The Online Giving Revolution of Nonprofits with Scot Chisholm

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And welcome back to the Tacos in Tech podcast. I'm your host, Neil Bloom and we have a return guest on the pod today, Scott from Classy. Hey, Scott, thanks for coming back on the podcast.

How are you? Good to be back.

Yeah, it's really good to. Good to see you from afar during the pandemic right now, but I'm really excited to catch up and hear how you're doing. How Classy's doing. A lot of big news lately, but for our new listeners, you want to give us a quick overview of what Classy is.

Classy is a social enterprise that helps nonprofit organizations maximize their impact through a suite of fundraising tools, online fundraising tools. So it basically helps nonprofits raise money online and connect to a younger generation Naturally, a lot of the tools that we use essentially attract the organization to a younger demographic. A lot of our nonprofits, the average age of a donor, believe it or not, is like 60 or 70 years old. And so they're looking to really start to build a donor base with younger folks. So it's kind of twofold. We're based in San Diego, of course. We work with about 6,000 nonprofit organizations from all sizes. Some of the smallest volunteer led organizations in our community, all the way up to some of the largest nonprofits in the world. Received donations from over 190 countries. And we've raised now $3 billion across the platform since we launched in 2011. And this year we crossed 1 billion raised. So we're now doing over a billion a year, which was, you know, our BHAG from, you know, the foundings, the first all hands we ever had. BHAG is a big, hairy, audacious goal from Jim Collins. Is good good to great. We threw that on the whiteboard or something and said, wouldn't it be AM someday we could raise a billion dollars a year. And I think it's supposed to take you 15 to 20 years or something like that. And we were super grateful to do it in 10, almost exactly 10, like literally on the dot, which is kind of crazy. So that's classy in a nutshell.

That's awesome. On the last podcast, which we'll have a link in the show notes, we really dove into the backstory, starting from the pub crawl to what it is today, which is pretty amazing. But I don't think we were really understanding what was going on at the time. During the last podcast recording, you had just raised your series C, I believe, and from all intents and purposes on the outside, booming, right? You're growing, raising later stage capital, hiring a ton of people. But maybe let's dive into that story a little bit. What's it been like since then since that last fundraise to now pre pandemic also?

