February 28, 2017

Q&A with Lewis Gersh: PebblePost Closes $15M Series B Round

Lewis Gersh
The PebblePost cofounder and CEO reflects on what a $15 million Series B round means to the company’s future — as well as the validation it provides for his vision of Programmatic Direct Mail®.

Q: Congratulations on securing the Series B funding. What does this mean to the development of PebblePost?

A: We’re in a very fortunate position because our launch phase was so successful — way more successful than we expected. Most of the time when you hear companies talk about “growing pains,” that’s a euphemism. What they really mean is that they’re experiencing the pain of not growing, at least not at the rate they’d hoped. So even if they’re able to reach the B round, they know they’re on a fairly short string: “OK, we’ll fund the next round, but you’d better be able to fuel much bigger growth while you build out your infrastructure.” At PebblePost, those priorities are inverted. We are racing to build out infrastructure to keep up with the growth.

Q: What do you mean?

A: Our growing pains, such as they were, really were about growing. We are wildly over our projections on both the number of brands and the size of the brands. Mail volume and revenue have been way over anything we imagined. We’re setting records for a B2B deal in the martech space. So, for us, the B round is all about protecting this incredible upside of Programmatic Direct Mail®. It’s about building an infrastructure team and refining our operating excellence in a way that continues to place the customer A number one. I feel that’s something that gets lost in a lot of B rounds.

Q: Can you share some of the specifics of how the funds will be allocated?

A: Sure. Our first priority is to refine the process to determine the best and easiest way for our brands to succeed using our products and services. We’re building a best-of-breed team to manage every aspect of the customer life cycle, from sales through customer success/account management, including our products and our tech and our data behind it — things like our 1:1 personalized Programmatic Catalog. To help make that happen, we’ve opened an office in San Francisco and added a new CFO and Head of West Coast Operations, Marita Scarfi.

Q: How important were your contacts in the VC community in securing the B round funding?

A: Very. I’m fortunate that I’ve been on both sides of the negotiating table — 10 years operating as a founder and CEO, the 10 years in VC when I was founder and CEO of the fund. I built up a network of 450 co-investors, and 10 CEOs invested. Four CEOs I passed on invested as well. Having those contacts that I could call upon enabled us to stay incredibly focused on operations while also experiencing hockey stick metrics across almost every single KPI. The financial pressure from those spikes could have disrupted the team. Instead, the team worked with single-minded focus on fine-tuning Programmatic Direct Mail® to give our brands maximum benefit.

Q: Now that you’ve secured Series B funding, will PebblePost expand into new marketing arenas?

A: No. No, no, no, no, no, no, no. No! Have I made that clear enough? [Laughs.] To me, the faster you grow, the more rigorously you must focus on your core mission. No entrepreneur ever said, “Gee, I wish I was less focused on what was working in our early stages.” If you have something that’s working, the last thing you want to do is take a risk trying things that might not work. So, with us, we’re focused on these incredible results we’re getting for our brands and doing better for them. Nothing else. Just this new marketing channel — the first new channel since search and social, as our brands refer to it.

Q: Do you ever worry about interlopers coming in and stealing market share after PebblePost has done all the groundwork with Programmatic Direct Mail®?

A: We’ve already seen a handful of copycats. But they’re just doing enhanced direct mail, not truly programmatic. Huge difference. That’s maybe 10% of what we do — and 1% of where we’re going. We’re excited that we’ve got our full patents as well as our trademarks going international. We’re continuing the trajectory of thought leadership as the innovators who created this channel and will remain the dominant leader in the category of digitally reactive mail.

Q: So, it’s just a case of imitation being the sincerest form of flattery?

A: I can’t even call it that because they really aren’t imitating us. They just don’t get it. They look at us and think, “Wow, postcard retargeting for cart abandonment.” I remember the first time I told Rob [Rob Victor, CTO] that in a meeting, he was like, “Who said that?” Like he was literally ready to go out there and set them straight. [Laughs.] Because for somebody to make such a simplistic reduction of the giant vision that we had — it really was kind of insulting, to be honest.

Q: How long did it take you to realize that Programmatic Direct Mail® was a hit?

A: We were all-in on this concept from day one. Early on I set up BHAGs — I’ll be nice and say that stands for Big Hairy Audacious Goals. As Rob and I painted the vision at my kitchen table of the market development and product development roadmap, it was jaw-dropping to realize that this could get to more revenue potential than AdWords. But, of course, you still have to get out there in the marketplace and test performance. Now, I’m not going to say what our actual projections were or how we arrived at them. But I will say this: When Rob pulled the data after four to six weeks of launch, he said, “Hold on — this can’t be right.” But when he went through it again and the numbers came out the same, he looked up with this big smile on his face. And that’s when we just knew.

Q: Do you remember your first client?

A: Absolutely — Bombas socks. This is a great opportunity to give them a well-deserved shout-out. It’s one thing for us to believe in our vision; it’s another for a customer to do it, and Bombas did. David Heath is the founder and CEO. As an aside, it’s a cool company. For every pair of socks that they sell, they give away a pair of socks to the homeless — which is the number one requested item among those in need. And now we have signed dozens of the largest enterprise retail brands in the country and the world. It’s very humbling!

Q: Beyond providing the funding to take PebblePost to the next level, how important is the B round as a simple vote of confidence from your investors?

A: That’s huge. When I was growing up, my dad had a PR firm, and I remember him saying one time about a particular project, “I feel like everything in my career came together for this venture.” I feel the same way about PebblePost. It’s as if everything in my career, starting way back when my dad used to take me along with him when I was a little kid and I’d sit in meetings — he took me out of school to go on business trips to California — all led up to this moment. I can’t imagine a better place to be right now to build this venture with our team and brands.