Geoff Cook, CEO, The Meet Group
A Digital Meet Cute
How Geoff Cook linked up dating apps and live-streamed video to form a happy and profitable relationship.
Geoff Cook has built a small empire of successful meeting and dating apps—beginning long before anyone ever swiped right on Tinder—by following a philosophy of fearlessly trying new things.
“Ten years from now, what will I have regretted—losing half a million dollars or not having done the thing that I wanted?”
Of course, the fact that he has a half a million dollars to lose in the first place should be some indication that a lot of those risks have paid off. Thanks to a series of auspicious business decisions, starting with a profitable essay and resume editing business he launched as a sophomore at Harvard, Cook is living proof that experimentation lies at the heart of a successful startup career.
While his fellow Harvard-attendee Mark Zuckerberg was busy refining Facebook, Cook launched his own spin on a social media platform. Rather than focusing on adding friends that users already knew in real life, his platform would be geared toward meeting entirely new people. So myYearbook was born.
Today, myYearbook has evolved, changed hands, and expanded to encompass a whole collection of meeting and dating apps, all housed under The Meet Group, where Cook serves as CEO.
“I tend to be a tinkerer,” he says. “I’ll push forward an idea even if it seems strange, just because it’s an itch and just keep moving the ball forward. Sometimes, opportunities fall out of that, and sometimes you just lose a lot of money. But it’s an itch I had to scratch.”
In this instance, Cook’s itch proved to be so much more.
Cook started his first business in 1997 when, while still writing college essays of his own, he decided to put his economics classes to work and start a small side hustle editing his classmates’ papers and resumes.
But in astoundingly short order, EssayEdge and ResumeEdge had scaled to millions in revenue, and the Thomson Corporation was knocking at his door with an acquisition offer.
So Cook sold his first business in 2002, and just like that, he had the seed money to begin his first post-grad venture. But it wasn’t until he was in his mid-20s, when the social media era had just begun, that the light bulb flicked on.
“The thought was that there needs to be a place to connect to people you don’t know,” he says. “It seemed both MySpace and Facebook were heavy into connecting to your real life friends.”
Teaming up with his brother and sister, who were both still in high school, he created a social network designed to introduce rather than deepen existing friendships. Using games and his search algorithm, making new connections was simple.
All they needed now were users. Luckily, the Cooks had the perfect in.
At Montgomery High School in Skillman, NJ, where both of the younger co-founders were still in school, myYearbook rolled out in 2005. In the first two weeks, there were hundreds of users. Within nine months, there were over a million.
But the road to a million required some clever maneuvering.
“I think we built a pretty good mousetrap in the beginning, but we had nobody in it,” he says, laughing. “What really helped it take off was…we were able to create this great quiz app that ended up getting millions of users every month.”
Reminiscent of today’s Buzzfeed quizzes, users would take a quiz to determine what Seinfeld character they were most similar to. They would then share their results on their MySpace profile, and when a friend—intrigued to learn whether they were an Elaine or a Kramer—clicked on the link, it whisked them away to myYearbook where they were invited to register.
“Quizzes are a very high-uniques business,” Cook says. “You get a lot of uniques, but you get very few page views per unique, because you only basically need to see the quiz and the quiz result. So we turned that business from two page views per user to closer to two or three hundred, because we brought them into a very social experience.”
Once the former MySpace users began chatting with the new people they met through myYearbook, the platform blossomed.
“That was when we were basically off to the races,” Cook says.
But unfortunately, “the races” had an expensive entry fee.
‘The Servers Were Melting’
“We had to raise some money,” Cook says. “The servers were melting. The traffic was growing. The expenses were going up.”
So, in 2006, to keep their rapidly growing platform afloat, Cook and crew decided to begin their first round of funding. The success of this venture round left them with enough money to put a team and an office together.
The social media website continued to flourish, and in 2008, they began a Series B round of funding that enabled them to raise $12.8 million just before the financial crisis laid waste to the economic landscape.
