Reely Revenue, Valuation & Funding (2024)

[00:00] Hey folks, my guest today is Daniel Evans. He's a dynamic entrepreneur and senior executive with a passion for emerging tech systems architecture and user experience. He's got an extensive background aligning technology advance of marketplaces, opportunities, and assembling teams to execute. Today, he's building reely dot ai, automated short form content creation. Daniel, are you ready to take us to the top? Sure. Let's go. Alright. So who who's buying this? Is it the sports team directly or content [00:25] aggregators or somebody else? [00:27] >> It's kind of a mixture. A lot of our customers are in the collegiate space, D2, D3, subdivision one, and then we have some pro teams that we work with. Then recently we've been moving more into the high school space with name, image, likeness kind of hitting the college scene. More brands and sponsors are kind of looking at the high school space. So we're moving down there a little bit too. [00:49] So George Mason University is a good example of one of your customers. Help me understand on average, what are these companies paying you to use your technology per month? [00:58] >> Well, it varies. It's generally a SaaS model based on games. Right? So the number of games that they want to run for the season. And then we we kind of base that around how many hours that that will run through our system. [01:09] Mhmm. So so what would you say a sweet spot is for for those, you know, 50 games? [01:12] >> Yeah. Well, no. Like, George Mason will buy about 300 games. Right? Because we'll cover baseball, football, basketball. We cover all of the major sports, so they'll they'll do that, and and they'll pay somewhere between, you know, $40 to $50 bucks a game. [01:25] Okay. Interesting. That's that's for the annual contract? [01:29] >> Correct. [01:30] Got it. So you're looking like $12,000 annual contracts is your sweet spot sorta. [01:34] >> Somewhere in there. Right? It it depends. Smaller schools may may buy 60 games versus 300. Right? So just varies from school. [01:40] Is 300 your highest? Is that your biggest customer? 300 games? [01:43] >> No. We have we have some that'll run 2,200 games, and those are like private websites and people that are trying to post up, you know, more social engagement websites, whether it's a a sports site or if it's a new site that wants sports content. [01:57] And so that 2,200 customer that's that's paying for all those games, is it still $40 a game, about $80,000 a year? [02:03] >> No. It'll it'll come down in scale. It just depends on on the number of games. [02:08] Yeah, fair. Okay, take me back here. When did you write the first line of code for this? [02:12] >> So I was not one of the original founders of this. I actually came in because a friend of mine, you know, they were kind of struggling a bit after a couple of years of development, he asked me to kind of come in and stabilize things and set things up for the future. But the original intent was the founders were big fantasy players. There was three of them. And one of the founders really wanted to be able [02:33] >> to get the Alvin Kamara touchdown in his in his feed, like, as soon as he got it so that he could essentially send it out to his friends and rub it in. And that was kind of how it was born. They started to kind of cut games themselves manually and then said, you know, this is crazy. So they went digging into the academic sphere and found somebody that had written a book on using machine vision and [02:55] >> machine learning to do this and hired him, bought his work, the rest is history. [02:59] What's the hard part there? As you know, I'm a Washington football fan. When I see a touchdown pass, I can, like, find an illegal stream of that online and cut it up in iMovie myself. Isn't the hard part actually getting access to the content, not cutting the sixty second clip? [03:14] >> Well, it's you know, you can't scale that. Right? Like, you can have individuals like that, but, you know, our system will will pump it out in about three seconds, and then it'll it'll add any branding. [03:24] But how do get rights to the content? [03:26] >> Say again? [03:26] How do you get the rights to the content? [03:28] >> Generally, the our customers have those rights. [03:31] Got it. So you as I say, people can't use your your Reely tool unless you are have that person as a customer. So like an NFL team, like my team, if you don't have them, I can't get