Yeah, I think when we spoke it was probably in 2018 or so. And you know, it's always funny because, you know, articles are written, people cover your startup and you know, what's going on behind the scenes is more like a roller coaster ride, no matter what, right? Like the entrepreneurial journey is far from the pristine up into the right curve that TechCrunch usually portrays. It's all over the place at the end of the day, as long as you're going up into the right over time, like that's good. But there's all these ups and downs and twists and turns and all that stuff. And so yeah, when we were talking in around 2018, we were going. We were probably at one of those low points, you know, that we were digging through. Little benoist to most people. You know, I'll start, I'll zoom out a little bit though. We've had a really rewarding kind of fundraising experience. Generally the investors that we've brought on have been, you know, mostly fantastic and I think I feel very fortunate for that. In the very beginning, it was very difficult for us to raise money though. You know, one would really even touch Klassy or anything we were talking about, you know, with a ten foot pole. Like they were like, I don't understand, like you're helping nonprofits. Like are you a nonprofit? Are you raising? Are you asking me like a donation? Like, I don't understand this. And so it was just really hard to break through like that. There was this thing called social enterprise. And now, you know, the B Corp movement is connected to this and you can actually kind of hit both sides, right? Like you can have a business opportunity but actually be, you know, you know, a force for grid in the world, whether that's through your own values or the actual product that you bring into market. So it was a little bit awkward in the beginning. And we ended up raising money mainly from angel investors, you know, successful entrepreneurs that, you know, were really philanthropic and later, you know, stage in their career and that was a successful formula. Eventually raised money from Salesforce Ventures, Bullpen Capital and Hinge Capital, which used to be called Venture 51. And they were really the first institutional investors to take place a bet on us. And then Mithril Capital followed on from there. And the theme with all of those folks was long term thinking. And we got really lucky because Mithil, for example, they don't even have a fund life per se in terms of their investment you always get. The advice I got was ask your prospective investor what's their fun life? And usually it's seven years is the average for venture, but for private equity it could be shorter. But how that affects an entrepreneur is you might get external forces that are out of your control, pushing you for an exit or liquidity in your investment. It's quite important. I never asked any of those questions, by the way. I just went in, it was all gut and maybe that wasn't the best move. But I was very fortunate that that group of investors was very long term thinking, didn't really have a fun life and just was Very supportive of think big. And then we went into our series C like you kind of, you know, I'm coming all the way back now. And we partnered with a group that was kind of fundamentally different and not just because of who the firm is, but because of the type of money it is. And I think this is probably the biggest lesson for entrepreneurs. They talk about the difference between venture capital and private equity. Sometimes there's no difference at all. Like it really is firm dependent in some cases. But if you were to paint a broad brush across it, venture is a little bit more risk taking, they're a little bit more longer thinking and they're okay if like 8 out of 10 of their investments either just return the money or fail because the two or three that hit big and it returns the fund and then some. It's a different model than the private equity model, which is more Warren Buffett, which means we don't lose money. So there are usually a downside kind of thought process which means I'm going to protect my downside at all cost versus I'm going to bet big on a bunch of these and hope one explodes. And you know, that is easy to kind of understand, you know, when someone tells it to you, but then when you kind of live it and you live through a board, a board experience and sort of decision making on a day to day basis, it's far different. And, and frankly it's, it's a huge deal. And so that's kind of what happened to us. You know, we took on investment, it was from private equity and they kind of swam downstream a little too, a little bit. We were only, you know, I'd say, you know, more like a series B company revenue size raising a series C round. Like we were really, the momentum was strong and we probably could have waited but we didn't. We just leaned into our growth and we raised maybe a little bit prematurely and so they swam downstream. We stram up swing. This is a little bit of an oddball fit to begin with. But the bottom line on this was, you know, it was, it was a clash of kind of like long term venture thinking and more short term like profit centric quarter by quarter thinking. And that was really, that was a brutal kind of board cultural shift and it led to a lot of, you know, honestly friction to the point where the relationship was very, very frayed and we didn't know if we were going to come back from it. You know, there was a lot of moves made where both sides and by means sides not like me Sides. But, you know, investor and rest of the company, you know, basically decided to part ways. I mean, we initiated it. I don't know if you've had. You've had a lot of guests. I don't know if you've heard of a story where, you know, company buys out series C investor. That's literally what happened. You know, we initiated it. It was really, again, it was like. It was a perspective and values thing for us, you know, perspective meaning like the long term versus the short term kind of thinking and decisions that, you know, investments and decisions in the long term versus immediate results. You know, that that was an initial clash and then the second was really around our view on business. You know, it's one thing to, you know, have a sense of fiduciary responsibility, which you absolutely have to do. I mean, I, like, I started this. I love our shareholders. Like, I hope they see, you know, fantastic returns with classy. But there's something called shareholder primacy, which is essentially the idea that every single decision you make is about making that shareholder money. And you shouldn't necessarily consider the other stakeholders in your business as much as you consider the shareholder, even if it's to their detriment. And that's something that was introduced in the seventies at Chicago Business School, and it's been kind of the centerpiece of capitalism for a while. Until recently, and ironically, before the 70s, stakeholder capitalism was actually more of a thing. A lot of the companies and brands that we know, like Levi's and others, they. They ran a stakeholder model. And a stakeholder model just means they have goals around their. They identify their key stakeholders. For us, it's customers, our team, investors in the community. So this isn't like, you know, some mystery. It's. It's really kind of obvious stuff. But the difference is that you elevate goals across each of those stakeholders to, like, at a board level. So instead of just saying, hey, how did we. How did revenue do and how did profit do this quarter? It's like, well, what's our nps? Or what's our customer satisfaction score? And that's elevated to the same level as revenue and profit. I know that sounds kind of like a lot of startups do. They do have NPS in their board deck. But is it really obsessed over in the same way as profit? Usually not. And then team? Well, how the heck do you measure the success of your team or the happiness of your team? Well, we have something called ENPs now, and we're lucky to be in the 50s, which is really extraordinarily good, but it wasn't back then. We started measuring it and we started looking, and that would get reported to the board. And then we use the B certification and B score to identify how we're doing on the community front. So how are we essentially giving back? And how do we measure our own social and environmental impact as a business? Like, what is our effect on those larger communities? And that's our BSERT score, which we have a 115 now, and 80 is a minimum to get in. So literally, the stakeholder model is, you know, look at these metrics across your, you know, whatever stakeholders you identify, elevate them all the way to the board level and hold yourself accountable to them. You could take it a step further and become a B corporation, and that means that actually takes it into your governance. So the board has a responsibility to look at the social, environmental impact of your company and not just the fiduciary impact. And that's something that we just did with our series D raise, which I'm sure we'll get into in a little bit. So, anyways, we, you know, I feel like we're talking about entrepreneurs. It's like the best companies. It feels. It feels like you're on your eighth or ninth life always, you know, and so I feel very grateful that we were able to get out of kind of a really shitty situation there. I'm sure the other investor does, too, but, you know, I think it was just an oddball fit and we both went our separate ways. And I think, you know, we, at that point in time, probably could have done a lot of things, like, it's hard to sell the company or do other things just get out of it, right? And we bet on ourselves. We said, we're going to raise money from insiders and bring on some additional capital. We're going to buy this investor out, and then we're just going to put our heads down and literally we're going to prove that this is a phenomenal business. And that's what we've been doing since your podcast. Literally, this was all going on behind the scenes in the last year and a half or so. That's what we've been doing. We've been proving to ourselves and our customers in the world that we're better than that little period there of 2 years out of 10, right? Everyone has stormy clouds, I think I read once, like, the number one reason why startups fail is the founder gives up, and because it's freaking hard. And they just go like, you Know, you're just on such a strain for so long mentally. And this was one of those moments where I had to have some people kind of whisper in my ear, that's why co founders are great, dude, don't give up. You know, and that was one of those moments. And you know, now two years later, we just closed a round $118 million Series D from a top tier investor who shares our values. And I'm sure you want to ask about this, we'll talk about it. But honestly, it's so rewarding. Not just because where the company's at, but what we've been through. You know, the adapt and overcome value, which is one of our core values, couldn't have been more true in this, in this case. So while we're not doing victory laps, we have a lot more to do. It is very rewarding that we were able to like survive, you know, through that like kind of turmoil and then, and then turn things around.

