How Istaysafecorp CEO Karen Cantwell grew to $360K revenue and 2.5K customers in 2022.

hey folks my guest today is karen cantwell she's somebody that constantly innovates and in 2012 she started i stay safe with a mission to design a personal safety watch for children i was gonna say kids for children this led to the launch of tick-tock track in 2014 one of the first kids smart watches in the world karen are you ready to take us to the top sounds great all right so is this pure status or is it sas plus hardware plus consumer what's the mix so it's pretty much sas plus hardware so we do both interesting okay so talk about the hardware do you have a can you show it to us do you have the hardware today yes so we have uh we have two devices at the moment we've got a 3g which is it's a small kids watch um we also use it for elderly we also use it for domestic and family violence loan workers um so we've got quite a few verticals that we operate in um it's basically small lightweight it has um an sos duress function on it um so it's it's close to the camera it's like an iowa it's like an iowa it's like an apple watch basically yeah so it's like it's it it can just look like a sports watch it has a magnetic charging clip on the back um so we do that we also have a um we also have a phone application which has a remote bluetooth button that is just like a button on your keyring like a key finder um and so if you don't want to wear a watch you just want to use your phone as a dress alarm then the button remotely activates an sos in the event of an emergency so we have like two kind of different solutions there for personal safety interesting okay so that device you just showed me what does that cost so um this one costs um around 200 australian so um for the hardware and then you're looking at beta at around like 15 to 20 dollars a month for the sas and the sim and the the the uh the use of the platform is it 15 a month per watch yes yeah i see and so when you say the cost is 200 is that what you charge to people or that's what it costs you to make no that's what we charge people what does it cost you to make do you make margin there yeah so we um it cost us probably around um the new one that's coming out is a little bit cheaper to make than the previous one we had because we've just changed manufacturers but it cost us probably around um between 60 to 80 australian landed okay well got it so 200 retail 80 cost so you can make 120 bucks per watch sold something like that yeah okay interesting when did you sell your first watch what year uh 2014 20. okay so that was your effective launch date or were you working on coding before that so we um we started the business in 2012 it took probably about 18 months to find a manufacturer design the solution because back then kids wearables just weren't a thing like there was no one doing it um so it took me a while to find someone to manufacture and then we coded the software designed the features designed the hardware put it all together and launched in 2014. wow okay so now you're scaling how many watches are out there in the public now today well so we got thousands out in the public we i mean we've sold thousands over the years um we currently have probably about two and a half to three thousand subscribers um live at the moment um about twenty percent of our business is now business to consumer whereas previously when we started it was all business to consumer whereas now we're more b2b um because we've really moved into more of a reseller market in the last um probably two years so probably about eight percent of our businesses through resellers and the rest is b2c okay a lot to unpack there so let's let me let me do resellers first eighty percent is through resellers so if a reseller sells one of your 200 watches and sells a 15 month subscription what do you pay them in an affiliate cut right so with the resellers we operate a slightly different model um so with the resellers we will sell the watch for them at about um 150 wholesale so we make less you know probably about 70 a watch on the on the watches hold on the reseller price um then they put their own markup on sometimes we will sell at 200 retail because for consumers we try and keep the price down low they might sell it different markets have different pricing um so i guess structures because um they pay slightly different prices but that's that's obviously up to the retailer what they charge for that what about the software the software with the sas um for the resellers they pay around 11 a month um so we still make probably about three four dollars um per month on the sas and then they put their mark up on top of that oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 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 founder path check this out i'll show you how you can 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if you go to founderprep.com and hover over products click on get your evaluation 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 all right let's jump back into the interview got it you sell them 11 and they pay you 11 a month for the sass you're making 11 bucks per watch they sell monthly recurring yes oh okay interesting so 2 500 out there today across your value out of resellers plus your direct consumer at 15 bucks a pop right what so you're doing 37 000 bucks a month right now in revenue yeah so we're probably around 30 in revenue at the month um because we've with the phone app it's slightly cheaper because there's no sim card with the phone out so that brings the average monthly revenue um per month down slightly so because the phone app you're only paying like six or seven dollars a month for a retail customer because there's no service and if you're at 30 000 today where were you a year ago do you remember um a year ago um i don't remember a year ago