Bootstrap First to Exit, Bootstrap Again, Then Raise VC Money ALL from St. Louis: Stephanie Leffler, CEO of OneSpace (Part 2)

Sramana Mitra: You’re going way too fast for the story. Remember, we are doing an Entrepreneur Journeys story.

Stephanie Leffler: The key portion of switching gears from trying to be a retail business to starting our e-commerce journey was out of complete necessity. We were in a situation where we didn’t have enough money to keep our retail business going. We didn’t have any plans to be profitable fast enough for us to be able to survive. It was a survival technique.

Sramana Mitra: As a survival strategy, you decided that you were going to become a reseller of this e-commerce platform company?

Stephanie Leffler: That’s exactly right.

Sramana Mitra: What price point was the platform priced at, and what was the reseller deal that you struck with them? >>>

Bootstrap First to Exit, Bootstrap Again, Then Raise VC Money ALL from St. Louis: Stephanie Leffler, CEO of OneSpace (Part 1)

If you haven’t already, please study our Bootstrapping Course and Investor Introductions page. 

Stephanie bootstrapped her first company to $20 million in revenue from St. Louis. Her second, also from St. Louis, is venture-funded and crossed $10 million in revenue last year. Awesome entrepreneur, inspiring woman!

Sramana Mitra: Let’s start with the very beginning of your journey. Where are you from? Where were you born, raised, and in what kind of background?

Stephanie Leffler: I am from Northern Virginia in Fairfax. I was actually born and raised there. Ultimately, I went to school at Washington and Lee University. I found my way to St. Louis as part of my entrepreneurial journey. I’ve lived here ever since. >>>

Building a Fat Startup in Corporate Training: Karl Mehta, CEO of EdCast (Part 6)

Sramana Mitra: How do you charge? Is it a per user pricing model?

Karl Mehta: The pricing model is exactly like Salesforce or Slack. It’s a per user per month model. It’s close to $5 to $7 per user per month. It ratchets down with volume. If you have more than 10,000 employees, you get a pretty significant discount.

Sramana Mitra: When you start a significant account, what kind of deal size are you starting at? Is it $10,000 a month or $100,000? Where does the sales cycle begin?

Karl Mehta: Sales cycle begins with a very minimum commitment for as little as $5,000 a month. You get a pretty good experience of it and at the end of the month, you can either turn it off or add more users to it. >>>

Building a Fat Startup in Corporate Training: Karl Mehta, CEO of EdCast (Part 5)

Sramana Mitra: To what extent are your corporate clients specifying what areas they want learning content in, which then drives your strategy of finding people who can produce that content and deliver that content on your network?

Karl Mehta: When a corporate client sets up EdCast, they tell us the topics for which they set up channels. They will set up a channel on leadership or supply chain, for example. Those are all the topics that’s given to us. That goes into our content engine that brings either existing web content or it brings influencers that we know. Every enterprise has their own subject matter experts but they have not tapped into that. Our platform allows them to identify those subject matter experts. They can now share knowledge that is already sitting inside their company. That is a huge asset. >>>

Building a Fat Startup in Corporate Training: Karl Mehta, CEO of EdCast (Part 4)

Sramana Mitra: This is funded by Menlo?

Karl Mehta: Menlo was one of the investors, but the round was led by SoftBank Capital.

Sramana Mitra: What, in a nutshell, is the premise of EdCast?

Karl Mehta: EdCast is a knowledge network for anyone to develop lifelong learning as a passion. We have a knowledge economy and things are rapidly changing. In order to keep pace with whatever field that you’re working on, you want to get smarter every day. You need a network that is going to bring you the most personalized content in your field. Let’s say you’re into learning Big Data or even non-technology, you can go to EdCast and follow a channel on architecture, for example. >>>

Bootstrapping an Ad Tech Company from Paris: Daniel Nathan, CEO of BidMotion (Part 7)

Sramana Mitra: The $9 million in 2015 was your revenue or was it the gross spend of how your advertisers are spending with you?

Daniel Nathan: It’s the gross spend but the average margin was pretty high.

Sramana Mitra: From an accounting point of view, how do you calculate revenue? Growth spend is not revenue in your business, right?

Daniel Nathan: It is, because we are doing an arbitrage business model.

Sramana Mitra: If you’re gross spend is revenue, what is the gross margin then?

Daniel Nathan: We cannot disclose exactly the gross margin but it’s much higher than industry standard. The industry standard is about 30%. >>>

Building a Fat Startup in Corporate Training: Karl Mehta, CEO of EdCast (Part 3)

Sramana Mitra: There’s a lot of room for fraud.

Karl Mehta: We solved a lot of problems in the payment and transaction space that had never been solved. We didn’t start out to solve the problem. We just wanted to provide a simple service. We built anti-fraud technologies. We built multi-account technologies. The most important things that we built was the micro-transaction capability because you could not do a transaction less than a dollar because credit card charges you at least 2.8% and 30 cents.

PayPal has the same rate. Even now, it’s difficult to do a one-dollar transaction. We figured out that by doing a prepaid aggregation we could support a transaction for as little as 10 cents. That whole technology grew and became very big. We were the underlying monetizing platform when Facebook launched Facebook Credits. >>>

Bootstrapping an Ad Tech Company from Paris: Daniel Nathan, CEO of BidMotion (Part 6)

Sramana Mitra: Very interesting. When you got a bunch of companies going, how were you pricing? Was it a subscription pricing model or was it a media buying pricing model where you were taking a percentage of the budget you were managing?

Daniel Nathan: We were doing arbitrage. We go a client and say, “We want to make you profitable. The ad spend that you’re going to do with us is going to be positive. What is the current CPI that makes you sure that you’re going to make money if you’re going to buy at that CPI?” Then they tell us, “We have an average return per user of $2.3.” Then we start at $2.

Starting at $2, we’re buying again on CPM and CPC completely taking the risk on our side. We were plugging our technology on their servers. Every time we’re sending users to their app, we were able to understand the kinds of users. In real time, we are able to understand how an audience that we bought for them >>>