How Play Reached 11,000 iOS App Installs While Still Pre-Revenue (Interview with CEO Dan LaCivita)

Introduction and What Play Does

Nathan Latka

00:00Folks. My guest today is Dan LaCivita. He's this entrepreneur CEO who's built, grown, and led successful teams and businesses in the digital space for over fifteen years. His latest venture, Play, is transforming how teams design mobile products by letting them design, build, and experience their product in real time all on the medium they're designing for their phone. Dan, you ready to take us to the top?

Dan LaCivita

00:18>> Yes.

Nathan Latka

00:19Thanks for having You bet.

00:21So should what's the comp here? What's the analog? Is it sort of like Webflow for mobile or is it more like sort of, you know, like a Figma for mobile?

Figma vs Webflow Analogy and Product Positioning

Dan LaCivita

00:29>> Yeah. It's it's actually, I would say in between the two in terms of our current state. Right? So we're we're the first native iOS design tool for teams to design, prototype, and share directly on their device. Previous to play, we ran a design agency building a lot of mobile products for our clients. And one of the things that we experienced with as many great design tools there are Figma, Adobe XD, Sketch, they're sort of a mile

00:52>> wide and there is not really a platform built for people designing specifically for mobile products. So what we're trying to do is fill that gap and be very kind of focused in terms of product teams designing for mobile, and how do we give them an input directly into what they can achieve with kind of the sandbox that Apple has created and give them access to all that stuff.

Nathan Latka

01:12When was the agency before you like spun up the SaaS? It sounds like a software company. What year was the agency at its prime?

Dan LaCivita

01:19>> I would say probably right before and during. We sold ten years ago. So we sold to Dentsu. The agency was called, yeah, name of the agency was called Firstborn. And then we sold to Dentsu. It's about ten years now. So myself, one of our Michael who founded Firstborn, he left after four years after sale, and then June and myself left after eight years post acquisition, we started to play.

Nathan Latka

01:45Okay. And give me a general sense of like size. So before you sold, how many folks full time and like, can you share sort of what revenue was back in 2010?

Agency Background and Transition to SaaS

Dan LaCivita

01:54>> At our older agency? At the agency, yeah. Yeah, we're doing around $27,000,000 to $28,000,000 dollars annual revenue, about a 100 people. So it was, you know, services based business. So, you know, there, you know, we had some repeat clients, AOR clients, a lot of lot of project based business. So every year you're kind of, you're, you're, you're starting over to, to refill, you know, the pipeline, but going from agency world, which is, you know, services business profitability from

02:18>> day one to managing sort of now, you know, we were pre revenue right now. Going from managing a P and L to just an L has been a mental shift from sort of a CEO perspective, but it's been a good transition.

Nathan Latka

02:31And so sort of help me understand. So companies and agencies, when I've seen multiples recently, but this was again ten years ago, so it's almost irrelevant, but you're trading somewhere like two to four x EBITDA. I don't know what your EBITDA was at the agency, but but what was sale price like $50,000,000, $60,000,000, $80,000,000, something like that?

Dan LaCivita

02:46>> Yeah. It was I mean, we we never publicly disclosed it, but it was a it was a it was a it was a good deal, I think, for for everybody, you know, involved. Not just financially, but I think we found the right parent company to sell, at least at the time when we sold the business.

Nathan Latka

03:00What I'm trying to do by asking that question is getting your head as a founder, right? So have you now created a cash cushion for yourself back in 2012 that allows you to sort of do anything? Are you still sort of like, you know, have some flexibility now, but I still sort of need to stay here and earn my earn out for the next three years.

Dan LaCivita

03:13>> Oh, Yeah. No. I gotta gotta work. So I mean, you know, was able to to to to a have a bit of a safety net, but no, I'm I'm I'm here to work and and build the next next big thing. That's what we're here to do. Yeah.

Nathan Latka

03:25So you sold in 2012. When did you leave 360i or Dentsu?

Dan LaCivita

03:30>> Left Dentsu, it was three years ago now.

Nathan Latka

03:34Okay. Got it. So left Dentsu. Now did you guys already start writing code for this inside of Dentsu?

Dan LaCivita

03:39>> No. No. We, we, we, June left. I left about four months after he did. They, you know, June and our other there's four partners. So myself, Michael, June, and Eric. June and Eric kinda started together. I finished out a few more months at Firstborn, then I left and then joined them.

