Summary

Joe Davy, the founder of Bonsai, discusses his experience in the tech industry and the challenges he faced during the COVID-19 pandemic. Bonsai started as a data-driven platform for marketers, helping them grow their pipeline and drive attendance to events. However, when the pandemic hit, the field marketing business evaporated overnight. To adapt, Bonsai acquired High Attendance, a virtual event management platform, and Demio, a webinar platform. Joe also talks about the process of taking Bonsai public through a SPAC and the challenges of being a public company.

Takeaways

The COVID-19 pandemic had a significant impact on the field marketing business, leading Bonsai to shift its focus to virtual events and webinars.
Bonsai acquired High Attendance and Demio to expand its offerings and help marketers drive attendance and engagement.
Taking a company public through a SPAC can be a complex process, but it provides opportunities for raising capital and pursuing strategic acquisitions.
The SPAC market experienced a downturn, leading to challenges in securing financing and potential dilution for existing shareholders.
Bonsai is actively seeking new acquisitions to grow its business and address the fragmentation in the marketing technology industry.

 

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Transcript:

Jon Stoddard (00:01.103)
Welcome to the show, Joe Davey. How are you?

Joe Davy (00:03.318)
Thanks, John. I'm great. How are you today?

Jon Stoddard (00:05.523)
Good. Well, you started Bonsai 2016, and that's kind of a webinar company creating an ecosystem marketing technology solution. So tell me a little bit more about that. Now you're a tech guy in the background, Silicon Valley or Seattle kind of tech person. So you've been doing this for awhile, right? Yeah.

Joe Davy (00:22.774)
Yeah, we're the other white meat of Silicon Valley, yeah. Yeah, I mean, I'll just give you a little bit of my background, maybe a little bit of a bonsai. So my background is, as you said, as a software engineer, worked briefly at IBM, did some consulting, started one of the early big data tech companies, EvoApp, worked in, worked at a private equity firm for a little while helping them with some...

Internet tech investments that they made and then ultimately Ultimately joined Avalara in 2000 and I say maybe 2013 and then was there for a number of years grew it through 250 million in revenue something like that now part of then founded bonsai as you said launched in mid 2017

And yeah, we've been kind of on a tear. I'll tell you the, when we first started Bonsai, I would say like our theme throughout Bonsai has been basically building a data driven platform for marketers initially with the goal of helping them grow their pipeline and Bonsai, Bonsai pipeline, right? So that's where the name comes from.

But we started our first product, it was actually a precursor to our current Reach product, which we just announced, Reach 2.0 came out today. So we're super excited about that. But Reach basically, what it did, we had this insight that marketers had trouble getting people to their events, getting butts in seats for their events. And the biggest challenge wasn't like, how do I contact them? How do I send invitations to them? The biggest challenge was, who do I invite?

got to find the right people. And so the problem there is there's no data set at the time. There was no data set before reach that would tell you with a high degree of accuracy what somebody did, where they worked, what their seniority was, their firmographics, demographics, but also their geographic information. So where that person actually lives. And with COVID, this has become an even bigger problem because now people often don't live the same place their company's located.

Joe Davy (02:43.478)
just knowing that somebody works for Google doesn't tell you they live in Mountain View. Somebody who works for Google could live in Nebraska. And so we built basically a data-driven product that would somebody be able to put in their profile of exactly who they were looking for, but then also where their events were gonna take place. I'm doing 10 events across the country or internationally or whatever, and I want this profile there. So...

Reach was really good at driving highly targeted butts in seats for those events because it was able to send the right invitations that were relevant to people based on where they were, what they did, what they were interested in. That business did really, really well up until about, you know, March 16th, 2020, when the field marketing business completely evaporated overnight.

Jon Stoddard (03:30.611)
Hahaha

Everybody's got a COVID, it changed the business story. Yeah.

Joe Davy (03:35.926)
That's right. Yep, that's right. So at that point, we kind of we had just raised a venture capital round. I think our first board meeting was like the first week of March 2020. And at that point, even it wasn't clear that this was going to be a problem yet. And maybe it was last week of February. And so people were still kind of, you know, nothing had been shut down yet. Everybody was still just kind of thinking this was going to blow over. And we had a board meeting and you know, we said, you know, this could be a problem. We're not sure we're monitoring it. And I think at that point, maybe

Jon Stoddard (03:45.988)
Oh my god.

