Jeff Epstein, Founder, Ambassador
How Jeff Epstein built Ambassador to amplify word-of-mouth marketing.
When Jeff Epstein was in law school, he made enough money in online poker to pay off his sizable student loan debt—but not by gambling. Epstein and a couple of friends saw the booming online poker sites of the time, and created a business that referred traffic to online poker sites. In exchange, the poker sites would pay their company for the referrals—making Epstein’s business an affiliate company.
The referral company did well enough that Epstein was able to sell his stake in the business to his partners for a nice chunk of cash.
But Epstein’s biggest takeaway from that early entrepreneurial adventure was the power of referral to help a business gain more customers. That resonated with him, and it was successful enough in his early poker venture that it would inspire him to pursue his best idea yet.
In 2009, Epstein founded the tech company Ambassador. Headquartered in Detroit, Ambassador helps marketers increase their customer base and revenue using word-of-mouth referrals. Recognized by Inc. 500 as one of the fastest growing private companies in America, its software handles nearly every facet of the referral program process, helping to turn customers into brand ambassadors. Trusted by companies such as Logitech, HP, and Zillow, Ambassador was acquired by West Corporation in October of 2018.
There were, however, more than a few rocky steps between his law school windfall and his current entrepreneurial success.
Know When to Fold ‘Em
When Epstein was in law school in the mid-2000s, online poker was at the height of its popularity. He and his friends were big fans. They saw that there was a huge community of like-minded individuals, and felt there was an opportunity to build a business around it.
“In the simplest sense, we basically were an affiliate to online poker sites, which at the time were legal and have now become illegal,” Epstein says.
The business did fairly well, but with the laws regarding online poker changing, Epstein was ready to move on. With strict regulations on the horizon, Epstein “sold low” but was still happy with the outcome.
“With how well we did and what I sold for, it was enough to pay off my loans, which was kind of my goal,” Epstein says.
Although he was in school to become a lawyer at the time, he was decidedly not enjoying the practice of law. So after unloading six figures of debt with the sale of his stake, Epstein was ready to start from scratch.
That new start included buying an SEO business. It was a venture Epstein admits he should have never taken on, but he did so because he was able to acquire it at such a great discount. However, he learned that acquiring a company just because it’s a great bargain isn’t always a great decision.
“Unlike the poker thing, where I kind of knew the language and understood poker because I love poker, I knew nothing about SEO when I bought this company,” Epstein says. “I knew nothing about internet marketing really. So it was actually a really poor fit for me.”
A combination of factors led to its downfall. After multiple failed attempts to get the product working properly, hobbled by his own lack of knowledge, the business ended up folding.
But not all was lost.
One of the original visions for the SEO business was to somehow create an affiliate program within it. While talking with developers about building the program, he not only learned that there was existing software for what he was trying to do, but that he could build his own alternative at a reasonable cost.
Why purchase and insert software into an SEO business he knew nothing about, when he could build his own product around a topic he understood and had some interest in, Epstein thought.
With that, Ambassador was born in 2009. By leveraging the power of word of mouth, Ambassador helps simplify the referral marketing process and turn customers into brand ambassadors.
When Ambassador started, Epstein was still trying to figure out the best business model for the company. Around the same time, Dropbox was fairly new and finding great success with its freemium model.
Hoping to mimic the company’s prosperity, Ambassador started out free as well. A wave of sign-ups ensued, but unlike Dropbox, things didn’t exactly take off.
“We had I think 600 sign-ups, people using Ambassador before a single person even paid us like a dollar,” Epstein says. “So the freemium didn’t work. … You can make the argument that Dropbox can literally be used by anybody. That’s not the case for Ambassador, right? It’s a much more niche product.“
It would be nearly six months before Ambassador had a repeat paying customer, marking the beginning of a long, painful growth period for the young startup. Although he had built an affiliate product in the past, building an actual company proved to be much more difficult.
“The lean startup methodology didn’t exist,” Epstein says. “And when I read it I was like, man, this was like the fattest startup ever. We did everything backwards. … I didn’t know what I didn’t know, which in some ways was a blessing because I think if I had known what I know now, I would have never started.”
Over the next few years, Epstein and Ambassador would go through many ups and downs, leading to much frustration and many mistakes. Epstein admits that over the course of three years, he was not paying himself and frankly, losing money.
