SaaS Interviews with CEOs, Startups, Founders
AdEspresso: How They Make $1.8 Million Per Year
30 Oct 2015
Chapter 1: What is the main focus of AdEspresso and its target audience?
This is The Top, where I interview entrepreneurs who are number one or number two in their industry in terms of revenue or customer base. You'll learn how much revenue they're making, what their marketing funnel looks like, and how many customers they have. I'm now at $20,000 per talk. Five and six million. He is hell-bent on global domination. We just broke our 100,000-unit soul mark.
And I'm your host, Nathan Latka. Yesterday, you guys heard from Hollis Carter. He broke down how to charge 110 people $3,000 for a three-day mastermind. This is the Post Roll Open Loop for episode number 70.
good morning good morning good morning top tribe you are going to love our guest today those of you that are sass entrepreneurs or you want to get into an accelerator this episode is for you his name and god damn it i gotta start over armando is it beyondy yes damn it i should have just did it see i got it right anyway wasn't that good the energy was so polished now i gotta shit again perfect
All right. Okay. Let's just keep going. Yeah. So today's guest, just leave all that shit in. People will laugh. Today's guest is Armando Biondi, and he is the co-founder of Ad Espresso and five more tech and non-tech companies prior to Ad Espresso. He's also an angel investor in Mattermark and over 30 other startups. And I love Armando. He is hashtag 500 strong.
That means we're both part of 500 startups. And he's also a former radio speaker. Armando, are you ready to take us to the top? Yes, and I love this. I love it. I love radio so much. You have a radio voice. You have the accent, so everyone knows you're already way smarter than me. This is going to be great. So walk me through Ad Espresso. What exactly does it do? Yeah, super easy.
So Ad Espresso is a Facebook advertising optimization platform for small and medium businesses and small and medium enterprises. So anybody that's spending between five and 50, maybe up to 100K per month in Facebook advertising, that's our sweet spot and where we can have the most.
And the general problem for these guys is that, you know, when you start spending that kind of money, you need to test a lot of things. And so doing that, it's super painful, super time consuming. And so we streamline the whole process. And so I'm on your website right now. You have a base plan of $49 per month, a premium at $149 and an elite at $299. Which one is the most people sign up for?
The average. So the number is the basic plan. But in terms of value, the premium plan is the most frequent. What does that mean? What do you mean value? So if you look at the value, so at the total revenue, the most percentage of the revenue comes from the premium plan. But of course, there are more people in the basic plan, which makes sense. Volume wise, the basic plan has the most volume.
Correct. Okay, so walk me through a few kind of check notes just so people can understand how similar or different you are to where they are in their life right now. You said you've been part of five other tech or non-tech startups before this, and you are an investor in over 30 other startups. How many years ago was your first startup? Yeah. So the first technology startup was 2010.
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Chapter 2: How does AdEspresso optimize Facebook advertising for businesses?
Correct, because you're going to pay for your lawyer and for the lawyer of the counterpart. Not only that, when you're doing a price round, you don't know how it's going to go until you close the last investor, because at that point you have the whole amount, and so you process the paperwork and you have the wires coming in. While with a convertible note, you can have a rolling closing.
That's how it's defined, so essentially you take money as it comes. Yep, yep, on the same terms. Correct. On the same terms or on the terms you decide, because that's another difference between the convertible note and the priced round, right?
In the convertible note, you as the entrepreneur are the one that define the terms, while in the priced round is the investor, usually the lead investor that define the terms. Got it. And we say terms, but obviously the big one is pre-money evaluation to understand what your dilution is going to look like. Great. Okay, let's focus back on Ad Espresso.
So your funding history, 1.2 million, you and you have a co-founder. How many people are on the team right now? So as of now, 15 people. We're going to be 18 by the end of the quarter. Okay. We are now, so the quick snapshot is that we are now generating $1.8 million in revenue annualized. So we are a profitable company. We have been growing 15x.