Yeah. Wow. Remarkable. I think even more so than just that period of time, but just how dedicated you are to the North Star right from the very beginning to values that you have. Right. Not many companies, especially startups, regardless of what industry they're selling in, I mean, obviously you're selling in nonprofits, so you have to have passion for that. Not many would have such a strong North Star and gut conviction on this is the right thing that we're building, the right culture and the right partners to have. So to say you embrace it is an understatement, obviously, to show just that story.

Totally. And sorry to cut you off, but yeah, no, I mean, I tell you that one of the things that I would look back on and say, what didn't I do early enough? Was actually to codify some of this stuff. Some of the. Even though like we're 10 years in, so we've had a lot of time to kind of work on this. But you know, I would have done it even earlier, like in year one and spent a lot of time just on the, on what I call the core purpose, which is the mission, the values and the vision. A lot of people do a mission statement, but do they really think through the values and then like kind of click down and say like, what do these actually mean? And write it down. And I think that's one of the most important things that a company could do early on because it does really provide not only the North Star, it provides kind of like a life jacket of sorts when things go wrong. You know, it's like a, like it's something to lean on with each other.

Yeah. This is your first company you started, right?

As far as I know.

Yeah. But I mean when you're at first starting, it's hard to know what to do in the beginning, let alone everything is a first time lesson. So it seems like to this point, right, you've only raised one Series D now. Right. But the other piece that I think that no one is prepared for is. And yet still obviously you're building adaptability in is unforeseen. Like physical circumstances, like the pandemic. You could have core values, you could have the right partners, but man, like 2020 was nothing that anyone could have prepared for. Maybe our government could have, but that's a different conversation. But what was that like going into 2020, like where were you guys at and how did it change and affect the company?