It would take about a solid two years before the company would reach $10,000 a month in revenue. But their perseverance would pay off.
You’re a Techstar
In 2011, Ambassador got accepted into Techstars, the prestigious accelerator that helps startups with funding and provides access to a large network of mentors. Techstars wasn’t as well known back then and even Epstein admits he wasn’t familiar with the accelerator until he stumbled upon a video.
“There was very little content about startups, and so I found this video about Techstars and I had never heard of it,” Epstein says. “I was like, wow, this is the coolest thing ever, there was basically a boot camp for entrepreneurs, because I would love to know all these things and I don’t know anything.”
Epstein applied to join Techstars, but didn’t make the final cut based on his initial application. Not because they didn’t believe in the product, but because the company was missing one crucial component—he didn’t have a co-founder who lived in New York, where the accelerator was based.
Having come so close to being accepted, Epstein took the feedback and made the necessary changes. He found a local co-founder and applied once again. This time, Ambassador was accepted.
Over the course of a year, Epstein would absorb a wealth of knowledge and make a number of valuable connections. By the time Ambassador left the program in 2012, the company was making around $15,000 a month in revenue. They were finally on their way.
In addition, Ambassador was able to connect with investors while in the program, which led to them raising a couple hundred thousand dollars. Not a huge amount, but enough to keep them afloat for about three years before they had to raise a little more.
“We were super lean, super scrappy,” Epstein says. “I think the validation of this national program where we were picked out of thousands of companies, we were one of 10 … I think it gave me the confidence to really dive in full steam.”
With his confidence resurrected, Epstein and Ambassador continued to grow over the next few years and worked with some of the biggest brands in the world. In October of 2018, the company was acquired by West Corporation. Quite a feat for a company that, almost a decade earlier, showed no early signs of making any real revenue.
Despite no longer being involved with the company following the acquisition, Epstein still thinks very highly of Ambassador and its service. “Every company should absolutely have a referral program at some point in their life,” he says.
Jeff Epstein’s Tips for Building a Startup
Knowing what he knows now, Epstein says he would approach some things differently than he did when first starting Ambasador 10 years ago. Here are some of his tips for building a startup:
Take Feedback, Make Adjustments
In 2011, Ambassador was accepted into Techstars—the prestigious accelerator that helps entrepreneurs succeed by providing them with mentorship, introductions to investors, and other useful tools. However, when Epstein first applied, he was turned down during the final cuts.
He was told that one thing that held him back from getting accepted was that Ambassador didn’t have a co-founder in New York. Determined, he sought out someone local, applied again, and this time was accepted into the program.
When given feedback, examine it, and if the feedback is valid, make the necessary adjustments. Some changes may be big, some may be small, but you won’t know if the outcome will be different unless you make the change.
Learn From Mistakes
In the early days of Ambassador, there were a lot of growing pains for Epstein. He admittedly says that the early years of the company were painful, as it would take years before they would make at least $10,000 in revenue a month. He pushed through, though, no matter how hard it became.
“I think at a certain point, it’s super humbling to start a company and you screw up a lot,” he says. “And you have to sort of realize that you usually don’t know what you’re doing. … You want to make mistakes, but you need to learn from them.”
The path to success shouldn’t be put on hold because you’re afraid to make mistakes. Instead, don’t be afraid to fail, but if you do, don’t fail in the same manner twice. Learn from every mistake.
“In hindsight, I think if I were to start another company, I would do a fully remote company,” Epstein says. “I think it’s easier to start remote than to have people that are used to not being remote and then have other folks that are remote.”
Ambassador is headquartered in the suburbs of Detroit, and when Epstein was building the company, he used both remote and in-house workers. However, if he were to build another company today, he’d probably go solely with remote workers, but not both. He believes that mix caused some problems within the company that could’ve been avoided.
In addition, working remotely provides some flexibility for most workers, such as engineers who don’t need to be around a lot of people all day in order to write code, and can do so wherever they feel most comfortable. Not to mention, working remotely is starting to become the new norm, he says.
If you’re building out a team, seriously consider how often you need face time with your employees, and if it’s not much, then consider remote employees. This not only provides them with flexibility, but it also allows you to find and work with candidates from all over the world.
