SaaS Interviews with CEOs, Startups, Founders
MediaFly To Acquire More, $20m in ARR, Burning $600k/mo, $28m Raised
12 Jul 2020
Chapter 1: What is Mediafly and what services do they offer?
I think our gross retention last year was 98%. It'll be lower this year. Revenue or logo basis? Revenue basis. Logo basis, pretty similar. I think we only lost one logo all of last year.
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Now look, I never want money to be the reason you can't listen to episodes. On the checkout page, you'll see an option to request free access. I grant 100% of those requests no questions asked. Hello, everyone. My guest today is Carson Conant. He is building a company called Mediafly. He's the CEO and founder of the company based in Chicago, really focused on sales enablement.
Under Carson's leadership, the company's been recognized as an Inc. 5000 fastest growing company for five consecutive years, a best place to work by Inc. in 2018, and a best place to work by Crane's Chicago business. The software is currently leveraged by top Fortune 500 companies, including PepsiCo, Miller Coors, Disney, and Goldman Sachs. Carson, you ready to take us to the top? Yeah, man.
All right. Enterprise play here. It sounds like what's the company doing? Are you pure play SaaS?
Pure place to ask.
Yep. Okay.
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Chapter 2: What recent acquisition did Mediafly make and why?
obviously you can do stock, earn out, cash up front, blah, blah, blah. Let's say the cash, it's all cash up front, 10 million. Using CIBC or any other banking partner, how much do you think you can lever up? How much equity do you actually have to put in, you think?
So the combination of CIBC and then other folks, I think we can get to about one times ARR if we wanted to. I don't know if we get the full credit from the acquisition until a couple quarters, so there's probably a discount there.
And I think the model we've been looking at is kind of a one-third, one-third, one-third, where it's maybe a one-third in cash up front, one-third in stock, and then one-third in kind of earn-out notes.
Mm hmm. Okay, well, so if you do one third in cash, though, right, let's say the deal size is 10 million, one third is cash, that's 3 million. But you're able to raise personally in debt 1x your current media fly company ARR. Again, you could get away by using only debt doing this deal, correct?
Yes, yes, definitely.
Yeah, interesting. Okay, so that makes a lot of sense. What's the team size today? How many people?
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Chapter 3: How does Mediafly's self-serve model impact customer acquisition?
So we're now, we just, we added 22, kept everybody. So I think we're 120 now, I want to say.
Yeah, you were 85 four months ago. I mean, so that's a lot of growth. Have you raised additional capital to do this or still 28 million in equity?
We raised, I think we raised, well, kind of the beginning of our Series C here. So we raised some additional convertible stuff that'll convert in. So I want to say it's probably about It's a good question what it is. I'm not going to mention it. But we did start raising, essentially, convertible notes that will lead into our Series C that will come out.
Originally, we were going to do that right about now. But this acquisition, we decided to give ourselves kind of two quarters after this acquisition to let it bake and kind of impact our valuation. And so we think we'll close our Series C somewhere end of this calendar year, first couple months of the next calendar year.
And what is that looking like? A $10 million, $20 million, $30 million kind of round? What do you think the size will be?
Yeah. So we were, it's anywhere between call it 30 and 50 million, depending on how much, um, how much, um, kind of refinancing we do and that kind of stuff. Um, so it's, and also depending on how much inorganic we want to do. So, you know, there's kind of two, two groups of companies that are interested in us. Some that are saying, look, you know, let's, let's run to profitability.
We think we can get to be, we'll be profitable next year.
Um, what are you burning right now? Three months ago, you told me 600 grand a month.
So we're probably similar to that right now. I mean, this company is profitable. So everything we're doing is reducing that. And so we'll be profitable. This plan still hasn't changed since last time we talked, so middle of next year. And then everybody we're looking at from an inorganic standpoint would be profitable over a year.
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Chapter 4: What is Mediafly's current customer growth rate?
And so really what we're focused on now is acquiring customers, knowing that, you know, because we have such a strong retention and the solution is great, you know, it'll be good. So the next time we get on the next time we do this call, you know, in a couple of quarters, I'll have some better answers there.
That's great. Now, what's the split look like after the acquisition in terms of your team? How many engineers?
That's a great question. We picked up, I want to say, 10 engineers. So probably half of that team was engineers. So 60. Yep. So probably about 60 in engineers and kind of technical technical folks, engineers, testers, that kind of stuff. And then the other half of that business, obviously, was commercial. They were really light.
They had no real, you know, they didn't have accounting and finance, that kind of stuff. They had a really strong CEO that joined now as our um, kind of EVP of operations in Europe. Um, so there's, you know, there's almost no, or there is no redundancy.
So you have 120 people total on the team. 60 of them are engineers.
That sounds about right. It's actually, that sounds a little heavy. It's probably, but I, um, it's a good question. It's, it's, we're definitely a product company. Um, and so, um, so, you know, there's probably 40 to 60 engineers, but I would say as part of this team.
And how many reps carry quota?
That's a really good question. So, um, About 10, I want to say.
Okay. Are you ramping that up right now or you already have enough leads for them?
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