GE 188: How Twenty20 Burned $10M and Still Emerged as a Successful Company (podcast)

Hey everyone, in today’s episode I share the mic with Matt Munson, founder and CEO of Twenty20, a company that provides a photography marketplace for some of the best-looking authentic stock photos and royalty-free images anywhere.

Listen as Matt shares how Twenty20 burned through $10M by trying to scale too quickly and the lessons he learned (including talking about his “failures”), how they built a massive photo catalog of 50M+ images from 300K photographers that Google, Apple & Pinterest use (without advertising for a single photographer!), and how Twenty20 got 1,000 subscribers, 170K in MRR and 10x growth in 1 year.

Download podcast transcript [PDF] here: How Twenty20 Burned $10M and Still Emerged as a Successful Company TRANSCRIPT

Time-Stamped Show Notes:

• 00:54 – Eric introduces Matt Munson
• 01:16 – Matt is one of the co-founders of Twenty20
• 01:46 – Twenty20 sources their photos from a global community of about 300K photographers
  • 02:11 – Twenty20 wasn’t the original business model
  • 02:45 – They started with InstaCanvas before they moved to digital licensing
  • 03:08 – They have built a massive photo catalog with more than 50M images
  • 03:47 – Early market testing allowed them to license their content
  • 04:20 – Twenty20 never advertised for a single photographer — all acquisition was done through viral sharing
  • 05:05 – They were able to bring on some dominant mobile photographers and build a community of influential people
• 05:38 – Photographers get revenue share per photo sold
• 05:53 – Big companies are willing to pay more for photos with nontraditional content
• 06:09 – Time savings for companies allow Twenty20 to charge a premium
• 06:59 – Twenty20 is subscription based with 1,000 subscribers
• 07:29 – Revenue is about $170K MRR which was 10x more than last year
  • 07:45 – “It’s been a crazy year from a growth perspective”
  • 07:49 – The company is 4 years old and has been in the digital licensing market for just 2 years
• 08:57 – Paid advertising, Facebook, Google, Twitter Ads, and SEO have helped Twenty20 in terms of customer acquisition
  • 09:33 – Matt says they already found their company’s voice for content marketing
  • 10:01 – Twenty20 started producing more content around the real human experience
  • 10:23 – Cold emails are also working for them
    • 11:16 – The challenge in sending emails is the list
    • 11:37 – Twenty20’s team did something creative to cleanse out bad emails from the good ones which resulted in them being able to send direct cold emails
    • 12:06 – The type of content used is also a factor
  • 12:30 – Once they get leads, they do inside sales and leverage marketing
  • 12:59 – They have started testing a self service approach in August 2016, and are currently now on that platform
  • 13:19 – A decent amount of conversion comes from first-time visitors from paid and organic channels
  • 13:30 – Email efforts are also being used to provide education and support to convert leads who’ve shown interest
• 14:15 – Matt’s blog post: How I Burned 10 Million Dollars So You Don’t Have To
  • 14:36 – Matt describes Twenty20 2.5 years ago – 8 people in the team, on seed stage, just built a photographer community with a large image catalog
  • 14:46 – They have a handful of customers and they were running out of money so they raised venture capital to start their digital licensing business; they raised $8M
  • 17:06 – They started to market in February 2014 while figuring out who their customers were
  • 17:23 – They used matching advertising with the inside sales team
  • 18:33 – The started to burn more capital when they scaled up the team
  • 18:47 – Matt’s blog post came from the internal pressure he was feeling as CEO
  • 19:32 – By the end of the year, the sales team had grown from 4 to 20 people
  • 19:56 – In 2016, they’ve been growing about 20-30% monthly on the revenue perspective
  • 20:23 – The sales team became 3-4x more profitable
  • 20:46 – In January, they attempted to raise more capital
  • 21:09 – What they didn’t see coming—the financial markets fell apart in Q1 of 2016 and their entire sales engine fell apart
  • 21:46 – They went from $180K to $40K
  • 22:04 – They shifted the plan from raising money to making the company profitable again
• 23:09 – One factor from their sales engine fall is they made two mistakes:
  • 23:36 – They took the risk of going with just 1 primary acquisition channel
  • 24:24 – Second, they deeply under invested in sales leadership
• 25:09 – Significant gaps were present when they promoted their top deal closer as director
• 25:31 – Twenty20 is open about the mistakes they’ve made
• 25:56 – Matt says they could have slowed down earlier, but didn’t—which ended up being the biggest mistake
  • 26:38 – In June-July, they still hadn’t had the company turn around
  • 27:03 – They were at risk of losing the whole business
• 28:41 – Micah’s blogpost for Twenty20
• 29:13 – The last 6 months has been a huge learning experience for Matt and his team
• 29:59 – “The real risks in a business are not the ones that most people talk about”
• 31:28 – Twenty20 became team and culture centered
• 31:47 – They already thinking about how to build a scalable engine
• 32:23 – They are now a team of 10 people serving a thousand amazing customers
• 32:38 – They are doing $200K revenue per head today
• 34:03 – Matt believes they have internalized all the lessons from the struggle they faced as a business and as a team
• 35:02 – What’s one must-read book you recommend? Shoe Dog and Sapiens
• 36:16 – Connect with Matt on Twitter

3 Key Points:

1. Your plans will not always take you to where you thought you’d be—sometimes, they take you somewhere better.
2. Don’t put all your eggs in one basket—entrepreneurs should calculate their risk taking.
3. Prevention will always be better than the cure, start acknowledging those gaps when you see them.

Resources From This Interview:

• Twenty20
• Matt’s blog post: How I Burned 10 Million Dollars So You Don’t Have To
• Must-read books:
  • Shoe Dog: A Memoir by the Creator of Nike by Phil Knight
  • Sapiens: A Brief History of Humankind by Yuval Noah Harari
• Micah’s blog post: Hindsight is Twenty20
• Twitter @mattmuns

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 Connect With Eric Siu:

• Growth Everywhere
• Single Grain
• Twitter @ericosiu