SaaS Interviews with CEOs, Startups, Founders
1390 With $3m+ in ARR and 300+ Customers, He's Making Digital Advertising Easier for Publishers
15 May 2019
Chapter 1: What is Sortable and how does it empower publishers?
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Chapter 2: What led to the transition from Snapsort Media to Sortable?
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He had some success with Sortable, selling it early on to a larger company, Rebellion, backed by a private equity firm, then worked in 2014 to spin that back out and really scale it. Now they've got a model, which is essentially a SaaS tonnage fee on a CPM basis and then a rev share basis as well. They've got 300 customers right now, growing 30 to 40% year over year, doing well north.
of $3 million in revenue. Net revenue retention annually over 100% with this team of about 60 people between Waterloo and Toronto. Less than six-month payback period too, so healthy economics there. 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.
Chapter 3: How does Sortable utilize machine learning for ad operations?
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, everyone. My guest today is Chris Reid.
He's the founder and CEO of Sortable, a Waterloo region startup on a mission to empower publishers. With engineering background from the University of Waterloo, he's a serial entrepreneur on his fifth venture and has led tech ventures in industries ranging from educational technology to the consumer web and B2B SaaS.
He's a driving force behind Sortable, which was formerly Snapsort Media, which uses machine learning to help online publishers automate ad operations. Previously a web publishing company, it was acquired in 2011 and bought back in 2014 to relaunch Sortable's current day business. We'll jump into it today.
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Chapter 4: What is the revenue model for Sortable's services?
Chris, are you ready to take us to the top?
I am. All right.
So this is going to be fun. So it sounds like, I mean, did I get this right? You built an agency, you sold it, you didn't like what happened to it, so you bought it back and now it's more pure play SaaS. Is that accurate?
No. Give me the update.
Give me the accurate version.
Yeah. So we... We built out a publishing business that was consumer-focused, sold it, and wasn't happy with the trajectory we were going on post-acquisition, and so bought it back and largely pivoted to a B2B-focused SaaS company. trying to help publishers. So first company was publishing based.
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Chapter 5: How does Sortable achieve net revenue retention above 100%?
We learned a lot of lessons as a publisher and then bought the company back and repivoted towards helping publishers.
Okay. So there are, let me, let me break this down for a second. Number one, why'd you stay with the company after the acquisition? Was there an earn out you had to?
Yeah. I mean, there's, I think with all acquisitions, there's some, there's some type
tie-in you know i think that there's like monetary tie-in stock tie-in and then also um just me wanting to you know finish you know finish the job right there's like a commitment so a lot of reasons and why did it take three years for you to realize your new home wasn't gonna be a good fit and you should spin it back out why not do it immediately or after a year
Uh, that's just that I would never do that. Right. I would never sell something and then not, not try and work, make it work for the, uh, for the acquire.
You know, sorry, Chris, I'm not accusing you of doing something unjust. What I'm saying is why did you need a three year cohort sample size? Right. To understand it was never going to work.
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Chapter 6: What factors contribute to Sortable's year-over-year growth?
Right. Why not with that? If we go off your current logic, why not stay in? Why didn't you try it for 10 years?
Oh, because it was clear. It wasn't clear initially that it wasn't going to work. It took some time, and then it took some time to execute a buyout. I see. Working with private equity firms who have to... Working with the money side is not necessarily easy. So it's like you can kind of break the time up into... We continued to grow the company. It was going well.
than a period where it looked like, you know, it wasn't going to be what we thought it would be. And then a period of executing the buyout that, you know, those three things took time. And that's, that's how you get to three years.
So how much capital do you need to raise in a roundup from these private equity folks to take it back private?
Chapter 7: What challenges did Sortable face during its acquisition and buyback?
Yeah.
I mean, are we talking like a million or a hundred million or?
So I'm, I'm speaking primarily about negotiating with the PE firm who, who largely controlled us taking it back, not us raising money from private.
Oh, you're talking about rebellion directly.
I'm talking about the, the PE firm that backed rebellion.
I see. Okay. Rebellion was the company that bought you guys in the first place. You had to kind of get on good terms with them first, negotiate the deal, and then you were able to spin it back out.
Yeah. You have to negotiate both with the choir and with, um, the PE firm who, who, you know, has a lot of say over what, what they do. Got it.
Yep. Okay. Let's focus on the business.
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Chapter 8: What future plans does Sortable have for expansion and growth?
So what's the company do? And, and today again, how do you charge, how to make money?
So we charge publishers, um, in sort of two models, right? One model is sort of a SAS style tonnage fee. Um, which is on a CPM basis. And then the other, the other way we charge is on a rev share.
Okay.
Okay. That's how we make money.
Great. And is there one, do one of those make up more like the majority of their revenue? So does 80% SAS and 20% is rev share something like that?
Yeah. I mean, ultimately, ultimately it models that like SAS because the way we make money is a function of the amount of advertising someone is doing. So, um, That's a pretty stable input. The input is how many impressions, how many ads are we managing for you? Then the output is we're either charging a fixed amount per ad or we're charging a rev share amount per ad.
We're primarily rev share focused. But the two model really similarly because at some point, a CPM and a rev share are actually the same thing. They're transacted on a per impression basis and they can actually back out the exact same way. So it's really two sides of the same coin.
in turn you know when you say model similar to a sas company you know people like sas because they like predictability right and so they look at things like churn to see is the bucket leaky or is it truly recurring revenue so so if i just ask you just to try to understand this in one metric net revenue retention annually are you guys above 100 percent um i mean in aggregate we we try and look at it across a few cohorts right so that it's like it makes sense um
And I would say yes, because normally in SaaS, you have a lot of upsell opportunity, right? And so that's fairly typical. With us, there is some variability because some publishers grow really quickly. And as they grow, that kind of looks like over 100% retention. But if a publisher shrinks, they don't.
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