Grateful for their luck, but tired of raising capital, they vowed that this second round of funding would be their last, which meant only one thing: it was time to monetize. Luckily, Cook had a rapt audience at his disposal.
“I’m of the belief that if you can amass a big enough audience…you can monetize it,” he says, “especially if it’s an engaged audience that’s spending 10 or 20 or 30 minutes a day with you.”
In 2011, revenue was up to around $25 million to $30 million, and Cook was thinking long term. What was next for his company?
When he was introduced to Quepasa—a company similar to myYearbook but for South America, and the first publicly traded social network—he knew he’d found a fit. The two companies merged, transforming myYearbook into a publicly traded company, and Cook thought the time had come to rename the company, as well.
“We were always a social network for meeting new people, but the name to people who didn’t know that made people think of Classmates.com,” he says. “It was not really what we were about, so we changed the name to Meet Me.”
As part of the merger, Cook stepped into the role of COO with the intention that he would soon move back into the CEO role. In 2013, he made his return as CEO of the company, a position he has held since.
When asked how the job of CEO at a private, venture capital-funded company differed from that of a publicly traded company, he says that the two roles are far more similar than they are different.
In a privately owned, venture-backed company, he says, the CEO answers to several large investors who are knowledgeable about the industry and who demand growth. It’s the same for a CEO whose company goes public, he says. There are just a whole lot more investors to keep happy.
Cook says it can be difficult to know when the time has come to take a company public, but he did offer some insight for founders.
“I think the best time to be public would be when you have a lot of insight into your future revenues and profits,” he says. “One of the key differences of a public versus private company is that…you offer some guidance for the year—or even long-term guidance—on how the business is going to go, and then you’re measured to a quarterly yardstick on that.”
Without a degree of foresight, he says that going public would be an extremely difficult task.
“If you don’t have enough insight into your business to know your revenues except within a very wide range, or to know your profits except within a very wide range, that’s probably not the best candidate to be public,” he says. “You’re just setting yourself up to have some very bad quarters.
In other words, the key is predictability. But he reminds business owners that even the most predictable companies can present a challenge.
“You’re never gonna know everything, and there’ll always be some surprises, because things happen,” he says.
But despite the added pressures and challenges, Cook insists that there are many advantages to being publicly traded.
“There’s definitely pros and cons of being public,” he says, “but I would say we’ve had more pro than con.”
And the primary advantage of going public for Cook was a clear path toward acquiring other companies.
Forming the Group
Not long after myYearbook became Meet Me, the business was renamed The Meet Group, the moniker it’s known by today. Because the business encompassed more than a single app, the name change was apt, and it only became more appropriate as the years passed.
In late 2016, The Meet Group acquired Skout, a meet-up app that was approaching its 10th birthday. Then in 2017, they acquired Tagged, the San Francisco-based meeting app with high engagement in the African-American community, and Lovoo, a European dating app. And this year, The Meet Group also acquired GROWLr, a dating app geared toward the gay community.
But Cook says all of these acquisitions stemmed from a strategy inspired by one popular Chinese dating app. The company decided to start building a live-streaming video product after seeing its success at a Chinese dating platform called Momo.
Cook felt the app was somewhat similar to Meet Me, and when Momo added live streaming, he says that about 90 percent of Momo’s revenue was a result of that service. The Meet Group wanted to give it a try.
“We were also kind of clear-eyed enough to know that building a live-streaming business is a big commitment,” Cook says. “It’s essentially kind of an all-in sort of company bet.”
It was the kind of bet Cook was comfortable making. So they dove in headfirst and got to work building up the infrastructure, talent, and moderation capabilities they would need to execute their plan. And it paid off in tens of millions. Cook says that their annualized live video revenue grew from $0 to $82 million in just 16 months. This became the inspiration behind their acquisition of meeting and dating apps—to integrate video and watch as revenues skyrocketed.
“If we believed in our story enough to make that bet, well, then we could make that bet again and again,” he says. “There’s no reason not to double down, triple down, quadruple down on it.”
