Episode 62: The Capital Market and the Subscriptions Industry with Robert Bennett, Chairman, LightJump Capital

Mar 14

In this week’s episode of Subscriptions: Scaled, we speak with Robert Bennett, Chairman of LightJump Capital.

During the episode, we discuss the capital market and what it looks like for subscription business valuation. We cover everything from how the subscriptions industry has evolved to the future of the subscription model.

Keep reading to learn more about the episode.

LightJump Capital

LightJump Capital focuses on providing public market access to technology and technology-enabled brands using the Special Purpose Acquisition Vehicle (SPACS).

The company takes an interdisciplinary approach with team members from various backgrounds, from venture to entrepreneurial enterprises.

Robert Bennett

The episode begins with Robert sharing more about himself and the business.

Robert graduated from the University of Southern California in the early 90s. He got his MBA, started a boutique private equity firm called First Lexington, and acquired subscription-based businesses. In the early 90s, these mainly were publishing businesses.

However, Robert learned a lot about managing subscriptions in the publishing space in the 90s. By the early 2000s, Robert was working with software, IT, tech, and digital media deals. Then he started looking at venture deals.

Robert discusses how software and SaaS-based models have evolved to subscription-based companies, which provide much more certainty and predictability on revenue. He talks about how there are still a lot of subscription-based businesses in media, like Netflix, for example.

It isn’t just new SaaS enterprise businesses leading the way in subscriptions, and there are plenty of opportunities out there for various brands.

The Evolution of the Subscription Model

Robert has worked in subscriptions since the 90s, and he discusses how he’s seen the sector evolve over the years. He admits that previously subscriptions weren’t considered as interesting as they are now for businesses.

But now, the best businesses for subscription are SaaS models, and the subscription-based model is what everybody’s trying to accomplish.

That includes all types of businesses, from those in software to media. Robert shares that he had a conversation with the owner of a carwash who wanted to develop a subscription-based business. He wanted to offer an all-you-can-wash premium subscription.

So really a subscription-based model nowadays can apply to any type of business out there.

Robert talks about the difference between great models working well and bad models failing. While most businesses can benefit from the subscription model, Robert believes it doesn’t work for everyone and you shouldn’t force it. If you’ve got a low-margin business, the subscriptions aren’t working, the CAC is high, and the long-term value is low, subscription may not be the best route.

For some companies, it’s better not to have a subscription model. A business shouldn’t force it, and Robert recommends brands be cautious about this.

Robert has invested in many businesses in his time. He talks about some of the fundamental differences he’s seen in how subscription businesses approach sales and revenue compared to more traditional retailers.

Another topic heavily discussed in the episode is deferred revenue. Deferred revenue refers to liability on a company's balance sheet representing a prepayment by its customers for products or services that have yet to be delivered.

Robert also talks about marketing and where to attribute costs.

The Future of the Subscription Model

Toward the end of the episode, Robert shares where he expects the subscription trend to go and what he thinks will happen over the next few years.

Robert expects the subscription trend to grow across all industries, especially SaaS enterprises. He believes types of businesses love and strive to utilize the subscription model.

—