Yeah, I mean, we came into the year with a lot of momentum, kind of, you know, extending the story that we were just talking about. We really had had our heads down, we had made some just amazing product improvements. Like we were just feeling really, really good. And then in about March time frame, kind of the world, you know, stopped turning for a couple weeks and giving actually stopped. I mean, I've never seen anything like it. If you look at giving over last hundred years and you can do this through the USA giving report, not that anyone's going to necessarily dig that up, but just trust me on it, it's literally just this flat, like almost like linear line up and to the right. And it's crazy because giving is so resilient. Like even in economic recessions, people give, personal hardships, people give and I mean all levels of income. This isn't just like Warren Buffett's of the world. Like giving is quite democratized. More people, at least before this last election, more people gave than voted in the prior election. And so like it is, it is absolutely ingrained in our, in our society and a lot of societies around the world. But so in March it was just so it was crazy to literally see like giving kind of stop as people got their bearings. And then it kind of roared back in a big way specifically to Covid direct relief organizations like hospitals, food banks, things like that for March, April, May, and then you had the social justice movement. And that was unbelievable and unprecedented as well. And it's sad that it was unprecedented in some ways and long overdue. But at the same time that was also something that catalyzed giving in 2020. And we ran some survey data and I forget the exact Staff of something like 50% of people had not given to social justice causes before. And it was like a brand new donation for them in that general area, which was phenomenal to see. So you had kind of these two catalysts last year that were driving things and really elevated giving for a large part of the year. But it wasn't all, you know, peaches and roses. The small nonprofits actually struggled quite a bit, especially like your tried and true community foundations and charities, because A, they weren't in the direct line of the COVID relief, so they got drowned out and it was hard for them to get anyone's attention and raise money. And B, a lot of them rely on physical local events to survive. And so you had two things hitting them at once, and all of a sudden they have no revenue stream. So diversification online became a huge thing. So we sort of saw what we would call internally as the zoom effect of the fundraising world. Before 2020, only 10% of giving was online. And giving is a. Giving literally is a $500 billion market. 500 billion in the United States alone. And 10% of it was online. So you're like, wow, how is that possible in 2020? It's checks in cash, physical events, those types of things. Direct mail, major gifts, grants. Those make up a lot of the revenue coming into nonprofit organizations now. Online giving has grown double digits every year. Just like E commerce, it traces E commerce. It's just. It's just like probably 5 years ish or so behind. And so we kind of consider ourselves almost like the Shopify in a way, of the nonprofit space. We're like their storefront. We are their interface, if you will, with anyone that has intent to give online. And we basically remove the friction in the process. That's kind of what we do. And so you saw this tremendous surge of people wanting to give online. And then following that up, you had a lot of nonprofit organizations that traditionally fundraised offline. One great example is just like performing arts nonprofits, like theaters and stuff. I mean, theaters, museums, ballets. Like, they were in a hard spot because all their money came from ticket sales and other just offline events and galas and things like that. All of a sudden they needed to reinvent themselves. San Francisco Ballet signed up and they raised like, I think half a million dollars in no time to keep things going. And they did these virtual events. So you saw all these really cool, creative, kind of like dig deep moments for the sector, which I thought was really rewarding for us. It was one of our strongest moments. As a company, I think because we had to get really get in the trenches, work with folks on financial terms, everything, just to keep them going. And were we 100% successful? No. There are nonprofits that are smaller or went out of business because of the pandemic. Absolutely. But did the majority kind of find ways to survive? I believe so, and I think we helped. So it was a pretty tremendous year as a roller coaster year for, you know, our community. And we are our nonprofits. I mean, we, we have a win, win business. Our job is to help them raise money. It's just like Shopify, right? Like, if, if all of our organizations just, it lost, the inability to fundraise classy wouldn't exist. You know, like, we help them generate money. So for us, it's, it's, it's such a, you know, it's such a mission moment. You know, when something like that happens, it's like we dig deep with you, like we're gonna, we're gonna keep you grow as much as we can.

Pretty remarkable. Pretty amazing to have a tool that can help so many people at that moment of their need. Right. That's gotta be. Feel really fulfilling. It's great for business too. Sure. But what's great is that as your business grows, so does theirs. Tell me, when did the $2 billion process through the platform happen?

It feels recent.

Did that happen sometime recently?

