Building a Capital Efficient Startup from Nashville: David Stange, CEO of Beachy (Part 4)

Sramana Mitra: Where has Tennessee been an advantage? It sounds like you’re not scaling on the basis of these telephone calls. But you had to pound the pavements from a sales point of view through an online channel.

David Stange: Yes. Nashville has been an advantage for us because we have direct  flights to every market that we service out of Nashville. The travel within Florida is garbage. You cannot get from Panama City Beach to Tampa, Panama City Beach to Fort Lauderdale, or Panama City Beach to Fort Myers. It’s very disconnected.

From Nashville, I can go to the airport and I have a non-stop direct flight to every city that we service in the United States. We have employees living in the panhandle of Florida. If we’re taking a trip to Miami and they’re going, they end up meeting us in Nashville and connecting with us. It’s the only way they can get there.

Sramana Mitra: What about the talent that helps you do all this kind of work from Nashville? Is there a shortage of talent? What are you seeing?

David Stange: Nashville has more talent today with the addition of Amazon coming to town. Nashville just had a big IPO. There’s a lot of buzz around Nashville. I tried to do a staycation with my wife in downtown Nashville. It was actually cheaper for us to book flights to Manhattan and stay in the Renaissance Times Square for two nights than it was for us to spend one night at a hotel in Nashville. Nashville is hot and it just continues to grow.

All of our engineers are in their early 30’s. This is a great city for young people to be in. I don’t know if there’s an advantage. This is not Silicon Valley. This isn’t even Austin, but we are growing faster. 

Sramana Mitra: How many people do you have?

David Stange: 17.

Sramana Mitra: The company is bootstrapped?

David Stange: The first million dollars was founder-funded. Then we raised $4 million in debt on top of that. 

Sramana Mitra: Where is the debt from?

David Stange: From friends and family.

Sramana Mitra: So you have not used any institutional capital to build this company?

David Stange: None.

Sramana Mitra: What is the business model that you’re using to sell to the hotels?

David Stange: We have a two-part model. We have a monthly SaaS fee that’s paid by the hotel depending on the size of the hotel. They may range from a couple hundred dollars to thousands of dollars a month. Then we have a transaction fee that we charge to the consumer. Those vary based on which product they’re buying.

Our transaction fee ranges from 6% to 10%. If you spend $10 on a beach chair, that beach chair is now $11. The hotel keeps the $10 and we take a dollar.

Sramana Mitra: What kind of revenue level are you operating at right now?

David Stange: We’re in the low seven digits between $5 million and $10 million.

Sramana Mitra: Thank you for your time.

This segment is part 4 in the series : Building a Capital Efficient Startup from Nashville: David Stange, CEO of Beachy
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