Season 1 Episode 7

Today on Going Public. I am sorry to interrupt the show, but I wanted to make an important announcement. We are 21 days out before the end of the season. And while it has been an incredible journey getting to understand the companies and their founders, this journey will not last forever. So if you are interested and you want to click to invest in any of the companies on the show, please head over to GoOnPublic.com and let's get back to the show. We're diving deep into the business models and metrics of our reggae companies and their strategies to raise capital. Trouble is going in for the close on a major investor. I'm going to make sure that I do not leave until he clicks to invest. While Proven received a different type of outside interest from a titan of their industry. And Going Public heads to KPMG, one of the largest global professional services firms. There, they'll get a close and unfiltered look at their offering. I hope they give us some real honest feedback about what where we are today and where they think we need to be to go public. Are they on the right track? I guess we'll find out today. Welcome to Going Public. On Going Public you're going to hear from four companies that are open for investment from the general public, including you, the viewer. The companies have all filed an offering circular with the SEC that you should read carefully including the section called risk factors. Head over to goingpublic.com for more info. Next-Gen T's been in business for about five years. Welcome to the Fullstack Network Associate Bootcamp. We've grown the business and we've grown the learning management system where it can serve millions of users. But our challenge here is getting those users. You guys all know our mission The question is what? We want to change a million lives by 2030. So we've got some work to do. This is the time where all of us need to get really synced up. We've called this Leadership Summit to really plan our go-to-market for 2022, because our goal is to change a million lives. But how do we get there? How do we get millions of users to hear about NGT Academy in our programs? My man, Josh. Hey, what's going on? What's going on? Welcome to NGT Academy. Wow, I'm so excited. We brought in Josh because he has such creative ideas on how you can really convert the traffic at the top of your funnels. So what's going on guys? This is beautiful. I want to spend half a day, deep dive, and really try to figure out how do we get to 10,000? How do we get to 100,000 students? Josh isn't just about marketing. He will look at different angles of the business and come up with some really clever ideas. A lot of people from an outside perspective think, oh, is it another coding bootcamp? If you look at our competition, they are going after... the 30 to 50 year old. Now we created a program four months versus four years without the student debt. And I love to talk about the student debt because that's the big problem. And we want to go after even the younger demographics before they get into student debt. Well, wait a second. If you would consider colleges, traditional colleges, universities as competition? Yes. Well, where are they getting students from? High schools. High schools or veterans, military people? that are active duty. Let's stick to high schools for a second. Yep. Have you guys done anything with high schools yet? Anything with success? No, nothing significant. They would enroll or find us? If you catch them early enough, you're preventing the debt load system on America on its own. Trillion accumulated in just the past decade. That's huge. I mean, that's a trillion, trillion dollar problem that nobody is looking at. But in order to reach a younger demographic or potentially a different demographic, You have to tweak your approach, right? And if you're targeting high school students, where do high school students go? High schools? Hmm. Who talks to the students? The counselors. My perception would be almost that there is still a needs a paradigm shift. Like parents just saying, no, you have no choice. I'm sending you to college. If your daughter said, dad, I'm not going to college. I would freak. See? So if your daughter now educates you and says, dad, there's a different alternative. It's in downtown Phoenix. And guess what? You can save your money, Dad. What would you say? I would say, I want to learn more. And you know, I think the way we test this is, I think most parents are like, oh, I don't want to send my kid, instead of going to a physical space, just be stuck at home. The fact that we're here and have a campus, and have all these facilities, eating, sleeping. Training. What do colleges do? Come parents, check out the dorms. Look at the goat yoga outside. Like a dog and pony show for parents. Just like a college would say, hey, college is a campus. You have it here. You've already invested in it. And I like that because it justifies. the capital expenditures required to scale the physical footprint of the business. It builds upon itself. I like that. That is powerful. This is exactly what we needed. A clear path forward. Well, listen guys, this was amazing. This has got me jazzed that, you know, I get to be at least a fly on the wall with what you guys are doing. We can change lives and change education. Howdy folks, Jacob Hess here from NGT Academy, and I have some great news to share with you. We have just reduced our minimum investment. to 250 and with just three episodes left of the going public show time is of the essence so what are you waiting for join us on our mission today and head on over to invest.ngt.academy We are here in Beverly Hills, outside the Peninsula Hotel, where Chris Burch is up in the suite. Monday, Tuesday, and Wednesday, we have pitch meetings. Yeah. Which is exciting. The process with Chris Burch has been a little bit atypical. He really invests in the team. in people and his team does the analysis. I love it. You're actually pitching me hard, dude. So after Gary and I left him in Miami, we then had a string of follow up calls to actually figure out how much he was going to invest. So I'm going there with something called the presumptive close. I am presuming he will be closing today. I'm hoping to get $250,000, and I'm going to make sure that I do not leave until he clicks to invest. Tell me more about the business. What's going on? Treble is a music app unlike any other in the world. It's on demand. It's offline. It's full-license library, but it's free for the consumer. The highlights are user growth continues. Every day, we're adding 40,000 to 50,000 users. Awesome. Revenue. When I joined the company, 10k a month. We're doing like 15 to 20k a day. That's amazing. A day. That's incredible. So revenue going this way. And new music. We just signed a deal with Merlin. They're the aggregator of all the independent labels. So we're scaling. We're doing this without adding a lot of overhead. What I like the most is the overhead doesn't go too big, but when you start selling to the masses and they really love your product, they will buy from the advertiser point of view like we've never seen. We're going to make it work. Actually, we have to formalize it. We do have some business due today. Oh, you know I don't like formalization. We've got to get over to the computer. Punch it in, brother. Let's do it. I'm going to get Chris Birch to actually invest in the reg A on my computer. A deal isn't closed until it's done. So I took the liberty of the first couple simple steps of the click-to-invest process. So I put in your name and your email. They asked for social security number. Then they asked for your income and net worth. So I took the liberty of estimating. some things I read in Forbes about you. The next step, invest in trouble. How much do you wish to invest in this offering? And they're asking for the number of units. 