Interview by Nathan Chan, feature article reprinted from Foundr Magazine, by Nick Allen
- How Epstein used his poker affiliate business to pay off law school debt
- What he learned about the power of referrals in the process
- Why Epstein regrets acquiring his first SEO company, and what ultimately led to its demise
- How this failure informed the idea for referral marketing software, Ambassador
- Why it took six months for Ambassador to get a repeat paying customer
- What it was like to run a “fat” startup
- How Ambassador’s acceptance into Techstars helped the company take off
- The growth of Ambassador and its stressful acquisition by West Corporation
Full Transcript of Podcast with Jeff Epstein
Nathan: The first question I ask everyone that comes on is, how did you get your job?
Jeff: It’s funny. I was thinking about this the other day, and being an entrepreneur might be the easiest job to get in the world. You literally just start. You don’t make anything. I didn’t make any money for a long time, but I got my job by literally just starting to work, and really actually spending money and time. So yeah, that’s how I got started.
Nathan: And was Ambassador your first company?
Jeff: No. My story, so to speak, started … I mean, I’ve always been entrepreneurial, so I started a website in undergrad which was like in the year 2000, which was pretty early in terms of internet startups. For me, it was my first taste of having fast internet for example, being in my dorm room at MSU. So I had a couple website companies that kind of flopped and failed I guess. I mean, they weren’t even companies, they were just ideas that I paid to get done. Then, when I was in law school I started a company in the affiliate marketing space that actually did well and helped me pay off my loans, and allowed me to not have to worry about practising law.
Which, I was six figures in debt at the time and super nervous about not really enjoying the practise of law, but not knowing what else I was qualified to do in life as an adult. And so luckily, I did that and sold that affiliate company, and made enough money to pay off my loans. And then Ambassador was kind of an offshoot from that concept of really people referring others to help businesses get more customers. And so that was what I had done in law school, and then also that was the idea of Ambassador, was to help companies do that. So that was how it started.
Nathan: I see. Would love to really dive deep on Ambassador, because you recently sold that. But can you tell us more about the affiliate marketing company? And you said you sold it. What were you doing exactly? And how long were you working on it? And who bought it?
Jeff: Yeah. So it was much more of a traditional company that was online than an internet startup, because this was in the mid 2000s. And so I had just started it with a couple friends of mind. In the simplest sense, we basically were an affiliate to online poker sites, which at the time were legal and have now become illegal. But back then it was legitimate. And my friends, it was during the time, and myself as well, were really big into online poker. And so we knew there was quite a large community growing of 20 somethings who were professional, or kind of like e-gaming is now. I think you saw that every kid wanted to be a poker player 10, 15 years ago. And so I had a bunch of friends, along with myself, who were very into it. And we started kind of combining forces so to speak, and getting essentially better deals from poker rooms. Which, the poker rooms actually gave sort of money back just like a casino would give comps.
So we used that as a way, and we kind of collectively … It was essentially an affiliate model, but we did that to make money. So I sold to my partners. It wasn’t for a tonne of money to be honest. Again, it’s not like the internet of today. And again, the laws were changing. So I sold low I guess would be a way to put it. But again, with how well we did and what I sold for, it was enough to pay off my loans, which was kind of my goal. And so I was able to do that and kind of have a fresh start, which was really fortunate being in a big city in law school, which is super expensive. So that was kind of the affiliate company so to speak. And again, it was really just people referring their friends over AOL Instant Messenger and things like that to just grow this community of people who played poker. And we were able to kind of communicate directly with the poker sites and get better deals for the players.
Nathan: Yeah, got you. Okay. Makes sense. So then you started Ambassador. When was that?
Jeff: So Ambassador technically started about a year or so after, year and a half maybe after. And for as much as I learned in the affiliate company, I didn’t really learn anything about building a business. It was simply literally three or four guys just doing stuff word of mouth. There was no process, there was really no formal business or anything like that. So I did most of the legwork to be honest. The other guys were mostly in poker rooms and things passing out cards and things. And I was actually doing all the back office and very basic website stuff. And I wasn’t building it myself. I hard hired some outsourced developers to do it. So starting Ambassador … And I could even say, in between I actually bought a different internet business. So I was like, “Oh, I totally get internet businesses now. I know what I’m doing.” And I bought one, and it failed miserably, and wasted a bunch of money and probably a year. So that was what I was kind of doing in that in between year before Ambassador.
