Shorthand Revenue, Valuation & Funding (2024)

hello everyone my guest today is Ricky Robinson he's the CEO at shorthand maker of the visual storytelling platform trusted by the BBC Business Insider refinery29 Honda UK saved the children and hundreds of other publishers brands nonprofits and universities they make it simple for storytelling teams to create memorable stories that audiences want to share Ricky are you ready to take us to the top absolutely all right this is a you know scaling content creation is very difficult especially when you start adding video elements and it's not just you know blog post anymore these days I'm eager and excited to talk to you because I think it's a problem so many people have so tell us what's shorthand does and how you make money what's your revenue model yeah so these days we we do annual subscriptions it's just annual subscriptions we don't do month lease and we sort of sit in that space where you know prior to shorthand coming along news news organizations and big brands would have an internal development team to create these sorts of stories on a custom basis so case by case I'm so expensive very long time frames publishing and short hand kind of just comes and makes makes that a lot easier so you know we reduce time and cost by you know more than 10x in a lot of cases and how does it walk me through all this work so like the made up to look beautiful sent out to die campaign by the BBC right so this as I scroll through it I mean it's a blog it's essentially a full screen full bleed blog post or other interactive kind of elements built into it walk me through the back end how did you make this magic happen yeah so I mean all the magic is really I guess two parts so the editor the editor is really magical to use a lot of our customers say you know it's the best part of their day are using shorthand to create stories so we put a lot of effort to that and then the rest of the magic is all in the browser on the front end and I think one thing that we do that you know a lot of a lot of other platforms don't and I guess why why the likes of BBC and Business Insider are using shorthand is because we kind of make sure that all these interactions work across every device every platform so we do put a lot of ethic to that so give me an example give me an example of business insider so like what suppose they used you on yeah so business insider I'm they use it for commercial content so they do sponsored content for you know likes at Volvo Cartier those sort of brands and that that's a that's a fairly big use case so news publishers wanting to offer their brand for customers something special and a cut above what they've been offered previously but also something that they can do on a repeatable basis right yeah so again in the past they've done these stories but it's taken a lot of effort and now they can kind of create a lot of these stories in a very quick time frame you know make sense walk me through what the average price when is per year I went up wiggling on every customer chord I'm sure you have many but on average yeah absolutely so it's six thousand u.s. got at six thousand per year and and what what generally people get for that is that like one piece of content per month or how do you how do you define that no so we'll talk about that in a minute but I think one of the lessons we learned was was not to offer it on a per piece-- basis and we'll talk about why in a minute but essentially it's it's based on features but the big differentiator between you know whether you're what you're paying in the tens of thousands for shorthand or or less than that is whether you're exporting the story on to your own infrastructure there's a big difference between customers who want and need that ability and customers who are happy to have this store is hosted on shorthands infrastructure and so there's a there's a big difference in value there walk me through how you're tackling something like a load speed right so I've tested a bunch of these sites before I did in the load speed was really really bad because it's such interactive content right some of these things I imagine the BBC you're not actually hosting them so how do you handle things like load speed yeah so I mean load speed is an interesting one I think you'll find that for the kinds of stories that these are short hands short hand stories do load fast and one of the things that if they're hosted on you and not exported yet well it depends like a lot of our customers do do a good job of putting that on you know this infrastructure CD and in front all of that kind of stuff one thing that shorthand is it's different to some other platforms is that it's it's static files right there are their flat files so you are loading the the the HTML the assets CSS all off just a normal web server right and it's not being dynamically served out of a database I'm so that's one thing that that is quite different to other solutions and it's it's a big trend on the web at the moment is the some static static files right so when did you launch the company what year um so we got started we incorporated in 2013 but there was no product until 2014 ok and so how did you support yourself over that time to do is raise capital yeah we did so we have investor well-known guy in Australia called Graham wood so he's he's Baptist he's the only backer at the moment how much how much they own the beginning to give you yeah so three million Australian ok and and a total raise total raised to date is how much that's it yeah oh just sorry we sorry we we did we raised another five hundred basically to open up a shop in New York okay so if you raised three million five hundred Australian dollars which is equivalent about two point today which is equivalent out 2.5 million u.s. dollars yeah okay great and just from one investor that must be nice yeah I mean Graham's really supportive he's always been very interested in independent journalism good journalism he he funds The Guardian in Australia so The Guardian newspaper and he's had a bunch of other projects in his space before and over the past couple of years what have you been able to scale to in terms of total customers using you guys yeah so we're just shy of 250 customers at the moment that's great now if I take that 250 times now you said the that's 6,000 obviously was annually but I put it about a 1.5 million dollar run rate is that about accurate that's about accurate yes that's great that's very good and talk to me about the talking about growth so if you're at about 1.4 today where were you about a year ago yeah about a year ago we were doing where are we we're doing about 60 60 mr are you table on say yeah over this year I think the last Australian financial year which kind of ends in June it's been a little bit slower than the previous year and I think the reason for that was these story limited plans that we offered right so we we offered these plans for three thousand dollars and then three three and a half thousand dollars which gave you like a