Jesse Pujji 10 years later

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Today I’m catching up with Jesse Pujji, the founder of Ampush. When we first talked to him in 2011, Ampush was doing $1M a month. I want to find out how big he grew it and what he’s doing now.

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Jesse Pujji

Jesse Pujji

Ampush

Jesse Pujji is the founder of Ampush, a growth marketing partner that crafts holistic strategies and executes throughout the funnel.

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Full Interview Transcript

Andrew: Hey, they’re freedom fighters. Joining me for a repeat visit is Jesse Pooja. 10 years ago, I interviewed him about how Ampush this, uh, ad buying. And I guess he did more than ad buying back then. Didn’t you Jesse?

Jesse: There was lead gen and ad buying and we built software for Facebook. So we had to bump a few different pieces of the.

Andrew: And it was shocking to talk to you 10 years ago, back in like 2011, about how well it was doing, because most people thought of Facebook as this little thing that is just a waste of time that investors pour too much money into it. Meanwhile, look at how big it’s gotten. And also you were doing a million dollars a month from what I remember back then at a time when, oh, I like how your eyes just lit up when I said that at a time.

The world was still thinking the internet wants to be free and, uh, software maybe is where it’s at, but not really profit. Anyway, you were showing a lot of different things from what everyone else was doing. I did a gee whiz look at this guy interview with you. And then I did a course with you, a masterclass here on mixer G.

And I remember even little things stuck with me. Like I said, tell me what kind of ads are working. And he said, Andrew, it’s not even about the.

type of ads about this opportunity. That’s here in social, but all right, fine. You want type of ads. I’ll tell you that. When we put a red box around an ad, people pay more attention to it and they click it.

I thought, all right, this whole thing is really interesting. I, uh, kind of lost touch with Jesse. And then a while back, he got active on Twitter and I realized that he was like this, this person that others were looking up to. And I remember him being the person that most people ignored. And I thought I got to get them on here on Mixergy to talk about what’s happened with him. It’s company that pioneered online ad buy in social, and then what he’s doing with direct to consumer products, because he’s created this company called gateway X. That seems a little mysterious to me, but is. Involved in who something Eller was and a couple of other direct to consumer products and making investments.

I want to find out where he is now, where he’s taking this, uh, early adopter understanding of social and we can do it. Thanks to two phenomenal sponsors. The first will help you launch a website and do it right. It’s called HostGator. And you should sign up at hostgator.com/mixergy. The second we’ll do your email marketing, right?

And not. A lot of money later on when you’re dependent on them, the way other email marketing companies do, it’s called send in blue, check them out and send in blue.com/mixergy. But I’ll talk about those later, Jesse. Good to have you here.

Jesse: Yeah, thanks for having me, Andrew. I’m excited and I can’t believe 10 years have passed. Uh, cause it, honestly, that stuff feels like yesterday.

Andrew: How, how big did ambush get? Last time we talked, it was about a monthly million revenue.

Jesse: Yeah. You know, uh, by the time, but maybe a 2015, 16, and ambush went through a couple of different business models, which I’m happy to chat more about. Um, we, we probably had upwards of 350 million in ad spend, you know, kind of the gross, gross revenue. Uh, uh, we were, we were running across the entire business through our platform.

Andrew: And you are share that.

Jesse: Sorry.

Andrew: And your share of that, how much was, was going to ambush from that on a monthly basis.

Jesse: Yeah, it was like, think of it as, you know, a take rate model. So it was something at that time. I think it was around, you know, between 10 and 1200.

Andrew: Okay. That’s impressive. No outside funding, profitable business. What’s the craziest thing you bought for yourself?

Jesse: Um, Ooh, what a good question. I, you know, the, the most distinctive in my memory is like we, when we sold the minority interest of the business in red ventures, I went and bought myself an M five, like the next.

Andrew: That’s a BMW. I don’t know much about cars.

Jesse: Yeah, that’s a BMW.

Andrew: That’s all you got.

Jesse: it’s it’s, very much my style. Cause it’s not, you know, it’s like one of those cars that it’s probably faster than most Porsche’s, but unless you’re a car person, you probably wouldn’t know it. It looks like a sedan. Like I had, I had my son the same year we had that exit.

Um, and so it was like I needed something that, you know, the kids could go and do those four doors, but it was still, it’s like a super car.

Andrew: You know, what what’s strange about you is that you didn’t go all Hollywood considering like you’re in a space where people did not only that you’re still wearing a turbine and most of your photos, I swear. I was expecting you to have buzzed your hair, gotten a different look.

Jesse: That’s funny.

Andrew: Did you ever consider that? Do you ever say, Hey, you know what? This whole seek thing got me here, but I need to have fun. Let my hair down. Cut it.

Jesse: No, you know, it’s, that’s a great question. And you know, it’s, it’s not a, it’s not an easy question for a lot of people. I think the. You know you from the, from the day, you know, our son’s a six years old. He’s in first grade. And from the day you’re in preschool, I mean, pretty much within a few months or weeks, he knew he looked different.

You know, he had something on his head and his hair was long and that, that was unique. And, and I’d say, you know, the time I probably considered it, the most was like, you know, the, the, the days of high school where like, I, you know, I wanted to, I want the girls to talk to me. That was probably the deepest motivation I ever felt for it.

If I’m being, if I’m being honest, but you know, for me, it was always this thing. And, and my parents. So some people really struggle with it, you know? And, and I know I have, I know a kid, uh, who went, I went to college, he was a couple years younger than me. And he was, he was the class president with a turbine on his head.

And I was so proud of him. And by junior year he cut his hair and. It was a sad moment. I said, man, what you’ve, you know, you’re, you’re an Ivy league school, you’re president like, um, but everyone has their own journey with it. And, and, you know, it’s, it’s a part of different parts of who you are. In my case, it was always a, the way I was taught about it, the way I related to it was always this unique differentiator and bonus for me, you know?