Nathan: Yeah, sorry, but could you tell us about that, what exactly happened?
Jeff: Yeah. So it was a business that I knew nothing about but I got a really good deal on it. And it was an SEO related business. And it was doing let’s say like $100000 a year, and I bought it for way less than what it was making in revenue. It was like a fraction of the revenue. And it was a gentleman who had an agency, and this was kind of like a side project. And so that was the idea. And a friend brought it to me and he was like, “You just are into the internet space.” And again, in 2007 in metro Detroit, Michigan, that was a rare thing, to know about the internet in general. So I’m like lumped in with all the people who could build stuff even though I had no idea what I was doing. And so I bought this company. And unlike the poker thing where I kind of knew the language and understood poker because I loved poker, I knew nothing about SEO when I bought this company.
I knew nothing about internet marketing really. I knew some basics. And so it was actually a really poor fit for me, and then I also knew nothing about development. So the combination of those three things I think led to kind of the downfall. But the ultimate downfall was we tried to rewrite the code base, and that was a massive failure and a money pit. And actually, it kind of took the life out of me in terms of the passion for the business. I think I learned a little bit about SEO and kind of thought it was interesting. But the fact that I couldn’t get the product to work the way I wanted it to and didn’t know enough to be helpful was super painful.
And so ultimately, it was a tax write off at the end of the day, is what it became. And the reason why, which is ironic, the reason why Ambassador started was my big idea for this SEO business was to create an affiliate programme for this business that I bought. And so when I was asking developers to build it, I didn’t even realise that I could just buy the software. That was how early it was. And so when I was asking them to build it I said, “How much more would it cost if I actually built the product instead of just building it into this website?” And they were like, “It’ll cost about the same.” So I decided to build a product instead. And then Ambassador was, I realised had much more potential, and something I knew much more about. So that was really the birth of Ambassador. It was called Zferral at the time, but it was really born around that idea in kind of it was mid 2009-ish I guess, and then officially launched around then, and officially incorporated around 2010 or something like that.
Nathan: I see. And were there any other players in the space at the time? Did you do any speaking to customers? Or you just had a hunch that creating software that would facilitate referrals would be a great idea?
Jeff: Yeah. So there were a few players out there. There was like Commission Junction which was this big marketplace, and I had a little bit of experience with Commission Junction. And then there was also sort of these very kind of low quality kind of like outsource download products. And I forgot the name of one of them, but they’re still around today, and they’re like 100 bucks. But it was like really bare bones, and you didn’t get any support or anything. So there wasn’t anything that I saw that was more of like a traditional SaaS. Right when we launched, HasOffers launched as well, which is now TUNE, and they have been really successful as well. And we kind of went in different directions, but we both in some ways kind of solved the same thing. And it was really just like a SaaS affiliate management platform.
And so I definitely didn’t do a lot of research. Again, the lean startup methodology didn’t exist, and when I read it I was like, “Man, this was like the fattest startup ever.” We did everything backwards. It was like, built a product I knew nothing about. The naming conventions even for products, I didn’t know what I didn’t know. Which, in some ways was a blessing, because I think if I had known what I know now, I would have never started. But it also led to a lot of I think frustration, and of course a tonne of mistakes. And for me, I probably spent three years learning and started paying my own tuition so to speak. And was losing money and not paying myself. But that, I think, ultimately allowed me to learn. And then as we got to what you may call product market fit where we had the say a million dollars in revenue so to speak, by then that was probably three, four years later. By then we kind of learned the next part of business, which is how to grow a company.
And that’s very different than what you would imagine. Anyways, for me it was, especially not having sort of a real job ever. So that was quite an eye opener, and that was kind of what I spent the last few years working on, is really building a company and dealing with culture and people and all those things, which is quite different than building a product.
Nathan: Yeah, I agree. How did you learn that?