As they acquired social apps and fitted live-streamed video into them, they noticed that the engagement on those apps markedly increased.
“In meeting- and dating- and chat-oriented communities, there’s often periods of time where you just don’t have any inbound chats,” he says. “So, it’s kind of boring.”
But rather than exiting the app, the users of the video-fitted apps can simply hop into the tab labeled “Live” during those gaps.
“Our users are coming to us for human connection,” he says. “Meeting new people is kind of all about that. Interactive live video is actually human connection, right?”
Cook says that around 20 percent of their users visit the live streaming sections of the apps each day and that those users, on average, spend 20 minutes more a day on the app. Users can watch popular streamers, send them comments and witness their reactions. They can also buy and send digital gifts to the streamer.
“They do this because they want the attention of the streamer,” he says. “It’s almost like buying someone a drink at the bar. You don’t have to, but if you want a better shot, you maybe should.”
Cook is pleased with the success The Meet Group has found by incorporating live streaming into the apps—but he still has his eyes on Momo. Thirty percent of the Chinese app’s users visit the live section daily, a goal that Cook wants to push toward.
He also wants to continue pushing the boundaries of live video and sees one-on-one live video and various video dating experiences in the company’s future.
As the social media landscape continues to coalesce around a select few apps, this self-proclaimed tinkerer believes that the unique nature of his business will allow it to keep flourishing.
After all, as long as there are people searching for connection, there will always be a need to meet someone new.
Interview by Nathan Chan, feature article reprinted from Foundr Magazine, by Erica Comitalo
- How Cook’s resume editing side hustle at Harvard eventually led to an acquisition offer
- Why Cook decided to take a different route from MySpace and Facebook
- The surprising tactic that led to myYearbook surpassing a million users in nine months
- How Cook approached the funding and monetization of myYearbook
- The road to becoming a publicly traded company and the lessons learned
- How The Meet Group was born
- Why an investment in the live-streaming business changed the game
- What Cook has his eyes on for the future of The Meet Group
Full Transcript of Podcast with Geoff Cook
Nathan: The first question that I ask everyone that comes on is, how did you get a job?
Geoff: Yeah, I got my job, I guess by starting with the company. I started the company back in 2005. It was originally a social network for meeting new people. It’s now mobile apps for meeting new people. So, not that dramatic a shift. But I started the company back in 2005. I went through a few different rounds of funding, ended up selling the company and then coming back and leading it again shortly thereafter. Have been leading it as a public company … Leading the company more or less for 14 years and then leading it as a public company for really the last, I guess six. That’s essentially how I got the job. I created the company.
Nathan: Yeah, wow. The Meet group, which was formerly Meet Me, this is your first business?
Geoff: Actually, no, it’s my second business. My first business I started at school and actually started editing business as a sophomore because I didn’t want to get a library job. I didn’t want to basically get a side job, which I kind of needed just to have some spending money. This was 1997, and ended up starting an editing business. Ecommerce, people would send documents, resumes, and so forth.
I was the only editor as well as the CTO and everything else, website creator. That scaled to millions of dollars in revenue within just a few years. Then I sold that company to the Thompson Corporation in late 2002. That was my first business. This is essentially probably my second of size. I dabbled with an art community for a period of time too.
Nathan: Wow, interesting. You started what was called MeetMe in 2005. Was that when you’re in high school?
Geoff: No. I actually went to Harvard and my first company I started at Harvard in 1997. MeetMe, I started, I must have probably been 24, 25 something like that. Oh, no, I guess I was 26. My brother and sister co-founded it with me and they were in high school. So, I’m the older sibling and we co-founded it together. We actually launched MyYearbook, which was the predecessor name of MeetMe. We launched that in their high school. That was our starting point, Montgomery High School in Skillman, New Jersey. We got hundreds of people join in the first week or two, a million people would join in the next nine months.
Nathan: Wow. What was first MyYearbook, what was the premise of the product?