250,000. 250,000. Two, five, zero, zero, zero, zero. Once I like a human and I believe in what they're doing and I understand their vision, I let my team do a lot of back work. And my team's amazing. When they came back and said, look, we really like this business because it's different, it's global, I said, I'm going to dip my toe in this thing and help them make a good business. And there you go. We're partners again. Brother. It's exciting. I think it's going to be a really exciting venture. you know, give a lot back to the world. With the Chris Birch investment, it's Chris Birch as the investor that matters far more than his money. But getting Chris Birch as an investor is going to be highly strategic for our company. This is Gary. I want to introduce you to your newest partner, Mr. Chris Birch. He already made introductions to some brands. We expect him to help us as we go global because he does business all over the world. And we see Chris Birch not just as an investor, but a real advisor. and he's now part of the operating team. Just wanted to let you know the good news, and I'm with you guys, and we're going to make it happen. Thank you, thank you. Let's do it, let's do it, Chris. Did you doubt for a second if we were going to get Chris Burch to invest? No, of course not. He's our partner. You've got a chance to be our partner and get in on the offering. As you know, it is closing on March 30. Supplies are running out. Last chance to get in. All you need to do is click to invest now. Hi, Jamie! Jamie! So good to see you again! Me too! What's new? You know, a lot of good things. One of the largest global personal care companies. has presented us with a term sheet. Well, congrats. Thank you. Jamie is a fellow entrepreneur who started a product in the wellness space and then eventually sold her company for $100 million. So she's gone through this journey. Proven now has an investment offer. So we want to work with Jamie to get her experience as well as get her thoughts on that kind of opportunity. Tell me more about the offer. Are they looking at a full acquisition or majority? investment? We are only looking at an investment. So they want a partial investment, which is what at this time is interesting to us. We have, you know, turned away many potential series investors because it's not just about the money. Amy and I have always known that what we've created with Proven is very special. So with this decision, there are pros and there are cons. You know, is this the right time for us to take this investment? Do we see them as the right partner for us going forward? What advantages so far have you found in being a part of this kind of global conglomerate? One is our supply chain. We have a lot more opportunity there. Pricing discounts because we're buying at volume. Unilever has been negotiating these contracts and pricing for so many years. Greater distribution. With Proven, we have so much opportunity with the platform that we have. I think there's still so much for us to build. That's why we're thinking that it might make sense to have the help of a global personal care brand to help us as we expand internationally, expand into other categories, so that they can be on our side rather than, you know, competing against us. That was key for me with Schmitz. I knew that if I said no to Unilever, you know, my competition was going to grow more fierce. I mean, it's truly, do you join the family or do you continue to compete against them? And it's tough. Maine has a lot to think about, just like any founder who gets a big investment or acquisition offer. Taking on a big sum of money from investors opens up a lot of opportunity, obviously. But it also brings up new challenges. As you know, a startup moves quickly. As the boss, you're the one in control of the decisions. You have the freedom at Proven to just create products, you know, when inspiration strikes. And we do. You know, if you're acquired or if you have... Investors that have a big stake in your business, you have to get approval for some of these things. Things move more slowly. You know, product development is a little more slow. Of course, when you partner with a strategic, they're going to want to see that you don't have a lot of contracts that are in place that are hard to get out of. Make sure when you're negotiating terms that you don't have exclusivity clauses, so that everything's as minimal and loose as possible. The bigger the... The bigger the business gets, the bigger the challenges, the bigger the stresses. Like when our product was all tied up on store shelves at Target, Costco, Walmart, it was selling well. But I wasn't seeing that money for many, many months. And it's scary. Have you made up your mind yet? Or are you still considering? I think I probably have to pay more attention to these potential partners or acquirers to understand more about them. Thank you, Jamie. Okay, a couple of quick things to know from this meeting. First, a strategic investment is a term for an investment from a company that serves a larger business goal. It happens quite often in business, but you should know that this potential strategic investment is outside the reggae offering to the public. And as Jamie pointed out, it comes with some potential risk. Okay, let's switch gears a bit. Investors, this next segment is for you. Today, three of our issuing companies are getting some real unfiltered feedback on their current offering and future visions from the best in the business. My name is Roddy Moon. I'm a Managing Director at KPMG in our corporate finance practice. So my day-to-day job is actually in mergers and acquisitions. Roddy is kind of more upfront in the process and bringing investors and companies together. I tend to get... more involved once they've decided to do a deal and dealing with the implications of that. KPMG is one of the top four or five accounting firms in the world and it's very hard to get appointments with them unless you're a lot bigger company. Given that KPMG is one of the big four, I want to learn what the different options for us going to IPO, what are the paths, and what are the pros and cons of those paths. And feeling out, are we ready to play in the big leagues? And KPMG is the big leagues. It's a great opportunity. So get out. your pencils we're diving into some numbers well andrew tony thanks so much for coming in nice meeting you nice to meet you let me start with congratulating you on your recent reggae filing yeah that was a big milestone for us we filed mid-february Qualified March 30th, 2021. So for this offering, you're going out with a stated valuation? Valuation is one part art and one part science. The science part really comes down to business fundamentals. There are uniform benchmarks across an industry of what drives value. The art part... is why will one company that seems somewhat similar