Jeff: I mean, I like to learn by doing. I certainly read a lot. I think today’s there so much information out there, which is fantastic. I remember the only thing that I could find, and I remember I printed it out, it was so old school, but it was like Naval and Nivi wrote this thing probably like 2010 about getting investors. It was like Angel Hacks or something. And it was like there was a handful of PDFs on the internet, and there were a couple people blogging, but there was really nothing out there when I started. Now, there’s so much. Jason Lemkin on SaaStr is amazing. His stuff is so good. There’s so many folks though, so many blogs and bloggers and books now that can help. But for me, I learned a lot by doing. And I think my philosophy changed quite a bit over the years. But I mean, I think at a certain point it’s super humbling to start a company, and you screw up a lot. And you have to sort of realise that you usually don’t know what you’re doing, but you have to be willing to learn.
You want to make mistakes, but you need to learn from them. And so for me, I think I do a solid job from learning from my mistakes and not making the same mistake twice. And that was kind of like all facets of the business, between building a product and selling software and hiring the wrong employee or treating people the wrong way, or all of the things you do wrong, which are all those things when you’re building a company, and just trying to be better next time. And that was what I really focused on for myself, was continuing to level up as a person, and individual, and company, and then hope everyone can kind of follow suit.
Nathan: Yeah. I see. And when it comes to I guess the building of the company side, did you build a team locally? Or were you guys fully distributed and remote? Or was it a hybrid combination between the two?
Jeff: It was a hybrid. We started, my first original developer was remote. And the cool part of the story was he built the first version of the first product, and he’s still there today. So Greg, Greg S who’s awesome, so he’s in Poland, and he was part of a time-
Nathan: That’s cool.
Jeff: … yeah, and an agency, and didn’t speak a lot of English. And kind of watching him become a huge part of the team was really cool. And he was a big contributor and still is. So that was cool and fun to see. But most of the team, that was pretty rare. We had a couple folks that were … Greg and Marco, Marco’s in Croatia. So we had two devs who were in Europe, but everybody else, all the rest of the team was pretty local. We ended up having two offices, Michigan and Denver. But the majority of the team was in Michigan, which is where we were, in metro Detroit. We tried remote. We had a couple. I think remote’s the future, so I think we got more comfortable with it. I think there are a lot of downsides to remote early on, and I think it’s really hard to do both. In hindsight, I think if I were to start another company I would do a fully remote company. I think it’s easier to start remote than to have people that are used to not being remote, and then have other folks that are remote.
Because the work style and the expectations for things I think are just inherently different, and I think it created some problems having a little bit of both. And from an engineering perspective, I think that’s the easiest part. Because if you’re just an individual contributor writing code, you don’t need to be around a lot of people very often. It’s probably beneficial to be kind of in an environment that you’re the most comfortable. Whereas, that’s a little bit different maybe for some other people in other departments.
Nathan: Yeah. So it is tough. We have a hybrid kind of model. But as time is going on we’re kind of building more local. Because I think from my experience learning thus far, it’s really powerful to have someone in the same room or everyone in the same room. And that is heavily, heavily discounted now and everybody pushes that remote piece. It is to powerful just to have all key stakeholders in the room all the time.
Jeff: For sure. And I mean, I fundamentally agree with you. And I think I was probably one of the strongest advocates, to be honest, for everybody in the same room at the same time. And I fundamentally believe that’s the best way to achieve your goals most efficiently let’s say. But then, I think for me, or for us what the challenge was, was it didn’t seem like that matched well with sort of like the more modern employee who wanted kind of a different schedule, or the ability to have a different schedule in a lot of ways. And so we adapted to that. It wasn’t ideal I think for a lot of reasons, but I totally understand why it’s necessary for people, and I get it. And I think the challenge was sort of having different rules for different people created a lot of heartache for us, or for me because certain people would be like, “This is not fair.” Other people would say, “This isn’t fair.” And for me, that just bothered me.
So I kind of hate having different rules for different people. That’s just kind of against how I am. And I think when you have adults and you have people that are hardworking, it doesn’t matter. And you’d like to think that you always have people like that. But the reality is if you don’t, it creates a lot of problems. And so we went through some cycles where it was a lot of problems, and then it would be great. And then maybe a couple problems, but then we figured it out I think, and now it’s kind of a well oiled machine, and I think it works really well. And I know even today, I’m not there, but it sounds like things are going really well, and I keep in touch with a lot of folks, and it’s cool. I mean, they picked it up and have done even better than I was doing, so it’s great.
