How do you bootstrap to $10M after raising $2.7M?

Episode 85 - Jennifer Tsay Transcript Jason Kirby (02:53.646) Hey everyone. Welcome back to Fundraising Demystified. Today we have Jennifer Tsai with us, founder and CEO of shoot.com. That's shoot with two T's. And Jennifer, I'm really excited to have you on the show because this, your business is very close to my heart. Mainly because a past that most people don't know about me is I used to be a professional photographer. And I did my first real tech startup was basically identical replica of what you have just five, six years prior. I'm just excited to talk about your strategy, how you raise money, and how you decided to make this a one and done fundraise and move on to profitability, which I think is a more common story for so many founders this day. Jennifer, thanks for coming on the show today. Jennifer Tsay (03:43.831) Yeah, thanks for having me. Jason Kirby (03:45.75) So let's just kind of get started. What is shoot.com? Jennifer Tsay (03:48.879) Yeah, so shoot is a professional marketplace for photographers that are, they're working professionally. We're trying to fill all of their supplemental time with gigs. And you know, what that means is for the client, we're able to offer them free photo shoots, free mini photo shoots. They're free to book and you only pay for the photos you want. because we're able to aggregate demand at specific locations. So photographers end up having a day of back-to-back sessions. Normally when you are a professional artist of any kind, the biggest problem is trying to kind of cobble together enough work so that you can make a living off of that. So we were like, hey, can we fix that with a business model that kind of turns out on its head that you're not doing, you're not spending all your time finding gigs, doing all of the business to support it. but you're actually focusing more on photographing because we're handling all of that business activity. And so that's kind of what BOR, that was really what helped us make shoot. And we've been around for close to seven years now and we're very proud to have a 4.9 star rating on Google. And we're in 60 cities across the US. Jason Kirby (05:02.54) Now it's super impressive because this is ultimately what I had hoped for my business back in the day called Toggly to end up being, but we focused too much on trying to raise capital and less so much on just knowing that we actually had a good business. just actually wasn't very backable. So first thing I want to start off with is your marketplace. So you have supply, have demand. So on the supply side with the photographers, just the experience I had, was there any pushback? of standardizing pricing and kind of coming out with this business model with the audience that you try to pursue. And how did you get that initial kind of supply side set up? Jennifer Tsay (05:40.313) Yeah, that's a really great question. And we had so much pushback. think anytime you have a marketplace for artists, they just get very upset, understandably so, that they're getting taken advantage of, that they deserve 100 % of the money, like all of that stuff. I understand why they feel that way. There's so many people who are not necessarily operating in a good faith place. But because a lot of us started as creatives, the whole thing was we wanted to create something we wanted to see if we could have a business that was like a win-win-win for us photographers and clients. So, you know, a lot of the pushback is that they did deserve all the money. And so there was a huge education component that we had to say like, hey, we're providing all of these services that are actually really expensive and time consuming that you don't want to do. So then we had to really articulate that we're not for every professional photographer, but if you are a certain type of professional photographer that has supplemental time and you want to fill that with gigs that just come to you like easily. We handle customer service. You don't ever have to deal with that. We handle sales, gallery delivery, all of that stuff. You know, that's and marketing. Marketing is a huge piece of it. Finding clients and being able to do that in a cost effective way is really hard to get that kind of volume. that's what we kind of there's anyway. So that was the education piece. But when we first came on the market, we got a lot of death threats from photographers, actually. It was just really intense. And it's so hard when you try to help people, and the first thing that they say to you is they want you to die. And so that was just something we had to deal with. And that just really compelled us to have to figure out how do we articulate our value proposition to photographers. So you know. Jason Kirby (07:30.154) It there there's a written record of my death threats on an article written about me 10 years ago. yeah, I did a lot of media and yeah, I got ripped. got death threats. got all kinds of things when when we did that. So, you know, I empathize for you and kind of what happened there because, everyone has a very strong opinion and especially artists, because ironically, they spend the time. Jennifer Tsay (07:34.767) really? You had the same thing? Jennifer Tsay (07:44.342) Right? Jennifer Tsay (07:57.561) Yes. Jason Kirby (08:00.386) that they have not taking the whatever 150, 300 bucks they might get working for you, but harassing people online. Jennifer Tsay (08:08.44) No, it's true. we even, like we know that the offer of the free photo shoot from like a provider point of view sounds like we're taking advantage of, it doesn't sound possible, right? So like what we had to, it's too, that's exactly right. And so we get a lot of like, you guys must be a scam. So what we do to counterbalance that is like we provide a minimum guarantee of a hundred dollars per shooting hour for photographers. And then we do whatever we can to try to protect their time. So if they even show up, if they show up in the, Jason Kirby (08:18.444) Yeah, too good to be true. Jennifer Tsay (08:37.551) client cancels, they get a fee. If they're late, they get a fee. Like we try to pay them for everything that we can get money from to try to help them. And then, you know, again, it's just, it's, it's really hard to override that. People, people don't like disruption like this, which I totally get, but it does make it tricky. Jason Kirby (08:55.032) Yeah, no, but that's how these marketplaces, you know, spin about. That's why I'm spending time on this is just because marketplaces