Joe Davy (04:04.63)
Facebook had canceled their big conference, Adobe had canceled their conference, which were both customers of ours. And so we just said like, well, this could be something. We don't know, this might blow over. Probably it'll be done in six months, you know, and at the most, but we'll see. Anyways, obviously we all know how it went, but we made a business decision that year that once we saw what was happening, we decided we're gonna take.

Jon Stoddard (04:15.08)
Ha ha ha.

Joe Davy (04:32.29)
some of the capital that we had and we were going to invest it in shifting to digital. And so we acquired a business called High Attendance, which was a virtual event, an event software, event management platform, software as a service company. And then we also in 2021, early 2021, we acquired Demio, which was a webinar platform. And Demio just got named by Forbes as the number one webinar platform for marketers. So it's...

Jon Stoddard (04:46.404)
Yeah, yeah.

Jon Stoddard (05:00.975)
And this is for bigger companies too, right?

Joe Davy (05:03.434)
It's for companies of all sizes. We have, you know, in the neighborhood of 3,000 customers and they range in size from small businesses all the way to Fortune 500. So, you know, companies like, you know, recently announced with Reach 2.0 today, we announced, you know, Cisco, CrowdStrike, you know, RingCentral, our customers of ours. But we also have a lot of people that may be startups or even solopreneurs that use Demio to just help them

talk to their customers or talk to their prospects. It's a really powerful product, it's super flexible, and we offer a couple different packages. So we've taken a PLG strategy where customers can start on the low end, and then as their needs expand, they can expand up and kind of buy more capabilities. So you don't have to spend a fortune to get started with it. It's affordable to get started, and then over time you can expand. And we've had customers on that product that have gone from.

Jon Stoddard (05:35.218)
Yeah.

Joe Davy (06:00.562)
spending, you know, 100 bucks a month to spending $50,000 a year. So, um, really, it's a really cool product for customers because it enables, uh, them to do so much. And again, like the whole theory behind it has always been like our DNA has always been data driven products. So Demio, the whole, uh, thesis, what makes it special for marketers is that so focused on the data, the capabilities it gives marketers in terms of the reporting that they can see, the activity that they can see, the tracking, the integrations, all that stuff, um, are super important.

Jon Stoddard (06:04.497)
Wow, wow.

Jon Stoddard (06:29.939)
Tell me a little bit about where you were at financially and emotionally when this black swan of COVID hit going, were you cash rich from cashflow from the business or was this still VC money? Because I have a little experience with that because started TurboSquid a long time ago. We raised about 5 million for that. And then the runway took a lot longer than we ever expected on it. I mean, it was...

Joe Davy (06:57.407)
Mm-hmm.

Jon Stoddard (06:58.671)
years later sold the shutter stock but it I mean nobody got rich on a 20-year exit

Joe Davy (07:07.002)
Yeah, well, right. I mean, time, time kind of, if you got a great business, time is your friend. If you got a struggling business, time is your enemy. So, so we went from, you know, in March 2020, we went from time being our friend to being in a race against time, basically, because, you know, our sales went down in that month from the beginning of March to the end, our sales decreased by over 90%. So

Jon Stoddard (07:17.54)
Yeah.

Jon Stoddard (07:27.196)
Yeah.

Jon Stoddard (07:34.771)
Jesus. Yeah.

Joe Davy (07:35.53)
We were looking at this like, wow, this is an existential crisis for us kind of. Yeah. And so, so that's why we said, you know, we have to find other ways to support our customers. So that was what the shift to digital was all about, which ended up.

Jon Stoddard (07:40.692)
It was.

Jon Stoddard (07:50.339)
Yeah. And was this VC money that they did that? We had to be very transparent exactly what was happening because we always had the phone call speed dial. There's a red button to our VCs. Hey, this is what's happening. Good or bad, we wanted to know what's going on. Like, and did they support this? Like, OK, let's shift. Let's go buy digital stuff. It's going all online.

Joe Davy (08:05.876)
Yeah.

Joe Davy (08:15.378)
I think it was, I think they basically looked at this as like, wow, this is going to be the fastest we've ever had an investment go to zero because, you know, like we cashed the check in February and then like by middle of March, we're like, well, we're screwed, you know, the whole market is gone. And we don't know when it's going to come back. So we had some but we had some money, we had some runway. And so

Jon Stoddard (08:26.516)
Hahaha!

