How We Built A $3M/Year Business Automating Social Media
Note: This business is no longer running. It was started in 2014 and ended in 2021. Reason for closure: Shut down.
Hello! Who are you and what business did you start?
Hey! My name is Justin Hartzman and I’m the CEO & Co-Founder of Needls Media. We’re the Internet’s FIRST Robo ad agency so we use AI and data science to automate social media advertising. What does that mean? It means that after answering just a few quick questions, Needls will build anywhere from 50-500 ad campaigns in real time. Next? Businesses then launch these campaigns and watch qualified leads roll on in… It’s as easy as that!
There are currently 90M SMBs with a Facebook business page, however, only 7M are currently advertising on there. We are targeting the 83M not currently advertising. Generally, these SMBs are not advertising on Facebook because of one of the following three reasons:
- it’s too challenging
- hiring an ad agency is too expensive for an SMB owner on a tight budget, or
- they’ve tried other social media advertising platforms to no success because these tend to also be tools for experienced marketers.
Needls provides the only solution for SMBs that makes it simple to create, target, and optimize Facebook and Instagram campaigns with no knowledge required.
Needls launched April 2, 2016. In the first year, we did $1.7 million in revenue, which was some pretty aggressive growth considering we went from zero revenue to $200,000+ a month simply charging $100/month + 10% of ad spend (of which 90% of the latter goes to Facebook).
What's your backstory and how did you come up with the idea?
My two friends, Jeremy and Michael, and I have been building businesses together for the past decade and a half but we’ve known each other since we were kids, in fact, we met at camp!
We’ve had 3 exits, two in 2005, and another one about two and a half years ago. Now we run two startups together, one of which is Needls. My personal career started when I worked at my grandparent's outdoor lifestyle store in Kingston, Ontario.
Once we hit sales of 300x in the first quarter, we realized we had something.
I loved helping people from a young age, finding out what they needed and providing a solution. Around my teenage years, I started a humor website called RudeJoke.com with Jeremy. As quickly as we started generating around $20,000/month, the dot-com bust happened and RudeJoke.com started to fizzle.
After graduating from Western University, I started working for the family real estate business. I wasn’t enjoying it though so I reached out to contacts at ICQ, who elucidated to the release of MySpace. I figured this was going to be a great space to get into so I asked Jeremy, who was working on Bay Street, for a loan of $5,000. Intrigued, he quit his job a couple of weeks later and we started a website called MyResourceSpace, which allowed MySpace users to customize their profiles with digital skins.
Three months later, we sold it to an Internet content company in Hawaii. With those funds, we bought out some competitors and sold them as a package deal. A light bulb went off and we came up with the idea of an online brokerage marketplace for selling websites. This was when Michael joined us and we started WeSellYourSite.com. We also launched AllYouCanEatInternet, to help companies create and market businesses. Once they were ready to sell, we could do that through WeSellYourSite.
Around 2013, we went back to the drawing board and brainstormed ideas on how we could expand. The three of us were all sitting in this meeting and my wife called me. She said that one of my friends posted on Facebook that he needed an iOS app built. She tagged me in the post and it turned into a $60,000 contract.
That’s when we realized that people were asking for things on social media. We started thinking about how we could target those people directly. I had a developer create a simple script that watched my Facebook and would alert me anytime a keyword popped up. Once we hit sales of 300x in the first quarter, we realized we had something that ticked all our boxes: social media, advertising, marketing, and small businesses.
Take us through the process of designing and prototyping the product.
We decided to produce our first version of Needls as a white label and convinced a friend, who was amazing at webinars, and whose wife also went camping with us as kids, to go sell it.
We had a date set: November 24, 2014. We emailed invites to 17,000 people, but only got 440 on the call. However, of these, 280 converted into a yearlong package and $500,000 in revenue within 24 hours.
But we knew our product was not fine-tuned yet. The industry average for finding leads with an intent purchase using NLP was around 35% accuracy. Although we had about a 50-60% accuracy rate our customers still were not pleased with the results because they were getting leads that were irrelevant to them and didn’t meet the proper intent for their business.
For example, if you are a contractor who does bathroom renovations, you do not want leads that say “If you want to do your bathroom, call me. I'm a good contractor”. Instead, you want leads that say “I’m renovating my bathroom. Call me to give me a quote”. The problem was that these look very similar, but you are giving that contractor “leads” that are not relevant to him.
At this point, we knew that we needed to get funding in order to perfect our product. But I had never raised capital. Interestingly, we were contacted by Gener8tor and, after speaking with their portfolio companies, I decided it was an incredible opportunity and I flew out to meet the team in Milwaukee last minute.
The next day, they called me to officially accept us into their startup accelerator program as part of their 2015 class. It was a truly life-changing na dbusiness-changing experience. Having the ability to listen to entrepreneurs who have been in your shoes and succeeded, is invaluable. I took the opportunity to open my ears and learn from their experiences.
Two weeks into the program, Needls had raised $800,000 in funding, which was enough to relaunch the product on April 2, 2016. We hit an annual revenue of $2.2 million that year.
Describe the process of launching the business.
The partners were able to pool together $500,000 to start the business. Much of this was used to invest in natural language technology, which helped improve our accuracy rate to nearly double that of the industry standard.
We were growing like gangbusters, having fun, clients were happy, our product was in order. Then Cambridge Analytica happened and everything changed. The cost to obtain clients sky-rocketed, which meant client ad costs went up.
We were burning through tons of cash just trying to stay afloat. In a last ditch effort to keep that company alive, we RIGHT SIZED in October 2018 and since then we have rebounded 100%. We are a healthier company, with significant money in the bank and back on a trajectory of growth into the future.
