How Srax CEO Christopher Miglino grew to $26M revenue and 500 customers in 2019.

hello everyone my guest today is christopher mcglinnow he's the ceo and founder of shraxx he spent the last past 20 years working in digital advertising space and has successfully launched and sold two internet companies both these companies were sold to publicly traded companies on the nasdaq his detailed understanding of how technology interacts with brands again now building this one allowing consumers to control personal data christopher you ready to take us to the top i am all right so this is obviously a very hot kind of controversial topic right now what does shracks do when what's your revenue model how do you make money so our core business is in aggregating data around different verticals so over the last 10 years we've been aggregating data around uh different core verticals and most recently we've launched over the last couple years a platform that will allow consumers to own and monetize their own data because we you know we understand what uh what data we're buying in the marketplace we understand how the consumer is being taken advantage of in the marketplace so we launched a platform that lets consumers own their own information and then get compensated for sharing that data okay so you are you exclusively b2c or are you selling to any are you selling this data rolling it up and anonymizing it and doing any b2b stuff we are doing b2b so what we do is we'll we'll take the business to consumer data put them into what are a lot of people don't understand how the data business works data comes into what are called segments in the digital advertising space segments are uh different pieces of data about how the consumer is seen so you have you know you're a male you are a certain age you make a certain amount of money you shop certain places every time you use your credit card every time you uh go into a certain location with your phone that drops you into different segments those segments are then sold back to marketers that are looking to reach those types of consumers so we've created that infrastructure for that allows that to happen so you're paying consumers right they're not paying you correct consumers we pay consumers historically what's happened is we have uh we buy data from the big data sellers so companies like experian and oracle and uh facebook all sell access to certain amounts of data okay so we take that information uh instead of paying those providers for that we pay it to we pay it directly to the consumer um say that one more time you pay for data from experian and facebook and do what with that data well no historically what we've done has we've bought data from aggregators of data so experian oracle axiom these are all people that consolidate a bunch of different data together and sell it to marketers now the consumer doesn't get compensated for any of that so the challenge and nor do they even understand that their data is being sold in so many different ways you know they they don't know that when they go and shop at a certain store that stores them reselling their data yeah so chris sorry i think i get it now just be clear historically your model has been you spend money to buy data from facebook experian axiom you then sell that to marketers your new product basically removes you having to pay those guys maybe you still do but you now actually will pay consumers directly for their data so you are becoming a axiom facebooker experian right with consumer opted in consent so the challenge that all those other pla those players face is that the consumer doesn't really understand what they're getting into in that relationship whereas in our platform they fully understand the relationship they fully understand that they're putting their data in the platform in order to be monetized and protected okay so you pitch me on this nathan sign up for our consumer thing what date am i gonna give you and what will you pay me for that so you're gonna give us all your basic demographic information when you sign up so you're gonna say okay uh this is my basic uh address my email address my phone number uh and then as you get into the application the application starts to ask you more questions based on things that we think you might be interested so it'll track where you're going and it'll say oh yesterday did you go to hugo boss or did you go to nike and you'll say oh yeah i did go to nike and then i'll say okay what did you buy a nike did you buy something at nike and then it'll ask you a variety of different questions like that one of the things christopher sorry are these actual questions in like a web form or am i installing like a shrek's app on my phone and you're automatically able to capture this data after i told you you can automatically capture it both it's a combination of both of those things so you're we're you're installing an app and there's a desktop version of this as well and then you uh you are answering questions inside the application as we're tracking your location and you've consented to that location tracking consumers don't understand that google and everybody else is tracking location data and showing that back into the market so what do i get paid for this what do you pay me for it so i've been on the application for around two and a half months i've made around 850 bucks in in the app but i'm obviously i'm pretty active in in the application but uh consumers are paid not only for their uh own data but they're paid for data of anybody that you bring into the platform as well so it's like if facebook would have said to you 12 years ago 15 years ago what's the average you're a power user what's the what's the average consumer is what making like 50 60 bucks a month from europe your platform yeah that's a that's that's around a good number of uh of what people are making and the good part is you don't need to continue to participate if you want to just be a consumer that downloads it once put your information in never touches it again then you're still earning money as time goes on how many consumers have opted in so far we haven't given those numbers out we pl we're a public company and so we're uh giving those numbers out in our first uh first quarter quarter earnings call which is coming up on may 15th ignore the actual as well i mean what's the tar i'm sure you put out targets for this right are you talking about like a million people or a thousand or you know our goals our first goal is half a million people uh and then because we think we can start to monetize after a half a million people we we had a we had a platform that we sold last year for 52 million dollars that had around four uh hundred thousand uh doctors in it why did you what was the platform and why did you sell it so it's focused around uh the pharmaceutical industry and uh aggregating doctors that were uh prescribing certain types of drugs it didn't fit the model of paying doctors for their data because that's illegal so you're not allowed to pay doctors for their information or for their