI assessment note: “We're, we're, uh, we're, we're a flat SAS kind of shop”

Q We'll even, but Ryan, I just want to be very clear on this. Is that how you make money? You lock up inventory at a fixed CPM. You mark it up a little bit and you make the spread.

A Um, it's not exactly that. So we create the ad units, and we facilitate the demand, and then we help the agencies actually create the ad units. The agencies will then go buy it, and then we take a cut of that. So the money comes to us, and then we, we will get the publisher a 50% plus of, like, the publisher, and it's, it's not, we're not securing inventory, it's our inventory. We're, we're facilitating ad units, the demand, we're doing everything. The publisher just gets a really nice Uh, really nice ad experience and they, they collect money. So, and actually for publishers, there's two parts. Like publishers, we, they, we have a SaaS business there where they pay us money to drive audience development, collect emails, try subscriptions. So they pay us. And then, then if we have a lot of publishers where they pay us and then we pay them. So it's like, and just sometimes two different departments. So it's really cool.

AI assessment note: “Um, it's not exactly that. So we create the ad units”

Q You can like, Ryan, are you talking like two to six percent kind of interest rates, somewhere in that range?

A Um, when you're, there, there's gonna be some that are six percent, some that are, um, gonna be more of the, The 10% range. If it's, if it's, uh, if you're looking at like no interest for a certain period of time or very low warrant coverage. So you might give up like a point of equity. So, but if you, so, um, the ones that are taking a little equity, they might, um, or they're say there's no covenants or there's minimal covenants. Uh, so very, very, very, uh, kind of friendly term. You might be paying more than the 10% range, but that's still super cheap. So then you can raise your paid off or you can keep like, Rolling if you like, if you're doing well, so.

AI assessment note: “there's gonna be some that are six percent, some that are... The 10% range”

Q That's good. Well, hey, Tell me real quick, before we, before we dive deeper into Bounce, why did you decide to leave? Was Bonobos right before this, or was the security firm before it?

A Um, Bonobos was before, before this. So, um, yeah, it was, um, I had to leave. Yeah, well, it, it wasn't, it wasn't deciding to leave. It was, it was already pre-decided, probably before I got there. It was a matter of, hey, was I going to get traction with Bounce Exchange or not? Was I going to be able to pull the right co-founder or not? Uh, I started working on it in probably 2010, but, uh, I was already in my thirties at that point, so I know you only have like one or two good shots. Uh, I wanted to take my time and, and really like, uh, test out, test out different versions of the product, test out different revenue models. Once I figured out what was going to work and, and had the right people, uh, you really need someone good to go into battle with. I, uh, I, that was a mistake I made in my twenties where Um, I was pretty, always pretty good at executing on things. And, um, the issue with that is like, you can take really bad ideas, which all my ideas then were, and still probably are. Uh, but you, I can make a bad idea work for too long. It wouldn't fail. I'm like, Oh, it's not going to fail. Just make it work.

AI assessment note: “Bonobos was before, before this. So, um, yeah, it was, um, I had to leave.”

Q So Ryan, real quick, give us a sense of what is it? It's March,

A Yeah, we're, we're about a 150 employees. Um, even though it looks like on paper, we've taken on like, uh, seven, eight million dollars. A lot of that just went to, we're in the New York Times building right now, and the security deposit was three and a half million dollars. So, uh, we, we were profitable as a business, but we just needed to pay the security deposit to move because we were, we were growing. That's the reason why we took on a lot of money. And also, it's good to have, have a little bit of breathing room, um, just in case something happens. But, um, yeah, we, we, Uh, I funded most of it, and then Cole came on, uh, and put some money in, so did Andreas from our company. So, uh, we, we put in the initial money, which is really our seed round. And then what we're going to do is series A companies, uh, it would have been really easy to do a five to ten million dollar one then, but we don't want to give up 30% of the business and, and we sacrificed valuation just to get a better partner in there and someone who believed in, um, we wound up having to work with a New York VC because West Coast VCs were pumping money in, like hire as many salespeople as possible. We wanted, we wanted a business to go organically. We want it to be mostly inbounds.

AI assessment note: “we're about a 150 employees. Um, even though it looks like on paper”

Q And how much of the seventy five million was debt?

