Bootstrap First, Raise Money Later: Joe Speiser, CEO of Little Things (Part 2)

Sramana Mitra: You started this in 2000?

Joe Speiser: We started the deal sites in early 1999.

Sramana Mitra: This was bootstrapped at that point?

Joe Speiser: Yes, there were no VCs. These businesses were profitable in the first few months. If we weren’t able to make money in the first few months, we’d move on to the next set.

Sramana Mitra: On what kind of revenue level were you doing this in the 2000 to 2001 time frame before you partnered with your competitors?

Joe Speiser: I think it was around $300,000 to $500,000.

Sramana Mitra: It’s pretty decent.

Joe Speiser: Yes, it was enough to keep me interested and not go down the path of applying for a job at Goldman Sachs or Morgan Stanley.

Sramana Mitra: Yes. Also at the age of 22, that’s a colossal amount of money.

Joe Speiser: You have no liabilities and expenses. I was sharing an apartment with three guys in Manhattan. All that money went into the bank.

Sramana Mitra: What happens next? You were earning $300,000 to $500,000 while you were doing it by yourself. You bring in one of your competitors. How does the revenue scale at that point?

Joe Speiser: We were still both running our own PNLs but under the same headers to get that higher web share. It wasn’t until we started aggregating a ton of other sites on the Internet under our umbrella that we started making some money. The first year it spiked up to $2 million. That was in 2002. It scaled significantly form there, because we realized that it wasn’t just coupon sites out there that wanted a piece of the affiliate action. Anyone who wanted to post a link to their site could be compensated. Any blogger, at that time, who wanted to do a review of a product could be compensated if that product sold. We can link to Amazon and get a web share from that as well.

We kept going broader in who we were representing in terms of the publishers. We realized very quickly that we outgrew the amount of e-commerce companies willing to compensate you on web share. This is after the dot-com crash. Everyone pulled back and got really tight with how much they’re willing to pay out. We moved to a much larger advertiser audience. We went to CPA.

At that time, not many people were doing CPA. Everyone was doing eyeballs. After the dot-com bust, no one wanted to pay for eyeballs anymore. CPM was dead at that time. They just wanted to pay for results. We built a network around CPAs. We would connect publishers with advertisers. These advertisers were Netflix and any advertisers that understood what their lifetime value was. When you understand what your lifetime value is, you can front load a lot of the cost. You can pay the full year upfront because you know after the first year, you’re going to be making money. The whole market moved towards this system of performance-based metrics. This was huge. From 2002 to 2005, we went from $2 million to $15 million a year.

This segment is part 2 in the series : Bootstrap First, Raise Money Later: Joe Speiser, CEO of Little Things
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