Dataclay Revenue (2024)

[00:00] Hey, folks. My guest today is Ari Stefchanski. He's the founder of dataclay, a company developing software that automates the production of data driven creative content at scale. His academic and industry experience inform his entrepreneurial endeavors leading a talented team that sports enterprise licenses such as Netflix, Amazon, Apple, NBCUniversal, the NFL, and others. Are you ready to take us to the top? [00:19] >> Yeah. Why not? Let's do it. [00:21] Alright, man. So just to be clear, the logos I just reeled off here, your team gave me that when they gave me your bio. Those are all paying customers of dataclay. [00:27] >> Yes. That is correct. [00:29] Yes. That's amazing. [00:30] >> Yeah. Yeah. It's a very powerful tool we've made here. [00:33] Let's do NFL. Let's just do them. How do they use you? [00:35] >> Sure. So with the NFL, they wanted to separate their marketing department from their video production department to get more content out to their social channels. And so our software acts as kind of like a data merge software for video. So we built them a Slack chatbot where marketing folks could go in and chat with the bot, and then content would be made on the other side, right, on a server that somebody at the NFL would QA, [01:05] >> and then it would go to their social channels. So it's basically helping them create content for their social. And then, also, we have another group in the NFL that's doing stuff like, you know, just, player stats and just prerenders for stuff that you see on broadcast. So a lot of the work that that gets done in post production in that kind of, you know, world where they're creating, graphics, our software sits, atop of their workflow to [01:36] >> handle all the data that's incoming from the games and from the players to get that data to display in the way that they want it to display in their, in their content. [01:46] So, Ari, just to be clear, look, I'm a big Washington commanders fan. It's obviously a bad time for us right now, but we just played Aaron Rodgers and Green Bay packers the past weekend. And it's always remarkable to me when some play happens. Right? I'm gonna make this up. Aaron Rodgers gets sacked. And right away, Troy Ackman in [02:00] the broadcast booth, there'll be [02:01] a graphic that pops up that says, this is the first time in nine million years that a quarterback older than 38 with five gray hairs who runs slower than 10 miles per hour got sacked in the third quarter with two minutes left. And it's like they they feel like I feel like they can pull a stat for anything. And I always wonder how the hell do they do that? Is this on the back end? Is this [02:19] what you're powering someone's basically, a marketing person saying putting that in and then it's going live on broadcast? [02:25] >> Yeah. So on the broadcast side, they a lot of those systems are, like, real time systems. Our software kinda plays to that market where they're experts, but they're using the Adobe ecosystem, the Adobe Creative Cloud ecosystem. And so what you're seeing when they do it like in real time, virtually real time is more of a broadcast based real time graphic system. Our system is more of an automator, and it allows users to create a lot of [02:55] >> different unique content before it gets broadcast or before it gets to a play out. So, you know, it depends on how fast they wanna get that content out there. But when you're seeing live [03:06] But you're then not real you're not real time? [03:08] >> No. Yeah. We are. Okay. We we're called just in time. So it's it's it takes time to render, but a lot of the content that gets rendered out eventually ends up in some kind of play out, you know, some some kind of control panel that gets played out. [03:25] Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect [03:49] your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna [04:13] get a different valuation. A VC is gonna pay a different valuation, Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity And red is if you sold the whole thing outright. Now what's cool about this is this is [04:35] not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired the valuation and the multiple. Maybe you're [05:00] going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. All right, we're gonna go back to the YouTube video here in a second, but [05:22] if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into [05:49] the interview. What about what about okay. So you're not able to feed data directly to a live broadcast on NBC when I'm watching commanders or a screen bay packers. But what about right when Terry McLaurin and a receiver makes a 40 yard catch and it goes up on Twitter from, like, six different accounts and that becomes a viral tweet for that game? That's that's almost real time, but not a 100% real time. Is that you? [06:11] >> That's exactly yes. It's that that is the use case for our software. Yes. I see. Always wonder, man. Like, it's [06:17] it's it's not people at the NFL or even an NFL team. It's like people that run their own NFL related podcast or the NFL content. They are able to get these clips. You're the one powering that. [06:26] >> Yeah. On their servers. So our software is running we don't have access to their data, and that's one of the reasons why I think our customers really like our software is that the data is actually very precious. It's very it's their crown jewel for the customer. So they don't want some, you know, video production company having access to that data. Our software allows our users to install it on their own environment within their own environment. So [06:54] >> they have complete control, whereas Dataclay has no conception of what data is flowing in and out of its software, which is on prem. [07:02] It's sort of