How Alyce CEO Greg Segall grew to $5.7M revenue and 460 customers in 2023.

hello everyone my guest today is greg seagal he's the founder and ceo of alice an ai powered corporate gifting and incentive platform founded in december 2015 alice tells a corporate gifter exactly what to send and the most impactful times to send before alice he was founder and ceo of onepika one of the premier global e-commerce agencies he also invested scaled and aided the acquisitions of several smaller retailers one pico was successfully acquired in december 2012 by a holding company in san fran he received his ba in graphic design from boston university in 2001 with a strong focus on computer science greg are you ready to take us to the top let's rock all right last time we spoke if i remember correctly you were very much in this kind of stage of figuring out if you know the revenue stream that alice was kind of going to grow is going to be you know relationships with gift vendors that you'd recommend to these corporate buyers or an actual technology pure place sas kind of company where are you today yeah so it's actually evolved a lot uh since we talked about a year ago uh so the whole company obviously still makes a lot of money off of the the gifts itself and the transactions but a majority of the money is coming in from sas so we've actually built this out because the the product and the platform that we've built we've just learned has a lot more value than just the actual sending the gifts itself you know it's evolved since uh just being hey this is a gifting platform i can go into more like on the use cases if you want to hear more about that because that's been one of the big things that we've uh we've done also we've raised a big round of funding um which you probably saw as well yeah so give us the update news on the funding so how much total have you raised now to date yep so we've raised 5.4 million um from three of the top investors in boston uh one out in palo alto and then one up in toronto uh and uh that's right for where we are with funding that's 5.4 all together or just the last round okay so what is it all together all together about 5.9 5.9 okay very good so this was your really your first equity round then very good okay so walk me through and give me a sense to you mentioned earlier that you you know you have a large volume and a large amount of revenues coming from just the gifting side of things quickly tell me that revenue model and then tell me why the transition into sas and how you've scaled yeah so the well the revenue model itself again is that we have deals with all these merchants across the globe um and you know that's something we've been working on now for close to two and a half years uh but the big play has been that we've moved over to uh focusing on one major use case which is gifting for prospecting so we send a gift off to somebody and then in order for them to accept the gift they take a meeting you know with us and that was just something we just saw from you know we had a few hundred customers that were uh going through the system with us and using it and we looked for the trends and how people are actually um you know using this across you know all different uh departments inside the organization so uh what we ended up doing was saying okay well there's a lot of value here because you know we're able to send a gift off to somebody to be able to generate a meeting then there's obviously a sas platform that we can or a fee that we can actually charge because the value of what we're adding and bringing to these folks is much higher than just you know hey let's just send this gift off to these individual folks and again remember part of the the model too is that we're not sending the actual gift we're sending the option for the gift so we focus very much on the gift itself being something that that the recipient actually wants which is why we've had such high conversion yeah so i want to understand more about that because remember when i was first preparing for this interview last time i think either you sent me or i sent myself a gift like the option for the gift just to see what it felt like and my first thought was i just don't know if people are going to put in this 16 digit code or whatever from the postcard on the online platform actually claim the prize you've said you've kind of built it sounds like some sort of ai or something to make sure that the incentive is very strong for me to do that yeah correct so i mean this is we've evolved a lot you know over the last year and of all the the delivery mechanism of how we actually get the gift uh link or the gift option to you uh so it started off when we when you used it last uh probably about a year ago we only had handwritten cards and it was a very long code so the first thing is that we've shortened the code down to eight digits which has increased conversion you know considerably and secondly there's a whole entire follow-up cadence that happens after the gift is is there so even if you don't put in the code we end up sending you a link to get right to the gift via email so what ends up happening is that a lot of the additional conversion happens later on so they might get the box you know which we have a whole bunch of different options for boxes and handwritten cards now and they will uh get that and then see the code and some of those folks will put in the the code of which we try and get about 50 of the people to do that and then the other 50 will end up waiting for the email or getting a reminder email and then they'll have the actual link inside of it itself okay so you have in a given month 100 of these invites go out how what percentage of those are there are claimed via the postcard and what percent right now are claimed via life cycle marketing well i think there's a better way of thinking about that which is you know if 100 of these are sent out um when it's prospecting it's cold meaning like i don't know this person and we're starting to obviously experiment with like further down the sales funnel um but when it's a cold prospect uh right now we can see anywhere between let's say six is our lowest you know all the way up to what we just had which is about 30 um you know acceptance rate and then 50 of those will be by handwritten card or by the branded box and the code being entered in versus you know the other fifty percent uh based on the actual gift link and over what period of time is that you know a month after they receive the card or send the gift usually we let it go between 45 days and 60 days