Fanbase Revenue, Valuation & Funding (2024)

[00:00] Hey, folks. My guest today is Isaac Hayes III. He's the founder and CEO of fanbase, which has raised $3,500,000 in seed funding on Start Engine in May 2021. The company is a new social media platform that monetizes social content for all users. Isaac, you ready to take us to the top? [00:15] >> Absolutely. [00:16] Alright, Of man. Who's paying you? Who's using you right now? [00:19] >> What do you mean? [00:21] Who are your customers? [00:23] >> Oh, well, anybody. Like, anybody that wants to monetize their content. Right? The world is full of people that give away their content for free, and the times are changing. I think we're moving into a subscription based world through everything. And so it doesn't matter who you are, where you are, what you do. I think all content has value, and so I'm really excited to offer the opportunity for any person on the planet to monetize their content [00:46] >> on fanbase. [00:46] But it's really hard to build a product and get users if you try and build it for everyone. So who are you building the MVP for? Who are you targeting? [00:54] >> Well, really, I think fanbase is for the future. So it's really for the youth. I really think that the future of social media belongs to the younger generation of kids that understand in app purchases, virtual currency, subscribing, all these things. So fanbase is truly for the Gen Z generation, the centennials that are coming right into social media right now. [01:12] Mhmm. The the way you present the story on the website is effectively almost like Instagram, but people can sub it's a paid Instagram. You can subscribe to someone's Instagram, and I'm sure there's video content besides just images. And then I can see almost sort of like, oh, what's that? Oh, almost sort of like OnlyFans, but obviously not that industry related. But you can log in and see your revenue reports live too. [01:33] >> Absolutely. You can have followers and subscribers on the same page, which is cool because it's a freemium app. So it's like the things you want your followers to see like you normally would on Instagram or Twitter or Facebook, it's free. The things that you want people to pay for, whatever their skill set is, if it's a podcast, a tutorial, your private life, whatever it is, you can post that behind a paywall if people can subscribe to [01:55] >> see that. So I think that's what makes it very simple. And then we have tons of of verticals, which is like photo, video, long form, live, audio rooms like clubhouse and Twitter spaces, stories, and our new version of our short form video editor called Flix, which is like our TikTok and Reels, which is coming early at the top of the year. So it's just a it's a wide variety of tools for anybody to use to monetize [02:15] >> their content. [02:16] Isaac, when did you launch the business? When did you write the first line of code? [02:20] >> So that started in 2018. Really, we we we launched the app at the beginning of twenty nineteen, and I didn't tell anybody that I built it. Right? I let it sit for a year because I wanted to have a proof of concept without using my name or anybody that I knew to get users. I wanted somebody to come on the app and use the app what it was intended for, and we had several users do that. [02:39] >> But one person made about $6,000 in a year, and we had less than 10,000 users. And so that that showed me that I have a proof of concept that I could take, you know, and raise capital and to do so. But then 2020 came and COVID hit, and then I couldn't move. So we had to go a different route with crowdfunding. [02:55] Mhmm. So how many downloads to date? All downloads since 2018 of the app? [03:02] >> Probably almost 200,000. [03:03] Oh, wow. Okay. And how many just in the last thirty days? [03:07] >> Oh, we just had a big uptick. Maybe maybe twenty, twenty five, 20,000. [03:13] What drove the uptick? [03:15] >> Well, [03:16] >> we actually had a new user, rapper Lotto. She just joined the platform actually, and she's having a birthday party here in Atlanta. And she's inviting five people to come to her birthday party on fanbase, which I thought was really, really cool. And people are downloading the app and subscribing to her like crazy because they wanna come to her party. [03:34] That's very cool. Okay. So you mentioned that one user made $6,000 in 2018. How much have all your users made all time? [03:42] >> Oh, I don't know off the top, but I mean, it's we're well over probably almost $300,000 or $400,000 just thinking about all the users in our user base. So it's it's a significant amount of of users that have made a lot of money. [03:57] So over 300,000 made by made