to another have a very divergent kind of valuation? Some of it comes down to the overall story behind the business. We're coming out with a valuation of four times 2021 revenue. So 120 million pre-money. What support do you have for that four times the 30 million? There's three metrics that everyone looks at. The revenue, the growth rate and the profit margin. But the fourth one is brand equity. We thought four times 2021 revenues was quite reasonable. That's how we looked at valuation. We want to make sure that these founding investors, they got a really fair shake if we execute on the plan. Today, a majority of the sales are direct-to-consumer online. Yes. But you still have a portion that's brick and mortar, if you would. I think this year we'll end up about 60-40, 60% online. I would think that next year we'll start to hit towards about 70% direct-to-consumer, 30% wholesale. So to be clear, do you have company branded stores? We have two retail stores. They're profitable. So with this offering, are there plans to do more? We hope to have 10 Hammett branded stores open sometime in 2023. One other metric, though, that I think is important with DTC businesses is customer acquisition costs. Well, customer acquisition costs at the moment is $140. But during the holidays, that can double because there are a lot of advertisers buying space online. It has been trending up, I think for a lot of people, because Facebook is getting more expensive, more people are trying to use it. So is Facebook your primary sourcing channel? Facebook is at the moment. We do quite a lot of Google and we've started to do OTT streaming, video advertising, Roku, Hulu. Some YouTube, we're testing a little bit on TikTok and learning from that. The OTT has been very successful for us and we'll put more money there. But I don't think there's any doubt that our main customer base is Facebook users. probably early 30s to 55, and household income, 150 upwards. So our customer can afford the high end. There's a huge gap in the market. You've got fast fashion, and you've got highly promotional brands, and then you have luxury brands. Louis Vuitton, Gucci, and Prada over here, and then the white space in between is what we're filling right now. Because in the end, we're really just making handbags. This isn't that complicated, right? We already know more than half of our revenue is coming from the same design over and over. So those two variables are simple. We talk about our average order value. We talk about our lifetime customer value. We talked about our customer acquisition costs. Those aren't just numbers. They're actually just more handbags. So it's very easy business. model to understand and to see that with over 13 years for us to scale it to 30 million, where it can go over the next 13 years if we just keep repeating what we're doing. So our current offering is a $50 million offering. Concurrently, we're going to be exploring most likely a Reg D private placement in parallel or a strategic investment from another media company or others that are around the table. In terms of Your installed user base today, how large is that? We are at 5 million as we sit here today. We have a very unique business. Treble has incredibly predictable user acquisition. And the beauty of that is users in this business equals valuation. in this business. So when we look at monthly active users, we can then measure how many songs they listen to, how many ads they watch, and how much revenue we drive per user, per minute, per hour, per day, per month. When we priced our Regulation A, we valued our users at $50 a user. You can then determine what's our proper valuation. So if you do the math, we're at roughly 5 million users. You multiply that by $50 a user, and that values us at around that $250 million mark. And that's... That's the price prospective retail investors will get to pay. You know, Bob's got a tremendous amount of passion and believes that he's got a really differentiated approach to what some would argue is a market that's sort of already spoken for. I mean, downloadable music, I think, is interesting, is commendable, but again, tremendous amount of execution risk. You had mentioned customer acquisition costs. That's been coming down. So CAC is variable based on the region, the type of phone, type of user. And we see very, very low. CAC in emerging markets. It's really one of our greatest strengths and we expect that to be replicated in other countries. An interesting thing about Treble, are there plans to expand internationally in the next 18 to 24 months, seeing them execute on their plan? will be a good indicator. What's the offering? How much are you looking to raise? So we're looking to raise $72 million in total, $36 million on a $200 million pre-money valuation, and then with warrants for the next $36 million. How are you thinking about what drives that valuation? Is it enrolled students today? Since our Reg D Series A, we were valued at $50 million post-valuation. So that was two and a half years ago, and we're looking on. 3.2 top line, but probably 2.1 million. So I think there was like a 22, 24x multiple. But that was in Silicon Valley. And sometimes the valuation is not just based on revenue, right? It's based on team. It's based on the founder's background, domain expertise, a bunch of things like that, IP, LMS. Ultimately, you will be reporting on those metrics and people are going to want to see trends and developments and progress along all those lines and positioning the business really as a technology company as opposed to just a traditional for-profit education company. From a market perspective there's a different perception of the multiples associated with those businesses. At the core I would say we are a technology company that has taken next-generation training and now we want to deploy it and serve it to the masses. If we are Going to IPO successfully, we are looking at comps around 6 to 7x as a traditional education company. Roddy giving us feedback around... You guys need to position yourself as a tech company more if you're going to demand something much higher. That was very insightful. What is your cost of the education, though, for the student? Typically, it could cost the company around anywhere from $5,000 to upwards to maybe $8,000. Slightly higher if they're going to come to our campus location. So that's kind of our cost baked in, but that's including customer acquisition costs. That's the instructor cost. That's the infrastructure, the equipment. We put a lot into the program. And so you're. We get payback out of the students'earnings and income. Yeah, so we started the ISA program in Q1 of 2020. So we've been running that for about 18 months. It's unique, but it's not unheard of what NGT is doing. But, you know, there's a layer of complexity. It's not as straightforward as a student coming in the door, paying tuition, etc. The way ISA works is if the student's financeable, we've de-risked that. We have a great partner that will advance us a percentage of the tuition cost up front. and another advance when the student completes our program. Right now, we hope to optimize it to at least 80% of our students to be financeable. Then the remainder, 20%, we finance in-house. That means we'll take the risk and we'll take 10% of their income once they get a job. Essentially, you're securitizing. Yes. With