Shipmonk is a successful eCommerce fulfilment platform for many businesses that have seen an increase with the popularity of drop-shipping stores and online brands.
Nathan Latka sat down with Jan Bednar, CEO of Shipmonk to get the inside scoop. Key highlights include:
- Launched in 2014 with a 1MM
- Over 1000 customers
- Grew to over 30MM revenue in 2018
Nathan Latka (00:00):
… Just got done editing this interview. You guys are going to love it. Before I do that though, I want you to know that I’m going to be in the comments for the next 30 minutes or so answering your questions. If there’re additional questions you want me to ask the CEO next time I interview them, leave them below. Or if you’re just loving the data points I get CEOs to share. Click the thumbs up button below. That’s your way of telling me you’re loving this stuff and I’ll get you more of it. Additionally, again, I’ll be in the comments answering any questions you have. All right. For 30 minutes. Enjoy the interview. All right, Jan. Yeah. So take me back to day one. How’d you get your first hundred customers?
Shipmonk CEO Jan Bednar (00:34):
So it was a challenging, considering we were competing with a lot of much bigger companies and we didn’t have the economies of scales like they did. So it was really me just going to different trade shows and kind of selling them on this concept of technology and fulfillment all in one. It was a lot of selling the dream while we didn’t really have that much to offer, but it was a really high level of survey at the beginning, a lot of manual work. And eventually, once the first 10 came in and the other 10 and the other 10, we really started building really good product and really good technology, and it’s allowed us to then make it a lot easier to bring the other one.
Nathan Latka (01:13):
Did you find it though, in any specific place, a trade show, a website, a forum?
Shipmonk CEO Jan Bednar (01:19):
Yeah, it was mostly trade shows, a little bit of cold calling. So went to… CES was a big one for us, because our customers are eCommerce or physical products companies. So they typically tend to go to, CES is definitely a good one. That was the first one I went to. A lot of cold calling. Just trying to find companies that were local at the time and giving them a call and be like, “Hey, we’ll get rid of the operations’ headache for you. We’ll take that all in and we’ll make this happen.” And the first couple customers, just really liked the fact that they didn’t have to deal with all this nonsense of fulfilling orders and having a warehouse and employees. And that’s what really helped us bootstrap and get started. Because once you get one, it’s a lot easier to get the other.
Nathan Latka (02:05):
So help me understand today, when you look at your entire customer base, are we talking small e-commerce brands like big ones? What’s the average customer paying you per year to use the technology?
Shipmonk CEO Jan Bednar (02:16):
Well, so it really depends. I mean, there’s the small ones and there’s the big ones. Our biggest customer is 200 million dollars in revenue that what they do, what they pay us, it’s about a 30 million dollar deal for us. But keep in mind, it’s not just the software fees, right? They’re paying us for fulfillment, for shipping, for transportation. So the SaaS fee itself is probably going to be more like 10, 20% of that.
Nathan Latka (02:39):
Shipmonk CEO Jan Bednar (02:41):
But yeah, so they arrange from complete startups that literally just do 10 orders a month to people that do 300,000 orders a month.
Nathan Latka (02:49):
Yeah. So, when you look at 10% of that 30 million deal would be like 3 million just on the SaaS product. When you just look at the strength of your SaaS product, I mean, is that a 10 million dollar, AR kind of business? What’s the general size of that?
Shipmonk CEO Jan Bednar (03:02):
Yeah. So I mean, we’re going to do about 80 million this year in revenue. So I would say probably 10%, maybe 15% of that is SaaS. So yeah. About 10 to 15.
Nathan Latka (03:17):
What does growth look like? So if you’re going to do 80 this year, what did you do last year?
Shipmonk CEO Jan Bednar (03:21):
Last year we did 30. The year before we did 10. The year before four and then one and we were projecting originally to do about 55 this year. Right now it’s going to be more like 70, 80. So we’re probably going to end up the year with somewhere around there and then we’re so trying to figure out what next year’s going to look like, but it just changes so quickly that it’s really hard to predict or project at this point.
Nathan Latka (03:47):
Yeah. With revenue in that range, why did you need to do a 10 million secondary? Why not just pay yourself 5 million out of cash flows?
Shipmonk CEO Jan Bednar (03:56):
Yeah, well it was the two things, right? I think as a founder, I’ve always had this dream of taking this business to a specific point and selling the business. And I think it’s just, when you’re profitable, it doesn’t keep you disciplined as a founder. And if you bring partners in, you now have somebody else that you got to actually report to. And they bring in a lot of experience from not just building companies, but selling them and building great companies. And I think that’s what really…
Shipmonk CEO Jan Bednar (04:25):
I had a really good friend of mine that did the same exact thing. And when I heard the deal and I heard how it’s changed his life, I just figured I would do the same. I could eventually pay myself the same amount. It would take a longer period of time because as you can imagine with this type of growth, it’s not just that easy to take that much money off the table from the company. It’s just really enabled me to do things that I would’ve not been able to do and took a little bit of stress away as well.
