SaaS Interviews with CEOs, Startups, Founders
1150 Detroit Based Referral Program software passes $600k in MRR
17 Sep 2018
Chapter 1: What is the background of Jeff Epstein and Ambassador?
It will all work out if you work hard enough. He founded Ambassador back many years ago, 2010. He'd been at it for eight years, really focused in on SMB space. Since then, he's drastically increased his ARPU and really focused and doubled down on the mid-market to enterprise kind of customers, helping them with their affiliate and referral programs.
They currently serve about 300, 400-ish customers, paying around $2,000 per month, so do the math, somewhere around $750,000 in MRR. That's up significantly in December 2020. Sorry, in 2016, they did about 5.1 million. He's hoping to maybe as a stretch goal pass 10 million bucks or sorry, 1 million bucks per month here in 2018. But regardless, he's doing it the smart way. Only 3 million raised.
And really all this funding is coming from the best source, his competitors. 2% gross revenue churn monthly. That's obviously getting driven down. 7 grand to acquire a new customer. Payback less than four months.
Chapter 2: How did Ambassador transition from SMB to enterprise clients?
Lifetime value north of two years. All with his team of 40 folks out there in Detroit. 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 Jeff Epstein. He's a CEO and founder of a company called Ambassador at GetAmbassador.com.
Chapter 3: What is the current revenue model and customer base of Ambassador?
It's a 40-person venture-backed startup headquartered in Metro Detroit. Ambassador provides relationship marketing software to some of the world's most recognizable brands. He's a lifelong entrepreneur. His first internet startup was in 2000 and provided online food ordering for college students. He ran this startup while earning his BA from Michigan State University.
Jeff, are you ready to take us to the top? Absolutely. All right. So tell us, yeah, yeah. Tell us about Ambassador. What do you do and what's your business model? How do you make money? Yeah, so we're SaaS, so B2B, sell the customer, primarily marketing departments. We help companies get more customers at a very basic level.
You know, the way people consume through, you know, they talk to their friends, look for recommendations, be a word of mouth.
Chapter 4: How does Ambassador manage customer acquisition costs?
We provide the platform to allow businesses to leverage the voice of their customers, their partners, their affiliates, influencers to drive more business. And we obviously charge them a license and that's how we make money. And are you more SMB or enterprise focused or maybe ask differently? What's the average customer paying you per month? Would you say?
Average customers paying us about 2000 per month. Um, so we're much more, uh, slanted towards enterprise, but we work with, uh, our sweet spot is companies over 50, you know, over 50, uh, people in the organization. Um, but we do sell to some smaller businesses. We've helped a bunch of companies grow and get acquired and things like that as well. Okay.
And like how many customers are you working with today? Uh, uh, Several hundred. Okay. So like north of a hundred, but less than 500.
Chapter 5: What strategies does Ambassador use to reduce churn?
Is that fair? Yeah, that's fair. Okay. And, uh, give me more of the backstory here. When did you launch the company? What year? So the company was founded in 2010. It's been around a while. Uh, my background, uh, started, it was super SMB focused premium, uh, you know, do everything wrong. And we learned to, uh,
to build the company that can scale is, you know, charge more money and, and, um, you know, find great people to help build, um, you know, the product and then build a success team and then, you know, market and, and, and, and sell and all those things. So, uh, it's been a, it's been a long road. It's, you know, again, it's almost, it's eight years now.
So it's, it's, it's flown by for me, but, um, the, the company itself has changed quite a bit. You know, again, we were very SMB startup focused.
Chapter 6: What is the lifetime value of Ambassador's customers?
We've moved, continually moved up market as we found a success, uh, into some of the biggest brands in the world. And then as, as an organization, you know, we, we raised a little bit of money and we built teams. How much have you raised to date? About 3 million, not a ton, right. From, from a venture perspective.
