SaaS Interviews with CEOs, Startups, Founders
1540 Versace Gets Nordstrom Sell Through Data From Him, Passes $8m ARR and 500 Customers
12 Oct 2019
Chapter 1: What is Sky IT Group and what services do they offer?
sky it group again helping luxury brands understand sell-through data at their at their department stores like neiman marcus and places like that launched in 2008 their bootstrapped 500 companies right now doing about 8 million bucks in arr or about 650 grand per month that's up from 250 grand per month just a year ago so healthy growth net revenue retention annually in around 130 140 percent spending one to two years of first year acv or sorry one to two months of first year acv to acquire a customer so a healthy payback period there a team of 45 people
between New York City and Europe. Hello, everyone. My guest today is Jay Hakami. He is the founder and president and CEO of a company called Sky IT Group, an 18-year-old SaaS solutions provider headquartered in New York City. Again, really helping with retail sell-through data, collection, distribution, and insights. Jay, are you ready to take us to the top? You bet. All right.
So what does retail kind of data and insights mean?
Chapter 2: How did Jay Hakami start Sky IT Group?
What are you selling?
Basically, we're a SaaS platform that provides analytics, data collection analytics, to the supplier brand industry, as well as to the retailers. So for example, we work with brands to give them information on how their products are selling or not at the department store that they're selling into.
Okay, so let's use an example. Let's use, what's a brand? Abercrombie & Fitch. They have a little booth inside of the local mall. Are you selling directly to Abercrombie & Fitch or the mall?
Chapter 3: What is the significance of sell-through data in retail?
Well, Abercrombie & Fitch is a retailer. Can you hear me okay?
Yep.
Okay, we're dealing more with the brand. So let me give you an example. Let's assume a theory or better yet, let's use a Giorgio Armani. Perfect. Giorgio Armani sells into many department stores like Neiman Marcus and Saks and Bergdorf, Goodman and Nordstrom and so on. They need to have visibility as to how their products are selling or not in those stores.
What we do is we collect that data for them we cleanse it and then populate it into a user interface that enables them to see what's selling, what's not selling by combination of product attributes, geographic location, the different stores, as well as time dimension.
So Armani is your customer.
We currently have about 70% of the luxury market as clients right now. So all the LVMH, Caring, Coors, Curry Birch, you name it, they're using our platform.
That's great. Okay, very good. Sorry, I didn't actually literally mean are they your customer, but is that the type of customer you're selling to? It sounds like yes.
That's the type of customer we're selling to. Now, this is Skypatch for wholesale.
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Chapter 4: How does SKYPAD benefit luxury brands and retailers?
We also have Skypatch for retail. What that does, basically, it allows the retailers, such as Saks and even Marcus, to... to have a platform to distribute their sell-through data into those suppliers. So basically, we attack it from both sides, from the retailer as well as from the brand.
Last 12 months revenue, what percent was from retailers versus the brand paying?
Well, it's interesting that the platform is a vendor-funded program. The retailer does not pay anything. It's the suppliers who are paying for that data. So it's 100% a vendor-funded program.
Okay, it's 100% the luxury brands, the Versace's of the world paying you, not the department stores. That's correct. Oh, I see. Okay. And I'm sure you have a bunch of different customer cohorts, but on average, what would a brand like Versace pay you per year for this?
Well, it depends. If they're looking to only get data from, let's say, Neiman Marcus, they would pay just a few hundred dollars a month to get this information on a portal with the slicing and dicing capability. But a company like Versace would like to see not only Neiman's, they'd like to see how they're doing in Sachs, in Nordstrom, in Bergdorf, and any other 170 retail that we do worldwide.
So when we do that, we integrate that together with their style information, with their ERP system, so to give them a complete visibility to their product, the orders, the shipments, as well as obviously their sales.
Yeah, so just back to my question. On average, like the customer that is like your most, your highest use case, what do they pay per year typically?
