How FindMine Reached 8 Customers and $7M Raised with Machine Learning Content for Retailers (Interview with CEO Michelle Bacharach)

Introduction and Company Overview

Nathan Latka

00:00Hey, folks. My guest today is Michelle Bacharach. She's the CEO and co founder of FindMine, an award winning content engine that uses machine learning to scale content creation for the world's top retailers. Michelle, you ready to take us to the top?

Michelle Bacharach

00:12>> Yeah. Thanks for having me.

Nathan Latka

00:13Alright. Content creation is a tough space. Walk me through this. How'd you get into the industry? Is it is it fashion and and and content for retailers exclusively?

How FindMine Uses Machine Learning for Retailers

Michelle Bacharach

00:22>> Yeah. Retailers and brands currently across fashion, beauty, and home. Those are our first three categories. And I started the company because I felt like there was a a big friction point for the consumer where, you know, consumers aren't experts in the product categories we're buying, whereas the companies we're buying from are experts. And so there's a gap between how much of that expertise is actually reaching the consumer. And I found that that gap was really happening

00:47>> because merchants and marketers within these brands are, you know, they're trying to communicate their expertise, but they're stuck with kind of manual means of doing that. So you know, making an email campaign or a Instagram post or you know, curating a landing page on the website. So what our approach is, is to use machine learning to kind of predict what that person is going to do within the organization rather than predict what a customer is likely

01:14>> to do. Because if we're predicting what the customer is likely to do, they're going to stay at that same level of expertise they've always had. Whereas if we predict what the brand expert is going to suggest, we're gonna get that aspirational kind of brand imbued expertise.

Pricing Model and Average Contract Value

Nathan Latka

01:30So what are these what are these brands paying you for this technology on average per month?

Michelle Bacharach

01:34>> So our average contract size is about a 160,000.

Nathan Latka

01:37Per year?

Michelle Bacharach

01:38>> Per year. Yeah.

Nathan Latka

01:39Okay.

Michelle Bacharach

01:39>> And it's driven by volume. So the more places they use our engine to put content in front of customers, So places

Nathan Latka

01:47like like location, like physical locations or web properties?

Michelle Bacharach

01:51>> Properties. So channels like email or social media, e commerce. The more, you know, eyeballs basically that we have on our content, the more the more they pay, but there's also, you know, a unit economic benefits. There's economies of scale built into that pricing model.

Nathan Latka

02:08Yep. Yep. Yep. And what's the cheapest plan people can get started with?

Michelle Bacharach

02:12>> It's about 20,000 a year.

Nathan Latka

02:13And how and how many unique hits is a website getting if they pick $20,000 a year?

Michelle Bacharach

02:18>> It depends. So it depends a little bit on, you know, how many products they have, depends on, like, what their average order value is and how much revenue we think we can increase for them. But, you know, it would range from, a few million to maybe 20 or so million.

Nathan Latka

02:32Okay, interesting views across properties. Okay, so you're upselling against multiple triggers, and then don't obviously name the company, but what's your largest customer paying you per year?

Largest Customer Contract

Michelle Bacharach

02:41>> Our largest contract is probably about 750,000.

Nathan Latka

02:44Okay, got it. So pretty large. What's the backstory here? When did you guys launch?

Company Founding Story and Timeline

Michelle Bacharach

02:48>> Yeah, it's a great question. So I've been trying to kind of solve the consumer side of this problem since 2010. And it was always kind of on my list of, you know, I hadn't started a company, I was getting my MBA, I was working full time other things. But you know, I had this list of 50 startup ideas on my phone and this kind of friction for the consumer I kept coming back to. And I was

03:12>> trying to solve it from like a consumer standpoint since like 2010, you know, officially like incorporated a holding company to workshop startup ideas of which this was one, in 2014. Kind of hit on like the b to b angle in 2016. We launched with our first b to b customer in 2016. And then, you know, since the pandemic, obviously, retail has changed dramatically. And so our business and the product offerings and the way we

03:38>> do it really changed in 2020. But I would use 2016 if you have to kind of pick one start date.

Nathan Latka

03:44And what was your revenue in the first year? It's always a fun question.

First Year Revenue and Early Days

Michelle Bacharach

03:48>> I think our first year revenue was, like,

03:52>> $3,000 for the year.

Nathan Latka

03:56Did that make you guys feel in December that year? Do you remember?

Michelle Bacharach

03:59>> I mean, it was great. I think our customer got, like, a 3,000 x ROI, and we were like, okay. We need to change our pricing a little bit. But we were thrilled. That was huge.