Jon Stoddard (08:32.999)
Yeah.

Joe Davy (08:41.398)
They fortunately they were super supportive. I mean, they understood the situation. We had a lot of conference calls with other founders. It was Mitch Kitamura, who's a super experienced, really, really great investor from Draper Nexus. And so we, which is now DNX Ventures. And so we had a lot of conference calls going on with their other founders and stuff like that. And people were saying, okay, we're gonna.

people who were in businesses that were going to probably be totally unaffected, like robotics businesses were already laying off half their staff, you know, or three quarters of their staff and going to the mattresses. And, and we just said like, okay, well our version of going to the mattress is a little different, you know, we're going to, we're going to try to change our strategy, you know, so we, we kind of did more of a, you know, move to Vegas approach versus a,

versus a shut the business down approach to borrow a Godfather reference. So anyways.

Jon Stoddard (09:38.746)
Yeah.

When would you, yeah, the mattress, mattresses thing. Let me ask you about when you reached out to high attendance in Demio. What kind of conversation starter opener up was this? I mean, like, oh man, we don't know what's happening here. Come under us, you'll probably survive. What was it?

Joe Davy (10:03.99)
Well, I mean, those businesses were doing well, right? Because they were obviously in demand. So like Demio had seen their business go from under a million dollars to like two and a half or three million dollars at the time. And so so, you know, they were obviously on the upswing and because they were in a very high demand segment all of a sudden, right? There was a huge spike, right? And as you would expect.

Jon Stoddard (10:27.663)
Yeah, yeah, like Zoom went from, yeah.

Joe Davy (10:34.07)
Yeah, I mean, the conversations were, we just really, the timing worked out where, you know, the founders felt like, in the case of Demio, they'd been at it for like maybe seven, eight years. They had loaned the business a lot of money. It was, you know, both the founders, two guys, really sharp, really smart guys, really good guys. But yeah, both of them, but you know, had most of their net worth tied up in the business. And so I think they just looked at it as like, hey,

can we, you know, maybe this is an opportunity for us to get out. And we all go into too many other details, but we got connected through a friend who knew that they were potentially open to selling. And so that's how we kind of, you know, started talking with them. And once we got to understand the business a little bit more, we just said, yeah, let's move forward with it. So we...

Jon Stoddard (11:28.403)
Yeah. How did you value them without being specific if you're under non-disclosure? And how did you buy them? Like, was it a hundred percent cash? Was it 50-50? Earn out, seller financing? What did that look like?

Joe Davy (11:33.824)
Yeah.

Joe Davy (11:44.795)
Yeah, so we borrowed some money and there was an earn out component, there was a cash component and there was a stock component. So they got some shares in Bonsai, they got some cash on Close and then they had an earn out as well. I don't know whether I can say what the exact numbers were, everything. It might have been publicly disclosed or whatever.

Jon Stoddard (12:09.307)
No, no, don't worry about it, no.

Joe Davy (12:11.734)
But yeah, it was a structured deal. And that enabled us to get the upfront purchase price to a number that they felt they were going to be comfortable with and that we felt that we could deliver on. So yeah.

Jon Stoddard (12:25.263)
Yeah. Did you, with this valuation, do you think it was too high, too low now after buying it? Or?

Joe Davy (12:35.394)
Well, in retrospect, it's been a great deal for us. And I think it was a good deal for them, too. So I think it was like a Goldilocks type of deal. Because they managed to kind of cash out at a really good time. The business obviously continued to grow from the time that the deal was struck. So in adjusted purchase price terms, our multiple has been, if we look at the revenue today versus what we paid for the deal.

we paid a really fair multiple for the business. And then we've also been able to help the business. I mean, one thing we think about is, where can we strategically add value? And so in this case, we just saw they were really focused on SMB at the time, which we knew was going to be a higher-churn customer, and we knew it was going to be just a smaller average ticket size. And so we said, hey, we have, one asset that we had, an intangible asset, was we had a lot of these reach customer relationships. We had maybe 250, 300 customer relationships, and a lot of them were

were bigger companies, mid-market to enterprise companies. And so we said, hey, we can take this product to that market. And then we said, maybe we can retrofit reach to work for webinars too, to drive attendance for webinars and so. Yeah, so that was the first.

