Star Investing was able to sit down with AppsVillage CEO Max Bluvband recently about the company’s IPO process [PDF], and how it’s empowering millions of small companies to play with the big fish.
Star Investing: Thanks for coming in today — AppsVillage is something That really interests me as someone who’s kind of looking at the market, but for people who have never heard of AppsVillage or what it does can you give me a brief overview of what is does?
Max Bluvband: So AppsVillage is all about making the ability for SMBs to be in the same marketing level of the big chains like Zara, Mcdonald’s and Starbucks, etc.
AppsVillage is a SaaS company that enables every SMB to create its own app within minutes.
SI: What, what sort of growth stories does AppsVillage offer potential investors that they can’t necessarily get with other investments geared towards SMBs on the ASX? Of course we recently had Prospa that listed down here. So just talk to me about, I guess the next unique sales proposition from apps village point of view.
MB: Yeah, so we’re targeting a huge market only in Australia. 2.1 million SMBs and SMB is from one side they are very expert in their own business but on the other side they are less expert in digital marketing, they’re less expert in financial, the less expert in any kind of services that the business needs.
So you have a lot of solutions for the financial, and a solution for managing inventory, but you have very less solution for the marketing side.
And I think the most supporting that investors needs to know about to what we solve is that we actually give the SMBs for the first time the option to have a digital marketing tool, which is an app, to grow their business with.
SI: I guess one of the interesting things about AppsVillage is that if offers SMBs or SMEs an opportunity to play in the apps space without spending thousands of dollars, which is what it would normally be.
Talk me through how AppsVillage is able to keep the price point low for SMBs.
MB: Normally to have an app running, you need to spend $40,000 you will need to have marketing expertise, QA, UI, UX, and things that SMBs can not reach.
We are focused on the needs of the SMB, and we literally automated all the development on the services of QQ, security updates, upgrades and so on.
We took the existing resources they have, so do they have a Facebook or Instagram page, and we build based on that, their branded app.
So having all these things automated, including the features for the SMB, has meant we can provide it in a very low cost of $20 amount for a month for $180 a year.
When you focusing on one vertical, which is SMB, doesn’t mean you can give them a powerful too and not have it be a one-off project.
SI: Talk to me about some of the features that SMBs can use from an AppsVillage solution — what can they get from an app created by AppsVillage?
MB: So once they get to our website and then when we work with Facebook, we create them the app and they can see the various features of the app — one of them is that it’s an app which you can download to your mobile.
Then you can send push notifications — you can push pop-ups on the offerings, and you can automate that.
Third, you can make a stunning graphics — if you may feel the push notification, you have to have the ability to have graphic designs. The SMB’s don’t have graphic designers so we’ve given them templates of a lot of amazing graphic designs and they can change the text.
So it can be offering 20 percent or 30 percent or any other thing.
The fourth is the ability to set an appointment through the app — so if it’s a barbershop, a nail shop you can schedule an appointment through the app.
Another amazing thing is the cashback and the loyalty card.
And what did that we’ve integrated the payment systems, the service so they can sell actual products.
The last but not least important, then we enable them to not only to reach their current clients new potential clients by advertising Facebook with two clicks.
You don’t need to do onboarding on Facebook, we do it for them.
We have APIs to do that, and then in two clicks and we targeting automatically the audience. We think that this special offer is relevant to them.
SI: Just playing Devil’s Advocate for a moment, hearing about these lower entry costs for SMBs, hearing about all these features AppsVillage offering customers — I guess the question is how you make money…
MB: So the business model that makes money is that we offer based on subscription base.
Instead of investing between 20 to $40,000, you may invest $20 a month and he gets this, this app with this powerful tools or you pay once, $180 a year.
SI: You’ve gone through some of the functionality that AppsVillage offers SMBs, so how would you summarise the value end users get out of a solution like AppsVillage — is it simply the ability for them to do something they couldn’t do previously?
MB: Bottom line, they have a digital presence in minutes and to get to their loyal customers and to millions of new customers on the mobile strategy.
Everyone today is one mobile, and 90 percent of the time they are in apps rather than web browsing.
So we allow them, in minutes literally, to start communicating with potential clients and with their current clients with a mobile strategy.
SI: I think one of the really interesting things about AppsVillage is obviously the technology is great and how it’s able to solve a problem for SMBs is great as well — but you’ve chosen to list here in Australia as I sort of our home market and you don’t necessarily think of a scalable tech play, you know, heading from Israel to Australia, and then scale across the world.
So I guess the question is what made Australia sort of stand out in your mind is sort of home market for the company?
MB: So first of all we are a global company and we sell to…we have SMBs from more than 150 countries.
If you look specifically at Australia you have more than 2.1 million SMBs which are striving for these kind of solutions.
Also we are looking to penetrate to new demographics like India, like Indonesia and China, and we think Australia is a good hub to start from.