the income sharing agreements, that's one aspect. But on top of that, what they're doing then is factoring or securitizing that stream of payments through a third party. And that's not an unusual concept in terms of securitization. Any future cash flow stream, you can sell that and receive upfront payment. But, you know, that's got to be handled, I think, very carefully. Wow, there was a lot there. I hope you're learning more about these reggae offerings as they really dive into their metrics and how they arrived at their valuation. Next, we're looking to KPMG's extensive experience advising companies going through the IPO process to help our founders navigate potential avenues for the future. And as I've said before, there's no guarantee that any company on going public will IPO or even list on a national. exchange. All right, let's head back to the office. There's a lot that companies have to do to prepare to go public and it can be anything from accounting and reporting, getting ready for compliance requirements, it can be setting up corporate governance of a public company, it can be helping them think through how do we scale, all while keeping their eye on the business. So if I put myself in the seat of your investors and they're looking how do I get my return out of this company what's your vision as far as you know the IPO process? I'm supposed to look at people like you're gonna get your money back in like four days. The hardest part was meeting with investment firms was that was always their question. What's your exit and how fast? And I always knew it was the wrong money. I think it'd be wrong to assume that we could do this in 18 months. To build a luxury brand takes a few years. I've said to all of the friends that put money in, start thinking about a five-year timeline. If it happens sooner, fabulous. But we can't compromise what we're trying to build with the brand by trying to take a shortcut. I like to hear you say that. You know, you've got a long-term vision. I think companies that are at your stage are not even as far along that say, you know, oh, 18 months, 18 months goes fast. Bob, what's down the road? What's the road for you? How are you looking at maybe creating liquidity for these investors that are going to sign up for your Reg A offering? So one of the things our CEO did was he made sure that we kept all swim lanes open for life after Regulation A. If we decide to stay as a private company, there's actually a path to doing that through filing a Form 1Z and then taking private money. That's one of the three swim lanes. The other is going public either the old-fashioned way or through an uplisting or a SPAC. Option three. is we sell to someone with big muscles and a huge market cap. I think we need a little bit of time, though, to prove to the world that we can be a multi-billion dollar valuation company now. So we're leaving those doors wide open as well. What are some key milestones that you believe that we should hit to be able to IPO in 18 months? For me, it all comes back to kind of business fundamentals. I think whatever path you choose, at the end of the day, you're going to be... assessed off of your KPIs of your business metrics. Overall enrollment, job placement, customer acquisition costs, these all need to be trending in the right direction because you're going to have to continue to deliver value for your shareholders long term. Now, in terms of going, you know, looking forward, and there's a lot of hype around SPACs. How should we look at that as another vehicle? SPACs are hot right now, and with a SPAC, companies can negotiate upfront with the sponsor. and have a little bit more visibility into valuation versus an IPO. You don't really know until you price. And so in this volatile market, SPACs have become more attractive. So certainly technology industry has been hot from a SPAC perspective. And so you're well placed. Often you're bringing in sophisticated investors right through the SPAC process. So depending on who you choose to partner with, you'll get some benefit there. You know, you might give up a little bit more from a sort of liquidity and control perspective, really just depending on how the negotiation goes. So it's just a matter of, do you want to do it a little bit more at your own pace? And I think that's traditional IPO. Once you start partnering with a SPAC, you lose a little bit of control around timing because it's all about how fast can we go. It was great. It was exhausting. It was a little bit like speed dating. You feed off the energy of these entrepreneurs. I'll certainly be watching these companies to see how they evolve and how they progress. And there's so many areas that KPMG can help these companies, whether it's IT, whether it's accounting, whether it's controls. I look forward to seeing where they go and being a part of that journey with them. I think just about everyone got something valuable out of those meetings. If you want to learn even more or click to invest in any of these companies, you can go to GoInPublic.com. There, we've got more info on these companies, the offering circulars, and direct links to their investor site. Hi, it's Tony again. And guess what? I jumped out of bed today. Super excited I went ahead because that's what an entrepreneur does. Every single day. That's why I launched Hammond 13 years ago. so I can create something that's never been done, the next great American luxury brand. And I ask you to trust me and to join us on this journey. Please go to invest.hammett.com and jump out of bed every day with me because we're doing something special together. Next time on Going Public, these reggae companies have been crisscrossing the country on their journeys to raise capital from the public. But it's time they make a big bet. Go to invest.hammett.com That's right, Going Public is headed to Vegas. All four reggae companies are taking their pitch to the Money Show. Money Show 2021! From a high-pressure presentation... We're disrupting a $155 billion industry....to savvy investors... I do want to know, how many subscribers do you have now? ...to a full schedule of one-on-one meetings... Based on what you've heard, you like the opportunity? ...it's time for these reggae offerings to face the public. We own the Money Show. Treble owns Las Vegas. to invest through an exemption from registration with the SEC called Regulation A. These offerings have not gone through a registration process with the SEC and do not have the investor protection that it provides. And it should be noted that just because the show is called going public there is no guarantee that any company will in fact go public or ever list on an exchange like Nasdaq for example. Bottom line you need to know the risk going in. And Going Public makes no assurances or guarantees that any potential investor commitment or strategies discussed will result in companies'success. Another thing you need to know is that Going Public is operated by Crush Capital. And Crush Capital is being compensated by the companies featured on the show. And some of our mentors have interests in the companies as well. These relationships mean that there could be a conflict of interest between the investors, Crush Capital, the companies featured, and the mentors on the show. We detail all these potential conflicts on the Going Public website at goingpublic.com. I'm Rob.

