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In the modern world, everyone appreciates rare moments of elevated emotion, which can be enhanced with thoughtful gifts from loved ones. And what if the mission of making thoughtful gifting easier to produce, turns into a successful business surpassing $1M ARR?

Our guest today is Andrew Horn, Founder, and CEO of Tribute, making it easy for people to create meaningful group video montage gifts with baked-in-virality features, surpassing the $1M ARR run rate. Andrew is an inspiring Product Income Maker, we all have something to learn from.

Who is Andrew Horn and what is Tribute solving?

The quick way to explain Tribute is to tell a simple founding story which is on my 27th birthday, my wife, who was my girlfriend at the time, decided that she was gonna get me a very special gift, so she reached out to 20 of my closest friends and family members, asked each of them to submit a one minute video telling me why they love me.

She collected all those videos and put them in one montage. When I got home that night, she surprised me with the video. I sat in the back of the room watching my best friend, my mother, my father, and anyone I could think of sharing these videos, telling me why they loved me and how it impacted their lives. And I was in the back of the room, bawling my eyes out cause it was the best gift I’d ever received.

After the video was done, I went up to my girlfriend. I said, how did you do this? And she looked back at me without blinking an eye and said, “Well, it’s sucked; it took me 15 hours to do. I had to chase these people down, collect videos and send over hundreds of emails”. And at that moment, I realized. Well, this is the best gift I’ve ever received, and it’s really challenging to create these.

And so I went into the other room. Within a couple of minutes, I had the name Tribute, and the mission began, which is I just wanted to make it easy for people to create these group video montages that you can give as gifts on any occasion. And what started as a simple movement to spread gratitude and human connection has grown into this global movement with over 5 million users.

And as we just mentioned, well over $1M ARR run rate. And then we’ve got Inc. 500 inclusion this past year. So the future is bright, and we’re very excited to be where we’re at.

How did you validate the customer’s willingness to pay?

Well, I think it was our first user test, right? There are very few gifts that make you cry tears of joy, and so if I had that experience, I think it was a pretty safe assumption that other people who received these video montages would have a similar experience.

I had seen other people creating these types of group video montages. There was just no streamlined way to do it. So we started doing this without building a technology platform. We’d manually cut them together for people; we’d charge hundreds of dollars. People wanted it. So, every step of the way, I was our first user test.

Then we were doing it just hacking together a non-technical system. People wanted to pay for it, so we had a pretty solid assumption that people would want to pay for this as a product by the time we started investing real money into building the platform.

Can you share the product premise of video montage gifting as a B2B offering?

I think when you look at companies, one of the number one reasons that employees leave their organizations is because they don’t feel appreciated. Employee recognition is a billion-dollar-plus industry every single year. So giving people rewards, gifts, and appreciation that help them to feel valued at their place of work is a massive industry.

We’ve created a tool that does that exceptionally well on major occasions. So we’ve got partnerships with everyone from Shopify to Zappos, to doing custom integrations to people like 1-800-FLOWERS, to make it easier for them to share gratitude with their employees internally.

And then also for someone like 1-800-FLOWERS, how do we add a Tribute to a flower purchase to make it easier for their customers to integrate digital greetings along with their flower purchases?

So we’re doing all sorts of B2B stuff, and it’s a big growth channel for us right now.

What Enabled Growth at the Beginning, Baked-In Virality or Some Killer Feature?

It was definitely the product baked-in virality. One of the great things about Tribute is the average user who creates one of our videos invites about 20 people to join them. And so you think about that for every customer that we acquire, we’re getting 20 new users out of that.

So much of our growth was focused on how we create a viral product loop where those people who are using the platform just submit a video and then want to start their own tribute.

Is it fair to say that COVID-19 increased business because of social distancing?

Yes, we went from several hundred thousand dollars a year business to a several million dollar year business in the span of a year. So COVID-19, the lockdowns, and people not being able to go to parties in person had a massive impact on our business and our trajectory. We were very grateful that we were able to stick it out long enough to get to that place and really take advantage of the opportunity.

Can you share some product metrics, such as CAC and Average Order Value?

So our average order value is right around $60 right now, and our LTV is right around $80 based on current usage. And, CAC blended across platforms we’re working on right now is around $30. So we’re doing really good, primarily on paid search.

And the viral coefficient that we’re looking at right now is about 0.7, meaning for every customer that we are acquiring, we are getting about 0.7% of a new customer. So there’s that virality that’s baked right into it. It’s not a certifiably viral product where it has that exponential curve, but it is a significant and primary driver of new users on our website.

Do you think baked-in virality can go higher than 1%, or will you have to pay for new customers?

Yeah, we definitely feel that we can get that viral coefficient above one. We’re launching a new product right now, which is a one-to-one video greeting service. So right now, Tribute is many to one service. We’re opening up what we’re thinking of as a hallmark for the digital age, making it easy for our users to send one-to-one video greetings.