by users posting this great content. And how many? How many have made at least a dollar all time? [04:05] >> Oh, probably 80% of the app. It's not very high. It's not very hard to make money on fanbase, and I think it's very, very intuitive, and people are very, very transactional with virtual currency. Like, love is the virtual currency. So you can like something on fanbase. You can love it. You buy love in a subscription store. If you love a post, you tap it. You give the user 0.5 a penny, and you can actually give as [04:27] >> much love on a post or in an audio room or on a video or in a live as you want. So people are making money, like, the first day they come on fanbase. They're like, oh, I made $3 on fanbase, and I've been on Instagram for eleven years and haven't made a dime. So it's very, very easy make to money on the platform. [04:41] When you say 80% on the app, is that 80% of the 200,000 downloads? [04:46] >> Yeah. I'm I'm 80% of the user base. So, yeah, 80% of the people that have actually used the app have actually made money. [04:51] Well, so how many users? I don't I don't know how you quantify user base. [04:56] >> By active users. [04:57] So how do you measure an active user? They log on at least once in the last thirty days? They posted at least once? [05:02] >> Yeah. So they yeah. They posted at least I mean, anybody that's posted at least once [05:07] All time? [05:07] >> Someone yeah. That's made money all time. But active users, we're in the, you know, maybe 48, 49,000 a month range, which is pretty good for an app that, you know, doesn't have that's almost 25% of the app that's just checking in month and then daily is pretty high too. [05:26] What does that mean though? 49,000 made at least one post or they just open the app and cruise through content? [05:32] >> They open well, they open the post. They use the post. They join an audio room. They sit on the stage. They're doing some sort of activity that has them on the app for a period of time. [05:41] I see. Super interesting. Okay. Let's talk about Start Engine. So first off, were you bootstrapped before Start Engine? [05:47] >> Yes. I I actually paid for the the MVP of fanbase with my own money out of my pocket. [05:53] How much was that? [05:55] >> That was probably about a $150,000. [05:58] Wow. Who'd you have to pay? [06:01] >> My CTO and his company, which actually they became [06:06] >> equity partners and fanbase, and they are the team that continues to build fanbase to this day. [06:11] Interesting. Was that a local dev shop in Atlanta, or who was it? [06:14] >> Yes. It was a local shop in Atlanta, a gentleman by the name of Ramiro Canavas, and it was great. I got introduced to him through an attorney of mine, and he hopped right in and said, yeah. We can do this. And they they've been in business for about twelve years, thirteen years. And fanbase is the first app that they actually wanted to invest in because they believed in this so much. I was really excited that they [06:33] >> wanna join the journey, and I couldn't do it without them. And I'm glad to have them on board. [06:37] So how much equity did you give them? [06:39] >> Oh, I can't tell that. [06:41] Mean, a range a range is fine. Are we talking like a percent or, like, 10%? [06:46] >> Oh, no. It's it's well above a percent. I mean, you and and and in tech, you have to have, you know, CTOs that actually have some skin in the game because when you're building these things and you're raising capital, people have to know that the butts are gonna do what they're supposed to do and belief that people are gonna stay involved who are around. [07:04] So they own more than 10%? No. Okay. So between one and ten. We'll leave it at that. [07:09] >> Yeah. [07:10] I see. Okay. Cool. And then you mentioned he invested. They they so were they your pre seed round before Start Engine, or they put money in via Start Engine? [07:19] >> Both. They were pre seed, and so they just came on and said, hey. Let's get in this. And then they they came in a little bit more on Start Engine. [07:27] So when did you raise your pre seed round? [07:30] >> Well, it it really wasn't a it really wasn't a pre seed. That's the thing. It was just they wanted to come on board and and and be part of the the platform, so I allowed them to do that. I mean, the only other capital that we raised at Start Engine was just Start Engine. It was just myself, [07:44] >> Romero, his team, and then we went to Start Engine. [07:47] I see. Okay. Tell me about Start Engine. How much did did you end up raising, and how much of the company did you sell? [07:53] >> We raised about 3.4, almost $3,500,000, right at $3,500,000 at a 20,000,000 valuation. So that's about 15% of the company. [08:03] Pre money or post? [08:07] >> You're saying 20,000,000 pre money. Post money is 23.5. [08:11] Okay. So, yeah, you sold about what? Eight 18%, something like that? [08:15] >> 17% of the company. [08:16] 17? [08:17] Yeah. Every point matters, baby. Every point matters. [08:19] >> Absolutely. [08:20] Alright. 