The Intersection of Sports and Technology

Earlier today I had the chance to participate on a panel at the new home of the Atlanta Braves: SunTrust Park. After seeing the stadium progress (very cool!), we talked for 30 minutes about the intersection of sports and technology, especially the innovation opportunities that lie ahead.

Here are a few of the ideas discussed:

  • Teams want to use technology to enhance the fan experience, especially the downtime when the game isn’t happening (e.g. between innings, pitcher changeovers, etc.) and the community element
  • Bandwidth is no longer a concern at modern stadiums as every fan can stream video real-time, opening up new opportunities (drones? more cameras on wires?)
  • Startups play an important role in the sports technology world even though most will fail (it only takes one to change the world)

I’m excited about the future of sports and technology.

What else? What are some more thoughts on the intersection of sports and technology?

Notes from The Trade Desk S-1 IPO Filing

The Trade Desk, a demand side advertising platform, just filed their S-1 IPO filing to go public. Demand side advertising is where ads are purchased to be then served by supply side advertising platforms. One of the big benefits is having one system to buy ads that then integrates with dozens of other systems.

Now, let’s take a look at the S-1 from their recent filings. Here are a few notes:

  • Our platform provides access to approximately 3.2 million ad spots on average every second for our clients to bid on across millions of different scaled media sources—websites, shows, channels, stations and streams. (pg. 1)
  • In 2015, approximately $14.2 billion was transacted in the 1 Table of Contents programmatic advertising spot market via real-time marketplaces, according to Magna Global. (pg. 2)
  • Financials (pg. 2)
    • Revenue
      • 2015 – $113.8 million
      • 2014 – $44.5 million
    • Net income
      • 2016 1H – $6.6 million
      • 2015 – $15.9 million
      • 2014 – $5,000
    • Gross billings (pg. 11)
      • 2015 – $530 million
      • 2014 – $201 million
  • Trends (pg. 3)
    • Media is Becoming Digital
    • Fragmentation of Audience
    • Shift to Programmatic Advertising
    • Automation of Ad Buying
    • Increased Use of Data
  • Approximately 389 clients, including the advertising industry’s largest agencies, as of December 31, 2015 (pg. 5)
  • Clients can easily buy targeting data from over 80 sources through our platform (pg. 5)
  • Average days sales outstanding, or DSO, of 88 days, and average days payable outstanding, or DPO, of 64 days at June 30, 2016. (pg. 18)
  • Approximately 7% of our gross spend in 2015 was derived from outside of the United States. (pg. 29)
  • Access to borrow up to $125.0 million aggregate principal amount of revolver borrowings (pg. 31)
  • Accumulated deficit of $28 million (pg. 48) (Note: it’s really impressive to achieve this scale and growth rate on this relatively small accumulated deficit).
  • Between our inception in November 2009 and June 30, 2016, we generated aggregate proceeds of $88 million from the sale of convertible preferred stock (pg. 68)
  • Ownership (pg. 124):
    • VCs – 34%
    • Founder / CEO – 26.7%
    • Founder / CTO – 1.5%

Congratulations to The Trade Desk for building a great business in seven years and for heading towards an IPO as their next milestone. This IPO will be well received based on scale, growth rate, and profitability.

What else? What are some other thoughts on The Trade Desk IPO filing?

2 Year Growth of 2 Pre-IPO Atlanta Startups

Continuing with yesterday’s post on Atlanta Companies on the 2016 Inc. 500, there are two tech startups that really standout: Kabbage and Cardlytics. Both are financial tech (FinTech) companies that are growing super fast. Here’s a bit about each and their revenues for the last two years:

Kabbage – Small business lending based on alternative data sources to evaluate credit worthiness (e.g. checks your eBay ratings, Amazon ratings, UPS shipment volume, and QuickBooks statements to determine a loan amount). Here’s Kabbage’s revenue for the last two years as published in the Inc. 500:

  • 2016 – $97.4 million
  • 2015 – $40.1 million

Cardlytics – Aggregates data from 1,500 financial institutions to run online and mobile banking rewards programs (think anonymized purchase data from consumers that’s used to serve up relevant offers). Here’s Cardlytics revenue for the last two years as published in the Inc. 500:

  • 2016 – $77.6 million
  • 2015 – $53.4 million

Based on the scale of the business and growth of revenue, both of these companies would be in pre-IPO territory. Often, $100 million in revenue is the magic mark to go public and both should pass that this year. Congrats to both companies on the great growth and here’s to their continued success.

What else? What are some more thoughts on Kabbage and Cardlytics?

HESaaS: Hardware Enabled SaaS

Last week I heard a new term: HESaaS. HESaaS stands for Hardware Enabled Software as a Service and the idea is that there are new SaaS opportunities that come from the addition of specialized hardware. Put another way, the Internet of Things (IoT) is going to enable a variety of new HESaaS opportunities.

A local Atlanta Tech Village HeSaaS startup is Gimme Vending (disclosure: I’m an investor). Gimme makes a device that transmits vending machine data to the cloud for more efficient inventory management and product merchandising analytics. Without the hardware to send the data to the cloud, there’s no SaaS business.

Add HeSaaS to the list of reasons to be Bullish on SaaS Growth.

What else? What are some other hardware enabled SaaS opportunities?

35 SaaS Marketing Products @ 1 Startup

Yesterday I was talking to the head of marketing at a fast-growing, <100 person SaaS startup. We were talking about the modern marketing stack and he mentioned that they pay for 35 different SaaS products. Yes, 35 different marketing apps at one small business. Some of the app categories included marketing automation, social media management, A/B testing, SEO analytics, etc.

Here are a few questions that come to mind:

  • Is there an upper limit to how many marketing apps a small business will use?
  • When does app fatigue set in?
  • How many are apps require daily work vs ones that are set it and forget it?
  • How is reporting done across so many apps?

SaaS is unique in that once the business has $500,000 in recurring revenue, it’s hard to kill. Thus, there’s a huge cottage industry of SaaS marketing apps that provide value. It’ll be interesting to watch the industry over time and see how it plays out. My prediction: there’s no upper limit of marketing apps and we’ll keep seeing more and more.

What else? What are some more thoughts on the idea that there are 35 SaaS marketing products at one small business?

Platforms and Microservices

Steve Yegge has an epic rant on Amazon being a poor place to work but more brilliant than Google when it comes to innovation at platform scale from 2011. David Skok recently published a post on his blog titled Microservices Essentials for Executives: The Key to High Velocity Software Development. The idea is that tech companies start out building their product as one large, monolithic system because it’s simpler and faster. Then, as the startup achieves greater levels of success, innovation slows down considerably even though more and more people are added to the product team. What gives?

The larger the product, the harder it is to make changes to it due to all the dependencies. Amazon was the first major technology company to realize that Internet scale, and it’s greater levels of complexity, requires a new way of building large-scale systems: microservices. Microservices are simply smaller, self-sufficient special purpose products that form a platform (e.g. tiny apps that are used to make a big app). Amazon went further and built Amazon Web Services (AWS) to make the backend of these microservices even easier to manage and scale, and now AWS is one of the fastest products to $10 billion in annual revenue, ever.

Tech entrepreneurs need to understand the benefits of microservices and start planning them once they hit the growth stage, but not before. All major platforms going forward are going to have some form of microservices underpinning them.

What else? What are some more thoughts on platforms and microservices?

Account-Based Marketing for Dummies

Tonight Terminus launched their new book Account-Based Marketing for Dummies (disclosure: I’m an investor). From the publisher:

This practical guide takes the intimidation out of account-based marketing in today’s highly digitized world. You’ll be armed with the knowledge you need to increase your reach in real time, giving you greater exposure to other decision-makers and influencers within an account. You’ll discover how, through a combination of marketing technology and online advertising, your messages can be displayed where and when your customers already engage online.

  • Align your sales and marketing teams for greater success in your ABM efforts
  • Analyze data to identify key accounts
  • Target your messages for real-time interaction
  • Integrate your campaign with marketing automation software

Want to learn about account-based marketing? Buy the book today. Also, learn more about Terminus.