How ShipMonk Grew from $1M to $30M in Revenue and Projected About $80M for 2019 (Interview with Founder Jan Bednar)

Nathan Latka

00:00Just got done editing this interview. You guys are gonna love it. Before I do that though, I want you to know that I'm going to be in the comments for the next thirty minutes or so answering your questions. If there's additional questions you want me to ask the CEO next time I interview them, leave them below. Or if you're just loving the data points I get CEOs to share, click the thumbs up button below. That's your

Getting the First 100 Customers

Nathan Latka

00:18way of telling me you're loving this stuff and I'll get you more of it. Additionally, again, I'll be in the comments answering any questions you have. Alright. For thirty minutes. Enjoy the interview. Alright, Jan. Yeah. So take... Yeah. Take me back to day one. How'd you get your first 100 customers?

Jan Bednar

00:33So we, you know, it was a challenging considering we were competing with a of bigger, much bigger companies, and we didn't have the economies of scale like they did. So it was really me just going to different trade shows and kind of selling them on this concept of technology and fulfillment all in one. It was a lot of, you know, selling the dream while we didn't really have that much to offer, but it was a a

00:56really high level of service beginning, a lot of manual work. And, you know, eventually, once the first 10 came in and then doing the other 10 and then the other 10, we really started building really good product and really good technology, and it's allowed us to then make it a lot easier to pay the other one.

Trade Shows and Early Sales Strategy

Nathan Latka

01:13Did you find it, though, in any specific place, a trade show, a website, a forum?

Jan Bednar

01:19Yeah. It was it was mostly trade shows, a little bit of cold calling. So, you know, went to CES was a was a big one for us because, you know, our customers are ecommerce or or physical products companies, so they typically tend to go to... But CES is definitely a good one. That was the first one I went to. A lot of cold calling, just trying to find companies that were local at the time and, you

01:38know, giving them a call and be like, hey. Let's... We'll get rid of the operations headache for you. We'll we'll take that all in, and and we'll we'll make this happen. And and the first couple customers just really liked the fact that they didn't have to deal with all this nonsense of fulfilling orders and having a warehouse and employees. And that's what... That's really helped us, you know, bootstrap and and get started. Because once you get

02:02one, it's a lot easier to get the other.

Nathan Latka

02:04Mhmm. So help me understand today when you look at your entire customer base. Are we talking like small ecommerce brands or like big ones? What's the average customer paying you per year to use the technology?

Customer Mix and Biggest Deal

Jan Bednar

02:16Well, so it really depends. I mean, there's there's the small ones and there's the big ones. Like our biggest customer is $200,000,000 in in revenue that... What they do. What they pay us, it's about a $30,000,000 deal for us. But keep in mind, it's not just the software fees. Right? They're paying us for fulfillment, for shipping, for transportation. So it's... So the SaaS fee itself is probably gonna be more like 10, 20% of that.

Nathan Latka

02:39Yep.

Jan Bednar

02:41But, yeah, they're... They... So they range from complete startups that literally just, you know, do 10 orders a month to people that do 300,000 orders a month.

Nathan Latka

02:49Yep. So when you look at... You look 10% of that 30,000,000 deal would be, 3,000,000 just on the SaaS product. When you just look at the strength of your SaaS product, I mean, is that like a $10,000,000 ARR kind of business? What's the general size of that?

SaaS Revenue as a Share of Total Revenue

Jan Bednar

03:01That's... Yeah. So, I mean, we're gonna do about 80,000,000 this year in revenue. So I would say probably 10%, maybe 15% of that is SaaS. So yeah, about 10.

Nathan Latka

03:16And then when you... I mean, what does growth look like? So if you're gonna do 80 this year, what did do last year?

Revenue Growth from 2015 to 2019

Jan Bednar

03:21Last year, did 30. The year before, we did 10. The year before, four, and then one. And we're we're, you know, we're... We were projecting originally to do about 55 this year. Right now, it's still getting more like 70, 80. So we're probably gonna end up the year with with somewhere around there, and then we're, you know, still trying to figure out what next year is gonna look like. But it just changes so quickly that it's

03:43really hard to to predict or project at this point.

Nathan Latka

03:47Yeah. Why did you... I mean, with with revenue in that range, why did you need to do a $10,000,000 secondary? Why not just pay yourself 5,000,000 out of cash flows?

