Buying Control Back from VCs: Jason Robbins, CEO of ePromos (Part 7)

Sramana Mitra: The scenario that you are pointing out is a scenario that a lot of venture-funded entrepreneurs face. Business is not the rocket that the VCs thought it would be, but it’s a healthy profitable long-term business that the entrepreneur may be interested in running. That’s a scenario where VCs and entrepreneurs have to sit down and go through this negotiation to set things on a different track.

Jason Robbins: I’m very fortunate. I don’t want any of your readers to think that mine is a normal case.

Sramana Mitra: No, it’s not. It’s not a normal case but the scenario that you’re describing – that after some amount of execution, the investors realized that they have not invested in a rocket. The whole model is based on investing in rockets.

Jason Robbins: It’s one out of 100. That’s right.

Sramana Mitra: I understand that. What I’m saying is the company should not be forced to die just because the company is not growing at venture scale or pace.

Jason Robbins: I’m with you. You and I sound like we’re very peaceful, ethical, mindful people. That’s not always the case. To any entrepreneur who’s trying to get to a million in revenue, it’s a lesson to be learned and it’s an outcome that you will look back on in a positive or a negative light. If you want money, there are consequences to it. Don’t think it was a one-hour discussion where we all shook on it and it was beautiful. There were lots of fighting and arguments, and lawyers talking in order to make that happen.

Sramana Mitra: I’m very sure that’s the case.

Jason Robbins: We had a deadlock Board in a company that I started. I’m sitting here and it’s a game of chicken. If I leave, your business is going to go to absolutely nothing. If I stay, I’m not going to be motivated to run the business. It takes a while. It wasn’t easy but the outcome, in the long-term, worked out.

Sramana Mitra: I’m very happy for you. Where do you go from here? You’re about $50 million a year.

Jason Robbins: More profitable. I guess there’s a whole piece of adapting your business to the market over time. I don’t want to get into my secrets on how we plan. The more you know your business, the more you can find strategic chances to take within it. We’re looking to take calculated bets in our industry. By getting into the Internet, I was betting that more people would be coming to the Internet channel than the traditional channel, which would be decreasing. It’s a very simple macro plan.

Fortunately, there were a lot of people who had mom-and-pop businesses who were too busy doing selling to take the time to do what I was doing. I do believe that people will be buying promotional products for a very long time in the future. The more digital advertising and marketing gets, the more important it is for somebody to have something they can touch and feel as a way to remember the company.

Sramana Mitra: You want to keep this company private or are you looking at an exit at some point?

Jason Robbins: It really depends. On one hand, today we’re saying, “We have some really cool growth plans. If we can get the right partner so that we won’t be so reliant on pay-per-click, we can get very profitable.” If there was a company that has a lot of small business customers, they can say, “We don’t sell promotional products. Why don’t we buy ePromos or work with them? They can sell promotional products to our audience. It would be easier for us.” That’s a strategic pairing. My pay-per-click could cost millions of dollars a year.

Sramana Mitra: I’m sure.

Jason Robbins: On the private equity side, I do have some very cool strategies related to that as well. All good businesses probably have those two different ways to go. Businesses where people are getting older and tired and they just want to be done, there’s a lot of roll-up work out there. We know a lot of private equity companies who make their money on finding entities and rolling them all up. That’s not where we are right now. If anything, we could, with our efficiencies and technologies, be able to acquire some other companies in our space. Right now, we are looking for a strategic buyer or strategic partner with a longer-term view.

Sramana Mitra: It was very nice talking to you. I’m glad the financial engineering worked out.

This segment is part 7 in the series : Buying Control Back from VCs: Jason Robbins, CEO of ePromos
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