actually what happens is uh somebody might even accept a gift and then it's not until 45 days later that you actually get the meeting with them um or you might actually say hey you get this big big what always happens it's a big wave up front and then there's this trickle and then all of a sudden there's some of these big pops that happen you know a little bit later on and we're just learning it's all different industries have different conversion rates um it depends on how saturated the the market is for this type of uh of direct mail uh and and it's just a very interesting like we're generating a ton of data around this based on all these different use cases on how people are using it so if a cmo is watching right now or a head of sales or chief revenue officer is listening and they say i want to run a test on this i'm going to send 100 gifts out to prospects that just have not returned any of our cold emails they send out 100 today what you're saying is over the next 45 to 60 days 30 of those will accept and of the 30 15 or so will be from the manual code from the physical mail another 15 will be from like the reminder emails hey you have a gift from alice like open it redeem it etc and then some period after that those 30 people will then book that meeting uh with uh with you know their their sales reps yeah so it would be between 6 and 30 is what i would say depending on where and what type of industry it's in and you know who they're trying to target so if you're trying to target cios for example you know you're just you're going to have a lower conversion rate than than going after somebody that's lower in the in the funnel inside of an organization because those getting listed to you know uh as as necessarily because they're sometimes they're not the decision maker but they have they have budgetary control so that's how that that would work so if a cmo is listening to this right now or ahead of inside sales or demand gen then the whole goal here is that you're actually using this as another way another touch point in the target accounts that you're trying to go after right now to be able to get their attention and then be able to use your inside sales team not to be able to follow up and then actually get that get that meeting but we also have another piece of functionality in there now which we just launched over this last month which is calendar integration so when you actually send a gift we can actually have a calendar invite automatically added to the calendar when the person accepts the gift so it's circuiting a lot of that because we learned is that a lot of times the bdrs would be like oh well now i got to go send an invite on top of seeing that this gift was accepted and right now we're playing with and checking how that can how that affects conversion across the whole entire flow that's smart what are people paying for just the sas component of this per month on average um anywhere between you know lowest will be a thousand a month and the most expensive is probably you know 10k plus okay and depends on the size of the company amount of gifts i was gonna say that's what you're doing it's it's dependent on the size of the company number of gifts right okay and uh give us a more about the background here so launch year was which year so we launched in december of 2015 with a very alpha product we officially went live uh at the end the holiday season in 2016 um and you know 2017 is what i call sort of this getting on the wall year that was sort of when we when we talked where we were talking about all the different use cases on how people were using it from like you know work anniversary gifts to you know closing gifts to you know what we found out you know the prospecting side of things to customer appreciation gifts um and so we've just really tried to double down on one specific use case and that's really what's what's catapulted our growth and what have you scaled today in terms of total customers uh it's about five times what we talked about last time so we're probably in the in the 5 600 range right now customers i think you were at i think you're at about 100 last time so that makes sense so i mean can i greg can i take the 500 times a thousand i mean you guys are doing 500 a month right now on revenue uh if you can get around that number i'm not going to be the exact number but yeah okay well um are any of those numbers high or low i'm just obviously multiplying there well we have we have of those 500 customers some are paying small amounts some are paying much larger amounts you know and then some are are one-off customers too so that's why i said minimum was a thousand well that's for the sas customers themselves so we have we have of that of that group of customers um i'd say about 10 of them are sas customers right now and those are the folks that are paying us uh uh that revenue but then we also have all the gmv or the the gift volume that's going through from a lot of customers that aren't paying sas fee but are using it for work anniversary gifts like we have like envision you know uses us for all their work anniversary gifts for example and they're they're putting through you know a large number that 500 plus employees so you can sort of do the math you know against that got it so you you're still working on converting people paying you just on gmv basis to get them to upgrade or change the sas model it's a much newer model that we've just launched over the last the last let's say three to four months okay well yeah i mean look that that math would just be 50 times a thousand you can kind of back into it there right but um walk me through i mean i would imagine the gm the money you make on the kind of just gross merchandise volume side of the business is obviously significantly less in terms of margins than what you can make on the sas side is that accurate correct yeah it's about a quarter of what we'll make on the sas side yeah and then um what are some of the metrics you're tracking actively internally is really gmv per month kind of the thing you're really focused on or what metrics matter most to you well there's there's different types of metrics that we look at especially at the stage of the company you know most people obviously revenue you know that's one one big one we're trying to see we're also trying to track you know daily and weekly active users internally uh we also want to track how many gifts are going through based on each individual user that's actually uh in using the platform as well but then we also have other other internal metrics too