SaaS Interviews with CEOs, Startups, Founders
CustomInk Paid Over $20m for Swag.com, Will do $60m+ This Year, 30% Margins
20 May 2022
Chapter 1: What is the story behind the growth of swag.com?
Yeah, we started in 2016. Since we launched, we've grown over 100% every year. We're on track to do more than 60 million this year in sales.
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
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He's an entrepreneur and award-winning documentary filmmaker, currently the co-founder and CEO of swag.com, which was acquired by Custom Ink a couple months ago, back in November, 2021. Swag.com is the best place for companies to buy and distribute quality swag that people will actually want to keep. Jeremy, you ready to take us to the top? Let's do it. So much swag ends up in the trash, man.
You guys do something special. What's the secret to swag that people keep?
That's actually a good question. So we're very curated. So we don't offer thousands of mugs or thousands of water bottles. It's really the top of what's out there. So the top 20, top 25. It makes sure that people actually get stuff that they want to hold on to, not in the trash, but it also makes the decision-making a lot easier. They don't have to be paralyzed by choice.
They can find what they're looking for, design it, buy it, and know that the people that get it are really going to love it.
So give me an example. What's the number one piece of swag you're recommending in 2022 as everyone comes back to conferences and real-time events? Yeah.
I'm really about not necessarily the flashy things or the unique things. I want to offer people products that they'll actually want to keep. So even a really great backpack or a water bottle, except for the bottle is a really high quality one. It's not going to be flimsy or break or leak. I want to make sure that people are getting stuff that is actually going to be held onto.
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Chapter 2: How does swag.com ensure customers keep their swag?
Well, you can double either your customer count, but you can still double revenue by driving expansion. So you do think the strategy of just adding 5,000 more customers, that's where most of your growth will come from, not expansion.
Oh, yeah.
I think both. I think we're trying a lot of different things. We have a lot of new features that are completely different than what we're currently offering that I think will help us expand. But even just the customers right now, just putting things in perspective, we have about six salespeople. Two years ago, we had one salesperson. So we're very early in terms of outbound sales.
We have zero outbound salespeople at this point. What's the total team size?
If you include our dev team, we're close to 80 people at this point. How many engineers? 25. So 80 minus 25 minus six, that leaves like, where's the other 50? What do these other 50 people do?
It's operations. A lot of the backend after the orders are placed, it's the marketing team, it's customer success, handling the live chats on the site. It's more of that kind of stuff.
Interesting. Now, from what my research team is telling me here, you guys are pretty darn, even pre-acquisition, you guys are pretty darn capital efficient. What was sort of your funding story before November, 2021?
Yeah, we raised less than $4 million all in. And we only raised about $1.25 million in the pandemic because, obviously, as you can imagine, the whole world fell apart, especially events and trade shows. A big part of our business went away in early 2020. So we just wanted to make sure we could raise some money just to make sure that we're safe.
So we raised our biggest round in the worst time, but really it was to share up things. So we raised about $1.25 million right when the pandemic hit. We ended up actually growing over 100%. So we went from $7 million in 2019 to The whole world fell apart. Our whole industry dropped 20% to 40%. We ended up doing over $15.5 million in 2020. 2021, $33 million.
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Chapter 3: What was the funding journey for swag.com before acquisition?
That's not easy to do. Are you sticking around for a couple more years or working on a new idea?
No, no, I'm 100% running swag.com. Our whole team joined. Everybody on the team is really excited. We feel like there's just so much opportunity. It's an amazing, it's a huge industry. I mean, the promotional product industry is about $23 billion industry, but the gifting space is over a hundred billion. There's just so much kind of room for us to- We're just scratching the surface.
We are a very small player in the scheme of this, but we're not going to be that way in a few years. And we really feel so much opportunity. So we're heads down, guns blazing. We're not slowing down anytime soon.
How does customing keep you so motivated? I mean, it sounds like you made some personally something like five to eight million, you know, whatever pre post tax on this deal alone. I mean, what is their big handcuffs here? Big earn out stock and customing or what?
Definitely stock and custom ink, no handcuffs, no earning out. It's really just about us believing in the vision and that we feel like we can make a lot more personally and also the business can do a lot better and we could affect a lot more customers and we could give customers a great experience. Just feel like there's just a lot of room personally, professionally for everybody involved.
I'm going to go on a weird tangent here for a second. Web3 and swag. I loved, obviously, when we're sponsoring events to give people that visit our booth something that they can virtually activate in our Web3 world after the event. Are you even thinking about virtual goods yet at this point or no? Yeah.
We are definitely thinking about it and we're trying to figure out what makes sense without having to be so gimmicky or just trying to be like a me too kind of company. We want to make sure that more offering is actually a value.
Um, so yeah, we're definitely thinking about it and we have some ideas, but you never know with every idea you throw it out there, you see what works, you know, being okay with failure and then ultimately hopefully finding on it. And if it doesn't work, then you move on.
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Chapter 4: What challenges did swag.com face during the pandemic?
So, yep. All right, man, let's wrap up with the famous five. Number one, favorite book. Favorite book, Living with the Seal, Jesse Isler. Living with the Seal? Oh, Living Like a Seal. Yeah. Living with the Seal. Oh, with the Seal. Okay, got it. Number two, is there a CEO you're following or studying? CEO studying?
Not really. No. But I work under Mark Katz, who's an amazing CEO of Custom Ink. And I feel like I'm getting a lot of knowledge that otherwise I probably couldn't get seeing how somebody operates a 2000 plus person company and does it with humility and grace. And I feel like I'm learning a lot just being involved in the business. Is Custom Ink public?
No, private. Okay. Okay.
Chapter 5: How did swag.com adapt its business model for remote work?
Number three, what's your favorite online tool for building swag?
Favorite online tool. We use HubSpot. I think HubSpot is obviously a huge impact for us. Intercom, being able to connect directly with our customers, live chat, Figma for design user experience. Number four, how many hours of sleep do you get every night? I try to get close to seven. I have almost a 24-month-old baby, so a little bit less maybe these days. Okay. So married, how many kids?
I married one kid and went on the way.
Oh, very good. That's very exciting. Congratulations, Jeremy. How old are you? 36. 36. Last question. Something you wish you knew when you were 20.
Yeah, I learned a lot over the course of my career. But I think the main thing for my younger self would be just launch, learn on the way. Don't be too nervous about launching or being afraid because that was definitely, you know, was a big issue early on in my career. You know, wanting things to be perfect before you launched.
And once you launch, you realize that all the things you care about, your customers don't really care about. So trying to, you know, just get yourself out of the way and trying to learn from customers.
Guys, launched swag.com in 2017, paid $200,000 for the domain name, split equity with his partner 5050. Fast forward a couple of years, they did $33 million, survived COVID last year, on track to do $60 million this year across over 10,000 businesses that are purchasing at least one piece of swag. We'll have over 5,000 SKUs, 300 are the most popular, but again, scaling quick here.
Now inside of custom ink, Custom Inc acquired the business for more than $20 million. That's great economics. Jeremy only raised under $4 million to grow the business pre-acquisition. So now building inside of Custom Inc, learning a ton. Team of 80, 25 engineers, 6 on the sales team. We'll see what happens next. Jeremy, thanks for taking us to the top. Thank you so much for meeting.
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