Shipmonk CEO Jan Bednar (04:56):
It’s really about the partnership. The people that are on my board, I have a board, which I didn’t have before. So it keeps me accountable.
Nathan Latka (05:00):
Who is it?
Shipmonk CEO Jan Bednar (05:00):
It keeps me… It’s a couple different funds, but SGA Venture. The smaller guys that I actually like better than bringing on the bigger ventures because I just didn’t get a good vibe from them. This was more of a, they’re a smaller 200 million funds, but these guys really know what they’re doing. They know logistics, they know software and they’re just more personable and I have a little more available to me. And that’s what truly has been a great kind of turning point for me. Just having these guys available and making me think bigger. Because before this, it was just me and some of the mentors I had from before, but nobody really having that much experience working with bigger businesses and being in south Florida, there’s not a huge startup community where you get access to a lot of people that have done this. So it’s just been great.
Nathan Latka (05:53):
Jan, what’s your team size today? How many people?
Shipmonk CEO Jan Bednar (05:58):
Well, so we’ve got about 450 people. Different roles, different areas. Our engineering team is about 35 people. The rest is operations, customer service, HR, finance.
Nathan Latka (06:12):
Do you have a lot of inside sales folks? How many quota carrying reps do you have?
Shipmonk CEO Jan Bednar (06:16):
Yeah, we actually don’t have that many sales people. We have about seven now. So we’ve been able to build this business with a pretty good, we’re pretty efficient in the way we do sales. A lot of our leads are inbound, so we don’t do a huge outbound calling to people. Most of the people that come to us just find us online and then we could just kind of take them through the sales process and bring them in to get started.
Nathan Latka (06:41):
And how many customers are you working with today?
Shipmonk CEO Jan Bednar (06:44):
A little over a thousand.
Nathan Latka (06:46):
Little over a thousand. Okay. So some of these you put touch on, obviously. A 30 million dealer, you’re going to put a lot of touch on. The average customer, are you happy? What are you paying to get them onboarded?
Shipmonk CEO Jan Bednar (06:58):
By itself or an average customer acquisition?
Nathan Latka (07:01):
Average CAC. Fully weighted CAC. Sales people, direct marketing spend, everything.
Shipmonk CEO Jan Bednar (07:04):
Yeah, I think we’re at about 12 or $1,500 CAC right now.
Nathan Latka (07:10):
Okay. And what does that mean? You get paid back in how long?
Shipmonk CEO Jan Bednar (07:13):
Well, that’s a funny question because in a SaaS world, it’s kind of crazy because we get paid typically in less than a month on that account, but it’s because it’s not as just a –
Nathan Latka (07:28):
Service. You have service fees.
Shipmonk CEO Jan Bednar (07:30):
Right. So the SaaS formula doesn’t really work as exciting because everybody I tell this calculation, they’re like, “oh, well what the hell? Why don’t you just go out crazy and acquire customers?” Right? But there’s a pretty significant carrying cost of every account. And we got physical constraints because we got warehouses, we got infrastructure, we got people. So it’s not as easy to scale. We’re growing as fast as we can. And we’re expanding. It’s like Amazon, right? There’s so many buildings. and as for the constraints that we’re hitting, but yeah, I mean our cost for acquisition and how quickly it pays for itself is super quick. It’s typically less than a month.
Nathan Latka (08:08):
Yep. Now are you burning cash share? Or are you profitable?
Shipmonk CEO Jan Bednar (08:11):
No, we’re profitable.
Nathan Latka (08:12):
Okay. You’re profitable as you grow? I mean, are we talking like 10% EBITDA margin or like 50%?
Shipmonk CEO Jan Bednar (08:18):
No, no, no. Well, yeah. Our EBITDA’s about closer to 10. Yeah. Right now we’re investing really heavily into growth and infrastructure. So obviously then that one gets a little lower, but we’ve never had a single month where we’ve lost money and that’s kind of been our biggest focus. Just the mindset of bootstrapping has kind of allowed us to do that.
Nathan Latka (08:42):
Yeah. I guess what I think of when I hear 80 million in revenue, 10 million, it’s 10% EBITDA margin, right? So let’s call it 8 million to the bottom line, right? You sold a portion of the company, right? 5 million worth to these investors when it sounds like you could have just paid yourself out of the profits. I guess what I’m hearing you say is these people add additional strategic value where it’s worth it to you to do that.
