UK-based Globechain, a SaaS-enabled marketplace that distributes used corporate items, made around a £1.5 million run rate in 2020, up from £200,000 in 2019.
The company collects furniture, fixtures, construction materials, and other items from major companies in the retail and hospitality industries — items that would otherwise be thrown away. Globechain lists these products online, and charities can acquire them for free. CEO and founder May Al-Karooni calls it “a free eBay with social impact.”
The idea came to Al-Karooni when she worked in investment banking about five years ago. The waste she saw was “kind of commercial madness,” she says in an interview with Latka.
“Why didn’t [anyone] ever digitalize waste and connect these enterprises to people who needed it, like charities and small businesses? …. I just thought, surely we could be like the largest waste company carrying their waste,” Al-Karooni shares.
Al-Karooni built an MVP and quickly landed major British retailer Topshop as her first customer. Globechain signed on 60 of Topshop’s stores during the first year, and offered one year of free services for the retailer. (ASOS’ recent acquisition of Topshop means that the store will close at least 70 brick-and-mortar locations.)
Other clients followed, including the restaurant chain Nando’s and the National Health Service (NHS), the UK’s public healthcare system. Currently, Globechain has 34 customers paying £500 to £2,000 per location, or an average of £50,000 annually for each customer. The company also has 100% retention, although Al-Karooni expects churn might rise to about 5% as the U.K. begins to adjust to life after pandemic lockdown ends.
Source: GetLatka
In addition to its customers, Globechain has 10,000 member organizations that take and use the items. “Taking members” pay for logistics, but not the products. These members are typically charities or other non-profit organizations.Globechain recently introduced internal reuse of products within companies, as well. Customers and taking members are based all around the world: the U.K., Spain, New York, and, most recently, the United Arab Emirates.
In December 2020, customers listed about 10,000 products on the site in 60 listings — about 160 items per listing. About 98% of items go, within 48 hours; GlobeChain only struggles to get rid of used electronics.
Globechain has a team of five, including two engineers and one quota-carrying sales rep (in addition to Al-Karooni, who also sells). Globechain’s CAC is only £600 to onboard new clients.
The company originally bootstrapped for about four years, and then raised £750,000 in 2019. Globechain is planning the equivalent of a Series A round in 2021, with hopes of raising £5 million on a £10 million pre-money valuation.
Al-Karooni believes there’s plenty of room to grow: “It’s a £4.3 trillion industry … and we’re just scratching the base of it.”
What is Globechain’s annual revenue?
In 2020, Globechain generated about £1.6 million in ARR.
What is Globechain’s monthly revenue?
In 2020, Globechain generated about £130,000 in MRR.
Who is the CEO of Globechain?
May Al-Karooni, age 40, is the CEO of GlobeChain.
What is Globechain’s valuation?
When Globechain launches a Series A round this year, Al-Karooni projects the company will have a £10 million pre-money valuation.
Transcript Excerpts
Identifying a problem with a sustainable solution
“My background is investment banking and, funny enough, we [had] just moved offices across the road … and the facilities guys came round and said, ‘Pick your carpet color tile and your new table, and your chair, and a computer.’ I [asked], ‘What are you doing with all this?‘ They [said], ‘we’re just bidding it and buying new assets.’ … I was like, ‘that’s crazy, you’re going to give them to nonprofits charities or people that need it.‘ Obviously at the time … sustainability wasn’t really a thing. There was no pressure on banks obviously to do the right thing, and it’s too much hassle for them.”
Charging strategically when working with nonprofits
“We don’t charge for them at the moment … we work with network effects, obviously from a marketplace perspective. However, there are options to obviously put premium special alerts, that type of thing in there. But what we do get them to [pay] for is the logistics. And we’re just in the middle of building an API logistics in the system. So we’re able to offer career services, which the taking members will pay for. The taking member always pays for the transportation and delivery of the goods. And that way we have almost no no-shows turn up.”
Bypassing advertising to keep CAC low
“We hardly do any advertising with the B2B side, because all these companies are looking for solutions in sustainability. Most of our businesses come through referrals. In the past, it was obviously conferences and going to them. A lot of free events and very little big advertising.”