are hard because we're only talking about one side and that's supposed to be the easy side. Hey, I'm going to give you money. Now you got to go get the, you know, the demand side. So how did you manage to fill their calendars and how do you go about getting the supply side or the demand side these days? Jennifer Tsay (09:01.851) God, so hard. Jennifer Tsay (09:05.562) Yes. Jennifer Tsay (09:16.441) Yeah, so we were really lucky because when we launched in 2018, Facebook ads were so cheap at that time, at least for us. Like it was like shooting fish in a barrel. Their targeting was so good. And really it took off once we figured out who our target market was. So in the very beginning, we assumed that it would be millennials and younger folks that wanted photos because it was right when Instagram was getting really popular and having really high quality polished images was really in vogue. But then You know, it was okay, but then it really took off when we realized that our target demographic are like millennial moms and Gen Z moms. People, once you have moments that you want to start capturing with photos, so that's really like when people are dating seriously or they adopt a dog, things like that, and then they get married and then they get pregnant and then they have children, your children look really different and like even within six months. So those people constantly want professional photos. So once we started targeting them, It was, that's where we got like a lot of the bulk of our clientele and between Facebook ads, Google ads, you know, that's where, and a lot of guerrilla marketing, that's how we generate demand. Jason Kirby (10:26.798) No, and that's basically been a scalable model for you guys to this point, but let's go back to kind of the early days and kind of talk about what this show is all about when it comes to raising money. So you raised a little over two and a half million. Walk us through kind of when you decided to raise money and what your game plan was for securing the capital. Jennifer Tsay (10:49.167) Yeah, so I have to say that I am really privileged in this area because one of my co-founders slash chairman is like a serial investor entrepreneur himself. in the very beginning, once we figured out that what our target demographic was and we were advertising to them and we realized our acquisition cost was so low, our growth was really exponential. So like we grew super fast. Like even the first year, I feel like we went from like like $80,000 of top line revenue to like, like, I don't know, something like, you know what I mean, like 500, 500,000 the next year. So it was just, and then it just, and then we went to like a million. So it was starting to really look what they, what it looked like was like, oh, we have hockey stick growth. Like we just put money in it it's just very exponential. And so during that time, that's when my co-founder was like, let me just ask all of my friends for like a friends and family round. And he cobbled together that two, over two and a half million in the very early years, which was very lucky because I didn't have to really do any pitching, which is, I know, very unusual. So he just tapped into his network and the money just came in. And then iOS 14.5 happened where all of a sudden our acquisition costs started to skyrocket because there was Apple privacy. put into things. it went from, it only cost us $20 to get a client. Now it costs anywhere from like $50 to $200. So that's all of a sudden that changed how everyone, including all those investors, saw us. And then we knew our trajectory had to change. Jason Kirby (12:26.968) That's pretty brutal. Two and a half X to 10 X ROAS or not even your cost to acquire a customer going up that high. So it's a good thing you did raise the money because you probably wouldn't have survived if you didn't raise money beforehand. So I do want to, you said you didn't do much, but at the end of the day, you did drive hockey stick growth with very limited capital before raising capital. So you did do something. You made yourself attractive in the first place. Jennifer Tsay (12:28.217) Yeah. No, no, it was terrifying. Jennifer Tsay (12:39.993) That's completely correct, yeah. Jennifer Tsay (12:49.871) We did, yes. Jennifer Tsay (12:54.511) We did, we did, you know, yeah. Jason Kirby (12:56.522) It wasn't just you had a idea and you raised two and a half million. So I want to give you proper kudos there. from the time that... Actually, we probably should have talked about this first, but why did you start the business? Jennifer Tsay (13:03.883) Thank you. Jennifer Tsay (13:10.715) great question. So I started the business because I actually come from a background where I have like a strong background and I did investment banking, did corporate finance, all of that stuff. And then I transitioned into being an artist. So I was an actor for, still am sometimes, for like a little over 10 years. And so I had so many friends that were so talented, but were so poor. you know, no matter how talented they were, they couldn't cobble together enough work to stay the artist they wanted to be. And I, and it really stuck with me because it didn't like, I was like, this is, this is sad because the arts make the world a better place. Right. And so it kind of rattled around in my head. And then I reconnected with my co-founder chairman, like a decade after I worked for him, actually, I was, worked for him at a startup and I was like, you know what? I, I know I need another type of day job and I, and I want, feel like a startup is the best use of my skills. Do you know of any hiring? And then we got together and he was like, and we realized, I was talking about my background and we realized, hey, can we make a startup that helps the gig economy for artists? And we realized that we could do it for photographers. So that's really where it was born where we're like, hey, how do we keep artists artists? So that was really the impetus for what we did. And that's how it was born. Jason Kirby (14:33.676) Yeah. And when it came to that two and a half million, you had the major shakeup on your cost of car company or a customer going through the roof. How did you mitigate and kind of what was your plan thereafter? Was it to go back out and raise more money? Was it to figure out profitability? Kind of what were you dealing with at that time when the costs were going up so high? Jennifer Tsay (14:38.693) Mm. Jennifer Tsay (14:55.193) Yeah, no. So when that happened, that was the only time that I really had