AdTech: Spongecell Passes $13m+ ARR, Lets Old Customers Go, $26m Raised

Ben Kartzman

In Episode #818, Nathan interviews Ben Kartzman. He’s the CEO and founder of Spongecell, one of the fastest growing companies in the United States. Earlier, Ben worked at venture-backed Guidester (now Searchandise.net) in product and business development. He graduated with honors from Carnegie Mellon with a dual BS in Human Computer Interaction and Information & Decision Systems.

Famous Five:

  • Favorite Book? – Five Dysfunctions of a Team
  • What CEO do you follow? – Jeff Bezos
  • Favorite online tool? — Mint
  • How many hours of sleep do you get?— 6
  • If you could let your 20-year old self, know one thing, what would it be? – Don’t stress about your first job—just find things that are interesting for you, follow your passion and do those things

Time Stamped Show Notes:

  • 01:55 – Nathan introduces Ben to the show
  • 02:25 – Spongecell is one of the fastest growing companies because they are revenue driven
    • 02:36 – It was in 2009 when Spongecell first measured their revenue
  • 03:15 – 2017 revenue goal
  • 03:30 – $26M has been invested in the company and their largest investors is Safeguard
  • 04:27 – Nathan shares about his first investor report
  • 04:50 – Spongecell is a dynamic and creative company in the adtech space
  • 04:55 – Spongecell works directly with marketers
  • 05:21 – Spongecell’s technology manages different creative variations
    • 05:49 – The variations can grow very quickly
  • 06:04 – Spongecell sells licenses to a platform and beyond that, it is based on usage
  • 06:25 – The licenses are billed monthly and their biggest client is spending $3M a year
  • 06:47 – Spongecell is working with hundreds of customers
  • 07:20 – Spongecell is moving to target more enterprise customers
  • 07:39 – To fire clients, Spongecell raises the minimum
    • 08:47 – People are leaving because of the changes in the service
  • 09:30 – Usage-based charges per impression
    • 10:00 – For every 50 cents CPM, a company would spend $50K with Spongecell
    • 10:15 – Spongecell doesn’t get involved with the media side
    • 10:49 – Most clients have an allocated budget to be spent on Spongecell
  • 11:50 – Spongecell has a base amount and the average usage is based on how people are using it
  • 12:06 – Spongecell was launched in 2006 and they raised their first round in the same year
    • 12:41 – In 2009, they saw the need for programmatic media, which is the buying and selling of ads through technology
  • 13:22 – Spongecell has 95 people on the team
  • 13:53 – Average ARR
  • 14:35 – Spongecell’s intuition with their platform is one of the reason why companies choose them
  • 15:40 – Spongecell has promised to set up an Amazon database so clients can look up the data
  • 16:50 – Fully weighted CAC is changing as they’re slowly transitioning, but it is more than $5K
  • 17:43 – Ideal cohort of customers for Spongecell
  • 19:20 – The Famous Five

3 Key Points:

  1. It’s not easy to let go of customers—however, there are times where it’s the best decision to make for your company.
  2. The transition to focus on enterprise clients isn’t as quick or as easy as it seems.
  3. Find your passion and GO with it.

Resources Mentioned:

  • Simplero – The easiest way to launch your own membership course like the big influencers do but at 1/10th the cost.
  • The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
  • GetLatka – Database of all B2B SaaS companies who have been on my show including their revenue, CAC, churn, ARPU and more
  • Klipfolio – Track your business performance across all departments for FREE
  • Hotjar – Nathan uses Hotjar to track what you’re doing on this site. He gets a video of each user visit like where they clicked and scrolled to make the site a better experience
  • Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
  • Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
  • Audible– Nathan uses Audible when he’s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
  • Show Notes provided by Mallard Creatives