SaaS Interviews with CEOs, Startups, Founders
EP 400: AdEspresso Hits $20M Valuation, 4000 Customers, $400k MRR with CEO Massimo Chieruzzi
28 Aug 2016
Chapter 1: What is the background of AdEspresso and its CEO Massimo Chieruzzi?
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 top. 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. Okay, Top Tribe, this week's winner of the 100 bucks is Jose Avila. He is a 17-year-old that doesn't want to go to college and he wants to start his own business. For your chance to win 100 bucks just like Jose every Monday morning, simply subscribe to this podcast on iTunes right now and then text the word Nathan to 33444 to prove that you did it.
Chapter 2: How has AdEspresso achieved a $400k monthly recurring revenue?
Top Tribe, this is episode 400. Coming up tomorrow morning, you're going to hear from Deepak who quit his $180,000 per year Microsoft job to launch his own startup called Karma Circles. I challenged him. I don't know why he did it. Top Tribe, what is cracking this morning? Our guest today is Massimo Chiaruzzi.
He's one of the founders of Ad Espresso and CEO currently of Ad Espresso, a self-service tool to help small and medium businesses succeed in Facebook advertising. They're having a lot of success. Massimo, let's jump right in to this episode. People are gonna love it.
Chapter 3: What strategies does AdEspresso use to reduce customer churn?
Are you ready to take us to the top? All right. Hello, everyone. point about $100 average revenues per user per month, about $1,000 lifetime value. And you are currently doing at that time, which was in around October 3rd, 2015, about a $1.8 million annual run rate or about 160 grand in monthly recurring revenue. Give us the update. Where are you now?
Sure thing. So in terms of revenue per user, we are still there because we didn't change much about our pricing. We mainly focus on reducing our churn and, of course, growing.
Chapter 4: How does AdEspresso acquire customers at such a low cost?
So at this point right now, we are over a $5 million run rate. And last year, we grew 11x on all the most important metrics for us, from the revenues to the number of Facebook advertising dollars managed every month.
So what are you, so $5 million run rate, that means you're doing, you take 80, you know, 80 grand multiple times five, you're doing what about 400 grand per month and monthly recurring revenue? Yep. Okay. And average revenue per user per month is still about a hundred bucks. Yes. And what was 2015 revenue?
2015 last year 2015 revenue I think was around 3 million okay 3 million yeah so you guys are growing like a weed super fast tell me real quick you guys just raised a major round of funding between our last episode and now I think it was what 8, 10, 20 million something like that
No, no, no.
Chapter 5: What is the current team size and structure at AdEspresso?
That was just click baiting. So for click baiting, we published a post saying that we had raised 20 million.
That is horrible. OK, that tricked me. That is. Oh, my God. I can't. I got to end this interview right now. I'm so pissed off. Just kidding.
Chapter 6: What are the growth projections for AdEspresso in the coming months?
Well, hey, it works. It works. So how much have you raised total? Still still about what? Two or three million?
We have raised very little money. We overall from when we started, we have just raised one point eight million.
Is that all on convertible note or did you do a price equity round?
Now, the last one was a priced equity round. So we converted all the convertible notes.
Chapter 7: What lessons has Massimo learned from his entrepreneurial journey?
But the truth is that we have been profitable for the last year. So we don't need the money.
And what was on the 1.8 million when you got, you know, converting convertible note, what was the valuation you guys negotiated pre money? 20 million was the valuation. And what was the what was the influx of capital at that point?
It was very, very little. It was 1 million.
Okay. 1 million. So you had 800K on a convertible note.
Chapter 8: How can listeners connect with Massimo or learn more about AdEspresso?
You raised another million on a priced equity round. That million had a $20 million pre-money valuation. So about 22 million post money. Is that accurate? Yeah. Very cool. Okay. Tell us about customer account. How many total customers you have paying you per month now? We have more than 4,000 customers. And who are they? I mean, small business owners or what?
It's mainly small, medium business owners. So on average, our perfect customers are everyone spending between $2,000 per month up to $50,000, $100,000 per month. We also have outliers spending like $2 million per month and guys spending like $500. But that's the sweet spot. And our...
Top four verticals are startups, of course, but mainly small and medium media agencies, small brands, e-commerce guys, startups, and mobile developers.
Very cool. And I just want to make sure people know the website because they're going to want to go kind of research you after you articulate all this. It's adespresso.com, right?
Yep.
Very cool. Okay. Let's keep going with unit economics. Each customer got about 4,000 customers. They're paying you about a hundred bucks per month. Churn is always tricky in the SaaS world. What is your guys' monthly churn?
So we have a pretty good churn. It's around 7% and it's decreasing. But the most interesting thing is that we have most of the churn is in the first 30 days and it's for the lower subscription plan. Once they go over that, once they pass the first month, the retention is amazing.
What is the retention after the first month? I cannot tell you that. Do you get under 2% monthly churn on that cohort after the first month or is it still above 2%?
I would have to check. I don't remember this metric right now.
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