Bootstrap First to Exit, Bootstrap Again, Then Raise VC Money ALL from St. Louis: Stephanie Leffler, CEO of OneSpace (Part 4)

Stephanie Leffler: I remember Amazon called us about a year into this project and said, “How are you pushing so much work through Mechanical Turk?” We said, “We built this software platform to manage it, so it’s really easy for us to push a lot of work out there.” They asked us to come out and demo it for them. They were very impressed and said, “We’re trying to build a partner channel for this product. We need software providers like this to make our product more usable. Have you guys ever thought about going into business and selling the software?”

At that time we were like, “No, we’ve done the software thing. We’re in this thing now where you can just make money through advertising revenue. You don’t need to have any customers.” Two to three months later, we couldn’t get it out of our head. As our product got better and better, we thought that this is something that could actually impact the future of work. >>>

Bootstrap First to Exit, Bootstrap Again, Then Raise VC Money ALL from St. Louis: Stephanie Leffler, CEO of OneSpace (Part 3)

Sramana Mitra: All this was organically built or did you raise any financing in this process?

Stephanie Leffler: We didn’t raise any financing. We’re both very happy at this point that we didn’t. It wasn’t really by design but it was more because we didn’t even understand that those sort of things were available.

Sramana Mitra: How were you doing customer acquisition?

Stephanie Leffler: We got very good at search engine marketing. In Google, we ranked number one for the term shopping cart, shopping cart software, and e-commerce store. Every day, our sales line was a queue. Sales people would pick up the phone as fast as they could. It was all 100% inbound from our rankings in >>>

Bootstrap First to Exit, Bootstrap Again, Then Raise VC Money ALL from St. Louis: Stephanie Leffler, CEO of OneSpace (Part 2)

Sramana Mitra: You’re going way too fast for the story. Remember, we are doing an Entrepreneur Journeys story.

Stephanie Leffler: The key portion of switching gears from trying to be a retail business to starting our e-commerce journey was out of complete necessity. We were in a situation where we didn’t have enough money to keep our retail business going. We didn’t have any plans to be profitable fast enough for us to be able to survive. It was a survival technique.

Sramana Mitra: As a survival strategy, you decided that you were going to become a reseller of this e-commerce platform company?

Stephanie Leffler: That’s exactly right.

Sramana Mitra: What price point was the platform priced at, and what was the reseller deal that you struck with them? >>>

Bootstrap First to Exit, Bootstrap Again, Then Raise VC Money ALL from St. Louis: Stephanie Leffler, CEO of OneSpace (Part 1)

If you haven’t already, please study our Bootstrapping Course and Investor Introductions page. 

Stephanie bootstrapped her first company to $20 million in revenue from St. Louis. Her second, also from St. Louis, is venture-funded and crossed $10 million in revenue last year. Awesome entrepreneur, inspiring woman!

Sramana Mitra: Let’s start with the very beginning of your journey. Where are you from? Where were you born, raised, and in what kind of background?

Stephanie Leffler: I am from Northern Virginia in Fairfax. I was actually born and raised there. Ultimately, I went to school at Washington and Lee University. I found my way to St. Louis as part of my entrepreneurial journey. I’ve lived here ever since. >>>

Bootstrapping an Ad Tech Company from Paris: Daniel Nathan, CEO of BidMotion (Part 7)

Sramana Mitra: The $9 million in 2015 was your revenue or was it the gross spend of how your advertisers are spending with you?

Daniel Nathan: It’s the gross spend but the average margin was pretty high.

Sramana Mitra: From an accounting point of view, how do you calculate revenue? Growth spend is not revenue in your business, right?

Daniel Nathan: It is, because we are doing an arbitrage business model.

Sramana Mitra: If you’re gross spend is revenue, what is the gross margin then?

Daniel Nathan: We cannot disclose exactly the gross margin but it’s much higher than industry standard. The industry standard is about 30%. >>>

Bootstrapping an Ad Tech Company from Paris: Daniel Nathan, CEO of BidMotion (Part 6)

Sramana Mitra: Very interesting. When you got a bunch of companies going, how were you pricing? Was it a subscription pricing model or was it a media buying pricing model where you were taking a percentage of the budget you were managing?

Daniel Nathan: We were doing arbitrage. We go a client and say, “We want to make you profitable. The ad spend that you’re going to do with us is going to be positive. What is the current CPI that makes you sure that you’re going to make money if you’re going to buy at that CPI?” Then they tell us, “We have an average return per user of $2.3.” Then we start at $2.

Starting at $2, we’re buying again on CPM and CPC completely taking the risk on our side. We were plugging our technology on their servers. Every time we’re sending users to their app, we were able to understand the kinds of users. In real time, we are able to understand how an audience that we bought for them >>>

Bootstrapping an Ad Tech Company from Paris: Daniel Nathan, CEO of BidMotion (Part 5)

Sramana Mitra: You’re catering to French clients?

Daniel Nathan: Actually, we don’t have any French clients.

Sramana Mitra: Where are the clients from?

Daniel Nathan: US – a lot of them from San Francisco.

Sramana Mitra: How did you find these clients? >>>

Bootstrapping an Ad Tech Company from Paris: Daniel Nathan, CEO of BidMotion (Part 4)

Sramana Mitra: What happens next?

Daniel Nathan: My first company was not going to copy the technology I was building. They were not going to buy on CPM. On the other side, my company was not going to go to direct advertisers. The issue was that advertisers wanted to work with us directly because they had much more control. The incubator came in and said, “It doesn’t make sense to have two companies competing with each other.”

My third company bought us and then I stayed in the company for six months. I plugged the technology and the team. The team today is still the most profitable team in there. What happened is I wanted to do something else. When we built Uplift, we were using a third-party technology to build our business. We were not using our own technology and I always thought that this technology was not efficient. It was managing all the data and it was not applying any type of optimization algorithm or machine learning techniques. >>>