SaaS Interviews with CEOs, Startups, Founders

866 SaaS: Sports Teams Use This $40m+ Company To Manage Communication

07 Dec 2017

28 min

5157 words

2 speakers

07 Dec 2017

Audio

Description

I really enjoyed this interview with Dave for two big reasons: He's playing in a space that is not typical for B2B SaaS He's using freemium consumer adoption to drive enterprise leads at a very low CAC of $80 which he makes back in well under 12 months. Dave is the CEO of TeamSnap. He has more than 20 years of experience in technology leadership positions. He was previously CEO of SANRAD, a venture-funded storage networking company, which he joined in 2006. He also helped found LeftHand Networks, a Boulder-based company sold to Hewlett Packard. Prior to that, Dave was with Hewlett-Packard. An avid skier and wannabe competitive cyclist, Dave lives in Boulder with wife Deb and two children, Mariel and Gabe. He enjoys reading, cooking and microbreweries Revenue Model: Over 1m teams use TeamSnap and 250,000 of those teams pay Dave $80 per year to use TeamSnap to manage team communication, logistics, and more. The average team has 30 people ranging from coaches, to players, to players parents. TeamSnap leverages 3 revenue streams with the SaaS component making up 40% of the total revenue mix. SaaS revenues are about $20m in ARR from 250k teams paying $80 per year. Total revenue is approaching $50m which Dave expects the company will cross in Q1 2018. Overall the business is growing over 100% year over year. On Launching in 2009 in poor economy: Dave: 2009 was best time for us to launch. The trough of a recessions is best time to get company going due to low opportunity cost. In recession there are talented people available for hire. 2009 revenue was less than $100,000. It took Dave just 3 years to break $1m in ARR which happened in 2012. Fundraising First 5 years from 2009 to 2014 the company was bootstrapped. Dupont funded the company with his own capital and local area angels. He put a couple hundred thousand in himself in early days. In 2014 they took their first institutional capital and have sense raised a total of $43.7m. On seasonal users and how that affects TeamSnap gross logo churn monthly: Teams pay $15 during the season then stop paying us off-season. We don't look at this as churn because we know they come back next season. They are simply "in-active". The company looks at revenue per customer on an annual basis which averages about $80. On customer acquisition: We use our consumer app which people use for free to drive enterprise sales in a land and expand strategy. 30% of new consumer customers come through referrals. We've boosted that up by spending about $500k per month on Google and FB ads mostly. Payback is pretty strong, under 12 months. They'll pay $80 to acquire a customer that is worth about $280 over their lifetime which puts LTV to CAC ratio at about 3.5. Cash Flow: Net burn is really close to our discretionary marketing budget of $500k/mo. We are in good shape cash wise. Near September of next year (2018) we'll be cash flow breakeven at much higher revenue level. We'll figure out then what to do strategy wise. We are on the path to being a billion dollar company. I have no desire to sell out quickly to anybody. Build as big as can, shoot for IPO, create fantastic product over long haul. Strategy towards IPO: Large competitors like Comcast compete with us with their subsidiary called SportsEngine. Dicks sporting goods has a competitor in space called BlueSombrero and AffinitySports. Lastly, a private equity funded company called BlueStar Sports compete with us. Many of our competitors are purchasing small players and just aggregating. A short term private equity play versus a long term 20+ year deal. Would you accept $400m offer from Comcast? (minute 22) Well it would depend on the moment in time. In 2016 probably, in 2017 maybe, next year when revenue is higher, no way in hell! What is your favorite business book? The Hard Thing About Hard Things Is there a CEO you're following or studying right now? Samir, SendGrid CEO Whats your favorite online tool? Apple pencil to evernote. How many hours of sleep do you get every night? 7 What would you tell your 20 year old self? I'm married with 2 kids, married for 30 years, and I'm "approaching a milestone birthday". I wish my 20 year old self knew that "nobody does it alone". Connect with Nathan: Website Twitter Facebook Page Snapchat Instagram

Chapters

1. What unique challenges does TeamSnap face in the B2B SaaS market? 2. How does TeamSnap's revenue model work? 3. What strategies did TeamSnap use to launch during a recession? 4. How did TeamSnap secure funding in its early years? 5. What is TeamSnap's approach to customer acquisition? 6. How does TeamSnap handle customer churn and retention? 7. What are TeamSnap's growth projections and future plans? 8. What insights does Dave have about leadership and personal growth?

Featured

Nathan Latka

Dave DuPont

Transcription

Chapter 1: What unique challenges does TeamSnap face in the B2B SaaS market?

0.672 - 24.157 Nathan Latka

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 hundred thousand dollars to 2.7 million.

24.397 - 26.06 Dave DuPont

I had no money when I started the company.

26.4 - 47.47 Nathan Latka

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.

Chapter 2: How does TeamSnap's revenue model work?

49.171 - 67.848 Nathan Latka

Hello, everyone. My guest today is Dave DuPont. He's the CEO of a company called Team Snap. He has more than 20 years of experience in technology leadership positions. He's previously CEO of Sanrad, a venture-backed storage networking company, which he joined in 2006. He also helped found Left Hand Networks, a Boulder-based company sold to Hewlett-Packard.

