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Oct 20, 2017 · 21m · top-founders

818: AdTech: Spongecell Passes $13m+ ARR, Lets Old Customers Go, $26m Raised

Ben Kartzman · 10m spoken Nathan Latka · 8m spoken
0:00 / 0:00

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

Nathan Latka interviews Spongecell co-founder and CEO Ben Kartzman, exploring how the ad tech platform executed multiple strategic pivots, raised $26 million, and surpassed $13 million in ARR by transitioning to enterprise dynamic creative software.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 46.8% of the talking time here. How this is scored →

Nathan as informed peer 3.8 Guest teaching 2.3 Guest disagreement 2.0 Nathan pushing back 4.5
05100:0010:0020:001:55–4:43 · Nathan as informed peer 5/10 Ben Kartzman on Spongecell Funding and Inc Reporting Latka immediately challenges the guest's bio claim of being one of the fastest growing companies, demanding metrics. He presses Kartzman on exact target revenues for 2017, but Kartzman holds the line on non-disclosure due to his institutional investor.4:43–7:30 · Nathan as informed peer 4/10 Dynamic Creative Decisioning Engine and Enterprise Monetization Kartzman details the dynamic creative platform and pricing model. Latka inquires about contract values and target customer demographics, guiding a collaborative breakdown of the enterprise transition.7:30–11:56 · Nathan as informed peer 4/10 Strategic Evolution: Raising Minimums and Offboarding Legacy Clients Latka probes the economics of offboarding legacy clients and misinterprets Spongecell's role in buying media. Kartzman gently educates Latka by clarifying that Spongecell does not purchase media and corrects his definition of a DSP.11:56–14:18 · Nathan as informed peer 4/10 Founding Story, Global Operations, and Revenue Growth Trajectory Latka explores company pivots and team distribution before trying to box Kartzman into a tight revenue range. When Kartzman repeatedly deflects with 'focused on growth', Latka aggressively locks down the $13M floor.14:18–18:06 · Nathan as informed peer 4/10 Product Differentiation, Enterprise Sales Cycles, and CAC Analysis Latka presses for specific customer acquisition tactics and CAC figures. When Kartzman admits CAC is currently being re-analyzed due to lengthening enterprise sales cycles, Latka forces an estimate above $5,000.18:08–20:27 · Nathan as informed peer 2/10 Acquisition Announcement: Productivity Platform TheTopInbox.com Following an ad read for his acquisition of TheTopInbox, Latka runs smoothly through the rapid-fire Famous Five questions with standard polite banter.1:55–4:43 · Guest teaching 2/10 Ben Kartzman on Spongecell Funding and Inc Reporting Latka immediately challenges the guest's bio claim of being one of the fastest growing companies, demanding metrics. He presses Kartzman on exact target revenues for 2017, but Kartzman holds the line on non-disclosure due to his institutional investor.4:43–7:30 · Guest teaching 3/10 Dynamic Creative Decisioning Engine and Enterprise Monetization Kartzman details the dynamic creative platform and pricing model. Latka inquires about contract values and target customer demographics, guiding a collaborative breakdown of the enterprise transition.7:30–11:56 · Guest teaching 5/10 Strategic Evolution: Raising Minimums and Offboarding Legacy Clients Latka probes the economics of offboarding legacy clients and misinterprets Spongecell's role in buying media. Kartzman gently educates Latka by clarifying that Spongecell does not purchase media and corrects his definition of a DSP.11:56–14:18 · Guest teaching 2/10 Founding Story, Global Operations, and Revenue Growth Trajectory Latka explores company pivots and team distribution before trying to box Kartzman into a tight revenue range. When Kartzman repeatedly deflects with 'focused on growth', Latka aggressively locks down the $13M floor.14:18–18:06 · Guest teaching 2/10 Product Differentiation, Enterprise Sales Cycles, and CAC Analysis Latka presses for specific customer acquisition tactics and CAC figures. When Kartzman admits CAC is currently being re-analyzed due to lengthening enterprise sales cycles, Latka forces an estimate above $5,000.18:08–20:27 · Guest teaching 0/10 Acquisition Announcement: Productivity Platform TheTopInbox.com Following an ad read for his acquisition of TheTopInbox, Latka runs smoothly through the rapid-fire Famous Five questions with standard polite banter.1:55–4:43 · Guest disagreement 3/10 Ben Kartzman on Spongecell Funding and Inc Reporting Latka immediately challenges the guest's bio claim of being one of the fastest growing companies, demanding metrics. He presses Kartzman on exact target revenues for 2017, but Kartzman holds the line on non-disclosure due to his institutional investor.4:43–7:30 · Guest disagreement 1/10 Dynamic Creative Decisioning Engine and Enterprise Monetization Kartzman details the dynamic creative platform and pricing model. Latka inquires about contract values and target customer demographics, guiding a collaborative breakdown of the enterprise transition.7:30–11:56 · Guest disagreement 2/10 Strategic Evolution: Raising Minimums and Offboarding Legacy Clients Latka probes the economics of offboarding legacy clients and misinterprets Spongecell's role in buying media. Kartzman gently educates Latka by clarifying that Spongecell does not purchase media and corrects his definition of a DSP.11:56–14:18 · Guest disagreement 3/10 Founding Story, Global Operations, and Revenue Growth Trajectory Latka explores company pivots and team distribution before trying to box Kartzman into a tight revenue range. When Kartzman repeatedly deflects with 'focused on growth', Latka aggressively locks down the $13M floor.14:18–18:06 · Guest disagreement 2/10 Product Differentiation, Enterprise Sales Cycles, and CAC Analysis Latka presses for specific customer acquisition tactics and CAC figures. When Kartzman admits CAC is currently being re-analyzed due to lengthening enterprise sales cycles, Latka forces an estimate above $5,000.18:08–20:27 · Guest disagreement 1/10 Acquisition Announcement: Productivity Platform TheTopInbox.com Following an ad read for his acquisition of TheTopInbox, Latka runs smoothly through the rapid-fire Famous Five questions with standard polite banter.1:55–4:43 · Nathan pushing back 6/10 Ben Kartzman on Spongecell Funding and Inc Reporting Latka immediately challenges the guest's bio claim of being one of the fastest growing companies, demanding metrics. He presses Kartzman on exact target revenues for 2017, but Kartzman holds the line on non-disclosure due to his institutional investor.4:43–7:30 · Nathan pushing back 3/10 Dynamic Creative Decisioning Engine and Enterprise Monetization Kartzman details the dynamic creative platform and pricing model. Latka inquires about contract values and target customer demographics, guiding a collaborative breakdown of the enterprise transition.7:30–11:56 · Nathan pushing back 5/10 Strategic Evolution: Raising Minimums and Offboarding Legacy Clients Latka probes the economics of offboarding legacy clients and misinterprets Spongecell's role in buying media. Kartzman gently educates Latka by clarifying that Spongecell does not purchase media and corrects his definition of a DSP.11:56–14:18 · Nathan pushing back 6/10 Founding Story, Global Operations, and Revenue Growth Trajectory Latka explores company pivots and team distribution before trying to box Kartzman into a tight revenue range. When Kartzman repeatedly deflects with 'focused on growth', Latka aggressively locks down the $13M floor.14:18–18:06 · Nathan pushing back 5/10 Product Differentiation, Enterprise Sales Cycles, and CAC Analysis Latka presses for specific customer acquisition tactics and CAC figures. When Kartzman admits CAC is currently being re-analyzed due to lengthening enterprise sales cycles, Latka forces an estimate above $5,000.18:08–20:27 · Nathan pushing back 2/10 Acquisition Announcement: Productivity Platform TheTopInbox.com Following an ad read for his acquisition of TheTopInbox, Latka runs smoothly through the rapid-fire Famous Five questions with standard polite banter.

