#43 Get This Party Startup in Here

If someone said to you “I want you to throw the party of a lifetime ... And here's 250 thousand dollars to spend … What would you do next?

Personally, I wouldn’t know where to start but I know someone who does...

Julie: ahhh you’re looking for beautiful bars, you’re looking for Instagrammable moments for people like me, and the other 13 million party hosts that are planning large scale events, we love this stuff 

Julie Roth Novack is about as passionate about her industry as a founder can get … so I’m curious to see if that energy … and expertise … will convince the investors to get on board. She’s here seeking $3 million dollars for her startup, PartySlate … 

I’m Josh Muccio and from Gimlet Media… This is the Pitch.

Our investors today...

Jillian: Jillian Manus

Jillian is a partner at Structure Capital, where they’ve invested $98 million so far in high-profile startups like Uber.

Charles: Charles Hudson

Charles is with Precursor Ventures where he’s invested $20 million in over 100 startups to date. 

Nicole: Nicole Verkent

Nicole is a founder CEO who’s previous companies did over $60mm in annual sales. Now, she’s also an angel investor.

Michael: Michael Hyatt

Michael built and sold two software companies for over $500 million dollars and now he invests for himself.

Phil: Phil Nadel

As a serial entrepreneur Phil built companies that sold for hundreds of millions of dollars. Now he manages one of the largest syndicates on AngelList.

All right, on with the pitch.

Julie: I'm excited to be here. My name's Julie Roth Novack. I'm the CEO and co-founder of PartySlate And after planning events through my digital agency career over the last 20 years, I have found that planning events are stressful, they're challenging, there's a lot of different players. It's inefficient And so I saw pain points on the consumer side, the party hosts that have money. I saw pain points on the event professional side - the hotels, the caterers, the venues. Everyone it takes to produce a large scale event.

And when she dug a little deeper, she realized that all these event professionals were struggling with the same thing. Their websites, they sucked.

Julie: And about eight years ago, I used a website called Houzz. Huge, huge website. I immediately got the concept that they're leveraging these photos to build the brands of these professionals And that's what I needed in the events world

Julie’s inspiration for PartySlate came from another startup … Houzz … Houzz calls itself a “platform for home remodeling and design.” Where home professionals … Everyone from the contractor, to the decorator, to the landscaper … Builds these photo-rich profiles on Houzz to showcase their work to an audience that is already thinking about home improvement ... 

And Julie wants to build the same tool … for EVENT professionals … like caterers, videographers, valets … you name it … anyone who wants a piece of the large scale events market. 

Michael: So I’m planning a big party. I go to your site and I look for vendors. 

Julie: first of all, you’re looking for ideas. So let’s say I’m planning a big party. All white parties, pink, themes. You’re looking for beautiful bars. You’re looking for Instagrammable moments. If it’s a corporate party, staging and signage for people like me, and the other 13 million party hosts that are planning large scale events, we love this stuff. We have an insatiable appetite we want to raise the bar. And so this is about raising the bar for these events, and connecting with the best local event professionals and venues We don’t want to be a beautiful Yelp. I love Yelp. It’s a great site. We want to be more like a Houzz.

Michael: So you’ve launched this whole thing?

Julie: We’ve launched two years ago. We have 300,000 photos uploaded to the site to date. We have 4000 event professionals sharing their photos. And we have 150 paying customers. So we were pleasantly surprised that the hotels like it for more than just leads they love it because they can show how they can transform the ballroom. It can be rustic chic, it can be an all-white bar mitzvah, it can be bah blah blah. They want to show someone who doesn't have an imagination, and most of us don't when you see... To be honest, some of the ballrooms are pretty ugly. When you see an ugly ballroom, you can't imagine what it's going to look like. And so on PartySlate we give them that vision 

The key to that vision is the photos. That’s why Julie keeps talking about how many professional photos are on PartySlate. And she says these photos are like marketing gold for the event pros … and for her...

Julie: How we make money - for an elevated presence on the site, I forgot that point, they pay anywhere from 2 to $5,000 to be boosted on the site.

Nicole: Per month or per year? 

Julie: Per year. So about $275 to $575.

Jillian: Who's they?

