SaaS Interviews with CEOs, Startups, Founders
1608 How He's Raising $1.5m on $6m Pre With $16k in MRR
19 Dec 2019
Chapter 1: What is the main topic discussed in this episode?
went into consulting and said, you know what? I'm going to do this thing myself. I'm going to launch Ripley, helps companies, helps school systems, anyone with assets, helps them manage it and trade easier, basically make more money on these, be more efficient.
They launched again, 2015, now 14 customers doing about 16 grand a month in revenue, five team members in Chicago, 540 grand raise, hoping to raise another 1.5 million on a maybe six pre-sell, call it 12% of the company. Too early to talk about metrics like churn, CAC revenue and things like that. But again, healthy growth right out of the bat. Hello, everyone. My guest today is Gary Cooper.
He launched his company in 2016 called Ripley, an asset exchange manager. It's the easiest way for professionals to share resources with anyone in their industry.
Chapter 2: How did Gary Cooper start his company Ripley?
By connecting leading research institutions, Fortune 500 companies, startup school systems, nonprofits, and organizations in between, Ripley is creating a shared economy for innovation. Gary, are you ready to take us to the top? Yes, sir. All right. So tell us what the company does and what your business model is. How do you make money?
Yeah, so basically we developed, we were changing a category, starting a category called Asset Exchange Manager, which is basically a manager between an asset management system and an online marketplace. And the way that we make money is we sell this Asset Exchange Manager, AXM. to primarily right now to organizations that do research. They pay us a subscription monthly for its use.
Chapter 3: What business model does Ripley use to generate revenue?
And then we also make money when an asset is sold from one organization to another on our system.
What's an example, Gary, of an asset like that that would be sold?
Yeah. So it could be something like a microscope. It could be some heavy equipment, like things you might find, like a drill or a mill, all the way to kind of specialized biologics and chemicals.
Interesting. So like a school, a school might use you. And when they want to buy new microscopes for their fifth grade science class, instead of just turning them over to the government, they'll put them all through your system and maybe make some money on them.
Exactly. And or a company would say, instead of selling our stuff to a corporate auctioneer, we can sell it to a local university, local charter school, so they can make better use of it.
Interesting. Okay. What do they pay you on average per month to use the technology?
So corporations tend to pay us about $10,000 a month. And again, it's primary use cases that kind of increase internal asset visibility and utilization. So one of the things that we talked with our clients a lot about is using REAPLY as the first step of procurement.
So you can imagine if you're at Google or if you're at Intel or a big company, it's very likely you might purchase something that someone else already has in surplus, but you have no idea that they have them in surplus and they have no idea that you need them. And so what tends to happen is that people are double buying and overbuying all the time.
So our real chief case to those big types of clients is to kind of help with internal reutilization of things that have already been procured.
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Chapter 4: What types of assets can be traded on Ripley's platform?
But then secondarily, they can say, hey, we no longer need this stuff. So we want to be able to sell it to universities, startups, small businesses, charter schools, and they can do that through our platform.
Got it. Okay. So average customer pays about 10 grand a month for access to this?
Yep.
Okay. And then when did you launch the company? What year?
So we founded the company in June of 2015, worked nights and weekends on it for about a year and a half. The hustle baby. The hustle grind. I was a full-time consultant and my tech team was a full-time tech team at another company. And then we launched full-time November 1 of 2016. That's great.
And how many customers have you scaled to today?
So we started selling, we did a year long pilot in 2017. So we weren't selling, we started selling January of this year and we've been able to get 14 clients today.
That's great. I mean, are they all paying that 10 grand a month?
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Chapter 5: How much do customers typically pay for Ripley's services?
Not all. So some of them are university. So we charge universities that 12, $1,200 a month. Okay. Um, so, uh, depending on where you are as a university or corporation, um, that's, that's what they pay. But yeah, so all, all, all but two of our clients are paying. Okay. Uh, which is, which is pretty good for a first year SAS company. No, that's great.
I mean, if I, if I assume that they're all universities paying just 1200 bucks a month times the 14, I mean, that puts you at what, like 16, 17 grand a month in revenue, right? Yeah. Yeah, exactly. Is that about where you're at right now? Are you higher? It is. It's a little, it's about that actually. Okay.
And going back a year, nothing, right? Nothing. Like we didn't even have a product that we could sell a year ago.
We were just testing it because there's a lot of, even once you get the technology right from kind of a user experience perspective, there's a lot of under the sheets regulatory things that we have to make sure that our users don't fall into, for instance, like posting psychotropic drugs.
or you know trying to ship chemicals you know things like that we didn't want our users to accidentally do this all the same things you might do in an ebay but with lab stuff because that can kind of get very dangerous very quickly so we had to kind of figure all that out and it's kind of cool to see this kind of thing blossom and gary how did you get the first you know 10 customers were these people you pulled over who you already were kind of consulting for
No. So that's a good question. So the first handful of customers that we got, so one of them, so I am an adjunct faculty member at Northwestern. So we were able to do a pilot there in 2017. The pilot was then, we got a spotlight in a journal called Nature, which is a world-leading peer-reviewed journal. And so from a credibility perspective, you can't get more credible than Nature.