Full Transcript Nathan Latka: Hello everyone. My guest today is May Al-Karooni. She’s building a very cool marketplace to reuse, based off ESG data. We’re going to jump into globechain.com today. May, you ready to take us to the top? May Al-Karooni: Absolutely. Nathan Latka: Okay. First off, is this a SaaS play or just more of a marketplace? May Al-Karooni: Yeah, it’s a bit different. It’s actually a SaaS Enabled Marketplace. We charge a subscription fee to use the service, but our interface or faces is basically like a marketplace. Imagine like a free eBay with data on social impact. Nathan Latka: Fascinating. Okay, explain to me on average, what are customers paying just on the SaaS side per month to use you? May Al-Karooni: Yeah, absolutely. It ranges depending on the sector, because we work in retail, commercial and hospitality construction, and anything from 500 pounds to 2000 pounds per location. And we work obviously on volumes of locations to do with stores, restaurants, hotels, and so on. Nathan Latka: And how many pounds would you say? 500 a what? May Al-Karooni: 500 to a 1000 pounds. Nathan Latka: Per location? May Al-Karooni: Exactly. Yeah. Nathan Latka: Fascinating. Okay. Give us the backstory. When did you launch the company? May Al-Karooni: Yeah. It was about five years ago. My background is investment banking and funny enough, we just moved offices across the road. Ironically, I used to fundraise for the old school venture capital trusts and hedge funds and property funds. And the facilities guys came round and said, “Picking your carpet color tile and your new table, and your chair, and a computer. And I was like, what are you doing with all this? And they were like, we’re just bidding it and buying new assets. I got chatting to them. I was like, that’s crazy, you’re going to give them to nonprofits charities or people that need it. And obviously at the time I’m going back probably about seven years when this happened, they were like, no, we have nothing in place. Sustainability wasn’t really a thing. There was no pressure on banks obviously to do the right thing and it’s too much hassle for them. May Al-Karooni: Their job is basically get the stuff out and get everyone in. And I’m talking to them. It costs them around 50,000 pounds per person to make the move. And literally we went across the road and we kept the buildings and we had 300 people in the building. I just thought that was kind of commercial madness and why didn’t no one ever digitalize waste and connect these enterprises to people who needed it like charities and small businesses. In essence, what happened was it was the time Airbnb and Uber were just becoming famous in the UK. And I just thought, surely we could be like the largest waste company carrying their waste. May Al-Karooni: That’s basically how it started. And I initially kept my job and put 800 pounds into a freelance developer and built my very first MVP and what took out to market to see who would take it on. And the first client to come back was actually the largest retailer in the UK, which had, and if you notice Topshop, it used to be in the US. And they trialed. I said to them, “Have you any problems with furniture?” And they were like, “Not furniture, but fixtures and fittings.” So these retailers spend millions of pounds a year on disposing of a lot of very bespoke, expensive fixtures that you see in their stores or their window displays and so on. That’s basically how it starts. Nathan Latka: What did Topshop pay? May Al-Karooni: They were paying per store. Initially it was, we did it for free for them the first year, because this is a new model remember. So no one had ever come across like a reuse platform where we give items for free and we generate ESG data as the value of the software, if you like. We have to test it to trial the model outs, so that initially we didn’t charge them anything. We did 60 stores for free for them. And then after the first year, obviously we had certain other clients coming. We had a restaurant chain called Nando’s turn up at the NHS, our healthcare system came on board with hospitals, and eventually we started creating the modeling. We would test with 500 pounds and the reason it was 500 pounds is because- Nathan Latka: Hold on. When Topshop started paying you after that first year test of 60 stores, what was the contract? Did they pay for 60 stores at 500 bucks each. May Al-Karooni: I did 60 stores for free the first year. Because we were testing, because it was brand new. And then afterwards it was 500 pounds per store. Nathan Latka: How many stores? That’s what I’m asking. Did they go [crosstalk 00:04:13]. May Al-Karooni: They did around a 100 stores in the first phase and then they increased it. They actually have 2000 stores in the UK. Nathan Latka: Was this is 500 per location per month or for the year? May Al-Karooni: It’s for the year. Nathan Latka: Got it. That’s a 50, 100 stores, 500 bucks each it’s $50,000 annual