Julie: Caterers, venues, event planners, decor companies. 

Nicole: Sorry, wait. It's a SAAS platform. It's not a marketplace where…

Julie: So it's not transactional. So let's say you're planning a big event It's unlikely that the main event planner, who was planning that event, would go online, see great venues and click buy. It's just, you're going to visit the venue, you're going to meet with an event planner. It goes offline very quickly.

Phil: You’re doing lead generation, but you're not charging per lead, you're charging for listings and elevated…

Julie: Exactly 

Julie’s business model is simple. The event pros and venues ... pay to be featured higher up on PartySlate. You know how on Yelp the first couple of results you see say “Ad” next to them? And if you’re interested you’ll click or call to learn more. But it’s not a marketplace where you’d just click to buy. 

Nicole: It’s really smart. You’re just ripping off the business model that’s been another niche platform. That’s smart 

Michael: what's the revenue now with all this traction?

Julie: So we started selling five months ago. We have two sales people. We have $340,000 sold in the first five months of our monetization 

Phil: Let’s walk through the numbers. If you said 340,000 sold.

Julie: Sold. Our MRR is 40,000 right now. And our forecasted to be 100,000 by the end of the year

MRR, by the way, that’s monthly recurring revenue.

Julie: What I’m really excited about is where starting to do group sales. What I would lightly call enterprise sales. So a large hotel chain in LA, basically for 40 hotels, is paying us $24,000. Wolfgang Puck - it’s good advertising for them - Catering Group bought nine memberships for all of their catering groups. Not even their restaurants or private spaces but for catering. And they get boosted in our Find a Pro Find a Venue.

Nicole: So you have 340k in revenue from the year so far this year? Or last year?

Julie: That's all in. So that's five months. Within five months. Because we just launched our sales team in December 

Charles: If you were to fast-forward to the time when the business is doing 50, 75 million dollars in revenue, what does the mix look like?

Julie: Of events or pros?

Charles: Oh no, just the revenue mix. Like where the money comes from?

Julie: I believe 25 or 30% is going to come from large scale hotels. So we have people from the big, you know, Four Seasons, and The Ritz, and the Peninsula, and Hilton and others The rest I think will be a mix of the caterers, decor companies, photographers and planners And it's going after these larger scale events. 

Phil: Julie, who are your competitors?

Julie: So the The Knot and Wedding Wire are very mass market and they're great sites. But they say eight out of ten brides come to The Knot, and some of them have small budgets and are doing things do it yourself. And what we're doing is going after people at larger scale budgets, across all party types 

Nicole: Well, you’re going after the event professional, whereas The Knot is more going after the person getting married, are they not?

Julie: We’re going after... We have two sides of our market too. So we have the event professionals. But then we have more than just the bride and grooms. We have the mitzvah mom, the gala host, the corporate planner. Anyone who has dollars to spend on an event 

Nicole: How is this different from Pinterest? Because everyone I know that goes to events, they just Pinterest and they can collaborate on boards. And you can click through and buy the product from the actual website.

Julie: So for do it yourself, Pinterest is a very good solution. We’re about professional planned parties that have more than three event professionals. They oftentimes have a professional photographer at the event. Pinterest, I use it for my kids, you know, rainbow sleep under. I love using Pinterest for that. That’s great. But when you’re planning a large scale event with over 100 people, the stakes are high and you’re looking for professionals and great ideas, that’s where PartySlate comes in to be 

Julie knows exactly what she’s going for with PartySlate. Now it’s time to see, if the price is right.

Nicole: And how much are you raising? At what valuation? What terms?

Julie: So we raised a one million dollar friends and family round about three years ago. Then we raised a pre-seed round of 1.9 million at a 5.5 pre and a 7.4 post. Now we're raising a $3 million seed round at a $10 million valuation 

Nicole: It feels like a pretty high valuation to me for a 300k

Michael: Sounds like you’re eating a lot of money too. You’ve eaten a lot of money. How much have you spent?

Julie: We’ve raised $3 million.

Michael: Well, no, you’ve raised...

Jillian: What’s your burn?

Michael: And it’s almost all gone?

Julie: Yes.

