How Cohley CEO Tom Logan grew Cohley to $6.4M revenue and 220 customers in 2024.

hey guys my guest today is tom logan he's the co-founder and ceo of new york city-based coley the tech companies that changing the way brands generate photos videos and product reviews tom ready takes the top let's do it nathan yep great great to be here with you and uh yeah i'm ready for my grilling you are competing in a fragmented space man what's your mouse trap how are you getting in yeah so you know early on it was the influencer angle um back in 2017 it was very buzzy people were very willing to get on a call to talk influencer and then from there we were able to ask about content generation about ad testing strategies email marketing marketing strategies and and how they were thinking about content generation as a whole so we'd go in with this influencer marketing mousetrap then expand the conversation well beyond engagement rates likes or you know some hollow promises of traffic to the website interesting and so just taking a step back what is the company doing today why are people paying you they're paying us because they need content and it really falls into three categories like you mentioned photos videos and product reviews and really they just need more content than they've ever needed at any other time in history and they need to be able to test at high frequencies if they want to compete in these crowded spaces they need a lot of content and you know that that also means they need creator-driven assets for tick-tock they need content that's going to speak to a wonder in a one-to-one fashion to gen z versus just repurposing content that they use for you know a classic millennial audience a year or two ago so it's all about tightening up that feedback giving them the assets that they need are these mainly e-commerce companies paying you they're mostly e-commerce brands yeah there's been a little bit of a shift over the last year because brands haven't been able to run traditional photo shoots just because of restrictions but and they're learning that their fears around third party created content weren't as drastic as they thought and sure they might may not be able to control every little bit of you know what the model might be doing with you know her his hand but guess what it's significantly less expensive it tests the roof and allows them to scale yeah that all makes sense okay what's the baxter when's your launch company what year we launched in 2016. yeah so coming up on our fifth birthday my co-founder and i started out the user generated content space and we basically saw influencers as the answer to all of our prayers they're creating high quality content on time frames that are predictable the legalities aren't a huge issue and um the quality is really significantly better than you know content that you or i might just create on our instagrams taking pictures of our nikes or something like that how much of your own capital junior you and your co-founder stick in uh we put in about 35 000 up front yeah did you blow it immediately like before you had a paying customer not immediately no um what we actually did in early 2016 was we started with a 100 a month product that was basically like a shoppable ram tools like a workaround that would allow people to shop from instagram feeds that allowed us to to get our first like 25 beta clients for kohli and then you know of course not all of them used it and an even fewer percentage of them actually ended up being paying customers only four of those 25 ended up paying us but there's today and they allowed us to build out the marketplace right that was a huge thing early on just like any marketplace the chicken or the got to build up the creator base gotta build up the brands okay so let's talk about the marketplace for a second let's just let's just talk gmb i assume that's what you measure last year how much went through the marketplace um yeah so just south of a million dollars but that's not what we that's not actually how we monetize we don't take a cut of that yep so annual sas licenses directly with the brands and we don't take a cut of anything that they do on top of that we'll give them creators take 100 of what they earn on kohli oh wow interesting so you paid out a little under a million to creators last year yeah how many creators i don't even know the total um there are a lot that do uh product exchange only especially the product reviews right that's an ftc regulation we do it in exchange for free products but you know we also have high-end photographers that make a few thousand dollars for producing 20 photos so we're starting to service both sides of the market you're talking like hundreds of craters or thousands of graders or dozens thousands oh wow thousands okay and how many brands put at least a dollar through uh 220 brands last year put at least a dollar through yep so it's a thriving marketplace and naturally it's become a lot easier to create um these pockets of niche creators uh for example in like new zealand or people who women who are going through menopause that was the decision we had earlier today it becomes much easier to build out that creator population once you have good brand names on the actual platform and when the brands are paying you the sas fees what are they paying per month or per year on average on average they're paying 1500 a month so 18k a year is is the kind of median price point and could you see yourself ever if the gmd grows 10 20 100 million you start taking a small percent