Madwire

JB Kellogg founded Madwire in 2009 with a clear mission: help small businesses grow and strengthen their local communities. At 20 years old, he already understood the business model would work, but it would take him until age 27-28 to truly commit to executing it. "I wish I knew when I was 20 was just to act faster," he reflects, noting that eight years of hesitation cost him significant market share capture during the critical early years.

Madwire built Marketing 360, an all-in-one platform designed specifically for small businesses with 1-100 employees. Unlike competitors like HubSpot that target slightly larger enterprises, Madwire created a more comprehensive solution tailored to SMB needs. The platform includes CRM, payments, invoicing, recurring billing, e-commerce, email marketing, social marketing, and multi-channel advertising all in one login. Critically, Madwire differentiated itself by building an in-house talent component—customers could outsource their marketing through dedicated Madwire team members, not third-party partners. On the backend, technology automated much of the work, but customers perceived it as premium services.

Madwire employed a direct sales model with a 200-person sales team split between acquisition (100 reps) and retention/upsell (100 reps). The unit economics proved compelling: they spent $3,000-$4,000 to acquire a customer paying $10,000 annually ($500/month ARPU), resulting in a three-month payback period. By September 2018, the company had reached 10,000 customers and $105M ARR. The business model was built to withstand high churn, particularly in the first 12 months, accepting that 50% of new customers would leave in the first year due to general small business failure rates (80% of small businesses go out of business).

The breakthrough came from understanding that retention wasn't about keeping every customer—it was about growing the ones that succeeded. Madwire mastered expansion revenue: customers staying beyond 12 months experienced expansion that exceeded gross churn, achieving net revenue retention above 100% at the cohort level. When they relaunched Marketing 360 eight months before this interview, they introduced "Smart Start," which automated onboarding with a single click based on vertical, instantly customizing the platform and building marketing journeys. This automation transformed profitability, moving from 1% EBITDA to 15-20% targets.

COVID-19 initially impacted highly-dependent verticals like fitness and restaurants, but Madwire's diversified customer base (35% in e-commerce) meant certain segments thrived. They strategically reactivated paused accounts and continued growing.

By the time of this interview, Madwire had doubled its customer base from 10,000 to 20,000 while growing ARR from $100M to $120M. The company employed 500 people (60 engineers, 200 sales, 100 back-office/support) and maintained a support ratio of 50 accounts per support person—better than HubSpot and Sprout Social. They introduced payments processing (reaching $1B annually across legacy accounts, with new payments showing 65% adoption at ~$1,000 average ticket size at just 2.9% fees), creating additional revenue streams and improved churn dynamics through increased stickiness.

Madwire raised only $7.5M total and remained profitable, targeting $150M ARR within 12 months and exploring a traditional IPO within 12-18 months. JB attributes the acceleration to finally putting the gas pedal down on a model he knew would work from the beginning.