Geoff: It was pretty simple. It was conceived as a social network for meeting new people. Facebook was in one school, at Harvard at the time. MySpace was the dominant power in social. The thought was, there needs to be a place to connect to people you don’t know. Just people around you. It seemed both MySpace and Facebook were heavy on connecting to your real life friends. Maybe MySpace a little less so, but still basically that was what it was about.
MyYearbook was connecting to people you don’t know. It made that easy through different fun games, and also just through the search algorithm itself. What helped really take off … I think we’ve built a pretty good mousetrap in the beginning, but we had nobody in it. What really helped it take off was this was the times of MySpace. There was a lot of virality on these social platforms in the early days. We were able to create this great quiz app that ended up getting millions of users every month, they would take a quiz, like what Seinfeld character are you? What blank are you?
You’d answer some questions, they would give you the answer, and you’d paste that answer into MySpace. If you recall, MySpace had very ugly profiles, anything goes and you could paste code. So, people were pasting our code. Our code would basically drive you to MyYearbook. We did a great job of converting quiz takers into registrants, and then filling our community that way. Then we basically turned … Quizzes are very high, unique business, you get a lot of uniques, but you get very few page views per unique, because you only basically need to see the quiz and the quiz result.
We turned that business from two pages per user, to closer to the two or 300, because we brought them into a very social experience, and they started chatting with each other. That was when we were basically off to the races.
Nathan: Yeah, wow. Interesting. What happened next?
Geoff: We built the company up over … In the earliest days, it was really just all about growing the user base. We did that pretty well, a million users in nine months, the whole quiz thing that was going well. We did a few different concepts like that. It was time to start monetizing, and we had to raise some money, because the basic of the servers were melting, the traffic was growing, the expenses were going up.
So, we raised a venture round from U.S Venture Partners in 2006. U.S Venture Partners in Sand Hill Road. Also, from First Round Capital, which was at the time in Pennsylvania. I think they have offices all around the world now. But First Round Capital and USUP was our first round.
That allowed us to put a team together, put an office together. Many of those people in those early days are with us still. Then in 2008, we essentially got lucky. We did a Series B right before Lehman, literally the month before Lehman when we closed it. We raised 12.8 million that way. That would be the last venture capital we would raise. Then I sold the company, or merged it, I should say, into a public company in late 2011. Then came back as the CEO in early 2013.
Nathan: Talk to me about listing the company, and then stepping down the CEO. Why did you guys decide to list? How far did you take MyYearbook, because you guys changed the name?
Geoff: I think we were up to like, I don’t remember exactly. But somewhere in the neighbourhood of 25 to 30 million in revenue at the time that we essentially sold. We sold to a public company because we felt like there was an opportunity to consolidate the market. We merged into a company called Que Pasa, and they had a social network for meeting new people too, but focused on South America.
We thought, okay, we take our North America, we combine it with South America. What we ended up doing is basically, turning off Que Pasa and moving all of the traffic to MyYearbook. And then we renamed my yearbook to MeetMe, just to better reflect what we did. At the time, we were always a social network for meeting new people, but the name to people who didn’t know that made people think of classmates.com. It was not really what we were about. So we changed the name to MeetMe, which we felt better reflected what we were about. Then we would eventually change the name of the company to the Meet Group to reflect that we now are a collection of apps, not just the one. We also have the Ticker Meet traded on NASDAQ.
Nathan: Got you. When you sold, you stepped down. But how long was that? That didn’t seem like it was very long.
Geoff: Yeah, it wasn’t very long. Part of the deal when we closed it in 2011, it was because of the liquidity went in the deal. I moved into the COO role. I worked closely with the CEO. I think there was an expectation that I would be CEO shortly, and that’s basically what happened.
Nathan: Got you. You left for a little bit, but then came back.
Geoff: Well, I never really left. I was just COO briefly. As soon as I sold it to the other company, I was COO of the combined company for a period of time, and then became CEO of the combined company.
Nathan: Got you. Then you guys decided to list not long after, right?
Geoff: No, no. The company we merged into was public. That is how we are listed.