And so, with that, we’re making it much easier for our users to convert. And so we’re very confident that we’re gonna be able to get that number up, to make it easier to get people into the top of the funnel, and that’s been a big project we’ve been working on for over a year, and something that we’re very excited about.

Why do you believe that the one-to-one product will yield a higher viral coefficient?

Because when people opt into the one-to-one product, it’s something that fundamentally turns them from a user into a customer. When someone becomes a customer, our ability to reengage them and remarket them, to upsell them to other products down the line, also increases. So essentially, what this does is it will sustain the current viral coefficient of 0.7 but also provide a lighter option and product for people who are not ready to convert to the group tribute, an opportunity to engage and become a customer where we can then remarket them and bring them into other products under the umbrella.

You’re basically returning the cost of customer acquisition within a couple of months?

That’s right, and there’s just a limit to how much we can spend there effectively on paid search, our primary channel. So that’s the reason why you’d expect a growth company like ours to see perhaps larger spending there, but we just found that there’s a limit to how much we can spend effectively, and so our numbers have been marked there for quite a while. But yep, that’s where we’re at.

What are other growth opportunities Tribute is experimenting with to scale faster?

So I mean, our efforts across like blogging and SEO and content creation right now are also pretty reliably showing growth. It’s a longer-tail, ROI activity. Our content creation efforts across blogs and SEO are definitely paying dividends in the long term. And then outside of that, like what we found is that it’s just really important for us to focus on what’s most important and that the product is continuing to fine-tune those viral loops.

Fine-tuning our ability to increase average order value through new product innovation and offerings in the product. Just looking at all of our re-engagement kind of flows to get both users, customers, and recipients back into the funnel as customers.

Can you share some challenges you faced?

The biggest one was being involved in a company that my co-founder and I loved very much and seeing that company was having a hard time scaling. It’s we had a foundational baseline of revenue; we’d always been making money.

But, as we continued to go into years three and four and the company revenue was flat and not really growing, we had a very hard decision to make, which was do we keep going with this thing or do we sunset it because it’s not looking like it’s gonna be able to pay us the type of money that we need to sustain families in New York City.

How did you overcome those challenges?

We decided is that we love this thing. We still think that there’s a lot of potential, and there are products to be built. And so we kept going with it during these challenging years as a side hustle. Both my co-founder and I got jobs for two years on the side, him at Google and me as an executive coach.

And in that time, what ended up happening is we made the product fundamentally a lot better. And then, when COVID came around, we were ready for it, and we were able to take advantage of that opportunity. But what I’d say is one of the biggest challenges has really been on the paid acquisition user growth front.

It’s like there was a long time when a video was not as prevalent or popular as it is now. So offering a video gifting service was a pretty novel and unique thing. And so what happened overall that time where we just persisted slowly, but surely kept it alive. The skeleton team, support agents, and engineers in that are allowed us to take advantage of the opportunity when the time right.

Is it fair to say that over time, more competitors entered the space, and customer acquisition costs became more expensive?

Absolutely, I think that what we’ve seen is that Tribute didn’t just launch a company. We launched a whole industry. When you look at it now, there are approximately four or five competitors in the space, and so personally, I think that they are growing the industry of group video montages as a service that ends up serving us all.

I love the idea of competition, and I’ve been an athlete my whole life. And so the idea that there are more people in space forces us to be better at what we do.

And we welcome the challenge and the growth of the sector, and it’s constantly refining and asking us to define what we do best. What do we do differently? How can we really harp on those things from a product marketing perspective so that our users and potential new users are really clear about why they want to use us over any of our competitors?

How is Tribute different and maintaining its competitive advantage going forward?

Customer support number one, we are the best service to work with. If you don’t really want to do this yourself, but if you want someone who’s gonna hold your hands through the entire process and be there to answer every question and help you pick out videos and do everything. We are far and away the best in the business of doing that.

And so our white glove service really does differentiate us. On top of that, we’re also the only group video service that allows you to add gifts with your videos so that the recipient cannot only get 20 videos from your community but they can also receive gift cards from all your favorite retailers and shops. And then, more and more, it’s just product experience and reliability.

That just makes sure that this is a seamless experience that’s easy and that anyone can do, and that grandma has no issues uploading their video too.

So those three things are the pillars of differentiation.

Can you share your recommendations for books, tools, podcasts, and blogs?

Yeah, I’d say that the book that most comes to mind for me is Atomic Habits, which I think is for anyone who wants to create better habits, behaviors, and rituals. So James Clear wrote an incredible book, which I think is like the quintessential book on behavior change that’s been written in our generation.

And so whether you’re a leader, whether you are a designer, developer, anybody. So much of our productivity comes down to the rituals and things we do consistently, and he’s created and synthesized just a beautiful framework to help people to make better decisions about where they allocate their time.

