SaaS Interviews with CEOs, Startups, Founders
1058 How Screen 6 his $3.5m in ARR on $600k Raised
17 Jun 2018
Chapter 1: How did Screen6 achieve $3.5 million in ARR with only $600k raised?
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple hundred thousand dollars to 2.7 million.
I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is David DeYoung.
He's the founder and partner of Screen6 and has been closely involved in the development of innovation regarding the latest technologies for online marketing and advertising. David, are you ready to take us to the top? Yeah, indeed. I'm here. All right. Get specific for me. What is Screen 6 doing? How do you make money?
How do we make money? Good question. And what do we do? Well, let me start at the beginning.
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Chapter 2: What challenges did the founder face when starting Screen6?
We focus on identity resolution in digital advertising, which essentially means that we are a company that works for other technology companies in our ecosystem. And we inform them what devices belong to which users. So imagine, for example, 20 years ago, you know, you Nathan, you might have had one laptop at home, which was shared across your whole family.
It was pretty easy for an advertiser to track usage there, right? Like cookies and stuff, they needed just one cookie to track. Nowadays, everyone has many digital and connected devices, mobile, desktop, tablet, in-app, et cetera, and even smart televisions.
What Screen6 does is we connect all the different identities to individuals, therefore informing our clients what their consumers are doing across devices and across media protocols.
Okay, and so how is this different than like a Clearbit or a Full Contact or these kinds of companies?
I'm assuming, actually, I don't know these companies. I'm assuming these companies, they focus more on the marketing or the CRM side of the business.
Yeah, I just saw on my research team noted that on your website, you talk about your new features, CRM onboarding, campaign analytics, UTT connectivity. I mean, those companies I just mentioned do a lot of like, you know, hey, give us an IP address or give us a domain name and we'll tell you all the information about the people on these kinds of companies. But you're not doing that.
No, I guess those are more like census based and they're using the IP to abstract some information about the household potentially. What we do is more individually focused. So it's more for a display advertising use cases, for example, where you're showing a banner to someone and you would like to know whether you've already exposed this person. Yes or no.
whether they might have already converted with you or whether they have a specific profile that you might have some historical knowledge on.
And how do you charge? Is it a pure SaaS play?
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Chapter 3: How does Screen6 differentiate itself from competitors like Clearbit?
Uh, we, we, I am calculating. I want to give you a good number. Um, it's about two thirds of that.
Okay. Got it. So you're doing about your duty.
We have some legacy companies still in the, some legacy clients from the early days.
Got it. So you're doing about 350 K a month right now. Yeah. Okay. And what is that up from? If you go back and look at 12 months ago in December, at the end of December, 2016, what were you doing then?
We were doing about a 40% less, uh, Uh, we did grow pretty, pretty good over the year. Uh, but we also had some struggles during last year, uh, where, uh, one of our companies filed for bankruptcy, which led us, uh, basically that, well, that was a pretty big disappointment.
Did that company make up more or less than 10% of your total revenue? Uh, yes, they did more at that time. Yeah.
Yeah. No, uh, they did about 10% of them at that time revenue.
So that's why it was tough for you guys. You had to figure out how to replace that revenue pretty quickly.
Yeah. You know, we were expecting of course that revenue during the year and we were already investing on top of that. And then, uh, you know, once of a sudden they, they, they fade away and they take a big loss in, in unpaid bills. And of course all the future revenue is not coming as well. So that's a, that's a loss in, uh, in our, for, for us. Sorry.
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Chapter 4: What was the revenue and growth trajectory of Screen6?
And that's your current kind of money velocity.
Yeah. So that's, that's basically four months actually. It takes four months to remit it.
That's healthy. And then what do you assume lifetime value is on these customers? Do you have a good sense of that or no?
not yet because we are still scaling and no, I can't say for sure. Of course we can calculate with the churn and the growth that every client does. But you know, in a company that has like 20, 25 clients or so, it's very difficult for us to predict the lifetime value.
Or it just lies to you. Like if we just calculated yours based off how some people calculate it, you would take one divided by your monthly churn, right? Which is 1%. So they stay with you a hundred months. And if they pay 25 grand a month on average, it's 2.5 million in LTV, but that can be deceiving.
I think that the math could work, but in actuality, it might not work out that well. As you know, in smaller companies, when you didn't yet achieve a certain level of revenue, it's very difficult to predict.
What's your team size today? We are 18 people at the moment. Okay, based where mostly? Amsterdam mostly. Okay. Amsterdam. Good. And we have a team in New York as well. Okay. Amsterdam and New York city. Good. And then what is the, I mean, how do you make decisions around when to raise capital or not?
So you've raised for the size you are, you've actually done a good job at really not raising that much capital. How do you make decisions around that?
Well, There's so many things that influence me and my co-founder and also the board making these decisions. A lot is gut feeling. I think that we can create excels and we can create budgets and predict what amount of money we need to sustain a certain growth and then, for example, multiply it by two and try to raise that amount of money, right? And that...
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