Bootstrapping to Exit and Bootstrapping Again (and Again): Adam Robinson, CEO of Retention.com and RB2B (Part 3)

Sramana Mitra: Well, I think what you’re pointing out is that if your ad can rattle people enough to get them to comment, it’s with comments and discussions in social media posts that you get distribution. That’s what snowballed the algorithm distribution. So by rattling these people, you were getting that distribution. So whether people liked it, resonated with it or not, you were getting distribution, you were getting your ad in front of enough people who actually were interested in buying.

Adam Robinson: I think a mistake that people can make is that it’s not good for your brand. But when you’re starting a startup, you don’t have a brand. I don’t think you have a brand to ruin until you’re like well past $10 million ARR.

I could never do that to Retention.com right now. I’m doing something different with my personal brand on LinkedIn, which is fueling the new company. My personal brand is defined as that. So doing things like that don’t tarnish it.

Sramana Mitra: So let’s go back to GetEmails. So how far did you get to with this go-to-market strategy of advertising on Facebook and stoking up controversy? How far did you get to?

Adam Robinson: This is wild. So zero to $1 million was the Facebook ads. Then with six people doing only cold emails out of the Philippines, mind you, we got from $1 million to $10 million with one salesperson, one sales assistant, and one onboarding manager who was just kind of sending out onboarding instructions. I was always working on special situations or what our next move would be.

Sramana Mitra: I have a question on the cold email Philippines strategy. By this time, did you already determine that your target audience is going to be Shopify merchants or e-commerce players?

Adam Robinson: No, that did not happen until the end of 2022. This product was always very high churn. One thing that I didn’t know until I spoke to a bunch of investors in 2023 is that there are certain product categories that will always be higher churn than other product categories. So like a CRM has the lowest. It’s a system of record. It’s people’s data. The only reason they’re moving is if they go to another CRM or if they go out of business.

When you’re selling leads or intent data as a SaaS, it has one of the highest churn, because there’re just so many reasons why someone would turn it off.

Sramana Mitra: If leads don’t convert. They turn it off. It’s very simple.

Adam Robinson: Yes. Or it’s somebody new shows up in the department, they turn it off. There could be a million reasons. The only thing that changes about their business when they turn it off is that they don’t have those leads anymore. It’s not really mission critical.

I fail to appreciate that. If you look at the revenue chart of this company, there were a couple of times when it plateaued and went down. In month nine, it was lower than nine months before. Early on, it’s a very devastating feeling. You’re like, what am I wasting my time on?

The slope of the line over time was exponential. There’re two nine month periods where it was very nerve wracking. The reason, of course, is churn. It was always very easy for us to sell. After the first nine month period, we actually added the e-commerce segment to who we were prospecting. That got us to the next plateau, and then the next plateau. When we took everybody else out, it got us to the next plateau. Does that make sense?

Sramana Mitra: Yes, it does make sense, but you haven’t answered my question on what was the target when you were making cold calling as your primary strategy?

Adam Robinson: Diana, who’s my co-founder and was doing all the sales, was just prospecting out of BuiltWith. She would just hit anybody that used tech and was related to emailing in any way.

Sramana Mitra: I see. Low conversion rate, very spray and pray kind of strategy. Even then, you got to $10 million?

Adam Robinson: We thought that this technology was more suited for the affiliate world. That was our original focus. Then we shifted our focus to these Klaviyo type people. So, Shopify vendors got us out of the first plateau, and then these Klaviyo guys really loved our product. They’re bringing in their friends. They never churn these Shopify plus guys specifically. At the end of 2022, we decided to take everyone else out. It’s not self-serve anymore. We’re only going to give demos to large Shopify stores. We thought we had it figured it out. We thought our metrics were going to improve to look like Klaviyo’s if we did this.

We hired a bunch of people, thought churn was going to go down by 75%, but it only went down by 25%. I thought we would be at $100 million ARR by now. I thought we were going from fifteen to fifty based upon what I was seeing in 2023. Churn did not improve because of this product category, a dilemma, and the fact that we don’t have a diversified product suite.

A lot of other stuff happened to SaaS companies in 2023 related to zero interest rate policy getting pulled back and people not buying everything. It was tumultuous to have expectations that were constantly rising and then crashing down in your face.

Sramana Mitra: But, you did not raise money.

Adam Robinson: No, we didn’t raise money. We thought about taking growth equity at one point because of that trajectory we were on. It kind of made sense.

Sramana Mitra: Thankfully, you did not take money.

Adam Robinson: Thank God. Growth equity evaporated in 2023 in general. Then our business was basically uninvestible. They don’t buy a high term EBITDA business.

This segment is part 3 in the series : Bootstrapping to Exit and Bootstrapping Again (and Again): Adam Robinson, CEO of Retention.com and RB2B
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