Nathan: Got you. That’s how you became a listed company. Got you. Okay, that makes sense. Interesting. Then you said, you guys now have a suite of apps. How come that came about?
Geoff: That really started in 2016. We’ve felt for some time that the space was consolidating. There’s just natural network effects and social networks for meeting people. The more people you have on your network, the more value for any new person who comes to the network. Now, there’s more people to meet. There’s just natural network effects.
But what I would say even drove it more was we decided in 2016 to start building a live streaming video product, in part because we saw that would be successful in China, in particular for a Chinese dating company called MOMO. We always felt like MOMO was similar to what we had in terms of the product. When they added live streaming, it just totally transformed their business model. Now, something like 90% of all their revenues, and they’re a multi billion dollar company are coming from live streaming.
But we noticed it pretty early. We said, well, let’s build this. But, we were also clear eyed enough to know that building a live streaming business is a big commitment. It’s essentially an all-in company. If you’re going to build out all the needed infrastructure, talent, moderation capabilities for live streaming at scale, the more users, the better.
If we believed in our story enough to make that bet, well, then we could make that bet again and again. There’s no reason not to double down, triple down, quadruple down on it. That’s what we did. We acquired another company called Scout, which was backed by Andreessen Horowitz. I guess that was late 2016. Then in 2017, we acquired two more companies. Scout was a meeting community, similar to MeetMe. I’d known the founders for a long time.
Then we acquired Tagged, an African American meeting community in 2017, was backed by Mayfield also, but based in San Francisco. Then in late 2017, we acquired a European dating community called LOVOO. Most recently, 2018 we really didn’t acquire anything, we just really focused on those integrations and unrolling out live streaming video to all the properties we had acquired. We did do that by mid-2018. Most recently, we acquired a gay dating community called GROWLr. That was less than a month or about a month ago or so.
Nathan: Okay, interesting. It seems that you guys are really snapping up companies. Why is that?
Geoff: The reason is that we have seen what video has done now for us and for the companies we acquired. What live streaming video has done is take … Well, for one, we grew from zero to 82 million of annualised live video revenue in just 16 months. Just by adding live streaming video, we turned on this revenue stream. We’ve managed to grow substantial revenue streams on every app that we did it to. We basically look at an app and we can say, “Okay, we like this business. We like the underlying business. We’re even to buyers generally. We feel like we’re paying a reasonable price for the EBITDA, given our own EBITDA trading multiples.
At the same time, we feel like we could turn on a new source of revenue that the company didn’t have before. Every time we’ve turned on this revenue, it’s actually become the fastest growing product in the history of the company for all four of those apps. That’s the whole narrative. It’s basically we found that live streaming marries quite well to social meeting apps. We’ve bought a bunch of them and we’re executing on that strategy.
Nathan: Wow, fascinating. Because with MyYearbook, it was more just around meeting people. But now it looks like you guys are acquiring dating apps as well. Yeah, you just bolt on the live streaming product. Basically, before they even meet for the date, they would live stream and then a certain amount of that live streaming time, they would have to pay for, or both parties would have to pay for. Is that correct, or do they have credits or something along those lines, right?
Geoff: Yeah, it’s credits based. Basically, the way it works is in meeting and dating and chat oriented communities, there’s often periods of time where you just don’t have any inbound chats. It’s kind of boring and bore if that’s the case. It might be exciting because you’re chatting someone who’s interested in responding to you. But then you’re sending a bunch of outbounds, nobody’s coming back to you. Then what do you do? You can go and leave the app, you can go do something else.
But what we found is if you add a tab called Live, people will go into it. Only 20 plus percent of our users a day do this, which is pretty substantial. But the magic of is it takes those 20% of users and it extends their time by 20 plus minutes a day. Suddenly, you have a lot more time with the user. Our users are coming to us for human connection. Meeting new people is all about that. Interactive, live video is actually human connection. You’re able to give comments, you’re able to watch the person react to them. The monetization model is the viewers of the live streams actually give virtual gifts to the streamers. They do this because they want the attention of the streamer. In a popular live stream, you want to stand out. It’s almost like buying someone a drink at the bar. You don’t necessarily have to, but if you want a better shot then you maybe should. That’s how it’s worked out.