And, and what’s the hardest thing in business is like to be. Well, when you’re the one of 500 people at a conference with a turban on your head, and you say some things, all of a sudden people remember you. And, and, and so that was what it was like for me in high school, when I did student council and debate, that’s what it was like for me in college.

You know, when I was in my early job things and as an entrepreneur. So for me, it’s always felt like a bonus and something that, uh, was really important to me and a distinctive identity that I really cherish. And so,

Andrew: stand out for me. I have to be honest, when I think of you, I think of the turbine, I guess you might be the only Sikh that I’ve interviewed with who still maintains a turbine. Obviously there are people like who are seeks, but you don’t really fully know that that’s what they are. Unless you can read the bracelet and understand.

They cut their hair. Let me ask you religiously. Are you spiritual? What is it that you believe and how does it impact your, your frankly, since we care about business here, how does it impact your business? What do you believe and what does it do for you?

Jesse: Yeah. Yeah. What a great question. I I’ve had such an interesting journey with this, you know, so my parents, um, you know, my mom was actually Hindu and converted when she married my dad and they had like a love marriage in India and, you know, in the seventies. And that was very weird. Um, and then, you know, she adopted the religion.

My, my, so my parents were always very, uh, made it ever present in our lives, but never forced it on them. Which I think, like, I don’t know that they, these things were strategic for them, but now I look back, I’m like, geez, that was a genius strategy. Like we got enough, we went to camps, you know, with other Sikhs and there was a couple of retreats and we’d go on Sundays to temple and, and, you know, it was, um, so we were always, or, you know, we were around it, but never in a way that felt like it was being shoved down our throat and sort of let us opt into it.

And I think that was important at the same time, you know, Sikhism as a, as a religion is a really unique blend of Western and Eastern. So, you know, the Western aspects of it are. It’s it’s monotheistic. There’s one, God, it professed in 15th century, India, that all people are equal. Not all men, all people are equal.

Um, and there’s several other things like that that feel very, you know, volunteer, give money, you know, there’s all these things that feel very Western and then it’s extremely Eastern in the sense that it’s like the, you know, the, the path to God is not through church. It’s not through. Following some set of rules.

It’s through meditation. It’s just the thinking about God and the oneness of God or the oneness of the one. Right. And there’s not even the word, God is not really used. It’s just the oneness of one. Right? That we’re all just one thing. And so I was always attracted to the, to the doctrine, if you will, or the spirit, you know, the, the aspects of.

But I would, I would see these family, friends and people, and I, and I, I just, I felt very disillusioned probably in, you know, the late teen years until the actual institution of it, because know these people, aren’t practicing what they preach like this man doesn’t treat his wife equally, but that’s what our religion says you’re supposed to do.

And I had these kind of things. And so, you know, I was, I was definitely that way. And to tie in business, you know, about four or five years ago, I started working. With a coach and he uses this paradigm called the conscious leadership group, know 15 commitments of conscious leadership. And I read this book and I, you know, as soon as I got done with it, I go, this just reminds me of Sikhism.

You know, I, I have to be, I be okay with the way the world is and I have to work on myself and I have to like the, you know, the, the doctrine became almost, and as they started to meld in my mind in a very unique way, but I think it’s definitely a spiritual aspect, you know, it’s like I meditate every day.

Um, I, you know, I try to focus on myself. There’s, there’s, you know, trying to get very clear with my emotions or my stories and not being reactive to them, but being responsive to them, which very much cuts across both business and religion.

Andrew: What do you mean by your stories? What’s a story that you tell yourself that could affect you negatively.

Jesse: Uh, yeah, I think, I think anytime I think there’s a, you know, someone not call me back, is that a slight eye, the fact is they didn’t call me back. But the story I might say is that as a slight or the story, you could say, man, maybe they’re going through something tougher. I can be kind to them and I can show up in a way that’s, um, or, or, you know, numbers look crappy.

And my stories are like, ah, the business is going to fail. Right. And maybe the story is, oh, there’s something really interesting to learn here. That’s gonna help us be even better next time around. So really starting to hone in on. Uh, the stories I make up around facts and, and that’s very much a conscious leadership concept, but also I see it mirrored in religion, around disconnecting from your thoughts, you know, not believing your thoughts necessarily, but keeping them independent from, from your being, if you will.

Andrew: You know what that happened to me the other day, Maryn, Kate and entrepreneur that I’ve interviewed here invited me to dinner with some friends. I had such a good time. Some people here were friends that I’d known for a decade and, uh, I was drinking and having a good time talking. I sent her a text saying, thank you for inviting me.

This felt great. She didn’t respond back. And I, in my mind, I imagined that she was angry at me for something that I had said. And I, I said, well, this stinks. Why did I do it? Why did I have such a good time? I can’t let myself go. When there are people who I, I know from work, it’s just not appropriate. And I made this whole story up and finally, she texted me back.

She said, oh, Andrew, this has been a great night. And. And I didn’t respond back to her and I realized I just let that happen for nothing. Assume so much.

Jesse: Yeah, absolutely. You know, and, and, and what, what in conscious leadership talks about this? And again, it’s true in most things is like when we do that, we create disconnection between people and, and ourselves. Like we disconnect, we make up a story. And then we disconnect sort of our love. We, we talk about like, I got to cut off.

I got to protect myself here and I’m no longer going to do this. Um, and, and I try my best when I find myself in those places, business or otherwise saying, hold on, what’s the opposite of the story. Um, maybe this person’s not responding because they’re incredibly busy and I try to choose kindness and candor, which to me go hand in hand by the way.

