Learning From Mistakes: Roy Peleg, CEO of Firstimpression.io (Part 7)

Sramana Mitra: Once you made these vital switches, what happened? In terms of revenue, how did you do in 2015?

Roy Peleg: We ended with gross revenue of $1.3 million. In the month of December, we generated $185,000. The trajectory was great. We quadrupled the revenue in 2015. Then we took on a few more employees. We actually raised the bar even more. When it came to publishers, a million to two million page views a month was considered an adequate publisher to pursue. Most of 2015 and 2016 we focused on publishers with 5 million page views a month. In 2016, we actually tripled the revenue. In 2016, I’m talking about $3.9 million in gross revenue and for the first time, we were profitable. Our current revenue run rate is more than $6 million a year.

Sramana Mitra: This is $6 million in gross revenue right? Your revenue is more like $2 million.

Roy Peleg: Yes.

Sramana Mitra: I’ve seen a lot of Bootstrapping With a Paycheck stories. We actually support Bootstrapping With a Paycheck very diligently in the One Million by One Million program, and we’ve had lots of success. My observation of just listening to your story of three false startups and getting the hang of this one is that the business model in the previous three is flawed. If you just got some help, which you eventually did and did start moving the business model a bit, you would probably not be spending so many years bumbling around.

Roy Peleg: Correct. At the accelerator, our mentors pushed us to keep the SaaS model and they told us that we can’t do both. While that’s correct, the SaaS model is much more appealing to the premium publishers while the second-tier publishers appreciate the revenue share model.

Sramana Mitra: The thing is you can’t build both businesses. If you had this discussion with me, the first thing I would tell you is forget about these little publishers. They’re going to suck you dry in terms of sales cycle, and they’re not going to deliver the level of revenue that would make them interesting. Focus entirely on the larger publishers where you can probably do the SaaS model. If you’re doing revenue share, at least, you have meaningful revenues coming into the account. Otherwise, this whole exercise of long sales cycles for tiny deals is a flawed business model.

Roy Peleg: Correct. In terms of just a few points along the way, we were eight people at the end of 2015. Today, we are 18. We aim to triple the revenue by the end of 2017. By the way, when we were in the accelerator we tried to raise some funds and we, miserably, failed. The ad tech industry then took so many blows.

Sramana Mitra: I would say that’s a blessing for you because you now have a business that doesn’t have to scale in a way that would fulfill the venture capitalists’ aspirations. You’ve been forced to be very diligent and disciplined to find a business model that works. Now you’ve got a business model that works and you can scale reasonably well based on your organic growth. In a way, I would say it’s a blessing that you don’t have the pressure of venture capital financing.

Roy Peleg: It is a blessing. We did meet with angel investors back then who gave us $100,000 when we were already breaking even. We got a few acquisition offers along the way that we turned down. While we were at the accelerator, we got an acquisition offer from a multi-billion dollar company. I remember me and my co-founder speaking. We couldn’t believe what we came to do. $8 million sounded like a nice amount for the time invested, but we decided not to go through with it. We realized our business had more potential.

Sramana Mitra: Those were aqui-hire offers?

Roy Peleg: Yes. We were four people.

Sramana Mitra: All this is going away. Right now, Silicon Valley is not in this mode. You got this probably a couple of years back when all this throwing money around was happening at a much faster pace. At this point, the market is a more sober market. At the end of the day, what you’ve done is built a fundamentally sound business that is scaling because of its own business model merit. That is what entrepreneurship is about. It’s customers, revenues, profits, and being sustainable. You got those pieces in order and that’s really the achievement of your business.

Roy Peleg: There were many questions. Until we got market validation, it was very difficult. I was throwing money out of my own pocket. It made a difference in being humble enough to say that what I did was a mistake and then trying a different path.

Sramana Mitra: I’m very happy to hear that it has finally found its groove and that you’re in a place where it’s real execution. It’s a great pleasure to meet you. I enjoyed your story. It was painful to listen to you at times, but that is the reality of a serial entrepreneur’s journey, and it has taken you a few different starts to get to one that is working. I’m thrilled that you found that success now.

Roy Peleg: Thank you very much. Thank you for giving me the chance to tell my story.

Sramana Mitra: My pleasure.

This segment is part 7 in the series : Learning From Mistakes: Roy Peleg, CEO of Firstimpression.io
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