Now, Amrondo, just to be clear, the annualized revenue, right? So you're at about $150K per month in monthly recurring revenue. Is that $1.8 million the past looking 12 months or the forward looking 12 months based on August run rate? Correct. The second one, the forward-looking based on the August run rate. So help people understand how you make money.
If I spend three grand per month on Ad Espresso, am I only paying that 49 bucks per month or is there a percentage of the ad spend you're taking too? No, no, no, no. We take no percentage. You only pay the subscription fee. Got it. And then you either upgrade or you wait for the next billing cycle to kick in. Got it.
So walk me through then how many total paying customers do you guys have right now? Um, about 1000, something more. Okay. About 1000. So people are then, if you look at the total, I guess if you look at the ARPU, the average revenue per user per month, if you're doing 150 K per month with a thousand customers is 150 bucks per month. Yeah, 100 more or less. Okay, 100 more or less.
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Chapter 3: What pricing plans does AdEspresso offer and which is the most popular?
Okay, so kind of in between, well, I guess premium to elite. Okay, interesting. And then walk through a lot of the folks listening in, they're part of the top tribe, they're software as a service entrepreneurs. So they like understanding things like, does Armando have a CAC, you know, customer acquisition cost to a lifetime value ratio that he likes to stick to?
So walk me through things like, let's figure out lifetime value first. So if you have $100 ARPU, how many months will they stay with you on average? You can say that the annualized value for customers is like $1,000, maybe $1,100. But we are a very peculiar company on that side because our go-to-market strategy, so our acquisition effort is essentially inbound.
Like 95% of our customers found us because of the content that we write. So we do not have a sales team. Well, what about ad spend? What about variable marketing spend? Um, like $5,000 per month. Okay. What about, do you do any like conferences or do you pay people that blog on your site or anything like that? No. So we, we don't do conferences.
The 5,000 include the people that are writing for us that have not the founders. So not me, not Massimo. Hmm. Okay, so $5,000 per month is about the total marketing spend? Correct. Okay, interesting. And so walk me through, you were about to say growth rate before I rudely cut you off. How many new paying customers on average are you guys adding in any given month? That's a good question.
We are adding probably a couple hundred new customers. Let me quickly check on that because I have the charts in front of me. Sure. Um, yeah, I would say probably a couple hundred customers right now. Okay, so two to 300 new customers per month, average ARPU of 100 bucks per customer. So you're adding anywhere between 20 and maybe upwards of 30k per month and new MRR. Yeah, that's great.
That's an amazing growth rate. So walk us through. How do you decide when you want to do your next round of funding? Do you not want to do funding? Are you profitable? Help us understand economics. Yeah, so as of now, we are actually not thinking of going for another round of funding because we don't need to.
And that's a big, you know, one of the counterintuitive things that out of early stage founders don't really realize that You want funding when your company is weak. You really don't want funding when your company is strong. Following that logic, why would anyone ever say they want funding?
Wouldn't they say they don't need funding even if they really need it to remain in a strong leveraged position? Was that sorry? Following the logic you just articulated, you only want to raise money when you don't need it.
Wouldn't everyone always say they don't need money so that if they do raise money, they do it from a position of strength, even if it's a perceived strength versus an actual one? Correct. And that's the name of the game. So it's on the investor's side to actually look at the financials and the unit economics and understand how the company is really strong, regardless of what the founder is saying.
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Chapter 4: How does Armando Biondi's experience as an investor influence his business strategy?
Because to grow 20% month over month when you have 1,000 customers and you need a couple hundred customers more, right? you need to do different things compared to when you are at, I don't know, 10,000 customers. And that 20% is going to be 2,000 customers more. So you said most of your growth, though, is coming from free content marketing or inbound marketing. Is that right? Correct.
What's the number one way you're doing that inbound marketing? We actually doing a lot of different things. So we have a weekly blog that posts. Actually, now we are posting mostly, I would say probably on a daily basis on a normal week, you know, without considering August. There was a kind of a particular month. So we have a blog and we post very often on there.
