How TeamSnap Furloughed About Half Its Team When COVID Hit and Began Bringing People Back (Interview with CEO Dave DuPont)

Introduction

Nathan Latka

00:00Hello, everyone. My guest this morning is Dave DuPont. He's the cofounder and CEO of TeamSnap, the household name in integrated sports management. Dave wears many hats from being the boss to sweeping the floors and everything in between. Since forming the company, he's managed three successful investment rounds, secured strategic partnerships, and overseen impressive growth. Nearly 20,000,000 administrators, coaches, players, and parents now rely on TeamSnap to manage their sports lives. He continues to focus on both day to

00:27day and long term initiatives. Dave, you ready to take us to the top?

Dave DuPont

00:30I am, Nathan. Let's do it.

How TeamSnap Survived When Sports Went to Zero

Nathan Latka

00:32Well, we can we can't bury the lead. If people heard that bio, they're going, wait a second. What's TeamSnap doing today if sports teams are not meeting?

Dave DuPont

00:40Well, surprisingly, we're doing better than expected. So TeamSnap, you would expect us, given the fact that we are right in the middle. We provide communication and coordination services to sports organizations. So we're right in the middle of sports activity. And when activity goes to zero, you kind of expect us to suffer. And we did to a limited extent. We saw a quick decrease in activity in mid March, and it flattened out and has climbed ever since.

01:13So we think part of the reason is that our member organizations are still using TeamSnap to communicate with their members even if practices and games aren't taking place. And they are starting to come back. But that's been the secret to us actually retaining a pretty healthy activity set and also revenue stream.

Use Cases: How Teams Use TeamSnap During COVID

Nathan Latka

01:40Can you give us an example? I mean, you name a sports team in Boulder or New York or anywhere that's sort of using it and explain sort of how they use you just to really paint the picture?

Dave DuPont

01:50Yeah. So I mean there are literally tens of thousands of these organizations. And what they're doing is they're using TeamSnap to for instance coordinate online workouts to just stay in touch with people. And the return to sports is in motion. We have a return to sports, we call it interactive heat map on our website, which shows how quickly sports are returning in various parts of North America. And in certain parts, it's actually over 100%. More Canada

02:22than The US, because they manage the crisis more effectively. But we've been surprised by how quickly sports has come back as well.

Pricing Model: Teams, Clubs, and Leagues

Nathan Latka

02:32Now you launched this tool back in 2009. I assume you've done a lot of pricing tests since then. How are you priced today?

Dave DuPont

02:42So we've had lots of changes since we introduced TeamSnap in May 2009. We started off as just a team communication and coordination solution. So our pricing was focused on that feature set. A freemium model, kind of classic freemium internet model, and we've tested that for more than a decade now. But increasingly, we have expanded our business into larger organizations. So when we got started, you as a coach or manager would find out about TeamSnap somehow, often

03:18just through friends, and sign up for it and invite everyone on your team. And we had a freemium model, so if you hadn't used TeamSnap before, we still have it by the way, you can use our premium version for twenty one days. And then afterwards, you decide which version you want. And one of the versions is free. So that still exists. So you

03:40have a free trial and a freemium.

Nathan Latka

03:42There's not a hard stop at twenty one days.

Dave DuPont

03:45There's not a hard stop. We don't force you off and say, pay us or you're done. It's pay us if you want to continue to use the premium features. And that's worked well for us. Our conversion to paid from the free trial is about, and this has been consistent for a decade, 30%.

Nathan Latka

04:02Oh, wow. Okay. So if 1,000 people in a given month start using that free trial by the end of that twenty one day period, about 300 will convert to paid or something like that?

Dave DuPont

04:13Yes.

Nathan Latka

04:14That's amazing. So who are you selling? So let's say the Bravos Little League Baseball team in Boulder is using you with 30 players, you know, 49 parents, and and three coaches. Is the coach paying? Is the parent paying? Is the player paying?

04:30Who's paying?

Dave DuPont

04:31Yeah. It's typically the coach or many teams have a manager, an assistant coach. So one of those two individuals sets up TeamSnap and typically pays. Sometimes they're reimbursed by the participants or parents, sometimes not. And our pricing is between we have annual and monthly plans, but just for simplicity, I'll say our pricing is between $10 and $20 a month for the entire team. So the great majority of folks on TeamSnap, the players and the parents you

05:01were referring to just a second ago, they don't pay directly TeamSnap. Now that's the original model for us, and it's still a significant portion of our revenue, but it's not the main part of our revenue. Increasingly, we're selling TeamSnap to the club or league. They adopt it for all the teams, the Bravos, the Astros, etcetera, in your example of a local sports league. And the coaches and managers and players and fans don't pay at all. The

05:32organization pays for all of those organizations to be using TeamSnap, and we provide a whole range of services in addition to the ones we originally provided for teams for clubs, leagues, and associations. See. Things like registration for the upcoming season or scheduling games. Teams don't schedule games. Clubs and leagues do.