contract. May Al-Karooni: Exactly. Yeah. Nathan Latka: That’s great. May Al-Karooni: That’s how it works. Nathan Latka: That’s very cool. May Al-Karooni: Yeah. And actually it works out around 50,000 per year per clients usually. And over the years, actually it developed not just an external reuse marketplace, but an internal reuse. Ultimately it was a reuse and learning system inside the company. And then you could click a button and reuse items externally. It became a 50K per year model, basically. Nathan Latka: How many Topshops? How many customers do you have on the platform today? May Al-Karooni: We have around 34 customers in the UK. We’ve got 10,000 members. They’re the taking members, the people that take the items and we’re in UK, Spain, we actually just launched in New York last month just before Christmas. And we’re in the UAE. We have a partnership with the Royal family in Abu Dhabi and Dubai. Nathan Latka: Very cool. I mean, so can I multiply $50,000 AC times 34 you got like 1.7 million? May Al-Karooni: Not quite that because there was some earlier ones obviously, but yeah. Getting close in the dollar stage. Yeah. Nathan Latka: That’s great. And so if you have just sort of past 1.5 million in ARR, where were you a year ago? So we can get growth rate. May Al-Karooni: Yeah, really interesting. I actually bootstrapped for four years because there was no market cap in the industry. I only got VC funding late 2018, and we got some 150,000 from VC and we’ve been running off that since, actually. We were due for a fundraise last year in COVID, but that stopped everything in the works, especially in the UK. We’ll probably start it up this year again. Nathan Latka: That was revenue? What did you finish the end of 2019 with in terms of revenue rate? May Al-Karooni: Nathan Latka: That’s great. Eight people in 2019? May Al-Karooni: At the end of 2019. Yes, eight people. Nathan Latka: And how many folks today? May Al-Karooni: Today actually we’ve got five. Nathan Latka: Five. May Al-Karooni: Because yeah, just because of COVID and we just basically lost a couple to the US actually they moved back. We’re recruiting again. We will be eight soon. Nathan Latka: Of those five. How many are engineers? May Al-Karooni: Actually, we’ve got two. Nathan Latka: Okay. May Al-Karooni: Two engineers at the moment. Nathan Latka: And any quota carrying sales reps? May Al-Karooni: Yeah. There’s one and me. I classes as a sales rep. Nathan Latka: Of course, you have to count her. Okay, very cool. You only raised today total 750K, correct? May Al-Karooni: Yep. Nathan Latka: Okay. And up to 34 customers. Now, you said these companies like Topshop, those are the 34 customers. They pay $50,000 per year on average. Help me understand the other side of the marketplace. What are the 10,000 sort of you called them takers or charities get? May Al-Karooni: Yeah, absolutely. We don’t charge for them at the moment. And there’s two reasons why the psychology of nonprofits generally have no money. They’re taking the items for free. We work with a network effects, obviously from a marketplace perspective. However, there are options to obviously put premium special alerts, that type of thing in there. But what we do get them to charge for is the logistics. And we’re just in the middle of building an API Logistics in the system. So we’re able to offer career services, which the taking members will pay for. The taking member always pays for the transportation and delivery of the goods. And that way we have almost no shows turn up. Nathan Latka: And how do you quantify the 10,000? Is that ever, that’s taken at least one thing from you over five years or is that just last month? They all took at least one thing. May Al-Karooni: Yeah, no, usually it’s around, obviously we’ve got the 80/20 rule, right? 80% of the clients, usually 20% of the network at any one time. It’s usually around 20% of the network. And what usually happens is what- [crosstalk 00:08:14]
Nathan Latka: What is 20% of the network though? That’s what I’m … May Al-Karooni: It’s a couple of 1,000 basically for the UK. Nathan Latka: Yeah, but what does that mean though? Is what I’m trying to get at. 20% do what on a time basis? May Al-Karooni: I’m sorry, they take per month. Nathan Latka: Per month. Okay. May Al-Karooni: Yeah. They take per months. What happens is an alert goes out when people list items and people tend to go onto the platform then, and obviously you start requesting the things. Nathan Latka: Interesting. And so how many sellers list at least one new chair or cabinet per month? May Al-Karooni: Yeah. To give you an example, we would just look … It’s usually on two or three times a month, it’s quite a regular listing. To give you an example. Just last week we thought it’d be slow. Because it’s the first week back off, obviously holiday season. And we had over 48 listings and that’s over 2,400 products. That were listed and they’ve all got reserved. Things get requested literally in less than 24 hours. And at the moment it’s like 20 minutes. Nathan Latka: So 48 listing in 2,400 products just to December of 2020? May Al-Karooni: No, just last week. Nathan Latka: Oh, just last week May Al-Karooni: From the first of Jan to 11. Nathan Latka: How much total in just December 2020? So we can get a full month snapshot. May Al-Karooni: Yeah, it was around, December actually was quite a busy month. We had around 10,000 products listed on the site. Obviously we’ve been in lockdown- [crosstalk 00:09:32]
