How Swag.com CEO Jeremy Parker grew to $60M revenue and 10K customers in 2022.

hey folks my guest today is jeremy parker he's an entrepreneur and award-winning documentary filmmaker currently the co-founder and ceo of swag.com which is acquired by custom inc a couple months ago back in november 2021 swag.com is the best place for companies to buy distribute quality swag that people will actually want to keep jeremy 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 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 and buy it and know that the people that get it are really gonna love it so give me an example like what's the what's the top what's the number one sort of 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 like the unique things i i want to offer people products that they'll actually want to keep so even like a really great backpack or a water bottle except for the bottle is a really high quality one it's not gonna you know be flimsy or break or leak i want to make sure that people are getting stuff that is actually to be held onto so and also we try to push people not to necessarily be a walking billboard a lot of people think of swag as look at me i'm promoting this brand but it's really about the recipient who gets it you want them to fall in love with it and ultimately they can become an evangelist for the brand so that's really really high quality stuff and you got going into this back in i think 2016 right yep yeah we started in 2016. since we launched we've grown over 100 every year um we're on track to do more than 60 million this year in sales and we have nearly 10 000 customers at this point ranging from amazon and facebook to a lot of smaller startups 60 million how many skus we have about 5000 skus on the site but about 80 of our products are within about 300 skus uh from three interesting 300 skus very interesting and so how many individual pieces of swag is equal to 60 million in gmb yeah it's a good question it's it's it's millions of pieces of swag yeah a lot it's a lot i'd be surprised we knew that off the top of your head but i was curious interesting and i guess a better question would be um let's do last year so in 2021 how many individual corporations bought at least one piece of swag through swag.com yeah it was nearly 5 000 companies wow wow and what do you think it'll be this year we're hoping to double every year so it's really about keeping our customers happy but also getting getting new customers well you can double either your customer account but you can still double revenue by driving expansion so you do think the strategy of just adding 5000 more customers that's where most your growth will come from not expansion 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 um but even just the customers right now like just putting things in perspective we have about six sales people you know two years ago we had one sales person so we're very early in terms of outbound sales we have zero outbound sales people at this point all of our what's the total team size uh if you include our our dev team we're close to 80 people at this point how many engineers uh 25. oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 interviews i've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when i hover over here right so the teal is what a vc would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on youtube all these datas are built from real time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 to their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of sas valuations than what you can get now inside of founderpath and we're thrilled to bring it to you all right we're going to go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your valuation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform i hope to see you there all right let's jump back into the interview so 80 minus 25 minus six that leaves like where's the other what do these other 50 people do it's operations a lot of the back end after the orders are placed it's the marketing team it's um customer success you know handling the live chats on the site it's it's more of that kind of stuff interesting now from what i my research team is telling me here you guys are pretty darn even pre-acquisitioned you guys are pretty darn capital efficient what was sort of your funding story before november 2021 yeah we raised less than four million all in um and we only raised about 1.25 million in the pandemic because obviously as you can imagine the whole world fell apart especially like 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 like the worst time but really it was kind of to sure of things so we raised about 1.25 million right when the pandemic hit um we ended up actually growing over 100 so we went from 7 million in 2019 the whole world fell apart our whole industry dropped 20 to 40 percent we ended up doing over 15.5 million in 2020. 2021 33 million this year we're hopefully on track to break 60 million um and keep growing you know we've really figured out a niche for ourselves we were very ahead of the curve so in 2017 we saw a shift of work from home culture of people trying to engage with their you know employees and teams and best customers so we built an automated distribution platform so customers can buy swag we'll hold an inventory and do individual distributions to remote addresses this was pre the pandemic pandemic kids it becomes like a need to have frankly everyone's remote everyone's disconnected so we had that kind of source to allow people to to keep connectivity happening within the company so are you paying i mean are one of your big expenses monthly literally warehouse space you're drop shipping you're storing the swag until it needs to be shipped uh sometimes so sometimes people buy swag and we ship it directly from our suppliers to their office or their home