on prem in that regard. [07:04] >> That's exactly right. [07:05] How do you generate recurring revenue so you can have predictability and, you know, build a team and build a company? Is it like an SLA agreement or a licensing agreement? How do you structure that? [07:14] >> Yeah. So we it's basically a term based license. You get a license key that activates the license on the machine. It's a recurring payment that must be made for that license to continue to operate on the user's machine. [07:32] >> And as far as like the larger enterprises, yes, we will engage with them on a more SLA level. We have, you know, a master professional services agreement for, you know, mission critical projects that they might be doing. So, yeah, it's I mean, it's in one aspect, we have our website where people go and they download a license key. They pay us, they download a license key, and then it's a recurring revenue stream. We also have an [07:57] >> exclusive reseller that has more that that we've partnered with that has a lot of inroads to a lot of different studios around the world. So it's a it's a mixed approach as far as Understood. As far as that. [08:12] So so help me understand what you price again. Does it number of clips generated, numb amount of data processed per weekend, number of seats? How does the NFL not the NFL, but just we're using NFL as an example. How would they pay you? [08:25] >> Yeah. So we basically license on a per machine basis. So it it does depend on how much volume they are rendering. But Okay. It we don't track per video. I think that's that's another reason why I think that our customers enjoy our software is that we're not interested in being so restrictive about, oh, it's gonna cost you x amount of, you know, dollars per video that gets rendered. [08:50] How many machines though does the NFL have or AMBC Universal or Apple? I mean, are we like, I just have no concept of this. Is it 10 or 10,000,000? [08:58] >> No. It's not 10,000,000. Certainly not. I mean, we're talking about software that is extending Adobe software, which is very much human driven. Like, Adobe requires humans to be in front of their their software. So it's it's a desktop software that is basically being extended into an automation software, which is what we provide. So, you know, at the largest, I'd say some of our clients have, like, you know, maybe, like, 20. Some of them have, like, five. [09:28] >> Some of them have, you know, in between that. So it's not it's not a vast amount. [09:33] Sweet. Would a sweet spot be, like, 10? [09:36] >> Yeah. I'd I'd say that's a that's definitely like, if you're doing if your entire line of business is video and you need to be creating video on demand and you have a lot of requests coming in, you're certainly gonna need to have a fleet, [09:50] you know, let me repeat this back to you to make it make sense to our audience. Right? So you are selling a license key that the NFL would install on prem on the desktops of 10 of their people in their marketing department responsible for video content that allows them to get this content just in time and post to Twitter when there's a big catch, a big touchdown, or to Facebook or to social media? [10:12] >> Yeah. [10:13] Amazing. Essentially. Yeah. Yeah. [10:16] I got it. My head's around it now. So give give me give me a little bit more of sort of help me understand. Mean, these are obviously enterprise accounts, right, which would incent you know, say that you're sort of selling enterprise level plans. But what would you say sort of the average customer is paying per month or or or per year? [10:33] >> I mean, the average customer, maybe somewhere, like, I don't know, 6,000 per year. [10:40] Okay. It's yeah. [10:41] >> I mean, more so the enterprise, they can be paying up between, like, 24 to 50,000 per year. [10:50] Your biggest customers pay 50,000 a year. [10:52] >> Yeah. Yeah. It depends on yes. Yeah. And that largely is dependent on how many seats or how many machines they want to run the software on. Yep. So so yeah. [11:03] Well, I guess 50,000 a year would be like 20 machines versus 6,000 a year would be like five machines. [11:11] >> Yeah. Mhmm. [11:12] Something like that. Okay. So you do get you do get cheaper per machine economics if you're buying bulk [11:20] >> Oh, certainly. Yeah. Yeah. We have We have both term based discounts and volume based discounts, which entice, yeah, entices the customer to purchase more licenses upfront. We also have, month to month or annual recurring. We also have just term term limited, meaning you can buy a key that is only good for three months, and Yep. It will just cut off at the end of the three months. And then if they decide they that customer decides they [11:51] >> need more time, they'll have to buy a new key. [11:54] That makes sense. [11:55] >> So there's so [11:56] Put this on a timeline for me. Were you, like, a sort of an ex NFL quarterback that retired and then got into this space, or what year did you launch this business? [12:03] >> Yeah. Okay. So we we launched it in 2014, in the summer of 2014. I have my background's in filmmaking and in computer science. And also in also in something called interaction design, which is basically the design of how humans work with, you know, things, products. And, you know, I took all these I I used to work in a post production studio and a motion graphics design studio in Chicago. And I realized, you know, a lot [12:32] >> of this stuff can be automated. And so I combined all my skills to build this product that I thought would be well served in the industry because I knew the pain points. And so the pain points, I was solving those with the software I was building. I partnered with a again, a company in New York that is a it's a reseller of of software that basically, you