How Studionow CEO David Mason grew Studionow to $6M revenue and 65 customers in 2024.

hello everyone my guest today is david mason he's a veteran technology entrepreneur and e-commerce pioneer starting one of the first internet bookstores in 1994. ultimately buy.com became and had a successful ipo with a market cap of 3 billion and raised more than 225 million in capital when it was listed on the nasdaq david worked as ceo of that company europe the europe version based in paris and munich he started a studio now in january 2007 since then it's gone through a bunch of different changes related to aol today though it's spun out we'll talk about it today david you ready to take us to the top yeah definitely thanks for having me on the show nate so like why aren't you you should have been jeff this you should have been the richest man on earth why aren't you yeah i should have a lot less hair on my head you know you should be seeing a shiny reflection right there no though in all seriousness i mean the concept behind buy.com was really an internet bookstore so why did jeff do what he did but you obviously didn't do what he did now it's a great question a question that you know obviously over over the years and based on the success that jeff and amazon has had i've asked myself over and over again um but you know it's very apparent you know now looking back so fortunately my brother and i michael mason we actually had a head start so we had a first mover advantage on amazon we started our internet books were really at the end of 1994. launched it early 95. opened it up it was a huge success on day one we had some partners in germany that had created their own internet bookstore about three or four years even prior to that so in 1991 time frame uh so we had the technology up and running exact same concept as of amazon just did it maybe six seven months before amazon uh there was two of us i i was technically still in college my brother is about two or three years ahead of me um our first business um something that we did not know anything about the book business the book industry technology um but david what did you guys what were you able to grow revenue do i assume you kind of went on you listed in 99 i imagine when you raise the capital you raised what were you guys doing in revenue at that point well in in in 99 we've gotten the company up to 100 million dollars in top on revenue okay when we eventually merged the company with buy comp to create buy.com we did about 115 million in total revenue and our first year of business is that combined entity and that broke compact computers previous first year in sales records so super successful company so i'm not jeff bezos and we're not amazon but we we got pretty close so david just to be just to be clear though on that so when you're saying a 100 million bucks top line revenue i i don't know if you're actually holding books in inventory that's not transaction volume through your platform correct that's actually what you're taking per sale well that's our gross revenue you know and then we're going to have cost of goods which is purchasing the books and then you're going oh okay so you're making much closer to a 10 or 20 margin on 100 million you're doing 10 20 million in net revenue exactly like amazon's financial model outside of aws yeah but for my audience who might understand that to be clear what you were doing in 99 when you listed is you're processing 100 120 million bucks in book volume you're going to buy the book right so your margin after that was maybe 10 20 percent in that range correct that's right typically in the book market and then discounting came to be much more aggressive with amazon barnes no typically in the book market the retailer keeps forty percent so if it's a ten dollar book your gross profit is going to be four dollars so what what did you optimize for back then you're taking 20 million to the bottom line or what uh no i mean what we were doing once we were part of buy.com we were being super aggressive i mean we're almost selling products that cost so if you know from a gross margin standpoint we were passing all of that to the consumer and that was our customer acquisition amazon has done that too i mean they're notorious for buying the market and not making any money until you know these these last five or ten years but in the early days amazon had you know heavy heavy losses um and that's because they're highly discounting the the product but kind of going going going back to the early days just your your first question i mean at the heart of it what it came down to we brought a knife to a gunfight so my brother and i super junior super young we started the business we're in a strip mall outside of ingram book company which was the main wholesaler that's where we bought our books from that's where amazon bought bought their books from they raised 10 million dollars from kleiner perkins the first day i think we scrapped together twenty thirty thousand dollars the first day so yeah we're we we were outmatched from day one we hung in the game i think we we did a fantastic job competing with amazon there was a new york times profile article that ordered books from us ordered from amazon we were the ones that shipped the books david i don't i don't mean to cut you off but we're very sure on time i don't want to spend too much time on this because i want to talk about studio now but the reason i'm asking these questions is because in the in the bio that your team gave me it said market cap of 3 billion and 225 million raised just to be clear there's a lot of money lost in 99 when this thing went down because you really only had 10 20 million bucks going to the bottom line on a three billion cap well i mean ultimately what happened is that we could not keep going back to the capital markets to raise more capital because it crashed the scale yeah so yeah amazon could and that's always been jeff bezos strength so they were able to sustain the market downturn but at that point they were they were far from profitable we were far from profitable so it was all about how much more capital could you put in correct yeah it's a story let's let's fast forward let's fast forward to today so studio now i want to start where you're at today and then we'll go backwards with the aol story so help us understand what the product does today and what your revenue model is is it pure place ass uh yes so so that's the focus of the company is pure place sas you have your advertising media industry which is about a trillion dollar global industry we're the other side of the coin so before you can even watch a tv super bowl commercial before you can watch an instagram video it has to be made first so what we focus on is the creative spend or the production spend and that runs about 15 to 20 percent of the media spend so we estimate it to be anywhere between a 100 billion and a 200 billion dollar market and that's what large brands spend every single year to create all that content so how do you price though yeah talk about your pricing model yeah sure so we have a sas platform that manages that spend so if someone like a procter and gamble will put 500 million dollars worth of spend on the studio now platform and that's for all their tv commercials all their digital spots so we charge them either a percentage of spend or a per user license and so we're making you know dollars on the amount of spend the amount of projects that go through our platform plus the number of users that are on that platform why why should so if i'm one of these guys buying this and by the way we had bill wise on media ocean and had this exact same conversation a couple weeks ago out of the coin they're but just just to be clear what you know this whole thing with the ad tax in the middle you're going to keep getting nailed by startups that are that are pissed off without ad tax and they want to get you out of the middle basically so why should someone pay you more money when the fixed cost to create the content is one time and let's say they put millions and millions and millions through that over the next decade why should they keep paying you a percentage of ad spend yeah because we deliver an unbelievable roi so we are saving them money in in two big buckets so right now there's no technology all right so so the way creative and production has been managed today is the same way it's been managed since the don draper days i mean it is old school it is telephone calls it is emails it is spreadsheets going back and forth it's incredibly inefficient however the big problem has been the exponential need to create more content so when you're dealing with you know very old school processes and kind of business rules and operations it can't keep up with the demand of all the content that needs to be created now so our technology is saving them time and it's saving them a ton of money then why don't you put your pricing axes around minutes produced versus dollars spent yeah so so it's very easy i mean we we charge a certain amount per seat and we can and we can show that we have about a 80 percent time savings in terms of sourcing vendors creating bids processing bids selecting a vendor managing a project and then finally deliverable a file we we save 80 from an agency standpoint and from a brand standpoint to go through that whole process the kind of a to z of production and then we allow the brand...