Nathan Latka

03:59Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second. But you log in, you connect

04:22your Stripe account, you see your valuation real time, you can see what changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna get

04:47a different valuation. A VC is gonna pay a different valuation. Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is not

05:09built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired the valuation and the multiple. Maybe you're going

05:34out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at, and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. All We're right, gonna go back to the YouTube video here in a second, but if

05:56you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. If Or you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into the

06:22interview. So sorry. When you say partners, don't mean that the agency now you're talking about play. There's four four founders.

Dan LaCivita

06:28>> That's correct. Yeah.

Nathan Latka

06:29Sorry. So say that again, June, Eric, who else?

Dan LaCivita

06:31>> Michael founded Firstborn and then myself. So we all we're the four founders for play.

Nathan Latka

06:37Very cool. And did you guys just decide, okay, we're gonna be even and split 25 each or what? How do have the equity conversation? That's always tough.

Dan LaCivita

06:43>> Yeah. It was it was relatively equal. We started with our own capital. So we started with a million dollars of capital. Michael put in the lion's share of capital. So that kind of got us started. We're, I think, a good position from from that standpoint. Like, we can hire people from day one. We weren't really, like, hardcore bootstrapping, you know, per se. And then we ended up raising kind of a pre seed round on safes and

Pre-Seed and Seed Fundraising Details

Dan LaCivita

07:07>> then quickly followed that up with what ended up being our our our seed round, the First Round Capital led, which we weren't really looking to do. But after meeting a partner there, Todd, we we we thought it was the right thing to do.

Nathan Latka

07:17That's good.

07:18How much was that pre seed round for and what year?

Dan LaCivita

07:21>> So we did both of those were last year, the pre seed round, we raised 3,000,000 on a $15,000,000 post money valuation cap and the safes. We followed that up with another 6.1 that First Round Capital led.

Nathan Latka

07:37And did you close that like December last year or is that, or like January?

Dan LaCivita

07:41>> We closed, yeah, we closed that in April of last year.

Nathan Latka

07:45Oh, got it. So that 3,000,000 pre seed was like basically end of twenty, right around end of twenty twenty or early twenty That's '20 right. I see. I see. Okay. So the 6.1. So help me understand that. I mean, obviously you still probably had a bunch 3,100,000 sitting in the bank when you did the 6,100,000 and the sorry. Sorry. You said that was 6.1 on what? Did you get the valuation on that?

Dan LaCivita

08:04>> No. We didn't. We have we haven't disclosed the the valuation on the on the on the 6.1, but it was in the it was in the, you know, tens of millions. I think it was a it was a it was a good jump up from where we did our pre seed kind of pre seed. Yeah.

Nathan Latka

08:15Mean, most in our seed today, they're selling something around 10 to 20% of the business, right? We sort of in that range.

Dan LaCivita

08:19>> Yeah, we're in that range.

Nathan Latka

08:20Okay. Fair. So that's like, call it 30 pre, 40 post, something like that.

Dan LaCivita

08:24>> Yeah. We're Okay.

Nathan Latka

08:25Yeah. So why, why do it again? You still have a bunch of cash in the bank.

Dan LaCivita

08:29>> Yeah. So we had good runway. We had cash in the bank. It was two things. It was, I met Todd Jackson. We got to know each other, you know, over the course of a few weeks. He was the, you know, former founder. He, First Round Capital actually invested in his business. He was a product guy. He, you know, tried the product. He had some of his kind of designer, you know, co coworkers use the product. He like,

Why Take First Round Capital Investment

Dan LaCivita

08:52>> he did a lot of diligence in a very short period of time and understood the vision of what we were trying to build. And he, he wanted to, he's like, look, wanna be involved. And I just had a good relationship with him. You know, we just, we just kind of kicked it off. We didn't run a process. We didn't optimize for evaluation per sales. Like, I think this is the right partner. I think this is the

09:09>> right firm. And what it allowed us to do from a capital perspective was just accelerate our roadmap, right? So we're now going to be releasing the iPad product for play this month. We're building out some other products, some other platforms, you know, as well. So it allowed us to double the team and not be overly concerned with, you know, our, our, our burn. So we, we doubled the team for 20 people now. And I think if

09:28>> we would've done that race towards the end of last year, we wouldn't have been as far along on the roadmap as we are now.

Burn Rate, Team Size, and Runway

Nathan Latka

09:33So I mean, what are you comfortable with burn now? I mean, 20 people I'm doing back of the napkin, right? I mean, what you guys are burning something like, you know, $203,100 grand headcount expenses per month? Yeah. Interesting. Is there, are there any other big expenses I wouldn't know about?