know, helps the video post production world. Once they saw [13:05] >> it, the market response was just like, I had no idea. [13:08] You didn't get the met video. [13:10] Right? You owned a 100% of the business? [13:13] >> Yeah. Yeah. At that point start. I had it was yeah. At that point, well, I have I have a cofounder, and so it was between us. And so, yeah, at that point, it was it was divided in that regard. [13:26] But did you and your cofounder, like, you so you were the engineering, it sounds like. What was he or she? [13:32] >> More business development. Okay. You know, more more more relationship building. So I was kind of the one that was technically at, you know, the keyboard building, building, listening listening to the end users. Cofounder is more he was more about getting, you know, getting it out there, trying to, you know, develop a way to Totally understand. [13:56] I understand. This is very similar. I'm I'm always just curious, though, how an engineer and a business person would split equity at the beginning. It sounds like this was your idea first. You built it. You found him, brought him on to go to market. Is that accurate? [14:06] >> That is accurate. Yeah. [14:07] Okay. Okay. So you should you own more equity then. Right? [14:10] >> Yes. Yes. I do. [14:11] Alright. But but still enough for him where, you know, to call it ten, twenty, 30% where he's a true cofounder. [14:18] >> Yes. Yes. Yes. [14:19] Okay. Fair enough. Fair enough. Now, obviously, you guys can keep on and hold that equity as you grow the business unless you raise or do something dilutive. So did you have you bootstrapped or decide to raise? [14:27] >> We are completely bootstrapped. Yeah. Let's go. [14:30] I love that. [14:31] >> There there has been there have been investors that have approached us, and we did give away a very small fractional amount of equity just because, you know, this investor was really interested in the software and to see where it was gonna go. And, so yeah. [14:50] But beyond percent? That [14:52] >> Yeah. Okay. And so [14:53] I see when people say small, then I say how much? And they say 50%. That's not small. That's half your business. Alright. So did he put in money, or is he just an adviser? [15:01] >> He put in some he put on some money, but also advises from time to time. [15:05] Yeah. And some, again, some people say small, they say 10,000,000. I'm like, that's not supposed to, like, under a million bucks? [15:10] >> Yeah. Yes. [15:11] For sure. [15:12] >> For sure. This was early this was only 3 years into the business. [15:15] Okay. Fair enough. [15:15] >> It's like we were still fledgling at that point. [15:18] Fair fair enough. Okay. And then I wanna go back and get some of the 2014, 2015, 2016 part of the story, but I don't wanna bury the late lead either. How many customers are you working with now today? [15:27] >> Yeah. So I'd say we have around over a little over 200 active enterprise clients dispersed all over the world. [15:37] That's a lot of extra words added on the end of customers. So are the I mean, are they all paying, or why do you add so many extra words there? [15:45] >> Because we tier our license cost. We have a small we have a small medium business priced tier, and we have a enterprise priced tier. So when I say 200 enterprise, that's, you know, our bread and butter comes from the enterprise. And so when we talk about the small business, it's like there are more than 200 customers. But the the issue is that those customers are while we love them and they do help us, [16:14] >> they they're not a majority of the of the revenue that we see. [16:18] Yeah. Yeah. So 200 are folks that are paying you something meaningful every month. You know, two, three, five machines. And the biggest of the 200 have ten, twenty, 30 machines. [16:28] >> Yeah. Mhmm. [16:29] Yeah. Okay. Let's go back to 2014 real quick. [16:33] I always like to ask. [16:34] Sure. Do you remember do you remember what first year revenue was? 2014? [16:40] >> I mean, it's embarrassing. [16:41] I know. But that's why I asked. Right? [16:43] >> It's it's not it's not just embarrassing, but it's like it's you know, we've grown by leaps and bounds when you put it in the perspective of our founding days, our first year. Right? [16:52] Well, of course. But you're inspiring everyone else right now who's listening, who's thinking about founding a company. Right? So so how low was it? [16:56] >> I don't know. It was, like, maybe, like, 35, 40 k. I mean, was [17:03] And who was the first customer? Or not who, but, like, how did you find them? How'd you get the customer? [17:10] >> So, again, we partnered with that reseller who Ah, okay. Their focus is on marketing to post production motion graphics designers. And so we weren't selling direct to anybody. We were just like, hey. If this thing works on your site, you know, when when and you do the marketing work. [17:28] What kickback did you pay them? [17:30] >> I think at the beginning, was like like an Apple store kind of thing. It was like 30%. And then Okay. And then as as we saw the market respond, you know, we negotiated half of that. So it ended up being 15%. [17:44] Yep. And are they still selling customers for you today? [17:46] >> Yeah. Yeah. Yeah. [17:47] That's amazing. They're very good. Yeah. Is that how you're adding all your customer say is through value added resellers, or do have do you have your own internal sales reps that carry a quota? [17:54] >> So we have I have so it's it's only it's a total of nine of us. Still very small. Okay? [18:01] Yep. [18:02] >> I have one of the team is in charge of sales, and there are direct sales that are being made. The largest sales are being made direct. [18:13] How many are full time employees that are sales for you? [18:17] >> One. [18:18] Oh, just the