i know probably 2019 because we did an acquisition about a year ago um and that increased them uh mrr but um prior to that we were probably at around um 15 16 we probably doubled um since we did that acquisition okay we first interviewed i don't know if you remember this back in 2018 and you said revenue back then was around 20 000 a month so yeah that's you know that's four years later you've added 10 grand in mrr you know i would say you know that feels like really slow growth why aren't you growing faster um there's been a couple of reasons for us i mean firstly um resources we've always been really small um we we're pretty much um are you bootstrapped yeah pretty much we have had investment like we've definitely had um we've definitely had some good investment but um but it costs a lot obviously to develop the hardware um and unfortunately in australia the networks have been shutting down they'll shut down a network like a 2g network just after we launched and then we had to invest in redoing hardware and now they're shutting down the 3g network so we're having to re-invest in hardware so a lot of our our cash has gone into hardware development um which has really limited our ability to scale australia's quite a small market too and we haven't been able to to go overseas just yet so that's something obviously we're looking at doing um the weeks and and then obviously covert hit in 2020. so we invested in an acquisition then we um which we did at the end of 2019 and then cobra hit so that slowed sales in our b2c market um so really last year we we um we spent a lot of our time pivoting and moving more into the b2b market because our b2c um customers really dropped off so that i think there's been a number of factors that have impacted the growth but once how much total volcan have you raised about one uh 1.6 when was the last fundraise uh 2018 okay so so between 2012 and 2018 you raised 1.6 million total yeah got it and and investors own what like 15 20 of the business or more so the investors probably own at the moment um we've got investors that own probably about 60 of them oh wow would you do anything differently looking back that's a lot for investors to own um i think looking back obviously i i didn't come from a tech background and when i started this business in 2012 i had never raised capital before so um in doing things differently i certainly would um structure things slightly differently i would scale much quicker in the early days when the product was really new but i think because i didn't have a lot of resources it was just basically me um i think i was reluctant to take some of those risks because i hadn't done it before so i think what i've learned in the last five or six years would be i would probably take more risk early on and scale quicker early on um to really capitalize on some of those sales i could have done earlier how much equity do you still own today 20 okay so who owns the other 20 um my sister my parents so family friends and then a um an angel investor that has been with me since the beginning um who's amazing so do you get along with your sister and parents yes yeah my sister works friendly yeah yeah my sister works in the business with me and my um my parents like we're really close there's only there's only four to me and my sister in the family so okay i'm gonna be i'm gonna be brutally honest with you you guys have learned so much between 2012 and today like a crazy amount this thing is like not growing so like when do you get the courage to just shut it down move on take all these learnings and launch in your next thing which is going to grow much faster and you're going to own more equity because you've learned so much yeah i mean that's a really good point and i mean for the last six months um that's what we've been looking at so um at the moment we're looking at it like a strategic exit because we have like we have 30 grand obviously in recurring revenue so it's not nothing and we have i sort of feel like i have um an obligation to the subscribers to make sure that they're looked after because we're in personal safety it's not just a widget you can kind of switch off so we're talking about people's lives here so isn't your asset though the phys i mean getting a physical piece of hardware in penetration australian market 2500 to me that's a major accomplishment can you push software updates to the piece of hardware like can those be updated yeah so we can we can do firmware updates to change the features um a lot of what we've done with the with the software though is a lot of the features are on the software platform which makes it really easy for us to to update um and the software platform is device agnostic and we own that so it monitors not only watches but phones and other devices so that's that's i guess the um the unique piece about us is that our software's device agnostic whereas most of the software out there for these type of wearables is linked just to that one wearable um so that it allows it to transfer a little better to another business so that's what we're looking for at the moment we're just looking for strategic acquirers um so that we can move our subscribers on to maybe a bigger business that just wants to increase their subscribers by a few grand move into a different market potentially they're trying to get into the australian market um we've got integrations with leading security companies so they monitor the devices 24 7 and can dispatch the police or emergency services where required so for another security company this would be a good like strategic acquisition where they want to move into the australian market and that's already done for them um so that's kind of what we're looking at doing at the moment isn't the challenge price though you've already raised 1.6 million bucks built a company that's doing 360 000 bucks