How LeagueApps Passed $1 Billion in Total GMV Serving 3,000 Sports Organizations (Interview with CEO Brian Litvack)

Introduction and Background

Nathan Latka

00:00Hello, everyone. My guest today is Brian Litvack. He's the CEO and co founder of LeagueApps. He's also a member of the board of directors. Previously, he was part of the founding team at SportsVite and held various business development roles at CBS Sports, College Sports Television and the official College Sports Network. He's a board member of the NYC chapter of Positive Coaching Alliance and is involved in various other sports nonprofits. Brian, you ready to take us

00:19to the top?

Brian Litvack

00:20>> Yep. Thanks for having me, Nathan.

Impact of COVID-19 on the Business

Nathan Latka

00:22Alright. So LeagueApps, you help folks organize youth sports. How are you doing during a pandemic?

Brian Litvack

00:29>> It's the right question to ask. Our business dropped precipitously over a few days in March and we had no idea what was to happen. As much as we scenario plan, the idea of a pandemic coming along and wiping out these forests all across the country was something we could have never planned for. One of our investors mentioned, what you do is basically illegal in April as we were going back and trying to plan what our future

00:56>> will look like. Thankfully and luckily, and we are a mission driven company, we saw sports come back and return to play across communities all over the country happen in the spring and the summer and even into the fall. Right now, the demand from parents and families to have their kids play sports, even as school was uncertain,

01:19>> was pretty strong throughout the country. So now as there's another restriction in local and state governments around what is allowed, it's affecting youth sports, but hopefully come spring, people can play in safe, comfortable environments and get all the joys and benefits of sports.

Founding Story and SaaS Model

Nathan Latka

01:38Now you're a pure SaaS company, correct?

01:41Yes. And you mentioned investors. So let's start there. How much have you raised to date?

Brian Litvack

01:46>> Yeah, we don't disclose the amount we raised, but we took a more traditional BDC Series A round in 2015 and have continued to work with those investors.

Nathan Latka

01:54And when did you launch the company?

Brian Litvack

01:57>> 2010.

Nathan Latka

01:58Okay, 2020.

Brian Litvack

01:59>> Nathan, I have to admit something here. Even though I'm a big fan of your podcast, we did not intend to start out as a vertical SaaS company with integrated payments. We just wanted to make better tools for sports organizers and make it easier for them to play. So, really didn't even know what a SaaS company was in 2010. We had started as an online community to connect people to play sports together, especially adults. How

Nathan Latka

02:27big did that community grow to?

Brian Litvack

02:30>> Oh, we would get about half a million uniques per month. I'm trying to remember the metrics. And we had hundreds of thousands of members. It was called SportsVite. It was like eVite for sports.

First Customers and Early Financing

Nathan Latka

02:43Did you use that to get your first customers at LeagueApps?

Brian Litvack

02:47>> Yeah. So, our super users in SportsVite were sports organizers, or directors, or people who manage programs. They were the ones looking for players, posting on our message boards. We would do some offline sampling sponsorship activation with them. And we saw that they needed better solutions and better tools to actually do all the hard work to make sports happen within their community.

Nathan Latka

03:10So when did you write the first line of code for LeagueApps? What year?

Brian Litvack

03:14>> 2010. Oh, it was 2010. Okay, got it.

Nathan Latka

03:16And did you, and sorry, do you raise your first round of financing right at the beginning or you waited?

Brian Litvack

03:21>> We had friends and family and angel investors. We had one, we kind of came out of that SportsVite company. So, that company was starting in 2007. In 2010, we really built up LeagueApps. It was me and a core group of engineers and my partner. And we had raised friends and family and angel rounds up until 2015 with the idea of most VC or institutional investors laughed at it in our face that this was a total addressable

03:49>> market that was large enough to attract venture investing. And we knew it was. We knew that the economy of youth sports was big enough, but it took a while to be able to show enough traction to be able to tell that story in a way that made sense for us to raise more institutional finance.

Pricing Model and GMV

Nathan Latka

04:09Talk to me about what these leads are paying on average per month to use the software today.

