By Geoff Roberts 5 min read
With some vacation time now in our rearview we’re heading towards the home stretch of 2018, making it the perfect time to fill you in on what we’ve been up to at Outseta since our July company update. Here’s the latest and what’s to come.
We now support Stripe as a payment gateway
When we launched our subscription billing and management functionality, we initially partnered with Forte Payment Systems as our payment gateway. We did this because it allowed us to offer the best possible pricing to our customers, but Forte can only support processing payments in the United States and Canada.
We’ve received quite a bit of interest in Outseta from international customers and companies domestically that sell internationally. As a result, adding Stripe as a payment gateway very quickly became the most requested feature from our users.
We’re happy to say that we now offer Stripe as a payment gateway. While many early stage SaaS companies just think “I’ll use Stripe!” when considering their billing needs, they very quickly realize that they need to build quite a bit of other “scaffolding” around Stripe - subscription management functionality and logic to handle upgrades, downgrades, and cancellations being a few examples. We’ve built this functionality already so our customers don’t need to and we’re eating the $.30 per transaction fee that Stripe charges as well.
You can learn more about our subscription management and billing tools here.
API support for partial CRM record updates
When we rolled out the first version of our REST API, if you wanted to update one of your CRM records the API would resubmit all data on that record. This wasn’t ideal for companies using multi-step onboarding processes or forms, because if a user abandoned the form or onboarding sequence prior to completing it the data that they had entered would not be captured and they would essentially lose out on a (partial) lead. We’ve updated our API to now support partial updates to CRM records to better support these workflows.
Shout out to Callum at TapTapGo for this feedback!
Paid advertising experiments
Our go-to-market strategy to date has consisted primarily of launching on Product Hunt, email prospecting, and content marketing - essentially free tactics focused on building our our audience and stirring up some initial customers. As our product matured, we got to the point where we decided it was worth experimenting with some paid advertising moving into Q3.
The goal of these efforts is to test the waters and see where opportunities to acquire customers with paid advertising may lie, while being very judicious about limiting expenditures. Here’s what we’ve done so far.
Because our product competes in a number of hyper competitive categories, we need to stay away from keywords like CRM, subscription billing, and email marketing. While these keywords are accurate descriptors of what we offer, there’s simply too much competition on these keywords; we’re priced out.
As a result, we’re looking for creative ways to cost effectively tap into search intent from people who would likely be interested in our product. That means we’re primarily targeting keywords that have low search volume and low competition, but still represent highly relevant traffic. A few examples of keywords we’re bidding on…
MicroConf - MicroConf is a conference for self-funded software entrepreneurs; there couldn’t be a group of people that’s a better fit for Outseta. While this audience is not searching for software when they search for MicroConf, we’re using some interesting ad copy to lure them in to a landing page we built specifically to address this audience: https://www.outseta.com/microconf.
Indie.VC - Indie.VC is a venture capital firm that invests in companies that focus on selling their product at a profit from day one. Again, our approach at Outseta likely resonates with this audience and companies that are truly focused on profitability from an early stage are attracted to our pricing model.
Best platform for startups - A long-tail keyword that’s relevant and has low competition.
Because these keywords all have low search volume it’s going to take several months to get a good sense of how effective these campaigns will be; we don’t have any results worth sharing just yet. But we’re getting clicks, quite cost effectively.
Linkedin Direct Sponsored Content
A more aggressive experiment that we ran was throwing $500 at Linkedin advertising. We did this because we know founders of SaaS companies tend to be active on Linkedin and we can easily target the right buyer persona using targeting criteria like…
Industry: Computer Software
Title: CEO, Founder, Co-Founder
Company Size: 1-10
You get the idea. For the $500 budget, these ads generated:
3,018 impressions (the number of times the ad was shown)
80 clicks (landing visitors on our website - $6.25 per click)
3 Outseta accounts created ($166.66 per account)
Ultimately the success of these campaigns will be assessed by revenue created and there’s lots of room for landing page optimization - we sent people who clicked on the ads to our home page this time around. But this experiment gave us some useful benchmarks in terms of how our ads would be responded to, which messages resonated, and how cost effectively we can drive visitors to our website (and create account sign-ups) using Linkedin.
Sales Pitch, Take Two
You may remember from previous updates that we decided to put a page called "Sales Pitch" in the primary navigation on our website. We don't want to come off to prospects as "salesy," and instead want to readily surface any materials that will help them decide if Outseta is right for their business.
Our original sales pitch hit hard on the importance of start-ups saving time evaluating, integrating, and maintaining software tools. But we started hearing from our users that that was only part of the story; they were realizing other benefits as well. As a result, we updated our sales pitch page pretty dramatically to give a more complete picture of the benefits of working with Outseta. The retooled page better represents our pie-in-the-sky vision of the benefits all Outseta customers will realize.
You can check it out here: https://www.outseta.com/sales-pitch/.
We’re hard at work on what the next major feature that will be added to the Outseta platform - it’s one we’re particularly excited about, and the next time you hear from us it should be ready for action. At that stage we’ll transition from building new, primary pieces of functionality to going deeper on each of the core features of our product.
Thanks for following along!
-Dimitris, Dave, Geoff, & James
By Geoff Roberts 5 min read
It’s been a couple of months since our last Outseta Company update, so we figured we’d hit you with one before you’re all lounging by the lake/beach/pool for the 4th of July. Here’s what we’ve been up to since April.