Nathan: Got you. What I’m hearing was from you guys, keeping an eye on a company in China bolting on this live streaming product and seeing that being a game changer, and then effectively modelling that model to your business and everything you guys are doing has been a massive game changer for you.
Geoff: Yes, that’s exactly right.
Nathan: Wow, that’s fascinating. Now, is the game plan, as long as you guys can afford it to just keep acquiring other meeting properties, or social networking properties?
Geoff: That’s certainly part of our strategies is to expand into adjacent … Obviously, we just acquired a gay dating app. We’ll always look at opportunities that maybe add audiences or niches that we don’t have. But I would say the primary strategy is to grow our live streaming organic business. We have, today, 20% of our users on Live. We know, and obviously we got started a little bit after MOMO, but we know that they got 30% of their users online.
We feel like there’s no reason we can’t get from 20% to 30%. There’s enough interesting products and features in our pipeline that we haven’t released yet that we think will help us close that gap and bring more users into the system. With more users in the system, we would expect monetization rates to go up. There’s two levers. There’s number of video users you have. Then there’s the amount you monetize those video users by.
We still feel like we’re at pretty early days on these metrics. A lot of our focus is on just how do you grow? How do you get people into video? Right now, most of our videos is broadcast video. One to many, or two to many Live video. We’re going to be building out one on one video, live streaming video. We’re looking at different dating experiences to bring into the app. A lot of our users are there to meet new people and date, but our Live video product doesn’t really serve them as much as it serves the entertainment solution.
We just feel like there’s a lot of opportunities ahead of us that we’re going to be going after for the next year. I’d say that’s what we’re mainly focused on. At the same time, if the right deal came about at the right price, and we felt there was a video narrative, we would at least look at it.
Nathan: Yeah, I see. Are your brother and sister still active in the business?
Geoff: Yes, my sister is. My brother has actually moved on. He’s actually working and I’m backing that. He’s working on something in the podcasting space, a project called Podcoin. Which basically pays you to listen to podcasts, basically gives you loyalty points. You earn these loyalty points by how many hours of podcasts you listen to, and then you can redeem them for things like Starbucks gift cards, or Amazon gift cards and things like that.
He’s been doing that for the last, I would say, seven or eight months. It’s only been live for the last four months, but it’s been growing pretty quick. Got to about a million listening minutes a day in four months, which I thought was quite impressive on a shoestring budget.
Nathan: Wow, interesting. Podcasting. gamified.
Nathan: Interesting. Would it be safe to say, Geoff, and please, mistake my naivety but would it be safe to say that in the early days of starting MyYearbook back in the early days when there was a lot of different social networks, and that market really consolidated. Then there’s been some players that have clearly emerged that have stuck around Facebook, Twitter, and the like, et cetera, et cetera. You guys were one of those products or apps that, obviously didn’t win that battle. But you guys have been able to pivot and still now, you really carving out a blue ocean almost 15 years later?
Geoff: I’m not sure I would characterise it quite that way. Only because MyYearbook was focused on meeting new people from basically, the beginning. We never felt like a head to head competitor to really either Facebook or MySpace. With that being said, there’s something to what you’re saying. Because two of the apps we own, I would say are more like that. One is called Tagged and the other is Hi5. I didn’t even mention Hi5, because it’s not one of our bigger apps. But those were two … I would say, MyYearbook, Tagged and Hi5, all three of those were somewhere in the 2004, 2005 timeframe. Very early social network pioneers that are now meet new people apps and do quite well in that framework.
Nathan: Wow, interesting. What’s it like to run a public company? Is it so much tougher than being private?
