Hello everybody.
Thank you for coming. Thank you for staring. Really exciting.
Just a quick show of hands.
How many of you actually know of Recurly, what Rickurly does just quickly?
Apart from the employees.
Alright. That that's that's a good show.
Just quick one on Avalara, partner of ours here. Understanding, small amount.
Count, anybody on that side.
Alright. And then the the top one, world TV. How many people know -- True world TV. -- true world TV.
One guy. One guy. Yeah. Alright. So let let's just kick off with a quick round of intro so everybody gets to know who is on the panel, I will start with Sasha at the end.
Talk to remote. Hi, everybody.
My name is Sasha Wilson. I'm the senior director of international sales at Avalalora.
Alara is a technology business that focuses on tax compliance. So we help businesses that sell products and services from one country to another help them navigate the the complexities around sales tax, VAT, customs.
We help businesses understand what their obligations are. We help them get registered for the right taxes. And then we've got neat software that plugs into whichever platform they're using to help automate the calculation of filing those sections globally.
Hello everybody. Simon Ballis. My head at the International Partners team at Count.
Count array fraud prevention software solution, primarily working around the payment events. So, therefore, very tied into the world to be commerce, supporting businesses and merchants around their whole, you know, payment orchestration, whether that's increasing the number of transactions seeing or reducing through the impact of fraud.
Hey, everyone. My name is Alan. It's nice to see you all here today. I'm actually a a customer.
So I run true royalty TV which is a streaming service and basically it's the net Netflix for royal watchers. So if you're into the royal family, it's the channel that that I run and it's really big in the US which we'll get into in a minute. And I've had occasion. I'm gonna talk about fraud.
I'll talk about taxes, but in a fun way, I promise.
And I am always willing to be interrupted by the way. So if any of you want to interrupt me at any time, throw a hand up. Thank you.
Thank you all. Just a quick one. Just a quick thanks for Stephanie for arranging the venue.
Ivy for style. So way up my so thank you very much, Stephanie. Appreciate it. But we love to keep this as open and as informal as possible.
So Any questions that you may have for the panel? Steph's got a microphone. She will come over. Feel free to ask it.
I know hardly anybody does ask questions at these things that everyone goes silent, but please just anything that's on your mind. Even if it's not to do with the subject matter, just please ask the question, throw it out there, and the team will be happy to answer it. So thank you.
The session in itself is really to help clients and prospects and partners understand international growth around subscription in in itself, and challenges that clients have when they're, you know, in a single market, they start off a new business, and then they look to break out into, you know, additional regions. What are the challenges that they encounter, whether that's with taxation, whether that's with fraud, whether that's with invoicing.
Even with whether that's with their regional cultural aspects, of how how do they communicate with different clients in different types of countries. I saw our people you hand up for question already.
Boy.
Yeah. Oh, we're excited.
So I'll just kick off with Sasha. I mean, international not. When a client just starts to say in the UK for the first time and then they're looking to broaden their horizons into the European market, whether you're b to b or d to or even b to c.
What type of challenges did he encounter? Where did they kind of trip up at the beginning?
Yeah. I mean, this is this this is a huge, huge part of our business at Avalara. I mean, just kind of setting the scene before that if I can. So if you think about what's going on in in the subscription world. You have subscriptions are growing or booming. I mean, you ask anyone how many subscriptions they have. They might say twenty.
They probably have about forty or fifty. And and then, you know, it's not only pure digital services that are on subscription, but retailers. A lot of retailers, you know, DTC getting into that as well. So you've got that coupled with coupled with a global landscape attacks, which is incredibly complex.
You know, Europe, you mentioned there is is there's got some nuances, you know, if you're selling b to c, to customers in Europe, you need to charge the right rate of the AT and re be registered for the AT and and the the countries you're selling to.
There's other countries globally where, you know, you might not be aware, but, you know, if you're selling to a customer in South Korea or Mexico, you need to be registered for VAT there. Some country, you need to, you know, do some thresholds across as well. So it gets incredibly complex. I mean, I could talk for hours on the US and the complexities there and I'll do that.
Casino as well. But, you know, the US is a minefield as well. You got thirteen thousand jurisdictions there. They've all got their own rates and rules and and ways of taxing.
So so tax is is is is is incredibly difficult.
And, you know, if you get it wrong, it can have implications on you as a business. I think I think that's really the kind of the method key message we we we we say to customers is, you know, we will typically come across a customer at two stages of their of their progression. They are either they've been selling globally. They've been growing fast.
They've potentially triggered obligations in different countries. So potentially yeah. Or the the alternative is they they are trading slowly. And they they they wanna grow, but they wanna be careful about the countries or the jurisdictions that they're going into, make sure they're they're paying the right tax before they go they go ahead.
If you get it wrong, you know, typically there'll be an event. There'll be businesses will find themselves in an event where they're either looking to IPO.
They've been approached by tax authority, and and and so that point, there'll be some due diligence in a business, which will help them understand whether it's gone wrong, what they need to do to fix it, and and and how to move things forward. So, yeah, so I think that's, you know, very one bubbly answer. But, you know, particularly, you know, two two types of business will be the ones that will be looking at tax. The ones who go ahead, you know, out the box fast running, not really a clue in the world, and they try and figure out tax afterwards, and the ones who cannot do it as they as they go along.