So if you are interested and you want to click to invest in any of the companies on the show, please head over to GoOnPublic.com and let's get back to the show. We're diving deep into the business models and metrics of our reggae companies and their strategies to raise capital. Trouble is going in for the close on a major investor. I'm going to make sure that I do not leave until he clicks to invest.

While Proven received a different type of outside interest from a titan of their industry. And Going Public heads to KPMG, one of the largest global professional services firms. There, they'll get a close and unfiltered look at their offering.

I hope they give us some real honest feedback about what where we are today and where they think we need to be to go public. Are they on the right track? I guess we'll find out today. Welcome to Going Public. On Going Public you're going to hear from four companies that are open for investment from the general public, including you, the viewer.

The companies have all filed an offering circular with the SEC that you should read carefully including the section called risk factors. Head over to goingpublic.com for more info. Next-Gen T's been in business for about five years. Welcome to the Fullstack Network Associate Bootcamp.

We've grown the business and we've grown the learning management system where it can serve millions of users. But our challenge here is getting those users. You guys all know our mission The question is what?

We want to change a million lives by 2030. So we've got some work to do. This is the time where all of us need to get really synced up. We've called this Leadership Summit to really plan our go-to-market for 2022, because our goal is to change a million lives. But how do we get there?

How do we get millions of users to hear about NGT Academy in our programs? My man, Josh. Hey, what's going on?

What's going on? Welcome to NGT Academy. Wow, I'm so excited. We brought in Josh because he has such creative ideas on how you can really convert the traffic at the top of your funnels. So what's going on guys?

This is beautiful. I want to spend half a day, deep dive, and really try to figure out how do we get to 10,000? How do we get to 100,000 students? Josh isn't just about marketing. He will look at different angles of the business and come up with some really clever ideas.

A lot of people from an outside perspective think, oh, is it another coding bootcamp? If you look at our competition, they are going after... the 30 to 50 year old. Now we created a program four months versus four years without the student debt.

And I love to talk about the student debt because that's the big problem. And we want to go after even the younger demographics before they get into student debt. Well, wait a second.

If you would consider colleges, traditional colleges, universities as competition? Yes. Well, where are they getting students from? High schools.

High schools or veterans, military people? that are active duty. Let's stick to high schools for a second.

Yep. Have you guys done anything with high schools yet? Anything with success? No, nothing significant.

They would enroll or find us? If you catch them early enough, you're preventing the debt load system on America on its own. Trillion accumulated in just the past decade. That's huge.

I mean, that's a trillion, trillion dollar problem that nobody is looking at. But in order to reach a younger demographic or potentially a different demographic, You have to tweak your approach, right? And if you're targeting high school students, where do high school students go? High schools? Hmm.

Who talks to the students? The counselors. My perception would be almost that there is still a needs a paradigm shift.

Like parents just saying, no, you have no choice. I'm sending you to college. If your daughter said, dad, I'm not going to college.

I would freak. See? So if your daughter now educates you and says, dad, there's a different alternative.

It's in downtown Phoenix. And guess what? You can save your money, Dad.

What would you say? I would say, I want to learn more. And you know, I think the way we test this is, I think most parents are like, oh, I don't want to send my kid, instead of going to a physical space, just be stuck at home.

The fact that we're here and have a campus, and have all these facilities, eating, sleeping. Training. What do colleges do? Come parents, check out the dorms. Look at the goat yoga outside.

Like a dog and pony show for parents. Just like a college would say, hey, college is a campus. You have it here.

You've already invested in it. And I like that because it justifies. the capital expenditures required to scale the physical footprint of the business. It builds upon itself.

I like that. That is powerful. This is exactly what we needed. A clear path forward.

Well, listen guys, this was amazing. This has got me jazzed that, you know, I get to be at least a fly on the wall with what you guys are doing. We can change lives and change education.

Howdy folks, Jacob Hess here from NGT Academy, and I have some great news to share with you. We have just reduced our minimum investment. to 250 and with just three episodes left of the going public show time is of the essence so what are you waiting for join us on our mission today and head on over to invest.ngt.academy We are here in Beverly Hills, outside the Peninsula Hotel, where Chris Burch is up in the suite. Monday, Tuesday, and Wednesday, we have pitch meetings.

Yeah. Which is exciting. The process with Chris Burch has been a little bit atypical.

He really invests in the team. in people and his team does the analysis. I love it. You're actually pitching me hard, dude. So after Gary and I left him in Miami, we then had a string of follow up calls to actually figure out how much he was going to invest.

So I'm going there with something called the presumptive close. I am presuming he will be closing today. I'm hoping to get $250,000, and I'm going to make sure that I do not leave until he clicks to invest.

Tell me more about the business. What's going on? Treble is a music app unlike any other in the world. It's on demand.

It's offline. It's full-license library, but it's free for the consumer. The highlights are user growth continues. Every day, we're adding 40,000 to 50,000 users. Awesome.

Revenue. When I joined the company, 10k a month. We're doing like 15 to 20k a day.

That's amazing. A day. That's incredible. So revenue going this way. And new music.

We just signed a deal with Merlin. They're the aggregator of all the independent labels. So we're scaling. We're doing this without adding a lot of overhead. What I like the most is the overhead doesn't go too big, but when you start selling to the masses and they really love your product, they will buy from the advertiser point of view like we've never seen.

We're going to make it work. Actually, we have to formalize it. We do have some business due today. Oh, you know I don't like formalization. We've got to get over to the computer.

Punch it in, brother. Let's do it. I'm going to get Chris Birch to actually invest in the reg A on my computer. A deal isn't closed until it's done.

So I took the liberty of the first couple simple steps of the click-to-invest process. So I put in your name and your email. They asked for social security number.