Um, so I, you know, I might, if I really cared about that response, I might’ve said something. Hey, everything. Okay. Like, uh, you know, uh, just as a check-in or, or maybe even a day later, if they didn’t respond, I’d say, Hey, you know, you haven’t responded to this. Like I noticed myself worrying that maybe you’re upset with me about

Andrew: Uh, yeah.

Jesse: And that’s a form of candor, which is just, it’s not, it’s not, it’s not presuming to know anything. It’s just sharing the actual story going through your mind. And man, it, it is a, it’s a wonderful way to be connecting with people and a wonderful way to. To really check it’s like, you know, we call it, check your story.

Okay. Yeah. You have a story that’s normal. Everyone makes up stories about things. Just check it. Hey, I’m checking. This is, are you upset with me about something? And it’s so funny how oftentimes easy just expressing it will sort of release it for yourself, but then the person comes in and goes, oh, of course not.

You know, I, I dropped my phone like, and uh, so yeah, that’s become a really it’s, you know, and it all ties back to. And some of these other things, which is very core to Sikhism, like the, you know, the concept of Sikhism very fundamentally is getting sort of ridding yourself of the ego via meditation via, uh, you know, selfless, uh, volunteer work.

Like there’s a series of different things. And there’s just so many funny things like my coach, you know, he’s like whenever you’re starting to feel really, um, bad for yourself or like something’s going really wrong, that’s actually a form of entitled. Because somewhere in your mind, you think you, you don’t deserve what you’re getting or you don’t, you know, and he goes in, what’s the cure.

And I go, I don’t know, he goes, chop wood and carry water. Um, and you know, that’s his way of saying kind of do selfless volunteer work. Right. And I generally like, I’m pretty busy obviously. And most of you know, we have our handyman around the house and stuff to, you know, take care of whatever needs to be taken care of.

And my wife, you know, she, some days he doesn’t like it, cause he just wants me to do it. And generally I don’t, I think I’m just like, I’m busy, I’ll happily coordinate it. But the other day, this was like a few months ago. I was like feeling really low and I woke up Saturday morning. I go, give me your list of everything you want done around, run the house.

And I just spent like six hours, like changing light bulbs and fixing the kids’ swings. And, and I was like, oh gosh, this feels so good. You know, like just bringing myself back into the ground and doing stuff. And so anyway, this is, these are all just they’re, they’re very much crossover. These two themes for me in my life, which has been really, really fun and really powerful.

Andrew: Alright. Back to ambush you and I were talking about how you, you discovered this type of. This channel for advertising, the most people underestimated. And there was a story that you remember of one of the early wins. What was that?

Jesse: Yeah. You know, it’s been really fun just to give some kind of like, now that I’m doing gateway acts, we’ve, you know, we’ve launched, we’ll, we’ll have launched four businesses by the time this year is over. Um, and I, you know, I realized I love this. I love launching businesses and I can go more into that later.

One of the most fun things of this year is like, I haven’t really launched a business in 10 years. And so remembering stuff from the early days of Ampush has been one of the fun, like our connecting dots even has been a really fun like, oh yeah, this was just like that early days. And you know, we were trying to remind you or everyone, like we were doing Google ads.

Trying to, you know, generate leads for online colleges at the time university of Phoenix and Kaplan university were the biggest ad spenders on the planet. And they’d pay you 50 bucks. If you got them a qualified lead for masters in education or accounting or any degree program that they were trying to offer into the world.

And, you know, we were getting our ass handed to us on Google and, you know, a good day. Positive 5% margin and a bad day would be negative 20% margin. It was not going well. And, and we were not geniuses. We were just like, well, let’s try Facebook because this other thing, you know, ain’t working. But what we found with Facebook that was interesting in the early days campaign, one of the really days, it cracked.

Well, people are telling us who they are. And when you know who someone is, you can offer them a really tailored degree program. So I remember I built some of the earliest campaigns and they were like, let’s go, let’s go target substitute teachers. Okay. Substitute teachers back then, Facebook, we tell you exactly how many people are in your audience segment.

So it was like 43,000 substitute teachers in America. Then I had designed a little ad. Remember this on the right rail, this wasn’t new mobile, this wasn’t newsfeed. And it was like sick of being a sub question mark and had like a mean lady with someone throwing a paper airplane. And then like the copy said, go back and get your master’s in education check.

You know, we’ll match you to the best programs that was like the copy. And man, this thing, like the click-through rates were off the charts, the conversion rates are off the charts and they were an 80% margin. So what was a 5% margin was an 80% margin on, on, on Facebook. And then of course I said, oh, okay.

Okay. So let’s do teacher work. Okay. Let’s do the same ad for math teacher. Let’s do the same ad for an English teacher. Let’s do the same ad for, okay. What are other professions or things people might be doing? And, and in some ways, and, and tie back to today, like I’m starting to remember, oh man. And I say, I say, as entrepreneurs we’re having started myself, like I’m forgetting certain parts of it.

I’m like innovation is not a big thing. Innovation is a little thing. It’s like finding these little things that happen to work and being that close to the granularity that you, that you crack the code on something. So we really were like learning how to market education on Facebook at that time, but not in a way that was obvious to us at that at the time, it was just like, we’ve got to make this work.

We got to figure it out. That was like one of the earliest campaigns. And then of course that led to like art, art programs and music. I mean, you could just, you just go program by program and what does a person like, and they’re interested in how do we build a degree program? And next thing you know, we’re spending, you know, that was in June of 2010 by the following year, like 12 months later, we were spending a million bucks a month and it was extremely profitable.

Um, so it was a, it was a crazy time, but also a time that we did crack the code on something quite unique.