Jon Stoddard (13:45.107)
Oh yeah, there you go. Cross-pollination. How did the conversation go with the VC? Cause they have an equity position and you're gonna dilute that a little bit and they're always prickly about that.

Joe Davy (14:01.13)
Yeah, I mean, the nice thing is like, you know, this was like a little bit like, it was a little bit like, you know, somebody tells you have stage four cancer, and then, you know, they turn around, they're like, Oh, nevermind, that was just a funny looking mole. You know, if you get a solution for it, you know, people are very open to solutions when they think the alternative is death. So

And that's what we were looking for at that time, was we were looking for a good solution that we thought would enable us to keep the business alive, shift our focus, and ultimately just reorient our team on something that was going to be more productive. We didn't know how long COVID was going to be, so we looked at it and said, it's a possibility that this is over in six months. And in that case, making an acquisition might be stupid. But by the time we got...

to February 21, we were a year into the thing almost, and we knew it wasn't going away anytime soon at that point. And we didn't know how long it was going to be. And we're glad we did, because honestly, the Reach business, I mean, we just saw demand continue to stay very, very subdued for that business up until really the first quarter of 2024. So we've only just recently started to see inbound pick up and start to see customers come back. And people start to make field marketing investments again.

Jon Stoddard (15:06.565)
Yeah.

Joe Davy (15:28.522)
Machines, especially in mid-size or large companies, the wheels can kind of turn slow. And marketers think about budgets in terms of annual budgets a lot of times. So they think about, you gotta have a budget, then you gotta staff, then you gotta plan, then you gotta execute, and a lot of conversations. So if people started to bring back, maybe 2020 everybody started to kill field marketing, then 2021 they killed it for sure because they knew it wasn't coming. Maybe they put it in stasis in 2020.

Jon Stoddard (15:43.631)
And lots of conversations. Yeah.

Joe Davy (15:57.782)
They killed it in 2021. They left it dead in 2022. They started to talk about bringing it back in 2023. And we're just getting to the point where it's actually starting to come back in 2024. So that's great for us. That's why we've invested more in this Reach product, which we're super excited about also. And we've launched this today. Our motto is that we help companies get butts in seats. So we.

Jon Stoddard (16:18.365)
out

Joe Davy (16:24.238)
took a giant picture of a corgi butt and we put it on the NASDAQ tower and yeah, exactly.

Jon Stoddard (16:30.843)
So good, have fun with it. Yeah. Tell me about the high attendance, the acquisition. How did that transpire? NDA approved specifics on that.

Joe Davy (16:43.606)
Yeah, that one was just a lot faster of a deal. We basically did a part cash, part stock deal there, which I believe the consideration was all upfront. And there it was really, we had a great guy, Chris Justice, who stayed here for several years and helped us navigate that business. And we knew that we needed to get him to come across with the business. So...

There was an earn out component to it that was tied to besting a portion of the

Jon Stoddard (17:16.955)
Yeah. Did that earn out pay out for him? Sometimes our announced don't work. The reason I'm asking. Yeah.

Joe Davy (17:22.61)
Yeah, I think a portion of it, I think he ended up retaining a portion of it and didn't retain a portion of it. Ultimately, what we decided in 2022 or maybe early 2023 was, you know, we looked at where the business was and we just said, you know, the dynamics of virtual events were totally different than the dynamics of webinar. And

we didn't have as much of a way to make virtual events a data-driven thesis. For Webinar, it was really clear, for virtual events, it wasn't. I mean, they had built a really cool product, but also it was really a complicated product, a lot of setup costs, stuff like that. And we started to see the market shift when people started bringing conferences back in 2023. So a lot of the conferences came back before field marketing. And so when that started to happen,

you know, we started to see these tools like, you basically had this huge boom in virtual events. You had like Hoppin and companies like that went from, Hoppin was like an $8 billion company at the peak that then got sold for 15 million or something at the bottom. And so we just looked at it and said, you know, we just don't know what's gonna happen in virtual events. It wasn't really a market before COVID and we just couldn't maintain the thesis that it was gonna be a market after COVID.

Jon Stoddard (18:34.216)
Yeah, yeah.

