Scubana

Chad Rubin started out running Crucial Vacuum, a direct-to-consumer e-commerce business that he grew from a family vacuum company into a brand valued at around $20 million. At its peak he was handling about 60,000 orders a month across 17 marketplaces. The operational pain was constant. As he put it, nobody had built a robust all-in-one system for this new way of selling, and most available tools ran on legacy, old-school infrastructure. He made a lot of mistakes and lost a lot of money before deciding to build the system himself.

Rubin partnered with an enterprise developer to build an all-in-one ERP system that automates e-commerce operations. The company started as a usage-based product, beginning at $9 a month plus a fee on order transactions, before moving to fixed minimums of $250, then $500, then $999 as it shifted upmarket. Rubin said the early $99 customers consumed a disproportionate share of the team's time. When the company raised prices, many of those small customers churned, which he described as a deliberate trade-off. Scubana was built for growing sellers, not beginners.

Funding came first from friends and early contacts. Rubin said he emailed about 10 people in e-commerce he respected, and one responded. The company raised $880,000 in its first seed round, and Rubin put in another million of his own. The round included an institutional investor and a former early Amazon executive.

Rubin said most of the company's growth came from new customers finding Scubana, not from outbound sales. He credited a combination of unhappy sellers searching for better infrastructure, his book (which reached number seven in business and money), speaking engagements, NPR coverage, and a steady stream of guest blogging and podcasts. The company also used webinars. A recent webinar drew about 570 registrations and roughly 35 to 40 percent attendance, with only a few attendees typically converting. The app store and partner integrations, including QuickBooks through WebGility, were a secondary channel.

The strongest signal in the interview was retention. Rubin said the company had lost only one customer paying over $1,000 a month in its history, and that churn was effectively zero or net negative because of upsells. The company also moved from about $50,000 in MRR at the end of 2015 to roughly $300,000 in MRR. Rubin spent heavily on content and kept paid acquisition at zero, with content costs marginal, around $2,000 a month. The main drawback was the long build: about three and a half years before a meaningful revenue base. Rubin also acknowledged that the business is 'unsexy,' and that many investors passed on it, which made raising a further round about $1 million difficult.

As of the interview, Scubana served roughly 300 customers at an average revenue per account above $1,000, producing about $300,000 in MRR. The team was about 12 to 18 people split between New York City and New Jersey, with seven developers, two account managers, and operations and sales staff. Rubin said he was looking for the right investors and was open to a raise of around $1 million.