Openback Revenue & Valuation (2018)

hello everybody my guest today is david shackleton he's the ceo of open back the mobile engagement platform which uses edge computing machine learning to make push notifications smarter he also co-founded ding.com the 500 million dollar business that enables millions online and from 600 000 stores top up uh top up the family of a loved one back home in over 120 countries david are you ready to take us to the top sounds good okay so first question you mentioned ding.com in the intro it's a 500 million dollar business why are you not all in on that yeah so we've been building our business for for quite a while and and uh you know i think where i most enjoy stuff is kind of creating products and bringing them to market and bring them to scale and we kind of roll ding out ding is active in 125 countries um got a really good experience management team in there um and it's kind of on its own path we did some mnas we bought anybody in the space that made sense um and the business continues to grow well so you know i was kind of had a you know an itch to scratch um to build something new and we've been working on openback for a while as a sort of a side project um but it's got real potential for kind of real scale to change part of the internet works what is top up what's i've never heard that term before david what's top-up mean so mobile top-up is like cell phone minutes um but outside the u.s um you know you top up your phone so you add value you buy value for your phone and then as you use the internet or make calls it depletes your your balance i see so that 500 million number you put in the bio that's basically the the total amount of minutes people have purchased through your platform and then you make a small margin on that exactly exactly so that's the value we've transferred and it's mostly migrant workers topping up adding value to their families back home so it could be you know jamaicans in new york adding their mom's phone in jamaica or mexicans in l.a or indians in dubai or all over the world interesting okay let's focus on open back so what's the company do and is it a pure place ass company so it's yes it's it's pure place us you know we kind of fit in that world between kind of sas developer tool and then kind of marketing engagement and so it's kind of a mobile engagement platform what we you know where we focus we've kind of created this new segment i guess all about push notification delivery um so there's lots of engagement platforms and ways for mobile apps to send push notifications to their users and but they all do it in the same way so it's very much server-side out so you blast it out to whichever users you want to hit and we think that that sort of that that paradigm is broken and because actually those notifications don't always get through to the user so if you haven't opened an app in a month 50 of notifications won't even get through to you um and so we wanted to solve that but we also wanted to solve um the moments that notifications are delivered to you like you should never get a notification in the middle of the night you should never get a notification when you're driving it makes no sense for an app to send you a notification if you've got like five percent battery left right and so we wanted to flip it and actually change it and kind of use edge computing so use the app on the device itself to control it all and then do a really good job and so for us a good job is deliver a notification at a good moment that's helpful and somebody wants to engage with it but also not piss off users right you know i think sure yeah a high utility moment yeah exactly so break down the pricing model what's the company pay on average per year for to get access to your technology yeah so it kind of starts a couple hundred bucks and to get going up to a hundred thousand users so we basically charge based on the number of mobile apps that are currently installed out on people's phones um so up to a hundred thousand uh users you're paying like 500 a month um and then you can send as many notifications and use all our tools so just be clear most of your customers are kind of paying 500 bucks a month something like that yeah we actually we've ended up working with a whole bunch of much larger organizations that maybe have five 10 million sure yeah i'm talking on average though yeah average probably more three four thousand dollars to be honest we have quite a quite a few large customers but we kind of have a good entry point like our goal is to fix notifications for the for the world and so we try and make you know any app can get access and start getting the advantage of the software when did you find uh when did you start the company what year we started working on it back uh like end of 2015 um a bunch of engineers and myself and we're kind of working away we've just started really just scale up probably in the last four or five months um where we've kind of added some extra folks to the team we're starting to raise our profile a little bit what's the team size today so we're just 10 of us today okay all in dublin no we've got a couple of folks in san francisco so we've uh yeah some biz dev commercial folks two folks uh over in some so dublin and san fran and then what have you scaled to in terms of total customers on the platform to date so we actually we've over over kind of 400 different apps have sort of signed up and have started using our software just paid though just paid companies yeah so paid we're just around 25. but this is that makes sense by the way this is like an enterprise play right so 25 people paying three grand a month i mean you guys are doing what 70 grand a month right now something like that yeah yeah yeah a little bit yes a little bit more properly and then and i think where we're at is we've worked with a bunch of kind of quite large enterprises to to scale and get it right and we're coming into 19 we want to kind of open it out and let a lot more people get access to the tool yeah and help me understand kind of growth to date you're at obviously early stages so growth should be pretty high if you're at 70 75 grand a month today where were you exactly a year ago yeah so we've kind of we'll just notch about about 120 growth over last year um so which is okay but it's not bad yeah we're still at a pretty early stage right you know the size of the organization and how much work we've done to create awareness and you know i think we have an exciting pipeline coming up for 19. so 120 growth i mean you're doing about 30 grand a month a year is that right yeah yeah probably a little bit more but yeah yeah and around that just below the 50. yeah and walk me through how you're adding new customers what's what's the growth channel so we get we get a bunch of referral and inbound at the moment um i think we we do you know we do a bunch of sort of a bunch of blog posts and stuff around push notification delivery because it's actually interesting we you know it's uh most apps of scale when they start to really think about doing a great job for their customers with push notifications they start to realize that actually lots of people aren't getting them or you know i mean you talk to most apps and they've had a situation where they sent a push notification and half the people in the office didn't get it um and so people end up going researching that and they kind of happen