Michael: What did it go to?

Julie: So the first year was building out the core development team and the platform and launching our Chicago city. and as you know with marketplaces, it’s a grind It takes a little bit of time to build up both sides 

Michael: What's your current burn rate a month?

Julie: Our current burn rate is about 100,000. We have 15 people.

Michael: Okay 

Phil: That’s a lot.

Julie: Yeah. So we have a lot of, you know, we have one customer success, we have an editor, we have a marketing person.

Jillian: Why do you have the editor? Because it seems like, that would be something that I would add on later. I would really focus...

Julie: It’s actually driving a lot of our traffic. So the content...

Nicole: It's an inbound marketing person.

Jillian: It's a marketing person.

Michael: It's a chicken and egg issue.

Nicole: I’m just going to go, and just be honest. I’m going to pass. Just because the B2C is a bit murky for me. And it just feels like there’s so many different types of competitors in this space. And plus, it’s a pretty big valuation. Lot of cash. So umm I’m just going to pass just to put that out there. But I think you have a lot of energy 

Nicole bows out early… but there are still 4 investors left.

When we come back, it looks like Julie still has some convincing to do.

Phil: You know, I really want to do this. I like this but umm here’s what troubles me…

[break]

Welcome back. Nicole had just passed on PartySlate mid-pitch… But Julie gets right back to work on the 4 investors remaining. 

Julie: We feel like we're on to something big. And I'll be honest I am less concerned about valuation and where we're going than getting the right people in the room I want this to be a Houzz scale business globally. I don't think there's any reason why we won't be. We just need the right partner 

Phil: And how are you acquiring consumers? Not the venues, but the consumers?

Julie: The consumers we're acquiring in three main ways. Search engine optimization. So with our 300,000 photos, we are a content marketing machine. So The Knot that's been around for 20 years has about 200,000 photos. In our first two years we've had 300,000 photos And then publicity. So we do these launch events with the celebrity planners. And so doing tons of social media. And then finally we're doing a lot of email marketing. And email marketing is getting people in, bringing people back So it's not a stretch for us.

Phil: So when you do the email marketing, for example, what's your customer acquisition cost?

Julie: It's about... To get an email address, it's about $1.50. But we're getting clicks through Facebook and others. When we do paid marketing, about five cents. So it's a very low cost of acquisition 

Phil: How much runway will this round give you?

Julie: This will give us 18 to 24 months. And by the end of that, we want to be at $4 million dollars in revenue. And we want to be in 20 cities.

Nicole: So you’re at 300 now. So you’re going to earn 4 million revenue in two years?

Julie: Umhmm...

Michael: Yeah. I’m going to be out. I have a hard time getting around the model. I think that you’re building a marketplace, and I think this is going to drink a lot of money. And I think you’re going to continue to drink a lot of money. And I think that you’re going to need a lot more money than even what you’re raising to get this thing to scale. So to get your revenues up to 10, 20, 30 million, you’re going to need like maybe a multiple of that. So for me, that doesn’t make a lot of sense. So I’m going to be out.

Julie: Okay. Sorry to hear that 

Phil: Chicago was your first city?

Julie: Chicago was our first. Then LA, Dallas and New York.

Phil: And when did you launch Chicago?

Julie: We launched Chicago two years ago.

Phil: And how much revenue are you generating from Chicago right now? 

Julie: So we started selling in December. We have about 80 or so clients paying in Chicago.

Phil: How much revenue is that?

Julie: So it’s about... It’s about...

Phil: Tell me MRR.

Julie: The MRR is about $20,000.

Phil: From Chicago?

Julie: Yes, mainly Chicago, because we started selling there.

Phil: Right. So about half your revenue

Phil: You know. I really want to do this. I like this but here’s what troubles me. What I’m worried about is you’ve been monetizing in Chicago for six months now. That was your first city where you want to make it work. And your MRR from Chicago is only $20,000.

Julie: But we have a five month onramp for sales people It really wasn’t until December that we turned on our packages and everything on the platform could actually enable the things that we’re selling.

Phil: But still. December. That’s six months.

Julie: Yeah.

Phil: And you’re at 20,000 MRR.

Julie: Well, just in Chicago.