Andrew: And this was as an affiliate or did you have a direct relationship with them where they would pay you,

Jesse: We had a direct relationship. It was a mix like, like these things always are, but like with the big guys we had direct relationships. Um,

Andrew: but in the beginning you were, you were paying your own money. It’s not like they were paying you money and expecting a, a

Jesse: correct. University of Phoenix or Kaplan would pass 50 bucks every time a qualified lead came through and we had to take the risk of our own money

Andrew: Yeah.

Jesse: those leads.

Andrew: Okay. And so then at what point did you say, I think we need to get into direct to consumer what’s what’s the eyeopening experience.

Jesse: Yeah. I mean, uh, you know, again, it wasn’t an eye opener. Like we got a call in Q1 of 2011 and actually there’s a book that came out. I should tweet about this. I haven’t, you know, there’s a book called the billion dollar brand club and there’s a whole chapter, chapter five called from mad men to math men.

And it’s all about ambitious founding story. And it’s the best version that’s ever been told of that story. But, um, our account manager at Facebook called us one day and she goes, you know, who are you guys like? You’re one of our top 100 advertisers. The senior executives at that time, Facebook was as much smaller companies smarter than Pinterest is today.

They said they want to meet you. They wanna understand what you guys are up to. How you’re doing this. And we went in there and we came in, you know, we had come from sort of the wall street world. So we came in really buttoned up. We came in with a slide deck who we are, what our ideas are. And by the end of the meeting, they were like, well, you know what?

We’re looking for. Third-party partners to build software on top of our API APIs and go do Facebook ads for anybody. So, you know, this, this EDU thing is cool guys, but why don’t you? There’s a much bigger opportunity here. And we sort of, we bought into that and we became one of the earliest partners of Facebook.

And, you know, and again, we, we hung out a shingle and said, Hey, well, you can run ads for anybody. And, and it wasn’t like, you know, that time you go back, like gaming and daily deals were really big. And those were two categories. We spent a lot of time in. Um, but then, you know, along came a company that we almost didn’t take on as a client.

Named dollar shave club. And then, you know, a few months after that, another client that we, we, we, we actually did take on was blue apron. And then, uh, you know, six months later is Peloton. And so all of a sudden, and then the, you know, again, these are all

Andrew: weren’t you going to take on billion dollar, dollar shave club? What did you care?

Jesse: Well, you know, we were very thoughtful about our resource investments in, in clients, right? It’s if you take someone on $25,000 a month spending. Who doesn’t grow beyond $25,000 a month, they take up as much resources, the $25,000 a month vendor who scales to $250,000 a month. And so, you know, partly a junior sales guy brought them in.

So that was a really, I don’t, I don’t think this is that interesting razors. I don’t know. Right. And then I think one of their investors called me and said, Hey, trust me, dude, this is going to be a big business. You guys should take it off. Um, and we started finding let’s, let’s try it. And, you know, literally within three months it was, it was like four times the size or five times the size.

Andrew: Why do you think they hit it so big, so fast?

Jesse: um, what a great question, you know, I think they had all the things going for them. I think they were new. They were early. I think the brand was really like Mike Dubin built a really smart brand there. You know, they were don’t get it twisted though. They had very, very sophisticated. People working at the company.

We like people who have now, you know, Adam Weber is their COO. He came from P and G and he came from a shaving business. Uh, the art of shave he’s now the CMO of a publicly traded company called varsity tutors. Um, so, so like they had real, they have real great talent there. And I, you know, I think the other thing that they did really well was they focused on what mattered in a really like they did not get distracted by shiny objects.

They didn’t worry about selling a second skew. They were like focused on what they were doing and scaling what they were doing. Um, and, and yeah, I think, I think, you know, it was all those things together.

Andrew: Let me take a moment. I’m gonna talk about my sponsor. It’s for email marketing, it’s send in blue. In fact, Jesse, your, a clients have done email marketing, especially, well, you do it now, even on the brands that you own. How about instead of me promoting, send in blue, we just give people one tip for email marketing.

Do you have one that you would.

Jesse: Yeah, sure. There’s one I heard recently, which I really liked, which is, um, you can send the first email to someone like three or four times if they don’t open it. So you can build some logic in where if they don’t open it, send them the same email with a different subject. And then the son of another, they don’t open it to the point where you don’t worry about it.

If they haven’t opened it, it means they haven’t seen it. They’re not, they’re not taken by it. So feel free to send the same, same email.

Andrew: All right. Well, send in blue will allow people to do that easily because it is marketing automation, not just straight up email newsletters that you blast out to everyone, but intelligence based on whether people have opened, clicked and what they’ve told you, they were interested in. And frankly, even if they bought, if you want to sign up.

Send in blue.com/mixergy. They’ll take a discount off of their already low price, but more importantly, if you stick with them, you’re going to find that they’re not going to Jack the price up on you. There’s a reason that they’ve come back to sponsor. My, my audience has signed up because many of you have multiple email lists.

You’ve suffered by signing up for one of these, uh, bigger names. And you’ve got a great deal in the beginning and it seemed like great relationship. Then they lacked the features and the price was jacked up as your business grew. And so you said I’m never going to do that again. And the alternative is send in blue and that’s why so many people have signed up in my audience.

It’s send in blue.com/mixergy, marketing automation, all the tools that we talked about and also price that will not suddenly get jacked up as you grow. So I see now how the business grew. When you sold, how big share the business did you say.

Jesse: No, we sold 20 about 25% of the company to this really interesting business called red ventures. And there was a ton of lessons. There are a ton of lessons learned from that experience. Um, the biggest one was like, I think at that point we were ready to sell mentally and emotionally, and we probably should have sold the whole company.

