SaaS Interviews with CEOs, Startups, Founders
1081 With $2m in ARR and $16m Valuation for 7+ Years, Do You Feel Stuck?
10 Jul 2018
Chapter 1: What is the journey of Eric Frankel and his company AdGreetz?
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple hundred thousand dollars to 2.7 million. I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is Eric Frankel.
If you haven't heard of him before, you should know him. He's an innovative business leader with a proven track record in both traditional media and new and emerging technologies.
He's the CEO and founder of a company called AdGreets, the industry's leading SaaS video personalization platform that is disrupting the $560 billion advertising marketplace by empowering brands worldwide to build strong relationships with customers and exponentially increase engagement.
Chapter 2: How does AdGreetz disrupt the advertising market?
Eric, are you ready to take us to the top?
Yes, I'm ready to take it from the top.
Ad greets. How are you doing this? How are you disrupting the market? And what's your revenue model? How do you make money?
Brands pay us tens of thousands of dollars a month in the low tens of thousands of dollars a month to take their advertising from what we call one size fits all that doesn't really fit anyone to hundreds of thousands or millions of unique versions that talk to Nathan on Tuesday about his baseball cap and black T-shirt.
And how does it do that? If someone sends you one video, let's say this is my face right now, a recorded message, and how do you make my lips move to say John or Sam or Susie?
Well, we don't really. There's a whole creative process. What it's really about is that you and I don't really want to see a commercial today, I'm going to assume, Nathan, that's talking to us about dresses and pocketbooks and women's jewelry. Well, not me, Eric.
I don't know about you, though.
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Chapter 3: What is the revenue model for personalized video ads?
Yeah. Me neither. Look at the beard. I can't get away with it, Nathan. But the same department store sells black T-shirts and blue jeans and cool sneakers that you and I like and baseball caps and whatever. So we literally work with the creative process and literally make ā Thousands and thousands of variables that all get connected and make a cohesive message based on data.
So it knows you're Nathan. It knows what city you're in. It knows what day it is when you're watching. And based on seven different kinds of data, we'll talk to you about, in this particular case, products that that store sells.
In a video format. In a video format. Okay, got it. So the CEO or whatever, head of product records 20 videos and then you know that if a customer has tags X, Y, and Z, they should get video three at this time on this day.
Chapter 4: How many customers does AdGreetz currently serve?
So briefly, we just did one last week for Nissan. They have a mailing list of hundreds of thousands of customers. Which of the 13 model Nissans over which of the 10 years they own? So we're talking to you about your 2013 Rogue or Altima. We know you're in Toronto. We know you bought your car at Toronto Nissan. And there are about eight different variables to get together.
There'd be six billion different versions. And that one's done with voiceover graphics. and various images of cars driving.
Okay. So it's not in the video format. It's not a talking head saying, hey, I know you bought this in Toronto a year ago. You use other more scalable forms of text over video or something to create the customization.
The answer is we use whatever the brand and their creative entity wants them to use.
Chapter 5: What challenges does AdGreetz face in customer retention?
So yes, we do have Olympic athletes. And we do have Lady Antebellum telling you why Oreos are great. But then we also just have a card that comes up that says, Nathan, we hope you're not going to miss the big sale at blah, blah, blah. And where the local retailer is, that's a mile from your house and so on and so forth. So any and all creative, I'm auspices.
How many customers have you scaled to today?
Um, we've done this for about 80, you know, fortune 500 brands all around the world, all different languages.
Okay. And if I take 80 times that you said a minimum of 10 grand a month, I mean, that's 800 grand a month. Is that generally accurate?
No, we're doing ā last year we did a couple of million dollars up from about half of that the year before, up from about half of that the year before. And the business has gone from a Nathan, get away from me, kid. You bother me. I don't want to hear anymore to a, hey, this sounds really interesting.
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Chapter 6: How did Eric Frankel raise capital for AdGreetz?
Are you available to walk me through how this works tomorrow? And then hopefully the next one is, Hey, we want to sign up. And then we go from dozens of clients to hundreds to thousands.
What's it called? You said a couple million in 2016. I mean, we're talking like 3 million.
No, we're talking about literally a couple, two. Two million in 2017, half of that in 2016, half of that in 2015. And I'm hoping that we'll do more than double 2017's revenue in 2018. We already have most of 2017's revenue already booked.
So you doubled in 2017, 100% over your growth rate?
100% the last couple of years in a row.
That's great. Bootstrapped or have you raised capital?
Raised $10 million from smart industry leaders and myself.
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Chapter 7: What growth strategies are being implemented at AdGreetz?
Why did you decide to raise if you have your own capital?
Well, I don't have that much capital. I was the former president of Warner Brothers Television Distribution and spent 20 some odd years there and did quite well, but needed more money than I had in case I was wrong so that my children could still go to college. And my wife and I could still go to dinner.
So, you know, I put in about two million bucks and we raised another eight million from some terrific, smart, well-known executives from around the U.S.
One of those executives goes, Eric, listen, I don't want to be your insurance policy. If you're not confident in this thing to put in more money, why do you want my money to serve as your just in case money? How do you how do you counter that?
So that's not really what happened. I sat down with a stranger who's one of the leading entertainment lawyers in the world who turned to me and said, Eric, I may be the lawyer, too. And I could name 15 huge executives and celebrities that you and all your listeners would be familiar with. He said, but you know what I really like to do, Eric?
I really like to invest in cool new businesses with people like you. And he said, I'm in other friends and other friends and other friends. The next thing we know, we attack.
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Chapter 8: Do Eric Frankel and his team feel stuck in their current growth?
million bucks and we were off to the race.
Okay. And I assume that was priced equity round. Yeah. What valuation did you negotiate? And was that pre-revenue or no?
Um, no, that was, that was pre-revenue and off the top of my head, because it's already about six years ago, we raised 10 million at, I don't know, $16 million, um, valuation.
Pre-money or post?
Pre-money or post. That was, um, post.
Okay. Post. So, so you were valued at 6 million in pre you raised 10. So you were 16 million post, which means you sold over 50% of the company.
We, we sold it. Yes. I own about, I own a little less than a third of the company.
Got it. And now today, if you're doing about a $2 million run rate, that's about 160 grand per month, I assume across 80 customers. Is that accurate?
Yeah, that's pretty accurate.
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