Um, and, and, you know, we've operated super, you know, capital efficiently being profitable today. Uh, we, we will be this year cashflow, uh, from a cashflow perspective last year, we were a little bit in the red year before we were in the black. So, um, we try to be a pretty intentional and efficient, but we also have enough capital where we can hire ahead of, of, of some needs.
But, um, yeah, it's, it's been, uh, it's been like I said, eight years and, uh, you know, building out functional teams and have a bunch of departments and all that fun stuff. And Jeff, what are you growing at year over year? So, so like last year, 12 months ago, what were you at about? Um, I don't, I don't have the, no, I don't know if we can share the numbers I've ever had.
I mean, we're, we're growing in a pretty solid clip. We were on the eight five 500 list, uh, two years ago in 5,000 last year.
Chapter 7: How does Ambassador approach funding and investment?
Um, which is like several hundred percent growth over three years. Um, I think it was in the thousands percent growth before that. So, um, but just to be clear, those, those ink guys, I mean, they're doing, I mean, they are taking, you know, three year growth, not year over year growth. I'm just curious, generally each year, are you doubling year over year or 50% growth?
I mean, generally where are you at? not quite doubling. Um, so we're not quite there, but, um, you know, for us, it's a, it's a matter of not just growth at all costs. It's also trying to be capital efficient, grow in a kind of sustainable way. That's right. Yeah. And you were just, we understand size too. I mean, you revealed on 2016 revenue is about 5.1 million, right? Yeah. Yeah. Yeah.
Chapter 8: What insights does Jeff Epstein share about future growth?
And, and when did the transition from SMB to enterprise really start in terms of your product roadmap? So, From a product perspective, it's funny. Some things have changed, but it was more really in the way that we ran organizationally. So the product itself can still, I think, easily work with small companies. What we found that it wasn't effective from a business perspective.
And for us, that means we wanted to spend more time and make companies more successful. We cared about having companies long term versus having lots of people in the door and then a fraction of them staying. So exactly. So for us, it was focusing more on churn, bringing in companies, spending more time with them, making sure that it's something that they'll be successful with.
And for that reason, we just kept we kept moving up market and seeing where we could, in fact, be really add as much value as we thought we should. I remember you, by the way, going through this transition because I was a paying customer at my first company. Hey, I remember the emails you were sending out, trying to figure out how to verbalize the price increases and the shift in strategy. Yeah.
Yeah, exactly. And it's one of those things, right, where for us, it just made sense to continue moving a market. And again, in order to build the team and again, we haven't really it's three million is a lot of money for a lot of people. And it is for us, too. But as you know, for most venture backed companies, I mean, this company or size could have raised 10 or 20 or 30 million dollars.
And you can build the company very differently, especially if you have much lower price points. So for us, it just made sense the way that we're operating is let's get funded. We're primarily funded by customers, right? We obviously do way more than $3 million a year. That's who's funding the business, so to speak. And so let's be really intentional about keeping them around.
And for us, every person that has to answer a question, they have to spend as much time, potentially more time with a small customer as they do with an enterprise customer, right? And so for us, it's just a matter of of time and efficiency to spend our time with people that are paying us the most money. And that also informs how we market and how we sell.
And so all of those things together, you know, you can only serve so many masters, so to speak. And so for us, it was, let's go up market. We've seen the success there. Our customers are paying us more and staying longer and happier. And so let's focus on that at the end of the market. Do you think sometime this year you'll pass that million dollar per month mark?
Or do you think that you'll need more time to do that? You've got to be close. Oh. Potentially. Right. I mean, it's stressful. Yeah. So yeah, well, it'll be, it'll be close. Yeah. I mean, the reason, the reason I said, I'm just back in the napkin. If you're five, one in 2016 and you grow 180%, right. I mean, you can start to do the math.
And, um, I mean, that would be, that would be a fun metric. And I love that you have, I mean, you could easily, I mean, look, I'm assuming you're doing seven, 800, something like that. Now, I mean, you could easily be raised, have raised, like you said, 20, 30 million bucks. You've chosen not to do that. Let me ask you though, cap table questions. So
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