Yeah, the 2 billion milestone was. It just kind of flew under the radar. We were kind of just entering the pandemic, honestly, so that it just didn't feel appropriate to talk about and whatnot. We were just focused on other things, obviously. So that was like, probably right around the time where we were just telling the story. And 1 billion was 18 months before that. And then we just crossed 3 billion, which was a year about 12 months. So it's, you know, it's shortening in time. And we're over a billion dollar pace now, so we'll do hopefully a billion four billion, five, something like that. And so we're growing tremendously and our nonprofits are growing. And that's everything to us. I mean, that's our main metric. You know, that's like, when we talk about the stakeholder pillars, it's MPS, GDV. GDV's gross donation volume. How do you feel about the product? Would you recommend us? And how are you raising? Like, how's your fundraising going? Because growth and fundraising is everything. And so the other kind of trend that we saw this year accelerate, that I think is super relevant to other sectors. Too is this idea of subscription giving. So now 20% of our GDV gross donation volume comes from donors subscribing to our nonprofits. So that's giving to them on a recurring basis, whether that's monthly, quarterly, annually, and basically like mimicking almost like a subscription service or even like an investment. Think of it like, hey, not just giving you a charitable handout. I want to actually make a recurring gift to you for the next five years to see these projects come to fruition. Like, that's a whole nother world. And so if you start to see like the lines blur between for profit and nonprofit, this is where it goes. It's absolutely where it goes. And we're seeing it in droves. And it's being driven by millennials. And what's that generation that's younger than, than us? I forget now.

Gen Z. Yeah, yeah, Gen Z. I'm so old.

We're building features to sort of, you know, lean into that trend. But really they're coming to the table saying, oh, wow, interesting. Like I could give to you on a recurring basis. And a lot of times nonprofits are treating them differently. So they're treating them like, you know, kind of the inner circle, VIP kind of donor. So they're getting a little bit of a better experience, they're getting more touch points, they're learning about the impact in shorter cycles, things like that. It's not just like, oh, you get like, you know, 20 free T shirts if you give as a recurring donor. Like, maybe there's some perks, but it's usually around the impact and like just sort of having more of a front row seat and being part of the journey and seeing where your money's going. And I think that is really going to drive things moving forward.

What has that done internally to the team, the company? I mean, you've been, you and the founders have been at this 10 plus years. You obviously have surrounded yourself with some pretty amazing board members and executives and advisors. What are you doing, you know, because of the new style of giving and just the trend looking forward?

Well, subscription giving is worth, you know, one subscriber, if you will, to a nonprofit is worth five to 10 times more to the nonprofit than a one time giver just because of the lifetime of that, of that donor. And so one of the things like, you know, kind of breaking it into a science, our job is to basically not only help them convert more, you know, subscribers, it's to lengthen the lifetime. Just like a SaaS company, like the way you think about Your own business. And that's like kind of, you know, it sounds somewhat table stakes, but it's really revolutionary for the space. It's not, you know, thinking about your Nonprofit like a SaaS company is not necessarily something people are doing every day. But the same metrics apply, the same line of thinking applies, you know, that same nurture and that same care. And I think that that's, you know, really driving a higher level of service, which leads to a better giving experience for donors, which is really awesome. So we're, we're like quadrupling down on this. I mean we would love to grow a billion dollar recurring donor business for, on behalf of our nonprofits. And that's, that's where we're headed. Like, you know, I think our goal this year was somewhere like 300 to 400 million and we'll, we'll beat that handle. So I mean it is really, it's exploding. I mean it's growing faster than the overall business and it's just, it's amazing to see because it's so good for the nonprofit, it's stickier revenue. And, and the stat that I always think is remarkable is 80% of donors that give for the first time to an organization don't come back 80%. So imagine like your customer acquisition numbers from a SaaS perspective, right? Like you, you spend this money to bring around 80% of your first time customers leave. Like that's crazy. How do you actually scale and how do you grow your programs, which is where all the impact is. So there's a lot of phenomenal social innovation, environmental innovation trapped in a really, I would say antiquated revenue model in these organizations so that they can't get past 500k to a million dollars in revenue because their model isn't sustainable enough yet. Their programs, what they're delivering to society is phenomenal. Let's call it a 10 to $100 million revenue opportunity idea trapped in a 500,000 to a million dollar antiquated model. And that's kind of like what the space is sort of like. And it's not like sophistication. It's not willpower. It's not that this is some like third rate sector, I've found it's the complete opposite. I think some of the smartest people and well rounded and holistic thinkers that I've ever met are from the nonprofit space. The top students from the best schools and people aren't even going to college these days. It doesn't matter. But are going directly into nonprofit organizations. Not making it. Some like, you know, tour of duty stop at the end of their career. It's like it is their career. Social enterprises are thriving and B Corp movement that's bringing the two together. So I think you're going to see a lot of brain power on this, and I hope Classy can be a big piece of this movement. But I do see the revenue model and this idea of building sustainable revenue being the core of what a nonprofit's focused on moving forward.

