How Wooly CEO Scott Paul grew Wooly to $1.9M revenue and 80 customers in 2019.

you're gonna love this interview just got done editing it i'm glad i got it live for you i'll be in the comments for the next 30 minutes hanging out answering any questions you have in fact leave a comment below about data points or what you think is going to happen to the company and i will respond to every comment additionally if you're just loving the content click the thumbs up and i will go and check out your profile as well and give your videos some love as well in the meantime enjoy the interview hello everyone my guest today is scott paul after selling an agency to disney he ruined influencer marketing thank god he's now on a mission to change how we how commerce is done word of mouth marketing will finally be measured he's doing it with this company called woolly.com all right scott you ready to the top let's do it all right so what's the company doing is this a pure play sas model it started as a pure play sass but then we realized uh to really accomplish what you just said there to really start this new type of commerce we had to create a consumer application and so 2020 we'll see the the that come into life we'll see something where every consumer will be able to participate and in word-of-mouth marketing in a way that's never been done before instead of it being analog we're going to make it digital okay who's who's paying so give me a sense of like tell me a story of a paying customer right so are brands using you to find these kinds of micro influencers to today yes today of all the a brand um like stance socks or skull candy headphones or this purple mattress this mattress in a box company they use us right now to discover who's buying from them like who are these individuals like on social media and then they actually recruit from their customer list people to represent the brand to go out there and talk um both online offline about their love of the brand so it's essentially recruiting your customers to be your uh influencers um advocates if you will yeah much smarter than reaching out to cold influencers trying to get them you know to convince them to get familiar with your product and then trying to have them do it right so tell me tell me scott when these folks are paying you like skull yeah when these folks like skull candy are paying you right so help walk me through your pricing model a bit what's your kind of sweet spot well what interesting is the the brand pays to use our software but the customers of skull candy they're not paid they're not paid they're going to be um they're just going to be brought into the brand family and given you know product or credit to buy scott yeah sorry i'm talking about the i'm talking about the business yeah the business is i mean we're talking about the monthly sas so you're gonna you're gonna come in for uh we have a freemium model but most of the customers are using us for uh millions of contacts and so we have uh we're charging for kind of your contact database much like a mailchimp or clavio and then a little bit on how many campaigns you're going to run inside so we have a lot of activation tools and that there's a cost on like how how much you hit us there and lastly listening all the you plug your brand in and we're listening to everybody chattering about you on on all the networks and so that's the last um frontier of where we collect data and then for someone again paying for those things in terms of your average kind of customer uh what are they i mean you're talking like a thousand dollars a year or a hundred thousand dollars a year or a million a year what's your kind of sweet spot yeah yeah we have a smallest customer spending about six thousand a year and then the largest about two hundred thousand a year okay that's a big range though i mean sweet spot somewhere closer to six it is uh sweet spot would be about sixty thousand sixty okay good and and so let's describe that customer so someone paying you sixty thousand dollars per year how many campaigns are they running and how many uh contacts are they managing let's talk maybe like one like blend tech um they make both well they're actually helping them out from our team kind of a little more managed service and they're gonna run probably uh their go to market strategy in a year they're probably gonna run seven or eight campaigns some of those seasonal and then an always-on campaign something they're doing uh you know evergreen throughout the year yeah your little one is welcome to jump in by the way this is the beauty of being an entrepreneur right yes my wife is supposed to you're totally you're totally good if she wants to jump in it's no problem that's why oh that is life that is live okay so uh great so that's your sweet spot and then put this on a timeline for me when you launch the company well i lost it right after i left disney in in uh 2016 and then uh we took some funding from venture capital about 2017 and then right now uh we're about to do a series a and we have a pretty uh pretty lofty mission going forward here with uh kind of changing from sas to consumer why um why did you need to raise capital for this obviously capital comes with dilution why couldn't you kind of get creative and bootstrap it i've done that three other companies and sold them it's definitely a way to go it uh you retain most the ownership and you get to uh get the upside but i think on this one being that we have uh hired about 15 engineers i i didn't know how to i didn't know how to pay for those 15 engineers without raising some money first so it's a sas is unique i think it takes it takes hyper growth and it's kind of it's i don't know many sas that don't go for venture just because of the the speed that you need to grow at and and kind of the delayed uh income and you know recurring revenues and so when we did agency work with disney that that company was all bootstrapped and uh you know our customers were essentially our seed fund we'd sell ourselves into profitability uh this one i didn't have the luxury i wish i could it's the best way to do it well sorry i guess what i'm asking is you had successful exits why not just fund yourself or did you or were those exits nice exits but not like you know they were nice and i did fund myself for about a year um but i just uh de-risk it by you almost in any of every case you want to investors can be very good partners for you they're um if it's smart money they can bring you into uh certain deals and it just kind of de-risks you kind of want to know that other people believe in what you're doing and validate your idea so we didn't give a ton of equity away for the millions we raised but it's the way for me it's the way to uh somewhat de-risk and see if other people believe in what you're doing um you look at most uh most very successful exits uh they'll still go and raise from the biggest uh venture companies on their next one rarely do they self-fund uh from from the observations i've had yeah well by the way the ones that rage are the only ones that get press right the ones that bootstrap rarely get pressed but i could just yes i'm doing like three we just passed about three 000 these interviews i can tell you i am constantly shocked by these companies you've never heard of that have bootstrapped to like 60 million in aor but they're never in the press because no one wants to write about a bootstrap 60 million dollar hour company they want to write about the billion dollar funding round yep no there's several of my friends are doing that that much more than that bootstrap completely and yeah they just lay low and print cash great that's great i would do that i do that all day long if i if i could do it but this was one way how much have you how much have you raised a date you know two years ago we only raised a million said a lot okay so you have a million we're very capital efficient you have a million total in the company um yeah but we've we make well over two million a year so it's it's we could go cash we could be cash flow positive but just uh what we want to do next is going to require some new team members on the mobile side and so it's not it's just not gonna we we gotta we gotta take a little more so that we don't burn out yep so how much do you hope to raise then in the series a what's your target series a would probably be eight okay million okay and do you i mean you know most people would say in a series a you hope to sell maybe less than 15 20 of the company you feel like you'll be able to kind of get down that range um yes absolutely i don't think we'll do it if it's if it's more than uh 15 or you know it's got to be in between 15 18 if uh for that amount of money so yeah that's actually why we've delayed raising is if we we need to do a few things to get to the point where we can actually uh justify that valuation yeah i mean because you're talking about evaluation there if you're going to raise 8 million at 20 right times 5 you're talking about like a 40ish million kind of valuation on 2 million run rate right now right correct yeah yeah what do you think you have to get revenue to develop to get that kind of valuation um i think we have to...