Noteaffect Revenue & Valuation (2024)

you're gonna love this interview just got done editing it i'm glad i got it live for you i'll be in the comments for the next 30 minutes hanging out answering any questions you have in fact leave a comment below about data points or what you think is going to happen to the company and i will respond to every comment additionally if you're just loving the content click the thumbs up and i will go and check out your profile as well and give your videos some love as well in the meantime enjoy the interview hello everyone my guest today is jay tokash he's an entrepreneur and likes to transform ideas into working business models with multiple revenue streams note effect is his current venture seventh company that provides software technology for the education corporate and government sectors he recently exited a six company called core apps jay you ready to take us to the top yeah all right so everyone will wonder what that bio was core apps kind of a retreat to the bahamas and buy a yacht kind of exit or like i can take off for six months kind of exit uh it was an exit that i could i could seriously sit on the beach or play golf and and not do anything but um i'm just not that person you know and i had this vision um for note effect and uh i had kind of gotten it going just a little bit before the uh the exit i knew that we were we were getting close and um it was something that i i had a passion for so i wanted to make it happen that's good now what what did core apps do so core apps was a software company for the event industry we produce mobile apps uh software for managing your trade shows and conferences and things of that nature yeah and how did you bootstrap that company i did i bootstrapped that company was very fortunate to get it going that way um and uh and getting it started uh doing a bootstrap on that one and when we finished we had a little over 800 clients and we did about 1600 events a year that's amazing i mean and does that break down into a couple million in revenue or where were you generally size-wise oh yeah we were uh we were um close to 10 million okay so that's great i mean so i have to ask you because you're in maryland i mean this seems like an obvious hub and spoke model for a cvent or like do what they do with social tables and you're up there in maryland why didn't you sell to cvent yeah well hey you know they didn't approach us uh community brands is creating a you know this event killer if you will and they were the ones who approached us um i did talk to sivan at one point um the interest level on both sides really just wasn't there um and uh i think it was a good move to go over to community brands fair enough let's go over to note effect so what's the company doing you said software for education corporate and government so right now we have a uh we have a product out there on the market um that's being worked for the education market that's where i wanted to start because i felt like it was an area that we could really make a big difference in and what we do today is it's really focused around student retention and student engagement if you look on the internet you're going to find that most students learn by being engaged in the classroom and today what's better way to engage the students than you know with these right um and uh so i really sat down and uh and decided to kind of utilize the technology that everybody was using and uh you know what the um what the classroom look like today and so what we do is we take any digital uh classroom material and we broadcast that out to the students digital devices so it could be a powerpoint it could be a web presentation it could be off of a smart board could be generated by you know some other product like adobe i'm broadcasting it out to the students devices so they can make notes annotated highlighted directly on the material we have the ability to build in live polling the students can ask questions through their devices we have the ability for the educators to record and we recorded a little differently than most lecture capture type stuff we record the audio and match it directly with the presentation material so the file size is much smaller and then in the background we wrote analytics to or algorithms to analytics on participation and engagement and so and are you selling this to the teacher or the school or the student yeah this is going today because good question it's really going to the university level or department level within a university for higher education and then we have some clients over on the um high school side i see okay so give me a general sense there if your sweet spot is kind of department heads right are you kind of going smb pricing route or more like enterprise approach what's the average one what's the average one paying per year would you say oh uh it's really inexpensive they're paying anywhere from five to ten dollars per student per semester okay and what do they usually start with in year one how many students um well they're starting with apartments so each school is a little bit differently like we have one school that's a high school that's about 1200 students and then we have of one of our um colleges up in new york that is what is it six thousand students so yeah we we arranged the gambit across the board there okay so just to just to make sure i understand the pricing model you know uh uh five dollars per student per semester across your first example 1200 would be about they're paying you call it six grand a semester and that's correct that happens twice a year so first your acb is called 12 grand on that account yeah well in their particular case with a high school like that they don't really necessarily always have semesters um but yeah you've got the right pricing yeah okay interesting now where do you think i mean growth wise is most your growth going to come from more high schools or less but higher price department heads at colleges with more students right now i think the the growth model is definitely going to come from the higher education side one of the areas that we're really making a lot of strides in is what they call oer open educa open education resource this is material that's been generated it's out there it's available in the web there's a couple of different groups that have curated that like rice university and openstack and a few others who have libraries of this material and the material basically is free or it's a very low subscription price for the universities to use now it's not been developed specifically for their curriculum but it might be fifty percent there or eighty percent there or ninety percent there just depends what we're able to do is allow them to use that material and measure it against the class to see the participation the absorption the engagement and then go back and literally look at the areas where they lost that correct that material in that area and then reuse it again no i mean look it all makes sense right uh you're you're you're on trend for sure now when did you launch this company what year i launched it in the end of 2018. okay and