Risevision Revenue & Valuation (2020)

hello everyone my guest today is byron darlison he's been an entrepreneur's entire life and is currently building a company called rise holdings upon leaving school in 1987 he focused on creating information management systems that led to development of financial training applications and a health record management product fast forward he's now working on displays that are used in almost every setting imaginal but his content focuses primarily on secondary and post-secondary education environments and financial trading labs byron are you ready to take us to the top i am thanks for having me you bet okay so for people that haven't heard of rise holdings before tell us what the company does and what's your revenue model how do you make money um actually it's rise vision i have a crazy email address for a really old reason but anyways ry's vision does digital signage content management and it's a freemium model that's been around for a while it's in all over at this point 125 countries but our our forte where we really specialize is education and that's that's what we do yeah we try to make it effortless for our education customers in particular by providing them their content as they would need it for every imaginable job that they have within their schools okay so this is you walk into an elementary school you in the main lobby you see screens on the wall that says here's the events today you know here's a holiday coming up next week don't forget that kind of stuff exactly and are you not in universities uh we also we are a big provider of financial trading labs so basically there are many financial floors in universities and they train business business students to come out of there to to move into the financial sector and what would you say your kind of core value proposition is is there a hardware component here or is it just software the school buys the tvs so traditionally we did the whole thing and that was the old overwhelming chunk of our business it was a one-time service but over the last about five years we've been really focused on our sas offering and now it's about 65 percent of our gross revenues oh great okay put this on a timeline for us when was your one uh 1992 92 holy byron you're aging yourself here were you were you born then i was gonna say i was a the ripe age of three at the time uh okay that's great and it's almost like when i when i study stats ceos and you hear about a lot of these old kind of on-prem things where they had to go install a piece of hardware in the form of a server you maybe were that same model but you were installing tvs exactly and we were in the our industry we were the first to offer a sas product uh in 2010 or earlier i believe and when you've been doing it for a while when you fast forward to today i know you have a lot of different kinds of customers but what does the average customer pay you per month just for the sas product it's about about 52 a month on average but okay quite a swing so but on average it's about 52. okay and people might pay more or less depending on like what how many displays or what are the things that make that variable um the the customers that have financial trading labs they pay a lot more we we entered this business with reuters to put reuters data on the end of trading floors so we have uh agreements with reuters to redistribute their data worldwide so if you want that type of data it's it's a much more expensive package that's interesting and when did you decide that schools were an interesting opportunity for you um well the the trading floors turned their displays outward to attract the public when banking got into finance and all that kind of stuff and then the schools started creating many training labs to train students to go there and they use them as a big i don't know barbershop poll to attract students for you know their their enrollments and all of this kind of stuff so about 10 years ago we started to notice that schools were far more interested in using our trading labs as trading labs started to decentralize and shut down than actual trading floors where so yeah about 10 years ago the shift started to happen i met byron in the elementary schools and the secondary schools well actually no um it's post-secondary that started the whole trading labs but what's really interesting because of the financial literacy programs in the us high schools are now putting in trading labs so this has started in the last couple of years that's great and so what have you scaled to today how many customers uh well we're a freemium model so uh we've got just you know paying customers about 6 000 customers and how many give me the it's the number everyone always likes to share because it's always the big one how many total free and paid uh i think we're about actually i don't know you you can do this math far faster than i can 54 pay us so whatever that number is that's the active phase got it so the 12 000 that don't pay you they put up their own tvs they use your software for free basically there's about 6 500 of them and then about 6 000 others pay exactly interesting okay so if six thousand are paying 52 a month what that puts your sas business about 300 grand per month in revenue does that sound about right yeah i think it's closer to 350. 350. okay great and what's that look like from a growth perspective so a year ago in october of 2017 what was monthly revenue um we track our moving annual average growth so it's on a on that basis it's 25 24 points something okay so call it maybe you're doing about 310 000 about a year ago now doing 350. something like something like that yeah and um byron how have you done this your own capital have you raised i know we're just bootstrapped yeah why do you see that so bad that's such a that's a beautiful thing i personally think it's a fantastic thing yeah we were on a call the other day and and that call was private so i won't divulge details there but um we were kind of talking about and thinking about you know like why are people using venture debt and when does it make sense when does it not make sense have you do you work with any founders or have you talked to any other of your colleagues around venture debt and where it's been used effectively um i think if you have the ability and a strategy you and and you can see a return on it why not go for it um so you know for us and and you and i have talked about this