SKYPADrevenue

Nathan's introduction to today's show hello everyone my guest today is jay hakkami he is the founder and president and ceo of a company called sky it group an 18 year old sas solutions provider headquartered in new york city again really helping with retail sell-through data collection distribution and insights jay are you ready to take us to the top you bet all right so what does retail kind of data and insights mean what are How Sky IT Group provides analytics and data to brands and retailers you selling uh basically we're a sas platform that provides analytics data collection analytics to the supplier brand industry as well as to the retailers so for example we work with brands to give them uh information on how their products are selling or not at the department stores that they're selling into okay so let's let's use an example let's use um uh what's what's a brand abercrombie and fitch uh they have a little booth inside Why they deal with brands like Giorgio Armani of like the local mall are you selling directly to abercrombie and fitch or the mall uh well i recovered kitchen as a retailer can you hear me okay yep okay uh we're dealing with more with the brand so let me give you an example let's assume uh theory or um or better yet let's use a giorgio armani perfect giorgio armani sells into many department stores like neiman marcus and sax and bergdorf goodman and nordstrom and so on they need to have visibility as to how their products are selling or not in those stores what we do is we collect that data for them we cleanse it and then populate it into a user interface that enables them to see what's selling what's not selling by combination of product attributes geographic location the different stores How they've grown to serve 70% of luxury brands as well as time dimensions so armani is your customer uh we we currently we have about 70 of the luxury market as clients right now so all the lvmh carrying cores story birch you name it they're using our platform that's great okay very good no i just sorry i didn't actually literally mean are they your customer but is that the type of customer you're selling to it sounds like that's the type of customer we sell into now this is skypatch for wholesale we also have skype for retail that what that does basically it allows the retailers such as sax and even marcus to to have a platform to distribute their sell-through data into those suppliers so basically we attack it from both Why retailers don't pay for the data behind their platform sides from the retailer as well as from the brand last 12 months revenue what percent was from retailers versus the brand paying well it's a interesting the platform is a vendor funded program that really doesn't the retailer does not pay anything uh the suppliers who are paying for that data so it's 100 vendor funded program okay it's 100 the luxury brands the versace of the world paying you not the department stores that's correct oh i see okay and um i'm sure you have a bunch of different customer cohorts but on average what would a brand like versace pay you per year for this well depends if they're look if they're looking to only get data from let's say neiman marcus they would pay just a few How they price based on visibility across various channels hundred dollars a month to get this information on the portal with the slicing and dicing capability but the company like versace would like to see not only neiman's they'd like to see how they're doing in sacks in nordstrom in burgdorf and any other 170 retail that we do worldwide so when we do that we integrate that together with their style information with their erp system so to give them a complete visibility to their product of the orders the shipments as well as Why their average customers pay them $5k each month obviously their sales yeah so just back to my question on average like the customer that is like your your most your highest use case what do they pay per year typically anywhere from uh about five to six thousand dollars a month okay uh we have customers paying a hundred dollars for very small it's a value-based proposition so we have a customer is paying a hundred dollars and we have those paying you know 40 60 000 a month as well but five is a good How they launched the company ten years ago average that's a good app when did you launch we launched this program about 10 years ago okay so the company's been around for 18 years but we launched skype that about Why they've bootstrapped to 45% growth year over year 10 years ago okay 2008 and have you bootstrapped to raise capital uh no we did it we started with a credit card and paid off the debts and uh no vc money it's all operationally profitable that's great and growing at a rate of 45 to 52 year-over-year in the last three years oh congratulations how many customers have you scaled to well we currently have about 500 brands using the custom using our uh platform um and this is like like i said who and who How 500 brands and 2k users are on their platform right now in in fashion in the fashion industry and luxury as well as beauty by the way and so it's 500 brands about close to 2 000 users we're collecting from about we're collecting from four different continents around the world from about 180 retailers that's great so 500 luxury brands paying that average you just gave me a five grand a month would put you at about 2.5 million bucks a month right now on revenue is that accurate that's that's accurate that's great take me back a year so you said you're going 50 year-over-year so what you were doing about call it 1.6 million a year ago per month no actually we have grown more because uh the in the last two years we've been able to attract some of the retailers like saks and niemans and others to be able to give us uh to give us the um the sell-through data to their customers so basically right now we're on boarding to the tune of 30 to 50 brands per week How they are on-boarding 30 new brands each week onto our platform because that's free only that's free and paid or just paid uh this is 90 paid 90 pay there are some programs that we do which is non-paid which is a very small subset of customers that need very little information about how their products are selling in those stores yeah so just to be clear about a year ago today how much were you doing per month so last year uh a year from now a year Why they are up from $250k in MRR tweleve months ago ago october about i'm sorry october november 27th here november of last year we're doing about 250 per month 250k 250k oh wow like 10x year over year yeah yeah all right that's i mean that's How they are doing $8M in ARR today incredible growth why are right now is about about uh seven and a half to eight million dollars oh okay well then you're not doing 2.5 million a month right now no no no no oh yeah that's what i asked earlier you said yes that that was accurate i guess something with a connection here no no it's no problem i just misheard you uh okay so sorry 8 million in run rate right now would put you at about 650 grand a month in revenue is that right correct yeah got up from 250k about a year ago yeah and what that would mean is if you've