clips of the Washington football team. [03:42] >> Correct. [03:43] Yeah. Got it. Okay. Interesting. Who are you competing with? Because I see the football team put like, every NFL team does this. When touchdowns happen in real time, they put them out. Who do you compete with? [03:51] >> So that's a company called WSC. It's an Israeli company. They work at kind of the high end of sports. They're driven mostly by data feeds and AI, right? So they're getting the like the Sportradar or Stats Inc. Feeds, and then they're pairing that up with some AI to cut that stuff. [04:08] Do you have any idea on how big you think they are revenue wise or are [04:10] >> they public? [04:12] They I think they've raised their valuation, I [04:14] >> think, is somewhere in the $200,000,000 range. So they're they're fairly sizable. I'm not sure what their revenues are. [04:19] Yeah. Interesting. Okay. So what year did you join the company? [04:23] >> I joined in 2019 and took over as CEO in 2020. [04:27] And when did the, you know, the co founders originally launch it? [04:30] >> 2016, 2017. [04:32] Yeah. 2017. Okay. Give me a little bit of the funding history. It sounds like there were investors who were unhappy. That's why you came in. So what was the funding history before you joined? [04:39] >> I wouldn't say that. I think there was just a little bit of difference in in vision, but we've raised 1.8 to date, and we're in the middle of of raising a round right now that'll that'll value the company around 12 to 13,000,000. [04:52] When was the 1.8 raised? [04:54] >> We closed that in 2020, early twenty twenty. [04:57] 2020. Okay. So so no there was no money raised then before you joined? [05:01] >> A little bit of friends and family. [05:03] Okay. Got it. But you would consider the 1.8 that you raised your pre seed? [05:07] >> Correct. Yep. [05:08] I see. Okay. Got it. So friends and family before that 1.8 pre seed, what valuation did you raise that on? [05:12] >> 4,000,000. [05:13] 4. Was that fair at the time, you think? [05:15] >> Yeah. I think so. [05:16] Interesting. What why is that? I mean, I'm this isn't a right or wrong answer. I'm just curious. [05:20] >> Yeah, yeah, yeah. It's solid tech, right? They spent two years on the tech. The AI is pretty robust and being able to do this in real time is very, very difficult because you've got to balance the machine vision, machine learning components with speed, right? Because you only have so many resources on a machine. So I think that is the hard part. And they spent a good two years dealing with different elevations of cameras and different view [05:43] >> ports and different angles, right? So being able to accommodate all of that into machine vision algorithms is a lot of heavy lifting. And I think that is done now. And so now we're getting very nuanced into, you know, snaps and runs versus pass and things like that. So we're getting into some really interesting stuff now. [06:01] And so you're raising today. How much are you targeting? [06:04] >> We're raising 3,500,000 right now. [06:05] 3,500,000 on a 12 pre? Mhmm. Think you'll get it? [06:09] >> Yeah. Absolutely. [06:11] Who are you looking for strategic to lead, are you gonna go traditional VC route? [06:15] >> We have some strategics that are already in. So we'll, you know, mostly now we're just kind of filling it around with interested parties, angels and stuff like that. [06:24] Yeah. Interesting. Okay. So you join again. You come in the business 2019, CEO 2020. Early customers, it sounds like were these guys wanting to get hired to their favorite teams. But how many customers do you now work with today? [06:37] >> 128. [06:38] 128. Okay. Interesting. And how do you guys think about churn? [06:42] >> We haven't really seen much at this point. I think we've lost two customers in the last two years that I've been with. So we don't see it because once it becomes part of their program, it's really hard to remove. It's a workflow tool, right? So they get used to their distribution being automated. Primarily, you know, like the SIDs on a college campus will be able to, you know, get their highlights out to their Twitter feeds and [07:03] >> out to their social media. Whereas before they'd have to call the truck and try to get a cut and that's painful. And so other people, like you said, would get a, you know, a feed off the web somewhere or they would, you know, have somebody in stadium that would take a picture and that would go out to social and