Nathan: Yeah. So when you say it’s a well oiled machine now, can you just kind of define what the working model is? Because you said it was hybrid.
Jeff: Yeah. I think there’s just a lot of flexibility in terms of where in fact you are. We got acquired by a company that has dozens of offices across the globe. And so immediately, it’s completely fine to be out of the office for a significant amount of time, or to not be in the same location as your boss for example. These things are pretty new for the most part for a lot of people. So I think, again, from what I’ve heard things are going really well. And I think it was just an opportunity for, again, people to have a little bit more individual autonomy. Which, is something that you wrestle with if you want to have everybody in the same room at the same time, because you usually can’t have it both ways. It’s like some teams like to sleep in, other people like to get home early. Maybe they have things to do, whether it’s golf or they have kids. So it’s like all of a sudden you have all these different things.
And so in one regard, I think you can make the argument that as long as you get your work done no matter what, it’s fine. And on the other hand you have, I read this article by this company called Carta where they’re like, “We’re like a hockey team. We all practise together at the same time.” And I think there’s nothing right or wrong. I think they both work. I think the challenge is being consistent from an organisational perspective so that the people who join the team know what they’re getting into. And I think that’s where originally we didn’t do a great job, and that’s my fault. And you learn from it, and I think you make sure that we’re setting the correct expectations and having that conversation with potential employees very early in the process so that everyone is happy with how things work. And if you do that, then I think that sets you up for success. If you don’t do that, then I think it can create problems down the road.
Nathan: Yeah, I agree. Talk to me about Ambassador. So how’d you get your first batch of customers? How’d you build this thing up?
Jeff: Yeah. So the first batch was a big batch, and not necessarily in a good way. So Ambassador started as freemium, and it was kind of right off the heels of Dropbox, which was like this massive success of a freemium product that just grew like wildfire. And so I was like, “Well, of course I’m going to do the same thing.” And I remember we had I think 600 signups, people using Ambassador before a single person even paid us like a dollar. So the freemium didn’t work. And again, you can make the argument that Dropbox can literally be used by anybody. That’s not the case for Ambassador. It’s a much more niche product. And even if you just narrow it down to businesses, it’s a much smaller market. So just the freemium idea wouldn’t work. And that was over the course of several months at least.
So I think I didn’t get my first paying customer that renewed for a couple months until like six months in. So it was a huge struggle. It was painful. I mean, I remember doing everything with the woman who was the first customer. I still remember her name. And I think it was one of those things where we kind of inched along day by day. We started measuring the funnel and started figuring it out and started raising prices and started doing trials. And I spent a lot of time with a couple people who became good friends. But I was in a mastermind group which really helped me think about business a little bit differently and understand some internet marketing strategies. And it was essentially just me. So it was really me and as I mentioned Greg, who was in Poland. He was just kind of doing work. He was part of the team of course, but we didn’t have meetings or anything. For the most, he was just doing the tasks that were in the task management system, and I’m doing everything else. And it was just me and him.
And then slowly we’d add one person and then another person. So it took, like I said, probably three or four years to get to $10000 a month in revenue, which isn’t a lot. But then from there, we got to $100000 a month, which is a million AR. And from there, we raised a little bit of money before that and raised a little bit of money when we got to a million. And so then all of sudden you can start investing a little bit, and you sort of see the light at the end of the tunnel at least to the next phase of the business. And so that was kind of how it started. I wish there was a cool story, but a lot of it I think maybe I blacked out because it was really painful in the beginning. But at a certain point … It was mostly inbound for the first million or so in revenue. So the nice thing was, people, they raised their hands so to speak. They came to us. And then it was like, “All right, we need to build out a sales team.” And that’s a very different process. But the good news was we established a small brand by then and had people coming and signing up for demos and things like that.
Nathan: Yeah. Got you. So you said it took you three to four years to get to 10K MRR, is that correct?
Jeff: So we were in Techstars in 2011. So in 2012, when we got out of Techstars we were at about 15K MRR. So it took a solid two years probably. And mind you, we had probably started the company a little bit before 2010, or started developing it. So it was about two years, which, is honestly way too long. That would be … Let me take that back actually. It’s really hard if you need to make money. I didn’t pay myself for that time. I was fortunate I was married. My wife was bringing in enough money and we lived in a cheap area in Michigan where you could survive on not that much money. Our mortgage was under $1000 a month, so we could survive. But that’s really tough, it’s tough to build a company and take that long to get to 10000 a month.