Do you wanna give us a quick example, Alan, of international growth for your business and just to the points of Ash Sasha. Sasha and the taxation and the challenges, especially, you know, I have states versus Europe.
Just to start off, I think I'll start with the content. So as I mentioned, it's royal content, royal documentaries.
Another way to think of us as the truth behind the crown. So if you've ever seen the crown on Netflix for the truth, we we have documentaries, we have access to the palace, and so that's how we've That's sort of our IP. That's our that's our unique asset that we sell. And when we came out in the beginning, we were in sick we are still in six markets.
English speaking markets, but we thought we would be big in Canada, Australia, but the United States just came at us like we we wouldn't believe They they started consuming the products in a big way. It was our biggest market. And as you can imagine, the royal family of Britain, and some of you may may not know this. But they are the fourth largest brand in the world.
They're beating out the apples, the Samsung's, they're building they're beating out big brands. And any of you will know that in Britain, big business when it comes to the royals. So it's a great product to sell as you can imagine and in the US there's a deep fascination with anguophilia. There's a deep fascination with history.
There's a deep fascination with the royals and they don't just mean the Meghan's and the Harry's because that fills up the gutter press, but the actual going back to Henry the eighth going back what happened to the to a lot of the royal families in the past. There's a deep appreciation for it, and I will tell you by looking at our analytics, I can tell you what states specifically consume. We we thought we get if we were lucky two hours a month of consumption and some states like Texas, California, Florida. We're getting ten hours a week.
So it gives you an an example of of why. So suddenly, We had a great problem.
We have a market. It's called the US. It's a big country.
Now, I will say that thankfully were based in the UK, so we don't have to deal with the local tax laws, but I will tell you a story about another s law that had to. So we're we're good. We're selling in the US, and our trajectory was such that we came out d to c offering the product on the app stores. We very quickly got our own payment gateway.
Fire recurring because we wanted to control every step of the journey and then we can get into that. But very quickly, we were picked up by the likes of Comcast, Charter Cox, Roku, sling. So a lot of the US cable networks wanted to have us as an add on channel, and that was fine and good, and we were growing quickly. But then when Amazon Prime came along, They put us on there and it just it's a hockey stick now.
It's just the biggest growth channel for us. So we're constantly worried about taxes.
But thankfully, we have a good CFO. I can talk about fraud later because there's a story about that. But one of the interesting things that happened to us is we were in that very scenario you described. We came out the gate.
We had some assumptions. We thought we'd, you know, big audience here. Big audience there. We'll target them.
And then suddenly, whole rule book was thrown out and suddenly we have a hyper growth nation. And that precedes what our next growth plan is, which is to scale horizontally and vertically, so we're gonna not only the British royal family, but will go into other royalties and other monarchies around the world. And with a flick of a switch, we can be in pretty much any market we want. We just need to localize the content and we also need to worry about taxes.
So we're getting there. But that's just a brief story about how true royalty came out the gate and some of the the growing pains that we went through that suddenly became very apparent to us.
Thank you. Simon Ford and the Portland activities with regards to international growth. And challenges that you see?
Yeah. Sure. So, you know, just to sort of double up on what Alan was talking about and the businesses that can't work with, you know, we're primarily focused on world of ecommerce and payments like I said. And then, you know, the world of ecommerce, you know, traditional sort of borders, country borders don't really exist, and everybody's market is ultimately global. So we work with lots of businesses who primarily trying to grow their business and looking at ways to grow their business, moving into new territory, seeing opportunities and interest in their products in these new territories, is obviously a great opportunity for growth. So much like Alan talked about, it's in a market that's got an interest in their product. Brilliant.
Well, you know, overnight scale of the U. S. Specific website, launch our business and offer our solution into that market. But what does that mean from a fraud perspective?
Can we just take our existing fraud strategy and, you know, replicate it in another country. You know, it's it's never as simple as that. You know, you're setting yourself up to fair. If you take that approach, account, you know, ultimately we're making this decision at the point of payment, whether you should interact with this customer, allow them to access your service, or not.
And because we're integrated at the point of payment, we're collecting up to or over a hundred different data points. So we're making a really robust decision on risk. And and, you know, that risk and the tolerance to it and what you decide to exclude, do not allow access to your service versus do allow access to your service, you know, will differ country by country.
Fraudsters, they often look four businesses that are new, new to a market, new to a territory.
So by expanding and growing, terms of the regions that you're selling your service to is a risk for your business. So what count is able to do is take all the intelligence that we're gathering through the data that we're seeing and apply it very specific regionally.
So we can identify potential threats within the world of subscription.
And people might think, well, the associated fraud with subscription and ten, like, nine a month, it's pretty low. It's not something we necessarily need to concern ourselves about And it's really that approach that takes that makes them targets fall forward for us to see this in the is potentially an entry point for them to be able to do something like car testing. They've got ten thousand stolen credit cards details from the dark web. They now need to find a website, find a, you know, a host site that they can bombard with lots and lots of transactions and be able to identify which credit cards have been cancelled and which aren't and which are still open.
To something like a subscription website, you know, has a little or no, you know, fraud sort of outlook or strategy, you know, real real opportunities for these fraudsters. So going into this new region really puts you in the shop window for a fraudster. So being able to utilize count and be able to, you know, lean on us being fraud experts globally. You know, we work across over one hundred and seventy different countries.
