Isaac Hayes III has made a name for himself in the tech world. He has a brilliant plan to build his empire like Facebook and Instagram by giving users their own platform within a platform for users to garner subscribers. It’s called Fanbase. He’s just raised 6 million in seed capital to get it off the ground. Here he gives us a little more information about his new venture.
Kevin Ross: I want to talk to you from an entrepreneur perspective. Now you told me the other day that you had raised money in a way through a type of crowdfunding that wasn’t available previously. Can you explain that?
Isaac Hayes III: Yeah. So I took advantage of The Jobs Act, which was signed into law by former President Barack Obama and Joe Biden in 2012, It took effect in 2013. So from, I think 1935 to 2015, about 80 years, you had to be an accredited investor to invest in early-stage startups.
So that means you had to have a net worth of a million dollars minus your house or make $200,000 a year for two consecutive years and that pretty much knocked out anybody.
I don’t care what color you were. Just all people, it prevented 99.9% of people from being able to invest in early-stage startups. So if you ever wonder why no one knew when to invest in IBM or Google or Apple or Microsoft or Facebook or whatever, only wealthy people knew about these opportunities.
So the Jobs Act wiped out the accredited investor role and allows people like me to raise capital from the general public which is really a great opportunity because we can fund our businesses but don’t have to seek out standard investment protocols to be able to capture that money, which is especially hard for black founders. So, to be able to raise money from the general public, I think is phenomenal.
KR: What made you decide to go this route instead of just starting from scratch. Often in the black community, we don’t like writing, we don’t like doing grants, we don’t like applying for things. What makes you different?
Isaac Hayes III: I think it was just the necessity, right? We were in the middle of COVID, and I wanted to raise capital, and no one was really moving around. And also, I had a couple of venture capital meetings and the tone in which VCs spoke to me; I didn’t really appreciate.
It was almost like; they were looking for reasons not to invest. Like, oh well, come back when you have this or come back when you do that. And I’m like, that’s not what other VCs have to do. That’s not what other startup founders have to do. Other startup founders can walk into a room with an idea on a napkin and walk away with a check for 5 million.
It made me a better founder. It made me know my business more in-depth because there is an enormous amount of paperwork that you have to file, and a lot of things that you have to go through to really do that and audit, financial review, you incorporate, just all kinds of stuff.
You know, just numerous. I mean, it’s a three month process to onboard and to get everything to pass compliance, to be able to even start to raise. And a lot of people don’t even make it through that process, because it’s just too daunting. It’s intimidating. But I mean, I was up for the challenge and if you want to raise capital for your business, you got to do it.
KR: Is this your first business?
Isaac Hayes III: Not my first. It’s my first startup. I mean, I’ve produced for over 20 years. I’ve been a voiceover artist and just been all around entrepreneur my entire life. But I think this is probably the largest undertaking that I’ve taken on, but it’s been such a joy because it really comes from a place of passion. So the fun part in all of this, is the getting to the next step in that process as we continue to grow.
KR: Now, I’ve heard that when you find you get funding that there’s a lot of looking over your shoulder, a lot of well, what’s going on this week, what’s going on next week. Are you getting a lot of that? Are you having to explain yourself a lot or do you have the freedom to make your moves?
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Isaac Hayes III: Well, I definitely want to keep our investors aware of what’s going on. We have over 8,000 investors. I definitely want to make sure that we stay in constant communication with them. Often on the app, which is really one of the best places if you ever really want to ask me a question.
I tend to be in audio rooms from time to time, and I’m more than happy to answer questions to people that have them about investing, about the process of the startup. But we also send out newsletters and then also give investor updates through starting your portal. So it’s really good to be able to communicate with that.
I think, I’m not gonna say it’s necessarily looking over their shoulder, but a lot of people are definitely first-time investors and some of them do get a little antsy, but that’s totally fine and I expect that. So I tend to over-communicate, which is not a problem for me because I want people to understand where I come from and who I am. You’re investing as much into myself as you are to Fanbase and so I really want you to understand what I believe and how I feel we should run the company in the direction we should go. So I don’t mind over-communicating.
KR: I know the other day when we were speaking you said that you got your second round of seed funding. Are you still doing that for $250 or more?
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Isaac Hayes III: So both rounds are now closed. I did up the first round of 3.4 million and the second round was 2.6 million. We raised a total of 6 million. That one just closed on Friday last week. We got to 2.6 million. So that’s phenomenal for us. I am extremely excited to be able to achieve that. And now we’re just getting ready for Series A. So Series A is going to be a little bit more complex. It’s another challenge, but we’re preparing for that now and more than happy to take on that challenge.
KR: What is your goal with this business?
Isaac Hayes III: To disrupt. I think there are two significant things that I think Fanbase will do. Number one, it’s going to emancipate people from a system that basically locks them out. The ability to distribute your content to anyone across the globe and have people be able to subscribe to you is an enormous feat.
So that’s one. And then I think it’s also gonna really provide an opportunity for people to make money in ways that they never made money before, really pursue their dreams and their passions by being able to now do those particular things, do those things that they always thought that they wanted to do.