across us it's probably quite a lot of it and then we speak at various conferences and that sort of stuff as well where we get talking to people you pay for you pay for that we do pay sometimes to go along and like have a booth at a conference um but uh yeah you know we've done a little bit of that we will do a lot more next year are you bootstrapping the company are you raised no we've been strapping so far um you know we may raise next year kind of depends on how aggressively we want to scale out um in terms of sort of sales and market science and so excuse me you're bootstrapped today um are you burning capital are you cash flow positive so we're burning some capital um but not too much um so it's pretty sustainable um yeah how well so if you're if you're bootstrapped right and you're burning capital that means funding has to be coming in from somewhere so where's the money coming from yeah so myself and the other directors of the business and we've funded it we funded it so far um so we probably put maybe nearly two million dollars in so far to to fund it and get get to this point with the business okay got it so when you say you're burning like a little per month you're talking like five or ten grand a month or more probably ten to you're like a little more than you want right yeah well i it's it's all good though right like i you know i think we're you know we've really got a bunch of really happy customers and we've kind of rolled out we've done a lot of platform build and we've kind of re-architected how push notifications work um you know this whole computing device side it's been complex to do with scale um so it's you know we're still kind of we're coming out out of that period of heavy investment in the kind of platform in the infrastructure um but i think that that dial now moves across right to our to investment in the sales and marketing side david turns critical in any sas company what's your churn today and how do you keep it low so you know we don't have you know we shared the number kind of paying customers we have so we don't have too many um i think we've probably lost just one or two um along the way for for different reasons um i think we see kind of a bunch of people on kind of uh trials and that sort of stuff so sometimes we see slow decision making so somebody could use our platform you know and they kind of take time to make a decision to go fully live and i think have a proper churn percentage metric we're probably a bit early to give you something you know to really have a clear handle on what that looks like let me ask you a different question which is which is valuable in terms of customer growth so to get a new customer paying you uh kind of what you want which is three grand a month how much you're willing to spend fully weighted calc to get them [Music] yeah so at the moment we would probably be like i think we have a bit to do to really scale to admit for that without for that calculation to make sense and to really say it i mean i think we you know i it's really too early to put a number on it i mean i'm the stage we're at now i'm comfortable paying up to 100 right first year yeah well even beyond right and because of the stage we're at um but i think as we you know as we scale up then you know that obviously that economics on that need to improve i think we do think about the different acquisitions differently like we've you know done a bunch of stuff on scm right and you know that's you know we we tend to be you know getting good leads signed up to our platform for like 40 50 a customer right which is much cheaper the quality of that is lower and the chance of converting high paying customers lower so we kind of have different i guess ltvs and and calculations depending on the conversation why are you david why are you so you have a u.s subsidiary why are you risking your own capital to keep building this when you could use something like venture like non-duluth adventure debt um i think we're we're too early for adventure debt it would be my sense of it i think the venture debt market is certainly more mature in the us and especially west coast and then it would be in europe um but it was still early for venture debt and what do you mean by that like you've had conversations and people tell you you're too small yeah i think our risk profile is still you know we're we're still a relatively early stage company right and i think prevention my understanding in terms of venture debt would often make sense when you know companies are a bit further down the track their arrs are a bit higher and they've been around a bit you know a bit longer i think so far we haven't done it because we've invented a whole new way for something to work and i think we've needed time like we're at this three years right we've needed time to really get the platform right make sure the architecture scales you know work with early customers to really deliver the kind of ux for their business users um and so that's taken a bit of time and we have we didn't really know you know are we going to nail that and figure that out in six months or 12 months um and those can be tough you know if you go to kind of more i guess not ventured out but venture capital route you know sometimes there's a bit more pressure on to you know you've got to get it right and it's got to work or else and your cap table maybe doesn't look as good as it could do and we were lucky to be in a position to well then sure sure but well i don't know i i'm certainly the people i've talked to in europe on the venture debt side haven't felt our profile of business the stage we're at was was right for venture day yeah yeah yeah that makes sense that's good uh interesting very good let's let's wrap up here with the famous five number one what's your favorite business book favorite business book um well i just i gotta say shoe dog i just finished reading it and it was great um film night story number two is there a ceo you're following or studying right now um i am definitely following jack dorsey closely i was fascinated on his recent trip to india and to japan and it's been some the trajectory is bringing that business on number three what is your favorite online tool for building the company i gotta say google sheets number everything's there number four how many hours i sleep to get every night i'm pretty good i got ace and what's your situation married single kids married two young kids four and seven oh wow and how old are you i am 37 37 last question what do you wish your 20 year old self knew that it's great to be in a hurry but sometimes things can take a little bit time to get to the right answer guys sometimes things take a little bit longer launched this company back in 2015 again open back reinventing push notifications now 25 customers paying about three grand a month doing about 75 grand per month in revenue up from 30 grand a month uh just about a year about a year ago burning caught 10 20 grand per month they've put in about 2 million bucks to build the company team of 10 in dublin in san francisco too early to talk about churn but in terms of aggressiveness on customer acquisition he's totally willing to spend up to 12 months or even more of acv to get those customers in the door their enterprise customers they'll scale nicely as they usher in a new way to do these push notifications david thank you for taking us to the top thanks a lot nathan take care