Joe Davy (18:50.158)
as people started to bring events back, you know, just, and we couldn't really make the thesis that we were going to be the competitor to beat out Cvent and Aventry and some of these other larger, you know, rain focus, some of these other larger players that were doing really well, that it was a lot easier for them to pivot their in-person conference tool into virtual than it was for a virtual platform to pivot and do big conferences. And so.

We ended up cutting a deal with Chris, where we ended up selling assets of the business back to him in maybe the late 20 through early 23. Yeah, and it was, again, ended up being a good deal for both of us. And he then took the assets and we kind of refocused on the business and ended up selling it again. So, it ended up being a double dip for him, which was great. And it was good for us because it allowed us to just focus in strategically on the reach and demure businesses.

Jon Stoddard (19:21.711)
Oh, is that right? Oh, interesting, yeah.

Joe Davy (19:44.57)
And we launched another product called Boost around that same time. And so it was a good decision for everybody.

Jon Stoddard (19:52.723)
Was there any business you tried to buy that didn't succeed?

Joe Davy (19:57.723)
Yeah, I mean, I would say it sure happens sometimes, right? Yeah, I mean, it's...

Jon Stoddard (20:01.923)
Oh, it happens to everybody. Yeah. Nobody gets a, you know, 10 out of 10 bats, man. Hits some 10 out of 10, no.

Joe Davy (20:06.858)
No, I mean, I would say like, you know, when you're when you're acquiring a company, you just you never know what challenges you're going to run into. But we, we struck a deal to buy a business called high roast back in the very end of 2021 and great. Yeah, it's a great business, you know, really fit in with our customer base.

Jon Stoddard (20:22.491)
Oh yeah, yeah. Jesus, yeah, Hyros is, that's used by a lot of the coaches and marketers and well known, yeah.

Joe Davy (20:35.158)
really fit in with our data-driven thesis. Founder Alex Becker, really liked him, super sharp guy, got a big following online. So, we liked a lot of things about that business. And when we looked into the hood, we were really impressed with it. And so anyways, we went out, we kind of did it, flew down to Texas, shook hands with him, met with the guy for 45 minutes, agreed on a purchase price, shook hands, signed a term sheet later that day.

And we said this should be an easy deal to get financed. And so, you know, we said we got to go get the financing for it. So we went out to the market to get the financing and, you know, we had a really easy, I think we started the fundraise on like January 3rd or January 6th of 2021 or 2022, which was a fantastic market, like great time to be raising money right up until middle February. Yep. So, so, you know, sometimes you get lucky with timing, like in the case where we

Jon Stoddard (21:24.815)
Yeah, everything was still going up. Everything was.

Joe Davy (21:31.914)
We closed our VC deal that allowed us to do Demio and high tenants. We closed that right before COVID. So the timing worked out really great. Sometimes you get unlucky with timing. In the case of Hyros, we signed up a deal. We got a bunch of people ready to go, got term sheets, stuff like that. But then after the Russian invasion of Ukraine, markets just totally seized up and private equity just went into a total tailspin.

So the market dynamic completely shifted over like a two week period and it really has just not bounced back from it. I mean, as you know, like it is way harder to get finance today, raise capital today in either private equity or the private debt market than it was in 2020, 2021. And so, yeah, that was unfortunate timing. In that case, what we did, we sat down with Alex and we said, look, we've...

We did get a term sheet for somebody that said, we'll give you, they would commit to the, yeah, commit to the financing we needed for the deal, but they wanted us to go public as a part of it. And so we said, okay, we're going to go public. So we put together a big deal. We spent about two years and we did, we took the company public. We spent about 18 months, took the company public and all basically with the goal of financing this transaction. And unfortunately,

Jon Stoddard (22:32.551)
They'll, they'll, they'll commit to some number like.

Jon Stoddard (22:42.149)
Yeah, yeah.

Joe Davy (22:58.766)
because of SEC rules, both companies, both Bonsai and Hyros were required to get audited as part of it. Won't go into the details, but just, suffice to say that there were challenges that both of us ran into. I mean, it's a hard process to get a public company audit done and it was, so there were just some challenges that came up and won't go into the details of it, but yeah, we ended up having to.

Jon Stoddard (23:23.127)
Yeah, yeah. I, yeah.