Brian Litvack

04:14>> Sure. So we are a payments model of the companies like Mindbody or Shopify even are good examples. We built our payments platform on top of Stripe. So for every sports organization, they generate most of their revenue when the parents or player pays fees during registration to participate in the league. So we've built out the capabilities to help process those payments, but also allow them to collect their registrations, and along with that have program management, schedules, messaging,

04:47>> mobile apps, websites, all the tools

Nathan Latka

04:49that So they Brian, when you look at total revenue over the past twelve months, the split between SaaS versus percent of GMV on the billing model, what's the split in revenue?

Brian Litvack

04:56>> Yeah, great question. The way we built our pricing is that we don't have a SaaS fee. All of the fee is based on the transactions that are processed.

Nathan Latka

05:08Got it.

Brian Litvack

05:09>> An organization can use processing fees if they want or they could eat that fee. So we're taking a piece of that processing fee, keeping it as our margin and then paying Stripe obviously the credit card or interchange cost.

Nathan Latka

05:22So if I use you and I sign up a thousand dollars worth of my thing, I mean, generally speaking, I have give you exact number, like what range 4% are you

Brian Litvack

05:29>> percent, let's say.

Nathan Latka

05:30Percent. Okay. Got it. So you'll make $40 off me. That's

Brian Litvack

05:37>> inclusive of credit cards, which we don't count as towards our revenue. It just kind of gets split up in two.

Nathan Latka

05:44Okay, and how many leagues have processed at least, I guess, dollar through you over the past year?

Brian Litvack

05:48>> Greg, we have 3,000 plus leagues on our platform.

GMV Milestones and Growth Targets

Nathan Latka

05:54And you consider, I mean, that's who you call your customer, right? Exactly. Yeah. Okay, great. So, okay. So about 3,000 leagues. And then, I mean, I guess the other important thing that you measure is just, again, percent volume through your platform. So, I mean, what does that look like here in 2020? Tough year for everybody.

Brian Litvack

06:10>> What do you mean by percent of volume?

Nathan Latka

06:13Well, you make your money off percent of GMV. So, how much GMV went through the platform in 2020?

Brian Litvack

06:18>> Oh, our goal this year was to get to billions per year. That was significantly and drastically

06:28>> impacted, but that's where we're headed. It took us nine years to get to a billion total, and now we're eager to get to a billion a year and beyond.

Nathan Latka

06:37What did you break last year in 2019? A full year with no pandemic?

Brian Litvack

06:43>> We don't disclose that information, but we're growing 50% plus every year. And that number that we wanna get to a run rate over a billion is within our sights without a pandemic.

Nathan Latka

06:53So if you grow 50% from this year into 2021, end of twenty twenty one, you'll pass a billion in terms of GMV?

Brian Litvack

07:00>> Exactly. And we believe this is a $15,000,000,000 market of transactions for team sports in The US, which parents and and players pay to their organizations.

Nathan Latka

07:10Got it.

07:11If growing 50% year over year from today will get you to a billion dollars in GMV process in 2021, that means you're doing something like $750,000,000 in GMV over the past twelve months.

Brian Litvack

07:20>> You're the SaaS expert. We're not disclosing information, but those are the types of logic and math that we use.

Nathan Latka

07:29Yes. Brian, I'm only using your numbers. You just said 50 year over year growth, and if you hit that over the next twelve months, you'll hit a billion. And, I mean, those are two numbers you said. I don't wanna make any numbers up.

Brian Litvack

07:38>> Are those accurate? We don't we don't disclose GMV.

Nathan Latka

07:41Okay. But you I'm not you just disclosed 50% year over year growth would mean you hit a billion in GMV next year. Is that accurate?

Brian Litvack

07:49>> I said two things. We're we're growing 50 plus percent plus, and that's the trajectory that we wanna continue to. And I said that we are our goal is to get to a billion dollar plus run rate in transaction.

Nathan Latka

08:01And I followed up a minute six twenty eight in the interview if people go back a little bit and ask specifically if you follow that growth rate, will you break a billion next year? And your answer was yes.

Brian Litvack

08:09>> It's well within our sights.

08:12>> Sure.

Nathan Latka

08:15I just wanna make sure that you feel that. I'm not putting numbers in your mouth. I just wanna make sure I heard you correctly.

Brian Litvack

08:23>> You're you're you're asking me what?