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Chapter 5: What is the customer acquisition cost for Sky IT Group?
Anywhere from about $5,000 to $6,000 a month.
Okay.
Okay.
We have customers paying a hundred dollars for a very small, it's a value based proposition. So we have customers paying a hundred dollars and we have those paying, you know, 40, 60, a thousand dollars a month as well.
But five is a good average. That's a good average. When did you launch?
We launched this program about 10 years ago.
Okay.
So the company has been around for 18 years, but we launched Skype that about 10 years ago.
Okay. 2008. And have you bootstrapped or raised capital?
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Chapter 6: What is the current annual revenue and growth rate of Sky IT Group?
How many customers have you scaled to?
Well, we currently have about 500 brands using our platform. And this is like I said, who and who in the fashion industry and luxury as well as beauty, by the way. And, uh, so it's 500 brands about close to 2000 users. We're collecting from about, uh, we're collecting from four different continents around the world from about 180 retailers.
That's great. So 500 luxury brands paying that average, you just gave me a five grand a month would put you at about 2.5 million bucks a month right now in revenue. Is that accurate? That's, that's accurate. That's great. Take me back a year. So you said you're growing 50% year over year. So what you were doing about call it 1.6 million a year ago per month.
No, actually, we have grown more because in the last two years, we've been able to attract some of the retailers like Saks and Neiman's and others to be able to give us the sell-through data to their customers. So basically, right now, we're onboarding to the tune of 30 to 50 brands per week onto our platform.
That's free and paid or just paid?
Uh, this is 90% paid, 90% paid. There are some programs that we do, which is non-paid, which is a very small subset of customers that need very little information about how their products are selling in those stores.
Yeah. So just to be clear about a year ago today, how much were you doing per month?
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Chapter 7: How does Sky IT Group ensure customer retention?
So last year, uh, a year from now, a year ago, October, November, I'm sorry, October, November, last year, November of last year, we were doing about a two 50, uh, Per month.
250K?
250K. Oh, wow.
So you have like 10X year over year.
Yeah, yeah.
Correct. That's incredible growth.
Our ARR right now is about $7.5 to $8 million.
Oh, okay. Well, then you're not doing $2.5 million a month right now. No, no, no, no. Oh, yeah, that's what I asked earlier. You said yes, that was accurate.
I misheard you. I guess something was a connection here.
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Chapter 8: What advice does Jay Hakami have for aspiring entrepreneurs?
Is that right? Correct, yeah. Got up from 250K about a year ago. Yeah. And what that would mean is if you've got 500 brands making up that 8 million run rate, each brand's paying about 1,400 bucks per month on average.
And an average, correct. But the spectrum is so wide. Like, as I said, there's between $100,000 to $50,000 a month. Totally get that.
Totally get that. I just want to make sure it's $1,300, not $5,000 a month. But you definitely have people paying a lot more and some paying a lot less. Exactly. Yeah. Talk to me about churn. It's critical in any SaaS company. What's your churn?
Wow. We're churning. I mean, we have no attrition. I mean, this is a very sticky business. The minute a customer or brand comes on board, there's no reason for them to leave unless they go out of business. So in the last, I would say, eight years, one or two customers due to going out of business. But once they start using it, it's like a drug.
What about revenue churn? Any upgrades and downgrades?
Yes. Many of the customers are starting with one or two or three retailers and then they expand to the spectrum that they do. Some brands elect to use us also for their own company-owned stores as well as their .com, which expands its scope. We have actually a dedicated team to our clients, just providing them with additional value and additional enhancement to increase the monthly subscription.
Do you know what your net revenue retention is annually? It's obviously above 100%, but how far above 100%?
It's well over 100%. We really have not lost any customers.
Yeah. Yeah. I know. I know you haven't lost any, but I'm asking about expansion, right? So if you're growing an account from a hundred bucks a year to 110 bucks a year, that'd be about 110% net revenue retention.
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