Count It Labs Diligence

The following discussion supplements the 2016–2019 Count It Labs financials, and responds to questions from Wellable about company operations. (For a general discussion of the product and market, please see here.)

P&L Overview

Since January 2016, Count It Labs Inc. has booked a total of $174,177 in revenues, and spent $497,314.

• Revenues are up 47% in H1 2019 vs. H1 2018. Over the trailing four months, revenues have averaged $7,053 vs. average expenses (including COGS) of $12,871—an average monthly burn of $5,818.
• We’ve booked nearly as much income in 2019 as we did in all of 2018.
• August will likely be our best month to date.

Income

Count.It books several types of revenue:

• Subscriptions: 80% of the company’s total income in 2019, and 98% of the OpEx, comes from fees paid by clients for our Count.It PRO challenge platform. Count.It bills monthly in all cases, however client challenges can be of shorter or longer duration. (Note: See below on Reseller Sales.)
• Rewards: As a service for PRO clients, Count.It offers “automated” gift card rewards. Essentially, we purchase and send e-gift cards to individuals who have achieved stated goals. These rewards are charged to the client with a 3.5% transaction processing fee.
• Sale of Product: Count.It maintains a store through a partnership (currently with Invite Fitness), where clients can purchase Garmin and Fitbit trackers at a discount. Product sales have been de minimus in the last few years.
• Reseller Sales: Count.It has offered a private label version of the platform to other wellness companies. We currently have one active “private label” partner, PUSH Health. These revenues were broken out in 2017, but not since. In 2019 they amount to about 5% of our monthly income.

Subscription Sales Detail

In the trailing six months, Count.It has added an average of 417 new groups and 20 new, paid PRO groups per month — along with an average of 2,842 new users. We currently have 102 active PRO groups. In general, about 5% of all new groups on Count.It convert to our paid PRO service. Roughly half of these “self-upgrade,” i.e. without any contact from us. The other half go through our sales process, including a brief live demo.

The average PRO group size is about 40 members. Our single largest client included 3,000 members, and we’ve had about 40 groups with 100 or more members.

PRO plans range in price, from $4 per user per month for one month, to $2 per user per month for ongoing subscriptions of six months or more.

COGS

• Gift Card Fees: Count.It purchases gift card rewards on behalf of some of its PRO clients. We book the cost of the card as COGS.
• Hosting: Hosting currently represents 59% of our OpEx, and 20% of all cash expenses each month, i.e. COGS plus Total Expenses. The system is hosted at AWS, and we use MongoDB Atlas for our database.
• Stripe Fees: We pay a few for accepting credit card charges.

Expenses

• Count.It has no full time employees. As a result, 50–70% of all cash outlays go to part time contractor fees. These include our engineering team, sales, support, and bookkeeping.
• Engineering expenses have been both the most significant, and the most variable in recent years. In 2019, fees to engineers have ranged from 17% to 56% of all cash outlays.
• In May and June, we had significant, non-recurring expenses related to the filming and editing of the Count.It Movie.

Further Questions

• Rewards

Count.It “semi-automates the delivery of e-gift cards from Amazon, Starbucks, Chipotle, Whole Foods Market, Dunkin Donuts, and Target. Our system generates “fulfillment reports” which our support person uses to purchase and send the cards via the given brands’ website.

• Tracker Sales

Count.It maintains an online store through a partnership with Invite Fitness, allowing us to sell Fitbit and Garmin trackers at a B2B discount ranging from 10%-30%. All shipments are fulfilled by our partner, which ships directly to the client, free of charge. We also have a wholesaler/reseller relationship with Fossil/Misfit, which allows us us to offer discounted pricing on bulk orders of any Misfit device.

• Billing

Count.It has integrated Stripe to handle credit card transactions programmatically. Charges are generated automatically by the system, and then processed when approved by Oliver. A small number of clients require invoicing, and we use Quickbooks to handle that. The billing process happens monthly, and takes less than a day.

• Account Duration

Sixty-four percent of our PRO groups sign up for our one month plan, while 36% go for either the three or six month/ongoing options.

Once signed up, the average lifespan of our active PRO accounts is currently 5.3 months. We have 29 accounts that are six months or more, 12 accounts that are more than one year, and 5 accounts that are two or more years old.

• Contracts

All clients are on a month-to-month basis. We require not contract, and we advise clients that they can cancel at any time.

• CountItNeon Light

The initial CountItNeon sign is a prototype. We built it as a proof-of-concept, and to interest strategic clients and investors. We believe that it suggests compelling way to engage a community beyond the typical mobile or desktop flatscreens. From initial live demonstrations, we have seen that clients respond quickly and positively. We have not yet advertised it for sale, nor taken any orders. We do not yet have a retail price point, or a handle on the cost for manufacturing at scale.

Whether in this format or other, we believe that that any tracker programming for groups must go to where the users are, and that includes public displays (lobby monitors, neon signs, etc.) as well as integrations with group messaging systems such as Slack, Skype, Hipchat, etc.

• Hosting

Count.It relies on a number of vendors for hosting. The main environment, including all front and backend “worker” servers are hosted on Elastic Beanstalk Instances at AWS. The database is hosted on the MongoDB Atlas service. We use Sendgrid for delivering programmatic email.

• Marketing

Our sales stack includes Pipedrive for CRM, and PersistIQ for nurturing inbound, pre-close leads.

• Lead Gen

Count.It currently has no outbound marketing, and relies entirely on inbound leads. At present, roughly 10% of our PRO clients came via the Slack App Directory, and the vast majority of the rest find us via Google searches.

As noted, about half of our current PRO groups “self-upgrade.” The other half request a demo via an online request form. In July, Count.It has received an average of 1.4 demo requests per day. We convert about half of these to paying PRO clients.

• Customer Satisfaction

We do not currently conduct any formal customer satisfaction surveys.

Team

Count.It consists of Oliver, aided by a team of regular contractors in sales, support, engineering, design, and bookkeeping — and then additional legal and PR support (not listed below). The company was founded in late 2014 by Oliver and two full time FTEs. After a six month stint, which included the XLerate Health accelerator, and an initial attempt at fundraising, the company downsized. Oliver has run it since with a team of part time contractors. The team has evolved, but there are now stable contributors in the key positions, engineering, support, and sales.

• Nicolas Castelo, Acting CTO: Nicolas is the most critical Count.It team member. He is also the co-founder of DIXTRA, a contract engineering agency in Uruguay. Nicolas and DIXTRA are interested in putting more time into Count.It.; and DIXTRA has expressed an interest in reselling Count.It in South America. I do not believe that Nicolas is looking for a full time position, but I have not discussed this with him.