couple of stories and that was great for growth like they sold by the bucketload the problem is that a lot of those customers once they created those stories and exported them that was it that we're done gone and so turnover this last this last six months or so has not been great has been terrible I capture news like to two percent I take two percent logo turn per month yeah no that's revenue check two percent of revenue turn per month that's net or gross revenue turn that is that is gross okay so you're not adding back and expand the upsells no no no okay great and it's ready why do you say that's horrible that's actually I mean that's not horrendous it's for us it is because we know where we were at before where were you sure was was awesome so less than half of that okay so which sorry what changed so these story limit story limited plans right so offering these things where they create two stories and that's all they need then they move on so I think our problem that was in plan design and I think we we we've sorted that problem out now like we obviously don't offer those plans and insurance hire you well sure and churn is high at the moment cuz we've got annual plans right so we sold a plan a year ago one of these $3,000 plans they're turning now oh god they're not gonna new and at the new price yeah I see what you're saying so so that's been our issue but if you remove all of those story limited plans our curve looks a lot a lot nicer I would argue I would argue that 2 percent revenue churn per month on a gross basis Jenner by the fact that you're asking people to essentially who we're paying three garner now pays six grand for the same thing that's actually not bad at all walk me through new customers you're onboarding what's your CAC yes so our cat I'm so it costs us fifty cents on new ar-ar-ar dollar yes you spend really cents for that new for that new dollar they are yeah I guess three you know it's three thousand dollars to bring on a new customer yeah three K CAC and so then you're getting paid back what in about six months yeah roughly that yeah but it's all about paid up front so Kona cash basis in salutely yeah yeah interesting yes so how cash I mean you know the last Australian financial year we we had a cashflow positive year so it was yeah and growing and growing you said about a hundred percent your ear that's healthy yeah you talk to me about team size where you how many team members and where you based we have ten FTE web based all over the world so we have a office here in New York London so London the UK Europe is kind of our main market that's where we got started that's we've got traction with a lot of the big publishers the u.s. is kind of just coming up and maybe going to overtake that over the next 12 months and then we have our development team in Australia in Brisbane mainly and we have a guy in Japan and another guy in Seattle so we're kind of very distributed very remote that's great and walk me through kind of in terms of what you're doing the company today so are you looking at raising more capital or drive growth we're not sure like we think you know obviously we've we've done a bit of analysis we know what levers we have to pull you know if you spend this much here we're gonna grow by that much tell me about one of those leave it levers yeah so we've spent nothing on marketing literally nothing we've grown to where we are today just based on publishers coming in creating great-looking stories putting them on their website people reading those stories going holy cow how did they make this most of the stories have a shorthand logo at the bottom and people click that and come through to our website so to say 30 40 percent of people reach us that way and the rest is pretty much all just search and so we've you know we've done very little later to optimize that at search as well we're currently at a big project for us at the moment there's our SEO and so how are you tackling that project is it does it have to do hiring SEO experts or what yeah I'm so that so just bringing in we've done a contra deal with with an agency that kind of specializes in that we have a data scientist on the team very very smart cookie and you know there's just so much low-hanging fruit for us in that space because we haven't done anything so just looking at you know what keywords should we be putting on our homepage really simple that most most startups that our size and and our our age would have done this stuff by now and we just haven't let me ask you a question so you're in a room a price point perspective when you start analyzing the effectiveness of a potential inside sales team or putting touch on a sale your price points a very tricky one because it's high enough where someone doesn't feel comfortable putting a credit card on an online form without a phone call but it's too low really to pay too much in terms of a commission right or a kickback to whoever the person is closing the sale so how do you solve that yes so so you see I don't know whether you've seen our pricing page but would just we've just put that pricing page up and we've got these our export plans which are tailored plans the the top end tailored plan there really starts at 24k alright but but we sell those for often a lot more and that's based on you know the features that they get how many sites they're putting this this shorthand on and so we are slowly pushing that that that a CV up okay so you'll put touch on those accounts but yeah I'm actually also have a lot of no-touch sales coming in every month yeah we do yeah we do that's just just you know there's there's such a range of people who want to use this tool people who are you know upgrading from Squarespace sure town yeah they go on to a prelude plan and uh and then at the top end we've got you know the likes of the BBC um Honda etc so if you did just to raise capital about how much would you charge it raising that's a really good question we I'm I I wouldn't want to take too much to be perfectly honest but we've had offers not not offers we're currently discussing there's one really well-known firm that is talking about a 20 million dollar investment and that to me is like that's gonna change our company and we're not sure we want to do that right investing 20 at a 20-man dollar valuation or putting 20 million in 20 million in which seems crazy to me and the reason the reason that why are they lying are they buying the whole company what what first I think they probably buy buy out Rams stake which is what about 30-40 percent no he owns so so at the moment he owns actually the whole company and when when that deal if that deal gets done it restructures the company essentially wait and Graham ends up with why are you why are you as a CEO taking all the risk building this thing else and you own no equity so I was not a founder who found that it I well Graham did actually so Graham has backed a lot of these publishing projects in the past the you know if if we had our time again you know I wouldn't have structured the