How Lately CEO Kate Bradley Chernis grew to $3.2M revenue and 358 customers in 2024.

hello everyone my guest today is kate bradley chernis she's the founder and ceo of a company called lately which uses ai to automatically transform long-form content like blogs into dozens of smart social posts kate are you ready to take it to the top i'm ready let's do it content is obviously a hot space and splitting content up for easy consumption is even hotter how are you guys playing in the space here yeah we are really leaning heavily into the ai i mean what we've learned most nathan is that people hate writing writing is really at the baseline of all the content we create even video like this right so you still have to promote this with writing eventually um and it seems to be the bane of most people's existence lucky me i was a fiction writing major so i'm good at writing um but really yeah the other thing too i think you know this about me but i used to be a rock and roll dj and my last gig was broadcasting to 20 million listeners a day so what i learned about the neuroscience of music actually plays into the the the bedrock of our ai so i can talk on that real quick so so when you listen to a new song nathan your brain must instantly access every other song you've heard in this moment and it's looking for familiar touch points so it knows where to index that new song in the memory of your brain right and in that moment comes forth memory nostalgia emotion all the things that feed trust and trust is what makes you giving your money right now your voice nathan is like a song it has a frequency it's a note right and when you write text and i read it i hear your voice in my head so it's your job as the author to give me familiar touch points and trigger nostalgia nostalgia memory emotion all these same things right so the way ladies ai works is it first learns from me i've written thousands of radio scripts and fiction writing major and it learns from my best practices which i've listed out for my whole team to replicate and so the ai gives us what we need and then we augment it with my writing rules and then the ai continues to learn from itself right the more we publish the more it learns and same for all of our customers so we've con we've created um sort of like the multiple economies of scale through the ailo so kate this sounds sexy as hell the question is are customers paying for it they are paying for it how many so we have 358 customers okay that's down a little bit since when we last spoke so are you guys transitioning it is down a little bit yeah we're we're transitioning we're learning you know we've we've got punched in the face from kovid a little bit as everybody did but more importantly we started looking at you know those you know the cohorts cohorts right so i've been studying those for years and i wasn't really sure like what to make of what i was learning but i spent the summer with mark robers nathan google him is he an investor he's not an investor he's an advisor he led the first ever accelerator from stage 2 capital this summer 700 companies were applying we didn't apply they just actually asked us to be a part of it which is great and it was amazing by the way and i want to share this with everybody out there so we were talking about economies of scale and growth and mode and i was really frustrated and i said you know we positioned ourselves as a disrupter and he's like yeah why are you doing that you're not you're a category creator and i was like well because every investor i've ever said that to for seven years told me i was crazy and he said well that's because they've never seen it before but why they say you're crazy i mean you raised 250 grand in 2014 and another 2.5 million in 2017 so you convince some people well it's not that i didn't convince them to invest in me but i didn't convince them that we are a category creator which is a it's a rare rare thing right so everyone can take advantage or believe in the better mouse trap but the better the better mass trap is what we don't want to be right so getting back to your question about why we have less customers so we understood that our customers needed a social media management platform in order to publish the artificial intelligent content that we were creating but we've since learned that they don't they don't need our platform they can need any platform and that actually 75 of my headache uh as far as resources go is just dealing with facebook and linkedin and all their right and i didn't understand that lately could actually function and live without that so it could be an extension of all the other social media platforms right so we extend the value of what they already do by a hundred-fold similarly we extend this okay sorry hold on let's get let me get really really specific for something so three you were at like 380 customers about 10 months ago you're at 358 now they're still paying about 200 rpu so mrr is still about 70 000 bucks um mrr is at 79 000. we were up to 94 and we dropped oh okay well i mean that's not horrible so so let me ask you i mean you raised 2.5 million i think at a 7 million valuation back in 2017 how are the current investors who have been on the ride for now four years reacting to sort of the not hyper scale growth yeah so i actually have raised three point three million now um next round because i only had 2.5 in 2017. we did a couple of angel rounds and i can email you the specifics but so we've done some extensions and then i've got a couple of notes open uh had a couple of notes the last couple years once opened open now actually okay okay um so no no institutional funding still that last 2.5 was at a 7 million price round right yeah so currently the current note is at a 10 million cap yeah yeah that's great okay so you're still directing upwards so okay so you're pivoting you don't want to deal with the tuesday night updates facebook makes their api and outbreaks lately every week and you have to always like playing catch-up so you're pivoting away from relying on the whales what's the next product yeah so the next product actually falls in line what what what we already know so when we started those cohorts i learned to study the patterns within them and so i took them apart by with multiple icps i know it's weird but we do so took them