address sometimes we hold an inventory we do individual distributions we have a three pl that we work with they charge the storage fees and we pass those costs um to our customers so we make it for them to do it and we're not looking to make that a profit center that's more of just a way that we can allow people to consolidate swag bundle things up together and do that individual distribution yeah that makes sense take me back real quick to the starting days 2016. i think you had one other co-founder do you guys just split 50 50 at the start or what was that conversation like yeah exactly 50 50 at the start i was very uh front of the house um everything to do with the branding user experience um and my partner was very counting-based focused he was all the back of the house and and that has allowed us to really grow because we were never stepping on each other's toes and he believed in my vision for leading the business in terms of how we're going to get there and i believe that he would be able to take care of the business side of things and and i guess you were basically like so close to being effectively bootstrapped right i mean you took i think i think that first run was an accelerator right it was tech stars yeah we raised a little bit of money before tech stars um just to buy the domain name because we knew how valuable the brand name would be from the very beginning of the business wait jeremy what's the number come on what'd you pay for swag well we had we did a unique a unique thing where we basically licensed the name and we ultimately ended up buying it later period but it was 200 thousand dollars that we ultimately that was the number that we bought it for ultimately did you negotiate the 200 000 up front when the license started so all your license fees contributed to the 200k purchase price it wasn't that way but it was originally asking plus like 1.2 million we brought it down to 200 000 then we worked at a deal where we licensed the name with the option to buy it so it made sense was it worth it oh 100 i mean being able to convert offline conversations to online purchasing is amazing so imagine you come across a swag ad you might not need swag today you might need swag in a year from now but when you're talking to your co-workers you're boston you say hey i need some high quality swag i wanted to trigger them to go back to our site and that's what's happening people just don't forget the name so it was it was an unbelievable buy for us and then and i think that pre-seat round i think what tech stars models they did 120 for seven percent or something like that yeah about that yes yeah yeah for us we were working you know out of my co-founders pool table room in his apartment building so heads down and we felt like at that point we needed to expand kind of the vision and we needed more people to have eyeballs on the product so you know being part texters you just get introduced to so many investors and so many potential customers and other founders going through similar challenges so it really allowed us to kind of figure out where we want to be and where we could take it so when we joined techstars it was just two of us with one employee at that point and uh from that moment we did one million to three million to 750 million and really you know 33 million expanded from there and so why give up about a million bucks worth of equity in may 2019 and that seed round why i mean you didn't need the money right it's dilutive why'd you do it in january may 2019 we did about i think like 700 000 rounds okay at that point we realized this distribution model we actually needed the money to build out this whole new business if you think about it the business was doing really well in terms of growing every single month in terms of bulk ordering and distribution to one address in 2019 we really realized the shift of work among culture that was a big heavy lift it's really building a whole new infrastructure three pls warehousing all the complexities of you know calculating shipping times and shipping costs in real time based on bundling of products and all these kind of efficiencies that we've never dealt with so we had to learn this whole thing we had to hire the right people we had to build a tech i would do it all over again because that really allowed us to grow over 100 percent where our whole industry kind of fell off uh the face of the world during the covet so and also it's allowing us to really scale up at this point yeah and you know you're not like a traditional sas business here when we say seven million of sales in 2019 how much of that what's the margin like 20 30 margin profile uh a little bit more about 35 percent 35 percent okay interesting so so 10 10 percent seven seven seven so yeah about after the cost of the good did about 2.2 million before salaries and all that jazz top line yep okay so that makes sense why you'd raise some extra capital here it's not like you got seven million you know going to the bottom line yep um interesting okay and then you obviously raised during cobit it sounds really like a cushion uh you just want to be 100 sure you have lasting power that sounds like that could be pretty darn dilutive was it uh not as bad as it could have been um we still did an upround so the previous rounds yes everyone was going down everyone's cut we still had a a not a huge you know increase but definitely a a somewhat of an increase um and it was enough that we're like it's enough money to make sure that we have the next two years if we ever had challenges we weren't burning a lot of money because we're making a lot of sales so and just to put in our perspective we were doing about 800 000 or so right before a month right before the pandemic hit pandemic kids our sales drop off to 300 000. so you can imagine being in a space where every trade show every event all offices are