Dan LaCivita

09:46>> No, that's it. Signed a lease for some office space in the city again, kind of get some people out of their apartments and back into the office at least a few days a week. But other than that, it's all people.

Nathan Latka

09:56Yeah. So you're talking like burn is call it three fifty months, something like that, or approximately three million years. So you've got like eight, you know what, sixteen to eighteen to twenty months of runway, something like that.

Dan LaCivita

10:06>> Yeah. We're about twenty four months right now. So I think, you know, the plan is maybe raise our, our, our A towards the end of this year, early next year, but we've, we've had, we've had a fair amount of interest early this year and maybe we'll end up doing earlier. I think we'll, you know, we'll, we'll see in the next few months what happens.

Nathan Latka

10:20Where's the interest coming from? I mean, what are people seeing about the business that are flagging? Are you, your Alexa score going up? Is your user list growing? What is that? I have no idea.

Where Inbound Investor Interest Comes From

Dan LaCivita

10:28>> I have no idea. We'll get inbound calls and I'll ask them, you know, how did you, well, I know a product designer or I know a senior person at this company and a few of their designers are using it. And you know, now it's on my radar and I wanted to, you know, reach out to you, But it's, it seems to be more word-of-mouth of people who have used the product, tried the product, and then it

10:47>> makes its way through, I guess, you know, the kind of the VC channels.

Nathan Latka

10:51Yep. Yep. Yep. I mean, and you're getting traffic, right? Alexa score two eighty two. So it's not like you're getting no traffic. If people are hitting this site and it looked frankly, the design can, you know, congrats. This makes sense. You're coming from agency bones, but the site looks like you guys are a much larger company in terms of revenue than what you are. So when does the paywall go up? How are you thinking about pricing?

Pricing Strategy and Monetization Plans

Dan LaCivita

11:08>> Yeah, I think we will introduce, I think monetization this year for sure. Right now we're focused on retention and growth obviously from, from, from our users. I don't know if we want to reinvent the wheel when it comes to actually like packaging in terms of pricing, we'll probably look to do something as other design tools in the space have done maybe three tiers will most likely be a freemium product. So there'll be a free tier for

11:28>> starters, a paid individual tier, and then a paid tier for organizations and for teams. So that's been the focus now where, you know, our SOC two certification going because we are running into those conversations with companies where we've got a few designers inside of a company using it. And then you go down and you start talking to IT and legal and, you know, are you SOC two compliant? And so kind of getting those processes so we

11:49>> can at least begin to sell up into the enterprise where we're ready.

SOC 2 Certification and Enterprise Readiness

Nathan Latka

11:52Who are you using to get that SOC two done? Are you using a software or you hire a consultant or what?

Dan LaCivita

11:57>> We're using Vanta.

Nathan Latka

11:59Interesting. Good. I get this question all the time and I never had a good answer. So I always ask now. I mean, have you liked Vanta to date?

Dan LaCivita

12:05>> Yeah, we've just started. We're about thirty days in, but to date there, the system is the person who's doing it on our end has done this before and is like, dude, this is amazing compared to like the nightmare that you have to do this when it's on your own. So the dashboard that they provide has been really useful just in terms of tracking everything you need to do and how you, you know, giving you suggestions. So

12:27>> it's been, it's been pretty seamless so far.

Nathan Latka

12:29Is it super expensive?

Dan LaCivita

12:30>> It's not terribly expensive. I mean, I think we benchmarked a couple other companies. They were all in relatively in the same range, but quite honestly, I think if you're gonna I mean, look, you need to save every dollar, but also if you're gonna save $2,000 but it's gonna cost you another $10,000 of manpower, right? Of per people power to actually do the work. I'd rather

12:47>> pay the $2,000 and have those hours back from my engineers so they can get on billing with the product.

Nathan Latka

12:52What what what is it? Like, if someone was gonna sign up for Vanta right now, they know they need SOC two compliance. They should budget what? $10,000, $20,000, $30,000 to get it done, something like that?

Dan LaCivita

12:58>> Yeah. Think, yeah. Think for the first year, budget budget around $20,000, you know? Inclusive of the auditor fees too. They kind of bundle everything together.

Retention Metrics and Waitlist

Nathan Latka

13:07Yep, that makes a ton of sense. Okay, cool. Let's keep going here. So you just mentioned you're focused really on retention today. Many people would hear that and go, he's pre revenue. What does he mean retention? What activation metrics are you measuring right now to define a retained customer or a retained user?