apart by icp um by pr payment um reason for return all the things and it was screaming at me to do to build a self-service product with gamification um and that only focuses on the ai and nothing else so it's this weird position nathan where it's like i'm starting again but not really because i already have the knowledge of the last seven years right and this product answers all the questions that we know we can already answer how do you get yourself financially ready for that pivot like do you have enough cash cushion or you have three or four months where you can sort of test without any revenue growth oh yeah i have 18 months um right now worth of runway and that's in part basically my burn is about 48 000 so every 50k gives me three months your total burn is 50 care your net burn is 50k my my total burner's 50k okay so then you add back your revenue and you're actually profitable every month is that right um almost we're paying back loans as you know that's one thing we're doing um and we're paying back you know my staff right so there's been a million times when i've had to ask people not to take a paycheck or but your total monthly expenses then are what like 110 grand and your net burn is 40 grand a month yep right around there okay got it so you have plenty of runway 18 months so i need a runway yeah but the trick though is not the runway like i have the runway to live in cockroach mode but for this ship to sail i i need all the pieces to be moving so i'll be racing again in the spring i could do it now but frankly um how much are you raising on the 10 cap it's a i was raising 250 and i got oversubscribed so we're now at like 5 35 six just under 700. okay 650 750 grand so you'll close that 650 on a 10 cap and raise more traditional after those new product releases that's the plan but everything changes i'm going to go with how i feel i mean you know i'm allergic to venture funding they're allergic to me well how much equity i mean i like that by the way right how much equity do you still in the business low actually i need to be re-optioned so i'm around 38 percent i believe why so low um because when you're a female entrepreneur you just have to beg borrow and steal right so i've raised multiple rounds but all between two hundred fifty thousand seven hundred fifty all angel rounds and i have a lot of my cap table is messy there's probably 65 people in it okay 65 people on cap table god who's the next largest shareholder uh it's bob mccaslin who's on my board he was a fan of mine when i was in radio yeah he's just a really amazing angel from austin texas by the way oh amazing what does he own like 10 20 30. uh i don't know he was and he was in with i believe his full investment was 650 000 out of out of all okay okay cool very cool so you have you have allies behind you which is good and you also have time what's your team like today yeah well and i have also i have joanne wilson right so she's on my board member and my she led my last round we also have david mearman scott who just came in google him if you guys don't know him he wrote a little book called um and also is on the advisory board for hubspot um the theme is great i trimmed just down we're we're 100 focus product focused now not sales because we're moving to the self-service model so buy sales hello product um so how many team on youtube there's seven full-time six part-time and by part-time i mean people i get to work for me for free so no sales people no quota carrying reps um i have one salesperson who we pay intermittently because um we can't pay him often and he's a nice guy and his wife is kate snow from nbc so got it so you have to sort of manage that relationship uh okay cool so seven on the team you're reading this is what it's like you're raising capital this is great who's doing the engineering are you outsourcing development no it's my team um you know interestingly um my my two co-founders jason and brian make up the majority of my engineering team also greg is our vp of engineering and then um we our ai lead came from one of our investors so those guys make up make up the team for the most part but i wasn't paying my co-founders because that's who you cut first right um and so that was a big challenge for us because i was feeding them you know freelance work for years well how much equity did the two co-founders own together so they're next to me when we first started it was i'm 80 no sorry steve 20 i do math backwards jason 15 brian five and then i'm the rest so that's the ratios so they owned 40 you've been diluted by about 50 so today they probably together on about 18 19 of the business yeah right around that yeah really interesting um and they're still active which is good so i mean they have good upside i mean they have upside here too right they'll take a pay cuts for their equity value yeah i mean you know we all this is the thing we have to reassess every single day are we crazy that's what we want to know are we crazy yes yeah i mean you know like when i've got like hootsuite just literally texting me what's zapping me like let's close this deal with some giant company hurry up and integrate with us and i'm like okay i guess that is i'm not crazy and i've got salesforce pulling me in to be one of five why don't you exit the hootsuite for five million bucks all cash i mean i'm working on that nathan you know it's like it's weird because like you get all these accolades right where mark roberts comes out of the the you know the brick walls and it's like holy you're amazing and you're like well yeah but where's your investment right there's that you know so it's this constant like and i love mark and i i know we're as investment so i'm not actually putting him to the to the grind um but then at the same time you know we have we said we have churn like i've i still have that 98 sales conversion i still have that right thank god that's the ai doing his job but i have a leaky bucket i know this you know and so every day i'm literally thinking holy like can can we do it and everyone else is watching too it's part of the entertainment if the answer is yes you can do it we're out of time let's wrap up with famous five number one favorite business book oh oh um yeah pitch anything was it year ago i said it yeah like i i i i'm gonna say that is not a book we'll skip