In anticipation of Techonomy Detroit 2013 on September 17, we are profiling tech startups helping drive Detroit’s re-emergence as a center of innovation.
How do companies leverage the communities they build among users, and reward consumers for becoming unofficial ambassadors for their products and services? Detroit native Jeff Epstein asked this question in 2008, just as social media was coming into its own as an empowering platform for consumers. Epstein established Ambassador as a way for companies to give their biggest online evangelists a piece of the action. We spoke with him about harnessing word-of-mouth for a digital marketplace, and on Detroit as startup mecca.
How does Ambassador work?
Ambassador helps track and manage referrals. We work with about 500 companies globally, allowing them to turn their own users and partners into ambassadors. We do this by creating trackable URLs that ambassadors can disseminate through social networks or blogs. They get rewarded or commissioned for driving new customers or leads. We just rolled out a program with T-Mobile; their refer-a-friend program is run through our platform.
How did you come up with the idea?
I went to law school in Chicago, but realized after about a year that I definitely did not want to practice law. So I was trying to find ways to make money, to get out from underneath some significant student loans, and ended up starting an affiliate marketing company that luckily did quite well. I was able to sell the company right when I was graduating law school and decided to come back to the Detroit area and take what I learned and start a company. What I wanted to do was productize the ability for people to refer their friends and promote products and services for a commission or some sort of reward.
This was around 2008, and social media wasn’t fully mainstream yet. I didn’t know if my tastes were relevant when I was searching on Google. But when I ask my Twitter feed, I know who I’m talking to. Or if I ask my friends on Facebook, I trust what they’re recommending more than some algorithm. With Ambassador, we wanted to give companies a way to give their biggest advocates a substantive role. Traditional word of mouth is timeless as a way to get more customers. We’re trying to bring that tradition online.
What makes Ambassador different from other platforms like Groupon, Yelp, and Foursquare?
There are dozens of channels to acquire customers. The reason word of mouth is particularly compelling is that you’re getting recommendations from people who know you and inherently trust, so you’re not getting it from some email list of deals that’s the same as what I and my neighbor are getting. It’s not from a blind banner ad, which doesn’t know who you are. Ambassador is certainly not the only way to acquire customers. We fit within the marketing stack as another way for companies to grow.
What kind of challenges did you face launching it?
Starting a company is a roller coaster; there’s a challenge every day and a victory every day. We were part of TechStars New York, so we had this amazing network and we were able to get embraced by a thriving tech community in New York, which was amazing. Coming back to the Detroit area, the challenge is that we’re still a couple years behind New York, and many years behind what they’ve been doing in the West for so long. The mindset of people here, whether they’re new graduates or ambassadors, is still a little bit behind what we would hope for. But day to day, the challenges for me are just executing on the vision and building a company and a place where people want to be.
We’re still in the first inning. We’ve gone from three people early last year to nine. Most likely it’ll be 12 by the end of the year, and hopefully double again next year. From a revenue perspective we’ll double revenue again next year pretty easily. From a product perspective, we’re doing a lot of new things. We’re really focused on providing value in the marketing stack, helping companies manage ROI, using social to drive new customers and new revenue, and understanding the analytics behind that. The next few years are looking awesome and we’re excited to be a part of the scene around town.
What are the advantages of starting in Detroit?
There are a ton of advantages. We strategically decided to come to Detroit, where we’re a bigger fish in a smaller pond. The cost of living is lower, we can be a little scrappier, we can use our resources a little better, and we can last longer. In the end, my primary responsibility is to make sure that we don’t run out of money. That’s certainly easier being in Detroit.
Is there a sense of community among the area’s tech startups?
It’s sort of a grassroots movement. There are a couple institutional funds, with more popping up. We’re starting to see some new angel investors and smaller funds. It’s great to have a couple big names involved, but the real community grows as companies start succeeding, and then from those companies come angel investors, and new startups arise from them. A couple of companies are doing really well. The executive teams are starting to leave and they’re going to fund a new generation. So that’s the ecosystem I am most excited about and hope to be a part of, once we do well enough that I can participate from an investment perspective.
After the news about the bankruptcy, what do you think Detroit can do to turn itself around?
The bankruptcy was sort of the figurative bottom. I think Detroit is already on the upswing. It’s pretty clear to people who live here—even the fact that Techonomy was here last year. In my generation, nobody stayed in the metro Detroit area. The people who were seen as successful moved to San Francisco, Chicago, New York. Today, college kids are choosing to stay and are now moving downtown, which was completely unheard of 10 years ago.
I think the key for long-term growth is whether or not it can become a place for families to live. Now it’s a cool place for young professionals and single people. The things that are going to take longer are schools and safety and some other ancillary services. But I’m really bullish on Detroit, and I have been for a long time. The news and national spotlight is somewhat behind the times in terms of what’s actually happening.