0 to 6 Million ARR With Massimo Chieruzzi @ AdEspresso

You’ve probably heard of AdEspresso. Today we’re talking to its co-founder.

His Italian roots are so strong that he had to use their national drink as inspiration for the company name…

A company they then scaled to $6 MM ARR.

He recently left AdEspresso and is launching a new business – Breadcrumbs.

Breadcrumbs is a revenue acceleration platform that will allow you to achieve more with less, using smart lead scoring.

(more revenue, fewer leads)

Massimo is also a CMO on this big project, so I’m really excited to shoot him a few growth-related questions.

You can do the same, so…

Q: What really moved the needle for AdEspresso when it comes to marketing?

Any particular strategy, channel, activity?

A: The critical element for AdEspresso’s growth was really our blog.

We always saw ourselves as managing two businesses: A software one and an editorial one.

We wanted the blog to be useful first. Even our head of content was a professional Journalist who was editor in chief in many printed magazines. She was not an SEO expert.

Of course, we cared a lot about SEO but first of all, we wanted articles to be interesting and enjoyable for our audience.

If some new FB Ads feature was not yet available in AdEspresso but we thought it was useful for our customers we’d write about it anyway. The main goal was not to sell but to become the most trusted voice on Facebook Advertising

Q: Definitely interested to see what % content made up of your overall growth in AdEspresso? I’ve read many of your blogs over the years, all from using search to discover them – so imagine it’s been a big driver! How have you found Paid Search to be for SaaS too?

A: Likely in the 70% range, with word of mouth being another meaningful %.

Compared to the company’s size, I think AdEspresso had disproportionally HUGE brand recognition and brand awareness in the space thanks to content.

Paid is ok and it’s predictable which is great. The big problem is that depending on your industry it could be tough or too expensive to scale.

With AdEspresso we did Search Ads but we never figured out how to scale it beyond few thousands of dollars per month. High intent keywords had a relatively low volume. Lower intent keywords were just too expensive compared to the conversion rate.

Q: The same issues with search ads, even in a totally different industry (B2C, ecom).

As soon as we went above $1,000-$2,000 in daily ad spend, ROAS would go down.

It’s as if there’s a threshold you’re not supposed to go above 😃 I prefer FB though

A: That’s the way to go. Paid is great to get started and ramp up quickly but in the long term is expensive and the moment you stop spending $ you stop receiving traffic + anyone with more money can enter the market and outbid you.

Content and branding are a way safer bet as a long term strategy. Even if an aggressive competitor enter the market, it’ll take time for them to start ranking and that buys you time to adjust your strategy.

Q: How long did it take you to hit $6mm ARR?

A: 3 years 🙂 We started the company in September 2013 as a team of 4 and $0 revenue (started monetizing around march 2014).

We sold the company in December 2016 as a team of 50 and $6m arr.

Q: What should non-marketer startup founders do to prepare for their first marketing hire?

At what stage in the company should a founder considering making their first hire?

Do you hire a CMO? Or go junior? Or inbetween?

I feel like it’s incredibly common that startups hire marketers before their organization can translate that marketers costs, skills, and talents into revenue.

A: That’s a great question and one which I fight with weekly with Startups I’m advising.

If you check my blog https://divbyzero.io/

 you’ll see straight from the homepage the way I define myself is “Jack of all trades, master of none”.

Which is something that makes me quite unhireable but at the same time is my super power as a founder. I’m a bad developer, but I know how to build an MVP and most of all I know how to hire developers and talk to them.

I’m a marketer but clearly not a guru. But I can come up with good ideas for my team to execute.

Back to your question. I think marketing is something you should do from the get-go… even before you have a product.

Product and development is were most of the early startups fail. But it’s also not what’s gonna make them win in the long run.

Technology is becoming more and more a commodity. Anyone can copy your product.

Your brand, mailing list, and distribution strategy is way more important in the long run. That’s how we killed all our competitors.

If you’re a founder and don’t get marketing:

1) Start studying. You don’t need to become a guru but you need to understand marketing

2) Ask your network for good referrals of agencies that will charge you based on performance and start working with them.

3) Once you understand through agencies which channel is working better for you, start hiring people to take care of that channel

Q: Any tips for reducing churn?

A: what worked very well for us:

1) Build a community. We had a FB group with all our customers and they would help each others, share strategies, get direct access to me and the team. It’s tough to measure the impact in churn but I’m sure in tough times where we had major issues or customer support was slow, the community really helped us retain customers.

2) Education. Most companies position their product as a magic wand. Magic Wands don’t exist. And users quickly realize that, so they’ll churn and move to the next product. A FB Ads Tool will never fix a bad strategy. Adding a lot of education to help our users succeed was a key element of our retentnion.

3) For those that have money but don’t have time, add services. We had a team of real Fb Ads experts that would do anything from a 10 min campaign review to a 90 min strategic coaching to managed services. People who were touched by the service team, even in the lightest touch like campaigns review had a 2x longer retention time

Q: What’s the easiest way to track revenue back to specific acquisition funnels & Facebook Ad campaigns? We understand how to track the conversion from visitor to free trial, but we don’t understand how to track revenue by channel so we can make more intelligent decisions. Can we tag the acquisition channel in Stripe or something?

A: Another great topic 🙂 Attribution is a huge pain point for every company and the reality is that there’s no right answer.

Especially when you are content driven attribution is a nightmare because often when they finally signup they come in as direct traffic. But they’ve previously been avid readers of the blog for a long time.