Nathan Latka

04:10Mhmm. Yep. And then it was COVID, did COVID generally increase your revenue or decrease your revenue?

Michelle Bacharach

04:15>> I mean, decreased the revenue, but now has increased it. I think it was like, it was a curse and then a blessing, I like to say.

Nathan Latka

04:23Yep. No, that's good. Now, how many customers are we working with today?

Customer Count and Brand Portfolio

Michelle Bacharach

04:28>> We're working with about eight different payers, and some of our customers have portfolios of different brands. So, you know, we work with Adidas and they own Reebok and we work with Perry Ellis and they own Cubavera and Callaway and Original Penguin. So there's, you know, some portfolios that we work with. So there's definitely more brands. And then we also work with multi brand retailers who sell hundreds of different brands. So we have probably about 500

04:54>> brands on our platform.

Nathan Latka

04:56Well, Michelle, if I'm doing my math correctly, you just passed an important milestone. Can I take eight customers times the $12,000 ARPU? That's $96 a year. You're north of a month, you're north of a million dollar run rate at this point.

Michelle Bacharach

05:07>> Story. Yeah. You can you can do that math.

Nathan Latka

05:10Was that accurate? Did you guys pass that earlier this year?

Michelle Bacharach

05:13>> We have passed that.

Funding History and Total Raised

Nathan Latka

05:14Yep. Exciting. You got yep. Now did you do a bootstrap or did you raise?

Michelle Bacharach

05:19>> We raised financing. Yeah. We raised about $7,000,000 lifetime to date.

Nathan Latka

05:24K. What was that broken down and, like, how much how much did you raise in 2016, if any?

Michelle Bacharach

05:29>> In 2016, what do we do? I think it was, like, an angel round of a $100,000 plus some accelerator money. So we took we did an accelerator called XRC Labs, and we got 50 k from them.

Nathan Latka

05:44You recommend them? Have they been helpful?

Michelle Bacharach

05:46>> Yeah. So we are actually part of the first class ever, and they've, like, completely they were a startup themselves. They've completely grown, but they're retail focused specifically. And if if a company was trying to sell into that space, I 100% recommend them.

Nathan Latka

06:00Wow. Okay. Got it. And then you raised more since then. What was the other rounds?

Michelle Bacharach

06:04>> So we did, like, seed after that. And yeah. So that was the balance of it. But the Oh,

Nathan Latka

06:11so you're just in the seed. The seed was a 7,000,000 seed.

Michelle Bacharach

06:15>> Yeah.

Nathan Latka

06:16Oh, wow. Okay. When was that? Pre pandemic or post?

Michelle Bacharach

06:19>> Pre. Yeah.

Nathan Latka

06:20Pre. Okay.

Michelle Bacharach

06:21>> All pre pandemic. Yeah.

Series A Plans and Fundraising Strategy

Nathan Latka

06:22Wow. Okay. So what what's sort of the next plan? Mean, once you're sort of on the the VC flywheel, you have to sort of be raising every eighteen months. Otherwise, it looks bad in the market. So are you raising now?

Michelle Bacharach

06:31>> Yeah. We're actually you know, 2020 was not a good time to go out to the market, especially within retail. But now it's a great time to go out to the market because retail has more than rebounded. I would say the whole industry has been pulled forward like ten to fifteen years. And we're just seeing like tons we're getting tons of inbound from VCs who are like, we're really into e commerce enablement or we really wanna focus

06:52>> on retail tech and You're like, you're before.

Nathan Latka

06:54Yeah. I mean, that never happened before.

Michelle Bacharach

06:56>> People were sort of like, retail tech, like, that's not that sexy of a market, and now all of a sudden people are really excited about it.

Nathan Latka

07:04So So what's the right amount for you to raise, do you think?

Michelle Bacharach

07:07>> So we're looking to do like an $8,000,000 series a, you know, kind of right down the middle. We don't wanna raise too much. We've seen companies do that and not have great consequences. But we also have really, like, clear unit economics in terms of, like, pipeline conversion ratios, how many account executives we need to achieve quotas and stuff like that. So it's pretty capital efficient. You can do a lot with a little.

Sales Team Structure and Hiring Playbook

Nathan Latka

07:32Mhmm. How many account executives are there today?

Michelle Bacharach

07:35>> You're looking at her. It's just Okay.

Nathan Latka

07:37You? Yep. Yeah. So how do you model your first sales hire that's not you? Obviously, they're not gonna perform as good as you. You're the founder.