or no yeah um definitely it would just have to it would have to fit within our larger mission to generate lots of content at low cost right we want the big market brands these d2c brands that are keeping the massive conglomerates on us we want them to continue to be able to be viable challengers and we like that david versus goliath type of that type of positioning so potentially down the road i wouldn't say never to that but there are other ways that we can monetize 220 brands that are called a 18 000 price point you're flirting with a 4 million run rate something like that exactly right yeah you think you can break it this year absolutely yeah yeah i want to double this year we feel like the the uh the factors that are out of our control in terms of the market and and um the overall enthusiasm for what our offering is continues to grow and we're also really benefiting from partnerships with clavio with attentive we're one of five creative partners for tick tock as well so we're starting to be associated with these bigger brands and like sit in the middle of this ecosystem where we can where we can add testing where it didn't previously exist are you in any acquisition talks with clavio no no we haven't and i've been told to be careful because i know they're builders but um yeah they've been they've been awesome to work with and certainly certainly going to the moon you're trying to double this year maybe get up to an 8 million run rate but where were you exactly a year ago and maybe december 2019. a year ago we were at 2-5 and we were essentially flat through um through about may of 2020 and then really accelerated like crazy as as ecommerce spend berserk so we started doubling down we went heavy into marketing maintaining a really really healthy three point three to one ltv to cac so we've been able to lean into this and and you know the products continue to mature we've done a good job of of of using our most successful clients to help evangelize our offering and our methodology and yeah what do you what do you put your what do you like i assume you do some sort of math here obviously but what do you put your ltv at right now yeah our ltv to cac is is well our ltv is like 12k so interesting yep how do you get that how do you get that yeah it's like marketing we're pretty conservative about it so we like include rent expenses direct and oh hold on that's your cac is 12k right sorry what's your ltv oh ltv yeah yeah so i mean it's like two and a half years yeah so yeah yep and you're trying like 40k 40 000. something like that yep yep yep and the biggest thing for us is has been understanding what our actual ideal customer profile is and leaning into that like crazy right no and these numbers suck but like our non-icp our sub like s b cohort i mean they're turning out at sixty percent yeah that's that's not a sas business right yeah so now we've really been able to focus our marketing efforts our sales pipeline all the way through on on icp and luckily those brands are also a hell of a lot easier to work with right they come in with relative expectations they come in with ample budget resources and they know how expensive content is relatively speaking right for working with a brand new upstart brand they're looking to cut as many corners as possible doesn't tend to work out very well you can afford to put aes on the 18 000 acv sort of deal how many sales carry or quota carrying reps do you have currently we have eight okay and what do you set quota at what is 120k monthly nope that's per quarter quarterly yep that's quarterly exactly okay so you want them closing each year about 500 grand of new arr yeah yep we'd like to see it a little bit higher i mean frankly like our uh our csms are only managing right around 550k are right now we'd like to we'd like to see that closer to a million in the near future so what you have six of them right now so i'm at seven yeah you quit your math yeah i try to we want to get right to like yeah i try to get right to the numbers it breaks through a lot of fluffy stuff you know how that works um what's your total team size today little team size including uh developers in argentina's at 42. 42. okay argentina developer how many there 12. why argentina uh well two ways to look at that one is cost about 20 cents on the dollar the second is just an incredible education system um they are able to take a concept take an end goal and build around that build up to that understand all of the dynamics and potential solves without needing line-by-line instructions and i've just been i've been blown away by by these steps yeah that's great well good team nice growth hot space i'd be really impressed if you've done all this bootstrap have you raised yeah uh but not very much so uh only 2.3 to date we did a seed that was that was two million dollars about a year back we're about to do another debt round here in uh in the next couple months we've really benefited and i would actually recommend really any sas company do this early on you're obviously gonna be told by every investor and sas advisor under the sun that like stick to sas don't resist the urge to become any sort of agency but early on and this is carried over a little bit like we we were doing things that didn't scale we were doing project-based activations where we were essentially dog fooding our own tool and you know we did a did a campaign with chobani where we spent 22 thousand dollars not to mention uh hours and hours of labor for my co-founder and i and we we only charged