Then they asked for your income and net worth. So I took the liberty of estimating. some things I read in Forbes about you. The next step, invest in trouble.

How much do you wish to invest in this offering? And they're asking for the number of units. 250,000. 250,000. Two, five, zero, zero, zero, zero.

Once I like a human and I believe in what they're doing and I understand their vision, I let my team do a lot of back work. And my team's amazing. When they came back and said, look, we really like this business because it's different, it's global, I said, I'm going to dip my toe in this thing and help them make a good business.

And there you go. We're partners again. Brother.

It's exciting. I think it's going to be a really exciting venture. you know, give a lot back to the world.

With the Chris Birch investment, it's Chris Birch as the investor that matters far more than his money. But getting Chris Birch as an investor is going to be highly strategic for our company. This is Gary. I want to introduce you to your newest partner, Mr. Chris Birch. He already made introductions to some brands.

We expect him to help us as we go global because he does business all over the world. And we see Chris Birch not just as an investor, but a real advisor. and he's now part of the operating team.

Just wanted to let you know the good news, and I'm with you guys, and we're going to make it happen. Thank you, thank you. Let's do it, let's do it, Chris. Did you doubt for a second if we were going to get Chris Burch to invest? No, of course not.

He's our partner. You've got a chance to be our partner and get in on the offering. As you know, it is closing on March 30. Supplies are running out. Last chance to get in.

All you need to do is click to invest now. Hi, Jamie! Jamie!

So good to see you again! Me too! What's new? You know, a lot of good things. One of the largest global personal care companies.

has presented us with a term sheet. Well, congrats. Thank you.

Jamie is a fellow entrepreneur who started a product in the wellness space and then eventually sold her company for $100 million. So she's gone through this journey. Proven now has an investment offer.

So we want to work with Jamie to get her experience as well as get her thoughts on that kind of opportunity. Tell me more about the offer. Are they looking at a full acquisition or majority? investment? We are only looking at an investment.

So they want a partial investment, which is what at this time is interesting to us. We have, you know, turned away many potential series investors because it's not just about the money. Amy and I have always known that what we've created with Proven is very special.

So with this decision, there are pros and there are cons. You know, is this the right time for us to take this investment? Do we see them as the right partner for us going forward?

What advantages so far have you found in being a part of this kind of global conglomerate? One is our supply chain. We have a lot more opportunity there.

Pricing discounts because we're buying at volume. Unilever has been negotiating these contracts and pricing for so many years. Greater distribution.

With Proven, we have so much opportunity with the platform that we have. I think there's still so much for us to build. That's why we're thinking that it might make sense to have the help of a global personal care brand to help us as we expand internationally, expand into other categories, so that they can be on our side rather than, you know, competing against us.

That was key for me with Schmitz. I knew that if I said no to Unilever, you know, my competition was going to grow more fierce. I mean, it's truly, do you join the family or do you continue to compete against them? And it's tough. Maine has a lot to think about, just like any founder who gets a big investment or acquisition offer.

Taking on a big sum of money from investors opens up a lot of opportunity, obviously. But it also brings up new challenges. As you know, a startup moves quickly.

As the boss, you're the one in control of the decisions. You have the freedom at Proven to just create products, you know, when inspiration strikes. And we do. You know, if you're acquired or if you have... Investors that have a big stake in your business, you have to get approval for some of these things.

Things move more slowly. You know, product development is a little more slow. Of course, when you partner with a strategic, they're going to want to see that you don't have a lot of contracts that are in place that are hard to get out of.

Make sure when you're negotiating terms that you don't have exclusivity clauses, so that everything's as minimal and loose as possible. The bigger the... The bigger the business gets, the bigger the challenges, the bigger the stresses.

Like when our product was all tied up on store shelves at Target, Costco, Walmart, it was selling well. But I wasn't seeing that money for many, many months. And it's scary.

Have you made up your mind yet? Or are you still considering? I think I probably have to pay more attention to these potential partners or acquirers to understand more about them.

Thank you, Jamie. Okay, a couple of quick things to know from this meeting. First, a strategic investment is a term for an investment from a company that serves a larger business goal. It happens quite often in business, but you should know that this potential strategic investment is outside the reggae offering to the public. And as Jamie pointed out, it comes with some potential risk.

Okay, let's switch gears a bit. Investors, this next segment is for you. Today, three of our issuing companies are getting some real unfiltered feedback on their current offering and future visions from the best in the business.

My name is Roddy Moon. I'm a Managing Director at KPMG in our corporate finance practice. So my day-to-day job is actually in mergers and acquisitions. Roddy is kind of more upfront in the process and bringing investors and companies together.

I tend to get... more involved once they've decided to do a deal and dealing with the implications of that. KPMG is one of the top four or five accounting firms in the world and it's very hard to get appointments with them unless you're a lot bigger company. Given that KPMG is one of the big four, I want to learn what the different options for us going to IPO, what are the paths, and what are the pros and cons of those paths.

And feeling out, are we ready to play in the big leagues? And KPMG is the big leagues. It's a great opportunity.

So get out. your pencils we're diving into some numbers well andrew tony thanks so much for coming in nice meeting you nice to meet you let me start with congratulating you on your recent reggae filing yeah that was a big milestone for us we filed mid-february Qualified March 30th, 2021. So for this offering, you're going out with a stated valuation? Valuation is one part art and one part science. The science part really comes down to business fundamentals. There are uniform benchmarks across an industry of what drives value.

The art part... is why will one company that seems somewhat similar to another have a very divergent kind of valuation? Some of it comes down to the overall story behind the business.

We're coming out with a valuation of four times 2021 revenue. So 120 million pre-money. What support do you have for that four times the 30 million?