A Um, say it's about half and half the debt. We, we've acquired five companies. So when you acquire companies, you don't want to like sell equity. You don't want to, you don't want to dilute your company to acquire companies. So, uh, we've made some acquisitions, including a major one last year, and they've worked out really well, acquiring great people, uh, sometimes technology people. Uh, and, uh, last year we, we did both. So like that, that's really good for that. I think, um, especially because, you know, there's going to be a predictable revenue stream that comes behind it. So you don't want to just raise a round to go do it. You might want to raise that around to do growth. And we are, now we're going to do a big one, but we've, We, we were, we deployed very-

AI assessment note: “say it's about half and half the debt.”

Q Hold on, hold on. I need to make all this clear because I'm getting confused now. So if, if a client's going to pay you a hundred grand in a year and you know that you're willing to pay three months of revenue, uh, Is that right? To acquire them?

A If they're paying us a hundred grand, um, for a year. Say we're, say our gross margin would be 75 or 80 K, but it would take us, that's not including engineers, sales, all the other stuff. Uh, it would take us a long, it would take us about a year to break even on that. Um, I, I know that that's, that's about our math. So even we do one year contract, we don't make money on that client unless, unless they choose to continue to move forward with us after. And some would even as longer than that. So, uh, but I, I, we look at it like, so we would try to, uh, Uh, acquire, acquire the client. Um, uh, we say we close 20% of those, those deals. Um, Of, of the demos we have, and then we back into a price. We look at, in that case, somewhere, we'd like to acquire that, that qualified demo for about 2000 dollars, which is, uh, which is kind of a, that, that would be our CPA objective on that.

AI assessment note: “it would take us about a year to break even on that.”

Q Um, so now were you able to use basically go in June of 2013 and, and tell investors for bounce exchange and say, look, we already have a client. It's bonobos. Look at the revenue they're paying me. And is that what helped you negotiate the 1.5 million dollar series?

A Hey, not at all. And, and screw VCs, uh, even though I have some great VCs, uh, uh, no, it's, it's, it was like, Hey, we're going to have to sell on this thing at the beginning, get some traction. Um, don't want to have multiple VCs on a board making decisions. Just the, the fundamental way software companies grew and the ones that grew to a billion dollars plus, um, I just didn't believe in it at all. Um, and all these big companies that were these billion dollar plus companies, I'd worked with them all before, whether it was an analytics solution, um, like, uh, like, oh, Um, and other stuff that's Voldemort not to be named. It was just a really bad experience is really bad experience in the service side. And it wasn't something I would, I would stake my personal reputation on.

AI assessment note: “Hey, not at all. And, and screw VCs”

Q a higher valuation and less dilution, which is the name of the game, less dilution. Check it out today at founderpath.com forward slash products. That's plural forward slash valuations. Again, both plural founderpath.com forward slash products forward slash valuations. And what is the revenue? So let's talk about the product, right? Because you built a great product. You're doing multi-channel marketing for three core areas. Tell us about those areas.

A Yeah. I, I mean, I wouldn't call it marketing. We have, we have two customers. They're, they're one customer brands and we work on the best friends in the world. And some of our brands are commerce brands. Commerce brands means you're doing transaction online. So, uh, sometimes it's like e-commerce retailers, but we just call it commerce. So, um, there's no such thing as direct consumer. It's like, it's just commerce. And our second kind of, uh, the second kind of brands we work with are our publishers. Uh, so, but one customer group is brands. Our other customer is people consumers. So Every product we build is like for the benefit of people and improving the shopping experience. So we build things like what are consumers like interacting with? Um, and, and then we, then we connect friends to consumers. Basically we, that's, uh, that's kind of what we do. I mean, everything we do is, is taking like what people call personalization and, and scaling that it's everything we do is generally one-to-one. It's like, how do you create one-to-one experiences and scale those things?

AI assessment note: “I wouldn't call it marketing. We have, we have two customers.”

Q Yeah, yeah, yeah, yeah. When you're looking at what segment's growing the fastest, revenue the fastest, is it that top tier or no? Are you seeing a lot of movement in the bottom tier?

A It's end to end. So, uh, we should have moved to named accounts much quicker. So, we mapped out our TAM and out that 4000 named accounts, we We used to have SDRs, and now we kind of have an elevated version of that role. We call it a BDA, a business development associate. So they're paired on a one-to-one basis with a, with a new business rep, and, well, they'll maybe eight percent of the time with one rep and 20% of their time with another rep to spread it out a bit. And they have, they'll have like between 40 and a hundred named accounts depending. Mid-market will be more towards a hundred. Strategic will be more towards 40 or 50. And whether those are clients or not, their goal is to Uh, one, like, use all the resources we have at Bounce, which is themselves, the rep, um, our marketing team, our reliance team, to break into the account at the appropriate level. So there's something called, we don't do leads. We have something called a sales accepted opportunity.