attention span which you can do with consumers so doctors are under a lot more scrutiny in that area so it didn't really fit plus it was a great exit for us you know we started that from zero and we got oh you didn't acquire that much at a much smaller stage you actually launched that from nothing yeah we launched it from nothing like our other verticals we have we have a vertical around investors we have a vertical um that's around auto we have one that's around shopper that's been our biggest vertical and then we have one that's just a core so those are all natively grown inside the company so separate and apart from what you are and i are talking about those are other pieces of the business that we do so how much time do you think you need you just launched this two months ago how much time do you think you need your first 500 000 consumers signed up um we went through you know it's it's been like a uh learning process of changing things in the application so we went through the alpha went through the beta we discovered that we need to change some things ux ui so those things are happening right now once we're once we're done with that we think that uh you know we're ready for the full marketing blast around and there's a bunch of different partnerships that are b2b partnerships that are happening so you our b2b partnerships are uh you are a brand with a bunch of names you had a little box at the bottom corner that said yes you can market to me right but it wasn't consensual for the consumer they don't understand that you're actually taking their data and marketing backing out to you in the future we're revalidating that information partnering with brands and saying look let's pay your consumers that are in your crm and turn what was a cost center for you where you're needing to pen data from experian and all these other players into your data set and turn it into a revenue generating stream so chris for true or false gdpr is actually a blessing for you because when people see the things across the bottom websites that said accept cookies and everyone clicks accept right you're essentially actually legally getting the right now to do this where in the past people would try and hide it you actually love gdpr yeah it's fantastic for us and there's a you know and and for those people that don't know the gdpr is the uh the european um privacy laws and the uh those laws are coming to america in a big way it's a very political issue obviously because people are using facebook to win elections and this is a you know something that's uh we're very active and guide the litigation and not the litigation but um you know the bills that are being uh that are being created around this so christopher what do you mean you think that 500 000 consumers by the end of this year you think or no you need longer oh no no definitely by the end of this year okay very good all right um take me back to your hospital yeah that's the goal uh any year 2019. no that's great um you are public so just download some of the numbers for me because because i haven't done the research so total revenue last year was what uh last year we did 26 million dollars in revenue and uh but we we had this is now when you say last year for us because we're releasing our annual numbers uh in around five days from now so you're looking at a 20 uh you know you're looking at a 2017 number not a 2018 number so the 2017 number that's publicly available is uh was it 26 million dollars and what did you in your guidance what did you say growth rate year over year would be so where for this year we anticipate revenue to be in the 20 to 25 million dollar range but we sold the pharmaceutical business which was contributing to the year before so we'll be pair pursue for where we were before even without the business that we just sold you said in 2017 total was 26 million you gave guidance on what growth would be for 2018. you're going to release the actuals in five days what was the guidance number on the 26 million growth like to what we hadn't given we hadn't given guidance for the we hadn't given guidance for the 2018 numbers so there wasn't guidance there wasn't guidance out there for the 20 years no in fact a lot of a lot of small cap public companies don't give guidance at all so in 2019 for 2019 we did did give guidance of 20 to 25 million so we took our sales team from six sales people to 30. so we've increased the sales team significantly size the total team size between uh the sales guys and technology wherever 140 people 140 that's total though right everybody correct yep and then um so it sounds like you're about flat in terms of actual revenue however your cash position drastically increased assuming the 52 million sale was an all-cash deal um you released i think uh uh basically cash equivalents in these in this reporting uh what was cash equivalents pre uh sale and and post the 52 million dollar sale so we got uh in the in the transaction we got 31 million dollars in cash we got an earn out that we find out about in uh around 10 days from now whether we hit the earn out and then we still own 30 of that business so we still own a thirty percent ownership in that in that business interesting really interesting um but it's being run now under who bought it uh a private equity firm called halyard capital bought the company interesting okay very cool um walk me through so like i just had manny medina on right before you who's at building outreach right and they're pushing 100 million bucks in ar and he's saying to go public we really need about 200 million bucks in arr how did you end up public and why are you public with such little revenue wouldn't you rather be private yeah i think there's for us uh there's always been good opportunities in being public it depends how you approach it right you can what i never did was i never took a dollar from any venture capitalist so i have no vcs in our transaction uh so what happens is the vcs you know fund early and then you kind of get caught in that uh need to take continue to take money from those vcs as you move on so you were bootstrapped into going where did you go public uh we went public on nasdaq in 2016. okay and you were you owned 100 company basically bootstrapped at that point we did yeah we no we we took money in we were public on the otc we went public on the otc we self-registered onto the otc and then built up enough shareholder equity to get to nasdaq and then listed onto the nasdaq exchange without doing a deal nasdaq in 2016. how much did you raise on day one in the ipo there was so when you self register an uplist onto that we didn't raise any money we just self registered on onto the platform so nobody was taking money out it was just a other vehicle to allow us to continue to raise money in the future and to use the currency as for acquisitions yeah well and also now you can acquire talent on your team and there is a liquid market for their equity as they grow it right that's a huge upside as well correct yeah the stock trades it has its days where it you know trades to 