The Exchanges

Q Yeah. Okay, that's good. What's the expansion? Like, what's driving the expansion? Is it number of seats or some other utility metric?

A Yeah, so because of the fact that we're doing a lot with frontline workers, like a big passion point for us with our product is that the overwhelming majority of a hundred and thirty million U.S. workforce does not get access to ongoing skill development like other roles inside of the org. Uh, we can't price by user only because you're going to pay a hundred bucks a month for seller, but you're not going to pay a hundred bucks a month for maybe the usher or the security guard. So, uh, our pricing model has three prongs to it. Uh, price, we're, uh, users, so we still have users as one of the metrics. Second is admins. We've built a product where frontline managers can create content. So in a way, challenging HR is Employee development. So, uh, you, you know, frontline users, admins, and then the third part is amount, number of games in their game library. Now, sometimes we work with a, a mid-sized brand that doesn't have a large, robust library. Maybe they only have one person in charge of training. Well, in that, in that regard, we know that expansion is going to be driven by, you know, just seats. But, you know, we just sold into, uh, It's another great example. Like, uh, Tau Group. It's the biggest nightclub chain in the world. Uh, Tau, Tau Group has, um, they want to launch on day one with every employee, but they only want to launch with one topic area. So for us, now it's …

AI assessment note: “our pricing model has three prongs to it. Uh, price, we're, uh, users”

Q I'm curious. I mean, a lot of the, a lot of it sounds like referral marketing and you have no holes in the bucket, you know, no churn. So it's an amazing bucket, but the question just becomes how do you get more people in it? I mean, uh, are you raising capital really to spend some of that money to figure out what that paid acquisition market looks like?

A Yeah, I mean, I think it's two pronged. Like, we're raising money to do two things. One is, you know, every dollar we put into our technology to continue to productize it, the faster we can scale it, the higher level of adoption we can create, and the different, and the greater, uh, type of organization we can, uh, approach, right? I mean, when you start dealing in, you know, talking to New York Life Insurance, or Geico, or, uh, Hyatt Hotels, there's just, um, There are different challenges with your product that you just have to face, right? So every dollar we're looking to, how do we expand our products so that it does become more automated? And then number two is how do we make sure that we bring on the right sales force to expand us into new categories, right? Our sales process has been focused on, on a handful of categories, you know, a few different industries, professional sports. Sometimes companies look at us and they say, Hey, you're a sports company. We're like, no, I've never sold a ticket in professional sports. And I'm presenting at national conferences on how to sell tickets. It's because we've proven that we can penetrate one category. Now we have to get investors to buy into me and us and our team that we can do that in others. And that definitely is what part of the funding is, is going to do.

AI assessment note: “we're raising money to do two things. One is... productize it... number two is”

Q Okay, okay, good. So you're kind of like, you're maybe not enterprise, but you're about mid-market, right?

A Yes, I mean, we make our biggest impact in small to mid-sized companies, and it's really been a strategic choice, to be honest, Nathan, because, you know, if you look at, like, enterprise-grade training products, that's where all the competition is. Blackboard, Kaplan, Scholastic, these companies have all types of platforms that they try to, But they're mostly learning based, right? They're not, you know, we don't have any direct game based competition in the way that we're approaching this, but that, you know, the, the red comp, all the competition is at the, you know, firms over a thousand employees. So we've, we've tried to stay stealth, gain traction. We've done that with small to midsize companies. But if you look at our sales pipeline for the next six months, we have companies from ESPN to the NFL league office who we're talking to, So we're starting to, uh, expand beyond just that thousand employee threshold.

AI assessment note: “we make our biggest impact in small to mid-sized companies”

Q What do you burn in like per call? Like, well, like 40 grand per month, 60 grand per month. How much does your bank go down every month?

A So right, I mean, right now it's about, I mean, you're right, I don't know how you figured that out. Yeah, we're around, we're around 40 to 60 K right now. Uh, it has to, you know, it's, our biggest expense is our, is our engineering right now. Uh, in our engineering expense, we're starting to, like I said, uptick some of the paid acquisition spend. That's probably going to be, uh, another sizable jump here in Q two. But, you know, again, the biggest shift and the hardest shift, I think, for a founder in my position is going from being bootstrapped and driving through sales to now having some cash in the bank to deploy and being smart about how you deploy it.