I think solving this problem is gonna be a key differentiator in 2021. Actually wrote a blog post on this very subject yesterday: https://divbyzero.io/blog/revenue-marketing/

I think it’s very important to have a single source of truth for data. They’ll be wrong anyway but you’ll just go crazy if you try to compare different data sources.

For us it was Hubspot. If I had to redo everything today I’d add Segment on top to drive all our data in there more easily.

We then had a lot of custom code that would write every meaningful action and all the revenue generated back into Hubspot.

Recently they’ve released an attribution reporting tool which should close the loop.

That’s also our long term goal with Breadcrumbs. Right now we’re focusing on solving the lead scoring problem but in the long run we want to become a revenue acceleration platform and solve this very pain-point!

Q: We use a very basic lead scoring in Active Campaign based on page views.

What is the right time to adopt a more sophisticated lead scoring system, and how does Breadcrumb do it better than everyone else?

Last Q, why are you uniquely positioned / what about your background gave you the insight to see the gap in the market and execute to fill it?

A: Native CRM lead scoring is usually ok to get started but a bit limited as you scale.

What will make Breadcrumbs unique as we finish building what we want is:

1) Unified views on customers. We want you to be able to connect any platform yo use like mixpanel, zendesk, appcues etc to have a unified view on leads or customers (the system can also be used to score upsells or likelihood to churn).

2) Not a black box. Customers don’t want a black box AI that spit out a number. This makes alignment between marketing and sales way more complex because they don’t know on what they’re aliging on. Breadcrumbs uses AI/ML to help you but it’s up to you to define who are your best prospects

3) Fit and activity: We have a great balance between scoring users based on who they are and how they’re interacting with you. A great lead today might be a bad lead in a month.

In terms of getting started I think where Breadcrumbs makes more sense is organizations that have both a marketing and sales team and at least $1m in ARR and they feel the pain of sales wasting a lot of time talking with non qualified leads. Leads volume is also a factor. If you have enough bandwidth to call everyone, then lead scoring is not a priority for now.

I actually didn’t came up with the Idea. We met Gary Amaral, our co-founder at Hootsuite working on this problem. Then he moved to solve the same problem in Chargify. He was ready to move to the next company when Armando actually said “Let’s build a product out of this instead of you solving it for each individual company”

Q: How do you deal with staff attrition? Do you hire more people for the same or similar role in case one of them quits or is unable to keep working because of health or some other reason? How has that affected your company’s growth?

A: That’s a big problem when you get started and you have a limited team… it gets less relevant as you scale.

1) We hired in Italy paying above market rate which let us retain 95% of the team over 6 years.

2) When we were small it was very important avoid any silos so the 3/4 developers all knew most of the code to cover for people leaving or sick or on holiday. We also over documented everything which was very useful to then scale the team faster

3) As we scaled to 30 developers we created silos but always in units of 5 developers who were focused on a specific are of the tool. This way if someone left there was always enough people to cover temporarily while we hired a new team member

Q: What are counterintuitive lessons around scaling and growth that you think most people here wouldn’t know (or may even think the opposite of)

A: I would say:

Doing unscalable things. Everyone is obsessed with doing things that scale. That makes sense… but you don’t have to worry about it too early. In the early days We were calling 50 ppl per day, basically anyone who signed up for a free trial would get a welcome call from me or other team members. It was time consuming and unscalable but provided us a lot of great feedback and created the first few super fans of AdEspresso.

Also doubling down on Facebook was counterintuitive for a lot of people. Everyone was telling us to add Google or other networks to reduce the dependency on Facebook and reach a bigger market. But we kept doubling down on FB for a very long time. That’s because we were far from hitting the ceiling and it didn’t make sense to lose focus to expand a market where we really had a lot of space to grow available. We expanded to Google only when FB started becoming a direct competitor.

Investors are always afraid of platform dependencies. But the reality is that while you should mitigate risks, whatever you do, unless it’s building a platform, it’s dependent on someone else. Hubspot depends on Google algorithm for their traffic and top of the funnel. Apps depend on Google and Apple stores. Most websites depend on AWS… Parler is an extreme example of those dependencies you have anyway even if you’re not directly a partner with them.

Q: Do you think people still want / answer unsolicited calls in 2021?

A: I think so. It’s a matter of context. We never tried to sell them anything during those calls. We would just thank them and ask if they needed any help. Likely 2/3% of ppl were pissed off, the others really appreciated. Also phone number was not mandatory.

Q:  If you were starting from scratch and had to pick just one channel to start generating traffic, which one would you focus on?

A: There are three main factors to consider:

1) What are you good at

2) How much time you have

3) B2B or B2C

First of all I think you always need to start from understanding what you’re good at. There’s no single way of doing things or reaching an objective. If you are an extrovert and a great networker you could do Instagram or partnerships for example.

If you don’t have a lot of runway from a cash perspective, need to generate revenues fast and have a great product with a high conversion rate, paid could be a great way to start.

If you have time and are an introvert, or you don’t have a great conversion rate so you need to acquire customers cheaply, SEO and content marketing are the best way to go.

Personally, my first channel is always Content Marketing. But SEO takes time. That’s why I start it first 🙂

The downside is that nowadays everyone is doing content marketing and going crazy with the 10x stuff writing stuff that is super long without a real reason or something interesting to say.

This is making content marketing more expensive and competitive so you need to find some brilliant ways to acquire links at scale quickly or produce a lot of content at a reasonable price while keeping quality high.

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