I love it. As someone who, you know, helped with Startup San Diego, the nonprofit, you know, helping startups, but using a nonprofit model, we can totally relate to being capped, you know, by this invisible ceiling that says, man, if we could only do so much right. So, yeah, I can totally relate and I love that you guys are powering that. What have you done to the team itself to kind of set yourself up for who's leading this change and this momentum over the next decade of Klassie's life?

Yeah, well, we just announced a CEO transition yesterday too, which is crazy to think about after 10 years. I've been the founding CEO since its inception, but this was all by design. I initiated this and I always thought to myself there'd be a time where I would kind of look around and say, am I the best person? Honestly, it like kind of putting your self awareness hat on, like, am I the best person to take this, you know, to the next level? And it's always been yes, except this year. And I was like, you know, this is the time. Like, I think we're crossing like a serious level of scale and, you know, we're bringing in, you know, super talented folks on the team. It's super exciting. You know, I had this person I've been working with, Mr. Christopher Himes, who was the CFO of Fair Trade and then an executive at Salesforce. He's been on our board. He's been involved in Classy for six to seven years. Really close friend, understood the culture and the team. And it kind of just hit me like I was like, you know what? Like, this makes more sense and it doesn't mean that I go away. I mean, I'm taking on a full time executive chairman role. I'm going to be leading M and A and also working on what I'm calling like next Horizon product development. We can circle back on that. Just, you know, almost a startup within the startup. Like Jeff Bezos would say, like, how do you disrupt yourself type of thing. And so that's really, you know, invigorating for me. Like energizing. And Chris is an amazing leader and operator and has that nonprofit and for profit experience. So I feel like putting someone in, in the CEO seat like him is, it just makes me feel phenomenal because I feel like Classy just got someone that can take them to incredible, incredible heights. But you can still kind of get the best of what I can offer too. It's like kind of best of both worlds thing. I know a lot of founders will hang on, hang to the CEO role as much as they can. And 10 years is a good run, don't get me wrong. But I think there's a point in time you just got to ask yourself like, hey, does this make what makes the most sense for our customers? What makes the most sense for Classy as a business? And at this point it almost struck me as obvious, which is kind of like ironic and it happened to be poetic because it's exactly at the 10 year mark, exactly when we hit our bhag of a billion dollars a year and all these fun things. But I feel phenomenal. I feel great about it. And then we've just been building, you know, the team up over the years. Like we have really amazing bench strength. We have so many up and comers that are, some of them have been with Classy since the beginning. Like we have a lot of people that have done with Classy for a very long time. One, one guy, Brad, I think about, he was an intern. Now he's running all of our sales and enablement and he's great. And then you have, you know, more recent folks that have come in that are leading teams, you know, that are, you know, pretty significant and that, you know, I'd see them as future leaders for a long time. So it's, it's just, you look at the whole organization, you have this awesome blend of kind of the older folks, the newer folks like high energy and it's just prime to go and that's what you want. You don't want it all new, you don't want it all old. You don't never want to be stuck in the past. The culture's always evolving. It's like a plant, you know, you're growing it. And in this case it just made more sense for to put someone else at the helm for me to stay on, you know, and be this, in this full time role. And I think we are really poised to kind of take to the next level.

That's awesome. Well, congratulations on that transition. It's a big deal. I know emotionally too, you know, but just for the company to be able to actually do that and make that transition. How many employees now is classy at?

We're about at 250, I believe.

Awesome. Okay.

Not bad.

Yeah. Because you guys have always been kind of at the forefront of raising. And just like being a public company in San Diego, you also were kind of the bellwether for bringing talent to the market as well too, right? Bringing new talent, getting people to move to the area to work on this company, which I gotta imagine it's kind of interesting during the pandemic age right now, people can work from wherever, but you've always had that proudly built in San Diego banner at the bottom. So that's gotta be part of that as well too. Just attracting this new talent as well to the community, that helps work on your company, but then also benefits the San Diego area at large as well too, right?