a genuine like panic attack about my business because we started the business and all of us, a lot of us are very operationally, we're good operationally and good at processes, but none of us were experts at marketing. We had just done, like, it was like we ran Facebook ads and like no one had like a background in it, but you could figure out their platform. And so we're like, okay, cool. So then we were like, actually have to learn marketing from scratch. we have to, you know, we were just guessing before. that was kind of really the tall order. We thought about getting, you know, we floated the idea of getting more funding, but at that point in time, everyone was like, no one's gonna give you anything. Like there's just no way. So you gotta have to, you have to figure out how to make it work yourself. And that was really terrifying. So. like out of survival, we had to like really learn the nuts and bolts of marketing from scratch and think of ourselves as that kind of, you know, the kind of company to see like, hey, I know we had a good idea and like we could scale, but like, do we have what it takes to also be a profitable long-term company standing on its own two feet? So that was really what drove us to then focus on doing that. And I'm like, I think we can, I think we can do it. So that's what kind of put us on that path. Jason Kirby (16:12.92) But what did you do? Like, what did you change in the business? You had the cushion, you raised money at the right time to give yourself that flexibility to kind of make the decisions. So what did you do to kind of turn the business into a profit generating machine? Jennifer Tsay (16:18.629) Mm-hmm. Jennifer Tsay (16:27.107) Yeah. So there's nothing sexy to tell anyone. Like we just had to literally, we signed up for every marketing newsletter on the planet. We figured out how to track attribution ourselves and we've built proprietary like spreadsheets to really track every single platform, know how it changes on a daily basis, be able to be able to catch it when it starts to trend up or down. If it starts to trend in a good direction, magnifying that and putting more spend there. If it starts to trend bad, trying to figure out if it's us, if it's just what, you know, And just being so strategic about that, that's what it is on a daily basis. then, know, cutting any sort of incremental costs. So like, we don't pay for space, we're fully remote. We don't spend, we don't do any sort of experimental spend that is out of control. So it's like, I would never do like a $50,000 ad campaign that I have no idea how much it's gonna work. Like I need to know that it's gonna get me results. So it also changed our culture into one of testing, like, Constant small scale tests to see what works and whatever works we do more of and whatever doesn't work we let go of It doesn't mean that we'll permanently never do it like for example We figured we first time we tried connected TV ads it didn't work and then we tried it again two years later And now it works for us So it is but it is with the mind that like we'll try anything but we'll try it for a very short amount of time So it just changed the discipline that we had about running everything in our business instead of like let's wait and see. There's no wait and see. We'll cut you off within 10 days, basically. Yeah. Jason Kirby (17:57.528) Well, smart. how do you, again, for any marketplace founder out there that might be listening, how do you balance the supply demand that, know, it's like, okay, you've got photographers, but if they're not getting booked, they get disengaged and maybe don't respond as much. And if you don't have photographers, can't get customers. How do you manage that balance? Jennifer Tsay (18:19.865) Yeah, we, I mean, we're monitoring the supply demand balance. And so we're in 60 cities, right? So we have to know how each city kind of performs. are we, do we have too many photographers or too little photographers in each city and for the demand that we get. So we really do monitor that on a city by city basis. And we kind of know what their capacity is. And then we're hiring kind of all year round and we have to be very specific that unless you're in very, unless you're in like certain markets that your demand will be very seasonal. So the biggest season is fourth quarter. that's where like holiday, it's holiday card season. I'm sure you know, you're familiar with that. And so that's where like, we can't have, we haven't have enough photographers in most places just to fill the demand, right? Because that's when people really want it. But so then it gives us the onus of like, okay, what other on our side, like what other holidays or events do people want photographers to like graduation Mother's Day? Jason Kirby (18:56.398) Okay. to kids. Jennifer Tsay (19:16.595) Valentine's Day, summer vacation, if there's these other smaller micro moments, like how do we advertise for those better and drive the demand there? And then are we hiring enough photographers knowing what our demand was in previous years for really like aiming for fourth quarter to make sure we get the most of that to keep growing every year? So it is very much, know, we're looking at both. Jason Kirby (19:41.366) No, it's incredibly difficult. like one of the big reasons why we couldn't raise money when we were launching, you know, Togli was one, disbelief that the frequency of use, like a big marketplace problem for a lot of founders is there's not enough frequency of use on both sides to drive LTVs high enough to justify the CACs. And so a lot of investors just generally don't like these types of marketplaces for that reason. It's like, how many times are you going to really use a photographer every year? But you kind of hit that point there in terms of like, Jennifer Tsay (20:00.442) Mm-hmm. Jason Kirby (20:11.086) How do you generate more demand per year beyond just the Q4 kind of seasonal amounts? Like what tactics are you doing to convince customers to be like, you should do an Easter shoot. Jennifer Tsay (20:24.271) Well, the first thing is anyone who owns a marketplace, you need to be really on your emails. You have to know when that demand might hit and just religiously email people without being too annoying. But honestly, I'd rather be annoying than miss an opportunity. So just make the most of your email list for sure. And then we do things like we sell bundled packages where it's like, hey, get two or three shoots in a year. two or three and then you get like a significant discount. Some