Capital Efficient Startup, Venture-Scale Growth: ShipMonk CEO Jan Bednar (Part 3)

Sramana Mitra: Did you choose the first few customers by some threshold? Were they doing a certain amount of business already?

Jan Bednar: It was almost the opposite. They were companies that nobody wanted to do business with. A lot of the fulfillment companies in 2015 didn’t want to work with small startups because they couldn’t support them.

They had high minimums. It wasn’t economical for them. That left a ton of opportunities on the table. We went to the people that nobody else wanted to service. Eventually, those companies grew to be much larger.

We started working with a bunch of larger companies. To start, we found this niche that nobody wanted to touch. We built our core offering in that market space. 

Sramana Mitra: Were there any type of customer or e-commerce business that looked like it was gaining more traction? There are warehouses for different kinds of products.

Jan Bednar: It was almost like we were taking whatever was available. We weren’t picky but we did focus on subscription boxes. Back in 2014, subscription boxes were just getting started. We figured that nobody was focusing on that space.

Our first two larger customers were in that space. We started taking on other industries as well but that was the one category that we had a lot of focus on in the early days.

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

Jan Bednar: In our second year in business, we hit $1.1 million.

Sramana Mitra: Was it still just the four of you? 

Jan Bednar: We had four people at this time. The four of us were the core team. We had some people who were working the warehouses. I don’t remember exactly how many, but probably 10. 

Sramana Mitra: How big a warehouse did you need to service that level of business? 

Jan Bednar: Until the end of 2015, we were still part of that free one-year warehouse deal. This accelerator program was owned by the university I went to. They got a brand new building that was massive but didn’t get the budget approved to build out the entire warehouse. I renegotiated.

They were happy because every time they brought investors of beneficiaries, they had a physical business there. It was just a great support system. Ultimately, that’s what enabled us to continue growing it. 

Sramana Mitra: Was it in 2016 that you hit the $1.1 million mark?

Jan Bednar: It was 2015. 

Sramana Mitra: The free warehouse space got you to the million dollar mark already.

Jan Bednar: Right.

Sramana Mitra: What happened in 2016?

Jan Bednar: We did one of our best hires. We brought in our Head of Marketing who I hired out of an advertising agency. He was two years out of school but extremely aggressive and talented and very innovative.

I knew that we had no money to give him for marketing budget, but he just wanted to do this. Kevin started in early 2016. We rebranded to ShipMonk. He really started working on the brand. He started working on some of the long-tail stuff like SEO, organic, and referrals. Additionally, he started working and building out our paid advertising strategy through Google and social media.

Once we started doing that and built a good brand and reputation coupled with the software that we launched in 2016, it was a huge jump. We started onboarding a lot more customers. We started realizing that customers are starting to come to us instead of us going to them.

People were searching for us. That was a turning point where we had so many people coming in that we started being picky. We went from a million to $4 million in 2016. Operationally, that was a tough transition. It was challenging.

This segment is part 3 in the series : Capital Efficient Startup, Venture-Scale Growth: ShipMonk CEO Jan Bednar
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