AI assessment note: “It's end to end. So, uh, we should have moved to named accounts”

Q essentially said, okay, I'm going to go look at all the e-commerce brands with more than X X amount of GMV based off some, you probably scraped, got data from somewhere, obviously legally, but scraped it, whatever paid for it, and then you map out the 4000 accounts, and you say, we want to get all these 4000 accounts. You're at a thousand of them right now. Is that accurate?

A We have reps and BDAs to all those accounts, and then our marketing, and we just have There's, there's incentives everywhere to break into those accounts at the right levels. So, and then we, we have some other verticals, so we do a little bit of travel, sister vertical, and we have a separate publishing team, which we, we've completely broke out as own business unit, and have, have, had that team completely focused on its own thing, and the UK is also, it gets treated as own complete business unit, and those are, and that's been really effective for us. So, it's on sales org, it's on accounts org, it's on marketing, so it's, and, um, our, our publisher business unit is, is growing three extra year over a year. That'll probably do 25 mil itself this year, so.

AI assessment note: “We have reps and BDAs to all those accounts, and then our marketing”

Q Okay. Were you less than, you said you wanted an IPO at 40% year over your growth. I mean, were you less than 40% year over your growth the past 12 months?

A Um, It depends when you look at it. We're probably, we'll probably finish a year more than that. Um, you know, I guess, but we're, it's, you have quarters, you have, you have different goals. Q four, Q one. It's the, that, that wasn't the goal. You got to get the ships. You got to get the ships to attack for us. It was like having a scalable sales team. You gotta have the product market fit in your sales team. Now we have, we, we always had like some real strong athletes, great performers, but like getting that enterprise mid market team to a place where it's a machine. Where you got the right people in the right process, and like, we, we got that down now, so we know we can like, hit the gas there. In a marketing standpoint, um, for our top named accounts, say our top, even top 500 named accounts, like, we want to go in at the CO level, so it's like, how do you create these, these experiences where CO will come out, so we just spent about 200 K, we, we rented a private suite of the US Open Finals, we, uh, we, We choppered, we choppered these CEOs into our, basically our suite was, and uh, and we also had other CEOs out and like, so they got to kind of meet some other like CEOs or CMOs of big companies. They got to go to the Nadal final at a private suite chopper. So like you do, and, and I'm, we only have the top people from our company there. So it's a, it's an amazing experi…

AI assessment note: “It depends when you look at it. We're probably, we'll probably finish a year”

Q I'd love to chat more about that in a second. Yeah. So when you say fastest growing ever, I mean, how would you guys grow out revenue over the past 12 months?

A No, um, I, it's, it's, it's, I'd say I'll, I'll take a step back. Last year was just our best year in delivering, improving the value of product service. So like the revenue growth comes like when, when you want to grow revenue wise, that, that comes after your, your product service got really good. And, and for us, like we sell revenue. So a lot of software companies sell like, like time savings and efficiency. We, our software delivers revenue by improved experience. And we, uh, we improved our regular offering so much. So our identity versus technology, like we got that really off to a different level where we recognized nearly Of people. It's awesome. Uh, we, uh, we delivered an enterprise tech platform last year and that boom, uh, we're, if someone uses our full series, we can, we can increase the business by, by 20%. And that's like a real number. It's like within a year, like we can increase almost any business within 20%. So it's a pretty cool. And generally we're doing, or if, if someone has like our course, we were in six months, we're averaging a 10% increase. And we do that by scaling their personalization. So then here, yeah, then you, you get some big growth. We'll, um,

AI assessment note: “I'll take a step back. Last year was just our best year in delivering”

Q Is there a flat fee service to do the creatives? And then you also take a percent of the.

A So we, we, we create the infrastructure. And then we also, um, we help, we, we work with agencies and the agency is actually Buy our exclusive inventory through a private marketplace. So we, not only facilitate the technology, we also facilitate the buyers and it's, it's some, it's, it's very premium brand advertising. So it's advertising, like it's performs great for the brand. It performs great for the publisher, but the users enjoy it. It's like users really enjoy interacting with these ads. Cause we don't, we don't, when you want it, when you get to a publisher, you usually get to an article. What do you want to do? If you want to read the article, you don't want to be it. You don't want to be.

AI assessment note: “we create the infrastructure. And then we also, um, we help, we, we work with agencies”