And, and, you know, w what, what happened to us red ventures wanted to buy it. You know, there’s the benefit of hindsight. I would’ve really loved to sell to them work closely with Rick who’s their founder. Uh, for, you know, he wanted me for three years and like, I would’ve loved to do that. Like now that I look back on it or, or one of the other options we had w what we, you know, one of the learnings and coaching has helped me kind of see some of these things is, um, you know, in our mind we had evaluation and no one quite met that valuation.

And in the, you know, in the grand scheme of things, it wouldn’t have mattered, right? I’d say let’s just, we wanted to sell it. We thought we’d sell for over a hundred million. And the best offer was like 65 million. I was bootstrap life-changing for the three of us, no matter what number we sold it at, but we really got, uh, disappointed and sad.

Like, like that’s really the benefit of hindsight. We got pretty disappointed. And instead of sort of processing that emotion, probably still making the right choice, we let it down this interesting path. We ended up selling a minority stake to red ventures, and we gave them a call option to buy the rest of the business at a, at a predetermined nominal price.

W it was our sort of way of backing into like, no, no one day we’ll sell for a hundred million because they’re not yet willing to give us that, but we’ll, we’ll prove to them that we’re worth that much. And, you know, they they’ve, they’ve been amazing partners, 11 out of 10 on them. And we love them. And, and we couldn’t have asked for more in that furniture, but, you know, they, they went down, they started buying publishers and just strategically went down a different route that just didn’t make sense.

Uh, ultimately the deal actually ended up working out, interestingly, well, we talked about it as a negative earn-out so typically when you sell your company, you may get a certain amount of cash up front, and then based on your performance, you’ll, you’ll get more. But if you don’t perform, you’ve sold your company.

So that’s game over. So I described this as the opposite of that, which is by the, by, by a stake in the business, I’ll give you a call option. If I perform you buy the rest. If I don’t though, I get to retain the ownership of my business. And in this case, you know, it emotionally, it was a challenge. I’ll, I’ll tell you that.

But like financially it worked out quite well for us. Um,

Andrew: the means that you have the other 75% of a business that didn’t grow to the level you wanted it to. and.

now what does

Jesse: the business actually did grow fine. They just, they just strategically moved their, you know, they, they taught us a lot about how to make money, which was like at the time they invested, we were growing at a hundred percent a year, but we were roughly breakeven on the bottom line. And today we’re growing at 25% a year and doing like 25% in the bottom line.

So, so they really helped us learn how to make the business more profitable, uh, in a, in a variety of different and interesting way. And then they didn’t end up buying it and it didn’t quite perform maybe to where they would have liked it to, or it wasn’t a no-brainer for them, but like we were left with a very profitable asset without any venture money and with control and, um, you know, again and emotionally, it was hard because we, I think mentally we were ready to be done and sell it.

But, but again, financially, like the business is healthy assets it’s growing well. And so it kind of worked out again and that’s in that

Andrew: what’d they teach you about making more money?

Jesse: Oh man, this could be a whole episode. Um, Yeah, I think I’ve said this on Twitter and stuff. Like I think Rick and red ventures will ultimately be written around about the same way people write about Berkshire Hathaway in 3g capital. Like I think they’re a very special, he’s a very

Andrew: You do their, their acquisition is like lonely planet is a typical example. CNET might be a better known brand in our community of companies that they’ve acquired. Right. But it’s all media, isn’t it?

Jesse: Well, here’s the crazy thing, you know, when they invested in us. own no media assets. And that was only in 2015. So in 2015, they own what they were, was a tech enabled marketing services business that their biggest clients were direct TV and Verizon and what they would do. And, and, and for what they taught us.

Hey, instead of being an agency to people be a, be a partner to them, which means you do anything and everything you can to help them get more customers. So that would mean run the media, run the landing pages in their case, they run the call centers. So they would literally do the entirety of selling the product to someone.

And, and through that process, they became really great at site optimization. They became really good at SEO. They built a very dynamic culture. That’s like one of the coolest cultures I’ve ever come in touch with. And I worked at McKinsey and I I’ve worked closely with Facebook’s. I’ve seen great cultures.

And, and what was, what’s crazy about this? Like, this is the thing that someone ought to write a book about is they took that capability and culture. They, I mean, they pivoted a multi-billion dollar business to start buying publishers. So they bought the points guy and they bought lonely planet and CNET and they have

Andrew: BizRate I

Jesse: number.

Andrew: right

Jesse: Sorry

Andrew: bit wasn’t BizRate one of their big equity, a bank rate Excuse me, bank

Jesse: bank rate was. Yeah, but I mean, they bought a publicly traded company out from a private equity firm and they’ve improved it by multiples, uh, by pulling these four levers, you know, one, uh, one being traffic acquisition, uh, you both organic and paid one being onsite optimization. One being, you know, partnership like pricing and really partnering with the brands that, that buy leads from them in a really smart way.

And then the last one, just being really thoughtful about culture and staffing, um, you know, and not, they’re not, they don’t, they’re not a churn and burn type of organization. But they, but they will really staff things like a startup with staff, them really, really lean. Um, and those are the four levers and that’s what they taught us.

I mean, those are the four things they taught us to get really smart about. And I’d say the, the, the, the couple other specific things I’d add is, you know, when they, when they invested, we had 60, 70 clients, uh, ambushed today has 20 clients. And so they said, you know, you guys, they did the old 80 20 that said, you guys should work with your companies.

You should go way deeper with them and you should, you should also, the other thing they taught us. Align your compensation to your outcomes. So really take risk in your fees and be paid. And not only will it really improve your margins up, it’ll change your culture. And it really did. It really made people much more thoughtful and, uh, smart about how they worked with partners.

Andrew: And then at some point you decided you were going to invest in direct to consumer companies or was it not through Ampush? This was you personally doing It Am I right?