Geoff: There’s a lot more that’s similar, I’d say than different. In a private venture backed company, you have large investors who are very knowledgeable of the business and are demanding growth. I would say a public company essentially has the same thing. There’s also many, many more shareholders in a public company. That does change things. There’s also the quarterly … Well, in a private company, you may have quarterly board meetings, and you probably do or maybe even more frequent. In a public company, these are very public affairs, and you have this stock price that goes up and down and the team has to come to deal with the vagaries of the market in that way.
I would say, that can be difficult. But at the same time, there’s clear advantages too. I think, it would have been hard for us to acquire Scout, our first deal if we couldn’t issue some stock to do that deal. It probably would have been harder for us to raise the money to get Tagged if we weren’t public either. We acquired LOVOO and GROWLr with all debt. But I would say our access to Capital Markets is definitely held by being public.
I would say that, the acquisitions we made probably wouldn’t have happened if we weren’t public. There’s definitely pros and cons of being public. But I would say we had more pro than con.
Nathan: No, for sure, that makes sense. I’m really interested to hear, when you think of an entrepreneur’s dream pipeline when they start a company. It gets traction, and it’s growing and you’re building a team and you’re scaling and you’ve got product market fit, and you’re doing all these incredible things and it’s really exciting. Majority of founders pipe dream is to either sell the company or take it public so a form of liquidity will take place.
I’m curious around, what would your advice be around knowing or going down the model of taking the company public? Not that you have done it, but I’m just curious to hear your perspective. At what point in time, should you even consider something like that?
Geoff: I think the best time to be public would be when you have a lot of insight into your future revenues and profits. Because one of the key differences of a public versus private company is you publicly guide, or at least many do, or even most, guide to your revenue and EBITDA, or maybe your profit margins. But you offer some guidance for the year or maybe even long term guidance on how the business is going to go. Then you’re measured to a quarterly yardstick on that.
If you don’t have enough insight into your business to know your revenues, except within a very wide range, or to know your profit except within a very wide range, that’s probably not the best candidate to be public. You might go to tell a story where you can take something like that public, but that’s difficult. Because you’re just setting yourself up to have some really bad quarters.
If you have some predictability on your traffic, some predictability on your revenues and EBITDA. You’re never going to know everything, and they’ll always be some surprises because things happen. But when you generally have good insights, that’s when you want to start thinking about it. I think there is some scale too, somewhere north of hundreds of millions of revenue. Some companies have obviously gone public with no EBITDA or big losses. We look for margins in the 20% range.
If you’re going public with losses, that’s a tough game, but people play it. Some of the biggest high flyers play that game. But I’ve heard of rules of thumb of like, 100 million of EBITDA, 400 or 500 million of revenue. Every time you move up a valuation chart, if you’re sub $100 million public company, in terms of total valuation, you have different investors who can own you. You probably have less liquidity in the shares. It’s often called a micro-cap hell. It’s hard to break through to the next level. Then you do it and we did it. But if you can get up to that half a billion yard stick, then that’s even better. If you get up to that billion yardstick, that’s even better.
A pathway to a billion dollar market cap, you’d like to have a line of sight, I would say, if you’re going to think about going public.
Nathan: Yeah. Okay, that makes sense. That was great insights. You talked about being an EBITDA first company. What did you mean by that?
Geoff: I’m not sure I said EBITDA first. I would say, EBITDA is important. I would say, our goal is to grow our revenues, grow our EBITDA, please our users. But what I mean by EBITDA, is EBITDA is, of course, a measure of profitability, earnings before interest, taxes, depreciation, and amortisation. It tends to be, at least in the software industry, the mobile, internet tends to be what companies talk about.
If you have EBITDA margins in the 20% range, that’s pretty solid. In the 30%, 40% range, it’s even better. When I say we manage for EBITDA, you always have this decision to make when you’re running a company. Like, do you take that profit that you’re turning, and do you just plough it all into marketing or plough it all into building out new teams, and try to run at breakeven as a strategic matter? Or do you allow yourself to have a margin?
That’s one of the key differences as a public company than a private. A private, you might run at 0% for a long time in terms of margin. In a public company, that’s only going to work if your top line’s growing exceedingly well, and you have line of sight so you’re continuing to do so. It’s hard to do that.
