We usually make a mental separation between digital and physical commodities. But why shouldn’t one speak to the other? When I’m scrolling on Amazon, I can expect to get ads that are similar to whatever I was looking for. But with PebblePost this is all changing. Now you can get the invaluable service of analytics that inform what to market to individuals…through direct mail. Already seeing results, and a round of funding PebblePost is changing how direct mail is used.
Lewis Gersh, Chairman and CEO takes AlleyWatch through the startup changing mail and tells us about the experience getting funded.
Who were your investors and how much did you raise?
We raised a Seed round of $3M from Tribeca Venture Partners and ff Venture Capital led the round. Additional investors supporting the seed round included Alpine Meridian Ventures, Mantella Ventures, and Kickstart Seed Fund, and industry angels Are Traasdahl (TAPAD), Oren Michels (Mashery), Yen Lee (Rakuten), David Rodnitzky (3Q Digital), Sanjay Chadda (Petsky Prunier), Geoff Judge (24/7 Media), Erik Matlick (Bombora), Slava Rubin (Indiegogo), Frank Barbieri (YuMe), Michael Liou (Anvil Capital Advisors), and Bob Ellis (serial angel).
Tell us about your product or service.
Our platform encompasses the world’s first: Ad server for direct mail, Workflow management system for end-to-end digital-to-direct mail campaign management, and production and mailing. Additionally we have real-time analytics on response path and conversion activity and continuous daily optimization of dynamically rendered direct mail.
What inspired you to start the company?
Rob Victor and I spent many months mapping this out at the kitchen table (literally). We saw a huge open opportunity in direct mail and built a vision to bring the greatest things in Programmatic Advertising to Direct Mail. We mapped this out in terms of product roadmap, market development, sales, and business model. We believed it could be done and would radically change the marketer’s “complete breakfast”, enabling more relevant marketing with more efficient and effective results. We are enabling Programmatic Direct Marketing for the world’s intent data.
How is it different?
What market you are targeting and how big is it?
Between direct mail ($45B) digital marketing ($50B) and Data services, this is a $145B business according to Winterberry Group.
Why direct mail?
Direct Mail has been largely ignored by the technological innovation revolution that swept through digital media. It is the largest ad spend next to TV and the highest response rate next to telemarketing, but has had no new products in 25 years. Savvy marketers know the power of direct mail, and we are one integrated platform, easy to use, and cuts through the clutter of too many digital media offerings.
What’s your business model?
We priced on a SaaS model, by monthly volume of mail pieces, all inclusive – all segmentation, workflow, analytics and optimization, with production, printing, postage, mail sorting and delivery to USPS included. No up-front fee, no minimum and no term. Plug in and go.
How has your past experience as a VC helped you in this business?
It’s helped me very much. I was an entrepreneur in Bubble 1.0, then was founder/CEO of Gersh Venture Partners, which I renamed as Metamorphic Ventures and later added partners. So as a VC, I was also a founder/CEO. I built the largest portfolio of data targeting companies of any fund and working with these founders was enormously helpful in our crafting the vision and architecture. Many of them are investors and advisors – it was a dream team in a petri dish.
What are the biggest challenges that you faced while raising capital?
It was the news about the Postal Service pension potentially going bankrupt and the Restoration Hardware’s phone-book-sized catalog. It was hard for people to understand that direct mail is a powerful and large force as a marketing channel for those who never worked or invested in it.
What factors about your business led your investors to write the check?
I think a lot was relationships and trust. I had been on both sides of the table for many years in the NY community. Founding a venture backed startup in 1998 to founding one of the first seed funds in 2006, building a portfolio where I was hands on and very entrepreneur supportive. And, if we are correct, it is a multi-billion dollar revenue opportunity.
What are the milestones you plan to achieve in the next six months?
We are planning for more diversity of customers and results. We are very focused on growing our early customer base and learning more and more of what works and why. We have a very aggressive product roadmap going out two years – the best is yet to come.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
I don’t think there is one answer – everything is situation specific. It might sound simple, but every company should raise, use and spend the appropriate amount of capital relative to its own marketing opportunities and timing.
Where is your favorite place to enjoy the fall weather in the area?
This would be our farm upstate NY, no question. Being with my wife and kids, enjoying a campfire at sunset when foliage is blazing from our hilltop, with views out over 5 mountain ranges is, by far, my favorite place.