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May 20, 2016 · 22m · top-founders

EP 300: This Law Student Quit to Build Referral Program Business Doing $2MM+ Per Year

Jeff Epstein · 10m spoken Nathan Latka · 9m spoken
0:00 / 0:00

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

In episode 300 of The Top, host Nathan Latka interviews Ambassador founder and CEO Jeff Epstein, exploring how the Detroit-based referral marketing company scaled to $3.5 million in revenue with strong SaaS retention economics.

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 46.2% of the talking time here. How this is scored →

Nathan as informed peer 4.6 Guest teaching 1.6 Guest disagreement 1.0 Nathan pushing back 2.2
05100:0010:0020:001:13–3:42 · Nathan as informed peer 5/10 Introducing Jeff Epstein and Ambassador's Core Platform Latka quickly tallies the fundraising history and infers Ambassador's high ARPU based on customer count and round size. Epstein readily provides the figures and agrees with the deductions.3:42–7:09 · Nathan as informed peer 3/10 Jeff Epstein's Early Ventures and Launching Zferl Latka guides Epstein through his origin story from law school to real estate and founding Zferl. Latka probes into early exit figures and seed capital with gentle persistence.7:10–12:33 · Nathan as informed peer 7/10 Scaling Revenue and Analyzing SaaS Churn Metrics Latka displays strong SaaS domain knowledge by pressing Epstein on the distinction between gross and net dollar churn, comparing metrics to past guests. Epstein articulates why gross churn remains essential for evaluating product-market fit when pricing isn't seat-based.12:33–16:55 · Nathan as informed peer 6/10 Customer Acquisition Costs, Ad Spend, and Boulder Office Latka drills into ad spend, customer acquisition cost, and checks if investors mandated a Boulder office. Epstein shares detailed channel paybacks and clarifies the office move was independent.16:55–18:33 · Nathan as informed peer 2/10 Connecting with Jeff Epstein and Monday Giveaway Promo A low-intensity wrap-up featuring social links, an ad read for HostGator, and Latka commending Epstein for his customer responsiveness when Heyo used Ambassador.1:13–3:42 · Guest teaching 1/10 Introducing Jeff Epstein and Ambassador's Core Platform Latka quickly tallies the fundraising history and infers Ambassador's high ARPU based on customer count and round size. Epstein readily provides the figures and agrees with the deductions.3:42–7:09 · Guest teaching 1/10 Jeff Epstein's Early Ventures and Launching Zferl Latka guides Epstein through his origin story from law school to real estate and founding Zferl. Latka probes into early exit figures and seed capital with gentle persistence.7:10–12:33 · Guest teaching 4/10 Scaling Revenue and Analyzing SaaS Churn Metrics Latka displays strong SaaS domain knowledge by pressing Epstein on the distinction between gross and net dollar churn, comparing metrics to past guests. Epstein articulates why gross churn remains essential for evaluating product-market fit when pricing isn't seat-based.12:33–16:55 · Guest teaching 2/10 Customer Acquisition Costs, Ad Spend, and Boulder Office Latka drills into ad spend, customer acquisition cost, and checks if investors mandated a Boulder office. Epstein shares detailed channel paybacks and clarifies the office move was independent.16:55–18:33 · Guest teaching 0/10 Connecting with Jeff Epstein and Monday Giveaway Promo A low-intensity wrap-up featuring social links, an ad read for HostGator, and Latka commending Epstein for his customer responsiveness when Heyo used Ambassador.1:13–3:42 · Guest disagreement 1/10 Introducing Jeff Epstein and Ambassador's Core Platform Latka quickly tallies the fundraising history and infers Ambassador's high ARPU based on customer count and round size. Epstein readily provides the figures and agrees with the deductions.3:42–7:09 · Guest disagreement 1/10 Jeff Epstein's Early Ventures and Launching Zferl Latka guides Epstein through his origin story from law school to real estate and founding Zferl. Latka probes into early exit figures and seed capital with gentle persistence.7:10–12:33 · Guest disagreement 2/10 Scaling Revenue and Analyzing SaaS Churn Metrics Latka displays strong SaaS domain knowledge by pressing Epstein on the distinction between gross and net dollar churn, comparing metrics to past guests. Epstein articulates why gross churn remains essential for evaluating product-market fit when pricing isn't seat-based.12:33–16:55 · Guest disagreement 1/10 Customer Acquisition Costs, Ad Spend, and Boulder Office Latka drills into ad spend, customer acquisition cost, and checks if investors mandated a Boulder office. Epstein shares detailed channel paybacks and clarifies the office move was independent.16:55–18:33 · Guest disagreement 0/10 Connecting with Jeff Epstein and Monday Giveaway Promo A low-intensity wrap-up featuring social links, an ad read for HostGator, and Latka commending Epstein for his customer responsiveness when Heyo used Ambassador.1:13–3:42 · Nathan pushing back 2/10 Introducing Jeff Epstein and Ambassador's Core Platform Latka quickly tallies the fundraising history and infers Ambassador's high ARPU based on customer count and round size. Epstein readily provides the figures and agrees with the deductions.3:42–7:09 · Nathan pushing back 2/10 Jeff Epstein's Early Ventures and Launching Zferl Latka guides Epstein through his origin story from law school to real estate and founding Zferl. Latka probes into early exit figures and seed capital with gentle persistence.7:10–12:33 · Nathan pushing back 4/10 Scaling Revenue and Analyzing SaaS Churn Metrics Latka displays strong SaaS domain knowledge by pressing Epstein on the distinction between gross and net dollar churn, comparing metrics to past guests. Epstein articulates why gross churn remains essential for evaluating product-market fit when pricing isn't seat-based.12:33–16:55 · Nathan pushing back 3/10 Customer Acquisition Costs, Ad Spend, and Boulder Office Latka drills into ad spend, customer acquisition cost, and checks if investors mandated a Boulder office. Epstein shares detailed channel paybacks and clarifies the office move was independent.16:55–18:33 · Nathan pushing back 0/10 Connecting with Jeff Epstein and Monday Giveaway Promo A low-intensity wrap-up featuring social links, an ad read for HostGator, and Latka commending Epstein for his customer responsiveness when Heyo used Ambassador.

