Dataskrive Revenue & Funding (2024)

hello everyone my guest today is brad weitz he runs a company called data scribe an intelligent content automation platform uh he's had four exits and he is the ceo again today of a company called hero sports and data scribe brad you ready to take us to the top let's roll all right what are you spending more time on data scribe or hero sports uh by far data scribe okay got it so let's double down on that what's the company do and how do you make money yep so we're uh what we do is we use machine learning to create really intelligent and compelling content um and the way we want to use a sas business license revenue okay and so like give me a general sense of the average customer what are they going to pay per month uh generally speaking you're looking at between 30 and 40 grand okay oh sorry a year a year yeah so 3 000 a month yeah i got it okay so about 3000 bucks a month and then um give me like a use case so are any customers you can actually they've given you permission to talk about them how are they using you specifically yeah absolutely so one i can talk about very freely is the associated press um so the associated press is using us right now uh where we ingest uh sports data so think about box scores things like that um and we produce uh previews for major league baseball nba mls those kinds of things interesting okay and and put this on a timeline for me man when'd you launch the company so uh hero sports was launched initially in 2014 as a search for a traditional publisher i joined the business in july of 17 and sort of pivoted the business and data scribe was sort of founded it is a in about 2000 early 2018. okay 20 so it's still fairly new now uh are was this basically an internal tool you built for yourself and then you say wow that's so effective i'm going to spin it out yeah so exactly right so my background i don't have a media background uh my background's an enterprise software this is my uh eighth startup lucky enough to have four exits and so i came in and said hey we should build this platform that basically ingests data using machine learning to create uh compelling content uh and that content can either be voice text slideshow video whatever it may be we built it for ourselves because we were trying to cover all of college sports um and uh as a byproduct one of the things that happens is that we rank really well on google and for seo and so the associated press took notice and we decided to pivot the business to be a b2b plus platform because we made more money from the ap deal than we did in that revenue all the previous year yeah that makes sense to me uh is it public what the ap deal was or can you share uh in terms of dollar amount no or general i mean can you give me a general sense or range maybe uh yeah it's it's uh it's generally in the range of let's call it mid uh mid five figures okay good fair enough and then how many customers today have you scaled to again just on data scribe uh we're right now we're about 10 we're we're we expect we'll be about 30 by the end of the end of the quarter okay very good i mean can i take the 10 times 3 000 bucks a month we're doing about 30 000 a month right now uh yeah yeah that's that's about fair slightly less but yeah okay good and then um where are most of sign ups come from is it people that just notice what you're doing with here sports and say well tell us what the engine is you're using and then you sign them up or what how have you gotten the first you know eight nine customers yeah uh so a couple couple ways one is uh so hero sports is a sports platform uh as a sports publishing site we had writers that had a lot of connections and because we folks focused on universities they were sort of ripe they knew us they trusted us and so universities are are actually a core part of our our platform uh they're sort of represent a significant of our clients and then at the bottom of every article that we produce uh it says powered by data scribe technology and so um that's another reason people get to take notice we've had a lot of press come out recently so that's that's helped a lot as well um and then the the last is um because of the hero sports platform and we rank really well in google we show up really well and so then to your point they still come back and say yeah this is amazing tell me more yep yep very interesting all right and then if you're doing caught you know ten customers three grand a month today give me a sense of growth where were you about 12 months ago zero uh so we pivoted the business from a pure play publisher uh we started monetizing really in june of 18. um and we ended the year uh you know around let's call it 200 arr okay 200 200 000 and so now we've been next yeah so ending you're talking about ending 2018 with 200 000 in terms of run rate would be about 15 thousand dollars a month we're only six or seven months we're only four or five months in here to 2019 you've already doubled that yep yeah that's good all right um and it's most is had has that doubling been from expanding the old customer base getting them to pay you more or no it's been adding new logos all together uh both both so we've seen uh pretty good uh so our net our sort of our net retention is probably around 180 190 percent and what's growing what's gross turn at uh yeah gross church is about negative negative