Sramana Mitra: The two of you got this product going. How did you find your customers?
Jim Alvarez: I literally went door to door. I said, “I have this idea to help you manage the whole fundraising process during the event. Will you take a shot?” This was a pretty big pain point that charities had. A few charities took a chance and hired me. I sit on all these panels all the time.
They always ask me, “When was the aha moment?” For me it was right in the very beginning when we did an event for a big hospital. We didn’t have real-time dashboards. We didn’t know how much the charity had raised. After the event, Katie Lu from the hospital said, “You’re hired for every event we’ll ever do.” I said, “Wait. I haven’t even told you how much you raised.” She said, “I don’t care. The service you provide is worth it.”
It took me two days to figure out how much they raised. They ended up doubling how much they were hoping to raise. Flash forward six years, we have real-time dashboards.
Sramana Mitra: Go back to that first customer, how much did you charge them?
Jim Alvarez: I only charged them $2,500.
Sramana Mitra: Flat fee?
Jim Alvarez: Yes, that’s it.
Sramana Mitra: Were there upgrade fees?
Jim Alvarez: No, it was just $2,500. The next client I went to, I said, “$3,000?” The next client I went to I bid it up again. We landed on the sweet spot of $4,100. Our prices have come down over the years but there really was no market for this. It was hard to determine what the pricing should be.
Sramana Mitra: These are flat fee pricing? You still do flat fee pricing?
Jim Alvarez: We do. Even to this day, we have flat fee pricing. We never take a percentage of how much more charity partners raise.
Sramana Mitra: This is not subscription revenue?
Jim Alvarez: No. It’s a one-time fee. One of the major components of our service offering is the fact that we send people to help administer the registration, bidding, and the sign up process. Let’s say one of our charity partners says, “We’d like to buy a subscription.” They pay us $2,500. If they need people, they’d just call us up. That is then added to the $2,500.
Sramana Mitra: What has been the experience of acquiring customers? With these kinds of price points, going door-to-door is not a scalable process. What did you figure out as you went along and got validation from various non-profits who were running charity auctions? What did you learn in terms of scalable customer acquisition?
Jim Alvarez: One of the things I learned is that while the price point isn’t very high, the degree of stress and anxiety that goes along with making this type of purchase is very high. For some of these charities, 80% of their budget is raised in this three-hour window on a Friday or Saturday night. It has to be perfect.
I keep telling people, “If you’re selling some sort of medical device equipment for a million dollars, you understand how there’s a lot of anxiety involved in that sale.” Ours is a lower price point. While the price point is low, the stress level is high. Right now, we have 18 experienced sales people that are still making calls and going door-to-door. Our offering today is for these high-end events. We literally support the largest charity events in the world.
I equate our service offering to a brand like Marriott. They own Ritz-Carlton. When you go there, you expect very nice service. You expect the best. That’s who we are today. Marriott owns another brand called the Fairfield Inn where you probably wouldn’t expect valet parking or granite countertops. Some day, that will something that we’ll offer but right now, we are the top-of-the-line platform there is.