Nathan Latka

08:27I asked you about a minute and forty five seconds ago. Do you think, you know, if you grow at the 50% that you're targeting over the next twelve months, will you break a billion in GMV next year? And your answer was yes. It's well within our sights.

Brian Litvack

08:42>> Okay. So then I'd just clarify that. Right?

Nathan Latka

08:44So is that not accurate?

Brian Litvack

08:47>> The two the two things I'm saying is our plan is to grow 50% plus, and we wanna get to a billion in run rate next year.

Nathan Latka

08:55And and and you and you think you said you feel like you can easily do that next year. That feels like you can do that next year?

Brian Litvack

09:01>> Yes. It's that is that is the goal.

Nathan Latka

09:03So growing 50% and hitting a billion by the end of next year would mean today, seven fifty million times 50% growth gets you to 1,000,000,000 GMV. That's how I did the math.

Brian Litvack

09:13>> That's not that far off.

Nathan Latka

09:14There's Okay. Okay.

Brian Litvack

09:15>> COVID implications to it. Cool. Cool. But if you broke if you divided that by 12 and looked at it a month, that's very close Well, to where

Nathan Latka

09:23regardless, impressive. So, like, let's move on to that from that point.

Brian Litvack

09:26>> Is this all gonna are you gonna edit this out?

Nathan Latka

09:28No. This is live. We do 3,000 interviews, all live. So let's keep moving. Let's move past this.

Brian Litvack

09:32>> So so so you what you're why are you honing in on this?

Nathan Latka

09:36Well, because that's how you make money. That's your business model is GMV. So that that that of course, that's what I'm gonna ask about is GMV. Especially when you say you you already threw out numbers. You said you passed a billion in GMV, and you think you'll do a billion just next year alone. That's, of course, if you're gonna throw those numbers, I'm gonna ask those questions.

Brian Litvack

09:52>> Yep. Okay.

Nathan Latka

09:53I mean, that's fair. Right?

Brian Litvack

09:55>> Yeah. It's fair. It's fair, and and we're excited to get to a 100,000,000 plus in monthly g m in monthly GMV and go beyond that.

Nathan Latka

10:04Yeah. No. That that would obviously be amazing. How so how are you driving growth during how are you driving growth during COVID? Is it still from SportsVite in the community, or do you have partners, or what's the acquisition model today?

Brian Litvack

10:16>> So so SportsVite, we sunset. It's it's fully the the LeagueApps business. Growth comes by forming partnerships with new organizations. Since our pricing model is not one that's predicated on transactions or upfront fees or monthly fees Mhmm. We've been very supportive of our partners. They can they can there's really very little cost. There's a very small service fee to get going, but they can, only will pay us when they're collecting their fees. So we've been able

10:45>> to form a lot of partnerships. We just had a conference around how to around community, around impact, around how do we help organizations with professional skills. We've helped them get PPP loans. We've helped them throughout the year. You know, sports organizer is someone who has tremendous amount of passion, and our ability to help drive their not just their business goals, but their mission of what they want to do in their community is a big part of

11:07>> what we do. So we're forming partnerships. We're being judicious around who we partner with. There's shifts in the market right now, but we think that this is

11:20>> a little blip and that sports will come back stronger and more important to communities than ever before. So that's where some of those transaction numbers have been greatly affected, but our modeling and the things that we've seen and some of the pickup in the fall give us a lot of confidence that we'll keep on marching. You know, after talk

Team Size and Structure

Nathan Latka

11:36talk to me to me right now a little bit about your team today. How many folks are on the team?

Brian Litvack

11:41>> Sure. We have about 90 people in our full time people in our company. We're remote right now, but our office was based in New York City. That's split between obviously product and engineering, sales and marketing, and then all the kind of other functions that a typical software company has. We have a community unit and we're investing more and more into impact. So there's some things that I think are unique, but we look at ourselves and then

12:06>> we look at companies like Shopify and Mindbody and other vertical SaaS platforms as great examples of how they've scaled or or how they kinda continue to grow beyond what I I think at the beginning people thought that PMD Right. How many do you have? We have about 15.