Nathan Latka

05:54I see. Okay. So the pricing then is between 10 and 20 per team. And sometimes the organization will pay for 20 teams, which is the league in sort of their geographical area. Sometimes the team will pay directly, but very rarely do the... Are the parents paying or the players paying directly?

Dave DuPont

06:11Correct.

User Scale: Monthly and Daily Active Users

Nathan Latka

06:12Okay. And so how many teams today are using the platform, both free? And then I assume we can just do 30% are paid.

Dave DuPont

06:19Oh, well, daily active users, I'll answer this in a couple of ways, is about 5,000,000 at this point.

06:27Wait a minute, monthly active users is 5,000,000. Daily active users is 1,500,000, and you can do the math, but the average team has about 40 people on it. So that gives you a good feel for the number of teams that are active on TeamSnap.

Upsell Strategy and Pricing Philosophy

Nathan Latka

06:41Yep. Interesting. Okay. And so, I mean, one thing people always have to look at, especially if you're building like a SaaS company, is your ability to drive expansion revenue, especially to have it overcome any churn. You've sort of made the decision and said, no, we're gonna give our customers a great deal. We're not gonna upsell based off like number of players or things like that. Really, your closest thing to that is upselling a league based off

07:05the number of teams in the league. Do you... Would you do... Would you repeat that or would you would you give yourself the ability to upsell based off number of players if you redo this?

Dave DuPont

07:14We actually do upsell based on the number of players. Okay. Because we have several layers of our premium plan, and one of them is for teams with more than 30 players, for instance. We have teams with a thousand players, so it's only right to charge them a little bit more. But the

07:34expanded player roster feature, is what we call it, that's in the you don't pay more than the $20 that I referred to. Even no matter how many players you've got.

Nathan Latka

07:48I see. I

07:49see. Okay.

Dave DuPont

07:50It. So that's question. Would I do that again?

07:55I think we made the right call in the sense of, yes, it was more difficult to build revenue using the model that we did. But at the same time, we built customer trust and affinity and a large user base, and we made a decent amount of money. And now we are expanding on that large user base into the much more lucrative club, league, and association market. Much more money changes hands at that level than at the

08:23team level.

Revenue Growth: About 45% Per Year on Average

Nathan Latka

08:24And when you say a decent amount of money, can you share maybe what runway you passed last year or a range?

Dave DuPont

08:30We don't usually talk about revenue. I will tell you we are,

08:39what's the closest I can... We've grown steadily even since you and I talked. And around, I think our average has been 45% per year since we, yeah, grown since we last talked in users and revenue. And I'll give you a little bit of a teaser. We expect our revenue this year to be the same as last year. So not 50% growth or 45%, but the same as last year. But given everything that's going on in the

09:07sports world, I count that as a victory.

Total Funding Raised and Managing Flat Revenue at the Board

Nathan Latka

09:09So how do you manage that? Because last time you came on back in 2017, you have raised capital. You've been creative with it. You haven't just gone and raised heaps and heaps of VC. I think you've used some debt strategically, but I think you'd raised, what was it, 43,000,000 as of two years ago? How much have you raised today? And how do you manage that story of sort of flat even during COVID at the board meeting?

Dave DuPont

09:31Oh,

09:34so we've raised 48,000,000 to date. And

09:39our investors are investors in other companies too, and they see what's happening in the world around them. And frankly, they're delighted with our performance. And many people, many of our existing shareholders thought we were done. You know, to your point at the beginning of this broadcast, you know, how are you managing to survive when sports activity is really decreased? And the reality is we weren't as affected as we feared from a market standpoint, And also we

10:09took action to make sure that we were financially prudent moving forward. That part wasn't fun, but we did cut expenses as soon as we realized that it was going to take a while for us to see the end of this crisis.

COVID Planning and the Decision to Cut Once

Nathan Latka

10:22You only, Dave, wanna do that cut sort of once, which means you wanna sit down with your executive team and say, listen, when we make this cut, how many months of runway do we wanna have? And every CEO is sort of taking a different approach. Some are planning for really long time, thirty six month sort of time frames. Others are planning for sort of eighteen months. So when you sit down with your team, before you decided

10:44what to cut and announced it to the team, how many months of runway did you want to have post cut?