people will really opt into that. Then you try to get like first party data from them as well to be like, hey, it's your birthday. It's, you know, this, this event or that event that you might be interested in, give them a discount, try to drive them to book a session. So there's all sorts of little things to think about. It's, but it's a lot of meticulous planning on, know, in your, the email journey, in your marketing to try to hit these people. Jason Kirby (21:20.94) No, it's absolutely crucial. I think any consumer facing business, you have to be accelerating on the points that you've already touched on earlier, just the granularity in your marketing to your paid ads plus email to kind of have any shot at being able to generate enough cashflow from a customer and get them to spend more on a regular basis. When it came to this decision of like, you know you got to build a business profitably now. figured out the kinks in the business to do so. Can you share with the audience some of the numbers behind your business, know, kind of back then and maybe how you've grown today and kind of where you're at in terms of either top line revenue or profitability or just your unit economics? Jennifer Tsay (22:03.727) Yeah, so I think the first year we were at like 80,000 of top line revenue, we were in like one city. We were lucky to grow exponentially during the pandemic because we were one of the few activities that was outdoor and socially distanced. So you could hang out with your family and have a good time and have your memories without like getting sick. so that was something, and then there was also less competition with marketing. So that was actually like a really fortuitous time for us to grow. And now, Jason Kirby (22:19.15) you Jennifer Tsay (22:32.123) We really hit, so we were really lucky because in 2023 we finally hit breakeven. And that was a big deal for us. And, um, you know, we hit breakeven. Our, our customers are spending on average, like a hunt between 180 and 190 a person, which is really great. And then, um, in 2024, we actually, um, from, so sorry, we hit, we hit breakeven with 8.8 million of sales in 2023 and in 2024. we 20x to that profitability. So we went from like 45,000 to close to a million. And then on a top line revenue of 10 million, 10.2 ish. So that was a huge accomplishment for us. And because of the way that we work, we actually don't know what our financials are until January of the following year, because we have this like annoying tale of like, hey, pay only for the photos you want, right? So that means that there's a lag. They're not paying when they book the session. So we don't know how people are going to buy from, and people are kind of struggling a little bit during the holidays. And then we know in January, like, I'm positive we're profitable now. So there's this like, we're holding our breaths for those last few months. It's kind of brutal. so yeah, so then our whole year is really about, can I design my business? Can I set everything up for success well enough that we can stick the landing? Jason Kirby (23:46.776) painful. Jennifer Tsay (23:57.647) And it's kind of like, you do enough of the right stuff, it should stick the landing by itself. But there's like a lot of anxiety about that every year for that. Jason Kirby (24:06.626) Yeah, that's intense. Especially that pavement model. Are you paying the photographers up front regardless of the payout? Jennifer Tsay (24:08.035) Yeah. Jennifer Tsay (24:13.103) Yes. Yeah, so we pay like part of their guarantee. We do that. We have that hundred dollar minimum guarantee. And then we pay whichever one is higher. So we give them that we upfront that to them. And then whatever commission they earn on top of that, we give to them afterwards. So they have kind of rolling money coming to them twice a month, which is great for them. Jason Kirby (24:35.342) How do you manage that cashflow wise? That sounds brutal. It's like, I love these pictures, but I'll buy them with like three months from now. Jennifer Tsay (24:41.273) Yeah, so I mean, we have like an email journey again, try to really compel people to buy and then we just have to be really good about our finances and you know, understand how our working capital is because like, it's like once you hit like October, then the money really pours in. So it's about like figuring out how to spend that wisely through the rest of the year so that you can kind of survive until the next season. Jason Kirby (25:04.878) That's a fun game. Jennifer Tsay (25:06.925) It is a fun game. Jason Kirby (25:10.242) So now that you've got it established and kudos, 10 million top line, very few businesses can make it to that level. I always thought back with, talking to our business, that would have been the goal, would have been 10 million top line. And so you've achieved that and not a bad timing. think seven years to get there is actually pretty reasonable. What would you change? Would you go back and change anything? Jennifer Tsay (25:22.578) Mm-hmm. Jason Kirby (25:35.534) Uh, after kind of seeing what you've done and how you've progressed, is there anything about the business that you would have gone back on? Jennifer Tsay (25:44.409) The only thing that I would have changed is I took some bad advice early on that we don't need to have the best accountant. And I completely refute that. That is the only thing we had. had some, think certain accounting rules changed really early, like in the early years that we were in business. So we didn't realize there was a bit of a shift. So then we had to end up paying when we made things right. We ended up having to shell out like close to $300,000 of money that we should have paid, like could have been captured and paid upfront. So that's, that's the one big regret that I have. Jason Kirby (26:21.464) Have a good accountant. Yeah. Honestly, I've dealt with so many companies. I work with companies on capital raises all the time and like one, I either can't get the books, which is like huge red flag. Like it's just like, they're working on it. They're working on it. They're working on it. It's like, you need to fire that team now. If it takes more than, you know, especially with some of these businesses, they're not that complex. I don't have that many transactions. it kills the fundraise. kill it. Like if you can't demonstrate. Jennifer Tsay (26:22.587) Yeah. Jennifer Tsay (26:32.996) Mmm. yeah. Jason Kirby (26:49.758) management of your books or you have like just gross negligence of the management of your