Enables merchants to put trust in every single interaction that they're seeing, you know, depending on what country that is, can be a very specific thought profile that you might have in Asia versus Europe, for example. So you know, counter often working with businesses, and allowing them to grow their revenue by branching out into that international expansion piece, in confidence, And for us, you know, we take great pride in that we're supporting our businesses, not just stocking fraud, but actually growing revenue and doing that in a confident and securely manner. You know, we have had instances of businesses ringing us up, you know, in a in a heightened state to say we've launched in this new tree, we're under a massive fraud attack.
You know, what can you do to help us? And then the other opportunity the the other opportunity for count. Is this one? No.
No. That's for the camera. So quickly, what do you do to help them?
Sure. So you know, there's the there's there is the approach Alan is sitting saying, we've got a fraud strategy in place for the UK. We're launching in the US, let's just replicate it. And although, you know, fraud types tend to be very, very similar, globally, you know, how fraudsters are attacking your business can differ country by country.
So with Count, taking all of this data, looking at email, looking at device, looking at IP, we can make it very specific to that country. And what that might be is seeing that the credit card that is being used to open an account in your website can be linked to fifty different devices. So it's this large scale, you know, velocity fraud attack. Or we can see across our data network, so fifteen thousand merchants globally over one hundred and seventy countries.
We're seeing forty billion different interactions globally. And we use that in data intelligence to feed our machine learning, getting any models, to be able to make that decision. So just us understanding that you're launching in this new country will allow us to make a much more refined approach to those decisions that we're making on your behalf. And just taking this, okay, it worked in the UK.
Therefore, we'll roll out that strategy in the US. And do you typically do you typically work with enterprise or SMB type companies or b to b, did you see what work was the mix?
So it's a strong varied mix.
It's an enterprise level fraud solution that we offer.
But via our partners, you know, they offer it sometimes in a more prepackaged solution. That's an easy to use, you know, black box fraud tool, you know, wivery curling, we've got a pre integration into your platform so customers can utilize count. Without necessarily, you know, having to configure their own forward profiles, etcetera.
So we really do have a wide range from, you know, as a US business, we call them mom and pop stores in the US who just want to, you know, transact online securely.
Versus those enterprise clients, the waitrose, the John Lewis, who want to, you know, log in to their account multiple times a day, configure specific rulesets, depending on the product type that they're selling. So we really do have a solution for ultimately everybody but we tend to service that SMB market via partners who integrate and take a more of a prepackaged fraud tool into market.
Perfect. Thank you. And and Alan, any great world TV case studies on Ford?
You asked me if there's fraud associated to the royal family?
Loted question. Loted question. Can I just quickly rewind for one and I owe Sash an apology? I didn't tell the Avalara story. Just real quick, this'll be two minutes and I'm gonna talk about fraud in the royal family, which I'm sure you all hanging around for.
Just on I I work primarily at true royalty TV, but a little club formed of other sfods that I assisted and helped with, and most of it was migrating to recurly or whatnot. But one particular customer that I helped was in the And because we're based in the UK, we don't worry about the taxes, but in the US they had to worry about it. And they suddenly said, hey, we got recurrently working. That's great.
But there's all this local tax and state tax, and I'd forgotten. I'm I'm from Canada, and I've forgotten North America that when you check out, they apply the tax at the checkout completely went out my head. I've been over here for so long. And I said, oh, yeah, I forgot about that.
So to cut a long story short, they said, well, now we're gonna spend all our time doing spreadsheets and figuring out state tests. No. No. There's probably a product out there that does all this.
And so I recommended Avalara, and I never heard from them again, which is a good thing because it's working. So thankfully, this customer of mine ended up using your product in the US and then actually there's another one that came along and I just said, Avalara, and it kind of frees them up to not worry about the tax stuff, which is, I guess, if any of you running businesses is a nice a nice thing.
Fraud.
So when we launched, I wanna paint you a picture.
I'm I'm head of operation, so I worry about the whole machine. And you can imagine one day I came to work and I opened up my analytics and it was this hockey stick of growth and I went, I can't wait to my CEO when he gets into the office and I started digging in and I said I've got a lot of accounts but no one's paying.
What's this about? And of course, this is a new business right? So we're lean, mean, MVP, and start digging in the analytics. There's no account.
Certainly, my CRM system, which is HubSpot has got tens of thousands of new contacts that have just flown and come in in twenty four hours. And I'm going, I don't understand any of this. So I speak to my head of product and he says, No. This is not right.
Something's not right. And then he turns into me and says, I think this is what they call it. You'll check me on this. A brute force attack?
Yep.
So what had happened was even though we're available in only six countries and were blocked in other countries, somehow someone in Brazil had run fifty thousand credit cards through our checkout in the span of a day. And part of the process was they pre authorized the cards, but they also create an account. They don't choose a subscription you're not getting money. And I went, oh my god, this is a mess because now I've got, you know, I was gonna tell my CEO that we had a great day but clearly we hadn't.
So I spent the rest of the week doing cleanup. Well, I did. My my team helped me obviously, but they had to clean up all the CRM system because what this triggers is cost. So because we're on a recurring plan where it's per transaction, that went through the roof.
I think Paypal was on there, So if you imagine that you're on a transaction based program, suddenly you have a huge amount of nickels and dimes that add up to a lot of dollars. So that happened. And then on the CRM system, it pushed us into some new enterprise here where the price tripled for the CRM system. And we said, no, we don't have them an So it's a cut a long story short.