Dan LaCivita

13:23>> Yeah. So, so depth of usage and retention, I would say are our two primary kind of focuses, right? So we've got, we just put the app in the app store at the end of last year, right? In Q3 of last year. And as you know, there's a, there's a gate where you can go in, but you can't get full access. It's an invite only. So we've got about 30,000 people on the, on the list of people

13:44>> who've registered for full access. And we've been batching those people in over the course of the last year. We've got 11,000 app installs already of the product on iOS. So comparing usage quarter over quarter and then comparing, and then looking at retention rates. So we have cohorts emerging in terms of retained users at five, six, seven weeks that are 85% retained, right? So meaning they're doing more than just checking out the product and seeing, oh, this

14:12>> is this interesting or not. They're actually using it to, to design things and to build things. So what I'm doing is I'm looking right, looking at, at, at those cohorts and mix panel, and then going in and talking to those people, right? Over the last six to twelve months and say, what's, how are you using the product? What size company are you working in? What is the size of your product team? Are What the biggest hurdles?

14:32>> What do you want? The biggest piece of feedback we got over the last year by doing this was people were like, I would love a tablet application. Can you build this on iPad? And so we were like, okay, we're going to build it on iPad. And now we're shipping that this month. So looking at those retained cohorts of people who are using the product, how are they using the product? And where is that fitting into? One

14:50>> of the earlier things that we learned was we've got to meet designers where they already are, which is in their primary design tool, which is why we spent an enormous amount of time working on our Figma import capability. Right? So we're, we're an end tool. Right? And so I think like play is a great compliment to Figma. So if your design system is in Figma, you can import that design system in play and continue to use

15:10>> that inside of our product so that you don't have to reinvent and redesign everything inside of our product.

Nathan Latka

15:14So Dan, just to repeat all this back to you, you had 30 ks on the waitlist, 11,000 app installs today, correct?

Dan LaCivita

15:19>> Correct.

Nathan Latka

15:20And the way that you measure retention is you look at Mixpanel and you say, you watch when they're designing, but that's not a good, you can't quantify it by that Mixpanel. So tell me what it actually is. What's the action? They click the purple publish button on the app designer. What's the action that defines retained?

Dan LaCivita

15:33>> Yeah. So they're they're generating an basically, it'll be an app session, and then they're engaging with adding something to their page. Right? So are they are they creating something on their page? If they do that multiple times, then we're gonna we're gonna look to that as a as a retained user.

Nathan Latka

15:49And adds an element on their mobile app design page. So maybe they add a new button or they upload a new image or something, a new style class, something.

In-App Events and Usage Depth

Dan LaCivita

15:56>> Exactly. So those were tracking those as like events. Right? And so if we look at the past month, there were actually 650,000 events, right? 650,000 individual actions inside of the product.

Nathan Latka

16:11Across how many users? Are they 11,000?

Dan LaCivita

16:14>> No, those are just app installs. So actually we have it's it's far lower. We're we're in the multiple thousands, but the app installs are still people who haven't gotten full access yet. Right? So- I see.

Nathan Latka

16:24How many have full access on the 11,000?

Dan LaCivita

16:26>> We have, it's about 4,500.

Nathan Latka

16:29Oh, okay.

Dan LaCivita

16:30>> It's still pretty significant.

16:31>> Yeah. Got it. Got it. Got it.

Nathan Latka

16:32So we can take the 6,500 actions across the 4,500 activated users. Each one's using it about 144 actions per month, something like that.

Dan LaCivita

16:40>> 650,000.

Nathan Latka

16:42Yeah. 650,000 divided by 4,500 is about a 150 actions per user per month.

Dan LaCivita

16:47>> Yep. Exactly.

Nathan Latka

16:48And so do you have a sense of like how many actions per user per month they have to hit before they're comfortable paying a $100 per month per seat?

Dan LaCivita

16:55>> Not yet. So we started to reach out and have conversations with some of our more active users. Like how much would you pay? You know, what's too expensive to pay? What's too little that you would wanna pay? But we're just starting those pricing conversations with the users right now.

Nathan Latka

17:09Interesting. Really interesting. Okay, got it. So just to be clear, pre revenue today, thinking about pricing 4,500 sort of active folks that have installed and are using burning three fifty to 400 ks per month with call it 18 to 24 months of runway, team of 20 right now. How many engineers?