bootstrapped i assume bootstrapped it to begin with well i had the money from core apps so it made it really easy from there we're getting a lot of interest right now from investors because the ed tech space is really really hot and i am going to look for the right partner in this particular case uh simply because i know you know having someone to help invest uh really helps kind of put you on the map from a standpoint of pr right when you it's one thing for you to say hey i put my own money into it it's another thing when somebody says i believed enough in the product that i put money into it yeah it should be enough that you have customers that put money into it right which is what i believe but sometimes if you want the vc stamp you get the vc stamp if you do go to choose to raise kind of traditional capital it sounds like you've thought a little bit about this what do you think the right first amount would be we're talking like a million or 10 million or something else yeah we're talking about a million i don't need a lot the software's done the product is out there it's being used today we have everything from very top high education high um higher ed you know top groups all the way down to your historically black colleges which really need it from a retention standpoint yep yep now if you uh if you go raise that one are we talking like you're trying to get them before the end of the year or you think it'll be like q1 uh i think it's going to be more like q1 yeah yeah yeah sometimes the end of the year can be good or bad for that kind of stuff it's a nice forcing function i actually have a meeting on thursday so we'll see how that goes but but the fact is is that my gut tells me that you know what's going to pull the trigger into the beginning so you wrote the first line of code 2018 you're cranking along you use your own money from corrupts to build it i always like asking this question because i think it's telling and it gives insight to your creativity um how much of your own money did you spend building the mvp before your first dollar of revenue oh um you know what it's funny that you asked that because i just put together something for my accountant too is like what a million six oh okay good you know that exactly where most that go yeah most of it went into development i also had some advisors that were a part of this we brought in people who were educators in the industry everything from the k-12 space all the way up into higher end cios and and um and talk to them you know i i gave it a perspective from my angle which i'm not an educator i'm a tech guy right and i took education and we kind of sort of built the two of them together um and i think it's it's turned out really well from that case that's nice okay so you invest the money you're growing now looking at potentially doing around here in q1 uh let's talk about what ultimately matters which is customer growth so how many i guess maybe how many students in your cases who are trying to help how many students are on the platform would you say you know i don't have a count of students i have more of a count of schools at this particular point how many classes are so i don't monitor that so right now we have 12 schools okay um and um and we're doing uh i think it's 32 classes okay interesting that's what it's turned out to be and do you see pretty even is it pretty even distribution of about two to three classes per 12 schools um no some schools are adopting it um more you know more steady right i mean there's because it's a new product and there's not really anything like it on the market space what we get is we're getting the early adopters people who are willing to you know just jump in technology-wise yeah and then they're talking the others into um joining on board and and getting it to be a part of that and then um hopefully as we move along we'll get the the ones who have been sort of stalemated and and stuck back but yeah and jay what what's this of the 12 schools which ones started with the smallest amount of students like and how many students was it like 510 or oh um i have one coming up here uh lawrence university that's going to start with a class that's 10 students okay 10. so 10 students is the smallest class and what's the biggest one out of curiosity uh the biggest one that we have is 60. oh 60. okay good good good good so so then i mean i can kind of get it right if i take 60 classes time or sorry 60 students times 32 classes assuming they were all that size that's like almost 2k students at five bucks a pop so you're not at 10 grand a month yet in revenue but do you think you can hit that the next quarter yeah absolutely we've got um we've got the 12 signed up and i probably have another 17 or 18 that are outstanding that that will pop the biggest thing with the education and the biggest is the drawback is the sales cycle and this is so long there's a short window for you to get involved in it and then um you know you're looking at them putting it into their budgets which most of them are on a school year budget which runs around july time frame so that's your that that's the biggest downsides to that and that's one of the reasons why we've got i've gone ahead and started the development work on the corporate government um product uh for that side yeah yeah okay well that's and so it's fair to say that you're doing somewhere between call it 1 and 5k per month right now on the student head model yeah okay exactly that's cool now i'd love to learn more about the team you mentioned you put some money to dev resources early on what's the team size look like today so the team size today is a total of uh seven people okay and how many of those folks are developers versus marketing sales oh i'm sorry i just gave you the team size on the development side on our side there so yeah we have one machine learning person who is more of a part-time person at this point but we'll be coming on more full-time and then we've got um uh two junior uh folks and i've got a support folk support person who helps with implementation and really just dives into the lms's that we're doing there and then three other um more senior level developers sorry so what's the total team size not just developers you're not sorry yeah yeah so then we have um we have two uh other sales people myself and that so the total is uh i guess 10. yeah yeah now the two sales folks obviously excluding you or do they do you give them a quota or are you trying to figure that out um you know i haven't given them a quote at this point it's hard to do that with a startup um you know what we're what we're doing here today is i'm measuring them based on you know the amount of appointments that they're doing the demos that they're doing um that that type of thing at this point so that all that all makes good sense so um for other people that are just starting out hiring their first salesperson they're trying to figure out how many demos should they be doing all that stuff how did you think through that what do you set the targets at yeah i set the targets at well so i always like to be the person who does it myself first to see