How Dataclay Reached 200 Enterprise Customers with a $6,000 Average Contract on a Bootstrapped Team of 9 (Interview with CEO Arie Stavchansky)

Introduction and Customer Logos

Nathan Latka

00:00Hey, 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?

Arie Stavchansky

00:19>> Yeah. Why not? Let's do it.

Nathan Latka

00:21Alright, 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.

Arie Stavchansky

00:27>> Yes. That is correct.

Nathan Latka

00:29Yes. That's amazing.

Arie Stavchansky

00:30>> Yeah. Yeah. It's a very powerful tool we've made here.

How the NFL Uses Dataclay

Nathan Latka

00:33Let's do NFL. Let's just do them. How do they use you?

Arie Stavchansky

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.

Nathan Latka

01:46So, 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

02:00the broadcast booth, there'll be

02:01a 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

02:19what you're powering someone's basically, a marketing person saying putting that in and then it's going live on broadcast?

Real-Time vs. Just-in-Time Content

Arie Stavchansky

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

Nathan Latka

03:06But you're then not real you're not real time?

Arie Stavchansky

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.

Nathan Latka

03:25Oh, 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

03:49your 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

04:13get 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

04:35not 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

05:00going 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

05:22if 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

05:49the 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?

Arie Stavchansky

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

Nathan Latka

06:17it'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.

Arie Stavchansky

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

On-Premise Architecture and Data Control

Arie Stavchansky

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.

Nathan Latka

07:02It's sort of on prem in that regard.

Arie Stavchansky

07:04>> That's exactly right.

Nathan Latka

07:05How 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?

Arie Stavchansky

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.

Nathan Latka

08:12So 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?

Licensing Model and Pricing Structure

Arie Stavchansky

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.

Nathan Latka

08:50How 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?

Arie Stavchansky

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.

Nathan Latka

09:33Sweet. Would a sweet spot be, like, 10?

Arie Stavchansky

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,

Nathan Latka

09:50you 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?

Arie Stavchansky

10:12>> Yeah.

Nathan Latka

10:13Amazing. Essentially. Yeah. Yeah.

10:16I 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?

Arie Stavchansky

10:33>> I mean, the average customer, maybe somewhere, like, I don't know, 6,000 per year.

Nathan Latka

10:40Okay. It's yeah.

Arie Stavchansky

10:41>> I mean, more so the enterprise, they can be paying up between, like, 24 to 50,000 per year.

Nathan Latka

10:50Your biggest customers pay 50,000 a year.

Arie Stavchansky

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.

Nathan Latka

11:03Well, I guess 50,000 a year would be like 20 machines versus 6,000 a year would be like five machines.

Arie Stavchansky

11:11>> Yeah. Mhmm.

Nathan Latka

11:12Something like that. Okay. So you do get you do get cheaper per machine economics if you're buying bulk

Arie Stavchansky

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.

Nathan Latka

11:54That makes sense.

Arie Stavchansky

11:55>> So there's so

Nathan Latka

11:56Put 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?

Arie Stavchansky

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.

Nathan Latka

13:08You didn't get the met video.

13:10Right? You owned a 100% of the business?

Arie Stavchansky

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.

Nathan Latka

13:26But did you and your cofounder, like, you so you were the engineering, it sounds like. What was he or she?

Arie Stavchansky

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.

Nathan Latka

13:56I 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?

Arie Stavchansky

14:06>> That is accurate. Yeah.

Nathan Latka

14:07Okay. Okay. So you should you own more equity then. Right?

Arie Stavchansky

14:10>> Yes. Yes. I do.

Nathan Latka

14:11Alright. But but still enough for him where, you know, to call it ten, twenty, 30% where he's a true cofounder.

Arie Stavchansky

14:18>> Yes. Yes. Yes.

Nathan Latka

14:19Okay. 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?

Arie Stavchansky

14:27>> We are completely bootstrapped. Yeah. Let's go.

Nathan Latka

14:30I love that.

Arie Stavchansky

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.

Nathan Latka

14:50But beyond percent? That

Arie Stavchansky

14:52>> Yeah. Okay. And so

Nathan Latka

14:53I 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?

Arie Stavchansky

15:01>> He put in some he put on some money, but also advises from time to time.