Jesse: It was a bit, it makes a, both, you know, ambush has invested in a handful. Uh, I’ve invested in some, you know, obviously we saw the dollar shave clubs at one point, Mike Dubin is like, Hey, do you want to invest? And I was like, ah, I don’t know. What do you mean? No, like I was 26 or something and I had not a lot of money.

And at one point at baker, the head of growth at Uber looked at me and said, do you guys want to take some of your compensation and stock? I was like, nah, I need cash, man. I’m trying to hire people. Like what, what are you talking about? And so, as we reflected on five years, you know, we were like, oh, you know, next time those opportunities come along, we’re going to say, yeah, that’s and we’re going to invest in them.

And so, you know, we invested in Madison Reed, uh, that’s probably the most successful in terms of just growth, multiples and stuff, which is Amy era’s company. It’s a women’s hair coloring subscription. We invest in candid co, which is teeth aligners. Uh, we invested in blue land, um, which is a really cool green.

Um, green cleaning supplies business. So, so yeah, the it, as, as a 2016, both personally, we had some cash in the business was generating cashflow, but the things we learn and we said, next time, these opportunities come along and we’re going to, we’re going to write checks. We’re going to get involved in them.

Um, and that gave us some insights into all the pieces of running them and scaling them. Um, and you know, and just to kind of finish the story up, like by 2019 or so, I, on the personal front, I wanted to. My wife and I are from St. Louis. We want to raise our kids here. And so we started going out. We kinda want to move these all before COVID.

Um, so I wanted to move and then, you know, I, I had run and push for quite a while and gone through a lot of pieces of it. And I was kind of having that bug to start new stuff again, with all the new things I learned, sort of like I was, I would say at that time I was like 20 year old. Jesse got this far, like what could 35 year old Jesse do that?

You know, he knows all this new stuff. Like what would he start if he could start over? Those do things came together. And I, I, you know, culminated literally the month COVID started of me moving to kind of a chairman role at Ampush, uh, having a CEO there. And then, you know, I kind of took most of last year off actually.

And then in January we started gateway acts, which is this venture studio, uh, thing I’m trying to figure out.

Andrew: Yeah, I told you before we got started, I don’t fully understand it. And you said mean either, it’s you just saying? I think I see something here. I don’t know what it is. I’m going to experiment my way through it.

Jesse: Yeah, I think that’s a good, I think the, the, the spirit of it, uh, the why, if you will, for it is like working with my coach. I realized the things that give me endless energy are a few things. Ultimately it’s like, it’s like, I love helping others learn and grow. And I love using entrepreneurship as the vehicle to do that in a similar way that you might with your interviews or my Twitter.

That’s the thing I could do forever and I am always re-energized by it. And so I was like, I want to get myself a platform to do that all the time and the kind of sub bullets underneath that. Right. I love, I love this idea process of finding an idea, putting the pieces together to figure something out like that substitute teacher thing.

Like, I love that. I love it. Right. I love the, I love the process of coaching and teaching people to get better. I love getting to know people and building relationships that lead to, you know, human relationship, but also win-wins in business context and I wanted a vehicle that I could do all those things where that would be what my job would be.

And so that’s kind of the why behind it, you know, the, the strategy was, well, I think I have a lot of unfair advantages and I think they show up in primarily two places. One is customer acquisition and growth. So, you know, DTC or businesses broadly that are driven by that consumer business, I think I could start and be very successful in.

And then the second one is actually know these brands. I know what they need, and I know their challenges. And I think I could build both software and other services, businesses that would sell to the brand. And so I want to start sustain that. We’re just going to launch, you know, leveraging Jesse’s unfair advantages, quote, unquote, to launch new businesses with the two, two most distinct parts of it being one that we’re going to bootstrap them.

They have to get profitable within six months. That’s sort of the rule, um, and then grow profitably from there. And then the second rule is so far, at least in way I can change the rules as is like, it’s going to be more like red ventures in the sense that it’s one culture. Like if you ask somebody where they work, they say gateway acts, they don’t

Andrew: They don’t say.

see, not even maybe seen that’s a little early, but

Jesse: don’t. No, no, no. Yeah. They, anyone who works at red ventures and it gateway X, we, everyone works in one company called gateway X that happens to run multiple businesses. Um, so that’s kind of the, the setup that we have and, and what we’re trying to figure out. And the goal would be like, could we launch one or two things that grow profitably and successfully and then do it again and then do it again.

And, um, and, and the idea is almost inherently, or, um, like, I want to say they’re anti venture, but they’re. We think there’s a lot of space between the, the mom and pops of the world and like the venture funded of the world that there’s just like these, you know, middle-market profitable businesses that we could start a lot of, um, for,

Andrew: Like give me an example of one that exists outside of your universe.

Jesse: Yeah. I mean, uh, there’s a business called some of the spaces I’ve played in, like there’s a business called Gali G O L i.com. It’s the apple center. know, raise no capital and we’ll do a hundred million EBITDA this year from what I’ve heard. Um, and it’s literally just supplements, selling apple, apple, cider vinegar, and never raised any money and bootstrap its weight in that direction.

