William Leonard

Good afternoon, ladies and gentlemen. Welcome back to the Atlanta Startup Podcast. I am William Leonard, your host and investor here with Valor Ventures, a leading seed-stage venture capital fund in Atlanta, Georgia. This afternoon, I’m really excited to sit down with Jason Schubert, former CEO of inBrain. Jason, welcome to the podcast.

Jason Schubert

I appreciate you having me on, man. I’ve been looking forward to this.

William Leonard

Same. And I say former, not as in he was ousted or anything negative, but the team recently went through an acquisition. Jason is really going to share a lot of insight around that for us. Before we dive into that, Jason, give us the rundown a bit about inBrain and then talk to us about your background a bit.

Jason Schubert

Absolutely. Background, a quick high level of inBrain, is we basically help mobile app companies monetize with surveys. We have several different integrations where mobile apps can easily offer surveys to the users where they would typically show ads and send surveys. The value add for brands is that they get more insights into audiences they’re not reaching now. That’s a little bit more about inBrain. As a company, we also own our own mobile apps, in addition to those integrations. For my background, specifically, it’s a little bit interesting. I never actually worked in a full-time role. I came up with this idea in high school. If you want I can go into the background leading up to the company if that works.

William Leonard

That’d be great. I think that would give a lot of perspectives and then show the true trajectory from idea to exit here.

Jason Schubert

Absolutely. The original concepts were nowhere near what it is now. I call it a pinball of pivots. In high school, I had this idea where I could create an SAT app that helps people prepare for the standardized test, the SAT, which is way far from where we are now. But as soon as I got to college, I started learning how to code in order to build that mobile app. I went to the University of Georgia. I went to UGA. I went for finance, too. I graduated with a finance degree. I did freshman year building tons of mobile apps, such as SAT app, games, a workout app, a camera app, a photo editing app. In retrospect, I’m not sure why I actually put so much time into doing that. Because I was putting countless hours into not only building the mobile apps but learning how to design, learning how to market, and I was making zero money. It’s been like this for years, absolutely, there’s no financial incentive to this. I was just building things. One day, my brother sent me a message saying, “Hey, those games that you’re making, you should pay people to play those games.” And that ended up launching into this concept adjusting the games that give people a cut of the Ad revenue that will pay them to play. That started working much better as a concept. We actually rebranded the company as Apps That Pay. When my brother started in college that next year, we had scaled up enough where I was like, “Hey, can you help me? I need to manage sending out these gift cards.” And things like that. That’s when my brother came on to the company to help out. I told him I’ll pay him 50 bucks a month to help out. And he was like, “Absolutely, I need money to go downtown.” From there, we started monetizing several different ways with that same concept of paying people to use the apps but what we realized is that there was this huge discrepancy between rewarded Ad revenue and rewarded survey revenue. It was such a big discrepancy that we decided to go all-in on the market research side. When we did that, we actually ultimately removed all of our mobile apps. And this is at this point in time I graduated college in 2017. We honed all of our focus on market research. We had our Zap Surveys which was our largest mobile app. We’ve focused a lot on market research connections and also building out the algorithms, and building out the mediation for service. We had this pretty advanced yield management system that we’re building. We basically said, “Well, we’re building all this for just app surveys. But we have too much survey inventory for us to handle.” Let’s build this as an integration where mobile apps and games can tap into survey monetization the same way we’re doing it and use that as a revenue source for rewarded units inside mobile apps.” That’s where we took the direction of going beyond just app surveys. In-depth surveys have over 8 million registered members. It’s a decent size mobile app and helped us serve as a good example to start inBrain going into it saying like, “Hey, we have Zap Surveys, here’s how we’re using it, you can check it out.” We started scaling the monetization side of the business by helping other mobile apps monetize with surveys. That’s where we built into inBrain.ai, as our company that was kind of our business-facing brand. We were able to scale that upon the market research side, as well as the mobile app publisher side, ultimately into an exit.