speaking balance: gold is Nathan, purple is the guest (3 minute bins)

0:00 · Nathan 82.7% · guest 17.3%0:00 · Nathan 82.7% · guest 17.3%3:00 · Nathan 32.8% · guest 67.2%3:00 · Nathan 32.8% · guest 67.2%6:00 · Nathan 36% · guest 64%6:00 · Nathan 36% · guest 64%9:00 · Nathan 31.2% · guest 68.8%9:00 · Nathan 31.2% · guest 68.8%12:00 · Nathan 33.5% · guest 66.5%12:00 · Nathan 33.5% · guest 66.5%15:00 · Nathan 29.6% · guest 70.4%15:00 · Nathan 29.6% · guest 70.4%18:00 · Nathan 77.3% · guest 22.7%18:00 · Nathan 77.3% · guest 22.7%21:00 · Nathan 94.3% · guest 5.7%21:00 · Nathan 94.3% · guest 5.7%
Sharpest disagreement ▶ 13:57 Kartzman stonewalls Latka's revenue bracket

When Latka repeatedly pushes Kartzman to confirm if Spongecell's revenue is between $13M and $20M, Kartzman firmly stonewalls him by repeating 'focused on growth' twice.

 Hardest push from Nathan ▶ 14:05 Latka refuses evasion to establish revenue floor

Latka rejects Kartzman's deflective non-answer and re-anchors the conversation to verify that the business has surpassed at least $13 million in ARR.

