How Shiphero CEO Aaron Rubin grew Shiphero to $84M revenue and 5K customers in 2024.

hello everyone my guest today is aaron rubin he's the founder and ceo of ship hero he's previously the founder and ceo of an online retailer of brazilian jiu jitsu apparel that he founded in 99 at age 19 and ran until he started ship hero all right aaron you're ready to take us to the top yes sir all right what does the company do and how do you guys make money so shapiro is a sas product we serve e-commerce companies and three pls three pls are third party logistics companies who ship four e-commerce companies how we make money by charging monthly sas monthly is it pure sas or is there mica marketplace play as well uh our revenue is almost all from sas we do drive some revenue to our three pl's and we got a little money off it but it's not uh significant compared to the sas revenue yeah okay very cool and so so on average like what do companies pay you per month and then can you paint the picture of a company paying you and how they're using you yeah so it varies pretty widely um especially because we have legacy customers we used to start and serve smaller customers so we still have a bunch um average customer pays us about 1500 a month okay um but our three pl's generally are paying us between five and ten thousand a month because they have a lot of more shipping more shipments they're shipping for a lot of merchants um versus if someone was shipping on their own in their own warehouse they might be paying us five or seven hundred dollars a month okay and so someone paying you 1500 bucks a month versus you know five thousand dollars a month what do you price against is like number of boxes shipped or square footage or what just seats it's just one at one angle just pure how many seats yeah well three fields we charge for seats what's a three p oh by the way it's a third party logistics company so let's say you make socks you don't want to ship out of your basement you outsource it so those guys those guys use our software and then they give you a log on to use our software as well but you don't have to pay us the 3pl pays for your subscription as well yeah yeah that's interesting all right and put this on a timeline for me when you launch the company so we started on it you know nights and weekends being my co-founder about 2013. um got first customer really like 2015 and then about 2017 we started to get some like real traction in 2015 that first customer tell me that story who's you have to bribe to get them in right well so our real first so i had an e-commerce company um so that was cus actually a friend of mine was customer one um my own company was customer two those were jiu-jitsu one yeah so those were the easy ones um my friend was company wine chateau they're still a customer they got a bunch of retail stores and they ship uh wine and spirits um we actually early days we spoke to so many people the one that i regret so much is fashion nova have you ever heard no but i assume they're big now fashion was huge they're like cardi b is like their influencer i think they're like top three shopify store in the world why didn't they sign up we spoke to the ceo like several times we were it was like super early days the product was so narrow we spoke to him i think he did trial it but like i don't know i remember chatting with him about like his vision and it was like nasty gal back then he's like oh we're gonna be like nasty gal you know like way bigger than nasty gal uh i think that's got shut down or something um but yeah whatever they just didn't go with us and they were yeah so tell a story of the one you of one or two that you close like how are you getting your first couple dozen customers so uh shopify apps that was the first year not anymore but that was in the early days there was it was like a barren wasteland out there for if you needed software i remember talking to the head of been visited for the app store it's like all combined they were much smaller than i said hey we're building this product and it's got all this automation and you can use ipads in the warehouse and it's gonna serve your bigger customers and we're like you know people that are doing a few hundred orders a day at least he's like yeah we don't have those customers you're in the wrong spot the shopify back then only had the tiny tiny customers but as they were growing and they got those bigger customers there was no one to serve them so how did you position yourself in the app store to make sure they found you like was there keyword ranking or metadata stuff that you did to optimize or reviews um yeah so back then it was purely based on reviews um which makes it hard to start uh so like ship stations been around forever and they're the kind of industry default um they have way more reviews so it's hard so we'd only get the people who like got through the first few and they didn't meet their needs they'd come to us yeah we always people had hard problems yep that's interesting and how many customers have you scaled to today um so people that pay us directly so not counting the merchants yes yell uh around 300 but you would count one psl as as one right right one three they'll be one even though they might have 200 submergence yeah yeah that would be what so so so aaron i mean can i multiply there can i take 300 times 1500 bucks a month that puts you at like 450 grand a month in revenue yeah we're like we don't disclose exactly but in like the 5 million ar bullpup 5 million okay fair enough okay so right around there then yeah yeah yeah fair enough good and then help me understand growth so if you're around that today where were you back you know a year ago well so 2018 we were 2.6x 2017 okay um this this year you know story's still still to be told um but hopefully similar ish well do you know where you finished 2018 at so if you're at a 5 million run rate today what were you like four and a half or four um i don't remember exactly but our business is somewhat seasonal in that q4 is when we get most of our growth because people are ramping for getting prepared for holidays okay so if you if you look at where you're at today and you go back 12 months obviously that takes in the holiday season of 2018. yeah it's around the same so 0.6 x you said 0.6 x 2.6 2.6 okay so you're more a little more more than doubling yeah yeah that's great yeah yeah so maybe like i'm making this like 200 grand a month right about a year ago now you're at like 450 something like that something like that is most the growth coming from adding new logos or getting more and deeper engagement from your current ones uh more from the current ones most of ours growth is from existing customers yeah so so that's rare most people driving you know growth from adding new customers so talk talk about your secrets of customer engagement once they start paying how to get them to double triple quadruple what they're paying you well so one interesting approach for us is to mark these three tails is really tough it's a challenge we're trying to figure out how do we get these three plus to know we exist um so the what's been happening so far is a merchant will be familiar with our software and they'll go to a 3pl and they'll be like all right i want to outsource to you and they'll look at them at the 3pl software now like the software sucks get try shipyards better software um so what the 3pl will do is they're like all right i'll try shipyard just for you right so we only got one merchant to start so they sign up they're like we'll just do it for this one merchant and then because it's a lot of friction to change existing people then what will happen is if we're doing a good job as they get new customers who don't care what software they're on they don't know any software in advance they'll put them on our software so we start growing from the minimum you could pay as a three bills a thousand dollars a month so you'll start at a thousand dollars a month and then you might get to five or eight or ten thousand over the next couple of years uh just by adding more users so we just got to get our foot in that door interesting all right and talk to me about how you've built this in terms of funding so have you bootstrapped or raised uh so i put in the first cash um from my previous company once we hit which was uh 1.2 million that i put in my own money once we hit around 100 kmrr i got some friends and family on safe notes for like 435 000 from them okay and then two months ago we borrowed some money um from a company called lighter capital yeah we borrowed 800 grand from them was that on a term loan or revenue-based financing yeah so they say they do revenue-based financing and i had spoken to them and i said i don't want to do revenue-based financing i want a term loan and then they give me a turnoff why didn't you go to an svb or a sas capital which typically can give you cheaper term loans and lighter yeah so i spoke to sas capital um and later sas capital i spoke to them and they didn't get back to me they did have a lower cost of capital but they wanted warrants yeah lighter capital like it was like three weeks from when i said...