Nathan Latka

15:05Yeah. 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?

Arie Stavchansky

15:10>> Yeah. Yes.

Nathan Latka

15:11For sure.

Arie Stavchansky

15:12>> For sure. This was early this was only 3 years into the business.

Nathan Latka

15:15Okay. Fair enough.

Arie Stavchansky

15:15>> It's like we were still fledgling at that point.

Nathan Latka

15:18Fair 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?

Arie Stavchansky

15:27>> Yeah. So I'd say we have around over a little over 200 active enterprise clients dispersed all over the world.

Nathan Latka

15:37That'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?

Founding Story and Background

Arie Stavchansky

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.

Nathan Latka

16:18Yeah. 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.

Arie Stavchansky

16:28>> Yeah. Mhmm.

Nathan Latka

16:29Yeah. Okay. Let's go back to 2014 real quick.

16:33I always like to ask.

16:34Sure. Do you remember do you remember what first year revenue was? 2014?

Arie Stavchansky

16:40>> I mean, it's embarrassing.

Nathan Latka

16:41I know. But that's why I asked. Right?

Arie Stavchansky

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?

Nathan Latka

16:52Well, 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?

Arie Stavchansky

16:56>> I don't know. It was, like, maybe, like, 35, 40 k. I mean, was

Nathan Latka

17:03And who was the first customer? Or not who, but, like, how did you find them? How'd you get the customer?

Arie Stavchansky

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.

Nathan Latka

17:28What kickback did you pay them?

Arie Stavchansky

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%.

Nathan Latka

17:44Yep. And are they still selling customers for you today?

Arie Stavchansky

17:46>> Yeah. Yeah. Yeah.

Nathan Latka

17:47That'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?

Arie Stavchansky

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?

Nathan Latka

18:01Yep.

Arie Stavchansky

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.

Nathan Latka

18:13How many are full time employees that are sales for you?

Arie Stavchansky

18:17>> One.

Nathan Latka

18:18Oh, just the one. Okay. Cool. Yeah. And and how many engineers besides yourself?

Arie Stavchansky

18:23>> It's two under two other engineers besides myself.

Nathan Latka

18:25So three total. So what do the other five people do?

Arie Stavchansky

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.

Nathan Latka

18:36Another tell

18:37me about it?

Arie Stavchansky

18:39>> Yeah. If you wanna hear about it Alright.

Nathan Latka

18:41Let's save that for the end.

Arie Stavchansky

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

Nathan Latka

19:28We 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?

Arie Stavchansky

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.

Team Composition and Roles

Arie Stavchansky

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.

Nathan Latka

20:33Very 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

20:50here in the next two months?

Arie Stavchansky

20:51>> Yeah. Yeah. I do.

Nathan Latka

20:53Alright. 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.

Arie Stavchansky

21:01>> So That is the hustle.

Nathan Latka

21:03On that note, let's wrap up here with the famous five. Number one, favorite business book.

Arie Stavchansky

21:08>> The Messy Middle.

Nathan Latka

21:10Yep.

21:11Number two, is there a CEO you're following or studying?

Arie Stavchansky

21:17>> Really? No. I I can't say that I am.

Nathan Latka

21:19No. You're good. Number three, what's your favorite online tool for building dataclay?

Arie Stavchansky

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.

Nathan Latka

21:39Number four, how many hours of sleep do get every night?

Arie Stavchansky

21:41>> Between four and five and a half.

Nathan Latka

21:45Alright. Fair end situation, married, single, kids?

Arie Stavchansky

21:48>> I am married with three children.

Nathan Latka

21:50Three kids. Wow. Busy guy. How old are you?

Arie Stavchansky

21:53>> I am 45 years old.

Nathan Latka

21:55Last question. Something you wish you knew when you were 20.

Lessons Learned on Building a Team

Arie Stavchansky

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.

Nathan Latka

22:44There 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

Revenue and Growth Trajectory

Nathan Latka

23:07a 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.

Arie Stavchansky

23:19>> Nathan, thank you. It was a pleasure to be here. Thank you so much.

Nathan Latka

23:23One 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

23:48Central. 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

24:11fundraise, 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

24:32up 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. And if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people.

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