So that’s an example on the, on one side, um, there’s a business called looks L O X that’s one of the primary softwares you use for reviews on Shopify. And from again, with the rumors I’ve heard, it’s doing 10 plus million in top-line and

Andrew: Wait, this is software software for doing reviews On your Shopify

Jesse: your Shopify store,

Andrew: Got it. Okay. So these are two different examples. When you look at Gali, for example, what’s the model here. They’re buying ads on social, getting people to come to their site, selling on their site. And then, and then what is that a, what else? that’s it? No, I don’t think the examples you’ve

Jesse: revenue. Like they have models of discounting. If you buy multiple skews at once they have subscription. Um, but the key, the key, if you’re going to launch a DTC, CPG or brand or supplement is like, you basically have to get to first order profitability. Right. And if you can get to first order profitability, so if your product is $59 or maybe sometimes 99,

Andrew: It’s 95, a golly, one, one product that I’ve got in my shopping cart right now is $95. I can even use Afterpay to, to spread out those costs

Jesse: split it up. Great. Yeah. So, so if it’s not 95 and let’s just assume they have delivered a 60% gross margin, they’re probably higher than that, but let’s assume. I mean 60 bucks and somehow they blended their CAC down to 40, right through Facebook, through email remarketing, through other things. Um, you can print my, I mean, literally just, and not, I’m not saying that’s easy, by the way, we tried it with a brand that didn’t work, so it’s not necessarily easy, but that’s the bar.

That’s the bar. And that’s the model.

Andrew: But this is, this is where it is. It’s social to Shopify or something like that to recurring revenue. And that’s, that’s the way they work.

Jesse: Yeah, exactly. W with a great product. I mean, let’s not, let’s, let’s not over, uh, like over gobbledygook speak. They’re selling a product that lots of people want, and they’ve created a brand that’s compelling and, you know,

Andrew: I get it.

Jesse: have a customer that they’ve probably focused on who really wants this, the benefits of this, uh, things I, you know, there’s, there’s real there, there in terms of the product

Andrew: know that the cleaning supply company that you mentioned earlier, I forgot the name right now. Um,

Jesse: blue land.

Andrew: Yeah.

it makes total sense that.

Jesse: Yeah.

Andrew: They’re selling, cleaning supplies that is good for the environment. And also they’re not shipping big bottles of liquid over to your house, and they’re letting you get out of the whole Amazon ecosystem, letting you have something on your counter that makes you feel good.

Instead, it makes it feel like the same thing your mom had or your neighbors have. I get it, I get it, all of that. And I don’t want to discount it. Let me take a moment, talk about my sponsor, and then we’ll get into that business that you wrote about on Twitter. To be honest, I didn’t read it. The poo Foria.

Uh, tweetstorm. want to find out what happened with because it feels like that’s an example of what you’re trying to do, but also an example of what you’re willing to give up. If things don’t work out. My second sponsor is HostGator for hosting websites. Jesse, is there content business that you would launch if I gave you nothing but a HostGator account today, and you had to just make it big.

Is there a content or services business that you would build on top of say a Shopify web, excuse me. On top of a HostGator website.

Jesse: Yeah, one content business we’re we’re throwing around, you know, is this idea of like a. Something specifically built for bootstrapped entrepreneurs and both a community and content aspect where we talk about how do you, how do you deal with financing and a bank relationship or working capital in your bootstrap?

How do you deal with, with growth marketing

Andrew: you’re teaching content. You teach the things that you do, and then also there’s a community where they

Jesse: Yeah, something like that. Yeah.

Andrew: that that’s kind of like indie hackers, but you’re saying that you’ve got a different approach to it. What’s that?

Jesse: I don’t know. Well, I, I think the approach would be to, to. Provide maybe more proprietary content or things that like I’ve learned or things that have that specific, uh, backing them. And the other thing that I think is missing in the ecosystem is benefits. Like, I think if you went out and negotiated with software vendors and other people, you could get a ton of benefits.

Like it’s crazy that AWS has this like really great package if you’re venture funded, but they don’t have that for people who are bootstrap. It almost seems backwards to me. So I think with the right cloud and right mindset, you could probably negotiate a bunch of things that would help a bootstrapped entrepreneur.

Andrew: All right. Well, there’s a model of an idea. If you’ve got one rattling around your head, the easiest thing to do is to just go create the page for it. See how it feels as you get the business started. And then if you don’t like it, you can cancel and move on. If you do love it, you can grow and HostGator will grow with you.

Here’s a URL where you can get. A discount on their already low price and a service that you can count on. I know I do at Mixergy. We’re hosted on HostGator. The URL is hostgator.com/mixergy hostgator.com/mixergy. All right. Before you, what was.

Jesse: So before it was, uh, is it’s still around. It’s a supplement business for digestion and. You know, in January, February of this year, I, I had, I was talking to a bunch of companies. I was going to buy a couple of DTC businesses and, uh, you know, I just listened to my heart and I said, I’m just not excited about this.

I want to, I want to learn. I want to build. And as I was talking to my wife on evening and I was like, you know, she’s like, what makes a good DC business? I was like, you know, greater than 60% gross margins subscriptions solves a real problem. Um, I also kind of want to prove to myself that I could growth market and performance market, almost anything.

And I didn’t, you know, I could be fast and aggressive with it. And so, you know, we were kind of joking. She’s like, you’re always calling your uncle. Cause you have like reflux and all these weird things going on with your digestion. Like, why don’t you look into that space? And so I call my uncle and I’m like, Hey, w you know, tell me more about all of this.

Like, like what solves these problems? What’s the miracle drug, is there a drug I could prescribe, like, I want to be the hymns of this space. And he was like, you know, you don’t need any drugs, you just need a good diet. And I was like, yeah, but what do people actually do? And he shared this insight with me, which was kind of interesting.

Was he. You know, the funny thing, Jesse is that like pooping is the most important part of your digestion. And I go, oh, interesting. Tell me more, like he goes, well, if you, as long as you’re passing regularly, you’re going to the bathroom. Most of those issues are due to a conveyor belt, you know, backup.

That’s what that’s like acid reflux. Oftentimes you don’t need a pill for it. You just need to make sure you’re going regularly. So I was like, that’s, I’ve never heard anyone say that before. That’s interesting. I was like, all right, well, what’s the happy meal, any, you know, these, these specific probiotics are really good and, you know, take fiber.

