SaaS Interviews with CEOs, Startups, Founders
1118 CEO: How I Bootstrapped to $3m in ARR
16 Aug 2018
Chapter 1: How did Tradable Bits start and what is its mission?
Launched his company back in 2011. Now it's 17 people based in Vancouver helping events more effectively manage and fill their events and remarket to fans to keep them engaged over the long term. Serving about 250 customers, paying a grand-ish per month. So 250 grand per month right now on a revenue. That's about 80% pure SaaS. And then about 20% is some ad spend fees there.
Less than 5% gross churn annually. That's on a revenue basis. Paying about three to five grand to acquire a customer. Getting that back in under six months.
Chapter 2: What revenue model does Tradable Bits use for its customers?
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 of 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, everybody. My guest today is Darshan Kaler.
He is the CEO and founder behind a company called Tradeable Bits, which helps music and sports brands know their fans and market smarter. Their fan data platform is built for one purpose, to create the best possible fan experience. Music festivals and sports teams trust them to collect, analyze, and activate their fan data at scale, increasing ROI with automated personalization.
Darshan, are you ready to take us to the top? All right, sounds good. All right, so tell us more about what the company does and how do you price this thing? How do you make money? Well, first of all, its main purpose in life is to really understand the fans that actually go through to sporting games or go to a festival or a concert.
We all know that each individual person that comes to a given event uh, has multiple different reasons, um, right down to the affinity of the artist, meaning that they like the artist, that's why they're going to, um, you know, to a group, uh, activity where a group of friends coming together to enjoy a moment in time. But bottom line, um,
For a lot of people that are in the entertainment industry, they're all about trying to make sure that they get the best experience. But in the end, in the digital world, when you're trying to do advertising, it becomes a much harder struggle to make sure that, one, awareness on the particular event that's happening, and then also trying to maximize your advertising budget.
so that you can get into a scenario where you're reaching the right audience for a given type of event. So our platform does all of those things to ensure that the fan experience, you're getting ads that are more appropriate to you, for example, all the way down to a communication basis where informing you of certain activities and events that may happen within your neighborhood.
So Darshan, who are you charging? The company, the event organizer, or the attendees, the fans? This is actually tied to the promoter. So in this case, our clients are going to be like the companies like the Live Nations of the world, Ticketmaster, or right down to a potential artist that's trying to roll out their new album and things like that tied to a label. And how do you price to them?
Is it number of attendees predicted? Is it a pure play SaaS model, fixed fee? What is it? It is a SaaS model. Again, it's a long-term play. It's not necessarily, oh, I'm going to do one campaign with you and then run with that. So we do an integration with the ticketing vendor of choice, whether it be Eventbrite, Ticketmaster, or Frontgate, whichever models.
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Chapter 3: How does Tradable Bits ensure a great fan experience?
Okay. And give me more of the backspace here. Were you at like an EDM concert rocking and rolling, you know, sniffing all kinds of crazy things? And you said, you know what? I got to, I got to create a fan engagement platform. Like how'd you launch this thing? That's a great question.
So prior to starting Tradeable Bits, I was the director of Olympic services during the winter 2010 Vancouver Winter Olympics. And as part of my mandate was to deliver flawless games. And it was really interesting to see media competing with the mom and pop down on the bottom of the hill where they're sending a tweet of the time and awesomeness of that activity.
And then NBC going, guys, we have to compete now in real time. So these photos and images need to be up on our website as fast as they go on to Facebook or Twitter. So that really dawned on me as something, the unique change in our industry where everybody is an editor, an opportunity to engage in the world.
And what shocked me the most was that people didn't really understand an individual who was on Twitter may be different than they are on Facebook and certainly different than they are on LinkedIn. Um, but it's still the same person. And so then we came up with a, with a model of understanding social media and in the enterprise world. Interesting. So what year was that have been? Year one.
Year one would have been 2011. We first rolled out our suite of apps. How many people are yet today? Well, the engagement platform, if we go and take a look at it, we've gone through a lot of different ebbs and turn in the technology. So when we first rolled out tradable bits in 2011 was to really understand social media. So we actually gave the platform for free. Yeah. Darshan, sorry.
What's your team size today? Oh, team size. We're over 17 people. We're adding more people. All in Vancouver? All in Vancouver. Okay. So now go back to the question I think you were answering, which is what have you scaled to in terms of total customers? Yeah. So you have to take a look at it from an engagement perspective.
So total customers for us, you know, for example, if we have a live nation, that's one company, but they may have multiple different events, concerts and so on. So there's, you know, hundreds, if not thousands of activities. Um, so we have to look at it from engaged audience.
Uh, so today, you know, we're, we're about, uh, um, on an active basis, over 20 million engaged audiences on a yearly basis. Okay. But price that out. So what I'm trying to do is price that out. So when you say an account pays you on average 15 grand a year, right.
Is like, I mean, do you include live nation as one customer in that scenario or you break them down into the 30 different events that they run? Yeah, they might, depending on the, uh, engagement component might change. So if we're looking at actual, let's, let's take a look at companies, uh, by entity, you know, we're about 250 different companies that we deal with. Got it.
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Chapter 4: Who are Tradable Bits' primary clients and how are they charged?
At this point, we haven't seen the growth capacity because once we start signing up some large accounts, it's more about trying to get their sub-accounts inside in there. So for example, if we sign up a company like Alive Nation, there's multiple different events underneath there. And so they're cyclical.
So at that point, if we get them in at a particular timeframe, we might not get them again the following year. Interesting. Have you bootstrapped the thing or raised capital? raise $0. That's a nice place to be. Congratulations. Thank you. We've never raised any money. At this point, it's all organic growth through word of mouth. Tell me about Churn. Churn is more tied to the refocus.
In the last year, a year and a half, we focused exclusively on sports and music. We did have companies that are tied to
um tourism uh and things like that that we've slowly said goodbye to because so much total revenue churn has has there been with the model change uh no small amount i would say i'd say about five percent okay five okay annually annually and does your expansion revenue across the fifth you know the customers you're going more after now more than make up that five percent so that net growth is there or no
Oh yeah, no, we, we, we, we are growing every month. Uh, and so the churn is not something that, uh, is impacting us. Do you know what net revenue retention is? Uh, well, let's see. Uh, if we're taking a look at this point, we're just focusing on music. right, music and sports, the retention on that side is, I would say, or churn, I would say, is probably less than 1%.
Because it's a very sticky product. So once it gets deployed inside the enterprise world, it's very difficult to remove. What are you spending to acquire these customers? What's CAC? So the spend is predominantly tied to events. We don't do a lot of digital advertising. We go through and inform a lot of our clients through those scenarios.
So cost for acquisition can range between $3,000 to $5,000. And from that perspective, we're pretty strategic about which events we go to. Yeah, and if you're making a grand or two grand per month from customer, it means you're getting paid back in two to three months, right? Pretty well, yeah. On average, depending on which events that we go to, some are more expensive to sponsor.
Um, but in, in most cases, uh, we get those return at least within six months, six months. Okay, good. And then what do you, you know, this is hard, but what do you assume these customers are worth to you over their lifetime? I would say each customer is within, let's take a look at the last three years of most of our customers that have been on the platform.
You know, a lifetime is going to be between 50 to 60 grand in a three year window. Okay, interesting. Interesting. And folks, you're signing up now. Is that kind of what you're using for forecasting? You think 50, 60 grand lifetime value, which means call it three, four years? Yeah, yeah, yeah. That's pretty well our overall view.
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