just based on like conversion rates you know because the conversion rates to us is really the results on how how the use case is actually performing so we try and track that very closely with each individual customer and then you know as a whole across the different industries that are actually doing that to doing that as well because that that really is what the fundamental success and what the sas platform is built off of because if we're able to get you a meeting right now which which will happen anywhere between you know a third to an eighth of the cost of what it is now uh then that's a huge reason for you to be able to pay and there's there's a lot of value in that beyond just saying well it's a gift like to us we're not a gifting company we're a software company yeah so in 2017 how many options for gifts were sent oh my god in the tens of thousands um i don't know i mean our average customer right now is sending at least at least a thousand gift options you know to to folks you know per year um and then again there's a certain conversion you know that's on that as well because again the beauty of the model that we built is that when you send a gift option um they only pay when the gift is accepted yep so instead of you saying hey i'm gonna send off you know 50 or 100 yeti coolers you know to these folks um and we can say well cool send those same hundred you know 180 coolers or a thousand yeti coolers off to these folks but do it using alice and then you're only gonna pay for about between six and thirty percent of whatever is accepted yep so you end up so let me ask you a different question in 2017 what was gmv for you it's a good question uh i don't have a number off the top of my head but it was in the in the millions okay very good and what do you think you'll do in 2018 i'm hoping right now we're aiming to quote four times that right now okay good so so like what you break five million you think yeah very good and i'm curious when you went out and because you just raised when you were obviously negotiating your valuation how did you try and convince investors to give you more of a sas valuation versus a lower margin gmv model valuation well i looked at first of all we were very lucky we had 15 investors that wanted to come into the round um so we were we were very lucky and i did a lot of due diligence spent almost between four to probably closer to six weeks doing due diligence on every one of the funds and if you look at all the funds that we ended up choosing i was very mindful of bringing on all funds that had uh operators as the folks that i'd be working with um so if you look at like eric paley from founder collective or you look at you know larry bond from general catalyst where you look at you know peter blacklow from boston seed for example you know all these guys had run businesses before so they had empathy and understanding for for what the business was all about so when you talk about valuation i also looked at it in terms of you know as optimizing for the investors instead of the valuation like we probably could eat out another two to three million dollars on valuation um but we decided not to um and i decided to go with the investors that i wanted based on you know what they thought you know in the stage that we are in the business um to go from there so from my perspective the evaluation and looking at it from a sas business was just like look there's a huge opportunity here because of the early indications of what we were able to do with prospecting and all the and the early indications of what we were able to do to generate roi for our customers so when i backed out my numbers and i showed them what we thought we can be that was an easy way for us to be able to justify the valuation and what was your over year growth rate in terms of revenue uh we'd done like eight times so we're in a really good position we're growing i think at the time that we raised anywhere between 25 and 50 month-over-month growth got it and now greg i have to be fair here obviously too i mean these you're growing but you're not in in the millions and millions of revenue per year yet so you're doubling call it 100 to 500 hundred to a million et cetera correct yeah yeah correct and we're in the millions now but yeah that's a good good indication of why you know it's easier when you're earlier on to be able to apply that yeah of course now was 2017 the year that you passed a million in revenue okay good very good all right last question here on team size before we wrap up where what do you guys that say now in terms of team oh we're at 40 right now oh 40 good all in boston nope we're split between uh all over the globe actually eight countries oh wow so a remote team yeah it's a very very i'd say so it's about 75 percent of the team is remote right now but they're full-time employees of ours that's great all right greg let's wrap up with the famous five number one what's your favorite business book uh hard thing about hard things number two is there a ceo you're following or studying right now uh yes brian chesney from airbnb uh number three what's your favorite online tool for building the business question um besides your own of course ocean right now yeah actually we're using our own our own uh tool yeah alice for alice is a huge thing for us uh but notion actually which is a which is a uh knowledge based system is probably one of my favorites right now number four how many hours of sleep are you getting every night i aim for between seven to eight and i get it pretty rough that's good and what's your situation married single kiddos i am married and i have a daughter that just turned two a couple days ago congratulations very good and how old are you uh i'm 38. 38. all right greg last question what do you wish your 20 year old self knew um to be more open uh and to really listen yeah folks i already have it listen be more open from greg you got a new way to prospects coming at you with alice essentially sending out gift options that help you helps you control your costs and only pay for what your prospects accept they launched back in 2015. really had their spaghetti on the wall year as he said in 2017 they also that you're passed a million bucks in revenue more importantly they now have over 500 customers sending gifts they've been able to change 500 of those customers and convert them into sas product customers right so about 50 folks there have converted a team of 40 based in remote locations all around the world greg thank you so much for taking us to the top awesome thanks a lot nathan