How RJ Metrics Grew to 100 Employees and $22+ Million in VC Funding
The story of a lean startup using content marketing
The RJ Metrics founders gave a talk this week to the Philly Startup Leaders Bootcamp on how they grew their company. There was a number of growth hacks and stories that captivated the crowd.
In 2006 Robert J. Moore and Jake Stein were both fresh out of college and started working at a new company on the same day. Their job was to research promising new startups, so the company could decide which ones would be best to invest in.
Jake got really good at doing a 100 cold calls a week collecting data and figuring out the right questions to ask. Bob on the other hand hated the work, so he started writing software to do the job for him.
They both had the itch to start their own startup. Jake had a previous landscaping company. And Bob had built a Texas Hold 'Em odds calculator in college. Working at Insight Venture Partners taught them the fundamentals of building their own high growth startup.
Bob started testing out some new business ideas by interviewing potential customers. He asked non-profits a long list of questions about possible solutions they might want to buy. The only thing on the list they were interested in was data analysis for getting more money from donors.
Around this time Jake heard about Bob's idea to start a new venture based around data analysis. So he cornered Bob at his desk and convinced him he needed a partner. The plan was for Bob to build the tools and Jake to sell them.
For the first year their company was called Donor Bolton (sp?). But over time they realized that for-profit businesses could benefit from the same type of tools, plus they were faster moving and have more money to spend. So in 2008 RJ Metrics was born.
It started out with just the two of them working in Bob's attic in Jersey. They had no product. In true lean startup fashion they didn't build anything until they had paying customers lined up.
Ask the right questions
To figure out what people will say Yes to buying, you first need to hear a lot of No's. The key is to keep asking until a potential customer says No, and then ask why. If someone says they don't have the money in the budget until next quarter, then ask them to sign an agreement to purchase at a later date. You then hear from them what it's really going to take to make a sale.
Customers first, then you build it
Bob and Jake built an online demo after learning that customers wanted to see a product before agreeing to buy it. They generated a bunch of real looking data for a company called Vandelay Industries and started sending people to it. Three months later they had a company say "Yes". They then spent a month working crazy hours to actually build this product. This is the moment the pair knew they were on to something. And Jake still has that first email notifying them of a $200 invoice paid.
Everyone will say Yes if you ask:
"Is this a good idea?"
You get real answers when you ask:
"It costs X, will you buy it?"
They moved into a crappy little office in Camden, NJ when they started making a little money. They realized interns weren't going to work that summer in an attic without air conditioning. They were super frugal in the early days and kept costs low, so they could bootstrap the company off their savings. For the first 18 months they didn't pay each other anything. And then for a year they started paying each other what amounted to minimum wage.
The Viral Hit
Later in 2008 Bob noticed a sign for Collingswoodsingles.com and thought that seemed oddly specific. It piqued his interest more when he later spotted a sign for Princetonsingles.com, and then a 5thavenuesingles.com sign in Manhattan. So he started investigating. After doing some research he uncovered that one business had been purchasing thousands of these domain names using shell companies to conceal the true purpose of all these sites and signs. Their goal was to trick people into signing up for an offline dating service that cost thousands of dollars. Bob wrote a 5,000 word article detailing this elaborate scheme.
They shared this story with a few friends that found it interesting, and then it really blew up when it hit the front page of Digg and Hacker News. That exposure lead to thousands of traffic, and then hundreds of thousands when the national press picked it up. Having email collects on their site gave them enough new leads to keep them busy for an entire year.
Content is king
And since then their main marketing channel has been showing off their data analysis prowess through interesting content. Their next big PR hack was an analysis of every Twitter user. They were able to tap into Twitter's API and pull out a huge amount of data. Techcrunch picked it up and promoted it all day on their home page. Then when Airbnb became a hot topic they did a story about their data, and so on.
Content marketing is what propelled RJ Metrics into a rapidly growing trajectory. Their articles continue to draw hundreds of thousands of people into their sales funnel. They also now have dozens of case studies and white papers behind an email collect. Once you request one these their sales team follows up to see how RJ Metrics can help you grow and save you time.
When they ran into issues attracting new talent to their Camden office they started testing different versions of their job postings. The ones that stated they were located in Center City (downtown Philly) got the best results, but lead to awkward conversations. So to fix that problem they moved their office into Philly.
They kept bootstrapping the company for another year, but then their marketing budget became a limiting factor for growth. The ratio of Annual Reoccurring Revenue to Customer Acquisition Cost (ARR/CAC) was 8.1. Anything over 1 means a company is leaving a lot of money on the table and won't scale up as fast.
Want to read the Boxter White Paper?
Hypergrowth after traction
In 2012 they raised $1.2 million in venture capital to begin scaling up. Investors were excited to see the numbers continue to improve, so in 2013 they raised $5 million more to keep growing. Since they had built the business on lean startup principles they were able work out all the difficult challenges early on. Getting the company profitable before funding and ready to scale allowed them to negotiate much better terms with investors.
And in 2014 RJ Metrics raised a $16.5 million series B round. They currently have 83 employees, and a really nice Center City office. All it took was seven years of hard work, a validated idea and being in the right place at the right time.
Bob and Jake make a great team. They complement each other well, and have built up an even bigger team of people to support the company. Their focus is on inspiring data-driven people. And it will be exciting to see RJ Metrics grow towards becoming a billion dollar company.
This presentation was made possible by the entire PSLU team. Here's the full hour and a half video of the event:
And if you want to follow along with the Startup Bootcamp, here's the reading material for this segment:
- RJMetrics Mission Statement
- My Biggest Failure? Failing to Recognize Failure
- Why The Lean Start-up Changes Everything
- When 'Going Lean' Goes Wrong
- The Orange Underpants Logo and The Value of Testing
And here's the homework assignment:
Go through 1 full iteration of the feedback loop using Bob & Jake’s framework. The goal is to validate or invalidate as many of your initial assumptions as possible.
- List your core assumptions around the following:
- The solution
- Package your idea as a product. Pitch, flier, landing site, etc. Whatever is the most efficient minimal way to sell it.
- Sell it to your list of top potential customers (10 min.)
- Record all data from the loop.
- Analyze your results.
- If they buy, why? what is their top 3 features?
- If no, why not?
- Problems with sales strategy? pitch? product materials?
- Re-package/pivot product with feedback and repeat through step 2.
Concisely present your process in a slide deck of no more than 5 slides
- Slide 1 – Product Name and 2 sentence concept pitch.
- Slide 2 – Core Assumptions
- Slide 3 –
- Your Product
- Product Description
- Sales Strategy/Tactic/Process
- Slide 4 – Results Conclusions
- Slide 5 – Round 2 – Core assumptions and revised product