There's three metrics that everyone looks at. The revenue, the growth rate and the profit margin. But the fourth one is brand equity. We thought four times 2021 revenues was quite reasonable.

That's how we looked at valuation. We want to make sure that these founding investors, they got a really fair shake if we execute on the plan. Today, a majority of the sales are direct-to-consumer online. Yes. But you still have a portion that's brick and mortar, if you would.

I think this year we'll end up about 60-40, 60% online. I would think that next year we'll start to hit towards about 70% direct-to-consumer, 30% wholesale. So to be clear, do you have company branded stores?

We have two retail stores. They're profitable. So with this offering, are there plans to do more? We hope to have 10 Hammett branded stores open sometime in 2023. One other metric, though, that I think is important with DTC businesses is customer acquisition costs. Well, customer acquisition costs at the moment is $140.

But during the holidays, that can double because there are a lot of advertisers buying space online. It has been trending up, I think for a lot of people, because Facebook is getting more expensive, more people are trying to use it. So is Facebook your primary sourcing channel? Facebook is at the moment.

We do quite a lot of Google and we've started to do OTT streaming, video advertising, Roku, Hulu. Some YouTube, we're testing a little bit on TikTok and learning from that. The OTT has been very successful for us and we'll put more money there.

But I don't think there's any doubt that our main customer base is Facebook users. probably early 30s to 55, and household income, 150 upwards. So our customer can afford the high end. There's a huge gap in the market.

You've got fast fashion, and you've got highly promotional brands, and then you have luxury brands. Louis Vuitton, Gucci, and Prada over here, and then the white space in between is what we're filling right now. Because in the end, we're really just making handbags.

This isn't that complicated, right? We already know more than half of our revenue is coming from the same design over and over. So those two variables are simple. We talk about our average order value. We talk about our lifetime customer value.

We talked about our customer acquisition costs. Those aren't just numbers. They're actually just more handbags. So it's very easy business.

model to understand and to see that with over 13 years for us to scale it to 30 million, where it can go over the next 13 years if we just keep repeating what we're doing. So our current offering is a $50 million offering. Concurrently, we're going to be exploring most likely a Reg D private placement in parallel or a strategic investment from another media company or others that are around the table.

In terms of Your installed user base today, how large is that? We are at 5 million as we sit here today. We have a very unique business.

Treble has incredibly predictable user acquisition. And the beauty of that is users in this business equals valuation. in this business. So when we look at monthly active users, we can then measure how many songs they listen to, how many ads they watch, and how much revenue we drive per user, per minute, per hour, per day, per month.

When we priced our Regulation A, we valued our users at $50 a user. You can then determine what's our proper valuation. So if you do the math, we're at roughly 5 million users.

You multiply that by $50 a user, and that values us at around that $250 million mark. And that's... That's the price prospective retail investors will get to pay.

You know, Bob's got a tremendous amount of passion and believes that he's got a really differentiated approach to what some would argue is a market that's sort of already spoken for. I mean, downloadable music, I think, is interesting, is commendable, but again, tremendous amount of execution risk. You had mentioned customer acquisition costs. That's been coming down.

So CAC is variable based on the region, the type of phone, type of user. And we see very, very low. CAC in emerging markets.

It's really one of our greatest strengths and we expect that to be replicated in other countries. An interesting thing about Treble, are there plans to expand internationally in the next 18 to 24 months, seeing them execute on their plan? will be a good indicator.

What's the offering? How much are you looking to raise? So we're looking to raise $72 million in total, $36 million on a $200 million pre-money valuation, and then with warrants for the next $36 million. How are you thinking about what drives that valuation?

Is it enrolled students today? Since our Reg D Series A, we were valued at $50 million post-valuation. So that was two and a half years ago, and we're looking on.

3.2 top line, but probably 2.1 million. So I think there was like a 22, 24x multiple. But that was in Silicon Valley. And sometimes the valuation is not just based on revenue, right?

It's based on team. It's based on the founder's background, domain expertise, a bunch of things like that, IP, LMS. Ultimately, you will be reporting on those metrics and people are going to want to see trends and developments and progress along all those lines and positioning the business really as a technology company as opposed to just a traditional for-profit education company.

From a market perspective there's a different perception of the multiples associated with those businesses. At the core I would say we are a technology company that has taken next-generation training and now we want to deploy it and serve it to the masses. If we are Going to IPO successfully, we are looking at comps around 6 to 7x as a traditional education company. Roddy giving us feedback around...

You guys need to position yourself as a tech company more if you're going to demand something much higher. That was very insightful. What is your cost of the education, though, for the student? Typically, it could cost the company around anywhere from $5,000 to upwards to maybe $8,000.

Slightly higher if they're going to come to our campus location. So that's kind of our cost baked in, but that's including customer acquisition costs. That's the instructor cost.

That's the infrastructure, the equipment. We put a lot into the program. And so you're. We get payback out of the students'earnings and income.

Yeah, so we started the ISA program in Q1 of 2020. So we've been running that for about 18 months. It's unique, but it's not unheard of what NGT is doing. But, you know, there's a layer of complexity.

It's not as straightforward as a student coming in the door, paying tuition, etc. The way ISA works is if the student's financeable, we've de-risked that. We have a great partner that will advance us a percentage of the tuition cost up front.

and another advance when the student completes our program. Right now, we hope to optimize it to at least 80% of our students to be financeable. Then the remainder, 20%, we finance in-house.

That means we'll take the risk and we'll take 10% of their income once they get a job. Essentially, you're securitizing. Yes. With the income sharing agreements, that's one aspect.