Dave DuPont

10:49We didn't think about it that way, Nathan. We thought it more from standpoint of what do we think is going to happen with the crisis, and what kind of position do we want to be in. So in March, the assumption we had was that our business would decrease on the order of let me just think of the numbers here on the order of 50%.

11:09Through the summer. We'd see a slight trickle in the summer, and then we thought that we'd see a gradual return during the fall to 70% participation. So only 30% down in the fall. And I'm not sure whether that forecast will hold out, but we actually have exceeded it so far significantly, very significantly.

Nathan Latka

11:35Exceeded it in the extent that the business didn't take as much as a 50% hit. It was actually less of a hit than 50%?

Dave DuPont

11:40Much less, much less. Figures, Nathan, was about a third initially, and then we climbed up from there. So that relative to many companies, and especially companies like ours, was

11:57pretty good. And I'd like to touch on the furloughs that we went on.

Nathan Latka

12:03Yeah, I mean, that's not easy, Dave. How'd you do that?

Dave DuPont

12:06Yeah, so it's not easy at all. But as you can tell, I've been in business for a while. And as I told the team, said, guys, I've seen this movie before. It's not going to get better right away. And we can hope it will, but we have to count on things taking a while to recover. So let's cut once and once only, to your point earlier. And that means it's going to be painful. And I really salute

12:30the team because in other companies, big companies like Hewlett Packard, what I've seen is that functional leaders will often try to protect their people. So you end up with essentially turf war discussions. And the team was not like that at all. It was extremely collaborative. We decided remember that, I think it was March 13, that it became clear we had to do something. I grieved over the weekend and had the conversation I just described on Monday. And

13:02what was that, the sixteenth. And nine days later, we furloughed a good portion of our company.

Nathan Latka

13:08Yep. Yep. And how many so can you quantify that for us? How many people did you have to let go?

Furlough Details and Bringing People Back

Dave DuPont

13:13Yeah. So round figures, we furloughed about half the people in the company.

Nathan Latka

13:17Okay.

Dave DuPont

13:18That was about 80 folks. And that was one of the worst days of my life, by the way.

Nathan Latka

13:23Man, I can imagine.

Dave DuPont

13:25These are people that were very dedicated to TeamSnap that we were very close to, and, you know, that's not fun. And we knew we were tossing people out into a challenging economic environment. We furloughed folks because we wanted to bring some

13:41back, and we have done that. We've brought back about 15% of the folks we furloughed. And we hope to bring back more over time. But we're going to be extremely conservative.

Current Team Size and Engineering Breakdown

Nathan Latka

13:51So what's the team look like today? How many full time folks?

Dave DuPont

13:55We're a little over 80 people at this point.

Nathan Latka

13:5780 folks. And how many engineers?

Dave DuPont

14:01About a third of

14:02that is our engineering team. About half is product. So product managers, designers, and engineers.

Sales Force: Quota-Carrying Reps for B2B Motion

Nathan Latka

14:08Yep. Yep. And do you have... I mean, do you have quota carrying sales reps with this kind of freemium sales motion or no?

Dave DuPont

14:15Yes, we do. Not for the freemium part of our business, but clubs, leagues, and associations, that's not freemium. That's a classic business to business sales model. So yes, we do have a sales force there. We also, as our engagement with the overall market has grown, we have instituted advertising and commerce on our platform. And we have sales people, different kinds of sales people that call on brands, direct advertising and commerce deals. So, yeah.

Nathan Latka

14:47How many many of those folks? How many how many quota carrying folks?

Dave DuPont

14:52I I I could give you the exact numbers, but I'm just thinking through the organization now. Altogether, about 15.

Nathan Latka

15:0115. Okay. Pretty healthy group there. And do you... So when you look at your sort of weighted cost to get a customer, especially in the new environment we're in, I imagine it's a very different CAC on your freemium versus going and selling a big league deal. But let's just focus on getting, you know, one team paying 10 to $20 a month. What's your typical CAC on that kind of sale?

CAC Payback Period: 6 to 7 Months

Dave DuPont

15:23Yeah. So our typical CAC, we look specifically at CAC time to breakeven. And our typical CAC time to break even is six or seven months.

Nathan Latka

15:32Okay. So you're paying like 60 to $80 to get a customer.

Dave DuPont

15:36Exactly. To get a paying customer.

Nathan Latka

15:40One more thing before you go. We have a brand new show every Thursday at one p. M. Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers. They try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it. And the buyers try and make a deal alive. It is fun to watch every

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