one. Okay. Cool. Yeah. And and how many engineers besides yourself? [18:23] >> It's two under two other engineers besides myself. [18:25] So three total. So what do the other five people do? [18:28] >> One is a project manager because we have other product that is being developed right now, which we're really excited about, by the way. [18:36] Another tell [18:37] me about it? [18:39] >> Yeah. If you wanna hear about it Alright. [18:41] Let's save that for the end. [18:42] >> Okay. So, the other, we have a quality assurance professional who makes sure that every release doesn't break because we have on demand you know, we have always on systems. So the QA is extremely important. And then let's see. I have a technical lead that basically helps with all things infrastructure internally in our in our site. You know? And then we have I think oh, I have a very, very awesome customer support specialist who's who comes from [19:19] >> Apple. So, like, basically, the face of the company in that regard and the technical support, customer success, I mean, couldn't ask for a better [19:28] We know your team now. This I was curious of what the mix is. Alright. So nine folks, full time. I love that you're bootstrapped. Now, look, I mean, with this many customers at the price points you were talking about earlier, I mean, you've gotta be flirting with if you haven't already passed the million dollar run rate. Can can you do that this year, you think? [19:41] >> Yeah. Yeah. I think so. For sure. Okay. But the you know, I think the release of new product, new revenue sources, new revenue streams, I think that's critical for our continued growth, and we're doing just that. And so and at the top of January, we're going to reassess our pricing model. That is to say, we think that eliminating the small to medium business price is gonna actually help us even if even if we see some attrition. [20:14] >> And then we'll have two new we'll we'll have a completely cloud hosted product that's more easily accessible right now. It's very expensive. We're gonna be lowering that price. And then this new product that we're developing now is gonna be released in beta at least at the beginning of next year. [20:33] Very cool. Ari, we're out of time here. I'm a try and rocket through these real quick. Need 200 customers. Right? A $6,000 your price point you told me earlier would put you at about 100,000 a month right now in revenue, but it sounds like you haven't hit 83,000 a month. But I just wanna be clear. I mean, you feel like we've got two months left here in 2022. You feel like you can break $83,000 a month [20:50] here in the next two months? [20:51] >> Yeah. Yeah. I do. [20:53] Alright. Well, I'm rooting for you, man. It's very obviously, it's fantastic to bootstrap to that size. It's taken you it's taken you, what, eight years, but you know what? That's the that's the that's the hustle. Right? That's the journey. [21:01] >> So That is the hustle. [21:03] On that note, let's wrap up here with the famous five. Number one, favorite business book. [21:08] >> The Messy Middle. [21:10] Yep. [21:11] Number two, is there a CEO you're following or studying? [21:17] >> Really? No. I I can't say that I am. [21:19] No. You're good. Number three, what's your favorite online tool for building dataclay? [21:26] >> I mean, I really like I have to say two. There's I do like Jira for management, but I also like Miro, which is phenomenally great at whiteboarding across remote teams. Miro, it's great. [21:39] Number four, how many hours of sleep do get every night? [21:41] >> Between four and five and a half. [21:45] Alright. Fair end situation, married, single, kids? [21:48] >> I am married with three children. [21:50] Three kids. Wow. Busy guy. How old are you? [21:53] >> I am 45 years old. [21:55] Last question. Something you wish you knew when you were 20. [21:58] >> I [22:02] >> think that I wish that I knew how difficult it was to, you know, put together a really great team. And at this point, I feel like I've nailed down a really good core team. But I realized that team is really what it is all about and getting the right people in the right place and motivating them, finding the space to push them to new heights, to make sure they're not bored to death with their jobs, you [22:29] >> know, that kind of stuff. I wish I had known that at the outset. Before, it was just more like, I'm gonna invent a widget, it's and gonna be great. And it that's not the case. It it really does take a team to do great things. And so I I I, you know, I wanted to know that earlier. [22:44] There you have it. Those clips you see on Twitter after your favorite NFL receiver catches that bomb touchdown, that's dataclay.com powering that on the back end. They work with over 200 brands like NFL, Apple, NBC that pay on average call it $400 or $600 per month. It's a per machine model. They'll break a million bucks in revenue this year, bootstrapped up from $40,000 back in their first year of 2014. Their go to market was actually through [23:07] a reseller, where in the early days, they paid 30% kickback. Now scaling that channel with just a 15% kickback, but very capital efficient. Again, bootstrapped with team of nine. Second product on the way here in January. Ari, thanks for taking us to the top. [23:19] >> Nathan, thank you. It was a pleasure to be here. Thank you so much. [23:23] One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. 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 1PM [23:48] Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big [24:11] fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you want to take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign [24:32] up for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode. 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