Buying Control Back from VCs: Jason Robbins, CEO of ePromos (Part 6)

Sramana Mitra: You had a $5 million round. You were pretty much profitable. What are some of the major inflection points?

Jason Robbins: The $5 million basically almost disappeared. By the time money came in, the investors wanted a CEO that was known in the marketplace so they then can then raise the next round of money. We literally paid $50,000 to Spencer Stuart, which is a head-hunting firm. We were paying money. Then we needed a COO. We hired a COO so he could manage all the legal spending so we can convert into a C Corporation and develop stock option plans.

Before you knew it, we weren’t focusing on the business because we’re spending all of this money. It was very different from what I ever did. Another big lesson is the number of employees. When you get up to 47 employees and only 13 of them are selling, you get a bad balance between revenue makers and revenue spenders. Every business has to have a certain ratio of gross profit over employees. The key inflection point has to do with hiring and building a team. I knew that you have to hire people who are better than you. I tried. I really did. We had some good talent but the talent you need changes drastically as you go from $5 million to $20 million and higher.

I guess one of the big things I learned was when I finally got the right talent, things really happened. I got a VP Marketing about five or six years ago. She came out of a big billion dollar direct marketer. I got someone who could bring in some larger companies. The person is used to working at a large company so they’re a little less entrepreneurial. You have to get new things into the business.

Three years ago, I hired a President. I felt that once I reach about a hundred employees, I wasn’t the right guy for the job anymore. It just wasn’t my personality. That was a new inflection point where all the good things that he had to add started to show themselves in our strategy and execution. In between all that, you have the business cycles. You have 2008. Our business gets hit in a down cycle pretty hard.

Sramana Mitra: I have a few questions. Has Google organic search remained your primary lead generation mechanism?

Jason Robbins: It switched to Google Pay-per-Click but it’s still Google. It’s so much more costly. Over time, it became easier for people to compete. We got this head start. Our idea was we were going to become the brand that people thought of when they thought of promotional products. We accomplished a lot. We’re very proud of what we’ve accomplished.

Sramana Mitra: After that $5 million round, you did not take any further financing? This was then built organically?

Jason Robbins: Yes.

Sramana Mitra: You said earlier that you owned 100% of the company today. 

Jason Robbins: Yes.

Sramana Mitra: How did you value the company when you did that buyback? What was the underpinning of the valuation?

Jason Robbins: There was a realization that we weren’t going to be the big brand that we thought we were. There was a lot of competition coming in. It was a much harder business than we thought.

This segment is part 6 in the series : Buying Control Back from VCs: Jason Robbins, CEO of ePromos
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