Why Jan Took on Investors

Jan Bednar

03:56Yeah. Well, it was a... Well, it it was the two things. Right? I think as a founder, you know, I've always had this dream of of taking this business to a specific point and and selling the selling the business. And I think it's just when when you're profitable, it doesn't keep you disciplined as a founder. If you bring partners in, you now have somebody else that you gotta actually report to, and and they bring in a

04:17lot of experience from, you know, not just building companies, but selling them and and building great companies. And I think that's what really... I I had a really good friend of mine that did the same exact thing. And, you know, when I heard the deal and I heard how it changed his life, I just I just figured I would do the same. Like, I could eventually pay myself the same amount. It would take a longer period

04:36of time because, you as you can imagine, with this type of growth, like, it's not just that easy to take that much money off the table from the company. And so it's it's something that we're... You know, this has really enabled me to do things that I would have not been able to do and took a little bit of stress away as well. And, yeah, it's really about the partners too. Like, you the people that are

04:58on my board. Like, I have a board which I didn't have before. It keeps me accountable. It keeps me... It's a... There's a couple different funds, but SCA Ventures. The small... Smaller guys that I actually like better than than bringing on the bigger bigger ventures because they just... I I just didn't get a good vibe from them. This was more of a... You know, they're smaller $200,000,000 funds, but they just... These guys really know what they're

05:18doing. They they know logistics. They know software, and it's... And and they're just more personable and and, you know, a little more available to me. And that's what truly has been, you know, a great kinda turning point for me, just having these guys available and, like, making me think bigger. Because before this, it was just me and, you know, some of the mentors I had from before, but nobody really, like, having that much experience working with

05:42bigger businesses. And being in South Florida, there's not a huge startup community, you know, where you get access to a lot of people that have done this. So it's it's just been great.

Nathan Latka

05:53So, Jan, what's what's your what's your team size today? How many people?

Team Size and Engineering Headcount

Jan Bednar

05:58Well, so we've got about 450 people, you know, different roles, different areas. Our engineering team is about 35 people. The rest is, you know, operations, customer service, HR, finance.

Nathan Latka

06:12Do you have a do have a lot of inside sales folks? How many, like, quota carrying reps do you have?

Sales Team and Inbound Leads

Jan Bednar

06:16Yeah. We actually don't have that many salespeople. We have about seven now. So we've been able to build this business with a pretty good... Like, we're pretty efficient in the way we do sales. A lot of our leads are inbound, so we don't do a huge outbound, you know, calling to people. Most of the people that come to us just find us online, and then we could just kinda take them through the sales process and and

06:36bring them up to...

Customer Count

Nathan Latka

06:37Bring them into And and how many how

06:41many customers are you working with today?

Jan Bednar

06:43A little over a thousand.

Nathan Latka

06:44A little over a thousand. Okay. Now... So... Okay. So some of these you put touch on, obviously, 30,000,000 deal, you're gonna put a lot of touch on. You know, the average customer, are you happy... Like, what are you paying to get them onboarded?

CAC and Payback Period

Jan Bednar

06:57Like, onboarding to you by itself or, like, an average customer acquisition?

Nathan Latka

07:01Average CAC, like, fully weighted CAC, salespeople, direct marketing spend, everything.

Jan Bednar

07:04Yeah. Yeah. About... I think we're about $1,200 or $1,500 CAC right now.

Nathan Latka

07:10Okay. And what does that mean? You get paid back in how long?

Jan Bednar

07:13Well... So... Yeah. That's a funny question. Because in a in a SaaS in a SaaS world, it's it's kinda crazy because because it... It's... We get paid typically in less than a month on that account, but it's because it's not as just

07:27You few have service fees.

Nathan Latka

07:29Right.

Jan Bednar

07:30So so the, yeah, so the SaaS formula doesn't really work as exciting because, like, you know, every... Everybody I tell this this calculation, they're like, oh, what the hell? Why don't you just go out crazy and acquire customers? Right? But but there's a pretty significant carrying cost of every account. And it's... You know, we got physical constraints because we got warehouses. We got infrastructure. We got people. So it's not as easy to scale. Like, we're we're

07:51growing as fast as we can, and we're, you know, expand... It's like Amazon. Right?

07:54Like like, there's so many buildings to get

07:57built in and that's the the constraints that we're hitting. But, yeah, like, I mean, our our cost per acquisition and and how quickly it pays for itself is super quick. It's typically less than a month.

Profitability and EBITDA Margin

Nathan Latka

08:08Yep. Now are you burning cash today? Are you profitable?

Jan Bednar

08:11No. We're profitable.

Nathan Latka

08:12You're... Okay. Because you're profitable as you grow... I mean, are we talking like 10% EBITDA margin or, 50%?

Jan Bednar

08:18No. No. No. Well, yeah. Our EBITDA is about closer to 10. Yeah. We're, you know, depending on the... Like, now we're investing really heavily into growth and infrastructure, so obviously that number gets a little lower. But we've been, you know, we've never had a single month where we've lost money, and that's kind of been our biggest focus. You know, just just the mindset of a bootstrapping has kind of allowed us to do that.

Nathan Latka

08:42Yeah. I guess there... I mean, what I think of when I hear $80,000,000 in revenue, 10,000,000, it's 10% EBITDA margin. Right? So let's call it 8,000,000 to the bottom line. Right? You sold a portion of the company, right, $5,000,000 worth to these investors when it sounds like you could have just paid yourself out of the profits. I guess what I'm hearing you say is these people add additional strategic value where it's it's worth it to you

09:02to do that.

