Entrepreneur Couple Bootstrapping to $10M from Colorado: AdCellerant Co-Founders Brock Berry and Shelby Carlson (Part 4)

Sramana Mitra: Could you throw some light on what kind of revenue sharing you were doing? It sounds like that is the core of your business model.

Brock Berry: For the services part of what we do, the media company takes 70 cents out of every dollar they sell. That’s the revenue share so to speak. If you think about our business model from a manufacturing perspective, we’re more of a distributor in that relationship. These folks that we work with are more like retail locations.

Sramana Mitra: I don’t understand. I thought you were selling a piece of software to small businesses and you were going through that channel of a large media company that was connected to a lot of small businesses. How does that make you a distributor? It’s your own product, right?

Brock Berry: When we first started, we were in the process of constructing and evolving the platform that Shelby described to you earlier. We are bootstrapped. The only way that we could fund that growth and pave the path to where we’re at is by funding it through other profitable business models.

Our first business model, and it continues to be a dominant part of what we do today, is a services business where we run and manage digital marketing campaigns on behalf of these media companies. That was the initial relationship with the Voice Media Group team.

Sramana Mitra: I see. You were running their campaigns such that they were making advertising revenues because of the managed service that you were providing?

Brock Berry: That’s correct.

Sramana Mitra: This is not the same thing as what I understood, which was it was their salesforce selling their product to small companies.

Shelby Carlson: You got that right. We believe that the industry is in a shift. Most of the small to medium-sized business owners work with a sales rep out of media company. They’re purchasing a lot of their advertising through a sales rep that works for a media company.

Of course, that media company marks it up to make their margin. We’re actually the back-end of those media companies executing it for them. There’s going to be a shift that will help the direct marketer get some of these technologies without having to go through a sales rep with a media company and not have to have the markup cost.

Sramana Mitra: Got it. That’s very helpful. To follow that logic along, isn’t there a channel conflict now? You’re providing the services to do the managed services on behalf of your media company partner catering to these small businesses. Then you’re also turning around and asking their sales rep to sell your technology directly. What’s going on here?

Brock Berry: In some respects, there could ultimately be a channel conflict. Today, that’s not an issue. The way the market works is these sales teams using the software platform are paying a subscription fee for that platform.

That platform helps them enable and execute better digital marketing campaigns on behalf of their local business owners. From that perspective, we’re not going around servicing those local marketers in any way other than through the media company.

This segment is part 4 in the series : Entrepreneur Couple Bootstrapping to $10M from Colorado: AdCellerant Co-Founders Brock Berry and Shelby Carlson
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