We do pull. I mean, we have pulled a lot of people into San Diego. And that is a point of pride. A lot of it was. I give our old CTO a lot of credit. He used to travel the country and go to these, like, job fairs and college fairs. And, like, it was interesting. He'd go to, like, I don't know, just make up School X. That's good for engineering, mit. I don't know if he did this or not, but, you know, and he would tell me, he'd go in and Google would have a line like through the door, their booth, Facebook through the door. We'd have like three people, but we'd hire all three. And the difference was they knew exactly what type of company they wanted to work for. They'd come to us, they were talented, but they wanted a company that intersected impact and technology. So that was our strategy. It was like we'd get three people at the booth with 100% success rate, and they'd move, you know, they'd move to San Diego. And now in a world of remote work and living, I'd say, I don't know, maybe 20 to 30% of folks and our company have scattered around the country to be closer to family and other things. And so we're really thinking, what does the next phase look like for us? Like, what is. What does work look like at Classy moving forward? And I don't think we'll be 100% virtual. We'll probably have a physical presence for sure. But what will that look like? Will it be more like hoteling? Will it rotate? Will we have instead of one all staff retreat type of thing per year? Will we have two or three? What do you do to sort of create those bonds moving forward? Because you can't, you can't finish the day and go get a drink at, we call it Building B, which is basic downtown. You, you know, you just get off the computer, you know, and you're just like, okay, I guess I'll have that beer alone. You know, and so there's those little things matter, you know, that's what actually drives kind of the. Some of the culture. I mean culture is not just about recreation, but you know, you end up naturally just through those moments, talking about some things like values and others. And it kind of just always strengthens things, has it classy. And so we're really, we've been fortunate to have made this transition to virtual working pretty easily. I'd say that the team has done phenomenal and has adapted and overcome through this, you know, year or so. But moving forward, I think we're looking at some sort of hybrid approach and probably just creating as much flexibility for the team as humanly possible while also creating a physical presence that people can go to.

Got it. All right, well then good. We'll still see the classy people in downtown, looking forward to them. It'll still be hopefully a stop in the future tech crawl of a startup month.

Yeah, or we'll all just be on the pub crawl and it won't be a stop, it'll just be on it.

This latest fundraise, pretty significant amount of capital. Sounds like you hinted at some things that besides just doubling down on the stuff you're already working on, like subscription giving, you're also sound like you're. You're maybe looking at some acquisitions and some new product stuff. Can you give us a little hint more on. On what else you're gonna be working on there?