that one number it was this it was um i can't think of the name bib right now oh um i'm not going to say any of those books i'm going to say one train later by andy summers his autobiography and the reason i love that book is it's a great it's just like it's like my story it's an underdog story and he had to wait until he was quite old in the music industry for his team to come up right and there was constant constant chaos and whatever divorce you name it and they made it number two ceo you're following or studying it's always me number three what's your favorite online tool for building a business lately number four what's your favorite oh sorry how many hours to sleep to get every night i don't sleep between two and three hours so i wake up at some point and i don't know what happens there i do how many hours what do you get though on average each night i try to make it actually eight or nine but like that's you can see if i'm waking up at two i'm having to catch up for those four hours so i sleep late all right meetings before eleven kill me now yeah situation married single kiddos married any kids it's on the list of things to do but no rush i mean lately's first yeah i mean i'm pushing it nathan i'm 47 so all right fair fair fair and what do you wish your 20 year old self knew that eye cream is really worth the investment oh i crave guys there you have it kate from try lately dot com she still owns 40 of the business they're scaling nicely they have a little flat patch here during coba but they're now pivoting they're serving 358 customers they do about a million dollars a year and revenue terms are run rate raising 650 grand now at a 10 million cap that's closing team of seven very scrappy 18 months of runways look to pivot and then do a more traditional round in 2022 kate we are rooting for you thanks for taking us to the top love you 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 pm 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 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 sas 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 up for that at nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode 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 but i do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya

Introduction hello everyone my guest today is kate chernus she is the founder and ceo of lately which uses ai to automatically transform long-form content like blogs podcasts and videos into dozens of smart social media posts it learns will yield the highest engagement from your audience she's a former marketing agency owner and created the idea for lately out of spreadsheets for old clients like walmart that got him a great roi she's now bringing that power to all of you kate you ready to taste the top i'm so ready this is great okay so so how much of this is like ai versus like a human-powered back-end how many engineers are on your team yeah so we're a really lean team actually so there's three on the team um that are full-time and then we use some other people auxiliary about 82 percent of the brain is built in-house and then we've since integrated with c3 uh watson in the beginning that kind of thing so we recently also brought on um a professor at shanghai university who's got some crazy crazy ai accolades so he's been helping us do some cool stuff that i'll share with you maybe in a little bit i love that okay so three on the team total right now yeah yeah yeah okay no no not on the on the engineering teams the whole team it's about 14 strokes oh perfect great okay fourteen and three let's take a step back for a second what you launch the company uh 2014 i can't even believe that's true i love it when someone says to me like an investor be like what's taking so long and i'm like okay couple things amazon isn't profitable yet number one number two facebook took at least four years so you know female founders do you know this nathan we have to work 98 harder than our male counterparts i know i and i actually need to do a better job you know i don't do anything in my outreach to founders to target specific founders it's just sort of been natural but if i don't actively recruit female founders on the show it just doesn't happen so i'm really glad that you're on and you know what i really the other thing that i sort of struggle with is i never want to feature a founder because they're female i want to feature them because they're a great founder yeah i mean that's by the way right like i used to be a rock and roll dj my last gift was broadcasting to 20 million listeners a day for xm so like right no small shakes and i remember like not at xm but other radio stations having the directive to play two to four female artists an hour and that was annoying to me honestly yeah right because it was like it didn't go with the vibe i was playing not not that they were female but like i i wanted to play rock guitar rock and roll and there's not a lot of broads who do that super well you know joan jett baby okay so so 2014 and take us back to those early days i mean do you remember the revenue you did in that first year um so we actually just were in market only three years ago um i can tell you i i don't remember but i remember last year pretty well so last year we were at 25 000 mrr and we Monthly recurring revenue are now at 74 74 thousand dollars mrr so that's 196 increase in time that's incredible so so what did you you prepared you knew exactly what i was gonna ask um what uh what drove the growth yeah a number of things so number one we only use lately to market lately nothing else so our own ai which is all organic right we don't do any paid ads no cold calls and no cold emails what we've learned is that the ai is so good at finding the messaging that you want to read right or here that our leads are already warm so we look for customers that are liking commenting and sharing and then we can we engage with them and then move them into dms our demo is our kpi the demo has always had a 50 or higher conversion it's been at 98 for the last 10 months how many demos do you do a month um i can i know my week so i know weeks better it can be between 30 and 50 for a week generally yeah so we get a lot of we have more leads than we can handle we're you know one of those actual growths and constrained companies um but