300 000 shares and so there's liquidity there in the in the stock if people want to get out of it what's the market cap today it's around 25 million dollars so it's a really low market cap why is it so low you know you got me you should go buy something well so let me ask you a question right vista equity and they just raised 14 billion they're the biggest buyers in kind of the b2b sas place and unless you get like the toma bravo kind of kind of folks and maybe envision fun kind of folks softbanky um it's one of them offered you you know i don't know a premium call at 40 50 million bucks how do you analyze potentially you know take private scenario well you'd have to analyze that when it happens so you can't speculate about it you know there's there's been guys that have come and said like hey let me uh you know take it take it private for x amount of dollars and um you know we've historically we've said no to those type of things because that comes with a lot of teeth as well um so we think that it's a we think that as people start to recognize the the value of uh of what we're doing inside of the uh big token business and our other verticals that we'll start to see the benefit and of that in the marketplace of the 26 million kind of historical revenue over 12 months that's almost 100 right b2b you're selling your data to other companies versus the consumer stuff yeah so there's yeah there's been zero zero b2c revenue in there i'm sorry i think that's all b2b business i screwed up that question what i'm actually trying to figure out you have engineered a margin for yourself based off what you know you can sell like my if you pay me 50 bucks a month you know you can sell my data for 100 bucks a month to like the b2b like the other business you're selling it to right what what margin have you engineered for yourself what is the spread versus what you're paying consumers like me to give you data versus what you're selling it for fifty percent so we get fifty percent of the money to the consumer okay that's that's that's pretty healthy so you have kind of margins built in there at 50 percent correct and i mean that's typical what we're what what happens now right like when i buy um when i buy media for a campaign i'll typically pay you know dollar fifty two dollars maybe three dollars per thousand for the media and then i have to buy the data on top of that which is gonna cost me a dollar fifty two dollars three dollars up to seven dollars depending on what what kind of data it is so i that's that's a cost of goods sold that was built into the business before which is now just going direct to the consumer yeah interesting uh real quick questions here launch date of the company was what uh we launched in march of 2010 2010 and then how many customer bb customers today b2b customers yeah like like people that are making up your 26 million revenue how many i'd say probably around uh 500 or so i don't have the exact number that's okay that's okay but but i mean the reason i'm asking is i can then just take 26 million right divided by 500 they're each paying you like 50 grand a month 52 grand a month on average well you have the 80 20 rule so you know there's a lot of people that pay a lot more and a lot of people that pay a lot less so you have some marketers that are used to spending money and some marketers that uh you are just getting started yep very interesting um and your biggest competitors are probably what experian axiom facebook right they're frenemies so yeah they're we buy a lot from them have any politicians have any politicians bought your data for the 2020 especially like democratic kind of 2020 stuff uh yeah but you're smiling big you know this election cycle you make a lot of money from this hopefully i mean uh consumers are very interested in this selection cycle and they want to voice their opinion about where they stand on it and marketers want to buy that data and the data that politicians have historically purchased has been it's uh just well it's registration data about you know registered republicans registered democrats people that voted in primaries uh so our platform provides for a solution for more detailed questions on specific issues you know how do you feel about this how do you feel about this other issue so we can uh you know then start sending campaigns to those individuals targeted around their answers yeah yeah and in a world where in order to win right the the kind of electoral college you can only maybe need 70 80 90 100 000 vote swing i mean so micro targeting is a real thing if you figure out how to do it strategically and having data like what you have means it's very powerful yes so when are you announcing so when are you announcing that you're running for president it's never going to happen all right chris chris let's wrap up with the famous five number one what's your favorite business book um i like uh richard branson's uh leaving uh is it leaving my virginity or uh losing my virginity i know i i like uh think and grow rich good good all right number two is there a ceo you're following or studying i you know i love following richard branson mark benioff um those are those are two people that i really love to watch what they're doing number three what's your favorite online tool for building the company uh i love our email platforms i love uh you know any type of our marketing communication drip help help sales people communicate better with their prospects christopher what do you use for that part okay i think he's part of that number four how many hours of sleep to get every night i usually get around six or seven okay and what's your situation married single kiddos i have four kids and uh i have an and a wife i'm married and i have i have an 18 year old a 14 year old a 11 year old and a 10 year old oh you are a busy man how old are you i am 50. 50. last question what do you wish your 20 year old self knew uh let's see i would have told myself never to do business with certain financial people so never never take money from certain finance people like who [Applause] [Laughter] there is there's a world out in the uh there's a world in the public company small cap environment that is just uh ridden with people that do not have good intentions so i would educate myself about that guys there you have it christopher launched shrax historically has bought data from facebook experian and axiom and then again use that data to create interesting products now he's saying you know what we should go direct to consumer we should be transparent we should pay the consumer to give their data to us and then we can build in a 50 margin to us we'll give the consumer 50 bucks we'll then sell it to another b2b brand or a politician for a hundred bucks and there's a 50 dollar spread for us built in between there looking at scaling that right now doing about 20 26 million bucks in terms of uh 12 months revenue 500 customers founded in 2010 went public self-registered in 2016 and then went up on the nasdaq all right very good christopher thanks for taking us to the top