Thankfully, both were currently in HubSpot support. We're able to reset the plan so that we didn't have to end up paying all that money. My team had to go through and scrub all the accounts, and then we were sitting there going, how do we prevent this from happening again? Because we clearly wanna be doing other things with our So that's when we found out about count.
We we installed count on a on our recurly checkout, and we have had other brute force attacks.
But not at the scale of the first one. And so thankfully, it's more like a little bump in the road rather than a big hockey stick of of pain.
That we had to go through. So that that's a real life case study and, you know, as we grow in markets as well, we're gonna have to think about that like when we go into new markets. Someone's gonna try and run fifty thousand credit cards through our checkout, we need to be ready for that because as you say, the minute you pop up in a new country, you're sitting there in the crosshairs of a of a you're probably on some system that alerts, hey, there's a mere shot. Let's go run some credit cards through it. I apologize that I didn't get to any salacious material about the royals, but, you know, it was fraud on a royal streaming channel, so hopefully you're still okay with that.
Any questions for the panel on international growth? No. I've got a question.
And you are the names I actually from the pedigree technical. Yes. You're okay. Nice.
Sorry.
Looking at the royal family you mentioned is the fourth biggest brand in the world, given the the news this year and what happened last year, it's been a lot of venture to raise the the profile of the royal family. So in terms of acquisition for subscribers, that's a kind of natural progression.
We're looking at retention. I feel right now. And the cost of living crisis, retention is now or some people are calling it a year with retention.
What is sort of that forms and processes you're putting into playlists to retain those subscribers.
Yep.
That's a great question. There's there's another aspect to that which is acquisition is now harder.
So if acquisition's harder, if your cost of acquisition has gone up, it's harder to, you know, get a share of wallet in a messy world. You would then wanna spend time on retention because then you you you keep your most valuable customers. So it's a really good question because a lot of challenges have happened to the business, especially around D to C. So a couple years ago, and any of you run a business say five years ago, might remember the face book gambling machine. You could easily put a bit of few bucks in and get a customer spat out because Facebook was in the well, what they like to call the business of certainty.
They could find your customer and they could get your ad in front of them and they could convert at a high rate, and it put a lot of other advertising means out of business. I tell you that as context to say that machine is gone. And so on d to c, we've had to go right. How do we acquire new royal customers.
And part of that is through, to your point, what do we stand for? We're not gutter pressed. There's over servicing of certain content scenarios we stand for history and So there's a lot of that we had to do. But now we're going back to our existing customer base and almost reselling them and reassuring them why they've subscribed to true royalty.
Interesting story.
Our benchmarks around churn, retention are double if not triple some of the best metrics in the business. But the way we underperform is on consumption, so people don't actually watch all the shows that we have on the service, which is scratch scratch our head. Why would they do it? And we sort of figured out it's because they like the brand. It's a bit like a gym or like the economist or like national geographic. Pe if people like the royals, they just wanna have two royals It seems natural even if they don't watch all the shows or underconsume.
So what we don't wanna do is wake certain people up. If they've subscribed for a year and they've forgotten about it. So we we've now adopted a a philosophy which actually is we're in the process of doing now. Which is more around personalization and community, and some of you will have heard that buzz word in the marketing space in the absence of being able to use a a platform like Meta because of all the privacy issues, because of data protection, because of all these things, if a customer gives you their data, you have to treat them with respect.
And you have to treat them in a way that they wanna adore your product. So we're pivoting a lot of our retention strategy around personalization and community, and that spans everything from faxes to the content offering. So how do we start building about a recommendation engine so that people will stick around for what's coming up? We have a show that we do every two weeks So we wanna kinda create some addiction through that.
We have new we have at least twenty hours of content a month coming through, which is a contractual obligation for Amazon. How do we personalize that so people can find what they want? And lastly, with Recurly, we personalize the plans.
We found, for example, if people come to our check out. They don't choose a month. They don't choose a year, but they part with their email address. They start to check out.
We hit him again and say, hey, you you dropped out. But by by the way, there's this other plan we'll give you. It's three months. And we have a twenty percent conversion rate on that.
So with retention, we're doing the same thing. And one other quick story, we're blending AI with actual humans. So we actually have human customer support. And it's a funny story.
The guy that's running our customer support is in Utah, in a town called West bountiful.
Now why I find that interesting is because there's no east bountiful. There's no north bountiful. There's no southbound but there is West bountiful, and he's the most the nicest customer service guy you could ever meet. Why I tell you this story is because during the pandemic, A lot of people were contacting him saying, I just can't afford this anymore.
I just I gotta cut my bills, and what we instructed him to do is keep them at all cost. Give them free months. Give them a year for free. Go back to them.
Be empathetic. And what we found is by adopting that retention strategy, not only do we keep a lot of customers they weren't told their friends. And so we ended up getting good referral traffic. So there was a human element to it.
I I'm I'm a big believer in good customer support. So if you can have a great human being behind all the FAQs and all the sort of chat box that you might put up as a first line of defense, and you and you empower them to give away decent plans or keep people in the system longer and be human, you'll find that pays dividends in terms of retention. And then all the other machinery that recurly allows specifically around involuntary churn and making sure that people don't lose their credit card has brought us down to somewhere between two to three percent churn overall, which is nice because the benchmark is eight.
So so, yeah, I've I've rambled a bit, but it's a mix between great machinery and great humans. And just reimagining the proposition and reimagining how you might build someone in the future if they've been loyal to you for a while.