Phil: Wait, wait. I’m trying to look... I’m trying to understand what the big picture, the scope is. How big can this get. And I’m worried that in your first city, which is a major city, where you’re based, six months in you’re only at 20,000 MRR. That doesn’t seem... That’s not knocking my socks off.

Julie: Well we are forecast, and for the US alone, we’ve mapped out a $200 million marketplace. Obviously, everything needs to go right, and it takes some time to get to those cities. But we believe there’s that much marketplace. Our addressable market is about $12 billion dollars. So the amount spent on marketing and sales from the industry So we think the market is huge, we’ve just got to do a lot more on the consumer side, which we know we need to do 

Jillian: If you’re only doing 20,000, back to Phil’s point... That is worrisome. So I’m trying to figure out all the other reasons that you’re not able to sell, especially in your home town 

Phil: You know, the numbers to me at a $10 million pre should be a little bit more impressive.

Julie: Yeah.

Phil: And so that’s my concern. I’m like 95% out now I’m out. But But you know, the other part of it is, the burn is pretty high. And so you’re going to go through that money pretty quickly 

Michael: So what you’re hearing from investors is that your sales need to grow into your valuation. And we see this a lot in this show, where people come in here and raise successively, because they’ve got a pressure system as they take on VCs to keep raising it. And that looks good. But it gets to a point where you hit this ceiling because people are like, but your revenue hasn’t caught up to it. And the story is great, and you’re great. But you’re in this kind of in-between

Michael: Charles, where are you at?

Charles: So I'm a narrow pass now with a caveat. I think the two things that concern me, like Michael, I would... I'd like to better understand the 100k burn in Chicago. We invest all over the country, and typically I see a slightly lower burn, even just adjusted for headcount, in non-Bay Area, non-coastal cities.

Phil: Agree.

Charles: Passing no judgment as to whether it's right. I'd like to understand that. And second, the path for most of the marketplace investments I make, the path to getting big is really simple. Like, I can see it. I'm like, okay, we do this one thing. We're just going to do it a thousand times more often than we do it today. And it tends to be doing the same thing to a greater degree. And I feel like have a… I don't yet in my mind have a clear notion for how all the pieces of your business model fit together. So I'd be open to spending more time with you. I mean, for me, you check one of the big boxes which is you're definitely a subject matter expert in this category. And I don't think...

Julie: I love this space so much. And I love this industry. And I...

Phil: That comes through.

Julie: I love design. And I love the diversity of this industry. It's a lot of women-owned business and entrepreneurs. And it's very, very diverse. And we feel like we're helping this industry become better digital marketers. And I love supporting this industry.

Nicole: Jillian?

Jillian: I think there potentially is a conflict with Peerspace. That's one of my problems.

Julie: I think there is. Yes. 

Peerspace is a marketplace for booking space for meetings, parties, etc … And Jillian's already invested there

Jillian: But I think, for the same reasons, the valuation's too high. The burn is too high. And the revenues are really, They're too low. High, high, low.

Julie: Okay. Well, I can show you the growth on literally five months. It's very, very fast.

Jillian: Yeah, no I understand that. But I always worry when someone says we're forecasting this big growth and yet we're here right now. And I worry that... I think you're super smart. And so I'm not... I'm just concerned 

[byes]

Julie leaves the room without any investment. But the investors are still caught up in Julie’s energetic pitch… 

Jillian: Oh my goodness.

Nicole: Wow. A lot of energy 

Michael: Whatever it is … this is like round number three. There’s a lot of money. And I think you could probably make the argument, yeah, marketplaces take a lot of money. But I think it actually takes more money than she’s raising. I think if she was a Valley company, and Charles correct me if I'm wrong, you’d be 20, 30, 40 million in and you’d be pumping way more cash in and trying to get this thing much, much bigger and faster.

Charles: It takes a long time to get these things going. But I think... I just feel like there were too many moving pieces. 

Phil: more complicated. More difficult.

Michael: Do you feel that after two years she hasn’t quite figured out the business?

Phil: I don’t think it’s that. I think they just don’t have enough sales traction. 

Michael: Because the model...

Nicole: Because they haven't figured out the model.