And actually magnesium is a really, really good. Uh, thing that you can mix in with there. So I was like, great. I have my products. Like I was, I was in super decisive mode. I was like, great, I’m going to sell that. That sounds good. Then I, you know, one late night, if somebody around the internet, like I found that there’s actually a term that doctors use for like that really good feeling.

You get called porphyria and I’m like, oh, that’s the best name ever. Okay. We’re going to like, we’re going to buy that to me. We’re going to launch. So, you know, I launched and, and, and I wanted to get it out into the world, out into the market. And so our performance marketing against it. And, you know, we built the whole thing in less than four months and for like less than 30, $40,000, like it was, and that was including, maybe say paying a bunch of contractors to design stuff and to get the supply, you know, supply chain up and running supply chain was a little bit challenging.

Um, and you know what, when I think back on it, everyone kept saying, well, who’s the customer. Who am I talking to? And I sort of just totally disregarded that. I don’t worry about the customer. We’re going to run ads. Well, you know, we’re going to figure it out and I’d say, Ultimately the, you know, what we found was the space as much more crowded than I think we appreciated the humor aspect was I don’t know that we quite nailed it.

It wasn’t quite dollar shave club level. Um, and you know, we, we got, and to be fair to us, we got the economics down to three to four months of a payback. So, you know, I think our cap was like 80 bucks or something like that. And if you got to our, we had a $70 bundle, uh, we had decent subs, you know, decent retention, not the best, but not, not bad by any means.

Andrew: And so would you start off now by going back to customers and saying who’s the customer who doesn’t have a big problem who just wants to do better? We’re going to find a way to talk to them. Is that the.

Jesse: Not exactly. So we, we, we ended up talking to a ton of customers and what we learned, first of all, 75% of the customers who bought porphyria were women, which was shocked us, which really surprised us. And then we went and talked to a lot of those women. And did other kinds of customer research things. And we realized that, um, they don’t like talking about poop and, and we tried a couple ads and examples where we said, well, what about this?

This is an empowering and you know, no like this. And we realized that lots of women suffer from digestive issues. Um, and they have a code word that they use for it that we found, which is bloating, which is not a thing. Men typically,

Andrew: Okay.

Jesse: And so we started to go really deep down the rat hole and designed actually a whole thing with a doctor.

We even found a legit female doctor who knows that, you know, we went a little deeper and we said, okay, we’re going to design a solution for that problem. And, and we’ve, you know, we’ve designed an entire product, uh, as a single product. So there’s not multiple skews and not confusing. It’s much more straightforward.

And it’s very focused on solving bloating for women in particular. And so that will be out

Andrew: How do you, when you say you talk to customers, do you mean you personally Jessie or who’s talking to customers about this? That’s you?

Jesse: Yeah, me, there’s a couple of folks on my team. Yeah, absolutely. I mean, we, we, we definitely are trying to cultivate the, like, uh, everyone talked to five customers a week, sorta my mantra. And the other thing that we’re doing, I think you’ll like this too, Andrew, like I’m, I’m, you know, I grew up as a more B2B and still I’d say, I know that world better.

Like, I’ve been trying to sell it to customers. One to one, simply to the point of like, if I can’t convince a human, who’s giving me 15 minutes of their time to buy it, well, how am I going to do that with an ad or with marketing? Like I have to know the story and the team has to know the story in such depth and detail that we can tell it and convince someone if we can’t do that,

Andrew: And then how, w how are you talking to existing customers and how are you talking to customers that, you’re trying to sell to? Can you give me an example of a customer that hasn’t bought the, you try to sell to in a call and, and test.

Jesse: Yeah. So the new brand is going to be called unblocking.me, um, when we have a waitlist up there. So that’s how we’re, we’re, we’re attracting people to that via some via email. You know, some, we’re trying some stuff on Tik TOK. We’re really focused on Tik TOK right now. Um, and we’re driving people to sign up for emails and we’re reaching out and saying, Hey, will you talk to us?

Will you buy this? And before, yeah, we have 200 some odd subscribers and we probably have another 200 people who come to the site and buy it every. And there were just talking to them very directly about stuff.

Andrew: Oh, wow. All right. So then you they’ll get on the wait list. You contact them, you get on a call with them and say, here’s what we’re working on and see what excites them You do. Do you do video the way I do. I find that watching people’s eyes when I talk is so revealing.

Jesse: You can see someone going, oh yes, this is the thing I’ve always been waiting for versus like, oh yeah, that’s a clever idea. You know? And, and there’s a very different orientation for.

Andrew: Okay. And then, and we put forward a, you will actually see. The one of the weird things is people will say to me in interviews, go talk to customers. Nobody wants to take a phone call from anybody. Schwab has been my, my bank account forever. I was so rude. I got a call from someone at Schwab. I go, why are you even calling me?

I didn’t say It like that, but the attitude was, why are you even calling me? So how do you get somebody to take your call when you’re doing poop?

Jesse: It is hard. It’s hard. It’s I mean, people don’t want to talk about it. And so it has been hard. I think we’ve, we’ve thrown incentives at people to talk to us. We like here’s an Amazon gift card or discount off your neck. Like, so we’ve done what we can to get the right people on there. Um, I also resorted at one point to just cold calling and that was very effective.

Like we have their phone numbers, they bought something from us. And so I just said, let’s just call him. And I said, oh, hi Mary, is that you? Hi, I’m I’m, so-and-so like humanize myself within three seconds. I was like a real person. And she’s like, oh, sure. Yeah. Let’s. The da or like people who called in to complain or cancel, that was a big opportunity to talk to people.

Or we put them through a little form to answer questions. So we did our best to get as much of that stuff as we could.

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