Jan Bednar

09:05Yeah. That's that's one thing. And and and second thing is, you know, EBITDA is not necessarily cash flow. So, you know, we've got we've got a lot of big investments that we pay for cash. And and so, you know, we don't really end the year with 8,000,000 in cash. Right? Like, that would be a little bit of a different conversation. But so so there's there's a couple different things that play into it, but definitely having the

09:25partners in place has been has been a huge value. And also that was, you know, when we did the deal was a year ago, so we're in a little bit of a different place now also.

Nathan Latka

09:33Yep. Yep. Very good. Alright. Any plans to sell the company?

Acquisition Scenarios and Exit Thinking

Jan Bednar

09:38Well, the opportunity presents itself, you know, always open.

Nathan Latka

09:41Take me to take me to Fantasy Land for a second. What would be a number where you're like, oh my god, this would make me so happy I have to sell it'll be obviously very irrational. But what is it?

Jan Bednar

09:50Yeah. That's a great question, you know, because when

09:54I started the business, it's always been a 100,000,000. That was, like, the number that I've always wanted to... I was like, look. I I did the math, and I'm like, okay. At a 100,000,000, I could do whatever I have on. And and now, you know, we're we're kind of around that area and and maybe even more. It's just... At this point, like, it's not about the number. It's more about what I build and what I accomplish

10:14and what what what I've learned along the way. And, you know, I'm having so much fun, and I meet great people, and I get to work with amazing people. And, like, seeing the impact that we have on not just the the customers and the... But the employees, it's just... It's not really... Like, I can't really give you a number if you

Nathan Latka

10:29can't Okay, let me be more stop specific. Let's say Shopify wants to get more on Amazon's level, start competing more aggressive with them. They need a physical strategy. You have warehouses. You're someone that they could buy. Let's say Shopify offers you a billion dollars to sell the company. So more than 10 X, you're 80,000,000. Do you take the deal?

Jan Bednar

10:43I would probably take the deal.

10:45Yeah.

Nathan Latka

10:46So say, your board will probably... I see you're married. Your spouse will probably kill you if you said no to that.

Jan Bednar

10:51Right. That's true. Yeah. No.

10:52I'm surprised. And then, you know, depending on, like, the company too, like, the company,

10:57we'd love to sell to them and work with them for for for a while to build this into where we need to go. Right? So, yeah, I mean, it's it's all about the circumstances, but I'm not saying I wouldn't do it.

Famous Five Rapid Fire Questions

Nathan Latka

11:07Yep. Alright. Let's wrap up with the famous five. Number one, favorite business book.

Jan Bednar

11:15Favorite business book. That's a tough one.

Nathan Latka

11:18You can say none.

Jan Bednar

11:19None.

Nathan Latka

11:20Number two, is there a

Jan Bednar

11:20No.

11:22I've I've got a bunch of those company and this one.

Nathan Latka

11:25And number two, is there a CEO you're following or studying?

Jan Bednar

11:29Well, I love I love Toby Luke here from Shopify. He's a great guy. And Richard Branson is one of my favorite guys.

Nathan Latka

11:38Number three, what's your favorite online tool for building your company?

Jan Bednar

11:42Asana.

Nathan Latka

11:43Number four, how many

Jan Bednar

11:43And Slack.

Nathan Latka

11:43And Slack. Yeah. How many hours of sleep do eat every night?

Jan Bednar

11:43Eight.

Nathan Latka

11:43Okay. And what's your situation? What look like married, single? How many kids?

Jan Bednar

11:52No kids. Married.

Nathan Latka

11:54Married. No kids. Congratulations. How old are you?

Jan Bednar

11:54Thank you. 28.

Nathan Latka

11:5428. Last question. What do wish your 20 year old self knew?

Jan Bednar

12:07Don't be afraid to invest in people.

Nathan Latka

12:11Guys, there you have it. Don't be afraid to invest in people. ShipMonk launched back caught in 2014 at a million bucks in 2015, and 2017 broke 10. 2018, 30,000,000. This year, we'll do over $80,000,000 in revenue. Last year, a portion of their company for $10,000,000. They let some VCs in. 50% of that was secondary. Obviously, makes a lot of sense for Jan to take some money off the table there to continue to be, you know, comfortable

12:31and keep building the company from 80,000,000 up to many, many, many more multiples of that. Jan, thank you so much for taking us to the top, man.

Jan Bednar

12:31Thank you. Appreciate it.

Nathan Latka

12:31These CEOs rarely give these kinds of interviews. I hit them hard. I get the data, and I wanna do it more. So if you wanna get more of this stuff, make sure you subscribe up here. And then additionally, go check out one of my other CEO

12:53interviews right now.