being closed like how not yep available to say that 1.2 million around during coba you're selling what 15 to 20 of the business something in that range uh yeah yeah so look dilutive but not the end of the world yep a little bit less exactly a little bit less than 15 yeah that's great that's great so okay so now take me through a big decision biggest maybe moment of your life what customing approaches you you approach them how the deal go down yeah custom inc uh approached us we we had a um just friendly conversations because obviously we know of customizing from the very beginning they're the leader they're the kind of preeminent company in our industry and they're very focused on the consumer space um organizations charities etc and we're very we're only exclusively focused on the b2b space so we always had we knew that we weren't doing the exactly the same thing but we could learn a lot from them and we had a lot of conversations we met with their team frankly we really started to like 13. they're really great people they're unbelievably smart they're dedicated many of their employees have been there for 20 plus years it's one of these kind of cultures that really it's an amazing company culture and the people are just really great so when we start getting to know them even more and seeing all the similarities and synergies and what we can do together we thought what if we could combine forces what can we build together versus independently and it just made a lot of sense if i'm guessing acquisition i mean was it pro was it public would they would you know yeah so if i take the closest comp i have which would be december 2020 where you're doing 15.5 million revenue that year you raised a 1.25 million seat at around a 10 million valuation right and then we extrapolate that to a 33 million run rate which is right around where we were in the acquisition happened you could argue is definitely north of it should have been definitely north of a 20 million dollar sort of evaluation are you able to confirm that or no yeah i think it's probably think it's safe to say that okay fair there we go there you go there you have it guys a little bit of juice you're not going to get in the press release more than 20 million so what are you doing now i mean obviously you're growing internally like crazy doubling up to 60 million that's 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 um running swag.com you know we are 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 dollar industry but the gifting space is over 100 billion there's just so much kind of room for us we're just scratching the surface you know 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 like there's 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 uh i mean what is there big handcuffs here big earn out stock and custom ink or what um definitely stock and custom ink no handcrafts no it's um it's really just about us believing in division 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 um just feel like there's just a lot of room personally professionally for everybody involved you know i'm gonna go on a weird tangent here for a second web three and swag i'd love to obviously we're sponsoring events to give people that visit our booth something that they can virtually activate in our you know web3 world after the event would you guys are even 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 for 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 so yeah all right man let's wrap up with the famous five number one favorite book favorite book living with the seal jesse's slur living with a seal oh living like a seal yeah living with the seal yeah with the sale okay got it number two is there a ceo you're following her studying ceo studying uh not really no but i i i've you know i work under mark katz who's an amazing ceo of custom ink and you know 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 uh you know humility and grace and i feel like i feel like i'm learning a lot um just being involved in the business it's custom being public no private uh okay okay uh number three what's your favorite online tool for building swag uh favorite online tool we use hubspot i think hubspot is obviously a huge impact for us intercom being able to connect directly with their customers live chat um figma for design user experience so a lot of different tools number four how many hours i sleep to get every night i try to get close to seven i have a 20 almost a 24 month old baby so oh wow maybe these days okay so married how many kids married one kid and uh one okay and one on the way oh very good that's very exciting congratulations jeremy uh how old are you 36 36 last question something new wishing you when you were 20. um yeah well i learned a lot over the course of my career but i think the main thing for for my younger self would be just launch learn on the way don't be too you know 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 launch swag.com in 2017 paid 200 000 bucks for the domain name split equity this partner 50 50. fast forward a couple years they did 30 30 33 million bucks survive cobit last year on track to do 60 million this year across over 10 000 businesses that are purchasing at least one piece of swag uh oh we'll have over five thousand skews 300 are the most popular but again scaling quick here now inside of custom inc uh customers acquire the business for call more than 20 million bucks that's great economics jeremy only raised under four million bucks to grow the business uh pre-acquisition so now building a set of custom make learning a ton team of 80 25 engineers six on the sales team we'll see what happens next jeremy thanks for taking us to the top thank you so much for uh for meeting one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try 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