a year in revenue it's gonna be hard to find a company willing to pay a 5x multiple just to return money back to the investors how do you get out from under that yeah sure so i mean the the focus at the moment is releasing 4g um we already have probably about 300 um pre-orders that we're looking at for the 3g so we've got people waiting on the new device coming out and that will significantly increase our subscriber base so we expect um that by this time next year we'll probably be doing um just over around 54 000 mrl with the subscribers it will will increase from the release of the new hardware um so there's a really good runway for someone coming in we had an acquisition offer last year that was um 2.8 total revenue uh turnover last year was just over 700 000 with the hardware as well as the mrr in the sas um so i think we can probably realize you know a two to three million dollar exit potentially i forgot about that you have a lot of margin on hardware sales so 2500 watches times 200 bucks a pop is 500 grand and you're making what 300 grand in hardware bar margin on hardware sales yeah so we we we turned over a little over 700 thousand last financial year i see that's a little more real that's a little hardware sales won't get the same multiple software but it's a little more realistic to find someone that would offer you two three four five million yeah yeah so that's kind of what we're looking at we're not we're not looking to to make like ridiculous amounts of money we're realistic about it um i just think for us um it would it's it's a really good solid business for someone that already has an existing company in this kind of space that's looking to increase their subscribers or potentially move into new markets isn't churn like zero once you buy a watch you're not going to start stop paying for the software right no i mean we probably have a life cycle of about 18 months on the hardware so the watches some will grow about 18 months before they either turn it over get a new one or or change but that's why we bought the mobile device out because when people grow out of the watch they can then go onto the mobile device so it gives us that continuity of customer acquisition of customer um contact and the sas so i see very cool what's your team size today how many people so we just went through a restructure last year from seven we're down to two at the moment while we restructure and scale and we're trying to build things back up again so there's only two of us in the business at the moment um but we look to increase that over the next 12 months sounds like you're ready to be acquired that's hype side all right let's wrap up karen with the famous five number one favorite book oh um that's a tough one um i've been reading some books at the moment about um i can't like there's a i can't even think what i'm reading at the moment um we can skip that one number two is there a ceo you're following or studying um i've actually been um i've been actually studying i mean i know it's really obvious like richard branson looking at some of the things he's done with regards to growing his business because he's obviously started some really from small like interesting things and then growing things so i've kind of been following him a bit lately number three what's your favorite online tool for scaling your business found a path nah are you loving it you're having fun you know and i'm not just saying that because i'm on a podcast with you honestly if it was something else i would be honest but the tool is is really really good especially for a small startup um it really kind of consolidates all the information in one and i find it incredibly helpful to be able to pull metrics together that are really valuable for the business so yeah and as your score increases you're about to unlock some some cool new products that's we've sort of gamified it but no we love having you on it and i'm glad you're enjoying it um number four how many hours i sleep to get every night i used i still got about six to eight hours of sleep okay and what's your situation married single kiddos married two kids fifteen and ten boys wow and karen can i ask how old are you forty-nine for one night last congrats last question something you wish you knew when you were 20 um how scale of business [Laughter] guys there you have it i stay safe launched in 2012 they raised 1.6 million bucks to build a watch that helps first responders or folks that are collecting loans that might be in danger to quickly call the police or first responders amazing technology over 2500 devices in the world today they sell the devices for 200 bucks they make about 120 bucks per device sold and here's the catch they didn't sell a 15 a month software component on the back side of that really smart combination of sas plus hardware drive net retention rates through the roof doing about 700 000 bucks a year right now and combined hardware plus sas revenue as they look to scale or be acquired we'll see karen thanks for taking us to the top thank you lovely talking to you take care one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas 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 1 p.m central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m 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 sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i 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hello everybody my guest today is karen cantwell she was a born innovator in 2014 she launched tic launched tick-tock track the first gps smartwatch globally for children followed up with a bespoke software monitoring platform that platform now hosts multiple gps devices providing one platform for the safety of everybody in your family shields an mba from q-u-t karen are you ready to take us to the top yeah for sure i'd love it to be talking to you