it's been interesting so so only using it lately is a big one also so nathan i'm hell bent on upending the sas sales model uh a funnel model i think it's completely broken and old and dinosauric even right it doesn't apply anymore nobody wants to receive those cold calls nobody wants a bank of sdrs smiling and dialing who also by the way are painting your ass they they're only they stick around for like four or five months if that and then leave so you're constantly rehiring so why not instead make everybody uh an uber champion like instead of me just being on the cover of the magazine that we're selling let me put my whole team on it right so lauren chris on kit ben right and make them social animals which they are and merge marketing sales and customer service which is what we've done right so my job back to radio is to make you not a listener but a fan not a customer but an evangelist because an evangelist is going to go out and get me 30 more customers yup right yeah so have you built a community here that where can i start and what platform do you use to do it yeah we have and we've built it first on social so all the places linkedin twitter facebook insta um and then we moved it internally to a customer slack channel which we recently launched what's amazing to us is that honestly since march of this last year every single day at least one person has spontaneously posted something wonderful about us on social oh i love that i love that yeah so so you're saying a lot of the growth from 25 to 74 000 bucks a month over the past 12 months has been organic and sort of word of mouth all organic and word of mouth so no pain no paid whatsoever yeah we stopped that a long time ago i paid is dead i mean there's tons of data about this out now freakonomics just did two episodes on this the last couple of weeks in case you guys listen to that podcast but it has been for some time i mean you know facebook and twitter are making it very hard for you to do paid and do it well right and there's a reason they want you to go there and be active or and organic cambridge analytics you know that up for everybody frankly right um but it's taking marketing people aren't catching on you know why because they're so lazy right nobody wants to do any work when it comes to sales and legion which is shocking to me right so this is working Currently serving 378 customers for you how many customers are you now serving today 378 customers and how many a year ago uh i need to go look but i think it was roughly 120. okay got it um and are all those 120 still with you today um ish we've watched cohorts churn and so what we've learned is price point is a big one right yeah so a year ago we were selling a lot of people at 99 that was our price point now it's 300 that's our average price point per customer and we've up sold to much larger customers what's been interesting to us is about 20 of the people that fit our key demographic now who churned in the past have come back oh nice so the price point did something which was it it made the value more clear that was number one but also we did something so back to your earlier question so so a couple years ago and i'm going to back up a couple years ago i was in new york Raised and i'd raised around two million dollars and i couldn't find a lead what year was that 2019 uh 2018 20. okay so you raised 2 million like pre-product basically i raised i had raised 2.7 million dollars um and some of it was pre-product yes and then some of it was product but no sales yeah right and then and that's all you raised today 2.7 2.67 yeah and then when i had that two million circled i couldn't find a lead right and that's when that data came out about female founders not getting the funding right only two percent and so joanne wilson is one of my investors and on my board she's uh the gotham gal one of new york's most prolific angels she's balls and she was like hey this is what's happening to you and i was like what and so i had no choice nathan but to drop my burn from 100k to 10k which is pretty amazing and that are gross i assume that that's not yeah yeah yeah right monthly and like and also monthly and so but that also means most of my staff didn't get paid for the last two years okay i doubled our sales in that time and i landed some big clients sap and ap and bev and then i got us into jason calikanis's launch accelerator out in silicon valley right so he's he's you know this week in startups for people who don't know so i flew out to san francisco every week for four months to do a demo day right i graduated in the top three of the class won the final demo day had a term sheet in hand i'm over subscribed four million bucks and the world explodes yeah coven covet yeah but i had a couple of things i didn't love that term sheet so i was dragging my feet to be honest i was it was difficult for me i was there i couldn't i couldn't please all the people i needed to please where were you at though i mean a kid at the end of 2019 i mean do you remember like how much cash you had in the bank and what your burn was then oh yeah my burn was 10 was still 10k then okay and how much cash in the bank anywhere between you know thirteen thousand to twenty four thousand okay so you're operating like right on the margin here super lean yeah super duper lean right yeah and that's by the way i mean that's just i wasn't paying a bunch of people so like i owed my staff money yeah so it's much leaner than that really um and then what i did though is before i went and stuck my head in the sand because hey i failed nathan twice not once but twice right and so this felt pretty bad of course and i said all right i need to just take a break the world is collapsing my entire family wants to zoom call with me which is the last thing i want to do with anybody i don't want to connect i want to disconnect right so my head of growth lauren she was my head of customer service at that time she was out selling every sales gun we ever brought in by three to one by the way and i said just run the company i need to go die for a second but before i do can you please release this feature that everyone's been asking us for and that was the video clips feature right so gary vee saw that somebody somebody who he works with made him a twitter channel out of that showed it to them on his