And so doing that, we got a lot of inbound customers that were super interested in what we were doing from that publication. But then we've really been just growing from our client base. So our initial clients referred us to peers because obviously the system works right as a network effect, right?
So if I'm at Northwestern and it's to my benefit that I have someone like UChicago on the platform as well because we can trade and get and share things together. So we've actually grown. I think Northwestern referred us to Emory. When we closed Emory, they referred us to UAB. And, you know, we submitted a contract at UAB after one conversation.
So we tried to kind of fight the traditional hard to sell market with sometimes universities are thought of by really doing our job with our initial clients and having them refer us to the people that they would want to be in business with.
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Chapter 6: What strategies did Gary use to acquire his first customers?
So three are co-founders, two are the tech guys. So they were working at Guaranty Rate here in Chicago before Reaply. Everyone's in Chicago. Everyone's in Chicago. Chicago's home. And then the fourth person is a really good friend of mine, college roommates, director of marketing. And then we have Pete, who's an associate, just graduated from UC Boulder.
That's great. Okay, so five people, all Chicago. And have you bootstrapped the company or raised?
So we've raised, we've done both. So we've raised a date about $500. $40,000 in convertible notes. And we are right now in the middle of a pretty substantial seed round raise. So we're hopefully trying to close that by beginning of 2019.
How much are you hoping to raise? About 1.5 million. Okay. And can I ask kind of what valuation you're targeting? I'm sure this will change as you negotiate, but generally what are you aiming for?
Generally, given where we are in our market, we're thinking somewhere around $6 million pre-money would make sense.
Yeah, yeah. So what you'll sell, what is that, like 7% to 12% of the company, something like that? Yep, about 12%. Yep, exactly. That's great. And do you have a lead investor yet or you're still hunting?
That's, if I check my email now, the answer might be different. So that's what we're hoping to get this week, actually. Let me ask you a question.
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Chapter 7: What challenges did Gary face during the company's early stages?
You did convertible debt already. I mean, would you ever consider, just so that you don't have to take dilution, would you ever consider venture debt to keep fueling the growth?
yeah so we we have a good friend um here who's kind of briefly all on venture debt so we are considering doing it right after actually this fundraise so the way that i understand some of those instruments they kind of come right after you do a fundraise well not all of them i imagine the guy you're probably talking to um he probably or she probably only does it after vc raise but there's a lot of venture debt firms actually that will put money in um as long as you're north of 15 grand a month in revenue they'll put money in even pre-vc
Very interesting. No, I didn't actually know that. And actually, you're right. The guy who we've been speaking to is a traditional banker. But no, that's very interesting.
We'll chat more about that later. But where will you spend the money?
Oh, so really two buckets. The first bucket is hiring more salespeople. Quite frankly, I'm the chief seller, the chief operator, chief fundraiser. And then the second bucket is we acquire a lot of our customers at professional conferences and events. So we want to have a heavy presence at the conferences that our customers go to.
Yeah, that's great. Any churn so far? No one's canceled?
No, we have a very sticky business. If you can imagine putting assets and having a system up and going where you're getting value, it's very hard to just go back to your spreadsheet or to your sticky notes.
We've had customers, I won't even say their names because we love our customers, but we've had customers tracking multiple millions of dollars with surplus assets through the way you would make a grocery list. So it's kind of interesting.
uh some of them being some of the biggest tech companies in the world so it's very interesting that is crazy yeah but don't don't share those names they probably won't be happy uh let's let's wrap up here gary with the famous five number one what's your favorite business book oh the the um the hard things about hard things yep number two is there a ceo you're following or studying right now
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Chapter 8: What are Gary's future plans for funding and growth?
Okay. Not married dog, no kids. And how old are you? I am 34, 34. Last question. What do you wish your 20 year old self knew?
Oh, um, Hmm. Oh man, that's a great question. Well, okay. Uh, between yourself, I would say, getting the business faster.
Yep. Guys start a business faster here from, uh, again, Gary went into consulting and then said, you know what? I'm gonna do this thing myself. I'm a launch Ripley helps companies, uh, help school systems. Anyone with assets helps them manage it and trade easier, basically make more money on these, be more efficient.
They launched, uh, again, 2015 now 14 customers doing about 16 grand a month in revenue, five team members in Chicago, 540 grand raise, hoping to raise another 1.5 million on a maybe six pre sell, call it 12% of the company too early to talk about metrics like churn, CAC, revenue, and things like that. But again, healthy growth right out of the bat. Gary, thanks so much for taking us to the top.
Thank you for having me.
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