how well i do with it right because if i'm me then i measure against myself so if i'm if i'm able to do let's say 10 demos a month right i'm not always going to expect the sales person who you know i live and breathe this stuff the sales person necessarily to be able to do 10 demos a month so i'm going to cut that back at 50 and say listen i need you to be doing five demos a month right i think that's a that's a fair number using that and that's actually what i used is my um you know what i was trying to figure out yeah do you have a sense i mean considering that sales flow and considering um you've landed 12 customers so far do you have a sense of what it cost you to get a new class like all in cack i haven't i you know what i i probably should know that and i just really haven't not necessarily it's pretty early it's maybe a distraction early and it's something that i don't worry about because we're just you know we're laying down new road and are you spending anything on direct paid ads um very little uh what i found is is that at the beginning i was nathan at the beginning we were doing a bunch of things in the trade show i'm sorry in the trade magazines um educause uh iste how old was that test dollar wise dollar spend wise so um i just like i said i just did the the number it was uh it was sixty thousand dollars and how to perform how did you measure performance it didn't perform that well um it didn't perform that well because i think again we were we were laying down new road what i found more success in is and i've done some of the trade shows and the trade shows were great because they gave us feedback in 2018 we went to our first trade show at the end of 2018 and the beginning of 2019 with the product in hand ready for pilots and what we got was exactly what we asked for those pilots and the in the product in hand and we got educators from you know the teacher aisle all the way up to administration who are willing to play with the product and do do things with it they gave us great feedback which helped us sharpen up the product to get it to market to be able to sell and and that's what we got out of that but what i learned was is that those trade shows in the past that always been great for me and my other companies in this case it really wasn't because they were just recommenders and they weren't the best recommenders yep so that makes good sense i moved over to a model where now i'm doing more of a um more of a matchmaking type of engagement with direct buyers that are from the university level like the senior level provost or people who are superintendents within the school districts and i'm directly dealing with them now and that's really made a difference for us yeah that's the way to do it so kind of an abm approach you're outreaching to those folks specifically yeah yeah well and there are events out there that do the matchmaking and bring those specific people in and they've already named one that was helpful for you get it um so university summit uh was one that i did um it's a rather expensive one but they're putting you in front of that there's another one at 60k spend uh actually no was that was an additional on top of that okay yeah cool okay but that's a better matchmaking service kind of working better for you that's good to know exactly how so you obviously had an exit so you can afford some burn right as you drive towards growth i mean it sounds like i mean what you're burning like 50 or 100 grand per month right now as you try and drive some growth yeah yeah yeah is that is that are you can you sleep okay with that like at what point does that get uncomfortable uh that's a good question i i hit my budget just for this year um last week that's pretty good and which wasn't bad so what was the budget 1.6 the budget was actually 1.550 and i went a little over it um and um and i'm gonna and i'm gonna be good so i'm good for the rest of the year um i'm working on my budget for next year and uh um the problem with that is is that again development's gonna be big uh because the corporate government version we expect to have out and um and i'm going to put a lot in that because the sales cycle is just so much shorter and what's happened is we had you know i functioned more in that corporate government space so i have a lot of friends in that space they saw what we were doing they said this would be perfect for my meetings my internal meetings my company-wide meetings my hr meetings product meetings and we're adding levels of security that we did not have we don't need on the education side so you'll be able to essentially make a meeting uh control the content from the source from the standpoint of you can share with anybody you can share it only company-wide you can share it with this group that's here or you can't share it at all and we'll take control of the browser so you won't be able to screenshot it or be able to print it out or email it or do anything if there's no sharing and if there is sharing aloud we'll tell you who they shared it with and i'll be able to tell you cool analytics like you know where they made their notes how engaged they were all that good stuff very good we're looking forward to having that come out uh jane in the meantime we're out of time let's wrap up here with the famous five number one favorite business book uh still rework number two is there a ceo you're following or studying um the ceo from docusign number three what's your favorite online tool for building a note effect well right now we're using um hubspot number four how many hours of sleep to get every night i try to get eight okay because i so much better with that that's good what's your situation married single kids married any kiddos three throw your busy guy how how old are you i'm 58 58 last question what do you wish your 20 year old self knew ooh i wish that um i knew to be more confident and um and drive with uh what i thought what i think i can do and i didn't have that done guys there you have it more confidence he sold his last company core apps grew to over 24 folks boots dropped over 10 million bucks in revenue sold it to community brands now launching note effect which is really helping folks drive student engagement in the classrooms currently 12 schools signed up 32 classes doing between a grand and caught five grand a month right now in revenues he looks to scale spent about 1.6 million bucks on his mvp which was basically his budget as he looks uh to scale now to build repeatable sales processes nine ten people on the team two sales folks jay we're rooting for you good luck and thanks for taking us to the top hey thanks nathan have a good one you guys know i fight like heck to get these data points for you from these ceos that rarely do these kinds of shows if you want more shows like this make sure you subscribe right now we're trying to get 10 000 youtube subscribers by the end of september here 2019 and it would mean the world to me if you clicked now to subscribe additionally i've got two more great interviews for you if you want more data points from the world's leading sas ceos click and watch one of them right now