William Leonard

That’s a really great story, man. From working and having your brother as one of your first employees to now having an exit here. It seems like you’ve had this knack for building ever since you were a teen man, like, where did that knack come from to just continuously build these apps even though there was no monetization involved? Was it just curiosity or was it just the love of construction? What was it?

Jason Schubert

Maybe it was blind ambition. I was just building things with no result for a while. But I think it’s rooted in me for a while. When I was younger, I always wanted to be an inventor. Even when I was younger, I would draw up mocks for teams. I was like 10 years old designing maps and things like that and inventing things. I built things out of cardboard. I had a huge stash of cardboard under my bed, I was like eight years old, and I pulled things out of it. I think it’s something that I’ve had. In addition to that, my dad also started a company. I think that for me was a drive where I saw him start a company when I was young. It helped me be aware of that as an option. 

William Leonard

Definitely. I think when you come from a family of entrepreneurs, you’re either on one end of the extreme, seeing your dad and like, “I never want to build a business.” or ‘I want to follow in his footsteps and do the exact same thing.” That’s really cool. You built this business, you started this idea in 2014, and now, here’s seven years later. At what point of building in growth, did you feel like, “Okay, we’re on to something here. We can really have some type of liquidation event. We can have some type of significant market share.” At what point did you realize that the business was actually on to something here?

Jason Schubert

That’s a really interesting question. We never picked our heads up and said, “Hey, we really got something here.” Because we’re just heads down in the business. We are focused on that and I think we focused on our problems more than we did our positive sides of the business. I like to say we operate out of paranoia where we’re, “Let’s build this as defensible as we possibly can.” We’ve had several companies reach out to us. Over the past three to four years, companies have reached out to us about potentially acquiring us. We always entertained those conversations, but they were never great fits, whether it wasn’t a good fit on our end or wasn’t a good fit there. At the beginning of this year, 2021, we actually had four companies come up to us at around the same time, and that was certainly helpful to kind of feel different conversations. One of those ended up working out. An acquisition.

William Leonard

Right. And you mentioned the word “fit”. If there are some other early-stage founders who are listening to this podcast and in your shoes, in a similar fashion they built this company over the last 5-10 years or so, and now they’re starting to get a lot of attention from potential acquirers. What do you think about fit? How do you think, “Is this opportunity right for me?”, “Is it right for the business?” What are some tangible things to think about as a founder and acquisition?

Jason Schubert

That’s something we typically think about an acquisition, you think about the financial outcome of it. Obviously, considering the value of your company and making sure you put all your time and effort into it, making sure that you capture that value is important. But something that we had not before considered as much is understanding your fit within a company from a cultural perspective. How your business will operate and what does your life look like over the next few years working at this company? That’s something that we did not consider at first. But when we’re having those conversations this year, we had four conversations going at once. We’re able to more easily delineate what life would be like at each company, like will inBrains name live on in this company? Is this a good culture fit for our company? Those are definitely really important. We absolutely love Dynata. The people have been amazing. Our fit’s really great. We’re definitely really excited about it. I can’t speak to the construct of the deal. But we’re really excited about the acquisition because personally and professionally, Dynata is a company that bought us, the largest first-party data platform in the world. It complements our business super well. It’s a cliche scenario, one plus one equals three.

William Leonard

That’s exciting to hear, man. I’m glad you all had this event happen for you all. I think the fit is everything. Did you all take on outside VC during the process of building?

Jason Schubert

We never took on any outside capital. We actually never even put money into the business. It’s a little bit of a unique startup. When I first started learning how to code, I built mobile apps and launch them. I guess you could say, I initially put $100 into the company but after that, you can just build and scale. I did all the image design on Microsoft PowerPoint. Built designing on Microsoft PowerPoint, I wrote all the code on Xcode, which is free. I launched the mobile apps, did marketing on any word that had a hashtag, and YouTube then just post it a million times. Basically, that’s what helped get us three to five installs a day. Slowly scaling that up. Every bit of revenue we got, saving it, putting it into marketing, organically growing, and growth hacking, and then from there, we just put money back into the business consistently for all seven years.