Nathan: Got you, yeah, that’s what I was going to ask, how did you survive?
Jeff: Yeah. So I was lucky. Obviously, like I said, my wife, I was fortunate enough where she was able to pay the bills. And for a time, I also, this is super cliché, but I also lived in my parents’ basement and my wife actually did too. We weren’t yet married, but we lived in my parents’ basement before and actually I think during the first few months after we got married, which is highly embarrassing to think about now. But we were kind of all in. And my wife, and I give her a lot of credit, I remember we had this conversation where I told her, it was like, “I’m going to start this company and I may not make any money for a while. Is that okay? And if it’s okay with you, can you please not throw it in my face?” And she didn’t. Which, is amazing, because it’s easy I think to make that promise. But I think it’s a lot harder when it doesn’t seem like I’m bringing much to the table. And I didn’t for probably a few years, at least financially. So that’s a hard thing to do. I give entrepreneurs a lot of credit, and I give the spouses of entrepreneurs a lot of credit too, because it might even be harder for them. And so I was really lucky from that perspective.
Nathan: Yeah. I see. So after you went through … So you went through Techstars.
Nathan: And what … you to do that and not go it alone?
Jeff: I went to Techstars for a few reasons. But one, again, thinking back to 2009, 2008, there was very little content about startups. And so I found this video about Techstars, and I had never heard of it. And they had this video series, and it was like a little video. And I was like, “Wow, this is the coolest thing ever that there’s basically like a bootcamp for entrepreneurs, because I would love to know all these things and I don’t know anything.” So I applied, and I actually got to the final cut, but I didn’t make it. And one of the pieces of feedback was, “You don’t have a founder who’s local, or you don’t have a co-founder.” So I ended up applying again. And basically right before we went I said, “I will have a local co-founder.” And I hired someone from my area, and we both went to New York together. Didn’t work out with him long term, but we went through Techstars. We ended up getting in, and we went through Techstars in New York. And for me I was thinking, “This could be a really good opportunity for the business of course, but it can also be a really good learning experience for me.”
And it was, and I learned a tonne, and I made a lot of really good friends and of course got to meet with investors. So we raised some money right after that, a couple hundred thousand dollars, a very small amount of money. We probably raised the least amount of money of the companies that raised, which was probably almost all of them. And then we used that money for about almost three years. And then we raised a little bit more money in 2015. So we were super, super lean, super scrappy. But the Techstars experience and the confidence it gave me of the validation that, “Hey, this has potential.” Because your mom or your spouse can tell you that it’s interesting, or you can have a couple customers. But I think the validation of this national programme where we picked out of thousands of companies, we were one of 10, I think it gave me the confidence to really dive in full steam.
And I don’t know if I would have been able to stick with it that long if I hadn’t done that, and certainly not if I wouldn’t have raised money. Because at a certain point, I think I started taking at least a nominal salary. And I remember it was a big day in our household where, it wasn’t the fact that I wasn’t necessarily making money, but it was that we weren’t spending money on the business anymore. So that was like a big day.
Nathan: Yeah. That’s cool. So how did you really get traction you think? Was it having a special kind of refer a friend within Ambassador? Or what really gave you guys traction?
Jeff: I’d like to think it was a convergence of a lot of things, some of them intentional, some of them I think a little bit more luck and timing. I think we did a really great job of content marketing and we had great branding. I think we had some really smart things that we did well early. And some of it, again, was like. Some of it I’d like to think was intentional. Like, the name Ambassador is I think just a really great name. And we didn’t own Ambassador.com, but it didn’t matter. Ambassador sounds so much than some of the competitors out there. We also I think did a great job with branding and like I said content and even design. And I think we did well from the beginning there. I also think it was just, it was the right time in the market. During the lifecycle of sort of my career at Ambassador, we saw SEO as a primary driver of marketing to marketing automation. Which, there’s five public companies, or there’s 10 billion or 20 billion dollars of enterprise value of marketing automation companies, and they didn’t even exist when we started Ambassador.