Thanks, Alan. Any more questions from the audience?
I think some of the keys though is, I mean, we we help launch Paramount Plus into Europe, they're an American client of ours.
And technology takes you so far, but a a big key of of what the all of the panel will do really is help prospects, clients, understand the region that they're launching into, understand the culture of the region, do they churn a lot? How much do they pay for a plan? Is hired, susceptible susceptible to Ford, etcetera. So it's it's really I mean, the the keys for us in Paramount plus was leaning on us with our expertise and benchmarking data to make sure that, especially when you launch in a market and no one's ever heard of you before, how do you acquire as many subscribers for their, you know, the biggest amount of revenue at the beginning?
And then once you've got them on board, how do you make sure they stop from churning? In addition though when you're breaking into new markets, not to have a cookie cutter approach and look to repeat and rinse, look look to take what learnings you've got as a baseline and then listen to the the experts about gaining knowledge about what you should do within the market, and then being able to launch strategically and effectively to drive the the bottom dollar as they say in America.
So just on the international growth expansion. Just key takeaways quickly. Just the top one from each of the audience.
If everyone was to take this away, what would be the top thing that they would need to remember.
From Avelora's point of view, from, you know, putting a tax. Hat on is don't leave tact as an afterthought. You know, think about it with all your plans or your projects.
You know, there will there will be implications if you are gonna be acquiring customers in different territories.
So, yeah, just, you know, stay close to the finance team, accounting team, speak to partners who who know know a bit more about it, but don't it's better to deal with that as an ongoing concern rather than a problem three or four years down the line when there's a big tax field today.
Yeah. And from a count fraud perspective, I guess it's know your market that you're selling into. You don't have to know it inside out. You know, there's relationships that you can probably leverage to know a little bit more.
But just understand that whilst the, you know, world as a market to sell to, you know, looks good, they will require a nuance strategy when it comes to things like payments and fraud. And that's not just to protect your business, but it's to ensure that you can you know, ultimately get as many orders as you possibly can. With risk, it's and fraud, it is a balancing act. What you don't wanna do is, you know, have such a high, you know, fraud risk strategy that you're actually not allowing good of us on board with you.
It's very much a balancing act. So, you know, utilizing your partners and their intelligence that they can bring you will help you, you know, ultimately and and and, you know, bring you insight that you probably weren't ever aware of.
I wish I knew you guys when we started.
I've had the opportunity not just to work on true royalty, but what happened was with true royalty, I I started a brain trust like an SVOD Club where other SVuds came and we all shared information and I think My advice to anyone at any stage of growth who are about to go into a new market is if you can find a club and find people that you can chat to and learn from it is gonna pay dividends because the last thing you need is grenades going off when you're trying to scale on on any level. And so that a SVOD Club for me not only allowed me to learn from others that were in different markets, but allowed me to help them in certain ways.
And so we you know, that brain trust was organic and it grew. And it's it's hindsight's a wonderful thing. Right? It's twenty twenty.
You can look back and you can say, I wish I knew about fraud protection. I wish I knew about taxes But I think nowadays, you can know that stuff.
The market has matured a lot, so there's a lot of veterans out there like me. That have been through a few wars and if you can find find a couple that can help advise your business even for free, I think it's worth doing and worth consulting. I'll add one other thing which, actually, we were discussing, there's almost two types of leadership in a company, technical leadership and content stroke creative leadership. And I've worked to say that with lots of different businesses where they over index on one and under index on the other. And you can imagine what it's like to work with engineers. You don't wanna commercialize anything and how frustrating that can be because they just wanna tinker all day with the tech, and then you can you've got your creative people who just wanna shoot movies and commoditize them, and I'm I'm looking around seeing some nodding heads. And then someone like me is caught in the middle.
I've been caught between those two forces, and I will say, you know, that the learning I have to answer your question is you you gotta sort of identify where to put your energy, where you over index, where you under index, and my CEO said to me, the first day we launched, we're not a tech company because I was running him saying I need this, I need that, I need a team, any developers, any designers, like, we're not a tech company or a content marketing company. So we're gonna just focus on that. You figure the tech out. And so very quickly, there was certain tech partners I joined up with.
We wired stuff together, and the machine just grew because we knew we weren't gonna be a tech business. We weren't fin tech. We weren't SAS. We just needed to go get the best in class engines for our car and make them work.
And that really made my life a little bit easier because it it meant I didn't have start managing loads and loads of different people. So again, I would say try and get some advice where you can and think about where your energy goes in whatever role you're in in the company, try and be smart about where you over index, where you're under index. And if you don't know, ask someone who does, and there's a lot of people out there that can very quickly read the room and sort of perhaps guide you to where your energy is best put, and then success follows. Thanks.
So you just said the the machine grew. So, you know, as you would add, if you added Avalara count other technologies to the tech stack. How much of that becomes automated? So you can increase some operational efficiencies as opposed to being inefficient by having too much technology, too many reports, and then just getting confused about what the next step should be.
Picture it as an equation where how long are you gonna spend chasing your tail? That's the way I like to look at it. So in the beginning like any business, we were using Google Google spreadsheets, we wear color coding stuff, but that doesn't scale.
And so very quickly, you've got to go right. How how do I get a machine if If we go from one thousand checkouts to ten thousand checkouts, what does that mean? And if we go to a hundred thousand checkouts, what does that mean? And so very quickly, you start to look at what I call So in the case of two royalty, there's Recurly VimeoTT.