Dan LaCivita

17:25>> It is 12 engineers.

Nathan Latka

17:27Oh, wow.

Dan LaCivita

17:27>> Yeah, majority engineers. Yeah.

Nathan Latka

17:29Yeah, that's great. And this is interesting. This is like one of those products where I look at it and like, I just know if I ever asked my designers to design on a mobile app, they'd go, give me a freaking desktop, please. But you must have identified like, what is the scenario designer is in where they wouldn't use their desktop and they really wanna design on their mobile device? They're stuck on a subway all day or

Why Designers Would Design on a Phone

Nathan Latka

17:50what?

Dan LaCivita

17:51>> Yeah. Well, I think it's what it affords you to do that a desktop may not afford you to do. So for example, when you're designing on your phone, you're designing in the native environment. So you now get to plug into all of these native elements that iOS has to offer. So if you're designing a video player, right? All the primary design tools don't support native video. They don't support native modals or live maps or haptics or

18:16>> input text fields. So what happens is designers spend all these times on their desktop designing around hacks for all of these native things that you and I and everyone else feels on our mobile product or just prototypes. Right? We're using web technologies to simulate what a native gesture feels like a pan gesture or a pinch and zoom. So in play, you're using all the real native iOS gestures and controls. Now that's not to say there won't

18:39>> be some sort of desktop companion to play in the future. We currently have a web dashboard, it so allows people to drag their images, their SVGs, their custom fonts over into the dashboard.

18:53>> You, you would, you would think that there, the, the play web dashboard will grow in its fidelity as a tool as we're also launching iPad. It is not going to be a solely a phone product, you know, forever. I think what we wanna do is we wanna use each medium and each device for its strengths instead of trying to design one thing on one device and try to make it a mile wide.

Nathan Latka

19:16Yeah. Yeah. We're out of time, but wrapping up, you know, if someone like Figma or Mural or one of these companies InVision, maybe Canva even probably Canva's probably too junior. Like, it's a different subset for you guys. But if one of these guys comes to you and say offers you 50,000,000 cash all upfront, right? So about a 1.2 x through five x premium on your last valuation, do you guys sell the business?

Acquisition Interest and Long-Term Vision

Dan LaCivita

19:33>> I don't know. I mean, I think we're, I think we may need more than that to get off the, get off the highway. I mean, we're, you never say never, you know, right? But I think we're happy building, we're having fun. And I think there's a lot of opportunity in the market for a product designing for mobile devices. No one else is really focused on that right now.

Famous Five Rapid Fire Questions

Nathan Latka

19:50Right, guys, let's wrap up here with famous five. Number one favorite book, Dan?

Dan LaCivita

19:53>> It's hard to Principles by Ray Dalio.

Nathan Latka

19:56Number two, is there a CEO you're following or studying?

Dan LaCivita

19:59>> Studying, Elon Musk just for his comic relief on on his 20.

Nathan Latka

20:03Number three, what's your favorite online tool for building play?

Dan LaCivita

20:06>> The Huddle feature in Slack.

Nathan Latka

20:09Number four, how many hours of sleep to get every night?

Dan LaCivita

20:11>> Shoot for seven.

20:12>> Okay.

Nathan Latka

20:13And situation, married, single kids?

Dan LaCivita

20:15>> Yeah. Married. My wife and I have two boys.

Nathan Latka

20:17Oh, wow. Okay. And how old are you?

Dan LaCivita

20:19>> I'm 42.

Nathan Latka

20:2042. Last question.

Dan LaCivita

20:21>> Something you wish knew when you were 20.

20:25>> It's not about you. Just most things are not about you. So don't make it about you.

Nathan Latka

20:29Guys back in 2011, their agency did about $28,000,000 in revenue across a 100 people. They sold that a firm caught or in that same year, 2012, stuck with that firm for a couple years, left in 2019 to launch Play. It's createwithplay.com. It's a mobile first builder for websites. A lot of the designers are loving using this because they can use native elements. On mobile, you can't get on the same sort of app builders on desktop. They've

20:49got 11,030 on the wait list, 11,000 installs, 4,500 active users that have done about 650,000 events the last thirty days. Nice growth. 6,100,000 seed raised at, call it, 30 to 40,000,000 valuation middle of last year, maybe raising a series a later this year, early twenty twenty three. We'll see what happens. Dan, thanks for taking us to the top.

Dan LaCivita

21:06>> Thank you.

Nathan Latka

21:09One 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 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 1PM

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