the schools wouldn't wind up owning the conversation around their games. And so that was a big deal. [07:24] >> And also gives them a tremendous amount of ad space, right? New ad inventory that they can sell to their sponsors because, you know, all that content's going out to their social. [07:32] Do you have ad spend flowing through your platform today? [07:35] >> Correct. We do. [07:36] How much, like annually? [07:38] >> That's the that's up to the schools. I'm not gonna go into that, but each individual school is a little bit different. [07:44] I mean, do you take a cut of the ad spend that goes through your platform? Nope. Oh, I see. You do not. Why not? [07:50] >> Because we're just not there yet. Right? Like, once it becomes programmatic and we have enough wide enough footprint that we can offer that, then we would. [07:56] Got it. It's not code. It's okay. Got it. If it's not programmatic, it's difficult. Okay. Got it. So 128 customers, if they all look like George Mason, three hundred hours per year, that's $12,000 contract values. I mean, I can multiply that into an ARPU. You guys are doing about a $128,000 a month right now in revenue? [08:10] >> We're doing well. [08:13] Is that math core is that math would that math not work for any reason? [08:16] >> Well, yeah, the it varies by customer. Right? And not everybody's doing 300 games. Right? So it's it's in that ballpark. We're doing somewhere around there. [08:24] Okay. Can we just maybe quantify and say north of a $100,000 a month? [08:28] >> Sure. [08:29] What do you think you'll break next year? [08:31] >> I think we project to 3,100,000 for 2022. [08:35] And what do have to do to get there? [08:37] >> Say again? [08:38] What do you have to do to get there? Is it expanding current customer contracts or brand new ones? [08:42] >> No. So we most of our customers are renewing, so we continue to expand into that space. We've done a lot of work over the last twelve months on the esports side, so we're seeing a lot of growth on that side. We just signed a deal with a company called Challenger Mode, which is a major platform out of Europe that has 2,500,000 users and runs about 15,000 tournaments per month. So we'll be kind of getting all those [09:05] >> contents and packaging it up like ESPN style highlight reels and stuff like that. So we'll see a lot of growth out of the esports space and the sports will continue to grow. You know, this year it's a little bit tough just because everybody's recovering from the loss of dollars from COVID, you know, so you don't see the same growth that you would. But I think next year, that'll bounce back. [09:23] I want to go more to that in a second related to NFTs, but first, finish the revenue story for me. So if you're above 100 ks in MRR today, where were you about a year ago so we can calculate growth rate? [09:32] >> Almost zero because our customers were shut down because of COVID. Right? [09:38] Okay. But you couldn't have zero revenue you couldn't have zero revenue and then at the same time be doing a seed round at valuing it 4,000,000 when you just churned your whole customer base. So you didn't actually you didn't go all the way down to zero. [09:48] >> Well, yeah, we because all sports cut down. Right? So they were stopped. [09:52] You didn't know revenue. You didn't know revenue last year. [09:55] >> Yeah. Well, fall of twenty twenty through, you know, because they weren't playing sports, so we weren't signing any deals. [10:01] You didn't have any spring sports in 2020? [10:03] >> Mm-mm. [10:03] How [10:04] did you raise $1,800,000 seed when you just, your whole customer base just churned, you went down to zero revenue? [10:11] >> We have good investors that understood that this was a small thing, right? It was a blip. Because we were already running prior to the pandemic and the pandemic just shut it down. [10:20] What were you pre pandemic in '20 I guess in '18, '19? [10:23] >> '17, 18000, I think they were doing. [10:25] Oh, interesting. Okay. Got it. Got it. Got it. Got it. Okay. So fair to say that most of growth has been over the past, like, six months, seven months? [10:33] >> Correct. [10:34] Basically, to a $100,000 in MRR fairly quickly. That's fast growth. [10:37] >> Mhmm. [10:38] You just just need to change your start date and just say start date is January 2021. [10:43] >> That'd be nice, wouldn't it? [10:44] Yeah. I can't do that, unfortunately. Okay. Cool. Got it. That makes sense. That's still compelling. I