before we're at a crossroads where we've got some really interesting things coming up so we we may look at to more expansion through debt financing stuff like that which is based on the exact same formula that any other entrepreneur should be using to evaluate that but i not just debt by the way like entrepreneurs should use that formula for even venture the big difference is dilutive and debt is non-dilutive however there's an interest rate typically my my preference is is the debt side just because i'm a firm believer in the upside of you know controlling your destiny yeah i'm you and i are on the same page there for sure um walk me through some other economics here what's churn look like uh not not what we want it to be so our gross churn or well our logo churn is about 1.33 monthly and gross though is about four four and a half percent monthly sorry i mean you mean net is 1.3 gross is four no net is point six percent monthly what was the four the four is our gross mrr turn oh yeah so just to repeat that back to you gross logo churn 1.3 per month gross revenue churn 4 per month correct correct interesting so that would tell me that you have higher paying customers churning yes those are the trading desks um yeah so the the financial trading floors are starting to to shut down uh and move to their they're decentralizing and there's less less concentration of them so yeah what are you willing to pay to get a new 50 a month customer uh what's our customer acquisition cost our ratio is 3.18 lifetime value to customer acquisition cost and i know your math is way better than mine well that's okay what do you do you know what you assume lifetime value is in terms of dollars uh yeah lifetime value uh i love this guys you see if you're watching the video i love when a ceo has notes they know what to expect he's ready all right i listen to your show daily i know what you're gonna do to me thanks for listening by the way i appreciate it oh no it's my we've talked it's my morning coffee routine um about 1900 okay got it so lifetime value in terms of dollars is 1900 bucks i can then obviously divide that by three and means you're willing to spend about 600 bucks to acquire a 50 a month customer exactly actually i just double checked it yes that's great that would put your payback period at 600 bucks of cac 50 rpoo what is that so about a 12 month payback not bad uh i've got less than less than six okay walk me through the math how do you get that good question i don't know i would trust your math that's okay that's okay either way uh either way it's obviously it's it's working um the trick the trick it's something you're focused on now is how to how to get churn lower um absolutely everything we're doing right now is all about churn so so tell me something tell me about the test you're running right now that's going to decrease your that you're most excited about um we're trying to make the experience completely effortless so we call it an aha moment which is when a display activates which typically takes about a day to see something we have a really ambitious goal internally of making that five minutes so we're putting everything we've got into that that's i feel like that's really smart because then you can kind of model out so just be clear what does someone need to use if someone's listening right now they've got a tv above their kitchen right in their startup office and they want to put like a dashboard up on there can they use you absolutely okay and so what is the actual tech like most people what they do is they would take like their reporting dashboard from google spreadsheets they would just airplay it onto a tv and that's what they would do yep so like a really small small form factor uh or chromecast chrome device sorry not chromecast chrome device um is what we would install our what we call a player on and it would connect just over the internet and pick up all your content and display it okay and why help me understand why people would have to wait for you to ship them that and kind of do that process versus just errors they don't have to wait for anything if they've got everything um well i'm something they don't right assuming they don't have a chromecast thing right they need that but my point is why don't they just airplay it they they can it's just not very robust so digital signage is 24 7. so i you really want to have a hard wired connection and a you know all that stuff otherwise things happen okay um if you're experimenting with stuff i think i'll go for it but if you are looking for a 724 display that's reliable and monitored you want to hardwire it yeah yeah what's the team size today how many people 35 35 and where is everyone based everywhere we're totally virtual totally virtual that's great all right byron let's uh let's wrap up here with the famous five number one what's your favorite business book all time uh probably good degree number two is there a ceo you're following or studying no i i try to read a book a week so that's pretty good number three what's your favorite online tool for building your business i'm i'm old school so i'm gonna say trello we we live and die by our kanban boards number four how many hours of sleep you get every night about five that's pretty good and what's your situation married single kiddos married three three children and uh you you'd probably go to the to the bars with them so i don't tell you how old they are okay all right we'll keep that between you and i and how are you byron 56 56 last question what do you wish your 20 year old self knew um to read i don't have to figure anything out it's all been written down by much smarter people read read read guys there you have it from byron ry's vision launched in 1992 first with a partnership on reuters today over six thousand customers paying 50 bucks a month doing about 350 grad and monthly revenue that's up 20 30 year over year so about 310 000 bucks per month in revenue just about a year ago they're bootstrapped which i love gross logo turned 1.3 per month four percent gross revenue churn per month so they're churning higher value customers but they are actively working on how to bring that down by getting their activation from time zero to you know it all activated in value at aha moment in under five minutes payback period is about six months team of 35 based in all over the world remote locations byron thank you for taking us to the top thanks for having me