How Globechain CEO May Al-Karooni grew to $4M revenue and 34 customers in 2022.

hello everyone my guest today is may alcaroni she's building a very cool marketplace to reuse uh esg based off esg data we're gonna jump into globechain.com today may you ready to take us to the top absolutely okay so first off is this a sas play or is this more of a marketplace yeah it's a bit different it's actually a sas enabled marketplace so we charge a subscription fee uh to use the service but our interface or face is basically like a marketplace so imagine like a free ebay with data on social impact fascinating okay so so um explain to me on average what are customers paying just on the sas side per month to use you yeah absolutely it ranges depending on the sector because we work in retail commercial and um hospitality construction and anything from 500 pounds to 2000 pounds per location and we work obviously on volumes of locations to do with stores restaurants hotels and so on and how many pounds did you say 500 to what 500 to 2 000 pounds per location exactly yeah fascinating okay give us the back story when did you launch the company yeah so it was about five years ago my background's investment banking and funny enough we just moved offices across the road so ironically i used to fundraise for the old school venture capital trusts and hedge funds and property funds and the facilities guys came round and said you know um pick your new carpet color tile and your new table and your chair and your computer and i was like what are you doing with all this and they were like we're just binning it um and buying new assets so i got chatting to them i was like that's crazy you're going to give them to non-profits charities or people that need it and obviously at the time i'm going back probably about seven years when this happened they were like you know no we we have nothing in place sustainability wasn't really a thing there's no pressure on banks obviously to do the right thing and it's too much hassle for them right um you know their job is basically get the stuff out get everyone in and i'm talking to them it costs them around 50 000 pounds per person to make the move and literally we went across the road and we kept the buildings and um we had 300 people in the building so i just thought that was kind of commercial madness and why did no one ever digitalize waste and connect these enterprises to people who needed it like charities and small businesses so um in essence what happened was it was the time airbnb and uber were just becoming famous in the uk and i just thought surely we could be like the largest waste company carrying no waste right so that's basically how it started and i initially kept my job and put 800 pounds into a freelance developer and built my very first mvp and went to get out to market to see who would take it on and um the first client to come back was actually the largest retailer in the uk which i don't know if you know it's topshop it used to be in the us um and they trialed um i said to them have you got any problems with furniture and they were like not furniture but fixtures and fittings so these retailers spend millions of pounds a year on disposing of a lot of very bespoke expensive fixtures that you see in their stores or their window displays and so on so that's basically how it started so what did topshop pay so they were paying per store so initially it was um we did it for free for them the first year um because this is a new model remember so no one had ever come across like a reuse platform where we give items for free and we generate esg data as the value of the the software if you like and um so we have to test it to trial the model out so that initially we didn't charge them anything we did 60 stores for free for them and then after the first year obviously we had certain other clients coming and we had a restaurant chain called nando's turn up at the nhs our health care system came on board with um hospitals and eventually we started creating the modeling so we would test with 500 pounds and the reason it was 500 pounds well hold on so when topshop started paying you after that first year test of 60 stores what was the contract i didn't pay for 60 stores at 500 bucks each no they did 60 stores for free the first year because we were testing it was brand new and then afterwards it was 500 pounds per store how many stores though that's what i'm asking did they go away gosh they had um they did around 100 stores in the first phase and then they increased it they actually have 2 000 stores in the uk so was this 500 per location per month or for the year it was for the year got it so that's a 50 100 store is 500 bucks each it's 50 000 annual contract exactly yeah that's so that's how it works yeah so and actually works out around 50 000 per year per clients usually and over the years actually developed not just an external reuse marketplace but an internal reuse so ultimately it was a reuse and loaning system inside the company and then you could click a button and reuse items externally so it became a 50k per year model basically so how many top shops right how many customers you have on the platform today we have around 34 customers in the uk uh we've got 10 000 members so they're the taking members uh the people that take the items and we're in uk spain we actually just launched in new york uh last month uh just before christmas and we're in the uae we have a partnership with the royal family in abu dhabi and dubai very cool i mean so can i multiply 50 000 ac times 34 you're that like 1.7 million not quite that because there were some earlier ones obviously but um