phone and he was like oh my god i need that that now which was great the change for us was we stopped having to explain what lately does we could just show them yeah yeah so what did you close out the funding story for me when did you did you what did you close capital and if so how much in what year no and i so i didn't actually i did so you didn't raise 2.7 million you're still bootstrapped no no no i raised 2.7 in the in the beginning of 2018. uh no 2014 to 2017. oh okay so that's what funded it from and then you were gonna do another round and you ended up not doing that you didn't do that another round of another round of 2.5 couldn't do that right so i fail fail fail what was the value what was the valuation you raised out in 2014 do you remember the the last round i raised it was a seven mil post and that was the one in 2014. it it was so my starting to be confusing but my first round in 2014 was 250 thousand dollars right so the 2.67 in total that i raised of all price rounds between 2014 and 2017. right so you did the that round that seven million valuation was 20 in 2017. yep that was in 2017 yep so then we go to that 2018 round can't close it and then this last year can't close it but before the other thing i did before i passed on the couch and died was i said it was before i knew i wasn't going to close this round it just occurred to me like i feel like the world is going to be crazy right now i know that i need more runway to close this round i took out a loan of 50 000 bucks from one of our current investors who i trust and love and it gave me just that breathing room uh i think it was not much like i want to say we've already paid more than half of it back now so i want to say it was like i want to say it was four percent um it's not great it's very friendly yeah not crazy yeah um sorry there's a lot we have a lot of that's good i mean that means that means you have people that's backing i mean you can't build this without that so hey just because we have about three minutes up they want to get as much of your story in here so so 378 customers say if you look at your churn over the past 12 months on a revenue basis what's that been yeah the churn is two percent per month okay or less okay and what's expansion when you add back um of you mean upsells upsells oh yeah um so the upsells we move them from monthly into annual now what's as you know that's not the best move for the company overall right but it is the best move when you need cash in the bank yeah which is what we've needed got it right so your net revenue retention annually then is about 76 to 80 percent with with 20 return and and minimal expansion that's right yeah interesting okay so so this is great you've got a flywheel that's working what do you think you can hit next year in revenue so we're certainly looking at a million in arr by january yeah of course and yeah and so then next year it's it's going to be interesting so we're do we have a partnership with garyvee what does that mean um it's i can't give you all the details but it's all about gary driving ar to the company does he have equity in the business he is becoming an investor in lately yes got it is he the exclusive investor in whatever round you're raising right now or is it a bigger round um we're actually deciding that right now because i'm i'd be at series a obviously yeah if i want to but i'm not sure i need to sell 20 of my company and we're convinced that i don't yeah work means that we can make this a multi-million dollar company on our own in this lean way and really just take in a couple hundred thousand dollars to you know ease some annoying pain but not actual pain just annoyance right um with the team that i have now so i'm most excited about that um because i'm tired of working with nathan you know like i'm really good at the dog and pony show i can dance no problem right but like do i want to dance anymore f now i love that on that note kate let's wrap him with a famous five number one favorite business book favorite music book it's called pitch anything it's totally cheesy but it's all about the psychological manipulation of sales number two is there a ceo you're following or studying right now um other than myself no i'm completely self-obsessed number three what's your favorite online tool for building lately for billing building building building um like the product yeah um you know you're asking me questions where i only know like enough to be dangerous so i mean i'm going to have to answer for my cto and would i mean would that be github i assume sure number four how many hours of sleep to get every night i don't know i wake up between three and four or five then i take some cbd oil and hope hope i fall asleep and then i have a cbd hangover for the first four hours of the morning so this is like you relate this is hysterical okay so who knows we're gonna be a little bit question mark there and what's so what's your situation you mentioned your husband's downstairs cooking chili so assume you're married you have any kids no kids lately is my kid okay no kids yet and can i ask how old you are i'm 46 40 wow i would i would have guessed much younger last question thank you what's up eye cream there you go what's something you wish you knew when you were 20 um to listen to my gut because that sucker knows guys there you have it kate churnis uh 14 folks on the team building try lately up for to a 900 000 run rate today up from a 300 000 run rate just a year ago 196 year-over-year growth uh they are they have raised 2.7 million dollars 2.5 million in 2017 in a 7 million valuation but now they're in a great spot 14 people on the team healthy growth mainly word of mouth spending nothing on acquisition 24 annual turn a little high but that's to be expected in this space 76 net retention as she looks to continue to scale kate thanks for taking us to the top love you nathan thanks 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 pm 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 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 sas 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 up for that at nathanlacka.com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode 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 but i do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya