DipJar makes charitable giving fast and compelling. 8,500 devices are deployed to 4,500 clients and the business is set to scale fast. My interview with Chris Selland, CEO was an excellent opportunity to learn more about this exciting company just after I invested.
Interview highlights include:
Sal Introduces Chris Selland, CEO of DipJar
The Story of DipJar
DipJar Started Out as an Easy Way to Tip Waiters – But the Economics Did not Work Out
Fixed Fees Charged by Credit Card Companies Become Meaningful for Small Transactions
Devices Are Connected to a Platform – Charge per Dips Are Pre-Set
People Saw the DipJar in Coffee Shops and Started Asking If It Could Be Used for Charitable Giving
“…but the bottom line is 80% of the money comes in when they actually get the donors in person”.
“…we can take a lot of donations very, very quickly”.
About the Team
Startups Love to Create Brands Having No Idea of How Hard & Expensive It Is: Brand-itis
“So, the DipJar you just power it up and it works. And that's a big part of our selling prop too”.
Sal Talks About His Investment in Fine Tune Learning
Like DipJar, Fine Tune Learning Had a Restart – Hired CEOs Are Much Maligned But…
Investors Like Syndicates Because They Don’t Have to Write $25,000 Checks
Sal Asks the Burning Question for Angel Investors: How Am I Going to Make 30X on DipJar?
DipJar’s New Head of Platform Is Building Capabilities Critical for Scaling Revenue
“We've now got … I think about 8,500 DipJars out there in market and 4,500 customers”.
“We don't need to raise more capital ever if we don't want to”.
On Possible Exits: “I mean net, we're a FinTech company, we're in a hot space, right”?
On Being a Hired CEO
CEO’s Big Challenge: “…you have to be inspiring and you have to believe in the company when there's very good evidence for you not to believe in the company”.
“…optimism is not shading the truth”.
West Coast, East Coast
“The West Coast is more about top line; the East Coast is more about bottom line”.
Click here to read full episode transcript
Transcript of Chris Selland, “DipJar: Frictionless Giving”
SAL DAHER: Welcome to Angel Invest Boston. I'm your host Sal Daher, an angel who delights in the fascinating tech companies being built in Boston's singular ecosystem. Because of the unique concentration of great universities here, Boston is a massive exporter of great startup ideas and a huge importer of capital. This idea rich and capital poor environment gives me the opportunity to invest early in the companies that will be changing our world, companies such as Fine Tune Learning. I'll tell you a bit more about Fine Tune Learning later. Now I'd like to introduce my guest today, Chris Selland, CEO of DipJar, and also an angel investor. Chris, welcome to our studios.
CHRIS SELLAND: Thank you Sal. Great to be here.
Sal Introduces Chris Selland, CEO of DipJar
SAL DAHER: It's awesome. It's awesome that you're here. Chris studied operations research and industrial engineering at Cornell. Worked for a few years in the New York city area and then got an MBA from NYU. Right after NYU, he moved to Boston and moved his career in the direction of software and data. Chris had several successful stints in various enterprises with a focus on marketing and business development and data and along the way he made some angel investments. About a year ago, Chris was pulled in to help restart a promising company that had pivoted but needed to both reset and to scale. That startup is DipJar, really interesting company which uses technology to help remove friction for people giving money or buying certain items.
It has these cool little gadgets that help make people really excited about giving to a cause. They can be branded. It's immediate feedback for dipping your credit card into it. It's so cool. There are over 8,000 of these things out in the wild and their numbers set to explode if things go according to plan. Disclosure, DipJar just closed a funding round in which I am invested. I connected with Chris by seeing his really impressive pitch of Walnut Ventures. So once again, Chris, great that you're here.
CHRIS SELLAND: Again, great to be here and thank you so much for your support. We're really excited to have you and others on the Walnut team as new investors in the company.
SAL DAHER: People have known you for a long time. Ben Littauer, speak very highly of you. Chris, tell us what DipJar does and why it's so important.
The Story of DipJar
CHRIS SELLAND: It's interesting. Well, first of all, thank you for the background on me. Like me, DipJar is a company that has New York roots. Again, I was going to school in New York, worked for a few years in New York and then migrated to Boston and the company actually did the same thing. And you talked about startups and restarts. We're probably a little bit more of a restart right now. The company was founded to your point, in 2012 in New York city, two founders. And if you mentally rewind back to 2012 and payments, there was a couple of things going on. We didn't really have... They either didn't yet exist or they were very much in their infancy, all of these new forms of payment, like Apple Pay and Square and the like and things that we take for granted right now. They didn't really exist in 2012 or they existed, nobody really... I don't think Apple Pay did.
I think Square may have, but nobody really was really using them heavily. But what was going on was consumers were using cash a lot less, use of cash was plummeting and use of credit cards was skyrocketing. So there was a common problem that that posed particularly for sort of smaller dollar type transactions like in a pub or in a coffee shop where you might want to buy your coffee, buy your beer, pay the bartender, the barista, and you could pay with your credit card, but you couldn't always tip with your credit card. So the two founders of the company had this idea that let's build a device that makes it very easy to give a tip of the credit card, just a separate device, separate from the point of sale. And so they set out to do that.
That was really the founding idea, and that's also where the name came from. So the whole original idea for DipJar was to essentially be an electronic DipJar, i.e. replacing where you see the bills and the change in the coffee shop, the pizzeria, restaurant, pub and in those types of environments. So that was the original founding idea for the company. The company then raised... There were actually two seed rounds, one which was convertible. And again I wasn't there at this stage. So I'm talking just from history that I know from having been with the company, because I've only been on board for about a year now. I came in at the end of 2018 but the company raised about 2.8 million at the time and this is all in Crunchbase in the 2014 to 2015 ish timeframe to basically develop this idea.
What they developed was the DipJar, which is a device that was basically designed to sit on a barista countertop, and basically take small dollar credit card transactions. So the product was commercialized in the '14 '15 timeframe. That's when they started selling it. That's also when some investors obviously funded the company. Now, it turns out that the lead investors in those initial rounds were actually both Boston-based investors. So what started happening at the time in that timeframe, again, this was about two, three years after the company started, was the team started building here, in Boston as well. So even though the idea was originally founded in New York, we started building a team in Boston and one local investor, a local incubator called Bolt that specialized on hardware center companies in particular also housed the company, um, in those early days. And actually for quite a while thereafter also.
DipJar Started Out as an Easy Way to Tip Waiters – But the Economics Did not Work Out
So, the company built the product, got a bunch of them out to market, started taking tips and started growing the business. Let me fast forward a little bit and I'll kind of go to the pivot. So, then what started happening, I mentioned earlier, the fact that forms of payment were changing and new forms of payment were emerging.
SAL DAHER: Right.
CHRIS SELLAND: Well, of course, what happened now, if you start to think about 2015, '16, '17, those years, right? The company was actually selling product, getting traction, selling devices, taking tips. But things started changing. Like in the restaurant industry for instance, we not only had things like Square, but we had products or companies like Toast, started to evolve to basically... And it became easier. And then things like Apple Pay and other payment forms started kind of... Things were changing in the industry.
Fixed Fees Charged by Credit Card Companies Become Meaningful for Small Transactions
So, this initial problem of it's hard to tip with the credit cards started becoming less hard. So that was thing number one. Thing number two was that if you know anything about the credit card industry, the other thing is the credit card industry works on a per transaction basis. It's kind of interesting because I look at kind of our processor relationships and there's percentage fees, which is what everybody typically knows about. They pay a percentage fee in their credit card, but there's also fixed fees and when you're doing very small transactions, that a dollar, two dollars, three dollars, those fixed fees actually become very meaningful. They become much less meaningful when you're doing larger dollar transactions.
SAL DAHER: Yeah, they eat up all your margin.
Devices Are Connected to a Platform – Charge per Dips Are Pre-Set
CHRIS SELLAND: Right. Exactly. They eat up all your margin. And there's basically three ways we make money. Because one thing, by the way, I probably should have said right on, these are connected devices. So yes, we're selling a device, the device is the DipJar, but the DipJars are also connected to a platform that helps you manage disbursements that actually let you set what numbers you want on the device. The DipJar's intentionally built for giving. So that means that generally speaking, you have kind of a preset amount. For tipping, it might be one dollar, two dollars, three dollars.
SAL DAHER: Right.
CHRIS SELLAND: But for something like donations, it might be five, 10, 20, 50 and we actually go up to $1,000 a dip. I was at an event not long ago where there was a significant number of 250 and $500 dips being made.
SAL DAHER: I saw pictures with $500 dips and all that.
CHRIS SELLAND: Right. And so in that type of environment and a seven cent per transaction fee is pretty meaningless, right?
SAL DAHER: Right.
People Saw the DipJar in Coffee Shops and Started Asking If It Could Be Used for Charitable Giving
CHRIS SELLAND: So, there's transaction fees as well. So we have kind of our device sales, which is a onetime sale of the device to who's ever going to use it. There's a subscription fee to kind of keep it attached to our platform. And then there's these transaction fees. So the transaction fees actually turn out to be much more profitable really for everybody, for us and the customers when the amounts get larger. And so what we started finding, and oftentimes people were walking into coffee shops and seeing a DipJar for tipping and saying, "Oh that's cool. Could I use that for like my school fundraiser or my local food bank?" Or what have you. And the company started getting into the nonprofit industry and found that actually nonprofits really liked-
SAL DAHER: This is before your time there?
CHRIS SELLAND: This is before my time. Yeah, I've already said predating me. Because again, I just joined the company at the end of 2018.
SAL DAHER: Right.
CHRIS SELLAND: So, as the tipping market was kind of, I wouldn't say FAP parading, but definitely not scaling to the point where the company could grow-
SAL DAHER: Yeah, I imagine, having a dedicated device just for tipping, it takes up real estate on the table or people have to walk around with it. And it seems like a lot of work for such a narrow thing that can be solved in some other way.
CHRIS SELLAND: Right. Well, now you've got points of sale and payments types that make it pretty trivial to just add on a little bit of money when you make your purchase. So even the need for separate device, I would say actually the fact that it occupies space on a counter is a good thing. A lot of our growth is word of mouth. People see a DipJar and they're like, "Oh that's cool. Wow, I'd want to use one of those for this cause." Or that or to collect money for this. So the space on the counter actually turned out to be a very good thing for us because we get a good word of mouth component to our growth.
SAL DAHER: Right but in the nonprofit, in the giving space instead of the tipping space, because dollar amounts are much larger, space requirements are much less.
CHRIS SELLAND: Yes.
SAL DAHER: I mean, it's much less of a premium, yeah.
CHRIS SELLAND: Well, and the visibility is important.
SAL DAHER: Similarly, important, yeah.
CHRIS SELLAND: That the people see it. And it's pretty obvious when you look at a DipJar, what it's there for. It's there to take money. And a lot of the differentiators that we have from other forms of payment is it's branded. So the cause is generally displayed prominently and printed right on the front. It's a dollar amount that's displayed-
SAL DAHER: It's a cool looking [crosstalk 00:09:33].
CHRIS SELLAND: Yeah.
SAL DAHER: I mean, it lights up, but then it's just-
CHRIS SELLAND: It's unique.
SAL DAHER: Yeah.
CHRIS SELLAND: Well, and that's the thing too, if somebody uses it, it lights up, it makes noise. So it's got engagement. More than one customer and most of our customers, I'm kind of fast forwarding to the end of the founding story here, but most of our customers right now, almost all of them, especially the new ones, are nonprofits. So we do still have some tipping customers, but almost all of them are nonprofits. And a number of customers I've talked to have said some variant of events are really, really important to us.
“…but the bottom line is 80% of the money comes in when they actually get the donors in person”.
There are many nonprofits that say events, getting people together, getting their donors live, that brings in like 80% of their donations. They might solicit the email and they might send out different types of online solicitations, but the bottom line is 80% of the money comes in when they actually get the donors in person. But what a lot of the nonprofits also find out is that inviting people to attend the nonprofit gala, and of course it's the fall we're heading into fundraising seasons. I think you will be, I know I wouldn't be invited to many holiday galas end of year galas over the next couple of months. It's not so hard to invite people to attend, but oftentimes people are a little shy about asking for money, but of course that's the reason they're there. Right?
SAL DAHER: Yeah.
CHRIS SELLAND: Well the DipJar is pretty obvious what it's there for. It's asking for money. And the fact is the fact that it's lighting up and making noise and sitting up, taking up tablespace, it's somewhat of engaging and I might even say fun experience for the donor. And then one of the things we actually created last year, it was a new product called DipCast, that's a complimentary product that actually-
SAL DAHER: I saw that. That is incredible.
CHRIS SELLAND: Puts up on big screen. Yeah, it's actually pretty simple. It's designed kind of like a Chromecast, that's how we named it, but put up on the big screen what's being raised. So it's basically a tally of what's going through the DipJars and we've actually found some customers as well who want to start using us for more, displaying the results of their silent auctions. And sometimes the silent auctions are run through the DipJars, sometimes they'll run separately. I mean, nonprofits still use things like pledge cards and such as well, particularly when they're doing silent auctions for like big dollar purchases. But they might want to display that on the dip cast too, but-
SAL DAHER: Displaying a running number of the results of the auction, that is so powerful.
CHRIS SELLAND: It is because giving begets giving. The reason that events are so successful for nonprofits is because getting people together that you get the sort of virality of giving. When donors are sitting there at a silent auction at whatever other kind of event or just there for basically dinner, but they see giving going on, it makes them think, "I should give too." And that's really what we do. And that's the differentiation between our products and our platform and kind of the generic point of sale devices, is that we're really focused on helping nonprofits and helping promote giving and helping promote that virality of giving, if you will, to really display what's happening and how much is being raised. And that encourages others to give also. So that's really our secret sauce when it comes right down to it.
SAL DAHER: Yeah. I can think of my daughters both went to private school here in Boston, Montrose School. It's a girl's school and they're always struggling for cash, they don't have an enormous funding.
CHRIS SELLAND: Absolutely.
SAL DAHER: So, they've put a lot of emphasis on that. And there's a lot of school spirit. It's beautiful. The girls sing and they do their stuff and they're really into theater of the school, there's a strong connection and you have this feeling, "I love the school." And other people seeing, the same thing. It kind of triggers, I can see it working really well in that situation. It's removing the barrier from giving and making it really, really easy. And the immediacy of it, there's no sort of checking to make sure the credit card is okay and all that stuff. You put it in and clink, recognize it's a credit card and it sets off, it goes on.
CHRIS SELLAND: Right.
SAL DAHER: Talk about removing friction.
“…we can take a lot of donations very, very quickly”.
CHRIS SELLAND: Right. Well, we can take a lot of donations very, very quickly. And to your point, and that's the way we've architected the network. Now with the new product we're working on, we have had some requests to do real-time, but we do authorize, by the way, we don't not authorize it all, but we don't-
SAL DAHER: Do it real-time.
CHRIS SELLAND: We don't wait for the authorization to take another donation. So we kind of do it on a more of a rolling basis where if you're selling something, then you want that authorization because before the person walks off with whatever you're selling to them, you want to make sure the card is good. In our case they're giving, you're not selling, but we will have that as actually an option on the new product. But to your point about going back to your original point about the virality, yeah, that's very common.
I mean, even in the world of private schools and such, I mean it's kind of interesting when I'm out talking to investors and of course you're one of our new investors. Every single conversation gets on nonprofits that either the investor or the investor's family is on the board of, is involved with. Also, I get asked a lot, "Why did you join this company?" Right? And there's a couple of reasons I joined this company, but one is that when I met the people who were working there, when I decided to join, it was almost exactly a year ago, I really saw the passion for the causes and for helping. It's interesting. We're just in a more purpose driven world I think right now where people really care about these causes. There's a lot of passion.
I think social media has driven so much of that, but the investors we're working with, I think a lot of the reason they've invested is because they believe in the fact that we're helping good causes. And I also saw that in employees. So it's been really, really, really great to see. It's unique and people have said, "Well, nonprofit is a niche." Well, it's a bit of a niche, but there's... I think it was the Urban Institute did an estimate. There's like 1.6 million nonprofits out there and you gave some of our stats early on. We're working with about 4,500 of them, but we've got plenty more we can continue to work with as we think we got plenty of running room.
SAL DAHER: Yeah, it's an appealing kind of startup. I wouldn't have invested if it didn’t make business sense.
CHRIS SELLAND: Right.
SAL DAHER: From an investor’s perspective. That is also an appealing aspect to it in the sense that you're really helping all these nonprofits which struggle so much. Because I was on the board of the school, I was a treasurer and I saw how really hard these schools struggle to do what they do. It's really hard to get people to contribute, to understand the importance of supporting the school and so forth. So I think it's a thing that is really remarkable. I love the little gadget, the way it lights up and everything. That's a great concept and I think it has great legs. So you're talking about you love the team, the people who founded the company and so on. Tell me about the team now. Who does what and who you brought on?
About the Team
CHRIS SELLAND: Well, first of all, one of the founders is still on the board.
SAL DAHER: Okay.
CHRIS SELLAND: The two founders aren't operationally involved anymore, but one's still on the board and still remain investors in the company.
SAL DAHER: Good.
CHRIS SELLAND: The team, we have two remote people at the moment. There's 14 of us, two are remote, two are also part time. One of their mode is part time. So we're a team of 12 full time, two part time right now, which is about double from where we were a year ago. Again, we're kind of in the midst of our raise right now. The company is actually running pretty close to profitability. We actually got to profitability earlier this year, but we're also running extremely lean, kind of almost unsustainably lean and we need to develop some new capabilities and products, which we're in the midst of doing right now. So about a third of the company is dedicated to engineering and there's really two forms of engineering. We've got a couple of people working on our next generation devices.
There will be a couple of different versions of the next DipJar that comes out. It may or may not be called DipJar, which we're planning to release in early 2020, we actually should have some prototype units in market this fall-
Startups Love to Create Brands Having No Idea of How Hard & Expensive It Is: Brand-itis
SAL DAHER: For all it's worth, let me give you the advice of somebody who's been on this podcast who's done messaging for very large corporations. IBM, $100 billion revenue corporation considers it can support no more than five brands effectively.
CHRIS SELLAND: Right.
SAL DAHER: So DipJar, my vote, stick to DipJar however way you can, because that's a name that people recognize. You can call it DipJar, this or DipJar that, but the brand is DipJar. Kathryn Roy is the person talking about this.
CHRIS SELLAND: Yes.
SAL DAHER: So, she says startups have brand-itis, they want to create a brand of this and a brand. It's really, really, really hard.
CHRIS SELLAND: It's also really, really, really expensive. No doubt. Again, I'm a former CMO myself and I can totally relate to that statement. And I would say that one, our brand has great stickiness and brand retention. People know it, like it. It's a little quirky. It's interesting because it's tied to what? We don't do a lot of anymore. Although we do still have some tipping customers. Even recently you might've seen the city of Austin bought a bunch of DipJars to give out actually two musicians in to help-
SAL DAHER: Or to buskers.
CHRIS SELLAND: Well, yes, to buskers.
SAL DAHER: That would be great, buskers-
CHRIS SELLAND: You made me think of “Once” the movie, right?
SAL DAHER: Yeah.
CHRIS SELLAND: Yeah, exactly. And we actually have a few directly as well. And it's interesting too because people said, "Well, why don't you just use Venmo?" Because most bands now have a Venmo. But the thing is nobody really does it, because there's no virality to it. Nobody really knows it's happening. It all happens quietly.
SAL DAHER: It's too quiet, yeah.
CHRIS SELLAND: And the fact that we kind of bring it out, make it more successful. So we do still have some tipping customers out there. But yeah, changing the brand, that's a complicated, well, it's definitely not anything that's happening immediately. I think what I'm more alluding to... I mean, I mentioned DipCast, we've already got another product out there, right? It's more around the product name as opposed to company name. And so there's product names, there's company names, there's actually a blogger who I'm friendly with, who's California guy, a guy named Dave Kellogg. He actually wrote a blog just recently within the last 30 days on rebranding. And the short answer is his general advice was don't, unless things are really, really bad. For all the reasons you described for the complexity for... You lose whatever-
SAL DAHER: All this capital you've built up.
CHRIS SELLAND: Exactly.
SAL DAHER: And you say, well it may sound tired to you, but people recognize it.
CHRIS SELLAND: And it's extremely expensive. I was also talking to... I was at another investor event recently. I was talking to one of the... Actually who I would consider the top COO in Boston and we were having the same conversation that the brand might not be perfect in that it describes a business that we're not really doing anymore. It's got some interesting connotations. People sometimes hear DipJar and they think of things like hair gel and-
SAL DAHER: Yeah.
CHRIS SELLAND: But you know what, people remember it and there's a lot of value there.
SAL DAHER: In the context, it's important that they know in the context.
CHRIS SELLAND: Well, think of Yahoo and Google and some of these companies that had these weird names probably early on. It's like right now what's that? But you know what? The names stick and brand stickiness is a huge asset. And we do have no hair gel comparisons intended, but we do have a sticky brand or maybe, yes. Right? For whatever reason people remember the brand and that's good.
SAL DAHER: Right.
CHRIS SELLAND: So yeah, we're not planning anything immediately. And I find it's something we'll continue to look at right as the company grows and evolves. But there's a pretty long list of things to do and revisiting the branding is on the list, but is certainly not at the top of it right now. Right now getting a new product, building the team. I think I've started talking about new products, new services, and you were asking, I just think the original question before we digress massively here was the team. So we've got about a third of the team focused on getting new offerings out. Also building up the more robustness of the platform.
SAL DAHER: Right.
CHRIS SELLAND: We actually have a very robust platform and that's actually the part of the business that I'm really excited about developing further. And we just brought on a new head of platform in August, who was one of our really key new hires to help develop some new services and new in the platform as well because we really do want to turn this into more of a subscription recurring revenue business as well where we're kind of delivering ongoing support. We've already got a team of people, it's a small team, but it's a good team that helps consult with these nonprofits on how to make their events more successful, but to offer them more services, better analytics, better advice on how... We have all of this data from all of these transactions that we're driving.
“So, the DipJar you just power it up and it works. And that's a big part of our selling prop too”.
Our transaction growth has been exploding. It's been going triple digits over the last couple of years and it's accelerating as we sell more and more DipJars. So we have all of this data, can we do more of this data? Can we help the nonprofits out? At the same time? One of our key selling props is around simplicity and ease of use. That's actually also a big reason why people come to us, is because a DipJar you just power it on, use it basically. So a lot of people who work for or volunteer for support nonprofits aren't necessarily the most technically sophisticated. They're not looking to mess around with a lot of detail in the backend and setting up bank accounts and plugging things into my phone and so on and so forth. So the DipJar you just power it up and it works. And that's a big part of our selling prop too. But to be able to offer more robustness in the platform is certainly something we think there's a lot of value that can be delivered there.
SAL DAHER: Well yeah, create value from all this data that you're gathering.
CHRIS SELLAND: Yeah.
SAL DAHER: That helps.
CHRIS SELLAND: Exactly. We just brought a new head of marketing, actually somebody I worked with for four years in the past and has been on board 30 days if that and is already making a huge difference. We have a small inside sales and then basically everybody else is kind of sales and customer success. And then you have a few folks basically myself and the head of finance and ops who are kind of like operationally. And of course we have some people, we're still building the DipJars ourselves as well. That's another thing that we're looking at. Actually, we're based in downtown Boston.
“Literally, built in Boston”.
SAL DAHER: Literally, built in Boston.
CHRIS SELLAND: Literally built in Boston, which we have to think about as the business scales because we're growing now. Is that still the way, I would say the place that we build, it's actually on the Chinatown / Downtown Crossing border where we're really assembling them. We bring in components, but we also customize, and again, I mentioned we have the causes, logos and message on the front-
SAL DAHER: Built a brand of physical instantiation of it with the logos and slogans and so forth. It's really powerful.
CHRIS SELLAND: Right. We put them together, we test them and brand them and we've got a small team doing that as well. So we've got a lot to do with the team of a under 15 people, but running the company lean is what's allowed us to kind of be around this long and finally get to a point where we're really scaling.
SAL DAHER: Excellent.
CHRIS SELLAND: Yeah.
Sal Talks About His Investment in Fine Tune Learning
SAL DAHER: Coming up next I will ask Chris Selland of DipJar, the burning question that is on the mind of all angel investors. How is investing in your company going to give me the 20X or 30X return on my money that I seek? However, before we do that, I'd like to tell you a bit about another interesting company in which I was an early investor Fine Tune Learning. Are you familiar with Fine Tune Learning?
CHRIS SELLAND: A little bit.
SAL DAHER: I think there's a lot in common between what you're doing here and what Steve Shapiro did at Fine Tune Learning. When they invested in Fine Tune, then called Academic Merit. The company had a software that helps students deepen their engagement with literature. It was the brainchild of an inspiring high school teacher from Maine named Ogden Morse. Now, 3.6 million high schoolers who take the college board's AP exam, will have essays scored on the Fine Tune platform. So Fine Tune Learning has got the potential to really revolutionize the way that writing is taught. Because guess what, teachers can halve the time it takes for them to correct an essay.
SAL DAHER: Yes.
CHRIS SELLAND: It's an unbelievable.
SAL DAHER: And the way kids learn how to write is to write an essay and then have the essay corrected and then they write it again and they get better at it and it's very time consuming. But if you have a software platform that can do some of the stuff, use a little bit of machine learning, you use a little bit of pattern recognition and doing the grammar and the syntax and all that stuff, it's easy to pick up. And so it works really tremendously well. Now it's working at scale and the company's doing well.
CHRIS SELLAND: Well, that's great. Yeah, that's, as you said, there's a lot of commonality there, but because you've got a societal issue that there's a lot of passion that people have for it, but how do I solve the problem of helping teachers be more productive and helping students learn more effectively? So, absolutely. Those are the kinds of things that very parallel to what we do. Certainly not identical but very parallel.
Like DipJar, Fine Tune Learning Had a Restart – Hired CEOs Are Much Maligned But…
SAL DAHER: No, but I think what's fitting is that... To bring up Fine Tune in the context is that the company had a restart. Steve came in as a hired CEO. Steve's not a founder, he's a hired CEO. Hired CEOs are much maligned, when you see them working, it's good to see, because there's a kind of like “this company” syndrome, when the CEO says “this company” instead of “my company”.
CHRIS SELLAND: Right.
SAL DAHER: It's scary.
CHRIS SELLAND: I try to spend as much time as possible with our founders as I mentioned one in particular, a gentleman named Ryder Kessler. He's on the board. He's a great guy. It's funny, I was down in New York a couple of weeks ago. It was my birthday. I went down with my wife. I'm originally from there. I'm still Mets fan. We went to Mets game. But I made a point to go spend some time with Ryder and spend some time understanding and he's still so passionate about his vision for the company. Again, things have evolved, right? And he's also so thrilled to see it growing and I'm happy to be kind of supporting that. Right?
SAL DAHER: But the point of bringing this up is just to make a point that Boston is just full of really interesting companies. It's a capital-poor environment compared to other places and so if you're an accredited investor, this is a pitch to listeners who are accredited investors to consider the investments syndicates that I have. The way investment syndicates work is that you set up an LLC and the LLC writes one check to the startup. The investors, each write individual checks to the LLC. So you have 10 or 12 or 15 or 20 people investing in the LLC and then one large check goes to the startup. The startup likes it because on their cap table, they see just the LLC. They don't have 15 gazillion people adding to the cap table, which can be complicated when they get VC money and so forth.
Chris Selland: I can relate to that.
Investors Like Syndicates Because They Don’t Have to Write $25,000 Checks
SAL DAHER: Yeah. Now the investors like it because they don't have to write $25,000 checks. The minimum is 5,000, between 5,000 to 20,000 is the range of the check sizes in the syndicate. So it allows them to spread the money more widely, which for angel investors as really a good idea to do.
CHRIS SELLAND: Right.
SAL DAHER: And the syndicates that I set up, are companies that I'm really excited about, for example, in the case of DipJar, if the timing, if we hadn't just wrapped up the raise, I think it would have been a good candidate for doing a syndicate. If I'm excited about it and then I communicate it with the people who are my syndicate lists, who are accredited investors and if they like it, they come in. I did another syndicate involving a company called LifePod and it was kind of like came together organically. A bunch of people came to me and said, "We want to invest in LifePod, but there's a $50,000 minimum." And a whole bunch of people-
CHRIS SELLAND: That's pay check. It makes it harder for me to diversify. So yeah.
SAL DAHER: They really wanted to manage their cap table, because they're expecting a lot of VC raises and so forth ahead of them. So it made sense. And I did that as well. And the first one was Savran Technologies. Çağrı Savran was on this podcast. “One Cell in a Billion”, it's really compelling technology. So if I have a conviction in a company, I'll do a syndicate. And also the timing allows, if it's in the beginning of the raise, because it takes time to put together the syndicate, communicate with all the people and so forth. So it's not every company, but there's a tremendous logic to it.
CHRIS SELLAND: Right.
Sal Asks the Burning Question for Angel Investors: How Am I Going to Make 30X on DipJar?
SAL DAHER: But anyway, let's get back to the 20 or 30X. How's an investor going to make 20 or 30X investing in a company like DipJar?
CHRIS SELLAND: I mean, the net is we need to continue to scale the business, the businesses at what I would say, the very early scale stage right now. I mean, we're also unlike a startup in that we actually we have seven figure revenue coming in right now. So, and we have three lines of revenue, like I said, selling the devices, selling the devices because we have to build the devices and such. That's growing on a nice linear path, and we certainly want to take that up and accelerate that. But then it's really the installed base of the devices as we get more devices out there. I mean, not unlike if you look at what somebody like Amazon is doing with their Alexa devices, right? If you can sell them at a price point where it's a fairly incidental cost, they're covering the cost and we certainly want to more than cover our costs. But then the services you can deliver through those devices is really where you can see tremendous scale.
SAL DAHER: Right.
DipJar’s New Head of Platform Is Building Capabilities Critical for Scaling Revenue
CHRIS SELLAND: So, I mentioned a few times the platform that connects the DipJars and the fact that we just brought on a new head of platform, a guy named John Running, who I'm really excited about. He's been on board for just over 30 days or so. He's already delivered some great value. The good news is the team who originally built our platform did a really good job. I mean, I've been here a year. The platform hasn't hiccupped once, but it's pretty straight forward. It's managing the DipJars, managing the amounts, managing the cash. And obviously since we're managing credit card info and everything, we have to have pretty robust security. We have to have PCI compliance built into the platform. But if we can do more through the platform, we can deliver more scale there.
“We've now got … I think about 8,500 DipJars out there in market and 4,500 customers”.
We can also start to deliver other software-based services. I mean, right now we do focus on events and when you get your donors live in a single place, but we can start to go into the app space, we can start to go into the event management space. We can start to go into the online donation space. So we've got potential opportunities to expand the platform and scale a business more there. And then of course, last but definitely not least is transactions. Now, right now transactions is the smallest of the three revenue streams, but it's by far and away the fastest growing and more importantly, it's accelerating. So transactions have been growing triple digits, uh, for us, year over year. We've now got somewhere between eight and 9,000, I think about 8,500 DipJars out there in market and 4,500 customers.
So, the more DipJars that are producing, the more transaction volume that runs through them. So first of all, the more money we're helping our customers raise, this year is going to be not quite triple, but certainly well more than double what we did last year. And we expect that to move forward as well. So you've got real scale as our installed base grows on both kind of the platform and network services and then the transaction. So that's where we can really scale and grow the business. And of course from an investor ability and valuation standpoint as well, recurring revenue.
I mean, having talked to, I don't even know, I would say dozens, but it's probably in the triple digits, probably hundreds of investors in the year that I've been here, recurring revenue is-
SAL DAHER: Is everything.
CHRIS SELLAND: It's everything and there's fads in investment but recurring revenue is revenue that you get it year over year every year. So we can get recurring revenue from DipJars we sold five years ago and five years from now we'll be getting recurring revenue from those DipJars or other devices that we may sell. So recurring revenue really provides that scale capability and then you layer the transactions on top.
SAL DAHER: Right.
CHRIS SELLAND: That's how we really believe we're going to scale this business.
SAL DAHER: Savvy investors are thinking but how much capital will we require to grow that company? We're talking the week after that WeWork failed IPO. It raised so much money and the business just isn't there 20% margin on a business that they're going to have a lot of competitors on. They are nothing compared to the large holders of real estate of commercial real estate that will start getting into the business if this thing works at scale at all. So, question here for DipJar, of course DipJar is a totally different business, because it almost has the whole business to itself, but how much capital it would require before you can get an exit and what kind of exit is possible for a company like the DipJar?
CHRIS SELLAND: There's two questions there. First of all, there was the how much capital we need. And second of all there was the exit strategy. So let me talk about both because one kind of drives the other. Okay. So I'll explain what I mean by that. The how much capital we need. We're raising enough in this round. We don't need to raise more capital. We actually even had the company at break even earlier this year, but because of the state of our cap table at the time, we still, and because we had some convertible debt and so on and so forth, we also had trade debt, we really needed to restructure the cap table, so we did that.
“We don't need to raise more capital ever if we don't want to”.
Now we've restructured the cap table. We have brought on a few new folks, so we're burning, but it's a pretty modest burn right now. And honestly it's a matter of we could turn the dials and we're raising enough capital to get us through it. We've got a plan that will actually... We don't need to raise more capital ever if we don't want to. That's one of the advantages about having a product that's already out in market, having real revenue, having accelerating revenue. So when you have the revenue, and we were just talking a moment ago about recurring revenue, particularly when you've got recurring revenue, as we turn to more of a recurring revenue model, we've got deferred revenue as well, right? So we've got revenue we know is coming in.
So, if you plan the business intelligently, we don't need to raise more capital, it becomes then we may want to raise more capital to accelerate the growth of the business once we hit certain milestones. So the will we go out for another round? When we hit those milestones, we'll certainly look at that as an option. But what that gives you is the ability to not need to raise more capital. It gives you control of your own destiny. Let's get to question number two that you asked, which was exit strategies. So I will tell you, we've been talking to a lot of investors, we've got some strategic investors as well. By strategic that means both executives in entities that we're partnering with and working with us and may want to acquire us someday. We've already had a few of those conversations. Now, we still have some scaling up to do to be able to really move the needle in a big company.
I worked for five years, I actually worked at a company called Vertica, which was carved by HP. And even though Vertica was a 50 ish million dollar business in the scope of the 110,000 employee HP, and I forget what the revenue was, we barely moved the needle there, right? But to be attractive as an acquisition to a larger company, you've got to be big enough to move the needle. So we still would like to scale the business ourselves and grow it more. But at the same time I and we absolutely are going to build the relationships and already are in the process of doing that with partners who may decide at some point along the way that this partnership is going so well that they might like to absorb our business into their business or make our business a part of their business, might be a better way to say it.
So, we have exit candidates right now. As a matter of fact, as part of kind of the due diligence for the round that we're closing because of some of the restructuring, the cap table and everything, we actually had to go through a solicitation of, "Hey, if we put this business up for sale today, what would you offer?" And we just think that there's so much value that can be built by driving more transactions, driving more subscriptions, building more recurring revenue that we've got an opportunity to scale this business further.
On Possible Exits: “I mean net, we're a FinTech company, we're in a hot space, right”?
There such big companies in the nonprofit space and there's so many big companies in the payment space and obviously there's so much attention on FinTech. I mean net, we're a FinTech company, we're in a hot space, right?
SAL DAHER: Right.
CHRIS SELLAND: So if we can control our own destiny, we've now got a crystal clean cap table. We've got a crystal clean balance sheet, sparkling clean, and if we can maintain that, which we absolutely believe we can and drive more recurring business, we'll control our own destiny at that point, those things will take care of themselves and invest in the partnerships with the companies that might be the right natural acquirers for this business down the road. But if those things don't happen, then we'll just continue driving it forward. I get the IPO question a lot. I mean, it seems like it's always out there, but having been through some IPOs myself, I know that if you just keep growing the business and keep driving the metrics in a good direction, you absolutely can get there.
You mentioned WeWork and I think not to editorialize too much on WeWork, but I think one of the things that WeWork... WeWork has surrendered control of their destiny. They have a deep dependence on investors because of all of the obligations they've taken on. And also because they kind of flipped it around. I mean, we're actually... By the way, we're actually a customer of Workbar. We operate at Workbar who's one of WeWork's competitors, but we did that because it's a short term lease. So we're actually not locked in. But of course for the WeWorks and the coworking spaces, they need to lock in with the building owners. So they need to lock in long-term leases, But their customers only-
SAL DAHER: Another reason why it's such a terrible business.
CHRIS SELLAND: Well, let me put it this way. For a company like us, the coworking is a tremendous value proposition.
SAL DAHER: It's really valuable for us, for me. I use WeWork. But the thing is, the classic problem that banks have is a mismatch between their assets and their liabilities. Their assets are the loans that they make.
CHRIS SELLAND: Right.
SAL DAHER: And the liabilities are the deposits they take. The deposits are short-term, the loans are long-term, right? So the bank runs, they can't liquefy their loan portfolio to pay off the depositors. It's a classic problem that banks have had. And to this day, I mean the ALCO committee, the Asset-Liability committee is really important committee in the banks, because they have to think about this. Now, I think all these people, like WeWork, when times are good, you're going out there and getting into all these long-term leases where you have obligations to pay owners-
CHRIS SELLAND: For years.
SAL DAHER: For years, and you're releasing it-
CHRIS SELLAND: And you've got customers who only owe you for months.
SAL DAHER: By the month.
CHRIS SELLAND: Right.
SAL DAHER: Man, do you have a mismatch? And that is a massive problem.
CHRIS SELLAND: Right.
SAL DAHER: And these guys have no history. They don't even know it's there. One day it's going to hit them and they're going to be like, "Why?" Gosh, that is such a crazy business.
CHRIS SELLAND: Right.
SAL DAHER: And so, I think basically that kind of business is really built to be more like work bar, local scale, not this crazy scale with crazy valuations and so forth. It's overblown. Now getting back to exits here, Wistia, are you familiar with the company Wistia?
CHRIS SELLAND: Yes.
SAL DAHER: The video platform?
CHRIS SELLAND: I know of them, yes.
SAL DAHER: Yeah. Through Raul, I got connected with Chris and Brendan in there, they did a unique thing. They were very, very capital efficient. They built that company on a shoestring budget and now they have a really blossoming business. They're very creative about building out new products and so forth to help people who use video for marketing. If you're really, really interested in making your videos pay, you use Wistia. So they have dedicated paying customers. They never got VC money. It's a great business but not VC funded. They raised like 1.4 million in angel money early on and that's it. So last year they went out and borrowed money and bought out their early investors. The ones who wanted to leave, the ones that wanted to stay could stay, but people were saying, "Oh geez, you guys are never going to be... Never going to get in as exit." And so on. And since they have a cashflow business, they run out of borrowed money, I figured something like 17X for the investors who chose the exit. Beautiful exit.
CHRIS SELLAND: That's great. You said you needed 20 to 30 though?
SAL DAHER: Yeah. That's it.
CHRIS SELLAND: You would take 17.
SAL DAHER: It's aspirational.
CHRIS SELLAND: Okay.
SAL DAHER: Yeah, it's aspirational.
CHRIS SELLAND: As you can say, it's more than VC. VCs usually talk about 10, right?
SAL DAHER: Of course, it's more than VCs.
CHRIS SELLAND: Okay.
SAL DAHER: VCs are shooting fishes in barrels. We're kind of like cows in the field.
CHRIS SELLAND: You're coming in very early, high risk.
On Being a Hired CEO
SAL DAHER: Yeah. Much earlier. We need the potential of 2030 because 60 70% of the portfolio will fail. We will not return the capital. It's really early on. A company as developed as DipJar is not common. Usually there's really no revenue and so forth at that point. So anyway, Chris, let's talk about a little bit the challenge of being hired CEO. We talked about Steve Shapiro, there was another CEO who came in before, it didn't work out, and then Steve came in and he made a success of it. There's a problem with commitment, there's a problem of people are suspicious of you and so forth. So how have you handled that?
CHRIS SELLAND: First of all, I think it's important when you're walking, I'm old enough, I've walked into enough situations to not walk in like the know it all, walk in with your ears open, before you start opening your mouth. And I've really tried hard to do that and I would like to think it's worked. The former CEO, writer who I mentioned earlier, he had actually stepped back about a year before I came on board and the COO was running the company and there was a search going on for somebody to kind of step in and take over, particularly knowing that we had kind of a raising recapitalization process in front of us. Somebody with some experience doing that. So there was no real resistance to bringing me in. I wasn't replacing the founder per se. And the need for a CEO to come in was seen.
I mean, the culture was different. I think it was a culture that was... First of all, there was no question of commitment. I mean, it was a very small team, but it was a really, really committed team. That was one of the things that attracted me was that the team was so committed to the business. I think there was a skepticism like, "Are we going to make it?" Because the company had been through some very lean years and getting people encouraged that, "Yes, we have a future. Yes, we have a plan." And almost getting the culture kind of turned in a more optimistic direction was probably the biggest challenge. And I'd like to think, we've accomplished a lot of that, I don't think... I think we've still got more to go, but I think company culture is so important. Now, the team is... Again, I think it was about six full time people and maybe a couple of part time when I started about a year ago and now we've about doubled that.
So, we've brought in some new team who's brought some new energy as well. But again, there was no lack of energy, I think there was more of a... It was funny, one of our sales people said to me, "Oh, it was so nice that I came and joined their little company." But she wasn't really sure why. And there was some reference made to some other... And I said, "No, this is very real company." Because we have control of our destiny and we have real growing revenue. We have products in market, we have thousands of customers and we have thousands of products out there. That's as real business as you're ever going to see.
There've been some cultural challenges. A cultural evolution I think might be a better way to say and I think the culture has been going in good direction. But that was actually one of the most committed teams I've ever seen. And I think it was both commitment to the cause and commitment to the business. And I also think going through tough times really gets people engaged in a kind of different way, right? But commitment wasn't an issue, culture might've been a bit of one, but I think the acceptance that I've seen has been very rewarding. It is funny because I mentioned my new head of marketing, I'd worked at Vertica before.
I mean, it's a little bit different when you're kind of one of the team members as opposed to the CEO. And I definitely try not to be that, but at the same time I know that people are... The team's not in all the investor meetings and so on and so forth. And there's an element of having to kind of be part of the culture, but at the same time let other people drive it. But I think things are going in a very good direction from that perspective.
SAL DAHER: Yeah. Yeah. The thing with, you know, being a CEO is that you're part of the team and you're not.
CHRIS SELLAND: Exactly. You just said it a lot better than I did.
SAL DAHER: Yeah. It's kind of like Odysseus. You have to kind of be the shock absorber for all the bad news and all the bad stuff and put on a game face. And I'm trying to remember the second circumstance. I think it was in the Odyssey and it talks about, "I told them nothing for they could do nothing. Their role was to row." The true road and he had to contend with the danger and with the fears and all of that. And he had to spare his crew those fears because they couldn't do anything about, they were confronted with this. And so the CEO was kind of like the shock absorber. You got the problem. Okay, you cannot let on to your crew that you got this problem that's going to demoralize them. They have to believe in the thing, because if they-
CHRIS SELLAND: Or scare them.
SAL DAHER: If you scare them, they don't row.
CHRIS SELLAND: Right.
CEO’s Big Challenge: “…you have to be inspiring and you have to believe in the company when there's very good evidence for you not to believe in the company”.
SAL DAHER: Okay. And they're going to crash. And so at the same time, you have to be truthful to people. You can't be lying to them, but you have to be inspiring and you have to believe in the company when there's very good evidence for you not to believe in the company.
CHRIS SELLAND: Yeah.
SAL DAHER: See that's the hard thing of being a CEO. It is just the hardest job there is, it's incredible.
CHRIS SELLAND: Well, it's-
SAL DAHER: People don't understand this. They go, "Oh well." Yeah, it looks really nice, but-
CHRIS SELLAND: I've had hard jobs. It's hard in a lot of ways. And I guess it's the hardest job. But I'd also say it's the most rewarding. Two things I would say in response to that. One of my other kind of West Coast contexts, a guy named Jason Lemkin, I don't know if you happen to read him, he runs an organization called SaaStr, which is a conference series out on the West Coast and he's a very prolific blogger.
SAL DAHER: Right.
CHRIS SELLAND: And one of the things he always says is, "CEO has three jobs. It's basically raise capital, recruit and set the culture." And to me that's pretty much what the job is, right? And we've raised some capital, we've definitely done a good job recruiting. I think of those three, recruiting is probably the part that I'm best at. So if I sort of personally look at myself and then set the culture, the only thing I would say about set the culture, and I don't know if he's actually said set the culture and this was the second thing I was going to say is you can only set it to a point. What I was going to say, you were quoting, talking about Odysseus and such, I was going to say more like, the Friday afternoon, "Hey, let's have beers after a long successful week." Right?
SAL DAHER: Right.
CHRIS SELLAND: I think the team has more fun when I leave. I've made it a point to... I'll have the first beer.
SAL DAHER: Yeah.
CHRIS SELLAND: And then I'll leave. And I'm sure they actually have a lot better time when I'm not there.
SAL DAHER: Sure, yeah.
CHRIS SELLAND: Right? Because they just feel more relaxed when I'm not around. And that was kind of what I was trying to get at.
SAL DAHER: The CEO is not in that sense, you're not one of the guys.
CHRIS SELLAND: Exactly. You really kind of can't be.
SAL DAHER: They can't let their hair down. And at the same time, you've got to be close to them. I think that Lincoln could add fourth thing, the CEO is there to believe in the company when there's good reason not to believe in the company. See, that's the thing, because you're bringing into being something that doesn't exist. And if your imagination is incapable or if your emotional resources don't allow you to consider that, yes, it could fail, but I have to will this thing into being, I have to believe in this thing and make it happen. It's not going to happen.
CHRIS SELLAND: Right.
SAL DAHER: And that quality I think is rare and is really essential for CEOs. And I think it's often overlooked. And this is what I seem... Steve Shapiro, you talked to Steve. Steve is a very realistic guy, but he's also very optimistic. It's like, "We'll figure out what the way to do this." He sees all the problems, but he's thinking, "Well, maybe if we could do this and could do that." He doesn't panic.
CHRIS SELLAND: Yeah.
SAL DAHER: So, I think that's really-
CHRIS SELLAND: It's interesting too because I've talked a few times about, I call it optimistic transparency and I'm learning very quickly it's so important that we... I and we have a great board, but it's so important to be transparent with them and without naming names, times or anything else cause they don't want it. But I've been other places where, and I've been in enough board meetings to see that when the board doesn't feel like it's getting the full story, when they feel like they're getting the optimistic story, but they're also not hearing what could derail things, that's not good.
“…optimism is not shading the truth”.
SAL DAHER: But the optimism is not shading the truth.
CHRIS SELLAND: Right.
SAL DAHER: Okay. Optimism is saying, "Yes, we have this problem. I think there's a way around it. I think there's a way we can solve the problem. This is what I'm thinking of doing. I believe in the company. I believe that we can do this."
CHRIS SELLAND: Right.
SAL DAHER: That's optimism. Optimism is belief in the face of evidence that would lead you to give up belief. Okay? It's not denying the fact, that's something else. People like that don't take the steps that are necessary to address the problems. They are in denial and they are kind of, "Oh, everything's well." I've had that. I've had the experience with those guys as CEOs.
CHRIS SELLAND: Yes.
SAL DAHER: "Oh, everything's fine, everything's fine." Vanity metrics and so forth. And they keep raising money after round after round and the numbers don't shift.
CHRIS SELLAND: So, it's the investor's fault, right?
SAL DAHER: Yeah. You've got to cut them off, but you kind of say, "Well, give him one more chance and so forth." Yeah, I've gotten a lot harsher in that regard.
CHRIS SELLAND: I was joking with that-
SAL DAHER: No, no, but it is, investors have an obligation to-
CHRIS SELLAND: To hold the CEO's feet to the fire.
West Coast, East Coast
SAL DAHER: Yeah, the board members and the investors. Speaking of that, West Coast, East Coast, let's talk about that.
CHRIS SELLAND: Sure.