Joe Davy (23:26.602)
end up having to pull that deal. And so that was really unfortunate. I mean, really they, they ended up kind of, you know, coming back and saying, you know, we just don't think we're going to be able to get there on the audit. And, and so it was, you know, I mean, I'll just leave it at that. I won't say anything else about it. You know, there's all kinds of, you know, stuff going on, but, you know, we, but we really liked them like that business. We're still in good terms with them, but

Jon Stoddard (23:37.157)
Oh, that's interesting.

Jon Stoddard (23:54.999)
A lot of high profile customers, yeah. Yeah.

Joe Davy (23:57.014)
They got great customers. Yeah, I mean, it made a lot of sense, made every bit of sense in the world from a business standpoint to do it and from a team standpoint. You know, we even helped them, helped them kind of locked arms and helped recruit their current CEO over there, Emin Bro, who's a phenomenal guy as well. So, yeah.

Jon Stoddard (24:15.455)
Yeah. I'm just curious what you can say. Kind of textbooked it where, you know, we couldn't deliver what they want. The reason I say this is I helped a company go from the OTC to NASDAQ and it took 18 months. It took over a million dollars with everybody's background being looked at. So it was a long process and raising money at the same time. Right. You got to get

Joe Davy (24:40.118)
Yeah. Yep.

Jon Stoddard (24:43.963)
you know, commitments from large investment banks so they can get paid immediately when it bumps the first day. What was it that they were having trouble with? I'm trying to skate around this without getting trouble. Like they couldn't get it together. What does that mean?

Joe Davy (24:50.21)
Yep.

Joe Davy (25:03.118)
It, you know, I think I'll just say like, without going to any, any specifics on the company or anything else, I'll just say the PCAOB audit standard is a high standard. There's a lot of documentation that goes into it and they look at everything and they're going to look at every record that you, you know, put out there and they're going to say, okay, does what, you know, it's what you say, match what you did, match what the current status is. What's the explanation for all this stuff?

So just, you know, suffice to say like that, that was a big challenge of, of taking a company public. It was a big challenge for us to a bonsai, you know, we spent way more than a million dollars to get across the line. The audit alone costs a million dollars, probably. Yeah, exactly. So it's a, it's a very challenging thing to do. I mean, I would say fortunately like now we're on the other side of it. So, you know, we're in a better position because it enables us to.

Jon Stoddard (25:43.971)
Oh, it's a nice financial proctology, yeah.

Joe Davy (25:57.602)
So hopefully, get access to that capital over time. We need to go do more deals. So.

Jon Stoddard (26:01.795)
Yeah, tell me about how you went public. Is it you went through a SPAC? Yeah, and was this, this is like the peak of the SPACs or?

Joe Davy (26:05.61)
Yeah, yeah, we did. Yeah.

Joe Davy (26:12.638)
Yeah, at the time it was like, hey, this is a really good idea. And then obviously like the SPAC market also again changed. So, you know, sometimes you're on the lucky side of time. Sometimes you're not, but I think just as part of the, but you know, I think talk all day about, I think what's happened in the SPAC market, but essentially the, the challenge has been, um, when the overall market went down in 2022, the people who were really smart. Were the investors.

Jon Stoddard (26:16.773)
Yeah.

Joe Davy (26:42.434)
who put money into SPACs and we're holding onto the stock and the market.

Jon Stoddard (26:46.879)
Yeah, yeah, I read something on either Reddit or Twitter at that point was following Chamath Pali Ampatia about the SPACs and he was the king of SPACs and I look the only people making money are Chamath. That's it.

Joe Davy (27:00.834)
Yeah, there's some truth to that. Although what I'll say is the people who made money were the people who invested in the SPACs. And the reason for that is, you think about it, you buy a SPAC, what are you really buying is you're essentially buying an exchange traded T-bill, right? Because the SPAC takes all their money, they put into a money market fund that's going to basically pay a rate similar to treasuries.

Jon Stoddard (27:19.491)
Yeah, it's a shell company. That's it. Right. Yeah.

Joe Davy (27:29.65)
And so during that time, treasuries went up, the stock market in general went down, but SPACs were all pegged. They have this redemption rule that basically allows you to get your money back out if you don't like the deal at the end. So there were a lot of people that were just super happy to sit on these things for as long as they needed to, because if the whole rest of the, you know, if you were invested in tech stocks, and that included, you know, 50% SPACs and 50% tech stocks, then like, let's say you had a hundred million bucks.