Since launch, what has worked to attract and retain customers?
My favorite user success story to tell is about a 75-year old grandmother who worked as a dog walker doing 3 jobs per week.
She told us that she wanted to increase that number to 10 jobs per week giving her the ability to buy her grandchildren the Christmas gifts they had asked for. After one weekend, she said she wasn’t getting the expected results and that she wanted to cancel.
Needls is a service that you need to stay with for a couple of weeks before you see results because the AI needs to optimized. So, we convinced her to stay on a little while longer. Five weeks later, she was walking 7 dogs per week! Needls generated 380 website visits for only $271.50, which is an average cost of $0.71 per visitor. In fact, she couldn’t even keep up with all the calls! After a couple of months, I got an unexpected email from the woman saying that she had to hire 4 other dog walkers to keep up with all the demand! These are the kind of stories I love hearing because it’s the reason why we got into this business: to help small businesses with little resources to grow.
We really attribute a large portion of our success to what we call “sipping on our own champagne”. Meaning, we use our service to advertise on Facebook and Instagram just like our customers do. Getting our name out there is increasingly important. We want small businesses to know who we are so we work on maintaining a large social media presence and promote ourselves as a trusted source in the area of social media advertising.
Through our needls.u platform, we are continually educating our customers on the best ways to attract customers by posting content including guides, workbooks, blogs, case studies, FAQs, and webinars; customers can even sign up to our newsletter for the latest industry news, guides and tips to get the most out of their advertising budgets.
Jeremy, Michael, and I have always been big believers in providing exceptional customer service. Having a real person, who truly understands the service, available on the other end to answer your questions or concerns are underestimated and undervalued. We found that customers do not see the value in this resource until they actually need it. Taking a look at our testimonials page, which is written by real people with real businesses, you will notice that they are mostly about our incredible customer service. Inf act, we are proud to maintain a 90% customer satisfaction rate.
How are you doing today and what does the future look like?
After a period of “right-sizing” where we shifted our team to only key individuals that could take us to where we needed to be, we are proud to say that we are profitable.
We are growing at a rate of 20% in an industry growing at 15% YOY. It’s not an easy feat to create a robo-agency with an accuracy rate higher than that of a human. We have some people who inevitably mock the price you are asking for this service, although you will not find anyone who does what we do for the price we charge.
Do not be afraid to fall, failure makes you stronger. There are a lot of dark days when you are starting your own business. You go through a lot.
But these are the people that do not take the time to appreciate what we have built and how we are helping small businesses. On the other side, we have our amazing and appreciative customers who we have helped tremendously, and these are the reviews we lean on and show with pride to unconvinced potential customers.
Our long term goal that we are targeting has Facebook and Instagram at the forefront. We want to be the trusted source for small businesses for everything marketing and social media advertising. In the interim, in order to reach this goal, we are looking at adding more products to our portfolio outside of Facebook and Instagram.
For example, a landing page builder (most businesses struggle with this) and Needls.ENGAGE, which delivers fresh content daily to our business’ facebook audience. As you can see, we are still building and perfecting Needls. We are moving at the right pace now and we want to keep it going and continue ramping up sales so we are investing heavily in marketing the service to the right people.
Through starting the business, have you learned anything particularly helpful or advantageous?
One of the biggest takeaways I’ve learned is that I did not know everything I thought I did. Sometimes you can go into these ventures thinking you are invincible, but you will quickly realize that is not the case. Listen more than you speak. I learned to go into everything with an open mind and willingness to learn from others and appreciate those who are smarter than me and have the advice to lend.
Do not be afraid to fall, failure makes you stronger. There are a lot of dark days when you are starting your own business. You go through a lot. The trough of sorrow is a place every entrepreneur wants to avoid but, if you reach it, that impossible does not exist. As Will Smith once said, “The best things in life come on the other side of fear”. That is one quote that sticks with me to this day and has helped me get through tough times. Once you reach the other side of fear, that is when the best things in life will happen and success will come.
And above all else: Be useful!
What platform/tools do you use for your business?
- Customer Service: Slack channels for internal communication and ZenDesk for our external communication with customers.
- Marketing Automation: ActiveCampaign
- CRM: Base CRM (Now Zendesk Sell)
- Workflow Automation: Zapier.com
- Bookkeeping Services: Xero.com
- E-commerce and Payments: Stripe.com
- Appointment Scheduler: Calendly.com
- File Sharing: Dropbox.com
What have been the most influential books, podcasts, or other resources?
While I wish I had more time to read, I do religiously listen to the Mixergy podcast with my good friend Andrew Warner. In fact, if you want to learn more about myself and my journey, you can listen to the podcast I did with him here.
I love listening to other startup founders of much smaller and much larger companies and learning about their trials, tribulations, and successes.
Advice for other entrepreneurs who want to get started or are just starting out?
I have three pieces of advice here that have helped me and my co-founders get through the tough stuff and make it out to the other side.
- “No’s” are like knock-outs, it is all about how you get back up. Do not let it get you down. This is your fight to win, so fight like a champion with all your heart.
- Step over fear and laugh at it. Someone once said, “What doesn’t kill you, makes you stronger”. And this step in your entrepreneurial journey will not kill you.
- Passion wins over knowledge. Knowledge can be taught and experience is earned in time. Passion is something you are born with and it cannot be taught. So take that burning fire within you and run with it.
Where can we go to learn more?
- Website: http://needls.com
- Facebook: @TheOfficialNeedlsPage
- Instagram: @NeedlsAds
- Twitter: @NeedlsAds, @needlsJustin
- YouTube: Needls
- Needls.u: https://u.needls.com/
- My email: jh@needls.com
If you have any questions or comments, drop a comment below!
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