AI assessment note: “we're around, we're around 40 to 60 K right now”

Q How do you, how do you though create, like as an investor, like if you were trying to get me to put, call it a hundred grand in, I would say, eh, I can afford to wait a little bit. He's only got 400 out of the 1.2. What forcing function are you going to create to get people to actually close these checks to get up to 1.2?

A It has to do with, you know, I think it has a mix to do with some of the investors that we're already pretty deep in active conversations with. I think it also has to do with our sales pipeline. I think so many startups don't think about the current state of their sales pipeline as they're having active conversations around fundraising. We have a number of very large enterprises that if they close within the next two weeks, they might drastically change the way we think about the current seed round. We might just close it You know, call it a day until we have to come back to series A in a few months from now. Uh, so we're in a very, very strong position. We have a few pretty big active, pretty big clients, pretty, very large hospitality client in our pipeline, a very big automaker in our pipeline, and probably one of the biggest sports leagues in the world in our pipeline. If two out of those three close in the next 15 to 20 days, um, We might not need to raise as much as, uh, as, as we have currently up on the board.

AI assessment note: “if they close within the next two weeks, they might drastically change the way we think”

Q Yeah. It's about 2.9 to the company today. So far, uh, do you regret raising the 2.5 million?

A No, I mean, I think that, you know, the reality of it is, uh, I think you always have to, the balance that we have to weigh has to do with how fast can we move? And, uh, what does our market look like? And, you know, it's fair to say that with record low unemployment, And HR tech started to heat up because companies are understanding employee churn is a major problem for them. Uh, I think that the timing where we sat, you know, we grew very responsibly being bootstrapped the way we were. Uh, I think that looking at our financing in our last round, it was all about how do we continue to keep our foot on the gas? Uh, cause we were outselling our product a little bit.

AI assessment note: “No, I mean, I think that, you know, the reality of it is”

Q Okay, that's amazing. Um, why, so, okay, so that's obviously, that's, well, actually, you either skip over it, right? You either skip over that because it's so impressive, or I try and ask you to Quantify why, but ultimately it comes down to product. Would you agree?

A Yeah, I think it comes down to, yeah, it definitely comes down to product. I think it also comes down to the way we're pricing some of our, you know, some of our clients, uh, clients pay, um, you know, clients prepay for users. So on a month by month basis, if client seats are dropping off or dropping on, um, you know, there's turn, there's turn, there's turnover within organizations that we necessarily don't want to be in the business of counting heads. Uh, on a day-to-day basis, it just creates more friction for the client. But, um, you know, I would say that it's, we're working in a space where the alternative is so, you know, is so, I want to say boring or so, like, the opposite is so different that, you know, I look at traditional learning platforms. Here's a metric that's interesting. I sat down in a, in a big, uh, investor pitch a few months ago. I had heard a learning company stand up on stage and they said, Uh, the average learning platform has single digit participation, and they were praising the fact that they were getting 18% participation on their learning platform. We get a hundred percent participation, and the reason is-

AI assessment note: “Yeah, I think it comes down to, yeah, it definitely comes down to product.”

Q What's your goal with the company? What do you want to do with it?

A I think that we're trying to grow something to, you know, I look at this kind of like we're, we're running, we're running a, we're running a hundred meter dash right now. And we got a, once we get through the hundred meter, uh, we'll figure out if we want to run the 200. And if we get through 200, we'll figure out if we want to run the marathon. Um, right now we're not at, we're not at the, uh, we're at about the 50 meter mark. And you know, the hundred meter mark is the ARR goal we have for ourselves. And which is what, 1.3 million. We get, we get, we get to that number here, uh, fairly quickly in mid-twenty 17, then we'll start to look at what the 200 meter line looks like Listen, we have a product. We're in a learning space. There's a lot of competition. There's a lot of other tools. You know, we would be naive to say that we're going to displace all the other ones. I think that in the stack we're in, we might, we are open to, uh, we might be another tool in the toolbox for another product, uh, or we might just go, uh, might take him to the mattresses here, Nathan.

AI assessment note: “the hundred meter mark is the ARR goal we have for ourselves. And which is what, 1.3 million.”