William Leonard

We saw MailChimp exit in a similar fashion a few weeks ago, and congrats to them as well. But when you think about the organic growth path, and in growth hacking a startup to exit, it’s not sexy you know. Can you talk to us about some of the pitfalls and some of the hurdles that you all experienced? If you were to go back, would you take on outside funding? Because a lot of founders, I feel like are very wary of VC funding nowadays. They understand that you really want that partner who is going to be that true value add and not just money on the cap table and taking up room in a board meeting. How do you think about, I guess, strategic capital being injected into the business? What were some of the pitfalls that you all face while building organically?

Jason Schubert

It’s different for every business. But for us, specifically, to go to your question of if we went back, what would we do? If I could go back, I would not have tried to raise capital. I think that was a good move for us. Because I had no idea what I was doing in retrospect. There are many intricacies to the business, but forcing by growing organically, you force yourself to learn every single piece. And as the business grows, we build this culture of efficiency, because it’s the only way you can operate when you’re going organically. And that ultimately led us to build a great company. But if we took on funding, I wouldn’t have learned a lot of lessons that I did. And I could afford to make those mistakes because I wasn’t on a run rate. I was just building and growing and I knew I can spend this much money at this point in time. In order to examine the recurring revenue that we have coming in. If we make mistakes, not the end of the world. There are lots of lessons learned over the years and lots of mistakes but it ultimately led us to build the company we did today. Knowing those lessons that we learned, the next company, if I started another one, I would want to raise money. Absolutely. Looking for a strategic partner, I think is obviously very, very important. You have to have the right fit. But I think the main idea around it, I was not a founder, then that that would have been able to efficiently use capital. At this point in time, I feel much more confident about that. I think it depends on who’s taking the capital and what the need for it is.

William Leonard

Definitely. Every situation is not a one-size-fits-all. I think that’s helpful advice there. When you think about innovation in the space when you started building to present-day here, what has been the evolution of innovation within this space that you’ve built in? What do you think is the trajectory for the next decade? 

Jason Schubert

I think it’s a really, really positive trajectory over the next decade. The industry, historically, has been really, really archaic. It’s very antiquated. It’s a really slow business that has to evolve the technology. Right now, the current evolution is to become more programmatic, meaning, less phone call surveys, fewer email surveys, but surveys that are delivered in real-time, and a more of a heavy focus on that. Let’s keep in the first evolution of it, and we’re definitely still in the early innings of that evolution. As surveys, as a monetization unit, they have a bit of a broader appeal. As more surveys are going into the programmatic setting because many surveys right now are still being delivered not programmatically, as more than COVID was actually a big accelerant to that where companies are forced to put their time and energy into what’s the most efficient way to get their insights and going off phone calls and going off mail. We saw a real big influx of survey demand last year. The industry is still heading in that direction. But as more surveys come into the space, come into programmatic, there’s going to be a bigger shift towards shorter surveys that are more ubiquitous in mobile and web experiences, and our better user experience overall. That’s going to help deepen the roots of companies as a monetization unit. Brought in from a user perspective, ability to take surveys wherever be confident about taking surveys, there’s a lot of room to grow from an industry perspective. There’s a lot of tailwind behind it.

William Leonard

I definitely see that as well. I was on the phone with Delta the other day, and they’re like, “Will you stay on the call after you hang up with the representative for a survey.?” And I’m like, “No, thanks.” And I think that’s we’re gonna see more real-time action. Maybe like a text or something or some type of like, quick QR PDF, something that is sent to you rather than spending another five minutes on the phone and things like that. Really excited by what you all have built.

Jason Schubert

Absolutely. One part is like this customer surveys and also reaching people that you don’t know. There’s a lot of room for growth.

William Leonard

Is it correct to assume that you grew up in the metro Atlanta area before going off to college?