I I have never I mean, yeah, you do have great investors. Who led that 1.8? [10:53] >> Stadia Ventures, which is a a big sports tech and esports fund and accelerator. [11:00] Interesting. Why are you doing this? I mean, it looks like you have a a ton of history here. I mean, I would've if this thing goes to zero, would've said, see you. I'm gonna go work at a bigger firm where their equity is more valuable. [11:09] >> You know, I love this. You know, I'm a big gamer. I've played sports all the way through college, you know, so I just love the space. And a friend of mine is one of the big investors and sits on the board and gave me a call and said, Hey, I need some help with this. Would you mind doing it? And, you know, just decided to do it. [11:28] Right. How much do the original co founders still own the business? [11:32] >> I think they're still like 40%. [11:34] Okay. Okay. Fair. And I assume your friend gave you what, 20% to incentivize you? [11:39] >> I've been incentivized properly. [11:41] How do you incentivize a CEO coming in to run sort of a basically a turnaround operation, though? [11:46] >> Yeah. It's I mean, I it's it's all tied up in in the company itself. Right? So I don't I don't take a salary. I'm I'm here to to exit the company and do a good job with it and sell it and, you know, hopefully everything works out. [11:58] Mhmm. Interesting. Alright. But let's wrap up here with the famous five, Daniel. Actually, before we do that real quick, flesh out the team. How many total people? [12:05] >> We have 11. [12:06] 11. How many engineers? [12:07] >> Six. [12:08] And touch on NFTs for a second. That that to me is like where this gets extremely interesting. Right? Everyone's creating these NFTs. Now you don't actually own the content, but you could charge every team, like a gas fee effectively on auto generating these NFTs for these live reels. Are you looking at that? [12:23] >> Yeah. We've looked at it, you know, when when all the stuff hit with Top Shots and all of that earlier this year and and Dapper raised the 350,000,000 or whatever they did, obviously, our phone lit up because we can do these things in real time, Being able to craft these things in real time. We've taken a hands off stance right now because I'm not really sure where this is gonna land long term. Some of it's kind [12:45] >> of scammy, right? And of interesting to see the space. I want to see where it kind of lands and then we'll go. But we've dabbled with some of it on the esports side because that's the other thing being able to pull out those real time graphics and have them minted right then and there is interesting on the esports side. [13:01] Alright, Daniel. Let's wrap up with the famous five. Number one, favorite book? [13:05] >> Thinking Fast and Slow by Daniel Kahneman. [13:08] Number two, is there a CEO you're following or studying? [13:11] >> Elon Musk. [13:12] Number three, what's your favorite online tool for building reely? [13:15] >> Oh, Envision. [13:16] Number four. How many hours of sleep do get every night? [13:20] >> Seven. [13:22] >> Seven. [13:23] And situation, married, single kids? [13:25] >> Married, five kids. [13:27] Holy cow. You're busy. How how old are you? 49. 49. Last question. Something you wish you knew when you were 20. [13:36] >> To invest sooner. [13:39] There you have it, reely.ai. He joined the business to help his friend. Friend who wanted to turn the thing around. They're doing $18,000 a month in revenue pre COVID, went to nothing during COVID, raised a $1,800,000 seed round at a 4,000,000 cap to sort of restart the business, hold it through COVID. Now things have kicked off nicely. Basically 0 to $110,000 in MRR in the past, call it 12. They're now raising a 3,500,000, call it seed [13:58] series A ish at a 12,000,000 valuation. We'll see if Daniel can get it done again. Makes it easy for you to see and get and for teams to manage the clips real time as action happens. Daniel, thanks for taking us to the top. [14:09] >> Thank you. It's great to be here. [14:12] One 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 [14:37] Central. Additionally, remember these recorded Founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big [15:00] fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you wanna take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign up [15:21] for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. We [15:41] got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.