Student Entrepreneur to $10M Revenue Run Rate: Extrabux CEO Jeff Nobbs (Part 3)

Sramana: You started hiring after being awarded 25,000 dollars for winning the business plan competition. However, that is not a lot of money. Whom were you hiring?

Jeff Nobbs: More than anything winning the business plan competition was a nod of approval from the University which helped us raise more money. Over the course of the following year we raised close to a million dollars. The 25,000 dollars helped but it did not get us very far.

Sramana: Let’s look at that in a granular fashion. What money did you raise and how did you raise it?

Jeff Nobbs: The next thing we did was raise another 50,000 dollars from friends, family and angel investors. We did not have any VC or institutional investors.

Sramana: Who were your angel investors?

Jeff Nobbs: It was an angel network here in the local area. Most of the money we raised came from friends and family.

Sramana: So that brings you to 75,000 dollars in funding between the money won from the business plan competition and the 50,000 dollars raised in angel money. How long did that money last?

Jeff Nobbs: We really just raised money when we needed it. Once we realized that our cash flow was not going to carry us we would raise more money. Looking back that was a very stressful way to operate. The best time to raise money is when you do not need it. We were only raising money when we needed it. There were several months where we told employees to hold onto their paychecks for a couple of weeks before depositing it. We would then raise some money and then the checks could clear.

Starting last year we became cash flow positive and profitable. We don’t have to worry about that anymore. The business funds all of our spending.

Sramana: Let’s talk about how you build the business and got to profitability. You must have done a lot of things from 2008 to 2012 to build the business. How did you acquire customers? How did you get more merchants to work with you?

Jeff Nobbs: In our business volume is the name of the game. We are only making a couple of bucks on every transaction. When we were first starting Extrabux we thought it would be all about our marketing campaigns. We were more like a product team. We would turn into a marketing organization and get the word out on that product.

We came to realize that if we would just build the best product that we could, and if we listened to our users and catered to their needs, then our users would do most of the marketing for us. What is really fueling our growth right now is friends telling friends. We started growing exponentially in 2011. It was a combination of a bunch of features that we had been working on for a while. When we launched the “refer a friend” program that really struck a chord. At that point our users did the marketing for us.

This segment is part 3 in the series : Student Entrepreneur to $10M Revenue Run Rate: Extrabux CEO Jeff Nobbs
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