Jon Stoddard (27:41.977)
Right.

Joe Davy (27:57.194)
you put $50 million into SPACs, you're gonna earn over a two year period, probably $7 million on that, something like that. Cause you were gonna get some appreciation because of the trust was gonna grow because of the money market. It was basically just sitting in a money market fund, right? And if the whole rest of the tech market is a bloodbath, like it was in 2022 and even 2023 to some extent, being in a money market is a hell of a lot better place to be than being in a...

Jon Stoddard (28:12.226)
Yeah, you're going to make money the other way. Yeah.

Joe Davy (28:25.942)
than being in a, you know, in the bloodbath. And so there were a lot of people who looked really smart because of that, but then it ended up being, it ended up being, you know, yeah. I mean, it went from something that was like, oh, you know, this might be a bad deal if we have 50 million tied up here and Coinbase goes up another 100%, we were gonna wish our money was in Coinbase instead. But what happened was Coinbase went down 90% or 95%.

Jon Stoddard (28:32.119)
It's a good place to put your money. I mean.

Joe Davy (28:54.35)
And so everybody was really glad their money was sitting in the SPAC instead. And so what happened is at the end of that window though, a lot of people said, hey, now I can get my money back out of the SPAC. I don't necessarily want to put $50 million into whatever company this is. I'd rather take that $50 million and buy Coinbase stock when it's on 95% off sale. And so that's what ended up happening is a lot of redemption started occurring in the SPAC market.

Jon Stoddard (28:58.503)
Yeah.

Joe Davy (29:23.362)
And so these things that went from, it's gonna be a public entity that's got 100, 200, $500 million attached to it, went from that to now it's a public entity that really doesn't have anything attached to it. And that's just a lot more challenging situation. So then, I think everybody that went through that then had to get creative about where the capital is gonna come from and all that. Another problem.

Jon Stoddard (29:47.351)
Yeah. So the SPAC you used was, or the business combination was between a company called J seven J's GC seven GC. And is that a United States company or is that a European?

Joe Davy (29:57.73)
That's right. Yeah.

Joe Davy (30:03.443)
I think they're like a part like Luxembourg company actually, but the SPAC itself was a NASDAQ SPAC, I mean US company. The team is half in the 7GC team. They're basically a growth equity investor. They're invested in like Anthropic and a bunch of, you know, Hems and Hers, a bunch of really great successful businesses.

Jon Stoddard (30:13.04)
Yeah, yeah.

Jon Stoddard (30:24.411)
Hims and Hers, that's a billion dollar company, isn't it? Yeah.

Joe Davy (30:26.838)
Yeah, absolutely. Yeah. They've done really, really well. So 7GC, you know, they've got a great, they've got a great team, really sharp guys. They've made some really good investments there. You know, so we looked at this and we were like, hey, you know, these guys know the tech industry and that was a big asset for us, obviously partnering with them. They had a joint venture partner in their deal. So in their SPAC, it was half the money came from 7GC, half the money came from Hennessy Capital.

Hennessy Capital has been a long time SPAC sponsor, going all the way back to like 2011 or 12. They've done like a dozen of these things. So we looked at it as like, they were doing it before it was cool. So they know how to get these deals done. And that was ultimately really important for us. Cause otherwise I don't think the deal would have gotten done if we hadn't had the level of support from those guys. But exactly. But yeah.

Jon Stoddard (31:00.271)
Yeah.

Jon Stoddard (31:15.623)
Uh, experienced leadership. Yeah. How do you feel? Like, tell me about how you feel about being in a public company now. And also what did that, like your equity share look like? Did you just keep diluting down to what does it look like?

Joe Davy (31:32.79)
I mean today I think I own maybe like 13 like 11 12 13 percent something like that. So You know, yeah, I've gotten that I've been diluted over time for sure I think like the biggest Challenge with there were a bunch of challenges with taking company public After you go public then dinner like a whole new game

Jon Stoddard (31:39.154)
Yeah.

Joe Davy (32:01.483)
For us, obviously, our stock trades down a lot from a mean estimate public.