We were on HubSpot. We're shifting to another platform now.
And we had a an analytics package. And they all work well together. And if all the machine works well together, then think of it like an f one car. You need a pit crew.
You need the people that'll change the tires, you need the people that fuel the car. But if everyone knows what they're doing, and by everyone, I mean machinery as well, then the car just wise, and you just worry about driving it. And so we went through so many growing pains, but I think the saving grace for true royalty was that we had a great opponents. And if something broke, there was someone who knew how to how to fix it or someone who said actually, if you wire it this way, then it'll take care of twenty nine spreadsheets that you're running now to keep of stuff.
And so it was very much just thinking ahead and and kind of running scenarios because everyone likes to sit there and want a successful business. But what ends up you a quick story. There's a friend of mine who was running a an e com business, and he was making bags of crisps, chips like on crisps. And he was getting a hundred orders a week.
And then one day, Sainsbury's came on board and said we wanna order sixty pallets.
So you can imagine going from this to suddenly sixty palettes, and unfortunately, his machine broke because he wasn't ready. He wasn't he wasn't able to tool up quick enough. He'd never run a scenario. He said he could have it in a month, which wasn't true, and it would have taken three months.
And so it's the same with SVOD. It's the same with any business. If if you suddenly step changing, your customer base, your retention, your CRM, your marketing, every component of your machine. If you have great machinery that can do that at the gate like Avalara and like count, which I wish I knew about earlier, then a lot of my problems would have gone away, but I had learned the hard way.
But over time, you you identify fine. It circles back to my earlier point. If there's someone you know in your in your life that has further down the road from you, their knowledge of what machinery you should be using depending on what your ambitions are, will save you a lot of trouble, and don't be shy to ask because it's there was a lot of grenades that went off in my in my day. Thankfully, they're gone now.
And thank you, Simon. Simon, you you mentioned a few times earlier about algorithms in AI.
Can you tell us about before account had any algorithms or AI, what kind of manual processes were in place? And then once you implement a new AI, new algorithm, someone to buy chat to BT or anything.
But how does that now deliver to those operational efficiencies that you're looking to gain?
Yeah. Sure. So before count moved into machine learning and AI, it's always been there, you know, in the background to some degree. Before we heavily, you know, utilize it in terms of making those decisions, consuming all that data, you know, getting more intelligent on a minute by minute day by day basis. We were very much focused on rules with a lot of fraud platforms and fraud providers now.
They're still reliant on that on that rule piece. And what that can ultimately mean, he needs any merchant having maybe three to five hundred different rules on their account to say if x and y equal z, then this is the outcome.
You know, that is very difficult to manage. Rules are very binary.
You know, they're not making, you know, informed decisions. They're not reacting to emerging fraud threats, for example.
So we were actively, you know, rolling out probably three to five hundred rules on customers' accounts, and they're there to identify fraud, to identify good behavior, Nuance and specific to their market, their audience.
You can imagine, you know, what that, you know, means in terms of count manpower, you know, as a managed service and also customers' manpower.
The cost of maintaining those has increased to count having to deliver a lot more know, increase costs to market for our service versus now, you know, we've removed those three to five hundred rules to somewhere in the region of ten to fifteen and utilizing the machine learning and the AI to do that heavy lifting.
All of that is happening in approximately two hundred and fifty milliseconds and, you know, gathering all of this intelligence from the fifteen thousand plus merchants that we work globally is forty billion interactions that we're seeing. You know, all of that data is our first party data network, and it is what is getting fed into the machine learning models. So they're making super robust decisions and what we can see across our network So that's great for emerging fraud to be able to see that, okay, that credit card number or that IP, that device, that email address that you are seeing at this moment in time trying to access your service can be linked to this specific type of behavior. You know, and that is good and bad. You know, we talk about fraud, but realistically, it's only ever gonna probably be around, you know, at maximum one to two percent of all your transactions.
To count is actually able to rather than just spot the one or two percent of the bad people, identify the ninety nine percent of the good, and for a lot of businesses, you know, that's a much stronger story because that talks about, actually, rather than, you know, being able to have some see the doubt that might lead into some kind of manual review on maybe ten, fifteen percent of your transactions to just identify one or two percent fraudsters, you know, what what happens if we can identify the ninety eight and ninety nine plus percent of good customers immediately and allow them to access your service, immediately, you know, like they should.
That is really, really important, and that is what AI machine learning gives us. It it really does the heavy lifting of fraud. So, yeah, really really important to us as a business. Difficult being a salesman and trying to sell your AI and your machine learning being, you know, better than somebody else's. It's not necessarily tangible.
Everybody says this is the best. But, you know, account have been utilizing AI machine learning for over fifteen years now. It was all developed in house. It continues to be developed and maintained, and it's all our proprietary technology. We have over fifty data scientists internally. So you know, real buzzword at the moment AI and machine learning, but, you know, realistically, we've been doing that for about six or seven years now.
Thank you. Perfect. And just Sasha, I had a CFO ask me the other day.
They were very manually operated. They trusted the numbers that they put into the system for taxation, so then they knew it was true.
As soon as we start mentioning, it can be operationalized, automated, all of a sudden, is that trust and credibility that came into a question? Of how do we know that they're gonna be right? How do we check that they're right? How do we just trust you, especially we're we're in a hundred thirty two territories?