As of now, we are the company in the space that's generating the highest number of monthly uniques because of that. How many monthly uniques does your blog get? Around 180,000. 180,000? And is your goal with the blog post to drive people into a free trial or directly into a paid plan? So the goal with the website is to educate people.
So we post a lot of stuff that's informational and educational with data-driven analysis and stuff like that. And so we want people to get better at Facebook advertising. Then on the side, yes, we have a product that can do the job for them. So if they don't have the time and all the expertise, that's where we can help. And the next natural step is the free signup.
And so walk me through, we already talked, you're getting a couple hundred paid signups per month. How many free trial signups are you getting per month? That's another very good question. So this month, a couple thousand. Okay, so let's call it between 2,000 and 3,000. Mm-hmm. Got it. Okay, so let's just call it 200,000 monthly unique website views.
You're getting about, what is that, 1%, 2,000 to 3,000 trying the thing, and then another 10% of the people that try it converting to a paid plan. That's as of August here in 2015. Guys, you kind of heard it here from Armando. This is a super successful, fast-growing SaaS company. Go to their website, Armando.
armando what's the website so people can study it uh adespresso.com of course adespresso.com okay top tribe sponsors are wanting to pay me a lot of money to get on the show and i'm telling them all no because i don't want to waste your time so help me out and go subscribe to the show in itunes and then leave a rating and review all right sir my heart is pounding i'm getting excited it's my favorite part of the show do you know what's next
Uh, not really. Armando. What's happening right now? Come on, man. It's time for the famous five. Buckle up. Here we go. Number one. See, that's why I made sure to categorize this as explicit because the holy shits just slip out every now and then. So number one, what's your favorite business book, Armando? I'm going to surprise you on this. So the art of war, the art of war.
Why, why would that tell me why you thought that might surprise me?
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Chapter 5: What is the funding history of AdEspresso and how much have they raised?
Uh, because it's probably, I guess not that much. That's the one that's like 200. That's the one that's like 200 years old, right? By like Sun Tzu Zhang or something. Correct. So it's a much, something like a philosophical book and, and, um, but it's very, very much applicable to business actually. There you go. Okay, number two.
And again, guys, we'll link to all this in the show notes at NathanLacka.com forward slash the top seven zero, including the numbers Armando articulated along with the books and other links. So number two, Armando, is there a CEO that you're following or studying right now? One that I love, Daniel Muriel from Mattermark, which is, of course, one of the reasons why I invested.
Say that one more time. What was his name? Daniel Muriel. Daniel. Great. And what was the company? Uh, Mattermark. Mattermark. Great. Okay. Number three, what's your favorite online tool besides Adespresso? That's another very good question. Chart model. Chart model. What do you guys use that for? A chart model because it's a tool that I use to measure and track revenue. Got it. Got it.
Is that chart mogul or chat mogul? Chart. Chart with an R. Okay. Chart mogul. Great. Okay. Armando, you are building an empire real quick. Tell me a married single kids. What's the story there?
uh single uh no kids two cats okay two okay two cats that's a big one here so here's my big question yes or no do you get eight hours of sleep every night i get six on average but i'm a lucky guy because that's what i need so um i'm good with that that when you have two cats you have to manage right so all right that's my time that's up all right hey armando last question here if you wish your 20 year old self knew one thing what would it be
Ah, that's a hard one. Go for it. Go for it. Well, guys, you heard it here. Armando started off over 30 companies he's invested in. Now he's doing well over $150,000 per month with Ad Espresso Armando. Thanks for taking us to the top. And we're just getting started. Thank you. All right, bye-bye.
Coming up tomorrow, you guys will hear from Charlie Hooper, who breaks down how to pre-sell 25 people at a $500 price point for a course all while he was on vacation in Brazil. Okay, Top Tribe, sponsors are wanting to pay me a lot of money to get on the show and I'm telling them all no because I don't want to waste your time.
So help me out and go subscribe to the show in iTunes and then leave a rating and review.
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