Teach classes and be master orators and fitness enthusiasts and influencers and people that can really monetize the information and the talent that they have in a way that they’ve never been able to before.
KR: So when you say you’re getting ready for, you said Series A. How does that work?
Isaac Hayes III: So that’ll probably be more through a traditional venture capital route and I’m glad I kind of went through this route because it shows VCs that I can raise money without them. So the ability to say, hey, most people that are in the position that I am look to VCs as the only way to raise capital and it’s super, super hard.
So for us, I could actually do what we call a Regulation A plus through Start Engine and that would allow me to raise up to 75 million the same way through accredited and non-accredited investors. So that’s another opportunity to do so if I wanted to. But also I don’t really discount the value that VCs bring. So you also want strategic partnerships. I don’t mind working with VCs and would love the help of VCs that have relationships or opportunities. It can help this company scale.
So you definitely want those types of relationships. But I think it’s good to know that we’ve proven ourselves. So it gives us a little bit of leverage in dealing with these other companies that, hey, we’re able to raise this type of capital without you, so when we want to raise more capital, I think we need that and it really helps us to be able to set our valuation and really raise the value of what we’re doing.
KR: Are you garnering any interest at this point?
Isaac Hayes III: Yes, absolutely
KR: Then explain to me how I make money if I sign up. Like, how many subscribers do you have at this point?
Isaac Hayes III: So it’s not about subscribers on Fanbase, it’s about users. So we have over 260,000 users. What that means it’s just like any social network. We have a user base. Every single person on the platform can turn themselves into the point of subscription. So you don’t subscribe to Fanbase. You subscribe to individuals that you want to get specific content from.
So if you’re a really big Rihanna fan and she happens to be on Fanbase one day, you can subscribe directly to Rihanna and she can post content such as tutorials, Docu-Series, behind the scenes of her working on her album, all these different things that give you the ability to get that content from her.
So we’re turning every business, every person, every individual into their own Netflix. And so the importance of that is, is like now it gives people a reason to make content that they never had before. But it’s also a great way to connect with your fan base or your customer base in that fashion.
KR: Are you getting a lot of celebrity support?
Isaac Hayes III: We are, and I’m interested in it because I think it helps spur growth, but for the long-term growth of the company, it’s more about just the regular users on the platform. The regular users on the platform are gonna make Fanbase successful.
I love celebrity support, I think it’s great but celebrities tend to come and go. They might be active for a little while then they might not be as opposed to our fantastic user base, which is active all day, every day to the tune about an hour and 21 minutes a day, which is way above what people are on even with YouTube, which is about 40 minutes a day.
So we’re really having engagement on the platform that’s a really, really a long time. So as we continue to scale that visibility and that traction that we have is going to continue to stay. So I look forward more to the growth of the traditional user base as opposed to celebrities.
KR: Now, as far as users are concerned, is there anything that you find of course you’re learning as you watch the platform, is there anything that you find surprising as far as users that you don’t see on other networks?
Isaac Hayes III: The amount of time that they spend on the platform. I mean typically yeah. Typical people spend maybe 29 minutes a day on Instagram, 20 minutes on Facebook, 40 on YouTube is probably the most, but an hour and 21 minutes a day on Fanbase, that’s significant.
That’s a large gap between the time. Even the session time. Most people’s session time, which means how they use it in spurts and they start and stop is about four minutes, four minutes. Most people’s session time on Fanbase is around 10 to 11 minutes. So they’re using the app a lot more times a day and then even in those sessions that they do, they’re staying on the app 10, 12 minutes at a time.
KR: What about traditional advertisers?
Isaac Hayes III: So we don’t run ads. And I think that separates us from a lot of platforms because traditionally on platforms like Instagram. Instagram is in competition with its user base because for them to have a successful ad business, they can’t allow everybody to see your content.
Because if everybody can see everything that you posted, if you had 20 million followers, then you would have the visual equivalent of Sunday Night Football and you in turn could charge a brand $811,000 for 30 seconds worth of your time, to take over your page and show something. So for that Instagram smushes your visibility down to about 3 to 4%.
KR: As well as Facebook?
Isaac Hayes III: Yeah. And so they crush that down so they can run ads and so they get the visibility. I even ran an exercise on my page and it would take me $10,000 to reach 1 million people in seven days using the boost feature on Instagram. So that means if I had a million followers on social media, that means I could charge $10,000 over seven days. If I had 10 million followers, I could charge 10 million over seven days, or a million dollars.
So it’s an enormous amount of opportunity for people to be able to make money. So, that’s the thing about it. Reaching a million users for $10,000 then reaching 10 million users for $100,000, reaching a hundred million users for a million dollars but on Fanbase, we allow everybody to see your content.
KR: OK. All right. And so what happens when people want to advertise stuff or they want to spam, how do you rule that out?
Isaac Hayes III: I mean, that’s just content moderation. You have to be better about that. I don’t really knock the other platforms for having very sketchy content moderation because those are platforms that have billions of users. So it’s hard to watch everything that instantly appears on your platform that may or may not offend somebody, take care of it, pull it down. It’s a huge task.