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

0:00 · Nathan 67.9% · guest 32.1%0:00 · Nathan 67.9% · guest 32.1%3:00 · Nathan 18.1% · guest 81.9%3:00 · Nathan 18.1% · guest 81.9%6:00 · Nathan 42.6% · guest 57.4%6:00 · Nathan 42.6% · guest 57.4%9:00 · Nathan 22.6% · guest 77.4%9:00 · Nathan 22.6% · guest 77.4%12:00 · Nathan 36.7% · guest 63.3%12:00 · Nathan 36.7% · guest 63.3%15:00 · Nathan 39.8% · guest 60.2%15:00 · Nathan 39.8% · guest 60.2%18:00 · Nathan 79.1% · guest 20.9%18:00 · Nathan 79.1% · guest 20.9%21:00 · Nathan 100% · guest 0%21:00 · Nathan 100% · guest 0%
Sharpest disagreement ▶ 12:51 Epstein nuances lifetime value calculations

Epstein pushes back against standard LTV calculations, explaining that multi-year upfront contracts make standard month-based extrapolations less relevant to investors.

 Hardest push from Nathan ▶ 10:09 Latka challenges focus on gross churn

Latka challenges Epstein by contrasting inexperienced founders who only measure gross churn with experienced SaaS leaders tracking negative net churn.

 Biggest teaching moment ▶ 10:34 Epstein breaks down gross churn for non-per-seat SaaS

Epstein educates Latka on why gross churn is still closely scrutinized by tier-one investors to assess core product-market fit when an upgrade path isn't seat-based.

 Nathan holds their own ▶ 12:02 Latka calculates retention and valuation impact

Latka demonstrates his SaaS expertise by converting monthly churn into an 85% annual retention rate and contextualizing net negative churn's premium impact on SaaS valuations.
the scores for every segment, with the reasoning behind each
ChapterTopicNathan as informed peerGuest teachingGuest disagreementNathan pushing backWhy
Introducing Jeff Epstein and Ambassador's Core Platform 5112 Latka quickly tallies the fundraising history and infers Ambassador's high ARPU based on customer count and round size. Epstein readily provides the figures and agrees with the deductions.
Jeff Epstein's Early Ventures and Launching Zferl 3112 Latka guides Epstein through his origin story from law school to real estate and founding Zferl. Latka probes into early exit figures and seed capital with gentle persistence.
Scaling Revenue and Analyzing SaaS Churn Metrics 7424 Latka displays strong SaaS domain knowledge by pressing Epstein on the distinction between gross and net dollar churn, comparing metrics to past guests. Epstein articulates why gross churn remains essential for evaluating product-market fit when pricing isn't seat-based.
Customer Acquisition Costs, Ad Spend, and Boulder Office 6213 Latka drills into ad spend, customer acquisition cost, and checks if investors mandated a Boulder office. Epstein shares detailed channel paybacks and clarifies the office move was independent.
Connecting with Jeff Epstein and Monday Giveaway Promo 2000 A low-intensity wrap-up featuring social links, an ad read for HostGator, and Latka commending Epstein for his customer responsiveness when Heyo used Ambassador.