So I mean, it’s pretty crazy how marketing has evolved. And I think word of mouth, again, the reason why I loved Ambassador and was passionate about word of mouth was because referrals are ubiquitous. They transcend any channel or form or medium so to speak. People, they’re inherently going to refer things that they like. So it was really just something that was evolving over the internet as a way for people to consume, and it was natural that people would be using referral software just like they would be using all these other types of software eventually. And so I think the timing made a lot of sense. And so we were able to be pretty early and grow with just the general tailwind sort of of marketing on the internet. So I think that was a big part of it as well. I like to think that we went quickly and we were efficient, and we did much better than many of our competitors who had raised lots and lots of money, and much, much more than we had. And I think we were very, very smart and efficient and did quite well considering the resources that we had.
Nathan: Yeah. We have to work towards wrapping up, but a couple of big key questions I’d like to ask you. Actually, let’s go for three more questions. I hope you can remember them, sorry. Question number one is, do you think that every company should have a referral programme? I’d love to hear some stories on any crazy results any companies had got. Because I think any serious low hanging fruit, if executed correctly, it’s never worked for us at Foundr to be honest, but we haven’t really tried to do it properly. Question number two, I’d love to hear about the acquisition of Ambassador. And then the last question would be, where’s the best place people could find out more about yourself and your work?
Jeff: Sure. So first question, I think the easiest one, the answer is every company should absolutely have a referral programme at some point in their life. But I would say it’s not the first thing you should do. So I think you need to have customers and an established steady product first and things like that. I think the challenge that we saw with companies that weren’t successful was they were almost desperate to grow or survive, and at that point, that’s not the best point to necessarily have a referral programme. If it’s lightning in a bottle, if you’re Dropbox, if you’re some companies and you’re just super viral, then referral companies make a tonne of sense. But otherwise it’s like you probably need to have a steady, stable business first with a community of buyers or community of customers that you can talk to and have them kind of start. So a lot of times, we tell people, and I actually really like the saying, “We don’t want to be your first referral platform, we want to be your last.”
And I think that worked well. We saw companies be successful that were using us after they had done either one in house, or they had done one on a different platform that was maybe cheaper. And then they kind of realised, “Oh, this is why Ambassador’s better. This is also why it costs more, but they provide all these things that we need to really leverage these results.” And many, many, many companies brought in millions, and some tens of millions. And we projected a couple, probably hundreds of millions in revenue. They wouldn’t admit that because it didn’t make sense for them, but in terms of lifetime revenue, we worked with some of the biggest companies in the world, and it was amazing how many tens of thousands of customers came in through referral. So it was way more than we anticipated in a lot of cases. So certainly companies made a lot. And I think the average company also did really well. Most people would say it was one of the most efficient channels, or it was the highest LTV, or the lowest cost of acquisition, usually played into some really solid KPIs.
Nathan: Yeah. Wow. That’s crazy. Sorry, Jeff. I have to work towards wrapping up because I’ve got to go in two minutes, but I really don’t mean to be rude to cut you off. But yeah, I would love to hear just quickly ho the acquisition of Ambassador came about, and the best place people can find out more about yourself and your work.
Jeff: Sure. So the acquisition, it was pretty crazy. I mean, it started with the discussion with the board and really leadership team, and understanding what our options were. We were kind of in a position where we either needed to raise more money and/or look at other options, and selling was one of those options. And kind of as we went down the path, we ended up hiring a banker and going through the sales process, which takes almost a year and a lot of leg work and a lot of ups and downs. It’s like fundraising but times 100 in terms of stress maybe, so it’s mind of crazy. And certainly I could do a whole podcast on that. But I know you have to run, so the best way for people to find me is probably I think maybe on Twitter or LinkedIn. But my name is @jeff J-E-F-F _epstein E-P-S-T-E-I-N. If people have questions, feel free to tweet at me, or you can find me on LinkedIn as well. My email’s on there too, so happy to answer questions and be helpful if I can. And again, Nathan, I appreciate you having me on. It’s a lot of fun.
Nathan: Amazing. Look, thank you so much for your time. Congratulations on all your success. And yeah, we’ll speak soon.
Jeff: Sounds good. Thanks so much.