Go-to-Market Motion and Sales Team

Nathan Latka

12:23Okay. 15. Got it. Interesting. And do you I mean, is this some is this a go to market motion where you can, bring in sort of aggressive reps and have them go try and meet quota, or is the price

Brian Litvack

12:32>> point That's too how that's how we start. We started with inside sales, having people who had passion for sports calling sports organizations, getting all the this fragmented data of leads. So we started that way. We're going much more to a marketing driven approach where we're putting out better content and community and engaging with sports organizations. Referrals is actually a big one too. And then, going more inbound, where then our sales team is more taking the interest

13:01>> and turning it into partnerships.

Nathan Latka

13:02How many quota carrying reps do you have today, if any?

Brian Litvack

13:09>> Oh,

13:10>> we have SDRs and and then closers, we continuously, like, adjust, but we have a sales team of 20.

Nathan Latka

13:16Okay. And they all have a quota?

Brian Litvack

13:19>> The SDRs quota is more about scheduling appointments.

Nathan Latka

13:22How many are they those? How many just close with quota?

Brian Litvack

13:27>> We we've we've changed the model up, but before COVID started, it was about eight.

Churn and Net Revenue Retention

Nathan Latka

13:31I see. I see. Interesting. Okay. And and I guess sort of last thing before we wrap up with the famous side, obviously, in any payments driven business, right, which is really usage based or SaaS is really, really critical, right? So going through something like the pandemic, obviously, you don't wanna just measure churn regularly because this is a huge anomaly. How do you think about churn in terms of a leading indicator for where you wanna take the

13:51business?

Brian Litvack

13:52>> Yeah. We've had to do a lot with that with data. So one thing

13:56>> that we looked at is what are organizations that are on pause versus what are organizations that are ceased to exist, and then what are organizations that left our platform but are still continuing to operate? So, went deep into figuring out what are in those three buckets, right? The on pause idea and the death idea never really was as prevalent, but that's something that's really important because of where the landscape is at now, right? We also look

14:19>> at net revenue retention because we have a consumption model, and that's kinda driving our revenue. So it's not just are they churning, it's also like, is an organization gonna shrink significantly? We saw very natural growth and a lot Are you above 100%

Nathan Latka

14:32net revenue retention today?

Brian Litvack

14:36>> That before COVID we were. We believe we'll be back there. It's hard to again calculate. We're looking at it month by month, but yes, we're a company that is above 100% net revenue retention. That's believe we can continue to grow that.

Nathan Latka

14:47Yeah, where were you, how far above one hundred were you pre COVID?

Lifetime Value and Partner Longevity

Brian Litvack

14:53>> Our goal, I think for this year was 115%, and I think we were in a great position to reach that goal. And that's really without many hard upsells. So, as we bring more products to market, we think there was an opportunity, there's a big opportunity to even grow that. And what what the SaaS metric that we're most proud of is our lifetime value and our our churn number. We think an organization, when they become a partner

15:12>> of the the right size and type, is gonna be on our platform for twenty plus years.

Funding History and Future Capital Plans

Nathan Latka

15:16Mhmm. Last question here. According to Crunchbase, you raised about $8,200,000. It's public information because you filed Form D.

Brian Litvack

15:21>> Sure.

Nathan Latka

15:22I don't know why I didn't answer that earlier when it's public. But do you have any plans to raise additional capital?

Brian Litvack

15:27>> Yeah. We'll continue we've raised a little bit more than and we'll continue to raise capital to help fund the growth. We had a profitable Q3 that we were proud of, and we Congratulations. Never That's great. Thank thank you. It did feel good, especially after Q2 was Yeah. Probably the biggest loss So we we we've always been thoughtful about how to use capital. We like to grow the business with revenue. We have big ambitions. So

15:52>> where and how to use additional capital is is something that we're contemplating for 2021 in the future.

Nathan Latka

16:00Guys, there you have it. Brian Litvack found founded LeagueApps back in 2010. Focused hard on scaling today. They're making it through COVID just fine December 2020. Passing a billion dollars in total GMV through the platform with eyes on trying to pass that number in a year. Next year alone, they make money by taking 4% of GMV through the platform as they help support league owners manage everything about the league. Brian, thanks for taking us to the

16:22top.

Brian Litvack

16:23>> Thank you, Nathan.

Nathan Latka

16:27One more thing before you go. We 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, 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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