17%. And tell me about the rest of the team. How many folks full time today? [08:25] >> Oh, probably about 20. Maybe maybe maybe more even with development. I mean, I have a a senior team of of executives that work on a bunch of different things, especially onboarding and marketing. We're in we have sports and music. So there's a lot of verticals to the platform that require a lot in building some of this technology. You have to have the right personnel that helps you scale in those different areas. So the executive team is [08:53] >> pretty robust, and even on the marketing and the metrics side, our data and analytics. [09:00] >> So Got it. Got it. [09:01] So 20 people. How many are engineers? Oh, [09:06] >> probably [09:11] >> half? You know, about half. [09:14] About 10 engineers. And then flash out more of the story for me. We haven't talked about how you guys make money. [09:19] >> So fanbase takes 20% of all the revenue that comes through. So it it goes through in app purchases through the Apple App Store. So for every dollar, you know, Apple and Google take 30¢. We take 20 and we pass 50 on to the user. [09:33] Yep. [09:33] >> And that can be a lot of revenue as it's as you scaled up with with users. [09:38] So over the last thirty days, how much money was sort of, you know, spent through your system? [09:44] >> I don't know right off the top hand because we're we're rolling right into the end of the year, but not not off top. I don't know right off top of the off top. [09:53] What what's a It [09:56] >> really varies. Honestly, there is no it really varies just depending on who actually comes in and and uses the platform and works on it. So it's really hard to tell. [10:06] No. No. I get that. But I mean, Isaac, this is your number one driver. I mean, this is revenue into the company. Every SaaS, this is like the number one priority. Right? So you had 300,000 come through the platform all time. You already told me that. What's the range of what came in over the past thirty days you think? [10:22] >> I'm I'm telling you, it really honestly, I can't it varies. It just it honestly varies on the amount of users and what what activity is going on. We have a huge uptick in revenue because of the lotto activation right now. So even I I couldn't even tell you. [10:37] Well, I guess I guess I guess I'm just a little surprised like that isn't the thing you're looking at every morning when you wake up. I'm just shocked that that's not like you would know that number instantly to anyone who asked you. [10:49] >> Not not really because, I mean, I'm the money will come. I'm more interested in in building our user base and the things that we're building and actually getting users to come on board. So the first thing that I look at is is our growth. Like, how many how much time people are spending on the app? Because money we we generated money from the data we launched. So most at most platforms are not even profitable. Right? Some [11:11] >> are generating revenue. Some are trying to figure out generating revenue. The moment that fanbase existed, it was already generating revenue. So we're going to make money. It's about taking that and scaling that with a user base. So I'm more focused on the community. Community building is really what's gonna make the platform last long. The platform will make money and will do totally fine. But if we don't build a community, then there won't be a platform. [11:32] So you mentioned you really track average time on the app. Right? So what is that today? [11:37] >> In 2021, it was an hour and twenty five minutes. [11:41] Okay. Through the whole year or monthly or weekly or what? [11:45] >> Yeah. Through the through the whole year, it's about an hour hour and twenty five minutes, but it it probably varies between thirty five and forty five minutes a day, [11:54] >> probably in the last, like, three or four months. But that's really that really has a lot to do with audio because people are in the audio rooms, and they stay in the audio rooms consistently, but there's also a lot of content that they can scroll through while they're in the audio room. [12:05] Wait. Sorry. I'm confused. So of the how many are spending thirty five to forty minutes a day in the app? [12:11] >> The the average daily user in 2021 spent an hour and twenty five minutes a day in the room for two two thousand twenty