Michelle Bacharach

07:44>> So we we actually already went through that pre COVID. And then because of COVID, we we don't have a sales and marketing team since then. That's part of the way we, you know, cut burn and stuff to keep the lights on during the really challenging time of 2020. But what's really good about that is like we know all we've been through the wall on the first sales hire, which is a big challenge and learned a lot.

08:06>> And so we have kind of our unit economics and like the ramp and the training assets and all that stuff kind of lined up. So I know exactly what that looks like, and I know what

Nathan Latka

08:14How many months to ramp? How many months to ramp is in the plan for a new sales rep?

Michelle Bacharach

08:18>> Four.

Nathan Latka

08:19Four. Okay. And and what when they are ramped, what do you expect them to hit quota wise?

Michelle Bacharach

08:23>> Million a year is the figure.

Nathan Latka

08:25And do you have, like, traditional full on target earnings, $200, $100 base on your bank commission?

Michelle Bacharach

08:30>> Yeah. It's it's 50% base, 50% commission, but commissions are uncapped.

Nathan Latka

08:35Oh, nice.

Michelle Bacharach

08:35>> Yeah. So we you know, they could be like 25, 75 or whatever, you know Mhmm. Sky's the limit there.

Team Size and Engineering Headcount

Nathan Latka

08:42And how many total people on the team today?

Michelle Bacharach

08:45>> There's 12 full time team members today. About 20 something if you include, you know, part time and and consultant.

Nathan Latka

08:53What about full time engineers?

Michelle Bacharach

08:56>> Full time engineers? Four. Four.

Nathan Latka

09:00Okay. Interesting. Nice mix here. So so looking raising now, obviously, most folks well, not obviously, but most series a folks are selling 10 to 20% of the business these days. Do think that's probably what you're gonna have to sell here?

Michelle Bacharach

09:12>> Yeah. I think so. I mean, I think that's pretty standard. I've seen all the data. But, you know, I think I'm more interested in the partner than in the, like, specific amount within the bounds of kind of what's normal given up. Because, you know, VCs can make great connections, especially around hiring and customer base and stuff like that. So looking for, you know, some of the softer skills maybe as being more important in this next financing.

Nathan Latka

09:39Yeah. The only I mean, the only thing that's important in terms of, like, the check size versus valuation is dilution effects on yourself, right, and others. Right? So, like, I mean, it sounds like if you're if you're comfortable doing an $8,000,000 round, selling 10 to 20%, you're comfortable assuming the right strategic fit, you're comfortable doing, like, a $45,000,000 post all the up top, say an 80,000,000 post would be only 10% dilution. Is that right?

Michelle Bacharach

09:58>> That's right. Yeah.

Nathan Latka

09:59Yeah. Interesting. Interesting. Very cool. Okay. So scaling nicely, eight customers here. You already have a playbook because you had a pre COVID. Now, how many customers you have pre COVID?

Michelle Bacharach

10:11>> We had probably about the same. So, we lost three customers due to bankruptcy, unfortunately, during the pandemic.

Churn History and COVID Impact

Nathan Latka

10:18Oh, wow.

Michelle Bacharach

10:18>> But we've actually only had the only churn we've ever had are those bankruptcies and two companies that got spun off to private equity by their owner. So we've never actually had any product really to churn, which is I think pretty incredible that we kept those customers during the pandemic when everything was falling apart for them.

Nathan Latka

10:35So what would like, when you go into this raise, people are gonna ask for your growth rate. Right? So what would you say your growth rate was over the past twelve months?

Revenue Growth Rates in 2021

Michelle Bacharach

10:42>> Yeah. So since the beginning of 2021, I don't actually know for the past 12 rolling, but since the beginning of 2021, it's a 140%, and we should end the year at 400% year over year.

Nathan Latka

10:53Got it. And if you're around, like, a $100,000 a month in revenue, what you're saying is what? That you started the year at, like, $60,000 a month in revenue, something like that?

Michelle Bacharach

10:59>> On a monthly basis, I'm not sure, but, you

Nathan Latka

11:01know Okay.

Michelle Bacharach

11:04>> Math sounds right from a growth standpoint.

Nathan Latka

11:06Yeah. $60.60 grand a month and and then 40% growth takes you up to, like, you know, eighty, ninety now and 400%. I mean, gosh, that would be what? Do you think you get, like, to a 250,000 a month by the end of the year?

Michelle Bacharach

11:17>> Yeah. Wow. Have line of sight to that.