Jon Stoddard (32:05.807)
Yeah, I was just looking at it. BNZ, BNZ I, right? It used to be 10 bucks for 2023. Now it's 31 cents in 2024. Like it's a start over.

Joe Davy (32:10.55)
Yeah, yeah, I mean, it's like.

Joe Davy (32:16.618)
Yeah, yeah. Right, it's a start over. Yeah, it's at a, you know, it's in my opinion, internationally low price. You know, we had an analyst initiated a $3 price target a couple of weeks ago. So.

Jon Stoddard (32:31.631)
Yeah, if all the other companies are in there, that's crazy.

Joe Davy (32:34.178)
So yeah, I mean, it's just something that's kind of been this weird trend in the, you know, that's happened with SPACs. And there's a whole bunch of hedge funds that have a thesis around just shorting every SPAC, you know, why not? So that's been frustrating. But ultimately, you know, it's enabled us to do what we needed to do, which was, you know, raise some capital and hopefully it will ultimately enable us to get some, you know, get some deals closed. And, you know, we're looking at.

Jon Stoddard (32:48.423)
Yeah.

Joe Davy (33:03.956)
Number of deals now we're seeing a lot of great deal flow. So that's been good

Jon Stoddard (33:06.999)
Yeah. Are you positive cashflow with the current businesses? Are you still?

Joe Davy (33:13.226)
No, we're still negative cash flow. So, you know, our hope is that we can put enough businesses together to get to positive cash flows. That's what we're focused on right now. Yeah.

Jon Stoddard (33:15.207)
Yeah.

Jon Stoddard (33:22.339)
Yeah. So what you've got a number of LOIs out.

Joe Davy (33:28.002)
We do. We have a few LOIs out. There's a couple businesses that we're still working on trying to get to a close with that I think we're making progress on. And so, yeah, we're basically just chugging away and we're seeing more deals come through every day. So that part is really fun.

Jon Stoddard (33:43.887)
Yeah. And where are you getting your deals? I mean, I know that being in that industry, you could see those deals right around you. How do you find another, you know, two to five or $10 million deal?

Joe Davy (33:56.194)
So the cool thing about this business, this industry, is that there's a lot of fragmentation in the industry. So it's really about finding things that are gonna be a good fit for us that maybe aren't fully at scale yet, but where we think we can help them get there. And so we're looking at businesses that are, yeah, maybe a million, maybe five million, maybe up to, I think the biggest we've looked at is maybe 30 million in revenue. And...

Jon Stoddard (34:05.735)
Yeah.

Joe Davy (34:25.834)
You know, so there, and there's a lot of, there's a lot of those opportunities sitting out there right now there. You know, when I, when I started my first company in the big data space, we had, you know, at a Martech business back in 2010, there were something like 150 Martech companies in the world today. There's 13,000. So, uh, the space has grown enormously, you know, and it's been, uh, it's been cool, but also it creates a problem for marketers, right, which is just this fragmentation of you got to work with.

Jon Stoddard (34:45.738)
My god, yeah. Yeah, yeah.

Joe Davy (34:54.902)
you know, 100 different plus 100 plus different vendors to get their job done. So hopefully we can help solve that problem.

Jon Stoddard (34:58.8)
Yeah.

Jon Stoddard (35:02.563)
Well, what is it this journey taught you about yourself? Some big lessons, I mean, going from a VC funded thing to thinking, yeah, we'll have an exit strategy. Somebody's gonna acquire us, we're gonna go public, but to acquiring companies to save, kind of like to save the ship, to go in public with a SPAC, yeah.

Joe Davy (35:19.976)
Yeah.

Yeah, I mean, it's taught me a lot about resilience. That's probably been the main thing. I think if you're going to do anything challenging in life, you've got to be a resilient person. Because we've had some things that have, sometimes things go your way. Sometimes things don't go your way, as you said, and as we talked about earlier. And so yeah, the big opportunity for us, I think, is just

You know, trying to stay focused on the things we can control, try not to obsess about the things we can't control, and, you know, try to just basically keep working and building a bigger business, building a better business every day. Yeah.

Jon Stoddard (36:04.724)
Well, I wish you the best of success and luck. Joe Davy, thanks for being on my show. All right.

Joe Davy (36:07.286)
Thank you very much. Yeah, I appreciate it.

Yeah, thanks, John. Great talking with you. OK.