Nathan Latka: Across how many listing? May Al-Karooni: Sorry. That was over 6,000 listings. I beg your pardon. Sorry. It was 80,000 listings. Nathan Latka: Wait, so I’m confused. You just said over last week you did 48 listings in 2,400 products. May Al-Karooni: Yeah. Nathan Latka: You’re saying in December you did 60,000 listings. May Al-Karooni: No, beg your pardon. It was 60 listings. Nathan Latka: Okay. May Al-Karooni: Sorry. Yeah. Nathan Latka: 60 listings, 10,000 products. May Al-Karooni: Yeah, exactly. Because we measure the number of products per listing more than the listing volume, if that makes sense. Because for us one listing can be like a thousand chairs or something like that. Nathan Latka: Yeah. Yeah. Well, 10,000 products, 60 listings, what is that? A 160 products per listing on average. May Al-Karooni: Yeah. Pretty much. That’s right. Yeah. Nathan Latka: Yeah. That’s very cool. And so what happens if these products get listed, but no takers want to take them? May Al-Karooni: Yeah. 98% of the stuff does go straight away. The only thing that is more difficult to go is usually broken electricals and that’s an industry problem because it makes people recycle them. What happens is it’s the client that lists, usually the enterprise will have to dispose of it in their normal way. That’s usually incineration, recycling or dumpster. Nathan Latka: I see. Interesting. Okay. You’ve been really capital efficient doing this. If you add up all the funding you raised, you’re at like two or three X that a total amount in revenue, which is great. So very capital efficient. Are you profitable today? May Al-Karooni: We are almost breaking even obviously, because we’ve got less people now. So yeah, definitely in the next month or two, we will be. Nathan Latka: And any plans to raise additional capital? May Al-Karooni: Yeah. I think we’ll do another, like what we class, as I suppose it’s a small series AP for you guys it’s like a five mil round. We’ll probably do that this year. Nathan Latka: What valuation would you target for five million? May Al-Karooni: Probably the previous one was about 4.1 million. I’m not like a crazy kind of overvaluer for this stage, especially in the UK market’s very different from the US so kind of a 10 million kind of valuation for us is fine. Nathan Latka: Pre money? May Al-Karooni: Yeah. Nathan Latka: So you’re going to sell 33% of the business? May Al-Karooni: Exactly, yeah. Nathan Latka: Yeah. Interesting. That’s a lot of dilution. Do you have to raise capital? Can you keep growing and keep control? May Al-Karooni: Yeah, I’m going to keep continue for the next couple of months. Obviously COVID has been quite an interesting period for fundraise, so we’re not to go straight into like a big raise straight away. I’ll probably wait until a quarter two, and see how we grow and then reevaluate everything. I’m the sole founder so I’ve still got quite a lot of control. Nathan Latka: As a marketplace how do you measure churn? May Al-Karooni: Actually, it’s based on the enterprise side. How much they’re paying and up to December, we’ve had a 100% retention, which has been really interesting. I expect probably a 5% going forward just from COVID. Because we deal with a few hotel groups. When they come up for renewal, we might lose a couple of them for a while. Nathan Latka: Wouldn’t COVID help you though, if a hotel has to shut down, it means they have to get rid of all their furniture, which means they’re going to list on you. May Al-Karooni: Yeah. Basically the internal reuse would help the hospitality trade. At the moment, they’re pretty shut in the UK. It’s about just waiting and see, we haven’t lost anyone yet, but my prediction is they’re probably the worst hit, I’d say. From a COVID perspective, actually, it’s been very helpful in a bittersweet way because retailers are closing stores. They’re refurbishing, they’re restructuring their real estates. Actually it’s been very profitable on that side and also construction never really closed as well. And there’s a lot of construction in the built environment. That’s been strong throughout- Nathan Latka: And May on a fully weighted basis. What are you paying CAC wise to get a new $50,000 a year contract? May Al-Karooni: That’s really interesting because basically we’ll do, and it actually costs our business development people around 600 pounds to bring onboard that client. And most of it is, we hardly do any advertising with the