Jasper: The AI startup that became a unicorn in 18 months

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Hi 👋, this is the Today in AI Newsletter: The weekly newsletter bringing you one step closer to building your own startup.

We analyze a cool, industry-shaping AI startup every week, with a full breakdown of what they do, how they make money, how much they’ve raised, and the opportunity ahead. 

Let’s get to the good stuff in this email: 

• This AI startup became a unicorn in 18 months

• They’re revolutionizing marketing and copy doing it much faster with AI

• They’re projected to make $88M in revenue this year.

So what’s the startup and who’s the founder behind it? Here’s the story of Jasper and Dave Rogenmoser 📈

Content creation and copywriting have to be some of the most time-consuming parts of marketing.

🤔 Did you know that the average blog post takes 3 hours and 51 minutes to write?

This is what Jasper AI is trying to solve. Jasper was founded in January 2021 by Dave Rogenmoser, Chris Hull and JP Morgan with the vision to help people market better with AI.🤖 

Jasper is a software tool that helps marketing teams write high-quality content that’s on-brand, and in their tone of voice using AI.

This makes the marketing process much faster and more efficient. 💨

They use OpenAI models such as GPT- 4 for the back-end and just built a front-end to tailor the marketing tool for every user.

Backstory 👀

Before Jasper, Dave was working at the University of Missouri and thought he needed to go learn how to start a business.

He didn’t want to go and get a regular job. He’d been reading books on what that looked like since no one he really knew growing up had been a founder.

This was in Topeka, Arkansas, pretty much a desert town.🌵

One day, Dave went to a wedding and sat down next to an old friend of his, Chris, who he’d only known very loosely. 

They were catching up when Chris revealed that he was starting a software company. 

He said that he’d been taking this course that teaches you how to start one with no idea, no money and zero coding knowledge.

🎶This was music to Dave’s ears. It was the perfect opportunity to get started on his entrepreneurial journey, so he enrolled in the same course.

The course had you think of an idea through some training and had you hire someone on upwork to build it for you.

Eventually, Chris and another friend, JP, worked on one company while Dave started working on another.

The 3 agreed that when anyone started making money, they’d all team up and work relentlessly on that one thing. 💸

Dave had started an agency that teaches anyone to start a marketing agency with no money, no idea and no understanding of marketing.

The idea seemed to start working so he convinced Chris and JP to join him.

With the agency, the 3 founders didn’t really have any grand plans but didn’t want to end up getting jobs and just wanted to enjoy the process. 🤷 

Revenue slowly started to come in, but they weren’t making a profit.

Customers were happy but the marketing campaigns they built would cost more than what they charged 🤥. This is when they found out revenue and profit were completely different.

They learned a ton about marketing, so ended up turning the agency into a course/program to start a similar business.

Dave was good at the sales part of the agency work but sucked at delivering it.

This is when he started another course on how to land clients and scale out of the consulting business.

They started selling $30k-$50k/year packages on how to scale businesses with good marketing and copy, and even sold a $19/month membership to a Facebook group for entrepreneurs.

They then thought of making a more productized version of this and started “Proof” in 2017.

Proof is a software tool that increases conversions through social proof by displaying recent customer activity on a company's website eg. a popup showing the number of people that purchased a product in the last 24 hours. 🕰️ 

The startup got them into the Y Combinator in 2017 from which they raised a $2.2M seed round and got to $220k in MRR at its peak.💸

Despite making money, Proof was never really in touch with what users really wanted and never found product-market fit.

The founders spun down Proof in October 2020 and went back to their old roots.

Finding Product-Market Fit 🪄

Dave had now started yet another coaching business, this time teaching people how to do Facebook ads for B2B SaaS companies.

As part of the coaching, Dave taught people how to do copy but people weren’t able to follow along well. 

📉 Bad copy = bad conversions = coaching business wouldn’t work.

Instead of doing the copywork for them, Dave had seen GPT-3 and thought maybe AI could handle this for them.🦾

He got early access to GPT-3 through connections at Y Combinator and made a really simple front-end to the API.

Dave told JP about the idea and asked if he could build an MVP. JP built it over a month and Dave started showing it to potential customers from the coaching program over zoom calls.

They thought it was magic.🦄

Customers from the coaching business were ravenous over the zoom calls and until then, Dave had never had reactions like this before.

This time felt different. They felt like they had product-market-fit.

Timeline and Stats 📊 

The second week after showing these customers, they decided to open it up to the public with a super simple signup flow to see what happens.

📈 On week 3, it started taking off and people were loving it. By the end of the first month they hit $20K in MRR.

They finally had something. Dave and the rest of the team decided to leave everything and go all in on this.

It was initially called conversion.ai and they started spending $20-50K on ads monthly that were extremely profitable.💵

💸 They did that for the first 6 months before hiring this guy who took their spend from $50k/month to $1M/month in 30 days (and did it profitably)…

This along with viral marketing and word of mouth helped Jasper break through their limiting beliefs of scaling.

By the end of the first year they reached $35M in ARR with a team of only 9 people and 2 customer support agents serving 40K customers.

💰This is when they raised a historical $125M Series A at a $1.5B valuation from investors like Insight Partners, Hubspot Ventures, and Bessemer Venture Partners.

Jasper then did $80M in ARR in 2022 despite a forecast of $140M with a team of 25 people.

🚀 They peaked in 2023, hitting an estimated $90M in ARR with over 200 employees and 72 sales representatives.

Since then Jasper hasn’t grown much with projected revenue in 2024 of $88M with 140+ employees and over 100K active users.

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