SaaS Interviews with CEOs, Startups, Founders
899 How to Reward Customers with GiftCards at Scale Using $10m+ Revenue TangoCard
09 Jan 2018
Chapter 1: What is Tango Card and how did it start?
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. 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, everybody. My guest today is David Leeds.
Chapter 2: How does Tango Card generate revenue through gift cards?
He is the founder and CEO of a company called Tango Card. He was also co-founder and senior vice president of sales and strategy at Fiber Tower. He's on the board of Mighty Oaks Heart Foundation and a prior board member at Summer Search. He's a father of two and Sounders FC fan fanatic. I think it's what he was saying. David, thank you. Are you ready to take us to the top?
Yes. Thank you very much.
What was that last part? Father of two and what?
Uh, it's probably father of two. I have two sons, Nick and Eli, and then a Sounders FC fanatic. It's our local, uh, MLS soccer team.
Oh, got it. Got it. That's what it was. Yeah. The soccer team. Very cool. So you big, are they, are they soccer players? They are.
And in fact, there's a match tonight that we'll go to. So it's a big part of our family culture.
That's good. All right, TangoCard. Tell us what it does and how you make money.
Awesome. So there are about 2 million companies globally that use rewards and incentives in their business. And this can be For employee programs, customer acquisition, survey completion, loyalty, a whole range of things. And the common denominator there is that these rewards or incentives drive some business result for these companies.
And so the rewards are typically critical to their business, but not core to their business. So they partner with TangoCard to send out those rewards and incentives on their behalf. So they connect to TangoCard. Our enterprise customers connect to us usually via an API.
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Chapter 3: What is the process for sending rewards using Tango Card?
opportunity to innovate. So I just spent a bunch of time and then launched the company in late 2010.
Okay. And that first year, did you guys do any revenue? Do you remember what year one revenue?
Well, so 2010 was zero or maybe a couple of dollars because it was late, but 2011 was probably, I don't know, $70,000 or so of revenue.
On this 6% model or was it different back then?
No. I mean, the business, of course, has changed a little bit, but the core economics have been the same.
That's great. Okay, good. And what's the team size today?
So the team is 80. We've got 70 people in Seattle, Washington, which is our headquarters. And then we've got a 10-person engineering team in Boise. Idaho. So I've created a, um, basically an engineering outpost to try and help with some of the challenges associated with recruiting talent. And it's worked out. It's worked out fantastic. Which one are you in Seattle or Boise?
Uh, Seattle, although I, you know, Boise is only an hour flight away. So I'm, you know, I'm there frequently, probably not frequently enough, but, but I go there from time to time. It's an awesome city and a cool location.
And let's just call a spade a spade, cheaper developers.
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Chapter 4: How does Tango Card handle customer redemption of gift cards?
So what's the difference between gap revenue and net revenue?
Well, it's the same. I just I know that a lot of companies talk about, you know, ARR or run rate, etc. This is actual, you know, cash cash revenue. So, you know, generally accepted accountable accounting principles, revenue for the year, not run rate, etc.
Is most of that growth from 5.8 to 10 million coming from current customers putting more through your platform or from new customers coming on?
Great. Yeah, great question. So about 75% of our revenues this year are from existing customers, both And then 25% is kind of new in-year. And those percentages changed a little bit for us, but they've been consistent in the last few years.
Yeah, well, you almost doubled year over year, right? So if in this year, 75% is still coming from existing, there was significant expansion there.
Yeah, it's amazing. And our churn is probably about... one, you know, 1%, maybe a little bit less than 1%. How do you measure that?
How do you measure churn? Cause you're not like a typical SAS company where there's a, they stopped paying. You have to measure some usage metric. What do you consider churned?
Yeah. So churn is literally if a program stops. And so the, one of the cool things about our business is that, you know, because these are reward or incentive programs that have an expected business outcome, as long as they're working, they keep going. And so if a customer does not transact with us for, I think it's three months, three or six months, we consider that a churn.
I don't send at least one $100 Amazon gift card through you. It's churn.
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Chapter 5: What was the revenue growth of Tango Card in its early years?
Take us back 28 years. What do you wish your 20 year old self knew?
Yes. So this would definitely be more of a personal learning, but go the extra mile to maintain relationships and friendships with people that you meet in other countries, which is hard to do. And it's a minor regret of mine.
There you guys have it from David. Go the extra mile for those relationships, especially international ones. He founded TangoCard back many, many years ago, 2010. 2011 did about 70 grand in sales. Product-wise, check him out if you wanna send out every month gift cards to your highest-use customers, or if you wanna reward them, a $10 Amazon gift card for demos.
This is the kind of tool that can help you do that. They did about $5.8 million in net revenue in 2016. They'll do about $10 million in net revenue gap here in 2017. 75% of that revenue is coming from existing customers putting more gift cards or more spend through their platform. 25% comes from new customers. They've got sub 1% logo churn monthly. About 2,000 customers.
They make about a grand each from per month they've raised. $9.4 million in equity funding in June 2017. Did $10 million in venture debt. so he could save some of that equity for himself. David Leeds, thank you for taking us to the top.
Awesome. Thank you, man.
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