How Lately CEO Kate Bradley Chernis grew Lately 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...