books. It's such a deterrent for any outside capital to potentially come in and or just make your business totally screw, whether it's back up taxes or just mismanaged cash or not knowing what your cash position is truly. Like, you know what your payables are, especially with your cash management of like pay, then get paid situation. You really need to have predictability in that front. Otherwise you can have a great business, but be cash poor. Jennifer Tsay (27:01.327) Yes. Jennifer Tsay (27:05.784) Yes. Jennifer Tsay (27:11.289) Yes. Jason Kirby (27:19.79) That's good advice. I don't hear the complaint about accountants enough on this show. yeah. Well, that's a, you have all things to complain about. That's a good one to complain about. You know, if you had other things, know, there's always something worse out there. And now that you've hit this milestone, you know, 10 % EBITDA, you know, or 10 % profit on 10 million revenue. That's fantastic. You know, you're now bootstrapped. You could basically choose your own destiny. What are you thinking? What's next for shoot? Jennifer Tsay (27:23.705) really? my god, it's like the one thing. Jennifer Tsay (27:32.954) Yes. Jennifer Tsay (27:49.723) So this is where I am at the end of my road in terms of my expertise. Since I've never sold a business before, I don't know what the best path is forward, just to be totally transparent. Do we try to get VC funding to try to supercharge some aspect of what we've done? That's a possibility, though I understand the whole, don't, VCs don't like services, service-based platforms, of that stuff, right? Do we try to get bought out or do we try to like run it for who we just try to run it forever? So there's like We look at it and I'm like, you know what? I don't know which what's best for us But I just know that I want to do what's best for everyone involved at least on our side So I don't but I don't always know how to make that decision because I've never done this before So this is kind of like the interesting Crossroads that we're at but what's nice is like I don't have to make any one of these decisions Like I don't have to go get an acquire. I don't have to I don't have to sell, don't have to keep it, but like, you know, there's just, I'm just like, again, I want to do what's best for everybody. Jason Kirby (28:55.438) So I'm to tell my editors the pause right now, because I want to give you an option before I put you on the spot. So we're not going to, this won't be in the episode. This is what I do all day is I answer that question for, founder. Being that you just brought that up on the podcast, are you comfortable with me kind of doing a live session in terms of X, you know, expanding on that and having it be available? Okay. All right. So we'll roll back in then. Jennifer Tsay (28:59.4) my God. Yes. This way. Jennifer Tsay (29:16.409) Yeah. Yeah. Jennifer Tsay (29:23.099) Okay. Jason Kirby (29:25.026) Jennifer, this is fascinating because this is what I deal with every day with founders. There's, you know, what I kind of tell people is you, you built a business, you got to a certain door, you've opened that door and now you see three more doors. That's like, okay, sell the business, raise more money, stay, you know, stay, the course. and how do you basically choose what to do? And what a lot of founders make the mistake of is leaning towards what Jennifer Tsay (29:37.093) Mm-hmm. Jennifer Tsay (29:42.042) Mm-hmm. Jason Kirby (29:51.896) Passive vice has been raised venture, which was one of the first things you said to do. and a lot of cases that may or may not be an option. The reality is, is like, what's, you you kind of mentioned your core of like, okay, how do I positively impact the, those already involved, those that were with you during this journey that suffered with you got to this point. How do you make sure all as well for everyone involved? And what I do with founders all the time is I walk them through what we kind of call a capital strategy assessment. So what I'll kind of share with you and a curious to hear your thoughts. And this is for everyone in the audience as well. This is the secret sauce here. Basically, you look at those three doors, let's just say raise more money, sell, or be like a long-term profitable business. And the best thing to do is actually get the data of what the market's dictating on those other two options of selling or raising money and understanding if those are even attractive to you. Because like venture in some cases, just using my knowledge back in my head, probably not going to be interested. Just mainly because you're more kind of in the early stages of growth equity, but you're kind of too small for your traditional growth equity. So it's more like the smaller players are going to come in and they need to make money on you. And marketplace economics, there's a bunch of factors that come into place, but you might be priced out of multiple... Jennifer Tsay (31:01.947) Mm-hmm. Jason Kirby (31:18.304) EBITDA not revenue. And if you're priced in any category of selling or raising capital and you're based on EBITDA multiples at your business or your scale, you're probably not going to be in love with the number that you get day one. And then it's like, okay, that's where you are today. What gets you beyond that hump? So what gets you that higher multiple? What's the arbitrage play that gets you from like a, maybe it's a five to eight X EBITDA multiple to maybe like a two, three X revenue multiple. What changes would you have to make in the business? Or if you can go from like a five X EBITDA multiple to an eight X. And how do you manipulate the multiple game is where I usually like to start with a lot of founders of how do you figure that out? And sometimes it's subscription based. services, rolling out new services. Sometimes it's expanding into new sustainable growth channels, but there's always certain comps out there that can help founders navigate what actually moves the needle. In some cases it's EBITDA. So like a one to 5 million EBITDA for your business, don't have the comps in front of me, but you would probably fall depending on your growth rate and a couple other variables in the five to eight X EBITDA margin. But if you have a high, like really great growth rate, which You know, EBITDA has great growth, but revenues, maybe not as much. You could probably get to like 10 to 15, depending on the velocity and potentially owning a market and being a leader in the market, there's higher premiums that could be made from a private