818: AdTech: Spongecell Passes $13m+ ARR, Lets Old Customers Go, $26m Raised

SaaS Interviews with CEOs, Startups, Founders

Nathan Latka

Ceo, Entrepreneurs, Founders, Software, Business, Entrepreneurship, Saas, Startups

4.6 • 683 Ratings

🗓️ 20 October 2017

⏱️ 21 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Ben Kartzman. He’s the CEO and founder of Spongecell, one of the fastest growing companies in the United States. Earlier, Ben worked at venture-backed Guidester (now Searchandise.net) in product and business development. He graduated with honors from Carnegie Mellon with a dual BS in Human Computer Interaction and Information & Decision Systems.

Famous Five:

Favorite Book? – Five Dysfunctions of a Team
What CEO do you follow? – Jeff Bezos
Favorite online tool? — Mint
How many hours of sleep do you get?— 6
If you could let your 20-year old self, know one thing, what would it be? – Don't stress about your first job—just find things that are interesting for you, follow your passion and do those things

Time Stamped Show Notes:

01:55 – Nathan introduces Ben to the show
02:25 – Spongecell is one of the fastest growing companies because they are revenue driven
- 02:36 – It was in 2009 when Spongecell first measured their revenue
03:15 – 2017 revenue goal
03:30 – $26M has been invested in the company and their largest investors is Safeguard
04:27 – Nathan shares about his first investor report
04:50 – Spongecell is a dynamic and creative company in the adtech space
04:55 – Spongecell works directly with marketers
05:21 – Spongecell’s technology manages different creative variations
- 05:49 – The variations can grow very quickly
06:04 – Spongecell sells licenses to a platform and beyond that, it is based on usage
06:25 – The licenses are billed monthly and their biggest client is spending $3M a year
06:47 – Spongecell is working with hundreds of customers
07:20 – Spongecell is moving to target more enterprise customers
07:39 – To fire clients, Spongecell raises the minimum
- 08:47 – People are leaving because of the changes in the service
09:30 – Usage-based charges per impression
- 10:00 – For every 50 cents CPM, a company would spend $50K with Spongecell
- 10:15 – Spongecell doesn’t get involved with the media side
- 10:49 – Most clients have an allocated budget to be spent on Spongecell
11:50 – Spongecell has a base amount and the average usage is based on how people are using it
12:06 – Spongecell was launched in 2006 and they raised their first round in the same year
- 12:41 – In 2009, they saw the need for programmatic media, which is the buying and selling of ads through technology
13:22 – Spongecell has 95 people on the team
13:53 – Average ARR
14:35 – Spongecell’s intuition with their platform is one of the reason why companies choose them
15:40 – Spongecell has promised to set up an Amazon database so clients can look up the data
16:50 – Fully weighted CAC is changing as they’re slowly transitioning, but it is more than $5K
17:43 – Ideal cohort of customers for Spongecell
19:20 – The Famous Five

3 Key Points:

It’s not easy to let go of customers—however, there are times where it’s the best decision to make for your company.
The transition to focus on enterprise clients isn’t as quick or as easy as it seems.
Find your passion and GO with it.

Resources Mentioned:

Simplero – The easiest way to launch your own membership course like the big influencers do but at 1/10th the cost.
The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
GetLatka - Database of all B2B SaaS companies who have been on my show including their revenue, CAC, churn, ARPU and more
Klipfolio – Track your business performance across all departments for FREE
Hotjar – Nathan uses Hotjar to track what you’re doing on this site. He gets a video of each user visit like where they clicked and scrolled to make the site a better experience
Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
Audible– Nathan uses Audible when he’s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
Show Notes provided by Mallard Creatives

Transcript

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0:00.0	founder of Sponge Cell back in 2006. It was a very different company back in. They pivoted
0:04.6	many, many times, really started growing rapidly when they started reporting numbers
0:08.6	tank back in 2009. Twenty-fifteen was the last year. They reported over $13 million in ARR.
0:15.3	And at the same time, they really started sinking in and getting comfortable with their
0:18.0	current product line, which they're scaling very, very fast. $26 million raised, 95 people around the world, again, making programmatic ad buying
0:25.4	more efficient, especially on a CPM basis, but also they probably have a base monthly fee for
0:32.0	folks to just understand and get access to the value that their software is created that helps
0:35.0	them test creatives, organize creatives, and really launch multiple, multiple thousands or hundreds of thousands or even more than that
0:40.2	in variations all at one time.
0:42.3	This is the top, where I interview entrepreneurs who are number one or number two in their industry
0:48.6	in terms of revenue or customer base.
0:51.7	You'll learn how much revenue they're making, what their marketing funnel looks like,
0:55.5	and how many customers they have. I'm now at $20,000 per talk. Five and six million. He is hell
1:02.1	bent on global domination. We just broke our 100,000 unit sold mark. And I'm your host, Nathan Latka.
1:09.6	Many of you listening right now don't have time to listen to every B-to-B
1:13.0	SaaS CEO that I've interviewed. If you want to get access to the database I've created with
1:17.0	year-over-year growth rates, customer accounts, margins, and many, many other data metrics and
1:21.7	data points, you can go to g-et-l-a-com. Here's the thing, though, this database, I keep it to myself. It's so freaking valuable and to preserve the quality of the data and make sure that the people that have access to it have a true advantage
1:35.8	I'm only letting 10 companies on each month. So we're full this month, but you can go to getlatka.com to get on the waiting list for next month and look there's big's big people on the waiting list. I mean, the biggest VCs you've ever heard of, you've probably
1:47.5	heard of them. They're big, private equity, billions and billions under management. So it's an
1:51.3	impressive waiting list. Go get on now at getlatka.com. Hello, everybody. My guest today is Ben Kartsman. He's the CEO and co-founder of a company called Sponge Cell, one of the fastest
2:01.0	growing companies in the United States. Earlier, Ben worked at venture-backed Guide Star and product
	...

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