From Friends and Family Funding to $30 Million Exit: Vertical Response Founder Janine Popick (Part 5)

Sramana Mitra: What was the competitive landscape when it came to keywords in AdWords. It sounds like that was a major channel and that did become very competitive.

Janine Popick: Brutal.

Sramana Mitra: Absolutely, brutal is the word.

Janine Popick: You’re competing with people who can spend a lot more money. That’s what it comes down to. Any of these guys are getting $10,000 to $100,000 a month from their customers. We’re getting either free or $10 a month. It’s one of the reasons why Vertical Response decided to release a freemium product to let the freemium do the marketing for us. We launched that product a year and a half ago. We needed to compete. It was fine in 2005 to 2007. These days, the term email marketing is brutal.

Sramana Mitra: But in 2005 to 2007, the keywords were still affordable and you were able to get a significant amount of customers through that channel?

Janine Popick: Absolutely.

Sramana Mitra: What was the ramp rate? You were seven people. You were bootstrapping this thing with $1.2 million worth of investor money. You had this partnership with Salesforce.com. Largely, you were doing direct advertising with AdWords. That’s what we’ve heard so far. What kind of ramp did that give you?

Janine Popick: The ramp rate in the beginning was a lot higher. Our growth was 20% to 30% year on year.

Sramana Mitra: How long did it take you to get to a million dollars in revenue?

Janine Popick: About 2003 or 2004 from 2001.

Sramana Mitra: So about three or four years roughly speaking. How long did it take you to get to $5 million?

Janine Popick: $5 million was probably in 2006. We had some explosive growth before we leveled off.

Sramana Mitra: Going from $1 million to $5 million in a couple of years is good growth. In fact, a lot of VC-funded companies end up doing that kind of numbers.

Janine Popick: The bad time for lots of businesses was actually the not-so-bad time for us. Small businesses try to look at what they’re spending money on. When recession hits or something bad happens in the economy, and if they see they are spending $750 on AdWords, they are going to think, “I know I’m supposed to be doing things like this, but I cannot look at my credit card statements and say this is good.” The minute they send $30 a month and send out an email campaign and they got $2,000 in revenue, that’s what they rely on. In the bad times, we had more people flocking to us because they saw the immediate return on a very little spend. We didn’t feel that downturn as much as most businesses.

Sramana Mitra: What was your pricing model?

Janine Popick: Our pricing model through 2007 was pay-as-you-go basis. If you knew you were going to send 1,000 emails every single month, it would cost you $15. If you knew you were going to send it every month, and you bought 50,000 email credits, that will be stored in your bank. Every time you mail, we decrement your bank. That would fall down to maybe $13 per thousand. The other thing for us was a lot of other people were doing subscription. We decided not to penalize people for not using the product or not having as many names on their list. You can spend $5 or $10 with us. We’re going to make you feel comfortable with our technology before you start to have to pay a bunch for a big list.

In 2006, we saw that there were a lot of companies comparing us to the subscription model. Depending on how big your list was, it was not affordable to use us versus a competitor. We decided to offer subscription pricing as well as pay-as-you-go. We released freemium and freemium with a subscription not too long ago. The first thing customers said was, “I don’t want the subscription. I want the pay-as-you-go model.” You cant’ please everybody but we certainly tried.

This segment is part 5 in the series : From Friends and Family Funding to $30 Million Exit: Vertical Response Founder Janine Popick
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