okay so tell us about i stay safe what's the company do specifically and are you a hardware company or a pure place sas company so we're pretty much a little bit of both uh when we first started in 2012 with tic toc track it was primarily to have a hardware solution for children to keep them safe by the watch um but then we realized that we could help so many more people through a um a software solution that integrated other gps devices to keep people safe so um so then we kind of over the last two or three years has sort of pivoted into more of a software slash hardware company and we operate via a sas business model okay and what is the company ticktacktrack.com.a you or kind of the istaysafecorp.com so i stay safecorp.com.uuuuuu is it's i stay safe as a company and i stay safe really focuses on the software as a service solution um tiktoktrack was our primary product that we actually launched to market in 2014 which was a child safety watch which one is pure assassin the first one the first one okay so let's focus on that for the rest of the interview just for the sake of clarity even though understanding your first success came in the form of this tick tock track concept so for before i stay safe you know help me understand when people pay for the service what are they getting uh and and um and what do they pay on average per month so basically i stay safe is a software platform now that integrates multiple tracking devices so when someone pays a service fee they're um adding a device or a hardware piece to keep someone in the family safe so um if they're adding a mobile phone to track their um the adult child or their loved one then that they're looking at sort of around 3.50 a month for the service to add it to our platform and receive all the features if they're adding a tip-top track watch for one of the younger children then um the service starts at around 12 a month because there's a sim card in the watch that we provide as well so um it ranges from about twelve dollars up including the sim so what i mean just because i don't want to go down every product skew and every customer cohort on average when someone signs up with you are they paying 12. around six dollars a month six session okay so maybe it's like you know two of the things or one tick tock top and then one three dollar thing yeah okay great depending on who you want to keep safe and the family is what sort of device you add to track via our software platform yep yep and when did you launch the company what year so we started the company in 2012 launched our first solution in 2014. that's great now the early days are obviously really tricky how do you support yourself those first two years um so i had a um an advertising agency that i um that i owned so that was my first business so i basically ran that um to provide an income while i was getting um i stay safe up off the ground and just work from home that's great now over the you know obviously you're going through all the trenches making it happen now four years later what have you scaled two in terms of sorry i guess it's yeah it's four years how many customers have you scaled to so um we've mainly focused on australia to sort of get it right here before we go globally so um we've got over a thousand subscribers on our database at the moment um and they're in every state in territory across australia and we're now just starting to look at the global market that's great i mean that's wonderful karen congratulations i want to talk more about how you got those customers first and and why just australia first i think there's probably some lessons there can i take that thousand times that six dollar price point you're doing about six grand a month right now yeah so with the majority of our customers were probably selling on the tick tock track watch too so at the moment our average um recurring revenue was around 20 grand a month oh wonderful okay great when we scale it would be on average around six dollars a month but at the moment we're doing around 20 months you're saying so moving forward the average you think is going to settle out more towards six but currently it's too tall um yeah but at the moment our primary um product is the watch which is the higher price point per month that's great okay good so about 20 grand a month today and taking back a year so in december of 2017 how much were you doing a month um probably around 11. okay good so you've about doubled year over year how are you getting all these customers that's impressive a thousand um so i think mainly a lot of it's been word of mouth we have um um disabilities and um autism community where that's been really strong support for us in helping kids in that area um we've done a lot of publicity a lot of pr and um we've done a little bit tv advertising as well to really um to grow our brand um nationally so when you look at all these kind of paid efforts in order to get a new kind of 12 or 20 a month customer what do you pay typically to get that customer yeah it's probably around three or four dollars per customer okay and most that's tv ads and that would be our biggest expense but the majority of our advertising is online social through facebook um instagram twitter um we do a lot of facebook advertising um we do probably maybe one to two tv campaigns a year okay but we don't do that on a regular basis it's too expensive yep yeah what does that mean what does a tv campaign cost well in australia we probably spend between 100 and 150 000 for each campaign and what is that like a 30 second spot so that'll be a 30 to 50 a combination of 15 to 30 second spots probably over about a six week period there might be one or two weeks there where we're not on on television but um just over a six-week flooded period it's probably yeah okay 100-150 and have you bootstrapped the company or raised we've raised okay