Sure. I'm new to the the M and A game, but, you know, I look at it in two ways or three ways actually buy companies for revenue and customers. I don't think we're that interested in that. So that would be like buying like a smaller competitor that's doing exactly what you're doing or something similar. And you're buying for the revenue to grow inorganically. You know, it kind of boosts growth. You know, I don't. That's for some companies like roll up plays, things like that. But that's not really what we're doing. I think we're going to be, you know what M and A strategy I love. And there's a lot of podcasts on it stuff is the Atlassian M and a strategy which basically, okay, we have our core customer, and for us it's the development director within a nonprofit that's basically like the head of fundraising or the head of sales, if you will, for the nonprofit. You know, what are all the friction points in that person's world? Clearly, online fundraising is a big one. That's what we're already doing. But what are the other tools they're using that maybe don't connect in seamlessly enough or they cause friction for whatever reason administratively or, you know, there's a better way to communicate with their donors? That's what we're looking at. So we're basically looking at what's the toolkit, you know, around that person. How could classy bring all that together in a more seamless way? And so areas like donor intelligence or donor specific CRM and marketing automation or those types of things that just naturally, you know, plug into our product. That's really where we'll focus. And then the third is vertical expansion. So it's not buying revenue, but it's expanding into another vertical market, if you will. And the 501C3 space is humongous. Like I said, it's like 500 billion within there. There's verticals. We're mainly focused to date on the tried and true 501C3 charity, like the cancer charities of the world type of thing. But there's also like the religious market, which is congregations, churches. There's a couple companies, one out of Australia called pushpay, that's a pretty big company just in that space alone. And then you have higher ed and universities and education, and we work with a lot of these, but we're not, you know, we haven't really focused on it as much and put like a specialized team together necessarily. So those are things that we might do as we expand. Whether we buy into that space or we build our own product that's, you know, tbd. And then the other one that I'm really excited about is it's kind of along the lines of vertical, but it's also almost like just like I said, next horizon is corporate giving. What we found in 2020 was that the current platforms that are out there are insufficient for where the world's at. From a corporate giving, an employee giving perspective. And I mean that from two different kind of angles. One is if you think of corporate giving as it exists today, it's sort of just a digitized version of the, of the United Way model, which is more like, hey, the classies of the world or your company is going to give you an opportunity to donate part of your paycheck essentially to a charity, which is a Great start. But 3.0 is really about empowering the employees to do a whole lot more than that. So allowing them to search and discover causes in their local community and tie those donations or their volunteering or whatever it is, attending events to support that organization and also rally their peers from their company to do the same. So there's this like really missing link, I think of this strong connection to community. And then also like when things happen in the world, you know, it's one thing to give to someone on a consistent basis. I've just talked about how we're a big believer in recurring giving, subscription giving. It's great. But what if like there's wildfires, you know, in Northern California and you live in Northern California? Or what if there's a pandemic? And so organizations, companies, I mean, are feeling very flat footed in those situations, especially in a time where employees want their company to do more, to care more, to have a social and environmental conscience. And so that disconnect is a big opportunity, I think, for classy and technology in general to basically connect the dots between a corporation and employees and what's happening in the world with amazing non profits that are actually on the front lines doing the work. And so that's the opportunity we see, we saw and heard from many companies that said, look, I have CSR software, corporate social responsibility software, I have United Way 2.0 type of software, but my employees are coming at me with pitchforks. They're pissed we're not doing enough, we're flat footed. Can you help us? And we're like, yeah, kinda, you know, we're not really in that business today. And so that, that really opened our eyes because we're like, man, there's a lot we can do here. And there are like a couple players that really just focus on the, you know, Fortune 1000. Like the Benevity is one. They just, I think sold to a, you know, UK company for like a billion dollars. But they're really focused on the Fortune thousand. What about everyone else? There's millions of companies and they don't really have a great solution at all. And our 6,000 nonprofits, and especially the ones that struggled through the pandemic, that were looking for people to reach them, like that's a huge gap. So I'm really fired up about it and that's actually what I'm personally going to be working on. Moving forward, basically, my entire role is just around this one idea of, like, how do you match people and donors, wherever they are, to our nonprofits? And I see the corporate channel as a huge opportunity to do that, and that's where we'll start.

That's awesome. Well, excited for your new role comes with a whole new set of responsibilities, but also a little bit off of your back of not being in the CEO seat for now, too. So hopefully a little bit of breath of fresh air for a little bit before you. You hit it hard again, because obviously that's the only way you go. We got to know, though, this is the tacos and tech podcast. You know, when you are. When you're looking around, you've been working hard all day. Where do you. Besides. Besides Building B, which is pizza headquarters, where are you getting the taco from these days?

I gotta go. I think I probably said this last time, but I gotta go with Ortiz's in Point Loma. That's still my go to. And, you know, I've been spending some time in Montana, too. I think I was telling you earlier in my family, bought a small. I put on my LinkedIn, a small farm. We're dabbling and growing hemp, which is a totally different podcast. Another. Another subjective time. But up here, you know, it's funny, they don't really have great tacos or breakfast burritos, but what's so ironic is there's a restaurant in town called Jalisco that just opened, and it's the same owners of the Jalisco, I think it's called the same thing in Carlsbad. So it's a San Diego restaurant that just opened down the street. How lucky is that? So, you know, I got to go check it out and make sure that, you know, they're up to snuff. So that might be my answer next time I. Come on.

All right, we'll check in next time. Yeah. Hear how that's pretty random, but pretty cool to see. Carlsbad north county tacos being exported to Montana.

Exactly.

Yeah. That's awesome. Well, Scott, thanks so much for spending some time with us. Congratulations on just the storm you weathered. But now, man, the amazing ship that you've gotten to hear and given up the reins for new leadership. Keep it going another 10 years, right? Pretty amazing. So congratulations on everything, Scott.

Thanks, Neil. Always love coming on.

Thanks so much.

Thanks for joining us on the Tacos and Tech podcast with Neil Bloom. Thanks again to Cox business for helping make this possible by expanding the reach of the San Diego tech ecosystem. Big shout out to school rap for our rad intro music. And thanks as well to Nest Podcast network where we are recording live inside their studio at Nest Co working in Bankers Hill. You can find Neil Bloom on Twitter eelbloom as well as Fresh brewed Tech and Tacos and Tech Pod on Twitter too.

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