equity perspective. So I always route the expectation in a private equity standpoint and suggest founders that that's an outcome you can engineer, but for strategic, which are more ideal. like maybe a bigger company, any other marketplaces, like a thumbtack who you probably compete with. would want to buy out your business and kind of roll it into theirs and what would be the strategic value there. So those are the types of things that you want to look at, but they're hard to engineer. But private equity outcomes are always easy to engineer. Not easy, but you can set a path on how to get there. So I know I'm going a bit of a rant here, but this is stuff that gets me excited and I help founders navigate this stuff all the time. Jennifer Tsay (33:32.485) no, this is... I love it, I love it, because I don't know. Like, it's all new to me, so I deeply appreciate everything that you're sharing. Jason Kirby (33:42.574) So, but the root of it is, like, North star. that's always any talk I give to a founder is like, what's your North star? Some people like, just want to live on a beach. I was like, okay, well, how much money do you need to live at a beach? And it's like, okay, well, you need to double the business or you need to triple the business or you need to fix this part or you need to fix that part. And you need to do that under 12 months to hit this velocity to then have this outcome. So that's something that I always encourage founders to think about is like, what's actually your number and then what's your prep stack. So for you, should ideally even have a one X like pref on your capital raised. Jennifer Tsay (34:19.781) What does that mean? I'm so sorry. Jason Kirby (34:20.046) The answer doesn't understand a liquidation preference. So typically in almost all documents out there from credible notes saves, most people have a liquidation preference of one X. Meaning if I gave you $2 million, if you sold the company for $2 million, I get my 2 million, you get zero. Yeah. It's basically the first, or if you, if you sell for 10, 2 million gets taken out of the business first, they're guaranteed their 2 million, regardless of their percentage. Jennifer Tsay (34:25.477) Mm-hmm. Jason Kirby (34:48.928) And then the rest is just distributed. And there's like participating preferred and non-participated. There's a lot there, but basically the first thing you need to know is like, do you have any debt and do you have any kind of liquidation preferences on your investors? Which usually I would factor in at least one X unless, you know, it's just a super simple safe. And, and those cases like, okay, if you're going to sell for 10, well, you raise two and a half. So technically only seven and a half will get distributed in those situations. And so you have to think about, that enough for everyone to be excited about? that materials and not material? And that's always what I tell founders to think about is, you know, know your options, know what's behind those doors. So if you chase an exit or raise capital, you know, what's actually going to come behind that door and what do you have to do to be able to unlock that door as an option? And then does that even satisfy you? You know, is it worth doing the work to get to that point? and then there's, you know, stay the course. Do you like your people? If you like your team, do you like your marketing? Like what you do? Like if you, and you're profitable, like, and you always have that as an option, then there's certain KPIs that maybe you come back to this, you know, these three doors again in like two years. And, know, kind of say like, okay, you know, selling for 10, 15 million is not interesting to me. Selling for 30 is, I was like, okay, well, double the business, triple the business. No, you never know what the market will be, but. That's something that is always good for founders that kind of look at and know, all right, if we went to market today, what could we actually achieve? And what's the marginal impact in the business that we have to make today to make an outsized impact on the return. And there's sometimes like recaps you can do, like you don't have that, you have a pretty clean raise, there's recapitization. basically cleaning up. and getting rid of prep stacks and wiping out debt. And there's just like general cap table cleanup that can create massive outsize returns for the founders, not so much the investors. So there's just lots of creative deal structuring and financial engineering that can create a material outcome. depending on the business, and I've talked to many from like SaaS to consumer to direct to consumer and so on, just knowing what your multiples are. Jason Kirby (37:11.864) doing that homework, doing that research and knowing actually what the market's willing to pay for you now. And that's some of the most valuable information you can have as a founder to know what decisions you should be making right now to generate an engineering outcome. So I'll get up my soapbox now. Of course. Jennifer Tsay (37:29.677) No, and can I ask you a question? What? So right now is a weird time, business-wise. So how is that impacting kind of, I don't know if that's too general a question, but like, I feel like because people don't know what's happening economically, like how is it, how does that impact? you know, a business even in my standpoint, because I'm just like, with everything happening, it's so crazy. I mean, we're lucky enough for like, we're lucky that tariffs don't directly impact our business, but there's going to be, you know, consumer confidence is going down. Does it impact us that way? Like, are people going to be spending less all the time? So then, you know, when that is all roiling around in the market, how does that impact a business in my position looking to figure out like what's next? We think that we're just not going to do anything for a year or two, do you have any thoughts about that? Jason Kirby (38:23.534) So yeah, there, again, like going back to that door analogy of like, how does it impact door number one versus door number two versus door number three? So the stay the course probably minimal impact outside of consumer confidence. but that could also mean at Costco down because not everyone's advertising as much. could be in other aspects of the business, but it also means photographers can't afford new gear. Does that really impact you? Maybe not. but so that I think is not so material to your day to day operations. But from a transaction standpoint, this is what a lot of, I just