Statements from this episode (13)

Disclosure
Epstein: Ambassador grew headcount from 11 to 40 in 2015
“We started 2015 with just about 11 or 12 people. So it was a big year. 2015. We raised a little bit of money and went from basically 11 to 40.”
Jeff Epstein May 20, 2016 ▶ 1:45
Disclosure
Epstein: Ambassador raised under $2.5M Series A, totalling $2.9M
“Just under two and a half million. ... We raised about 400 K a few years back, so it was really the second, it was, I guess, formally an A, but it was a smaller A, at least what we're seeing, you know, especially last year.”
Jeff Epstein May 20, 2016 ▶ 2:03
Disclosure
Epstein: Ambassador serves over 300 customers as of early 2016
“Over 300.”
Jeff Epstein May 20, 2016 ▶ 3:06
Disclosure
Epstein: Ambassador average customer spend is $1,000 to $1,500 monthly
“It's probably over a thousand a month would be, probably 1500 a month would probably be average, and we still have some legacy customers, and we have some that are several thousands a month, but average is probably, you know, a bit over a thousand per month.”
Jeff Epstein May 20, 2016 ▶ 3:21
Assertion Not checkable as stated
Epstein: Ambassador's freemium launch resulted in 600 users who never paid
“I had this idea that we would be freemium, and Dropbox was like the most popular software out. We wanted to be freemium. I think the story I tell is we had 600 customers not pay us. 600 customers didn't pay.”
Jeff Epstein May 20, 2016 ▶ 4:53
Assertion Not checkable as stated
Epstein: Ambassador generated about $3.5 million in revenue in 2015
“So it was about three and a half million dollars.”
Jeff Epstein May 20, 2016 ▶ 7:26
Assertion Not checkable as stated
Epstein: Ambassador reached an annualized run rate around $3.8M–$4M
“Yeah, so run rate was about probably just under 3.84 million roughly.”
Jeff Epstein May 20, 2016 ▶ 7:50
Insight
Epstein: Raising prices and moving Ambassador upmarket significantly reduced customer churn
“So one of the things that we really learned was actually most people would think this is counterintuitive, but actually charging more and going up market Significantly reduced churn.”
Jeff Epstein May 20, 2016 ▶ 9:01
Assertion Not checkable as stated
Epstein: Ambassador achieves ~85% retention and under 2% monthly net dollar churn
“We don't measure it annually, but it's probably, our retention is probably close to 85%, 85%, which is which is maybe 10% churn. I mean, there's a couple different ways to measure it, but we also look at, you know, net dollar churn as well, so that, that's und…”
Jeff Epstein May 20, 2016 ▶ 9:52
Disclosure
Epstein: Ambassador gives an Apple Watch or $500 for closed customer referrals
“Through our own referral program, we pay 25 dollars if you refer a scheduled demo. So if someone schedules a demo and completes it, then we'll give you a 25 dollar gift card. They become a customer. We'll give you an Apple Watch or you know, 500 dollars. So li…”
Jeff Epstein May 20, 2016 ▶ 13:47
Disclosure
Epstein: Ambassador spends $25K to $50K monthly on paid ads
“Probably 25 to 50,000. So yeah, decent amount.”
Jeff Epstein May 20, 2016 ▶ 14:32
Disclosure
Epstein: Ambassador acquires 20 to 40 new customers monthly
“20 to 40, let's say. I mean, again, it all varies.”
Jeff Epstein May 20, 2016 ▶ 14:43
Assertion Not checkable as stated
Epstein: Ambassador closes about 5% of product demos
“And we know that demos will close at, or, you know, at you know, five percent.”
Jeff Epstein May 20, 2016 ▶ 15:24
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