Building a Portfolio of Bootstrapped Businesses: Ryan Millman, CEO of Undigital (Part 5)

Sramana Mitra: Relatively soon after that [around 2004], this market started to develop, including with venture funded competitors, right? There were a number of very successful venture funded competitors that hit this market. How did you deal with that competition?

Ryan Millman: Well, it’s a big market, right? It’s a multi-billion dollar market for overall photo finishing. We’ve always had a few competitors that we thought were true challengers to us. There are two things that drive top line growth – innovation and marketing. We really wanted to be good at innovation and marketing. So there was so much innovation happening – new product development and new things you could put on new types of photo products. We just had a thirst to be at the forefront and be a leader in innovation.

At the same time, we were a student of marketing and digital marketing was in early stage. With our prowess in digital marketing and with the marketing funnels that we set up, I think we developed a very strong internal team to acquire customers profitably and scale. The combination of continuous new product innovation and acquiring more and more customers profitably propelled our growth.

Sramana Mitra: So double click down on that for me. What was the marketing strategy that worked for you?

Ryan Millman: We took a few thousand dollars and ultimately we’ve turned those companies into $50 million today in annualized revenue. So in the earliest days of Nations Photo Lab, we put $50 for advertising in Google AdWords. There’re about 19-20 different marketing channels. Search intent is one of the most efficient marketing channels, right? People are searching for you. If we can have them find us and as long as we’re relevant to what they’re looking for, there’s good opportunity to convert profitably.

So we invested about $50 and brought in a couple of good accounts that were spending $5000 a month recurring doing things like baby invitations and wedding invites. Then we increased the budget to $200 and kept ensuring that the spend was driving incremental returns. We just kept increasing the spend until we got to a seven figure spend and the efficiency diminished. But the earliest days was just search marketing, all on Google.

Sramana Mitra: In the time frame that you’re talking about, Google search was incredibly effective. It was cheap, and it was very, very effective.

Ryan Millman: There weren’t a lot of competitors out there, and a lot of people didn’t know how to use them. They started bringing in things like negative keywords and you could get really dialed in. Personally, I’d say as an entrepreneur, one of the greatest things that I think has benefited me was that I was in the weeds doing that work. I didn’t outsource it to an outside company.

So to be successful, I think at least in e-commerce, marketing has got to be a core competency. It’s not something that we ever outsource. So we learned the ins and outs of how to ensure our dollars were effective and to be efficient within the Google ecosystem. That was a really great channel for us initially and still is.

Sramana Mitra: So how did this manufacturing company scale in terms of revenues and velocity and so forth?

Ryan Millman: We were doubling every year for a very long time, and the company is mature now. So we’re still growing double digits. The overall market has certainly slowed in photo. It’s gotten a lot more challenging. I don’t see that there’ll be a major uptick in the overall market sizing.

A lot of what we’re doing right now is just focusing on capturing additional market share. But we had a really great run from 2004 up to 2016-17. It was hyper growth. Things started to normalize. COVID was originally down to 50%, it has pretty much rebounded. So it’s kind of been a crazy ride. So we’ve sort of been through all the different phases.

Sramana Mitra: What is the top line on that one right now?

Ryan Millman: About $40 million.

Sramana Mitra: Oh, so the manufacturing business is the bulk of your business.

Ryan Millman: Yes, we have another entity that’s a sister company. It’s very closely related and it’s north of $40M overall. So we both sell direct to consumer. In our photo space, we’re north of $40-$45 million, annually. It’s been a great business.

The patented products that we’ve invented are fantastic. They are sold pretty much in every drugstore. When you go to a photo counter and you want to order products, they have to make it for you quite quickly. We provide the parts so that the associates who have little or no knowledge can make beautifully printed and high quality products such as wall decor, Christmas ornaments, photo cubes, and a whole list of other things.

Sramana Mitra: And that’s a separate business.

Ryan Millman: It’s very closely related. It’s a close sister company for sure.

This segment is part 5 in the series : Building a Portfolio of Bootstrapped Businesses: Ryan Millman, CEO of Undigital
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