So unless you’re really, really good at it, you have to have a really, really good algorithm. Algorithms aren’t perfect. There’s gonna be errors made. So we haven’t struggled with spam and stuff like that up to this point, but we’ve gotten a few attempts to spam the platform, which means I think we’re going in the right direction so now that people feel like this is a place where we need to spam and advertising. So it’s actually a good thing that people are trying to do so.
KR: Now, you may or may not be able to answer to this question, but how did you put together your app to actually create these functions? Was that outside help or did you do a lot of that yourself?
Isaac Hayes III: No. My CTO who is part of Fanbase and our team developed the platform. I was the big idea guy. They’re the guys that make my ideas come to life and it was a great partnership.
KR: How many people are on your team right now?
Isaac Hayes III: I want to say probably 26, including senior staff.
KR: All right. What’s the greatest challenge right now besides still raising money?
Isaac Hayes III: I think finding the right recipe of algorithms and visibility that helps the users really, really engage. Like as much engagement that we have right now. There’s so much more that we can do and that we’re working on to just connect all these moving parts, because the app has several verticals of function, which means we have stories, live, photo, video, audio, short form, and long-form content.
So to sew all of these individual functionalities together so that people can really use all of them simultaneously to send content or express themselves, there’s a lot of work needing to be done and we’ll be doing that as we continue to go through Series A.
KR: How was it putting together the team? Was that a challenge?
Isaac Hayes III: Not really. I think I was really blessed as far as my development team. The other key hires are people that I sought out that I felt fit the culture of what we we’re doing and they were really experienced in what we do and we need that type of experience to scale a company. So I’m really happy to have found the great people that work with Fanbase.
KR: Okay. You’re based in Atlanta?
Isaac Hayes III: Yes indeed.
KR: Okay. So what’s your goal as far as Atlanta’s concerned? Do you want to build other businesses there or you want to encourage other people to come there?
Isaac Hayes III: No. I mean, I want to scale Fanbase to one of the largest social media platforms that ever existed that was founded in Atlanta, Georgia, a predominantly African American community. Knowing the value that black culture brings to social media, I think this is the perfect place to do that and so I’m just looking forward to turning this startup into a mega monster that people just can’t stay away from.
KR: What do you see as the future of Fanbase? I mean, what would you like to get into? Maybe some other types of development like film or TV?
Isaac Hayes III: Absolutely. I mean, as we move into different types of content, I think there are enormous amounts of opportunities to get into like long-form content, content creation, music. There’s so much more. I don’t always really like especially now since the competition per se is watching, I won’t say too much. We continue to build, but there’s a lot of room to grow.
KR: Anything you want to add that I may have missed?
Isaac Hayes III: No, I think that’s it. I mean, I really just think that other than that, we just have a lot of cool functionality on the way. Looking forward to, like I said, raising this next round of funding, it’s gonna change everything for us.
KR: How can people sign up?
Isaac Hayes III: They can just go to fanbase.app or they can go to the iOS and Android stores and put in fanbase and it’s in a 170 countries free to download, free to join, free to create pages, free to use the platform. But if you would like to subscribe to someone or you yourself would like to create content and have subscribers, you have the ability to do so.
KR: One other question I wanted to ask, how did you get that name? Well, I know fanbase makes sense, but I’m saying, I would’ve thought that would’ve been taken.
Isaac Hayes III: So when I founded the company in 2018, the first thing I did is trademark. So before I ever wrote a line of code in which I tell people, when you think you have a really great idea, try to get as much IP as you possibly can so that you don’t hit roadblocks.
So I trademarked that in the specific area in which we function as a startup. It got approved. I did it before I ever wrote any code and before the app was even — You know, the app was well in development, but I had already filed the trademark and then I started buying .com like fanbase.app, fanbase.net, fan base.co.
We don’t have fanbase.com because that went into some crazy auction. But yeah, as common as the name fanbase is, you think it would’ve been snatched up by now, but it wasn’t. Then we were just fortunate to be able to have the IP that we have.
KR: And then getting a trademark is no easy process. That takes a minute.
Isaac Hayes III: It does. But I mean if you really do it early. Cause a lot of people abandon their trademarks. Having a trademark is one thing, but then being able to execute the idea pass just the trademark, which there were other companies out there called fanbase. They did it a little different than what we did. So we would make sure that we carved out exactly who we are and what we do and we can protect that as we continue to scale.
KR: They probably had office actions. Cause that’ll definitely slow you down. Are you familiar with that, office actions?
Isaac Hayes III: No.
KR: Okay. Office actions are what prevent you from — It’s like something you did wrong or something you didn’t fill out right that prevents you trademark from going through.
Isaac Hayes III: No. But often people, their trademarks were active, but then they wind up being dead. They’re like, you know, so you have to use the product for a particular amount of time before it becomes a permanent mark or whatever. And so we’ve been in business so I launched a trademark or filed the trademark in 2018. So we’re already in 2022. So we’re well into the growth and development of what we’re doing
KR: Well congrats and we’ll definitely keep watching and seeing your progress. I’m sure you’ll be very successful and I’ll definitely pass the word on and I’m grateful to talk to you for these few minutes
Isaac Hayes III: Absolutely.