Nathan Latka

11:21That's great. And is it expanding the number like the wallet share of the current date customers or adding brand new logos altogether?

Michelle Bacharach

11:27>> Both.

Nathan Latka

11:29Okay. Interesting. Very cool. Okay. Great. Great. Great. Interesting story here. And pre COVID, were you at the same revenue levels? So if compare 2019 to 2021, would it look flat without the COVID dip?

Michelle Bacharach

11:41>> Yeah. If you just looked at those two, it would look flat. Doesn't tell the whole story for sure. But

Nathan Latka

11:46No. Gosh. No. Definitely not. Very cool. Well, yeah, obviously, rooting for you. This is great. Any other thing any other products that you wanna chat about that I didn't ask about that you think is really important?

New Products: Brand Edit Syndication and Back-Office Tools

Michelle Bacharach

11:53>> Yeah. We have one cool product that it's so we do this content creation mostly for the brand's owned and operated properties. So like their website, their ecom or sorry, their website, their social media, stuff like that. But we have a new offering that we call brand edit syndication that is basically taking that point of view and putting it on the multi brand retailers site. So that becomes kind of like a flywheel from a growth perspective for

12:19>> us. But the benefit for the brand is they get consistency for their sort of storytelling opportunity on platforms that they don't control without having to do any manual work to keep up that asset. And then or create that asset in the first place, I should say. And then the multi brand retailer can monetize that. So you're starting to see a trend in retail where multi brand retailers like Walmart has Walmart Connect, Macy's has Macy's Media Network

12:46>> where they're monetizing their websites with traditional advertising. So we have a new product offering for that, which is gonna be huge. And then we have some new features and functionality within our existing software to help with some more of the back office metrics, things like inventory sell through rates and gross margin management or optimization for the merchants. So it's not just about the consumer experience anymore. Both of those new offerings were things that we like hunkered

13:14>> down and did during COVID because everything was changing, everything had to change. And I think our value proposition now to brands and retailers is like 10 times stronger than it was before COVID when it was just getting you more revenue, right? That's nice and it was working, but now we have these additional levers to pull as well.

Famous Five Rapid Fire Questions

Nathan Latka

13:32We hope all those customers get addicted to those new lines and you come on in a year and tell us about the success again. But for now, Michelle, let's wrap up with the famous five. Number one, favorite book.

Michelle Bacharach

13:41>> Oh,

13:44>> Quiet. I think the subtitle is the How to Succeed in a World that Won't Stop Talking or The Power of Introverts in the World that Won't Stop Talking.

Nathan Latka

13:53Number two, is there a CEO you're following or studying?

Michelle Bacharach

13:59>> I like my peer group. I think that I learn more from them than I learned from, you know, Bezos or some of the big ones that don't feel as relatable anymore. So I have a CEO peer group of, like, seed series a and series b companies that I connect with. There's a number of them.

Nathan Latka

14:14Number three, what's your favorite online tool for building FindMine?

Michelle Bacharach

14:18>> Oh, great question. I'm a big fan of Carta. They're probably my favorite favorite.

14:26>> Saves you a lot of time.

Nathan Latka

14:27Yeah. Number four, how many hours of sleep do get every night?

Michelle Bacharach

14:30>> Nine. Okay.

Nathan Latka

14:31And situation, married, single kids?

Michelle Bacharach

14:33>> Married with one child. He's 18.

Nathan Latka

14:36Oh, wow. Congratulations. That's so exciting. Can I ask how old you are?

Michelle Bacharach

14:40>> I'm 30 I'll be 36 on Monday.

Nathan Latka

14:42Oh, happy early birthday. That's great.

Michelle Bacharach

14:44>> Thank you.

Nathan Latka

14:45Take us home here. Last question. Something you wish you knew when you were 20.

Michelle Bacharach

14:49>> Nobody has it figured out, so my guess is as good as theirs.

Nathan Latka

14:53Guys, there you have it. Findmine.com, retail brand launched in 2016. Working now with eight brands. They do about a $100,000 a month in revenue. That's up significantly about 40% from the beginning of the year as they come out of COVID much stronger. They raised $7,000,000 today, looking at doing a traditional series A now, call it, you know, raising $8,000,000. We'll see what happens. But again, check out findmine.com and check out Michelle. Again, predictive intelligence for merchants

15:18and markets to automate their catalog. Michelle, thanks for taking us to the top.

Michelle Bacharach

15:22>> Thank you.

Nathan Latka

15:24One more thing before you go. 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 Central.

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