How Arkadium CEO Neal Sinno grew Arkadium to $22.5M revenue with a 119 person team in 2024.

you're gonna love this interview just got done editing it i'm glad i got it live for you i'll be in the comments for the next 30 minutes hanging out answering any questions you have in fact leave a comment below about data points or what you think is going to happen to the company and i will respond to every comment additionally if you're just loving the content click the thumbs up and i will go and check out your profile as well and give your videos some love as well in the meantime enjoy the interview hello everyone my guest today is jessica ravelo she's building a company called arcadium which provides interactive content to the world's most well-known brands and publishers like cnn jessica you ready to take it to the top i am ready okay so tell me first is arcadium a pure play sas model or is it more con consultative no so we are um quite simply a games company so we make games and we um either license them to brands or we deliver them directly to consumers and those consumers either pay us for them through things like the app store or they are monetized through um advertising okay great no no when did you find the company what year 2001 so it's been quite a long time 2001. now i want to get into the back story here because you raised capital then brought out your investors so i want to get into that because it's actually becoming a trend right now so 2001 you launched is it a trend oh my goodness there's more there's more people doing this so so that's why that's why i said yes when your folks said hey you should have just gone i said okay i'll have her on um so you launched the company in 2001. now do you remember what first year revenue was oh it was zero i mean we didn't have revenue for the first three years i would say okay um yeah first two to three years no revenue no revenue and then probably in the third or fourth year that we actually started making revenue and then it scaled fairly quickly probably the first year that we were um had revenue we probably did about six hundred thousand okay and what was that revenue basically advertising no back then i mean we had a slightly different model back then so we were still making games but we were um licensing them more um and directly to large brands so um that was that was pure licensing revenue at the time okay um and then so fast forward so 2004 caught six hundred thousand dollars in total sales what'd you scale to up in 2010 oh boy um i would say by 2010 we were probably six seven million six yeah sounds about right i'd have to go back and look to get you you know that's okay but same model licensing yeah primarily the same model i mean by 2010 our industry had changed pretty significantly so um when we started the business social gaming was not a thing and then that took off and then you know the iphone didn't exist when we started the business and then that started taking off so definitely shifts in how we earned revenue but it was all you know through the whole 18-year history it had something to do with games whether that be multiplayer games like poker or single-player games so i wanted 2010 as a beachhead because then in 2013 is when you raise the 5 million from edison so explain the dynamics around that start with what scale you were at so were you at about what 10 11 12 million an hour we were probably around somewhere between 10 or 12 at that time i would say um and you know it was more kind of what was i think there were two dynamics at play one was what was going on in our industry what we were seeing in our industry and at that time um if you can kind of remember back then it was like um at least in the gaming sector words with friends is really starting to take farmville was a huge hit and there was a lot of consolidation going on in our industry a lot of people were gobbling up game companies and so that was kind of the first time you know we had been through multiple cycles we've probably been through two cycles at that point that was the first time when we ever really considered because we're getting a lot of inbound interest like are we interested in selling are we interested in doing something um and the gaming industry is is um like many media industries very hit driven and what a lot of people who play games don't realize this is really expensive you know they think it's just some guy in their basement who's coding something you know and games i mean even casual games that people play on their mobile phones can cost upwards of a million dollars for a studio to make if not more and so if you have a string of those um and you don't have an out of the box hit like 99 of them aren't necessarily making their money back so to do that and be self-funded at the same time can be a very expensive prospect so that was the first time we kind of started looking at um this is something that we should even consider um and that kind of ended up with we looked at various different options from selling to taking investment um and luckily at that point we had already built a profitable business that was scaling and so we were able to take investment on um on pretty good terms we took a minority stake in the business how much did you sell um we sold less than 20 percent okay that's pretty good so less than 20 and how much did you raise five million okay got it so yeah i mean you're looking at it like a 20 million pre-money something like that yeah it was somewhere in that range and i mean i think the the other important thing um is that you know outside of the cycle that the industry was going through was just kind of what we were thinking and feeling as entrepreneurs and i say this because it kind of influences a lot of my thinking now and a lot of what i believe in as an entrepreneur now and that was kind of that i always had this little monkey on my back that if we didn't raise we wouldn't be a serious business we wouldn't be a a large business we wouldn't be a player um jessica i think you're up i think you're a player you you check the player you're you're good to go on you're good to go on these and you're a hustler i mean i think you know when you're an entrepreneur and you're you're in tech you're kind of you see a lot of of unicorns around you and they get a lot of ink and a lot of people talk about you know these high growth you know ridiculously scaling businesses and i think it's very easy to compare yourselves to what you see in the market and the truth of the matter is it's like you don't always know what's going on inside of business and people don't write about the 99 that that aren't necessarily having that success and that success from what i found is very um can be very shallow and it can be very fleeting top line revenue does not equal a healthy profitable thriving sustainable business now were you guys burning on 12 million in revenue in 2013 were you profitable or break even at least yes we were profitable yeah we've been like significant significantly we've always done somewhere between i would say ten and twenty percent ebitda margins i mean it's pretty good it's pretty high growth years maybe a little bit less um but you know that's what we always aim to be at now you know you raise the capital in 2013 you take dilution you you're gonna burn capital after that to invest it so i imagine in 2014 2015 maybe you were cash flow negative because you were investing the 5 million right we were maybe cash flow negative a couple of quarters um at most i would say one calendar year but never more than so where did you invest that five was it fixed cost or more like variable marketing it was in creating new product for the most part so um so we were um working on games that took longer to make that had larger teams that took longer to get to market um that was that was primarily where the investment went and then um yeah and then marketing so let's fast forward now we've got a good touch point in 2004 we got a touch point in 2013 take us up to 2018 right so how many folks are working on the company now today oh boy so uh as of today we probably have we're right around 100 range anywhere from 98 to 101 depending on no time of year and how many engineers we have about 40 engineers okay and uh and who are the rest uh sales marketing uh people innovation which is what we call uh our hr function um we have are the sales people are they on like commission are they a quota structure or no uh for sales yeah uh it's a it is a goal structure okay yeah fair enough so how many sales people do you have incentivized by this goal structure i would say one two three we have three who only do sales and then we have an additional uh for account managers who also do sales okay so what is the business now look like today so last year were you still selling and licensing games to larger brands is that still the product yep that's still the product i mean it is a mix between distributing our games through large brands and publishers and distributing them direct to consumer but the revenue comes from either via somebody else's website or via our own website people playing games is is are there any media outlets because i know this is very in vogue right now using things that almost feel like a game which is actually more like a survey where you're capturing...