growth gross can't be negative oh well so yeah we're we're basically our revenue is is our exist expansion is about 170 percent yeah yeah so what's gross okay so if expansion's 170 uh and you're and you're saying gross churn is how how much gross turn does not it basically nor's expansion oh yeah we're we're yeah we're renewing about 100 we have not had we've not lost customer yet okay so zero percent gross churn yep yep and you're saying that you've got about 170 expansion so break down what that means means for me so we've had clients that have basically doubled and tripled their spend uh and it's all happening pre-renewal cycle because they're so happy with our technology right because our technology can produce a lot of content and so once they see in action they're like oh hey can you do this this and this and so uh you know we're in talks to sort of double and triple uh on average kind of what current existing contracts are if we ignore what kind of what your in talks are and just look only at your actual historical data do you have people that came on at three grand a month and then more than doubled when they renewed yes that's what i'm saying right so of the we have we have eight ten clients that have been paying ready to roll of those ten clients uh five have already expanded to basically between seventy percent and a hundred and forty percent uh of what their initial price point was yes yeah yeah yeah um very good all right um let's uh talk to me talk to me a little bit more about the team right so when do you how many people are on the team today uh about 16. 16 and where's everyone based seattle okay everyone oh very good and uh boots dropped or raised raised how much uh we've raised about six million bucks to date oh wow okay so so okay okay then i would say that's and that's through the pivot what do you mean by that so we start like i said we started out as a hero sports sort of publishing site yeah but that's like totally different right that's like a i don't even compare this to but you're saying when you raise capital the cap table that that that that site was on is the same cap table as what this data platform is correct got it then did wait so those investors when they put the money in they had no idea they were investing basically in a media brand correct interesting was it a lot of work to convince them to let you kind of pivot i mean by the way this would obviously be a very cold thing to do to your investors but why not shut down the whole thing and relaunch it with a clean cap table brand new idea uh so the reason is is uh sort of twofold one is the media business and we've sort of flipped on its head and actually added a lot of value for us uh to actually maintain those relationships with those businesses if you think about it one of our target audiences is universities we were covering universities as reporters those reporters have developed relationships with sids and ads and folks like that so we basically flipped our reporters into biz dev so maintaining that level of business actually gave us a standing star rather than starting from scratch yeah that makes sense were you though when were you out of that capital in terms of what was in your bank account when you pivoted to the the data side of the business or no you still had it we still had we still had a decent amount left i see okay good so that really that money really did help you grow data scribe uh very good um with that much raise i imagine you are burning capital let's say investing in growth or no are you profitable uh no we're investing in growth yeah yeah so i mean this i ask this question because i like to get a sense of how aggressive different ceos are being right so so how aggressive are you comfortable being in terms of what you're willing to burn per month uh we're i mean we're burning we're pretty we're we have a pretty light burn relative to the number of people we're burning about 150 000 a month right okay and most of that is head count or is that a lot of marketing expenses too uh we actually have zero marketing zero sales it's all coming through organic through our platform okay so where is that burn coming from is it it's mostly headaches yep yeah so of the 16 like how many are engineers uh 10 got it and what are their six content producers uh no it's basically our leadership team and some operations okay got so so nothing on paid spend yet um i mean is that something you're experimenting with or you just you don't want to try no we don't want to try because our platform produces like i said really optimized marketing content so we show up really well on google for search organically we can do organic social so our names getting out there without having to do that paid spending yeah but if you i mean i guess your version of paid spending would be put out more content since the content is working right so like what is the limit of you putting out more content that ranks really high in terms of seo there's no limit uh and the reason is is like we're producing a billion and a half pieces of content right now over what period of time a month okay a month so you're putting out a billion happiest content per month uh and it's only driven you 10 new customers i mean that is not necessarily an effective content marketing strategy uh well i i would again we've started to monetize this really over the last eight