had a call with one of our clients earlier today on this, like the macro market dictates what people are willing to pay for your business right now. Cause when there's a, like whether it's a risk-free return of government bonds to being able to go into equities right now, equities got dirt cheap in the last few weeks because everyone's sold off in the market. And most of the capital allocators that I know, especially family offices that have diverse, you know, allocation strategies, they're all piling into private, uh, publics. And because publics are cheap and predictable and easier to manage and in and out of liquid. So why would they pay the premium for private, um, investing in funds like private equity, who might be the company that buys you and whatnot. Um, so ultimately privates have to lower their valuations and lower their terms and expectations. to be able to re-attract public, the money that's going to Publix. Now, of course, there's always private equity money that's already secured and venture capital money that's already secured that's deployable. But responsible fund managers who ultimately you're going to want to be sold to a responsible fund manager, they have to look at what's happening in public markets to basically price and set the discount to whatever they should be buying you at. knowing of what might be happening in the markets in three to five years with they choose to be, you know, look at liquidating you in that time, reselling you at a higher price down the road to kind of capture their, their return. So that's the kind of like, you know, the four D chess, as they say, in terms of like looking at all the different layers of like, okay, well really what you're trying to engineer an outcome for is for that private equity firm to flip you in five to seven years. I'm like, they need to look at you today. Jason Kirby (40:42.99) to see what they can do in five to seven years. And right now, you're right. It's shaky deals right now. They're happening. There's people that are just, you know, that's a beautiful, beautiful part about private markets. So once the capital secured, uh, in a fund, like they have the autonomy to make decisions, but they usually will try to capital, you know, capitalize on the shakiness of private public markets and try to negotiate better discounts. Um, and then there's some, you know, in venture, which is like finger the wind. don't care and just throw money at any price. Um, but in your case, selling, you know, there has to be an outcome that can happen and being that you're profitable, you can at least generate cashflow for the time being. And hopefully there's sustainable growth channels. But if I were you in your shoes at the very least, um, identifying any other channels of growth, um, it's going to be your most defendable mode that you can possibly have. Um, and then trying to secure, uh, provable, uh, I'd say. Jennifer Tsay (41:13.007) All Jason Kirby (41:42.478) How you can increase LTV year over year is gonna be pretty crucial as well. Jason Kirby (41:50.19) Yeah, no, it's fun. I usually don't get to do that on the show where I get to like dive in specifically on this topic. But since you brought it up, was like, I got to dive into this one. We could always have an offline conversation too. yeah, that's so kind of like taking a step back, you now that you kind of have that little bit of You know, we'd love for us to kind of wrap up and have you share some advice to founders that might be either in the marketplace Jennifer Tsay (41:53.697) yeah. Jennifer Tsay (41:58.759) please do. No, highly appreciated. Jason Kirby (42:19.342) economy right now, gig economy in that world. What would be your advice to them right now? Jennifer Tsay (42:27.105) marketplaces are really hard. So if you're going to do them, I think you have to be really obsessed with process and like logistics. If you really love just being day in and day out to optimize like the minutia of how things are running, like that's what I feel like has helped us be successful. is that we're just kind of fastidious about all of the details to run a marketplace successfully and stay current, to deal with like, you know, the day to day changes in marketing and being able to put out fires of like your different service providers for us, you know, our photographers, like the different problems that come up with that. figuring out pricing, like it's all of those little details add up to create an experience for both your, for us, know, our photographers and for our clients and our ability to optimize that and always kind of, we kind of see it as like a game that we, we're like, how do we, how do we play this game the best? Can we make it more efficient? All of that stuff. That's kind of what we do on a daily basis. And I feel like for a marketplace in particular, that's, that's what's really helped us. So maybe it's not the same for every marketplace, but we have found that to be key for ours. Jason Kirby (43:42.21) Now, I think that's great. And I think that is generally what makes marketplaces so hard. You have to be on point and then ultimately systematize as much as possible to admit. Jennifer Tsay (43:52.313) Yeah, super organized. otherwise it's mayhem. Jason Kirby (43:56.31) Yeah, it's absolutely am I remember those days and I do not wish them upon anyone. Well, Jennifer, it's been absolutely amazing having on the show. It's been a great blast for the past for me in terms of this general category and getting to talk about it. But if someone wants to learn more about you or shoot, where should they go? Jennifer Tsay (44:15.065) Yeah, so you can visit us at shootwith2ts.com. You can see our schedule of free bookable sessions. You can also follow us at shoot with 2ts at shoot photos on Instagram or TikTok. You can also connect with me at Jenjen T-S-A-Y on Instagram or on LinkedIn as well. also LinkedIn. So love being on LinkedIn. So, you know, come follow us, come, you know, ask questions, anything. to connect with any and all of you. Jason Kirby (44:47.596) No, I absolutely appreciate your flexibility and being open to that. And you'll look forward to including that all in the show notes down below. And thanks again for joining us today. Jennifer Tsay (44:56.662) Thanks for having me. Jason Kirby (44:59.182) So we'll cut here. I'll keep it recording just in case. But so what'd you think? Yeah, I'm curious. I don't usually get to go on those rants on these calls. So I'm just curious if that was helpful. Jennifer Tsay (45:10.075) No, it was super helpful. I