 Biggest teaching moment ▶ 10:14 Kartzman corrects Latka on media buying and DSPs

Kartzman corrects Latka's assumption that Spongecell purchases inventory for clients and corrects Latka's guess that DSP stands for Display Network, clarifying it is a Demand Side Platform.

 Nathan holds their own ▶ 2:16 Latka challenges fastest-growing claim

Latka immediately puts the guest on the defensive in the opening seconds by demanding he back up his claim of being one of the fastest-growing companies in the US.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Ben Kartzman on Spongecell Funding and Inc Reporting 5236 Latka immediately challenges the guest's bio claim of being one of the fastest growing companies, demanding metrics. He presses Kartzman on exact target revenues for 2017, but Kartzman holds the line on non-disclosure due to his institutional investor.
Dynamic Creative Decisioning Engine and Enterprise Monetization 4313 Kartzman details the dynamic creative platform and pricing model. Latka inquires about contract values and target customer demographics, guiding a collaborative breakdown of the enterprise transition.
Strategic Evolution: Raising Minimums and Offboarding Legacy Clients 4525 Latka probes the economics of offboarding legacy clients and misinterprets Spongecell's role in buying media. Kartzman gently educates Latka by clarifying that Spongecell does not purchase media and corrects his definition of a DSP.
Founding Story, Global Operations, and Revenue Growth Trajectory 4236 Latka explores company pivots and team distribution before trying to box Kartzman into a tight revenue range. When Kartzman repeatedly deflects with 'focused on growth', Latka aggressively locks down the $13M floor.
Product Differentiation, Enterprise Sales Cycles, and CAC Analysis 4225 Latka presses for specific customer acquisition tactics and CAC figures. When Kartzman admits CAC is currently being re-analyzed due to lengthening enterprise sales cycles, Latka forces an estimate above $5,000.
Acquisition Announcement: Productivity Platform TheTopInbox.com 2012 Following an ad read for his acquisition of TheTopInbox, Latka runs smoothly through the rapid-fire Famous Five questions with standard polite banter.

Statements from this episode (8)

Disclosure
Kartzman: Spongecell has raised about $26 million
“So we've got about twenty six million into the company.”
Ben Kartzman Oct 20, 2017 ▶ 3:30
Disclosure
Kartzman: Safeguard Scientifics is Spongecell's largest institutional investor
“The largest institutional investor is a group called safeguard based out in Philadelphia. Very knowledgeable investors in the ad tech space specifically. Great partner for us.”
Ben Kartzman Oct 20, 2017 ▶ 3:32
Assertion Not checkable as stated
Kartzman: Spongecell Supermarket Client Generated 80 Quintillion Creative Variations
“One customer actually did 80 quintillion different possible creative variations when they mixed. This was a supermarket chain. You can mix price with product. Description, all the sort of content around it, and then recommend that to different customers and sh…”
Ben Kartzman Oct 20, 2017 ▶ 5:25
Disclosure
Kartzman: Spongecell Client Annual Spend Ranges from $20K to $3M
“Some of our smallest clients are spending, you know, 20, 30 grand a year with us, and our biggest clients are spending three million a year with us.”
Ben Kartzman Oct 20, 2017 ▶ 6:24
Assertion Not checkable as stated
Kartzman: Spongecell's fee is around 10% of working media dollars
“So we're probably a little bit lower on the, on that end of the spectrum in terms of percent of working media dollars. I would say, you know, we're actually probably in like the, in the 10% range.”
Ben Kartzman Oct 20, 2017 ▶ 8:35
Disclosure
Kartzman: Spongecell's enterprise clients deliver up to 30 billion impressions annually
“Some of the larger customers that we work with will run, you know, thirty billion impressions in a given year. You know, more of a midsize customer will run, you know, three to five billion impressions a year. And then we have a couple other customers, you kno…”
Ben Kartzman Oct 20, 2017 ▶ 9:28
Assertion Supported
Kartzman: Spongecell launched in 2006 as an online calendar
“So we launched the company originally in, in 2006 raised our first couple million bucks. Back then the first product, believe it or not, was an online calendar. This is before Google calendar existed.”
Ben Kartzman Oct 20, 2017 ▶ 12:06
Assertion Not checkable as stated
Spongecell's enterprise pivot lengthened sales cycles to 3-9 months
“They're longer. So you can imagine we had five, 600 customers, very transactional business. You could close a deal, you know, in a, in, in a month. Now these deals are more sophisticated. There's more technology. There's more integrations that need to happen. …”
Ben Kartzman Oct 20, 2017 ▶ 17:06
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