company like when did you come in then what year I came in in 2015 okay and what happened to the start-up like the founders grandma isn't happy with him so he fired on what essentially yes okay I do I have another time okay so they're they're not involved at all anymore now why don't they own any part of the company who knows they didn't take what equity to begin with I was not part of that no idea okay interesting so so okay so grandma interpreting company you're basically an employee you have no equity which that's a whole nother conversation I'm confused why what's what's motivating you but maybe what's motivating you is potentially someone else buying out Graham for 20 million and then giving you ten percent equity or something and saying hey we run this scale it and build it sort of what is motivating us is that this is an awesome team to work for we have a lot of fun we have great customers if a Ricky you have come on your hunch one time you're taking all the risk I believe what you're saying like that's the right answer but you're taking all the risk you own no equity all right today today yeah so what is your path to equity it's finding a buyer who will then also say hey Ricky now we bought grandma a game a great return now we want to give you 10% equity and cent raise you to keep building the company it's gonna be something like that yes yeah interesting okay so did you take a 20 million our deal or actually just Graham take a 20 million dollar deal um I think I think we need to consider that it will change the way that that shorthand operates of course shorthand I mean you know the story so far is you know we've kind of dug ourselves out of a hole and now a cash flow positive and things are kind of going great right and and then we look at we look at investment we say like do we want to change that let's not call it let's not call it an investment it's not someone else would basically buy out it's a sale and then a restructure of the cap table that that may be the way it goes down that may not be there have been more like so there are multiple different parts to to how this could work okay well if if one of the paths is someone investing 20 million right and owning 10% a company that gives you an evaluation of something that I would just want to understand how the hell you do that because 20 million supplying 10% that's like a 200 million dollar valuation on 1.5 an AR that's like 200 X completely agree it boggles my mind as well but you just be clear you don't have offers for 20 million to buy ten percent of the company that's not what we're talking about talk about a buyout no we are we have what we've discussed and I'll be clear there is no offer yeah what has been discussed is that we reach something like 2 to 3 million ARR yeah at that point it'll be basically a 30% cut to Graham right so it will be as if Graham has owns 30% of the company in the past and then the investor will come in by 30 percent of the company okay so let me just play this through you have three million a year from now you have four you coming back on the show Nathan we hit three million bucks in a are great someone came in Graham currently owns a hundred percent someone pays twenty million and by seventy percent which means Graham now owns 30% well where are you fitting this picture no no no no no so the investor will buy 30% of the company so thirty percent will be Graham thirty percent will be the new investor okay well where's the other forty percent the rest is the team yeah but what if someone has to buy that from Graham though someone has to buy that from Graham though he owns right now yeah absolutely so the company's gonna pay him for that extra forty percent to then make it basically an employee option pool I'm not sure what you mean Graham currently has a hundred percent for him to get down to 30 percent someone has to buy 70 percent from him you're saying an investor's gonna take thirty percent well there's still 40% unaccounted for so how does I'm just saying it'll be a complete restructure of the cap table yes it does so it will be though generated by an investor coming in and essentially buying sixty percent from Graham they'll keep thirty percent as the investor and then incentivize you with the other 30 percent yes that's the only way that can that's that's how that's I mean that's how that would free up I just wanna make sure I'm understanding you correctly yeah okay interesting I'm just confused why you why not do demand that like say this now right like hey we're building a company I'm driving growth I'd like 10% give me putting my out of it the next board meeting is gonna be interesting twelve okay good we're gonna have you on on September 13th all right all right Ricky let's wrap up with the famous five number one what's your favorite business book ah so favorite one I probably insanely simple by Ken Siegel okay number two is there a CEO you're following or studying right now oh really no number three with your favorite online tool for building your business I'd have to say I the front or zoom front at war Azumi and both great companies number four how many hours of sleep do you every night I feel like this question is like a race to the bottom competition for first CEOs and founders not not enough nowhere near enough eleven hours I know five okay by the way I if someone tells me like to have a great company but they only sleep for hours I immediately ignore the interview and take none of their advice if they say they have a great company or okay company and they're sleeping ten hours I'm way more interested in that advice yeah yeah absolutely healthy I think it's a problem you know in startups at the moment yeah and what your situation married single kids married two kids 11 and 8 and how are you I am 39 okay last question what do was your 20 year old self knew ah I I wish I knew what focus really was I'd tell myself you think you know what it is but you're really dying guys there you have it he would have had to try to have a better understanding of what focus meant and what it was joined shorthand but he is not the founder of a joint shorthand back in 2016 that was three years after launch the early investors who owned about a hundred percent of the company basically kicked out the first two founders he's now running and driving great growth 100 percent year-over-year growth from about 60 grand in monthly recurring revenue in August 2017 up to about a hundred twenty-five grand per month today that's from 250 customers that pay on average 500 bucks a month but those are all annual plans about 6 grand per year again those are usually paid all upfront 2.5 million raised all in that's US dollars 2 percent revenue churn per month that's on a gross basis spending about 50 cents for a new dollar of AR AR or said differently there's been about 3,000 dollars to acquire $86,000 customer with a six month payback period team of 10 people based in remote locations but mainly New York City and London thank you so much Ricky for taking us to the top thank you very much