got 500 brands making up that eight million run rate each brand is paying about 1400 bucks per month on average on an average correct but the spectrum is so wide like as i said there's between 100 to you know 50 000 a month totally get that totally get that i just want to make sure it's 1300 not not five grand a month but you definitely have people paying a lot more and some paying a lot less exactly yeah talk to me about churn it's critical in any sas company what's your Why they have built a very sticky business turn uh wow we're we're turning i mean we have no attrition i mean this is a very sticky business uh the minute the customer brand comes on board there's no reason for them to leave unless they go out of business um so in the last i would say eight years one or two customers due to going out of business but once they start using it it's like it's like a drug what about revenue churn any upgrades and downgrades How Sky IT Group has gotten to well north of 100% net revenue retention uh yes many of the many of the customers are starting with one or two or three retailers and then they expand to the spectrum that they do some some brands elect to use us also for their own company owned stores as well as their.com which expand this expense expo so we're seeing a lot of we have actually a dedicated team to our clients just uh providing them with additional value and additional enhancement to increase the uh the monthly subscription so do you know what your net revenue retention is annually it's obviously above 100 but how far above 100 uh it's well over 100 i mean we we we really have not lost any customers yeah i know i know you haven't lost any but i'm asking about expansion right so if you're growing an account from a hundred bucks a year to 110 bucks a year that'd be about 110 net revenue retention Why they are driving 40% revenue expansion year over year oh i'm sorry i didn't get that yeah i guess i guess i would say we were about 40 uh expansion year over year an average customer okay that's pretty good so 100 340 kind of net revenue retention if you're not churning anybody that's great that's correct very good um talk to you about your team how many folks on the team uh small group actually we invested a lot in automation so we've been able to How their team of 45 employees is split between eastern Europe and New York scale down on the and the human factor we have about 10 folks dedicated folks out in eastern europe we have another 35 right here in uh in new york city in manhattan so new york city and europe 45 people total correct and talk to me about cac so in order to sign up a new kind of paid Why they are receiving payback with 2 months on newly acquired customers account what are you spending to acquire that customer uh well as i said it's very little right now because since we've signed up some of the retailers and as a brand if you want to get your data you have to come to us our cost of sales is basically it's getting them getting them on the web signing up once they sign up they fill out the information the credit card information within 48 hours they're up and running how many i assume though that someone's not just going to sign up for a 10 grand a month plan without talking to your sales team or your sales rep traveling to them i mean you have costs that's correct uh when we're talking about what's called skypad multi when you have multiple then when they want to get into multiple retail data collection it's a different combination uh our sales costs are fairly minimum they're about i would say about uh 10 to 15 of acquisition i'll tell you why wait wait hold on sorry what do you mean by that so if you're saying 10 to 15 percent of first year acv that's correct okay that would mean you're getting paid back whatever you spend you're getting paid back in called a month or two months absolutely right i'll tell you why because typically when we do a presentation on a demo 80 done deal based on the clients we have based on reputation we have based on the fact that we're the only game in town right now in the luxury space to do this to collect and present this information How customers like Versace will use their technology to see what products are trending and what will someone like versace they'll get your data this month and they'll make a change next month what kind of change might they make that they could only make because of your data uh well if they they're not going to make changes all they want to see is how their products are selling at the department stores they want to see what colors are trending they want to see what sizes are trending they want to know that they want to be able to be very smart when they have a conversation with the buyer at sas fifth avenue with the burger goodman this is the information they want to see now as far as changes they always want to see the information in different ways and different formats you might see additional reports they want to see reorder can we all can we place a reorder with the retailer we want to see sizings they're looking at different things but from something that started as a hobby to be quite honest it became something of a holy grail within the wholesale industry yeah that makes good sense let's uh let's wrap up here with the famous uh five number one what's The Famous Five your favorite business book uh famous business book would be dancing with the elephants number two is there a ceo that you're following or studying is there a ceo that you're following or studying jay um uh allison is the one that was uh larry ellis in oracle gary allison yes number three how many hours of sleep to get sorry what's your favorite online tool for building your business uh linkedin actually has been used as a vehicle for us to attract great talent as well as to attract great customers number four how many hours of sleep do you get every night i get uh about between five to six hours a night okay that's good and what's your situation married single kids married with kids how many four not wives kids i'm just kidding four four four kids and no four kids one wife and how old are you jay i'm 60. 60. last question what do you wish your 20 year old self knew uh whatever i know right now that's for sure i i wish i would i would be more aggressive on the things i did uh you know 40 years ago that i did today guys be more aggressive earlier on coming from a guy that's playing early on early on yeah absolutely don't be afraid just conquer don't be afraid just conquer i love it there you have jay from sky it group again helping luxury brands understand sell-through data at their uh at their department stores like neiman marcus and places like that launched in 2008 they're bootstrapped 500 companies right now doing about 8 million bucks in arr or about 650 grand per month that's up from 250 grand per month just a year ago so healthy growth net revenue retention annually in around 130 140 percent spending one to two years of first year acv or sorry one to two months a first year acv to acquire a customer so a healthy payback period there a team of 45 people between new york city and europe jay thanks for taking us to the top nathan thank you so much for having us