SaaS Interviews with CEOs, Startups, Founders
1560 Why 15k Members Pay $300/mo For This Special Card (Not AMEX)
01 Nov 2019
Chapter 1: What is SELECT and why do 15k members pay for it?
launched meet select in 2014 again site that gets you exclusive deals across many thousands of locations all around the world whether it's dining hotels experiences many other things even nine people based up in new york about 15 000 members that pay a membership fee they're doing about 2 million bucks in terms of run rate today that's up from 1.2 million run rate just a year ago november 2017 they've done all this pretty capitally efficient about 2.5 million bucks in capital raised 30 percent revenue turn per year kind of high but not bad for consumer space
$250 CAC to acquire the $300 customer. So pretty instant payback because it's all paid up front. Looking now at launching a banking product, hopefully raising maybe 10 million on a 40 pre or something like that. Last round was call it 12 million pre. Hello, everyone. Nathan Latke here. My guest today is Carlo Sisco.
He's a serial entrepreneur who's founded multiple successful companies and helped grow category-defining brands. He's currently the founder and CEO of Select, which has been heralded as Amex for the next generation and the black card for millennials.
He's also a member of YEC and has been featured in 100-plus stories across many different media outlets, including Entrepreneur Forbes and the Huffington Post. Carlo, are you ready to take us to the top? Yeah, I'm excited. All right.
Most people, when they think about rewards cards, they think, oh, like I'm going to get some like weird token thing that I'm never going to know how to actually use or exchange. Walk me through how meet select is attacking this market.
Yeah, exactly. So, so that's, that's sort of exactly the way the system works today. It's points, it's fractional cash back is things you need to earn a crew. And, you know, they typically aren't necessarily rewards. that relevant. So what we wanted to do was create a large network of benefits that were significant.
So our benefits are typically up to 70% off or priority access, free drinks to your entire party, that kind of stuff that people had instant and unlimited access to. So meaning like once someone has a select card, they can use all of our benefits anytime they want, as often as they want,
um there's no limitations whatsoever and then ultimately the goal is actually to combine that with the sorts of points and reward systems that you would see from typical cards today um you know in issuing a credit card to sort of create this mega credit card if you will and and you know that's where the amex for the next generation line um came from is you know essentially they're
perhaps the company that's innovated the most to date, but we have more exclusive benefits than them by a magnitude of over 200. So over 200 times as many benefits. So we've built a pretty robust program.
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Chapter 2: How does SELECT differentiate itself from traditional credit cards?
So once you have brands like Tao, Four Seasons, whoever it may be, Other brands want to be associated with those brands. Why do they believe you though? That's sort of the other big thing we have to learn.
Why does Tao believe you? Why do they what? Why do they believe you? When they say our check site is going to be bigger, like why do they believe that?
So with most partners, especially one of that magnitude, they're going to test initially, right? So initially with Tao, we have four locations. It was four locations here in New York. Within six weeks, they expanded to all of their New York locations.
What did the data look like from the test? How much was the increase?
Yeah, it's a lot of reservations. Check size, I don't know specifically for Tao. I know across the board, it tends to be around 20 to 30%. So it's not a huge magnitude, but it is higher.
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Chapter 3: What benefits do SELECT members receive?
And that is, you know, with the benefit factored in, whether that's free drinks or a discount or whatever the case may be, like after providing that benefit, they're still making more money.
Yeah. And the reason I ask is, I mean, I imagine I have a lot of millennials right now listening, right? Who are like when they launched their own company and they're going, why does he think that we're going to spend more money? I'm freaking broke putting all my money in my startup. I'm not going to spend extra on drinks. Like what? It doesn't make sense.
And you hear like millennials, they like are bad at saving money. Like why do they actually spend more out of Tao?
So so it depends on, of course, who the person is, how they like to experience things. Right. There's going to be a degree of variance. But typically what happens is when you're getting some sort of incentive that elevates your experience, you end up like investing further and elevating that experience. So like, you know, if you're saving 30 percent on a dinner, let's say.
you tend to order an extra round of drinks or get an extra appetizer or maybe do things that you wouldn't normally would. And what's cool about it is like, it makes your experience at that place so much better. It becomes like much more of a night out, much more memorable. Um, and I would say that's actually even more amplified with hotels.
So, so for example, like I booked, well, obviously I book all my hotels through us, but, uh, but before our hotel program was as good as it was today, I actually didn't do that. Um, I used to use whoever had the best rates, but, but now, uh,
Um, you know, saving over a thousand dollars on a trip, like it'd be hard if you're, if you're staying somewhere for more than three nights, not to save over a thousand dollars. And it's typically in the range of like, you know, The average savings is 31%, but you can be as high as 70%. I tend to save like 40% to 50%.
But what's cool is it completely changes the caliber of the place you can stay. We're still a startup, so being able to stay at five-star resorts at basically half the price, that's a pretty compelling thing for me, and it completely changes the nature of your trip.
Yeah. Can you, I want to get like really specific here. Is there, oh, okay. Oh, perfect. Okay. I see on your site, the standard Highline. I go here all the time. All right. Member benefits up to 25% off best available rates. Complimentary upgrade when available. Now, is this 25% off best available rates? Like truly, I look at booking.com. I look at the standards website. I look at hotel tonight.
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Chapter 4: How does SELECT acquire customers and what is their cost structure?
Yeah. Are you in talks right now to be bought by Amex?
We've had multiple of the top five issuers want to buy the company. And why hold out? We think that we can provide a credit card on our own in conjunction with one of those companies that allows us to become a much, much, much larger company to the extent that our current revenue is rather miscellaneous.
Yeah. Interesting. There's a lot of work, though, in terms of bank regulation, all that kind of jazz. It's not worth just piggybacking off one of those guys since they already did the work.
So you can do it in a different way, actually. So you can have a bank sort of handle all the bank stuff, handle all the risk, handle underwriting, all of that. You can actually get revenue, additional revenue in addition to the membership fee we have today for people that sign up as well as their total spend.
So when you have leverage and a network like we do, you can build a pretty attractive situation. And then, of course, the other thing that's come up a lot with the larger banks is obviously wanting to license portions of the program, that kind of thing. And we're open to ideas like that. There are certainly several discussions around that right
Yeah. Cause the value you've built in terms of someone to replicate you is literally the phone calls and the emails and all these partnership deals. And in my opinion, that's, that's the real benefit. Yeah. Cause that's not easy to get going. Um, okay.
So walk me through your team today. How many people? So we have nine, uh, full-time and then like a few like part-time and contractors. So it's actually a pretty small team. All in New York. Uh, about half.
It's about half here, half elsewhere. Okay. New York city remote. Um, okay. Got it. And what, um, going back real quick to the acquisition question. So, I mean, you have investors as well. So if, if, if, if an offer came to you where they actually got a great return, I mean, they could potentially obviously, you know, say, Hey, Carly really should do this.
Um, I mean, is there a number today that you would sell for? I really know you just, you want to figure out the banking thing first and then.
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