so i started off um purely just myself um began with just investments um from friends and family to small investments to actually get the product to market and the solution to market in 2014 and then um took on an angel investor um in november 2015. okay so how much total have you raised uh 1.6 million okay got it and and was that pretty easy to raise that in australia i don't know what the funding market's like down there no it wasn't easy you're like it was definitely not easy yeah i was really fortunate when i started because i mean the um investment market here in australia certainly over the last three years has really kicked up a notch like it wasn't like that when i started um so i was really fortunate i had super supportive friends and family um but in the last few years i think there's there's been more of a focus but it's still i think we're still probably a little risk-averse here in australia in terms of supporting new tech there's still that kind of desire to wait until it's proven before we invest um i'm fortunate that the angel investor i got was introduced to me through a friend and he's just just the most amazing mentor and investor you could have like he's super supportive and doesn't put any pressure on um so if you can get an investor like that i mean it's it's huge yep are you cash flow positive today are still burning money we're still um we're still not quite break even um but we're we're debt-free and we we have money in the bank so i love that debt free is great so when you say you're burning i mean are we talking like a grand a month or like 20 grand a month we're probably we're probably burning about 10 grand a month at the moment that's mainly through staff um salaries obviously yeah because i i had to i physically couldn't handle it all myself so i had to put on some stuff we've still only got 3.4 um full-time equivalents so there's still not a lot of us in the business wait karen how do you work out three point four you have a fourth of a human or four four nine like a part-timer and a casual and so you out of pull around you kind of make the equivalent welcome to the company we're cutting you in half we only want half of you okay yeah so four full-time people three three to four full-time people yeah yeah that's great and where's everyone based so pretty much most of us are based here in brisbane but then we have one staff member in cairns north queensland um she went on maternity leave working for us and then wanted to come back to the company but her partner had been transferred there so we set up a remote office so she could keep working for us well that's great what about churn um in terms of staff yeah no no sorry churn in terms of you someone signs up for 12 a month customer do they stick with you what's turn like generally um our customers will stay with us between 12 to 18 months we've still got some customers that will um that have been with us for the four years and they've gone through various iterations of devices and added different devices but um generally 12 to 18 months is the life cycle of the customer okay so you're churning about seven percent of customers per month or maybe like 80-ish or 85 per year yeah yeah around five to seven a month yeah yeah and why are they i mean this sounds like something that like once people install it they should have won it all the time they're keeping their kids safe why are people churning i think um the child grows up so um that's why we added the other devices to the platform because we were finding the younger children were using the watch and then when they grew up and started getting a phone the parents were like well we don't need to service anymore so now that we have iphones and androids on the platform they continue with us as a customer but that was only released in april this year so we're yet to see that the impact of that in terms of the chant i see interesting very good karen let's wrap up here with the famous five number one what's your favorite business book that's a tough one i think some anything by fern harness is really good yeah rockefeller habits is a good one yeah anything like rockefeller's is a good one that yeah that would probably be one up there in the top number two is there a ceo you're following or studying um i'm just at the moment i'm following the ceo vodafone group in the uk nick reed because sim cards are a huge part of our solution so i've sort of been following what he's been doing just look out for a partnership with him number three what billing tool do you use we use zero okay number four how many how many hours of sleep to get every night around five to six okay so not horrible and what's your situation married single kiddos married two kids two boys eleven and seven oh and do you mind asking how old you are forty five forty five last question karen what do you wish your twenty year old self knew um but you could actually be successful doing what you wanted to do because i don't think i really believe that that was possible back then guys you can be successful doing what you love she launched i stay safe corp which basically helps you keep your family members safe now over a thousand members paying to keep their members safe uh 20 bucks a month an hour doing about 20 grand per month today uh that's up from 11 grand a month just about a year ago so healthy growth burning about 10 grand per month but they've raised about 1.6 million bucks from a nice angel down in brisbane in australia four people full time again all down there in brisbane about 85 percent logo churn per year that's why they're adding new products to basically tie up and and expand more of the product cycle spending caught between uh two and four bucks to acquire one of these new customers so quick payback period karen thank you for taking us to the top thank you very much for having me have a great day