So how do you overcome that challenge?
Waringly, it's not just that once here. I've had quite a few people think that as well. So not not many businesses will have been aware of or implemented a tax engine before. Not something that everyone has to do once they start out.
And when they are told that depending on the countries they're selling to, the customers where their customers are located, that they're gonna need to calculate tax on every single transaction.
You know, the the the default answer is, okay. Well, let's see if we can figure it out ourselves.
Let's get a spreadsheet. Let's get all the countries. Let's figure out what the tax rate is. Let's hard code that in our ERP or in our building software or in our ecommerce checkout. And when, you know, customer a buys this product shipping to that country, we can just figure it out. Brilliant.
If there was that easy, we wouldn't have built up the business we have. And and, yeah, it's just not it's not scalable. It might work on that day one that it's implemented, but it's not gonna work day two onwards. Unless you are willing to invest in a team or, you know, technology to keep that updated, keep that maintained, check the logic within that as well. You know, we have software that that calculates and and ultimate sales tax and BAT and GT's globally.
At one point, up until about five years ago, I think we had about a thousand people about five thousand workforce were tax content researchers.
This is a vast army of people that are that are scouring.
They actually love doing it as well. But this is they actually love scouring tax authorities' websites for changes in rates and rules and making sure our top tax software is up to date. You know, that's how we could always say accurately that we're always gonna have the right tax rate because we've got an army of people doing it. To your point as well, we've actually now moved into into a bit of AI.
We've actually got some software that that that that that hasn't taken by all those thousand people, but we still need that that human touch as well. But a huge part of us being able to calculate tax is having the content and and and it being accurate. So the answer to your CFO answer to everyone else who's thinking of doing it. Just don't bother.
It's gonna be costly both in terms of the project that you're doing that you're gonna have to redo and and and purchase eventually.
And and, you know, the the cost of getting tacked wrong and the reason why people are bothered about having a tax engine is because it can really have an impact on your business. If you are approached by a tax authority, You've not been paying the right taxes for five years, ten years, whatever it is. That tax authority can go back as long as you've been trading. And not only recoup the taxes that are due, but the penalties can be sometimes fifty percent of that tax.
The interest on top of that as well. So if you're serious about trading in all the markets you're you're trading in and you're serious about sustaining that business there, and it it really pays to be on top of that. And and, yeah, automating it. Using technology to do it is probably the key.
But just I mean, the key message that you're saying as well is, know what your strengths are, know what your core business is, focus on that, and find the right partners who have built their businesses around these little nuances around recurring billing, around fraud about around tax compliance and and really really calling the experts when when needed.
Yeah. It's quite funny. When I asked the CFO, what happens when it goes wrong then? He's like, yeah, fire George. If I put in another system, I don't know who to fire.
It's kind of a risk versus reward.
Any questions on automation and organizations automating and to end processes?
No. Should there be a quiz?
There'll be a quiz afterwards.
Next subject matter is one that I hear a lot. It's a build versus bias. So we typically talk to a lot of subscription firms. Obviously, we sell subscription software.
But you get you get two types of subscription companies. You get a company where all they do is subscription. They do nothing else. And so the heart of their organization is selling subscriptions.
So it's the life blooded, you know, the life blood of the company, the subscription platform, and it's more of a full and operational solution.
And then you would get another bigger organization where you know, that they could be a multi billion dollar company, but only three percent of their revenue run through subscriptions.
So the way that they look at the solution is totally different.
And a lot of the times, we get companies coming to us where they've started as SMB, smaller organizations, where to your point earlier that they said they were a tech organization, they they built out their tech solution and they happen to sell content or they happen to sell product buy a subscription, and they they build a system, and then they've turned around and realized that they're not a subscription company, they're not a billing company, they're not a taxation company. They're not a Ford company. So all of a sudden, they have to go through a mentality shift, more of a cultural shift. Of who they are today, what type of solution they need moving forward.
And a lot of the times we speak to companies when they're actually on fire as opposed to thinking they're about to go on fire. It's kind of that they get to a scale point where all of a sudden they turn around and their ARPU, they they they measure themselves on average revenue per user. Across the organization, the ARPU starts getting hit dramatically.
And then they start looking at then different organizations of how they can solve that solution. But they've gotta talk internally because they've gotta change the inception of the tech team, the engineers, the product team who can't release new products quick enough because the engineers can't build it. The operational team where to to move an order through an organization takes forever. And then for the marketing team on acquisition, on how they, you know, launch and message their new products to market. So it becomes a really unique interesting conversation about twenty five, thirty percent through their life of them trying to change.
Just on your on your side, Sasha, do you what type of challenges do you see with a company that is either deciding them in SMB, let's just they're a startup and they're about to launch for the first time and they're like, yeah, we can do everything ourselves. We're heroes. And then you get a oh, the odd where you have a big organization where they're like, it goes back to your point of you have hard coded the spreadsheets, everything's in but if we go back to the COVID era, where countries were changing their tax rates overnight. So like all of a sudden, there's a massive impact of how to handle that.
Yeah. I think I kinda touched on this and and my last answer, but, you know, it's you know, you do get you do get two types of business, you know, the ones who are really, you know, ahead of the curve, knowing what's going on. They they they know the trajectory and they're on top things, and they are you know, they're building with that growth as well.