The third thing we see from the market is that Australian investors appreciate very much Israeli technologies, and as a company which has already made a lot of progress we think that it will be appreciated by the investors.
SI: Speaking of those are ‘nice sales’ as you alluded to before, I’m just wondering if you can tell me a little bit about the company before this point in time.
Obviously a lot of Australian investors are engaged with AppsVillage through the IPO, but talk to me about the company before this point and the progress it’s made.
MB: So we started about two years ago.
We have a very good technology team, a very good BI team, and acquisition team.
The first thing was to make a proof of concept. We went to, I think about a hundred SMBs and literally manually went to their store and ask them to start using the app.
First of all they were very excited by the fact they could have an app and upgrade themselves from the text messaging and emails — which is kind of considered spam, so we saw a lot of interest.
However, we saw also that we need to add more functionality to the needs they need to have. So then we widened our offering within the same pricing of $20 per month.
That took us about a year to develop and with a very talented expert technology team, and it took us about a year to get into position that we knew and how much and how, how much it costs us and how, and how we can acquire the customers to the digital channels to join us and to subscribe to the service.
SI: So it took you about a year to kind of get that cost of acquisition figure, sort of solid, and bake that into the business model.
I’m really interested in how this all started, because I think you have a cool story about how you originally came up with the idea for AppsVillage — it was because your wife’s bookstore was looking at an app and couldn’t find a solution that wasn’t going to cost $40,000.
MB: Right, it is an interesting story — my wife had a nice and very small children’s book store.
She had a lot of loyal customers, and loyal for an SMB is about 40 or 50, but in time she wanted to reach more customers.
She thought maybe she could put an ad in the newspaper, she can text message, she can send some emails — but the big chains already had an app and they could send out discounts with great graphics and they had the ability to put in front of the eyes of the customers the product.
And when she tried to tried to do that, it was like in a science fiction for her to do it in terms of costs, in terms of expertise.
So then we understood that this is something that not only business wise but also it’s a good objective to help this market.
To be an SMB owner is quite challenging in any case, so it really helps the market and helps the world — it’s not only about making money for us.
SI: I just want to go back to something you touched on before, and that’s the fact that you’re looking at India and China and Asia right now, and I’m guessing that’s why you’re in Australia because it gives you a good base to launch into those markets.
What do you see in those markets which is going to be key for you capturing those markets?
MB: So the beautiful thing about our company is that it’s all made digitally.
We don’t need to fly a lot of knock on people’s office doors, participate in RFPs and RFQs.
We test every region and see the customer acquisition. We saw that the cost of customer acquisition in those countries is lower than it is in Western countries like the UK, US, Australia, or Canada.
Because Australia is related to those Asian countries, business-wise it makes sense to base here and to have a presence here in Australia — and go after those demographics in Australia.
SI: AppsVillage does have an Israeli background, it’s an Israeli company — and when you think about an Israeli tech company you think Private Equity or Venture is the play in terms of funding, but we’ve seen a lot of Israeli companies actually come onto the ASX and seek a public listing.
From your point of view, what attracted you to Australia and that process — was it that other Israeli companies have gone down that path as well?
MB: Australia, for other companies is can look like a lot — and you’re right, a lot of companies in Israel go to the venture capital path.
I think the adventure that I saw in Australia was that we were already generating revenues, and when we grow our revenues the investors can benefit from that.
The ASX allowing a company like our to go public, because I think we know we can grow our revenues from day one of the listing, we can enjoy our success with a lot of investors and it’s a win-win situation.
SI: I was going through the IPO document, which is now available on the AppsVillage site, and what’s interesting that you’re going through how you’re going to spend the money from the IPO and nearly half of it is going to R&D.
That begs the question, if the product is already there, ways do you want to evolve the product with that R&D spending?
MB: We will keep on investing money in R&D because we always need to improve the offering and the way we acquire customers.
If you think about a company like amazon, it’s always investing in R&D to make it easier for their customers and to lower their acquisition cost.
However, this is not the main thing — the main thing is that we know today that every dollar we spend on marketing, how much that creates in sales.
If you look on the sales and marketing line, it’s net. It’s after deducting the revenues from that.
So we’ll spend a lot of money on marketing and we’ll, we’re focusing on not about if we make a sale but how fast we can grow ourselves.
SI: Finally, you’re in the middle of the IPO process — I’m wondering if you could give me an update on where that process is at and when we might expect to see AppsVillage on the ASX.
MB: If you look at the prospectus you see the date is 23rd of July.
We are now completing more than two weeks of a roadshow and it was very successful, and we got a lot of traction.
We have a very compelling story, but it’s not only a story, but we have positive facts — such as revenues. So I’m satisfied about that process.
SI: All eyes on July 23. Max, thanks for joining me today.
This content is produced by Star Investing in commercial partnership with AppsVillage. This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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