I think that the play you tend to see more in public companies is they mind their EBITDA, they try to expand margins while also growing revenues. That’s what we do.
Nathan: Yeah, that’s really difficult because usually you can only have one or the other, right?
Geoff: It’s always a balancing act. It’s always a balancing act. But I think like everything, when you have constraints, sometimes that’s when you do your best work because you do have constraints. But yeah, it’s a balancing act. You could always say, look, we’re going to spend more this quarter because we see this opportunity ahead of us. There still is some flexibility. But for the most part, we see it as how do we grow our revenues while growing our margins too?
Nathan: Yeah. You raised a really good point around sacrificing profit for growth and how much margin do you manage? Early stage companies, you find that it’s take the market, and everyone is sacrificing profit for growth quite aggressively a lot of the times. Especially venture funded companies, because, yes, investors want growth. That’s a question that every founder, I think has on their mind around, I guess, how aggressive do you be, because it comes down to your risk tolerance as well. What advice would you have to people around managing that risk?
Geoff: I would say, if your top line is growing 50% to 100% a year, you should not be worried about EBITDA. If your DAU is growing 10% week over week, the last thing you should be thinking about is EBITDA. The first couple years of MyYearbook, there was no revenue product. There was not even really a thought of it. I’m of the belief that if you can amass a big enough audience, and what is big enough for me is a different question.
But I tend to think it’s, you have a million DAU, that’s big, 10 million is better. But a million is big. If you can amass a big enough audience, you can monetize it. Especially if it’s an engaged audience that’s spending 10 or 20 or 30 minutes a day with you. Media tends to monetize at a certain rate. How many cents per hour can you make? I would never start off a mobile or social play, one that relates to how much traffic you can have, and say, “Well, I know what my revenue model is.”
The first trick would be getting your users in the door. It’d be nice to have a line of sight to a revenue model, but a lot of times, you may not even have that. It’s really just, can you bring in the users? I would say, at least in the MyYearbook case, we basically spent two, maybe three years without any monetization. We started adding our monetization products when we basically said, okay, we don’t really want to do too many rounds of venture capital when we raised in 2008. Maybe it was because Lehman Brothers had just happened. We vowed to ourselves, that that would be the last venture capital we raised. When you make such a vow, you’re going to have to monetize, and then that’s what we did.
Nathan: Wow, interesting. Look, thanks so much for sharing, Geoff. Its been a fascinating conversation. Two of my last questions for you would be the first one, what’s the best piece of advice you’d like to share with our audience in, I guess, parting words? Then also, where’s the best place to find out more about yourself and your work?
Geoff: I would say, I think sometimes I’m asked how do you start something like this? What I’ve found to be true is you just get started. If you’ve got an idea for something, and you’re sitting on it, you can be sure it’s not going to go anywhere. I tend to be a tinkerer. I’ll push forward an idea even if it seemed strange, just because there’s an itch, and just keep moving the ball forward. Sometimes opportunities fall out of that. Sometimes you just lose a lot of money. But it’s an itch I had to scratch.
I would say, when I’m trying to weigh how much money something might cost to develop, a lot of times, I’ll look at a framework that … I think Bezos talked about it, I don’t remember who said it. But it’s a regret minimization framework. 10 years from now, what will I have regretted? Losing half a million dollars or not having done the thing that I wanted? That’s an interesting way of thinking about it. Because it gives you the long term perspective.
As far as where people can reach me, I think I’m on Twitter as Geoff Cook, G-E-O-F-F Cook. I have a website, geoffreycook.com. I’m actually a children’s book author on the side as well. But my apps are MeetMe. You can find that on App Store or Play Store. I would say probably that’s a good one to start with. Or Podcoin, you can get that on App Store or Play Store, too.
Nathan: Awesome. Well, look, thanks so much for your time, Geoff. I really appreciate it, and we’ll speak soon.
Geoff: All right, thank you