And so that’s an amazing one. Tony Hsieh’s Delivering Happiness was so fundamental for my understanding of how to build a customer and employee-centric business. And that was a really, really big one for me, as well. And then most of the podcasts that I listen to are actually like an escape from work.

I work a lot. And so the podcast that I really most enjoy listening to is the Lex Friedman podcast, who’s really talking more about science and philosophy, and arts and engineering. Sam Harris who’s talking a lot about philosophy and cultural and social issues at like macro scale to understand the nature of our reality.

Those are the types of people that I enjoy listening to and fill me up, and I find that learning about those is just kind of like bigger explorations of how the world works. Just also fundamentally improves my cognitive abilities as a leader. And so it’s helpful to do something that’s fun, that does have a transitive kind of impact on me.

Which tools do you like to build the business with?

Our business doesn’t work without Zapier, so if you can find someone who’s a Zapier Wizard to basically help you understand how to automate all of your workflows, we are just so much more efficient because of that. Personally, I’d say that we used Asana for many years; we switched to ClickUp as our internal project management platform, and like that, as a task manager and project management software, it has cut our expenses in about half, and they do a really amazing job.

I think employee recognition is fundamental for any sort of good employee culture. And so we use a service called Bonusly, which makes it easy to do at the moment, recognition every single week, every day, every month. And we love working with them.

They’re a great partner of ours. I would say Tribute is also a cool one to set up different rituals for your company on birthdays, weddings, and baby showers. Any important moment where your employee deserves to be celebrated. So those are a couple that has been really helpful for us.

What leads, sales, hiring, and funding opportunities are you looking for?

I would say that right now, the biggest need for us is very much like leads like we’re super packed in on the product front. We have a clear roadmap. We have great people involved. One of the things that we’re really trying to grow is our B2B and partnership side of the business.

So, whether they are organizations that can attribute to their actual product marketplace, that’s a huge opportunity for us as well, as we do a lot of work with higher education is a huge contingent of our partnership business. And so I would say leads in higher education are huge, kind of consumer-facing businesses that have meaningful products or could benefit from this type of service.

Those types of affiliates have been really huge for us as well. So those are probably two of the ways to support the business right now.

What about affiliate programs to fuel growth and generate leads for you?

We’ve always had a very generous affiliate program. For us, our affiliate program has always been more of a user acquisition tool than a revenue generation tool.

And so what we say is, “Hey, if we can partner with companies that are brand aligned, get our product in front of them.” And it’s worth it for us to make this a real win for our affiliate partners.

So we’ve had our affiliate program dialed in for about six years, and over the last two years, we’ve seen the most growth, and it’s been something that we’ve always been pretty committed to.

What do affiliates get if they are listening to the show?

They get more money, and they get a better customer experience for their customers. So basically, our baseline for new affiliate partners is 25% of revenue. And so right there, you’re like above market. And depending on what they’re doing with our product, we can go higher than that.

So you have a high affiliate percentage. On top of that, we create custom materials to really fine-tune the user flow and make sure their customers understand exactly what it is that they’re getting with Tribute and how it makes sense in their kind of like product landscape. That’s a big part of it.

Is it 25% for life or the first year?

It depends on how successful they are as an affiliate, but that’s where we lock them in for the first year, and then we have a conversation based on their performance to year one.

What about acquisitions would you consider from a go-to-market perspective to acquiring Influencers who might effectively bring leads?

We’re very open to listing acquisitions. We’ve done some of that in the past, but it hasn’t been a major strategy, but we’re open to anything. I wouldn’t say that it’s a priority for us, but something that we’re open to.

What kind of mindset would you recommend other entrepreneurs to practice on their Product Income Making journey?

I would say it’s just a matter of prioritization and what’s most important. It’s like every day before you wake up, before you do anything, before you check your phone, let’s just take yourself to your priorities and say, What are the 3 things I can get done today that are most gonna move me forward?

And if you do that every single day and you just take the time to prioritize your energy, which is a finite resource, and really take the time to allocate your energy there, that is simple, but honestly, the most helpful advice I’ve received in 12 years building companies is

“just where you put your attention, energy flows, and so pointing that attention in the right direction when you wake up in the morning, maybe when you go to sleep at night is huge.”

Takeaways of How Tribute Crossed $1M ARR with Viral Loops, Businesses, and Affiliates

Tribute started in 2014 out of your personal experience of receiving an amazing gift experience, which was hard to make for your girlfriend (today’s wife). Sustaining through a rough couple of years, taking jobs, refining the product.

And when the pandemic hit, it really scaled from a few hundred of thousands per year to multimillion-dollar ARR business. Now scaling to enterprises. If you’re looking for business leads, affiliates will get a 25% commission rate. Andrew, you’re an inspiring Product Income Maker. Thanks for joining today.

Looking forward to seeing everybody on Tribute.co, check it out. If you have anything nice to say, say it all. It’s the most meaningful gift on the planet. If you got anyone in your life that you love a whole lot and wanna make their day, check us out.