one. [12:22] An hour and twenty five minutes a day? Yeah. That's that's like that's like crazy high. [12:31] >> I know. It's absolutely high. I I think because when you combine like so [12:37] Let me just repeat that back to you to make sure I understand it. You've got 49,000 monthly active users right now today. What you're saying is those 49,000 will spend today each an hour December 15 will each spend an hour twenty five in the app. [12:51] >> Yeah. Between between 45 an hour and twenty five minutes a day. It varies. [12:57] Across all those 50,000 monthly active users. So 50,000 people today will be in the application for about forty five minutes today. [13:06] >> Probably. Yeah. Absolutely. [13:12] >> I know that. So and and you know what's so funny is when I'm so as as a [13:16] As a Are you sure? Are you sure that that number is accurate? [13:19] >> Yep. I'm I'm sure that I'm sure that the yeah. I'm not it's I know it sounds crazy, but, yeah, our analytics absolutely show that. And the and the I'm telling you the reason is is because you're combining a visual component of photos and videos and interactivity with audio rooms. If you're on Twitter space as a clubhouse, you're just in an audio room. But if you're scrolling an app and you're actually having conversation and you're using both [13:44] >> at the same time, we're having users sit on the platform all day long in audio rooms. [13:49] No, I believe that. What what I'm trying to wrap my head around is you're saying there's 50,000 people that do that, that are going to do that today. December 15, today, there are 50,000 people that are gonna spend an hour in your audio rooms on your app today. [14:02] >> Well, probably not 50,000. No. [14:05] That's what I'm trying to dig at. [14:07] >> Our monthly active our monthly active users are around 50 to 60,000. [14:12] Your daily after Daily, [14:14] >> probably, I don't know, maybe between five and eight a day. [14:19] 25 eight? [14:21] >> No. I said five and eight. [14:23] Oh, five and eight. Got it. Okay. So that would be there are 5,000 people today that are spending an hour in these audio rooms scrolling around. That's your daily activity. [14:31] >> Between five and eight. [14:33] Okay. That makes way that makes way more sense. [14:36] >> Yes. [14:37] Okay. What what is the right revenue moving forward? Right? I mean, you've done 300,000 through the system. If you're taking 20%, you've really only made 60,000. And I think that's probably before you're paying Apple. So how do you No. [14:46] >> No. No. No. That's our revenue after. [14:48] Okay. So your total revenue over the past three years, four years has been $60,000 [14:52] >> No. No. No. No. No. That's no. Like I said, that's no. No. It's over that. It's way over that. [14:57] Why is it over You told me your total total GMV through the platform was about $300,000 and you take 20%. [15:03] >> No. That's at because what the money that flows into our platform comes in after Apple's already taken their percentage. You see what I'm saying? You understand what I'm saying? The money doesn't our money our our revenue doesn't come into the platform. It only comes in the platform after Apple takes their [15:19] What did you mean when you told me that fans all time have made 300,000 on the platform? [15:26] >> That's what that's what we've yeah. That's what the platform has made. Probably about 300,000. [15:30] And does Apple take 30% of that? [15:33] >> No. What I'm saying is all that money that that's after Apple takes their percentage. [15:37] Okay. Every time [15:37] >> we don't we don't see any money that come. We don't see that money. I don't count that money because we never it never shows up. [15:42] Yeah. So you're watching users give you pay for likes, go to your shop, etcetera. 300,000 of money has gone through your system. You told me your model is you take 20% of that. Correct? [15:53] >> Right. Mhmm. [15:55] The 20% of $300,000 is $60,000 all time revenue to you. [16:00] >> But we don't we don't see that, though. You understand what I'm saying? I don't I don't see them I don't see the money that Apple takes. [16:07] I'm not no. Isaac, you just told me the 300,000 is after Apple. Right? So ignore Apple. Right. You're telling me you see 300,000 after Apple, and you make money by taking 20% of that. Is that accurate? [16:18] >> Right. Yes. [16:20] Okay. Then 20% of 300,000 is $60,000 in all time revenue. [16:25] So is that is that accurate? [16:27] >> Yeah. But, also, [16:31] >> the users don't always cash out their revenue. So we pay once a month. Right? So people have to enter their payment information and say, I wanna receive my money. I wanna pull the money out. And once they do that, then