Shipmonk CEO Jan Bednar (09:05):
Yeah. That’s one thing. And second thing is EBITDA is not necessarily cash flow. So we’ve got a lot of big investments that we pay for cash. And so we don’t really end the year with 8 million in cash. That would be a little bit of a different conversation. So there’s a couple different things that play into it. But definitely having the partners in place has been a huge value. And also that was when we did the deal was a year ago. So we’re in a little bit of a different place now also.
Nathan Latka (09:33):
Yep. Yep. Very good. All right. Any plans to sell the company?
Shipmonk CEO Jan Bednar (09:38):
Well, if the opportunity presents itself, always open.
Nathan Latka (09:42):
Take me to fantasy land for a second. What would be a number where you’re like, “oh my God, this would make me so happy. I have to sell.” It’ll be obviously very irrational, but what is it?
Shipmonk CEO Jan Bednar (09:50):
Yeah, that’s a big question because when I started the business, it’s always been a hundred million. That was the numbering that I’ve always wanted to, I was like, look, I did the math and I’m like, okay, at a hundred million, I can just do whatever the hell I want. And now when we’re kind of around that area and maybe even more, it’s just at this point, it’s not about the number, it’s more about what I’ve built and what I’ve accomplished and what I’ve learned along the way. And I’m having so much fun and I meet great people and I get to work with amazing people and seeing the impact that we have on not just the customers, but the employees. I can’t really give you a number because-
Nathan Latka (10:29):
Okay. Jan, let me be more specific. Let’s say Shopify wants to get more on Amazon’s level. Start competing more aggressive and they need a physical strategy. You have warehouses. You’re someone that they could buy. Let’s say Shopify offers you a billion dollars to sell the company. So more than 10 X you’re at 80 million, do you take the deal?
Shipmonk CEO Jan Bednar (10:43):
I would probably take the deal. Yeah.
Nathan Latka (10:45):
Yeah. So say your board would probably, I see you’re married. Your spouse would probably kill you if you said no to that.
Shipmonk CEO Jan Bednar (10:51):
Right. That’s true. Yeah. Depending on the company too, every company would love to sell to them and work with them for a while to build this into where we need to go, right? Yeah. I mean, it’s all about certain circumstances, but I’m not saying I wouldn’t do it.
Nathan Latka (11:07):
Yep. All right. Let’s wrap up with a famous five. Number one: Favorite business book.
Shipmonk CEO Jan Bednar (11:15):
Favorite business, man. That’s a tough one.
Nathan Latka (11:18):
You can say none.
Shipmonk CEO Jan Bednar (11:20):
Nathan Latka (11:21):
Number two. Is there a C-
Shipmonk CEO Jan Bednar (11:22):
No, I’ve got a bunch of those at this one.
Nathan Latka (11:25):
And number two, is there a CEO you’re following or studying?
Shipmonk CEO Jan Bednar (11:29):
Well, I love Tobi Lutke from Shopify. He’s a great guy. And Richard Branson was one of my favorite guys.
Nathan Latka (11:38):
Number three. What’s your favorite online tool for building your company?
Shipmonk CEO Jan Bednar (11:42):
Nathan Latka (11:43):
Number four. How many –
Shipmonk CEO Jan Bednar (11:44):
Nathan Latka (11:45):
And slack. Yeah. How many hours of sleep do you get every night?
Shipmonk CEO Jan Bednar (11:48):
Nathan Latka (11:48):
Okay. And what’s your situation? Like married? Single? How many kids?
Shipmonk CEO Jan Bednar (11:52):
No kids. Married.
Nathan Latka (11:54):
Married. No kids. Congratulations. How old are you?
Shipmonk CEO Jan Bednar (11:59):
Thank you. 28.
Nathan Latka (12:00):
28. Last question. What do you wish your 20 year old self knew?
Shipmonk CEO Jan Bednar (12:07):
Don’t be afraid to invest in people.
Nathan Latka (12:11):
Guys there you have it. Don’t be afraid to invest in people. Shipmonk. Launched back in 2014 at a million bucks in 2015 and in 2017 broke 10, 2018 30 million. This year they’ll do over 80 million dollars in revenue. Last year sold a portion of their company for 10 million. They let some VCs in. 50% of that was secondary. Obviously makes a lot of sense for Jan to take some money off the table there to continue to be comfortable and keep building the company from 80 million up to many, many, many more multiples of that. Jan, thank you so much for taking us to the top, man.
Shipmonk CEO Jan Bednar (12:38):
Thank you. Appreciate it.