AdEspresso raises $20M. Here’s what next

This story was originally published as GuestPost on AdEspresso, May 13th 2016.

Oh wait, sorry. Sorry, sorry, sorry. My mistake. It’s not “AdEspresso raises $20M” but “AdEspresso raises at $20M”. As in valuation, not amount raised.

We wouldn’t know what to do with that much money and frankly speaking, we already have $5M in working capital (which is cash in the bank + annualized revenue) on a wildly profitable business model (we make 7.5X our Customer Acquisition Cost in the first month) and an aggressively growing company (10X in terms of AdSpend Processed and 6.5X in terms of Net Revenue, year-over-year).

So it’s *extremely* unlikely we’ll ever raise that much, but on the other side who could resist the temptation of a click-bait killer headline? Definitely not us. And besides, who cares about a funding announcement of less than $20M anymore anyway?

One Story, Two Lessons, Three Friends

To that point, if you ask us: making money is the new raising money, since it means you’re delivering actual value to actual customers. But this is not a story about metrics. However important, they’re just the mechanics of how things work. Don’t get me wrong; metrics are fundamental to a healthy and thriving business, but they are just the “how”, they are not the “why”.

And the “why”, the “why” is the most important thing.

See, this could have been the story of how we turned down five acquisition offers in the last six months. Or about how we had other Terms Sheets on the table and we could have raised 3X more or at 50% higher valuation, but we didn’t. Still, it would miss the point. By the way, if you are an entrepreneur, these are two quick lessons which can be very helpful to you too.

  • The first one: every time you say yes to something, you say no to the alternative… and the other way around. If what you’re doing is remotely interesting, you *will* get M&A proposals. It will be a great time to think really hard about what you want to do, where do you want to go, and what is the risk of trying to get there versus joining forces with somebody else. Every “no” you say, simply is a commitment to the alternative.
  • The second: when it comes to financing, valuation is just a number, not even the most important one. How much New Capital do you actually want/need to raise and to which purpose? How important to you is the Due Diligence speed? And the Governance Provisions? These are as much -if not more- important things.

On this note, allow me to welcome VentureFriends to AdEspresso. You may know a few of them…

Jokes aside: we’re extremely excited to work with them on ‘AdEspresso Phase 2’. Which bring me back to my point…

This is not a story about what has been; it’s a story about what’s next. Because if as an early stage startup your job is to survive against indifference and reach profitability, as a mid-stage startup your goal is to consolidate and expand. As for us, we were born around a very simple idea:

Facebook Advertising should be easy and profitable for everybody… not just for Big Companies.

That’s why we exist, the fundamental reason we’ve been doing what we’ve been doing for the past two and a half years: to help small and medium businesses make the most out of their Facebook Advertising budget. That’s *not* gonna change moving forward.

On that side, while we’ve been doing a fairly good enough job so far, there’s still a loooong way to go. At the same time tho, there are two fundamental considerations we’ve been reflecting more and more on, in the last few months:

  1. the perceived value of the best product in the world still is a function of their customers’ knowledge on how to make the most out of it,
  2. FBads are extremely powerful, yet there are things up and down the marketing funnel that will impact its performance but are not ‘Facebook’.

This is our Phase 2, and we’re talking about it publicly here for the first time. This is where we are going next, what we’re particularly excited about.

AdEspresso Phase 2 Kick-Off

Let’s talk about the education piece first. As one of our customers recently wrote us: ” My father always says free training is the most expensive training.” A wise man, his father.

Since day one, education has always been a critical part of our DNA.

We’ve been writing a lot about how Facebook Advertising can be a great channel, sharing data and insights which couldn’t be found anywhere else. We went from publishing one post per week to publishing more than one post per day, plus a weekly webinar (now actually two), plus ebooks, plus SlideShare presentations, plus online courses.

We kinda became the most trusted resource when it comes to Facebook Advertising, with a newsletter shared every week with almost 60k people and a website visited last month by 260k people. We care about that, a lot.

So much so that we don’t have a Sales Team, but we do have a Content Team. We’ve been investing time and resources because we realize that the more people understand Facebook Ads, the better for everybody.

Well: the news is that we’re further doubling down on that, creating a new University Section.

A premium area where everybody can get comfortable about spending even just a few hundred bucks per month on Facebook Ads, while learning the basics with dedicated courses, live webinars, special tools, a secret community of fellow marketers.

Also -cherry on the cake- actual experiments we’re going to pay for, decided by the community. Yep: an actual budget allocated for everybody’s improvement, on which we’re gonna report back.How awesome is that? The fun part about this is that the AdEspresso University has been in stealth for a few months now, but already hundreds of people signed up for this.

Excited To Learn More, Together

Sometimes, tho, money is not the issue; time is. Sometimes you don’t need to educate yourself; you need to rely on someone expert already.

Which is why the second initiative we’ve been playing with (again, a stealth program we’re announcing today for the first time), is to have a community of great Facebook Marketers you can rely on, to help when and where needed.