Getting it wrong is is is is to be avoided at all cost. And I think I think that's that's really the the key. And and again, it's not really gonna hit hard with a lot of businesses until they have been approached by that tax authority or or they aren't able to ship their goods, you know, from one country to another, you know, if their shipping is or goods, because they haven't got the right customs duties or or or h s codes. You know, it it it sometimes takes something horrible to happen to actually figure out exactly what that problem is and how bad a problem is.
So yeah.
I don't know how much more to add to that than the the question earlier.
Can I have one for you? Alright. Yeah. That's the point, I think. It's it's like people is on fire before they they realize that there's a problem.
I they've been attacked by Ford and they're like, oh, ouch. I should have paid for that off for upfront or I should have had the conversation or the tax man is knocking on the door and the conversation should have been well, I should have been more stupid. So it's kind of challenge sometimes is how far can you bend the the rule to be able to circumnavigate it, but I think you've got a a good antidote all.
Yeah. Yeah. Okay.
I've been burnt many times.
Earlier I talked about what now if we get mystical for a minute, the yin and yang in a business, a tech versus the creative, where people put their focus and energy into your point in a startup, everyone's eating each other's lunch, and everyone's got an opinion, and everyone's being consulted And at some point, you have to lock in and focus on what you're good at and what an outsource where you're not good at. One of the issues recently that happened at shoe royalty is we came out the gate thinking we were gonna be a D2C company. We were gonna sell straight to the customer. We're gonna have a nice high ARPU even with count and Avalau, not Avalau, but counts and all these things, we still had a great margin on our price and we thought this is the future.
We model our business on that. And then we found it was hard to acquire customers in volume until we got onto the b to b platforms, which take a a massive rev share but they give you volume and lots of headroom. And so we started looking around at other customers and we had a bit of an identity crisis which is kind of the point of of what your question was, but we looked at charts of other SVots and how much of the subscribers were third party versus direct And we were amazed that in our niche SVOD vertical, eighty to ninety percent of their of of our competitive not even competitors, but I guess comparative companies were Amazon.
And we looked at that and said what kind of business do we wanna be in? Do we wanna have a direct to consumer play, where we control everything, where we have a relationship, or do we wanna sell a lot of subscriptions at volume, or do we wanna be both? And it turned out the discussion went very quickly to we wanna do both. So now we were looking at okay.
There's two types of customer. There's your television, lean back, one click checkout customer, which we could sell the product to. And again, We have to use closed ecosystems, and we have to use, you know, a different way of marketing. But let's we've got recurrently over here, and this is to your earlier point.
What can we do with this, well, we could sell subscriptions, we could sell merchandise, we could we could we could up sell people, we could start a gifting shop. So if Someone wants to buy they're not interested in royals, but their aunt might be interested in royals, well, we they can buy a subscription to two royalty there. So we looked we kind of drew a line down the middle of a board and said all the stuff you can do in Amazon is about that long, but all the stuff you can do in D to C is Yay long. So now how do we gift?
How do we create multi multi month plans? How do we create a lifetime plan? How do we create a referral program? How do we create?
And so all the stuff you can do to, indeed, to see is still valid.
And we don't have to reinvent the wheel. All we have to do is set up new landing pages because the engines do the rest. And so we didn't try and bore the ocean to an earlier point. We didn't try and make things complicated and go out and acquire too much tech.
We had wine engine that does all this stuff, but we had an identity crisis in terms of what are we and we very quickly said we are a content marketing business, not a tech business. Thankfully, the tech takes care of itself. Amazon does what Amazon does, and we can focus on some of the fun stuff here on the tech stack that works. And all we have to do is create new landing pages and put some new CRM flows in.
And so, thankfully, that saved my bacon because it could have got very, you know, very early very quickly had we not had those systems in place Had we not decided at the beginning, we weren't a tech company, and we weren't gonna hire loads of developers and designers. And thankfully, it's it saved our bacon. So now when we talk to investors, and now when talk to shareholders. It's very easy to say, look.
We're just a subscription business today in six countries with one loyal family. Imagine what we could become globally with all the royal families plus all these other revenue lines that we can switch on overnight. And that that makes the conversation much easier as you might imagine than we've got a burning platform and the taxman's after us, and Brazil just frauded us last night and, you know, it it makes it makes my life as an operational person much much easier.
Thank you. And I think some of the key takeaways there is yeah. It's it's this software as a service, but it's a lot about the service that's in the software.
So how is the company supporting you? How do they bring in, you know, as you mentioned, Alan cohorts to the table, like minded folks so you can learn as quickly as possible about what to do and especially not what to do. So One of the key takeaways that I would love everybody to have is more about when you're talking to anybody whether that's around any technology stack at any product. Our in the market is really honing in on the service because of a software as a service. How that company's gonna support you ongoing during your growth, what type of reports can they give you, what type of learnings, how can they bring you to, you know, educated partners, whether they need them today or not? How do you get to understand the information early?
And if something does going wrong when things do go wrong in the world, then, you know, how you're gonna get supported? How's that gonna be action and how you're gonna be responded to? So they're key things. So Just getting thumbs up over there in the corner. It's like being on Britain's got talent.
So I'm not being on Brit's got talent by the way. So thank you all for your time. Really appreciate it. Or any of the the guests aside if you need to have any conversations.
Wrap tea, coffee, sweets, cakes, champagne, whatever you need to. Thank you all very much for your time. Appreciate it. Thank you, everyone.