but yeah getting getting close in the dollar stage yeah that's great and so if you have just sort of passed 1.5 million in ar where were you a year ago so we can get growth rate yeah we actually um so really interesting i actually bootstrapped for for four years because there was no market cap in the industry so i only uh got vc funding late 2018 and we got 750 000 from vc and we've been um running off that since actually so due for we were due for a run rate fundraiser last year in covid but uh that stopped everything in the works especially in the uk so we'll probably start it up this year again but what was rev what did you finish the end of 2019 with in terms of revenue right right that was only 200 000 because um i just got the um money in the vc side and growing the team to around eight people that's great so eight people in 2019 at the end of 2019 yes eight people and how many folks today uh today actually we've got five five because uh yeah just because of covid and um we just basically lost a couple to the us actually they moved back so we're recruiting again and hopefully we'll be eight of those five how many are engineers um actually we've got two two engineers at the moment yeah and any quarter carrying sales reps yeah there's one and me i classes of course of course you have to count there okay very very cool so you only raised today total 750 correct yep okay and um up to 34 customers now you said these companies like topshop those are the 34 customers they pay 50 000 per year on average help me understand the other side of the marketplace what are the 10 000 sort of you call them takers or charities get yeah absolutely they actually we don't charge for them at the moment and there's um there's two reasons why the psychology of non-profits generally have no money they're taking the items for free so we work with a network network network effect obviously from a marketplace perspective however there are options to obviously put premium special alerts that type of thing in there but what we do get them to charge for is the logistics and we're just in the middle of building an api logistics in the system so we're able to offer career services which the taking members will pay for so the taking member always pays for the transportation and delivery of the goods and that way we have almost no shows turn up because and how do you quantify the ten thousand like is that ever that's taken at least one thing from you over five years or is that just last month they all took at least one thing yeah no you usually it's around you obviously we've got the 80 20 rule right um 80 of the clients usually 20 of the network at any one time so it's usually around 20 of the network and what usually happens is what is 20 what is 20 of the network that's done it's a couple it's a couple of thousands basically for the uk but what does that mean though is what i'm trying to get at what 20 percent do what on a time basis they they take per month per month okay yeah they take per month so what happens is an alert goes out um when people list items and people tend to go onto the platform then and obviously you start requesting the things interesting and so 34 sell like how many sellers list at least one new chair or cabinet per month yeah so to give you an example we would just um look and it's usually around two or three times a month it's quite a regular listing to give you an example just last week um we thought it'd be slow because it's the first week back off obviously holiday season and um we had over 48 listings and that's over 2 400 products they were listening and they've all got reserved things get requested literally in less than 24 hours and at the moment it's like 20 minutes so 48 listing and 2400 products just in december of 2020 no just last week oh just last week so from the first of june to yeah 11. how much total in just december 2020 so we get a full month snapshot yeah it was around uh december actually was quite a busy month we had around 10 000 products um listed on the site um obviously we've been in lockdown across how many listings sorry that was over 6 000 listings at biggie pardon sorry it was over 80 000 listings wait sorry i'm confused you just said over last week you did 48 listings and 2400 products yeah so you're saying in december you did 60 000 listings no biggie pun it was 60 listings okay so yeah sorry yeah 60 listings 10 000 products yeah exactly because we we measure um the number of products per listing more than the listing volume if that makes sense because um for us one listing can be like a thousand shares or something like that yeah well 10 000 products 60 listings what is that 160 products per listing on average yeah exactly yeah pretty much that's right yeah yeah that's very cool and and so what happens if these products get listed but no takers want to take them yeah so 98 of the stuff does go um straight away the only thing that is more difficult to go is usually broken electricals and that's an industry problem because most people recycle them so what happens is it's the client that lists usually the enterprise will have to dispose of it in their normal way so that's usually incineration recycling or dumpster i see interesting okay so you've been really capital efficient doing this you have you know if you add up all the funding you raised you're at like two or three x that a total amount in revenue which is great so very capital efficient um are you profitable today um we are almost breaking even obviously because we've got less people now so um yeah definitely in the next month or two we will be any plans to raise additional capital yeah i think we'll do