B2B side because all these companies are looking for solutions and sustainability. Most of our businesses come through referrals and in the past it was obviously conferences and going to them. A lot of, kind of free events and very little kind of big advertising. Nathan Latka: So fully weighted 600 then. Right? I mean, your challenge then is you mean you would pour tons of money in that channel. That’s amazing economics. The problem is there’s not enough of that channel for you to like go get. May Al-Karooni: No. I mean, every corporate disposes of waste and spends million. We would in the future for sure, we’d have to start spending money and increase that CAC to bring onboard the clients. But it’s a 4.3 trillion pounds industry now is called [inaudible 00:14:12] Economy. And we’re just scratching the base of it if you like on the reuse side. Nathan Latka: Yeah. You haven’t tried then to really aggressively go after new customers because that CAC, if that channel and those economics hold, you’d put a billion dollars in that channel. 600 bucks to get 50,000 a year. I’d do that every day. May Al-Karooni: Yeah, no, exactly. Yeah. We would definitely be ramping up and I think we could ramp up significantly on the next round as well. Nathan Latka: Okay May. Good stuff. Let’s wrap up with the famous five. Number one favorite business book? May Al-Karooni: Oh my gosh. I like Malcolm Gladwell, Tipping Point. Nathan Latka: Number two. Is there a CEO you’re following or studying? May Al-Karooni: Gosh, that’s a hard one. I follow a lot of CEO’s because I like the variety to be honest. Top of my head can’t think of one immediate, but I there’s a few out there that I just follow. Nathan Latka: Number three, what’s a tool that you really enjoy in terms of what you use to build Globechain? May Al-Karooni: Oh, what I used to build Globechain. On our platform we have a [acachat 00:15:11], basically like a WhatsApp chat internally the dashboard, I like that, but from a systems perspective in the company, I actually, I used to hate Slack and I go to all the time now with the team. Nathan Latka: Number four May. How many hours of sleep to get every night? May Al-Karooni: Seven. Nathan Latka: That’s good. And what’s your situation, married, single, kiddos? May Al-Karooni: Yeah. Not [inaudible 00:15:31] okay, single. Nathan Latka: Single. Not married, no kids. And do you mind me asking how old you are? May Al-Karooni: I’m 40. Nathan Latka: Last question. What’s something you wish you knew when you were 20. May Al-Karooni: Oh my God, patience. Nathan Latka: Guys. There, you have, it. May when a big hotel shuts down and they need to get rid of all their furniture they use globechain.com to list that waste product and then charities go pick it up. They processed loads of listings last month in December, 2020, 60 listings, 10,000 products and 98% of that stuff got taken and moved. Those customers pay that hotel chain that shuts down on average $50,000 per year to use the platform to use that 34 customers, 1.6 million terms of run rate today from $200,000, just back in 2019. Healthy growth rate, only $750,000 raised to date looking to raise another 5 million at a $10 million pre-money evaluation sometime during 2021. May, thanks for taking us to the top. May Al-Karooni: Pleasure. Thank you Nathan. Nathan Latka: One more thing before you go, we have a brand new show every Thursday at 1:00 PM central. It’s called Shark Tank for SaaS. We call it Deal or Bust. One founder comes on three hungry buyers. They try and do a deal live. And the founder shares backend dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it. They share it. And the buyers try and make a deal live. It is fun to watch every Thursday, 1:00 PM central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2:00 PM central. Nathan Latka: To make sure you don’t miss any of that. Make sure you click the subscribe button below here on YouTube. They’re big red button and then click the little bell notification to make sure you get notifications when we do go live, I wouldn’t want you to miss breaking news in the SaaS world, whether it’s an acquisition, a big fundraise, a big sale, a big profitability statement or something else. I don’t want you to miss it. Nathan Latka: Additionally, if you want to take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders, you want to get in there. We’ve probably talked about your tool If you’re running a company or your firm, if you’re investing. You can go in there and quickly search and see what people are saying. Sign up for that at nathanlatka.com/slack. In the meantime I’m hanging out with you here on YouTube, I’ll be in the comments for the next 30 minutes. Feel free to let me know what you thought about this episode. And if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. We got to push them away, click the thumbs up below to counter them and know that I appreciate your guys’ support. All right, I’ll be in the comments. See you.