Jason Schubert

I’ve always been in Georgia. I grew up in Marietta, went to UGA, and came back to Atlanta. I’ve always been in the Atlanta area.

William Leonard

I was gonna ask was it always Option A to build your company here in Atlanta, in the southeast, or whether were their thoughts to go into another hub of the country to build in? 

Jason Schubert

I never really considered, being honest, moving outside of Atlanta. When I graduated college, whereas more open to moving around, my girlfriend was in Atlanta, who’s now my wife. My parents are in Atlanta. I felt pretty rooted here. Also, everything that I did was building. I sat behind a computer, built an app, and launched. I didn’t have to talk to anyone. That’s something that I wish if I could go back to, I would do more of. I’ve never really utilized the resources available in Atlanta as much as I could have. One thing I realized after college is my roommates were always at work. And I was like, “Oh, I’m alone all day just sitting here, just like working on this company.” Getting an office at the Atlanta Tech Village in 2017 was really helpful because that opened me to resources that are readily available right here and this co-working space.

William Leonard

What’s your take on the state of innovation within Atlanta? A lot of startups at the later stage are exiting, giving billion-dollar valuations, and we’re seeing a lot of early-stage companies building and in really interesting places and seeing a lot of early-stage traction. You started back in 2014, but since you’ve been building here in the city, and within the region, what have you seen in terms of innovation and drivers of growth to say?

Jason Schubert

Absolutely. Atlanta is certainly getting more attention with those valuations and exits that you mentioned. Obviously, as you said, the MailChimp forum was awesome. And it’s interesting, too, because that’s an evolving reputation. I was listening to a podcast the other day that the host was saying, you think this company would be a San Francisco company, Atlanta, so far from that. I think we’re still broadening our natural images. It’s like the startup ecosystem within Atlanta. But overall, I think it’s definitely trending in the right direction. We’re getting a lot more attention. I think that that’s another thing that was pushed forward by COVID is more people are open to hopping on calls that aren’t in Atlanta. I co-founded another startup that’s raising a round right now. It’s been easy to hop on calls with people that aren’t in Atlanta. I think it’s great. More capital going into the city.

William Leonard

Definitely. I’ve seen a lot of investors that I’ve spoken to maybe in Chicago, or the Bay Area, they’re like, Atlanta is on fire. What’s going on? It’s been like this over the last few years. And now people are just starting to take note, and I’m excited to kind of put these other CDs on notice with what’s going on here. Really excited about that, man, and I really appreciate you joining me today, Jason. I think a lot of insight you shared around how to think about a fit when you are having potential acquisition discussions will be helpful for a lot of our founders who were at that later stage, thinking about what’s next for their business. Equally, your story of building inBrain organically and not taking on any outside venture funding is equally going to be helpful for founders at the earlier stage, as well as they think about strategic capital, or just bootstrapping and growing internally. We’re really thankful to have you join me this afternoon, Jason.

Jason Schubert

Definitely appreciate the time. I really enjoyed the discussion. And thanks again.

William Leonard

Thanks, Jason. Cheers.

Jason Schubert

Cheers.

Lisa

Thank you for listening to the Atlanta Startup Podcast. You know, we’re not just a podcast, we’re a community, and we’d love to see you at one of our digital or physical events, go to valor.VC and sign up for an event that makes sense for you. We have events for founders and the investors who back them. Another event you might enjoy is Startup Runway. The Startup Runway Foundation is a Valor organization that provides $10,000 grants to founders who are women or people of color building next-generation software products. Applications are free and we’d love to hear from you at startuprunway.org. And as always, thank you so much to the organizations that make this podcast possible. Not only Valor Ventures, but also Write2Market, a tech marketing and PR agency in Atlanta, Georgia, and the Startup Runway Foundation and Atlanta Tech Park Valley’s headquarters, and also headquarters for over 100 local entrepreneurs, building global businesses. See you next week. Please bookmark the podcast and join us.