another like um what we cost as us i suppose it's a small series a for you guys it's like a five mil round so we'll probably do that this year what valuation would you target for five million um probably the previous one was about 4.1 million so i'm not um i'm not like a crazy kind of overvaluer for this stage especially in the uk market it's very different from the us so kind of a 10 million kind of valuation uh for us is fine free money yeah so you're going to sell 33 of the business exactly yeah yeah interesting i mean that's a lot of dilution is there any like do you have to raise capital can you can you keep growing and keep control yeah we're going to um i'm going to keep continuing for the next couple of months obviously covert has been quite an interesting uh period for fundraise so we're not going to go straight into like a big raise straight away i'll probably wait till quarter two and see um how we grow and then re-evaluate everything then i'm the sole founder so i've i've still got quite a lot of control as a marketplace how do you measure churn um actually it's based on the enterprise side so how much they're paying and um up to december we've had 100 retention which has been really interesting i expect probably a five percent going forwards just from covid because we deal with a few hotel groups and so when they come up for renewal we might lose a couple of them for wouldn't help you though if a hotel has to shut down it means they have to get rid of all their furniture which means they're going to list on you yes so basically the internal reuse would help um the hospitality trade at the moment they're pretty shut in the uk so it's about just waiting and see and we haven't lost anyone yet but my prediction is they're probably the worst hit i'd say from a covet perspective actually it's been very helpful in a bittersweet way because retailers are closing stores they're refurbing they're restructuring their local you know their real estate so actually it's been very um profitable on that side and also construction never really closed as well and there's a lot of construction in the built environment so that's been strong throughout and may on a fully weighted basis what are you paying cap wise to get a new fifty thousand dollar your contract so that's really interesting because um basically we'll do and it actually costs our business development people around 600 pounds to bring on board that client um and most of it is um we hardly do any advertising with the b2b side because all these companies are looking for solutions and sustainability so most of our um business has come through referrals and in the past it was obviously conferences and going to them so a lot of kind of free events and um very little kind of big advertising so fully fully weighted 600 then right so i mean that is i mean your challenge then is you mean you would pour tons of money in that channel that's amazing economics the problem is there's not enough of that channel for you to like go get it's um no i mean you know every corporate disposes of waste and spends millions i mean we would in the future for sure we'd have to start spending money and increase that um cap to to bring on board the clients but you know it's a 4.3 trillion pound uh industry now it's called circular economy and we're just scratching the base of it if you like on the reuse side yeah so you you haven't tried then to really aggressively go after new customers because that cac if that channel and those economics hold you'd put a billion dollars in that channel 600 bucks to get 50 000 a year i do that every day yeah no exactly yeah no you'd you would we would definitely be ramping up and i think we could ramp up significantly on the next rounds as well okay mate good stuff let's wrap up with the famous five number one favorite business book oh my gosh i like malcolm gladwell uh tipping point number two number two is there a ceo you're following or studying um gosh that's a hard one i follow a lot of ceos because i like the variety to be honest so top of my head can't think of one immediate but um there's a few out there that i just follow number three what's a tool that you really enjoy in terms of what you use to build globe chain oh well i used to go chain um on our platform we have a can chat basically like a whatsapp chat internal dashboard i like that but from a systems perspective in the company um i actually i used to hate slack and uh i go to all the time now with my team number four how many hours of sleep to get every night uh seven that's good and what's your situation married single kiddos i know yeah that's it we're okay single single no no uh not married no kids and do you mind me asking how old you are i'm 40. last question what's something you wishing you when you were 20 oh my god patience guys there you have it may when a big hotel shuts down they need to get rid of all the furniture they use globechain.com to list that waste product and then charities go pick it up they processed loads of listings last month in december 2020 60 listings 10 000 products 98 of that stuff got taken and moved those customers pay that hotel chain that shuts down on average 50 000 per year to use the platform she's got 34 customers 1.6 million terms of run rate today from 200 000 just back in 2019 so healthy growth rate only 750 thousand dollars raised to date looking to raise another 5 million at a 10 million dollar pre-money evaluation sometime during 2021. may thanks for taking us to the top pleasure thank you nathan one more thing before you go we have a brand new show every thursday at 1 pm 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