For example: with tactical advice on the campaign you just created. We call that “Request Review” button. Click it and within 24hrs, you receive a video review of your campaign with recommendations on what’s best to do, based on years and years of experience. Just to give you some sense of how that has been working out, a couple of feedbacks we got from early testers:

“This is the first time ever this kind of critique has been offered that I know of. It has been very useful and I am grateful it did not cost me a lot of money. I will be using this service again” — Steve
“The review that you sent me yesterday was amazing! I have updated my campaign as per your suggestions, and I am thinking about coming back to you for more feedback.” — Karen
“Just wanted to tell you again that your review was fantastic. I only had time to apply some of your Tips and already after 48h only i see more than 100% more sales than usual. Love it!!!” — Philippe

The simple idea behind it? Sometimes an expert eye looking at what you did for 10–15 minutes is (still) worth 1,000 times more than any algorithm.

The fun back-story? When we decided to test this out, we weren’t sure people would have tried it, let alone love it… and we didn’t want to spend a lot of time and resources on something we weren’t sure would add real value.

So we created a simple pop-up, to which we would manually answer to. Result: we went from less a half a dozen to more than a hundred requests per week (with the potential to scale to several thousand).

But to this day, that’s all the tech there is on that side because sometimes technology doesn’t have to be complicated to deliver great value to your customers. That’s not the only thing we’ve been testing out when it comes to expert support.

The Request Review Button is usually pretty tactical, while sometimes people have more strategic questions on what’s recommended in certain situations, or what are the Facebook Advertising best practices when it comes to certain industries or products. Enter the “1:1 Coaching Sessions”.

Also, sometimes people have small but sizable budgets yet zero time to do the work and are looking for someone trusted to which delegate the day-to-day work, someone effectively functioning as a VP of Facebook Ads. Enter the “Concierge Service”.

The ones that opted-in those Closed Beta Programs saw enormous value, and interestingly we see the potential to scale them to thousands of customers.

Codename: HubEspresso

That’s all nice and fun, because those initiatives are at the intersection of people, distribution, and technology; but there’s little hard tech on them. And we’re a technology company first. Which brings me to the last new thing we’re publicly announcing today, related to the second fundamental consideration we’ve been reflecting on.

The smartest marketers understand one thing extremely well.

Facebook is one step of a marketing funnel, an extremely powerful and flexible one, but still there may be a lot of work needed to enable the best possible results.

One example: if you’re doing FBads you’re likely using Custom Audiences, but keeping them up to date with your mailing lists takes time, and it’s tedious. So lots of people don’t do it as often as they should. Enter the DataSync (codename: HubEspresso).

We’ve been secretly working on it for six months now, and it’s just our most powerful and flexible new product yet. Yes: it keeps your mailing lists in sync with your Custom Audiences, pulling data from your favorite CRM system. But that’s not just it. It also pushes back real-time Event Data so that you can automate more of your Marketing Funnel.

Things like: “these thousands leads just changed their lifecycle stage, do this” or “these hundreds people just left you their email through your LeadGen Ad form, send them this follow-up in real time”. Frankly, we couldn’t be more excited about the possibilities a product like this opens up. Give it a try, and let us know what you think… you’ll see it grow a lot.

One More Thing

We spoke about technology, distribution and people. But we didn’t mention our team just yet.

We closed 2014 at 11 people; we ended 2015 at 22, this year we’ll double again. And yes, they’re just *the* best Marketers around, paired with just *the* best Developers around. Or we simply would not able to deliver so much quality with so little resources.

One example: when it comes to Tickets Requests, we’ve been delivering so far a response time between 4hrs and 9hrs during the weekdays with a Customer Support Rep every -wait for it- 1,000 active customers and 10,000 campaigns created and $5M in FBads budget processed.

When I found out about it, I almost fell off the chair. Seriously, how is that even possible? So yes,that’s great; but it’s not enough if you want to be the best.

A great product with only an ‘ok’ support ends up being just an ‘ok’ experience.

That’s why we’re more the doubling the Customer Support Team in the next few months to cut the response times further in half, implementing a live chat as well which so far we didn’t have. We know that’s important to you.

Also: I won’t mention how the team is working hard on other things. To bring you multilanguage,launching AdEspresso in different languages, starting from the Spanish version (està listo ya para ti si quieres) and the Italian one (clicca qui per la versione italiana).

It’s working hard on a new secret redesigned concept for the AdEspresso Blog, it will be like nothing you’ve ever seen. Ever.

I will mention one last person tho. Paul Fairbrother. You don’t know him, of course. We didn’t know him either, at least at the beginning. It was when we launched the closed beta of the AdEspresso Community. If you know a bit about communities, you know that you need a moderator usually, one or more people that set the tone and are the most active ones, almost always part of the company.

Another typical thing is the fact that the vast majority of the people “lurk”, as in ‘just read in the shadows’. They don’t write or engage very often, but they’re present. Not this guy. He was engaging with other people and answering to others’ questions and sharing insights.

Most of the times, faster and better than what we could have done ourselves. We were looking at his stuff, and he was super knowledgeable not only on Facebook Ads but on AdEspresso too.

Things like:

And we *never* even spoke to him. But we had to.

So we pinged him saying something like “Oh, hey! We never spoke, but you’ve been doing such an impressive job, for free… The average company would be perfectly fine with that, but what if we paid you instead? Wanna join AdEspresso?”.

In case you’re wondering, he’s now part of the team.