67.868 - 79.178 Nathan Latka

Prior to that, he was with Hewlett-Packard. He's an avid skier and wannabe competitive cyclist. He lives in Boulder with his wife, Deb, and two children and enjoys reading, cooking, and micro breweries. Dave, are you ready to take us to the

Chapter 3: What strategies did TeamSnap use to launch during a recession?

79.158 - 84.525 Nathan Latka

I am indeed Nathan. Why just a wannabe competitive cyclist? Why not go win some races?

85.208 - 87.801 Dave DuPont

I started a little too late and I'm a little too big.

89.131 - 91.493 Nathan Latka

Fair enough. All right. So you're based out there in Boulder.

91.513 - 98.56 Dave DuPont

I'm not fat or anything, but I'm 6'3", 190. And if I was going to be a cyclist, I'd weigh about, I don't know, 155 or something.

98.58 - 100.022 Nathan Latka

Tell us about TeamSnap.

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Chapter 4: How did TeamSnap secure funding in its early years?

100.062 - 101.663 Nathan Latka

What's the business doing? How do you make money?

102.084 - 115.577 Dave DuPont

Sure. So what we are is that we like to say we're the fabric for group activities. We're a utility, a tool that people use to organize and communicate on teams and other kinds of organizations.

115.76 - 117.443 Nathan Latka

And what's your business model? How do you make money?

117.644 - 140.227 Dave DuPont

We make money in a variety of ways, primarily through subscriptions that are paid to us by coaches, managers of teams, or administrators within larger sports organizations. We also take a cut of transaction payments for the activities that we help manage and we do more, um, increasingly we're advertising as well.

Chapter 5: What is TeamSnap's approach to customer acquisition?

140.768 - 155.566 Nathan Latka

Okay. And what, uh, what are the, you kind of just mentioned three revenue streams, a flat SAS fee per month, a percentage cut, and then advertising as well. Um, tell me which, which of those three makes up most of your revenue is the flat SAS fee. Yeah. You listed those in the right priority order. Great.

155.767 - 163.536 Nathan Latka

What is the average customer paying you just per month, just on the SAS side of things, just in the SAS side of things, the average customer,

164.174 - 172.146 Dave DuPont

The average user isn't paying us anything actually, or the typical user is not paying us anything. It's the coach or manager that pays for the whole team. Okay.

Chapter 6: How does TeamSnap handle customer churn and retention?

172.166 - 175.971 Dave DuPont

Or the club or league pays for the entire organization.

176.191 - 180.277 Nathan Latka

Well, tell me about the paying. Yeah. Tell me about the paying customers, the average paying customer. What are they paying?

180.377 - 193.236 Dave DuPont

Okay. The average paying customer at the team level is paying us about 15 bucks a month. Okay. For the whole team. And the average organization is paying us approaching 2000 bucks a month.

Chapter 7: What are TeamSnap's growth projections and future plans?

193.452 - 203.846 Nathan Latka

OK, and I want to make sure I understand that. So 15 bucks is the seat price. And then the average organization has, what, 100 seats in it or 150 seats? No, I appreciate you're asking that.

204.227 - 216.023 Dave DuPont

The average organization, the average team. So think of it as a pyramid. Bottom of the pyramid is participants. They use TeamSnap for free. So they're not paying anything. The next level up is a team.

Chapter 8: What insights does Dave have about leadership and personal growth?

217.064 - 234.023 Dave DuPont

And one can use TeamSnap as an autonomous team. So that's the 15 bucks a month per average. So if you look at the average team with 13 participants, and if it's a youth team, it's got parents, the average team is around 30 something. So that ends up being 30 seats for a team.

234.357 - 236.841 Nathan Latka

Which is like, and it's still 15 bucks total.

237.241 - 242.789 Dave DuPont

Yeah. Yeah, 15 bucks total, 50 cents a piece. Now, if you look at a club or a league, you're talking about hundreds of people in that case.

243.47 - 250.581 Nathan Latka

I see. I see. Okay, that's helpful. Do one of those different cohorts make up the majority of your revenue or is it split pretty evenly?

251.061 - 274.901 Dave DuPont

Traditionally, most of our revenue came from teams. In fact, all of our revenue until recent years came from teams. And over... We have introduced services for clubs, leagues and associations that are linked to our team solution. So when a club or league uses us, people on the team benefit from like the league schedule being immediately available to them, things like that.

274.921 - 292.908 Dave DuPont

And that part of our business is now that is clubs, leagues and associations represent almost 40 percent of our overall business. So it's growing 100% year over year, actually over 100%, and is an exciting part of our overall business.

293.269 - 298.163 Nathan Latka

And ignoring organizations for a second, but how many teams are using the platform today, paying teams?

299.286 - 300.088 Dave DuPont

Over a million.

300.355 - 320.622 Nathan Latka

Oh, you have over a million paying teams. That's incredible. Right. That's not seats. That's actual paying teams. And then there's probably two, three, four, five million, well, 30 million. You said it was the average 30 seats, right? Yeah. That's great. Okay, give us more of the backstory here. So what year did you found the company in? 2009. Hell of a time to start a company, huh?