him 12. right but until they put the cease and desist order on on us using their logo uh it was it was gave us a story yeah it gave the story it wasn't it wasn't sas revenue by any means but um we do still have a 20 uh pocket of revenue that comes from project activations primarily like tbs and things like that so 2 million raised last year when was the other 1.3 raised the no it was only another point three so we did a fifty thousand dollar uh friends and family then a two hundred thousand dollar uh two hundred fifty thousand dollar pre-seed and then a and then a two million dollar state oh got it so yeah i mean i would say that is pretty capital efficient i mean you you've raised less than your ar which is always a good place to be now now what is the perfect debt deal look like for you to drive future growth and why are you choosing debt over equity yeah that's a great question and um certainly we're unique in our thinking on this but this will be a two million dollar loan with a initial 12 month interest only period fairly high interest rate but we're staying away from from warrants and what's high in your book uh 18 ish yep yeah that's that's one i've seen we saw one for for 16. that has some warrants baked in the warrants have penny strikes right and if if that's equivalent to 1.5 ownership of the company that's like gifting 300k plus to them on day one yep it's kind of brutal right but um we are very much of the mindset that while we absolutely want to grow this thing as uh as efficiently and as quickly as we can we also know that 90 of all tech acquisitions are sub 100 million and we're cognizant of getting in bed with a vc that would make us grow or force mandates on us from a hiring standpoint that would move a little faster than we're ready for and we want that exit optionality we want the ability to make decisions on our own terms and it's very possible that at year end we do we see our retention shore up and get to that 90 level across the board we see our win rate continue to skyrocket acv continuing to go up but we could make the decision like all right let's let's go all in on this and i know that you're doing a um you're doing a webinar tomorrow to talk about like secondary you know liquidity and all that type of stuff which i think is awesome that you're educating on that i just i believe that there is a different way to grow a company in a way that that isn't that isn't coming from a place of fear it's coming from a place of prudence and being able to make decisions on your own terms and my kind of founder man my kind preaching preach preaching here i love it that's great pressure on uh on founders i think especially early on to to aim for the moon and to everybody reads split scaling and people dream of of you know being being a billionaire and whatnot and that's that's all well and good i think for the most part people are coming from a good place there but like think about it in a regimented fashion think about scaling in a way that you feel confident in then think about the funding process or kind of working backwards from that right yeah and tell yourself like all right i'm going to study these metrics religiously i'm going to make decisions based on these and i'm not just going to just swoon for the first vc that that offers this 5 million dollar term sheet i hear you i know you're good you have you're preserving optionality which is important tom we're out of time let's wrap up the famous five number one favorite business book uh zero to one number two is there a ceo you're following or studying um that's a great question ah jeremy levied indicative long-time mentor uh i was gonna say elon musk but that's that's a comment number three what's your favorite online tool for building a business um that's a great question my favorite online tool for building the business oh let's go bill with i think it's i think that's my favorite tool being able to see integrations that have um that have lots of carryover and crossover with our client base allows us to build out the partnership ecosystem and set our site's eye number four how many hours of sleep to get every night five and a half it's a it's a problem area and my fiance be the first person to i gotta work on it so fiance so so not married but not single any kids no kids no okay how are you 33 33 last question what's something you wishing you when you were 20 um you know i i wish that i knew that i didn't have to go into a field that was directly correlated to my major i think i was really learning through college was the ability to communicate ideas to write well and to think creatively and just to learn right if i could go back to college i wish i could just soak it all in and go to every office hours with every you know with every teacher and and just soak it up guys coley launched in 2016 very capital efficient but flirting with 4 million running out of 2.3 million dollars raised they're about to close a 2 million dollar debt round to preserve optionality whether they want to exit grow whatever they want they have all options on the table nice growth rate now serving up 220 brands that are connecting with creators a million dollars went through the platform last year as brands paid creators to come up with unique new content mostly e-commerce brands as is where they're focused we'll see what happens as they try and double this year tom thanks for taking us to the top thanks nathan one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder 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