Michael: Because the model isn't quite correct 

Jillian: Well it seems like a photo platform. 

Nicole: She’s saying no one buys on the spot, so it can’t be transactional. It’s like picking you up in an Uber.

Phil: So it’s hard to prove the value.

Nicole: It's like, I'm doing research, I'm looking at photos. But that's what Pinterest is.

Jillian: Yes. I have 300,000 photos. And then... And so I kept waiting for the 'and then'.

Phil: It's just hard for them to prove the value to their pros on the platform.

Nicole: But she’s a thought leader. And event planners, they have these event pro meetings where it’s like meetings for just events... Like, you know. And they follow the thought leaders like her 

Phil: I'd love to invest in her. I really like Julie.

Jillian: This is a perfect situation where you have a product that you're not quite sure of, but she's the real deal. 

Michael: This is not for me. But she's great.

Jillian: Let's go party all the time.

A couple months after her pitch, I called Julie up. Hoping to hear her side of the story.

Josh: So you didn't get an investment on the show. Why do you think that was? 

Julie: I will just say, when things don't go my way, I always, as a leader, like to look at myself first and that conversation did not go my way and I think there's two or three things I could've done differently. One, it's incredibly important to show the product because it's a highly visual site. And the second thing I would say is marketplaces like we're building, similar to Houzz, it takes some time and there's people that feel, you know, "Hey, you should be further along," and there's people that are blown away by how much progress we've made in the last two years. But I think I should have brought the laptop over and shown the site and actually walk through the mechanics of how our marketplace works. So that's my bad. I think I had an off day. 

Josh: You did bring a lot of energy to the room. and the investors were really digging you,, so I don't know if it was an off day. I mean, it didn't come across as an off day. 

Julie: Well, I didn't get a deal. [Laughing] It was an off day. 

Josh: [Laughing] I guess that's true You know I’m not sure that the investors ever really understood your product. They kept comparing you to pinterest as if that was your competition. which to me showed me how much they didn’t get it at all. And do you think they ever understood your business?

Julie: So I think what they don't get is photos for event professionals are marketing gold I know I've had many talks with Brad Feld, one of the leading VCs in the country and he said to me over and over, “Pinterest is not your competitor,” and we agree 100% We are a portfolio sharing tool that creates amazing content and helps turn this marketing gold, this photo portfolio that exists in dropboxes all over the world into a huge, huge marketing machine. And so I just don't think I described it correctly. It's kind of a concept that when you see it, you get it, and no, I don't think they got that part of our business. 

Josh: So since the pitch, have you been able to close any more deals? How's the round going? 

Julie: The good news is, you know, it was early, early on in my fundraising process a few months ago when I was there. Um, and since that time I'm excited to share that we've raised $2.5 million of our $3 million round. And the great news is two weeks ago, Revolution Ventures, the Rise of the Rest fund, just joined the round. 

Josh: Yeah, Steve Case. 

Julie: Yes, Steve Case. I'm dating myself here, but one of the original reasons I got into digital and this whole crazy online space was when I used America Online so many years ago. You know, I was like, “This is going to be huge.” 

Josh: which steve case, started AOL 

Julie: Yes So to have full circle, you know, Steve Case's fund invest in Party Slate, is really incredible. 

Congrats Julie, looks like all your planning, paid off.

Our show is produced by me, Josh Muccio, Kareem Maddox, and Molly Donahue. We are edited by Blythe Terrell. With editing help this week from Caitlin Kenney and Emanuele Berry. 

We are mixed by Enoch Kim. Original music composed by The Muse Maker. Our Theme Music is by Breakmaster Cylinder.

Lisa Muccio for planning the recording of this pitch.

We discovered PartySlate because of an introduction from Margot Schmorak, who some of you will remember from episode 36, When Two Startups Love Each Other Very Much... If you’re an entrepreneur, and you’re about to start asking investors for money. Go to thepitch.show/apply to apply to pitch the investors on our show - our next taping will be this November in Brooklyn, NY.

You can find us on Twitter at @thepitchshow, where you can let us know what you think of today’s episode, or send a quick note to our inbox thepitch@gimletmedia.com

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