just, being in my position, I just never know who to ask what to. And sometimes, if I'm already asking a certain type of client, I don't know, how was I going to put this? If I'm already talking to a, if I'm asking a VC for their advice, they're already giving me weird advice, and I don't know what to, and I don't like, you know what I'm saying? I don't quite know how to, like. Like what wisdom to take from anybody if that makes sense because there's always some sort of like strange bias that I'm just like no But I I really don't know how to filter this so I figure out what's best for me Do you know what I'm saying? Jason Kirby (45:48.642) This is, but you are, would say ahead of the game, recognizing the bias problem. because this is something I have to put like a reminder for people, just so many people, they listen to their advisors or their investors as fact. And the reality is there's, there's not always aligned incentives. and yeah, so the bias is misaligned incentives, like what they want you to do or what's in their best interest. Jennifer Tsay (46:09.083) course. That's thank you. Yeah, that's exactly it's that. Yes. Jason Kirby (46:18.486) is not necessarily what is aligned with your Norstar or what's best for you, your people who you care about in a transaction. And it's very important to understand your Norstar first. So you mentioned earlier your people and like the people that were with you now that that can come in a lot of different varieties and what it means success for them. And that would be kind of like the first thing to focus on. And then second is like, okay, with that in mind, what are the possibilities that could derive an outcome that satisfies that? sell, raise, stay in Cisco, there's other options. And then once, then you get, got to know what those actually materialize to be. And then you got to the market data, you got to get the facts, and then you get that in like a, I'm sorry, I might be overdoing it here, but this is what, know, so if you want to talk more, can set up a time where we can, this is exactly what we do all day long is I hand over like a silver platter of like, here's your options. Jennifer Tsay (47:08.921) Yeah. OK. Jennifer Tsay (47:15.323) Thank you. like, my god. Jason Kirby (47:19.894) Without the bias. that's the thing is like, the bias for me is a successful transaction. But the reality is like, we had another client where we did this for where they wanted a raise. I slapped him in face and said, you're never going to be able to raise. Your business is, you you need to fix these three things. And then you can talk about maybe selling. It fixed three things. Jennifer Tsay (47:33.955) Yeah. Jason Kirby (47:44.046) We ran a process, we got a phenomenal offer and they ended up turning it down because they now love the business because now it's printing money, it's growing and now they see a clear path that double the offer that they got in like six to 12 months. it materially changed the outcome of the business, but they were floundering, they were spending money on things they didn't spend money on. It was not marketable. It was just like their business, you know, kind of thing. And then the business where investors are like telling them to go left. Jennifer Tsay (48:07.725) Yeah, yeah, yeah. Jason Kirby (48:13.368) They wanted to go right. And like, how do you deal with that adversity and managing that and how to get ultimately we represent the founders. So it's like getting the founders what they want. so that's, think what's really the decision-making of the pivotal point that you're in right now. Jennifer Tsay (48:15.107) Yes. Jennifer Tsay (48:33.583) Yeah, no, think, yeah, I'd love to speak further. I think this is exactly what we need because I'm, yeah, everything else I'm like, I do not know how to overcome this weird bias thing and being like, you know, especially when you don't have previous experience in it, I just wanna naturally default if somebody, like, I'm like, well, you've done this before, so you definitely know better and that's not necessarily true, right? Because of the missing light. yes, and so I, so I didn't know that you did all this stuff, super, super good to know. Jason Kirby (48:53.388) Yeah, everyone's different. Jason Kirby (49:01.74) Ha ha! Jennifer Tsay (49:02.139) I love that you had the same business basically. You should have waited a few years later. We could have done it together. It would have been perfect, you know. Jason Kirby (49:04.694) I know, it's so random. Jason Kirby (49:11.598) You know, it one of those things where we got, we wanted the capital and that was, we wanted it for validation. We had a good business. Like we were making money, but we just, we're burning it. Like we didn't have to burn it. We were super lean. We're like three co-founders and like three, four people overseas building it. And we raised about like 400 K from some angels and like technically could have just kept doing it. Jennifer Tsay (49:18.105) Yeah Jason Kirby (49:39.566) kept growing the group, the gorilla grow tactics we had. I already had, I had the largest photography school in San Diego at the time. Um, so that's how we got it off the ground. Um, so that's what got us to start. And then, um, but we had the problem. We didn't go national cause we haven't, couldn't crack the ads yet because you know, that was 2013 ads were. Yeah, they were not as robust and effective like, uh, on the targeting stuff. It was pretty. Jennifer Tsay (50:01.435) 13, that's slightly before it, yeah. Jason Kirby (50:09.446) So it was a little more challenging, but, we were limiting ourselves. Jennifer Tsay (50:13.679) Everything's such a timing game. It's a timing game. Jason Kirby (50:17.004) Yeah. So, but yeah, no, it's really, when I saw you pop up and I was like, shoot, that sounds like I might've saw you before. think actually one of my co-founders had sent me your domain like a long time ago. she, think she booked a shoot with you guys. but, yeah, no, I think it's lovely. I'll, I'll, I'll shoot you another calendar link to book a separate, more normal time. And we can have more of a dialogue on the, we call it strategy assessment. like what's right left. Jennifer Tsay (50:41.979) Sounds awesome. Yeah. Love it. Jason Kirby (50:46.658) done them and all, what do you do kind of thing. All right, Jennifer, well, it's pleasure. Yeah, no, it's great having you on the call. All right. Have a good one. Jennifer Tsay (50:49.573) Sounds great. Well, thank you so much. Thanks for having me. All right, you too. Bye.