Sramana Mitra: What I see is that the bigger disruption is in looking for systematic ways of being able to compensate influencers.
Reed Berglund: That’s one way of looking at it, absolutely. If you examine the initial goal for these influencers on these platforms, they were free platforms. They went on from a hobby standpoint. In many cases, they wanted to use it to market their own skill set whether that’s music, film, or art, but they didn’t approach it with, “I can actually make some money doing this.” To clear the market, there was definitely a need for a mechanism.
Sramana Mitra: How much money can an influencer, who participates in your campaign, expect to make in your sweet spot?
Reed Berglund: It depends on where that influencer is and the life cycle of their influence, if you will. For folks who have 250,000 to 500,000 followers on a platform, they can make anywhere between $1,000 to $2,000 per campaign.
Sramana Mitra: You said 250,000 followers?
Reed Berglund: Yes.
Sramana Mitra: The 250,000 followers would yield $1,000 to $2,000 per campaign? That’s the benchmark?
Reed Berglund: Potentially. It’s not based purely on the follower because followers can be gained. The engagement rate helps mitigate some risk.
Sramana Mitra: I understand what you’re doing. I got most of your story. Is there anything else that you want to share?
Reed Berglund: I think from a startup perspective, bootstrapping was the number one thing we wanted to do because we weren’t quite sure which aspects we were going to be able to automate. We weren’t sure what the product would end up looking like. Before we could actually articulate an offering to the market and to an investor, we had to grow up. There were a lot of things that we had to figure out. That comes from no other way than just getting out there and literally doing it and having your head handed to you. There are a lot of painful lessons that go along with, “That positioning didn’t work. That solution didn’t work.” I’m sure all the entrepreneurs that you talk with goes through incredibly dark moments in those first seven months.
Sramana Mitra: There’s a lot of iteration and experimentation that goes on. My next question on that topic is, what have you learned that can be automated? How much of what you’re doing can be automated? How much of this has to remain manual?
Reed Berglund: What we’ve learned is that this creative approval process can be automated, but not for the entire market. Not everyone is going to accept that. Our model is predicated on no revisions of creatives right now. It’s done in one shot. The media world has always been centered on, “Let’s pick a hit and put it out there.” No one can predict the hit. You can sacrifice a little on the quality side because you may not be in the target demographic of who’s watching this content on these platforms, but you make it up in the volume of content that you put out there rather than trying to predict what would become a viral hit. Removing the choice of revisions was the one key that allowed us to automate.
Sramana Mitra: How many people do you have your team to deliver this type of revenue?
Reed Berglund: 20 people.
Sramana Mitra: That’s very good. Those are great numbers.
Reed Berglund: We’ve gone up and down. We do keep a close eye on the cost per revenue.
Sramana Mitra: Are you looking at scaling the company on an organic bootstrapped basis or are you starting to find ways in which this can be more of a product company such that it would warrant financing?
Reed Berglund: We just found a way for it to function as a product company. Our first round of financing actually closed this week.
Sramana Mitra: Congratulations!
Reed Berglund: Thank you very much.
Sramana Mitra: Where did you get that financing from?
Reed Berglund: It’s from a Pasadena angel group. It’s actually a mix of Southern California and South Florida money. This is still seed funding in terms of us continuing to iterate and testing two hypothesis on the product to get it ready for Series A.
Sramana Mitra: How much have you raised for the seed round?
Reed Berglund: $1 million.
Sramana Mitra: It was very nice talking to you and good luck with the next level.