months uh and you know if you think about a sales cycle average sales cycle on enterprise is between three and six months uh a little bit different because right now we're focused on sports so that seasonality plays into it uh we you know our pipeline's accelerating to the point where uh we'll probably 10x but from where we are now uh by the end of the year okay that sales process you just said you know sales people right these these enterprise kind of deals usually require a salesperson's touch because people aren't just gonna put a credit card on a website for three grand a month so what is your sales process looks like yeah so so we have we have a cs we have a couple of folks in cs uh and channel and so basically we through our technology we've automated a lot of the uh let's call it outreach components uh through email and things like that we drive them a lead the lead goes into our effectively our cs team our account team because they're the ones that understand platform are gonna be the ones servicing it and so we've been able to circumvent that type of funnel process okay customer success though is typically again for customers after they're already closed so who's in charge of an inbound lead because they saw powered by data describe at the bottom on your piece of of of content to actually getting them to pay yeah so so we've uh because we've sort of developed this over over the last uh while through my enterprise software experience what we found is because our weeds are our leads are much warmer right we're not sort of doing the whole inside sales thing uh what we do is we we almost act as a like a solution engineering role so we'll have someone on the product team on the phone or the customer custom on the phone because we already have the qualified lead we already know what you are interested in through the lead gen and then we'll say hey we'll ask a few questions so on and so forth and then it's we almost look at it as almost like a stage four in salesforce of you're already warm you've already spoken to someone now let's just sort of do some discovery some solution engineering and get it over the finish line okay got it so who is actually asking for the sale though who is saying great here's the invoice uh that so that would be our we have a vp of channel that sort of dual roles is that okay got it got it got it got it all right very good um yes so lead goes to customer success and then vp of channel actually closes the deal interesting okay um great any plans to raise additional capital uh we're considering it right now okay how would you do that and not just get totally clobbered in terms of in terms of dilution yeah so uh with some very uh supportive existing investors uh and with what we have in the bank today uh we're looking at a sort of you know our growth trajectory is pretty nice so we're purposely sort of holding out on going out and raising until we hit that sort of inflection point where to your point we don't get clobbered so what do you think that inflection point is in terms of revenue uh i would say a million error okay so you've got to get up basically double-ish a little more than doublish uh your current 30 grand a month get up to 83 grand a month and then go out and potentially raise what do you think you could raise that valuation why is it a million dollar run rate uh my guess would be somewhere in the neighborhood of 2025 free okay interesting um got it and then what you'd probably try and raise four five six million on that something like that yeah uh okay very good let's uh let's wrap up here with the famous five number one what's your favorite business book uh probably being startup number two is there a ceo you're following or studying uh i really like jeff weiner yep uh number three what's your favorite online tool for building your business uh probably trello number four how many hours i sleep to get every night uh three but most of that's because of my kids come on that three is not healthy there's no way you only get three hours of sleep every night consistently i would bet that that's probably true my i have young ones in there right come on you would not be you wouldn't be living if you there must be times when you go catch up when you sleep 12 hours i would say i haven't gotten more than seven hours of sleep in the last three years okay fair enough but it's something i mean the average would have to be higher four or five five yeah sure let's do five yeah okay good you said two kids yeah and you said married yep okay very good and how old are you i'm 38. last question what do you wish your 20 year old self knew uh be better at networking i think you're just fine at it i mean this was good energy conversation i bet you'd kill it in a good little conference booth section all right guys data scribe helping content producers produce at better scale including the associated press folks like this pay data described three grand a month and upwards to uh to access the technology 10 customers today 30 grand a month in revenue up from basically nothing uh 12 months ago they raised six million dollars to build this team of 16 people they're burning about 150 grand per month but that's okay they're driving towards hitting that million dollars in terms of run rate before brad considers raising capital again brad thank you for taking us to the top great thanks man appreciate it