SAL DAHER: You've worked in the West Coast, you've worked on the East Coast, you're a New Yorker. Compare and contrast.
“The West Coast is more about top line; the East Coast is more about bottom line”.
CHRIS SELLAND: I would say there's a different philosophy and it's already come through in so much of this conversation on the West Coast. The West Coast is more about top line, the East Coast is more about bottom line. I think is the way I would most accurately describe it. And again, it's a massive overgeneralization. It's not that we don't care about margins on the West Coast, but mostly they care about growth. I've been in enough kind of West Coast investor and board meetings and it's how fast can we grow top line, top line, top line. East Coast is more bottom line. How are you going to make money?
Neither is the wrong answer by the way. They're both right answers. They're just answers to different questions. But I would say that West Coast investors tend to focus more on how big we can make it. East Coast investors tend to focus more on how profitable we can make it. And ultimately you've got to achieve both. I mean, if you look at... I mean, Amazon, I referenced them much earlier in this podcast. This is a great example, right? Jeff Bezos was promising for years he could turn the dials and make the company profitable anytime he wanted to while he was losing massive amounts of money. And you know what, he did. Now ultimately, if he only stuck to books, could he have done that? I don't know. He probably could have done it there too, but it would have certainly been a lot less prominent company that it is today. Right? But it absolutely can be done. Right?
Kept pumping money in. I mean Amazon was losing bucket loads of money for many, many, many years. And if you read the conservative publications, I still read Barron's every week, right?
SAL DAHER: I remember.
CHRIS SELLAND: Alan Abelson and Barron's every week was like-
SAL DAHER: They were missing something. Amazon was building cadre of really, really exceptional managers. That's the thing, the people that they hire or the management team. Those people are top in their profession.
CHRIS SELLAND: That's true. But they also built a platform and if you really look at where their... What's really driving their financial metrics, it's AWS. It's not the retail business. And that's what, because you remember it was like Amazon against Barnes and Noble and who could make more money in books, right?
SAL DAHER: But the point is running AWS really, really well. It's a really well run company. You can be in that business and not do it well, but because you have the scale and so forth. So I think Amazon has that discipline. For example, in the space race, I would not be betting against Jeff Bezos despite all the stuff that we hear from SpaceX and so forth. The guy knows in his mind that you've got to manage things well.
CHRIS SELLAND: Right.
SAL DAHER: A lot of respect for that. Another thing that I noticed between the West Coast and the East Coast, I was out the summer, in the Bay area, the amount of money ready to be invested out there is shocking compared to here. The Boston area is really... I mean, we're loaded with people with startup ideas and so forth, struggling to get funding and over there it's like they're throwing money at stuff that you see really. I mean, 320 companies in a class at Y Combinator, they're all stars.
CHRIS SELLAND: Yeah, there's a lot of money flowing in the Bay area for sure. But look, I mean the Bay area, I was tend to say Silicon Valley, San Francisco, I mean, it's all the Bay area. It's kind of in a class by itself. There's no doubt about that in terms of the capital that's been raised and the exits that have been generated. Although you know, as mentioned, obviously Amazon is a Seattle company, right? So there are other pockets, but I think Boston community is doing just fine. And I think, again, I grew up in the New York area as opposed to the Boston area, but I think the East Coast's a little more conservatism, a little more focused on profitability is not necessarily... I mean, to me it felt like a better cultural fit for me, truthfully.
I've had many opportunities to move to the Bay area and somethings always kept me here in the East for some reason. Partly, I think I like the change of seasons, right? And here we are in October. This is my absolute favorite time of year. You certainly don't get the visual scenery and everything.
SAL DAHER: Oh no. Looks gorgeous.
CHRIS SELLAND: I don't know. I think after all this time I've spent probably aggregates of years, maybe you spent... Decades is probably stretching it, but certainly years in the West Coast. But I think I have more of an East Coast mindset. I like the East Coast when the opportunity, when some of the investors that I know are involved in DipJar, one of the advisors reached out to me. I said, "This looks interesting." But I've all respect in the world for the Bay area. At the same time, yes, there's a lot of money floating around, but that money imposes also massive amounts of pressure. And there's, I don't know, there's also a lot of fake it till you make it kind of behavior to justify the kinds of valuations you need to justify. So you just wonder at some point whether the bubble burst a little bit and things would come back to normalcy.
SAL DAHER: Yeah.
CHRIS SELLAND: I mean, I think people had been saying that about the Bay area for years. It hasn't really happened and obviously the bay area has yield so many great sustainable businesses as well, but there's actually more people and companies struggling out there too than you really might know. And having spent enough time out there, I see that and it's not perfect anywhere I guess is my point. I was with a company, this goes back about eight years or so, a startup... We were really struggling to raise money here and that actually was an early stage startup. We barely had a product. We raised some angel money. We thought about moving to the Bay Area because of the money floating around out there. But it's not as necessarily as easy as it sounds because there's also competition.
Like I said, although there might be a lot of funding, those 320 Y Combinator companies, they're all competing for the A rounds and so on and so forth as well. So it's not as easy as it might initially look. It's just a different mentality. Again, it's a lot more focused on top line, grow the top line as opposed to bottom line profitability. And there's a little East Coast conservatives in Boston, but I think I'm old enough, I can kind of look at myself and then, "Hey, that works well for me. I understand how to run a business that way." Right?
SAL DAHER: Well, Chris, is there anything we haven't touched on that you would like to tell this audience of angels, founders and people who work in startups?
CHRIS SELLAND: I think one of the things that I'm most excited about, I recently attended Boston FinTech week. I didn't attend the entire week exactly, but I went to a number of the events and I'm really excited about the FinTech community, that's growing up here in Boston. We've got a cluster of companies, everybody from MineralTree and BlueSnap and Toast. And we've really got some rapidly evolving scaling businesses in the FinTech space.
SAL DAHER: Right.
CHRIS SELLAND: And so I think Boston's got the opportunity to really become a hub in FinTech. And that's really exciting to me is the CEO of a... We're a little bit behind those companies in terms of our size or scale, but we're on the same path and we're growing rapidly. So I think for both investors in your audience and for folks who are looking at where are their job opportunities? Where are their career opportunities and I like Boston, I like the seasons. I kind of like the mentality around here like I do, I think it's an exciting place to look and we are hiring. So I'd certainly say, "Come drop by, see what we have to offer." But I think we've got a whole cluster of companies evolving here in Boston that's going to be really great for the local outlook and local investors. So I'm really excited about that.
SAL DAHER: Tremendous Chris. Thanks a lot for coming in.
CHRIS SELLAND: Thanks so much Sal.
SAL DAHER: I'd like to invite our listeners who enjoyed this podcast to review it on iTunes. Chris, if you have a chance.
CHRIS SELLAND: Absolutely.
SAL DAHER: Put a review on iTunes. This is Angel invest Boston, conversations with Boston's most interesting angels and founders. I'm Sal Daher. I'm glad you were able to join us. Our engineer is Raul Rosa. Our theme was composed by John McKusick. Our graphic design is by Katherine Woodman-Maynard. Our host is coached by Grace Daher.