they get paid. But a lot of users also haven't actually asked to get paid. Mhmm. Anything over any and they're also we only pay out anything over $50 too as well. So you have to make over [16:53] >> $50 to get paid. That's another benchmark that you have to do. So most users are actually [16:59] There's a bunch of money stuck in the app, basically. [17:02] >> Yeah. Until people decide they wanna make it. [17:05] So you as a company are are making, like, a couple of grand a month, $2,000, $3,000 a month, net net, like, your 20% take? [17:11] >> No. We're may I mean, well, [17:15] >> probably more than that. And I and I'm not, like yeah. More than that. Because, again, it varies on what we decide to pay out. We might we might say we're gonna pay out $17,000 to $18,000 in a month. That might be what's due. Everybody may or may not take that 17 or 18,000. [17:33] I'm not talking about that's an expense for you. I'm talking about what you as a company make your cut. You have to put this stuff on Start Engine when you list it. I mean, this has to be very, very clear. What did you put on Start Engine and what your revenue was? [17:45] >> No. We don't have to always we don't have to list all all of our revenue on Start Engine. You don't have to do that. Absolutely not. And, I mean and and most companies aren't going to [17:57] >> most companies aren't always going to post all their revenue. [18:08] I'm close with Howard, and I remember being at his office in LA discussing Start Engine specifically, and his concern was making sure investors understand what they're investing in. And so he was really pushing people that list to share as much as they possibly can. I'm reading under your section right now, the business model. Fanbase takes 20% of all in app purchases from users, including purchase of love packs or subscriptions of their favorite creators. Is that accurate? [18:33] Mhmm. Yeah. And then you say users are paid the first of the month. Right? Our average order value is $2.83. Right? Your CAC is 25¢, which is very low CAC, by the way. Congratulations. But I mean, you put some of these economics out there. Right? So so I guess my question to you is, how do you get this to the point where you're not having to raise every six months to fuel the growth of the business? [18:56] Like, how do you get up to, like, know, $10,000, $20,000, $50,000 a month in revenue? [19:01] >> The the actual growing the community. And, I think that's what's that's what's more important is growing the community because, again, I mean, with most platforms not making money, [19:13] >> I don't think we'll have to scale. I mean, I don't I don't think we'll have to raise that much capital moving forward. [19:18] Well, we will see what happens. In the meantime, let's wrap up with the famous five. Number one, favorite book. [19:24] >> The bible. [19:25] Number two, is there a CEO you're following or studying? [19:35] >> I I I study or follow I follow or study Zuckerberg just for for perspective. [19:43] Number three, what's your favorite online tool for building fanbase? [19:50] >> Content. Like, I guess yeah. [19:55] >> Like, apps that create engaging content. So it could be Premiere Pro, Adobe Rush, something that creates engaging content. [20:03] And and number four, Isaac, how many hours of sleep do you eat every night? [20:07] >> About six. [20:09] And what's your situation? Married, single, kids? [20:12] >> Single. [20:13] Alright. And no kids? [20:15] >> Nope. [20:15] Alright. And how old are you? [20:17] >> I am 46. [20:18] 46. Last question. Something you wish you knew when you were 20. [20:24] >> I could build an app. [20:27] Guys, there we have it. Fanbase launched back in '20, call it 2018. They've got over 200,000 downloads. In the last thirty days, 20,000 users have signed up. An active user is someone who's posted at least once all time. They got 49,000 monthly active users today and daily about 5,000. They're scaling fast. Creators have made over $300,000 on the platform. Fanbase makes money by taking 20%. They just did a successful raise on Start Engine, raising $3,500,000 at [20:52] a $20,000,000 valuation with their team of 20 as they look to scale to keep building the community. Isaac, thanks for taking us to top. [20:59] >> Thank you. [21:02] 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 [21:27] 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 [21:49] 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 [22:11] 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 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, I do it so that we can all learn. We have to counter those people. We [22:30] got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.