But on top of that, what they're doing then is factoring or securitizing that stream of payments through a third party. And that's not an unusual concept in terms of securitization. Any future cash flow stream, you can sell that and receive upfront payment.

But, you know, that's got to be handled, I think, very carefully. Wow, there was a lot there. I hope you're learning more about these reggae offerings as they really dive into their metrics and how they arrived at their valuation. Next, we're looking to KPMG's extensive experience advising companies going through the IPO process to help our founders navigate potential avenues for the future.

And as I've said before, there's no guarantee that any company on going public will IPO or even list on a national. exchange. All right, let's head back to the office.

There's a lot that companies have to do to prepare to go public and it can be anything from accounting and reporting, getting ready for compliance requirements, it can be setting up corporate governance of a public company, it can be helping them think through how do we scale, all while keeping their eye on the business. So if I put myself in the seat of your investors and they're looking how do I get my return out of this company what's your vision as far as you know the IPO process? I'm supposed to look at people like you're gonna get your money back in like four days. The hardest part was meeting with investment firms was that was always their question. What's your exit and how fast?

And I always knew it was the wrong money. I think it'd be wrong to assume that we could do this in 18 months. To build a luxury brand takes a few years. I've said to all of the friends that put money in, start thinking about a five-year timeline.

If it happens sooner, fabulous. But we can't compromise what we're trying to build with the brand by trying to take a shortcut. I like to hear you say that. You know, you've got a long-term vision. I think companies that are at your stage are not even as far along that say, you know, oh, 18 months, 18 months goes fast.

Bob, what's down the road? What's the road for you? How are you looking at maybe creating liquidity for these investors that are going to sign up for your Reg A offering?

So one of the things our CEO did was he made sure that we kept all swim lanes open for life after Regulation A. If we decide to stay as a private company, there's actually a path to doing that through filing a Form 1Z and then taking private money. That's one of the three swim lanes. The other is going public either the old-fashioned way or through an uplisting or a SPAC. Option three.

is we sell to someone with big muscles and a huge market cap. I think we need a little bit of time, though, to prove to the world that we can be a multi-billion dollar valuation company now. So we're leaving those doors wide open as well.

What are some key milestones that you believe that we should hit to be able to IPO in 18 months? For me, it all comes back to kind of business fundamentals. I think whatever path you choose, at the end of the day, you're going to be... assessed off of your KPIs of your business metrics.

Overall enrollment, job placement, customer acquisition costs, these all need to be trending in the right direction because you're going to have to continue to deliver value for your shareholders long term. Now, in terms of going, you know, looking forward, and there's a lot of hype around SPACs. How should we look at that as another vehicle? SPACs are hot right now, and with a SPAC, companies can negotiate upfront with the sponsor.

and have a little bit more visibility into valuation versus an IPO. You don't really know until you price. And so in this volatile market, SPACs have become more attractive.

So certainly technology industry has been hot from a SPAC perspective. And so you're well placed. Often you're bringing in sophisticated investors right through the SPAC process.

So depending on who you choose to partner with, you'll get some benefit there. You know, you might give up a little bit more from a sort of liquidity and control perspective, really just depending on how the negotiation goes. So it's just a matter of, do you want to do it a little bit more at your own pace?

And I think that's traditional IPO. Once you start partnering with a SPAC, you lose a little bit of control around timing because it's all about how fast can we go. It was great. It was exhausting. It was a little bit like speed dating.

You feed off the energy of these entrepreneurs. I'll certainly be watching these companies to see how they evolve and how they progress. And there's so many areas that KPMG can help these companies, whether it's IT, whether it's accounting, whether it's controls. I look forward to seeing where they go and being a part of that journey with them.

I think just about everyone got something valuable out of those meetings. If you want to learn even more or click to invest in any of these companies, you can go to GoInPublic.com. There, we've got more info on these companies, the offering circulars, and direct links to their investor site. Hi, it's Tony again.

And guess what? I jumped out of bed today. Super excited I went ahead because that's what an entrepreneur does. Every single day.

That's why I launched Hammond 13 years ago. so I can create something that's never been done, the next great American luxury brand. And I ask you to trust me and to join us on this journey.

Please go to invest.hammett.com and jump out of bed every day with me because we're doing something special together. Next time on Going Public, these reggae companies have been crisscrossing the country on their journeys to raise capital from the public. But it's time they make a big bet. Go to invest.hammett.com That's right, Going Public is headed to Vegas.

All four reggae companies are taking their pitch to the Money Show. Money Show 2021! From a high-pressure presentation... We're disrupting a $155 billion industry....to savvy investors...

I do want to know, how many subscribers do you have now? ...to a full schedule of one-on-one meetings... Based on what you've heard, you like the opportunity?

...it's time for these reggae offerings to face the public. We own the Money Show. Treble owns Las Vegas.

to invest through an exemption from registration with the SEC called Regulation A. These offerings have not gone through a registration process with the SEC and do not have the investor protection that it provides. And it should be noted that just because the show is called going public there is no guarantee that any company will in fact go public or ever list on an exchange like Nasdaq for example. Bottom line you need to know the risk going in. And Going Public makes no assurances or guarantees that any potential investor commitment or strategies discussed will result in companies'success. Another thing you need to know is that Going Public is operated by Crush Capital.

And Crush Capital is being compensated by the companies featured on the show. And some of our mentors have interests in the companies as well. These relationships mean that there could be a conflict of interest between the investors, Crush Capital, the companies featured, and the mentors on the show.

We detail all these potential conflicts on the Going Public website at goingpublic.com. I'm Rob.

Transcript for:Season 1 Episode 7

Transcript for:
Season 1 Episode 7