New Navigation UI and Global Search
Since James Lavine joined our team, he’s been focusing on improvements to our user interface. These changes are perhaps most evident in our new navigation, where you’ll see CRM, Marketing, Support, and Billing tools running down the left hand side of the screen. We’ve also added search functionality at the top of the screen, so you can locate People, Accounts, or Deals that much more quickly.
We’ve rolled out a new onboarding process to make it easier for customers to get started off on the right foot. You can see the new onboarding workflow for yourself either by creating a free account and walking through the account setup steps (complete with jokes about canned meats), or by clicking through this InvisionApp prototype.
We also added a “Getting Started” checklist once you complete the initial account setup steps along with some calls-to-action to complete the most common onboarding actions.
Other Quick Hits
A few other noteworthy enhancements; you can now accept Amex payments, merge email lists, and look at drip email campaign performance statistics on both an aggregate and email-by- email basis.
We recently pow-wowed to set goals for Q3 and came away with two primary product priorities that we'll be working on this summer. The first is allowing Outseta customers to process payments through Stripe in addition to Forte Payment Systems, our existing payment gateway. We've had some inbound interest from international customers, and offering Stripe will help us better support them.
The second major product priority is adding live chat functionality, both for use on your website and inside your application. Live chat is commonly used in both the context of sales and support, and adding this feature will help bring us closer to feature parity with the more established players in this space who are increasingly being dragged upmarket. This is one example of additional value we are delivering to our users, without any increase in price; the goal here is make the decision to use Outseta a no-brainer for an early stage subscription business.
What we’ve done so far
After launching our MVP on January 1, we made a deliberate decision to think long term and fight the urge to start pursuing growth aggressively. It was more important for us to start working with a small number of customers to validate what we’ve already built and incorporate their feedback into the product. So far we’re happy to say that customer retention is at 100%, which was our primary goal as a company.
In addition to things like launching on Product Hunt and growing our organic website traffic via content marketing, the vast majority of effort towards landing those early customers has been focused on email prospecting. Some quick stats on this front.
Companies contacted: 329
Companies that engaged with us: 120 (36.5%)
Product demos: 24 (7.3%)
All of this outreach was 100% “cold,” sourcing leads from sites like AngelList, Product Hunt, Betalist, and GetProspect. You can read more about our approach to email prospecting here.
As we move into the second half of the year, we have a much more mature product and are going to look to test some paid acquisition channels - primarily via Facebook and Google Adwords.
Our prospecting efforts have given us a significant and highly targeted list that we can use in Facebook to build a look-a-like audience and expand our reach to new buyers of the same persona.
We’re going to focus our Adword experiments in two areas - one is targeting software buyers specifically at small, self-funded SaaS companies. The other will try to intercept search intent for relevant keywords that have a low search volume, but also low competition. We’ll provide an update of the success of these experiments later this year.
Other Company News
As you may recall from our operating agreement, we've made a deliberate decision to embrace remote work. We think it's a significant competitive advantage both in terms of recruiting and in terms of employee retention. So catch this...
On a normal day, I work in San Diego, CA. James works in Portland, ME. Dimitris and Dave work in Boston, MA. So if I hopped on my sleigh and rode to pick up James in Maine, then we roared down to Boston to pick up Dimitris and Dave, chipped the ice off our windshield and headed to San Diego for an afternoon surf we'd cover about 6,296 miles.
This summer we're stretching that net quite a bit. At various points this summer, Dave will be working from Oahu, Hawaii. Dimitris will be in Athens and Varkiza, Greece. Geoff will be in Sifnos, Greece before joining Dimitris in Varkiza. And James will be in Nairobi, Kenya.
So if Dave jetpacked from Hawaii to Greece to meet Dimitris and Geoff for our weekly team meeting, before shooting down to Nairobi to swoop up James, then we all continued on our way back to Hawaii for some R&R, we'd cover about...
We hope you don't do that - it's summer, it's hot, and we hope you enjoy your 4th of July wherever you are!
-Dimitris, Dave, Geoff, & James
By Geoff Roberts 3 min read
This is the first company update we’ve published in 2018, so let’s start with the big picture; we’ve delivered our minimum viable product, have started charging our users, and are continuing to develop the platform based on user feedback. Here’s a closer look at what’s new.
Our team is growing
We’re excited to announce that James Lavine has joined our team as a designer. James started working with us in January and is already responsible for the brand refresh that you see on our website and in our software. James is now earning sweat equity in Outseta commensurate with his contributions. We feel that with Dimitris and Dave on development, James on design, and myself focused on our go-to-market efforts we have the team we need to get Outseta to the next level. Welcome, James!
Redesigned knowledge base
One example of James’ work is our newly designed knowledge base. The new design features larger, easy to read text as well as an easy means of navigating between categories. The design is also particularly well optimized for mobile devices, making important product documentation available wherever you are.
New Feature! Sales pipeline management
We had initially scoped SaaS metrics and reporting functionality into our minimum viable product, but we decided to punt on this feature temporarily and instead build functionality to help SaaS start-ups manage their sales pipeline. We made this decision primarily because of our own need for sales pipeline management tools; we figured if we needed this functionality prior to reporting capabilities most other early stage SaaS start-ups would as well.
The drag-and-drop interface allows you to set up as many pipelines as you like, while easily adding columns to your pipelines that can be customized to mirror the stages of your customer acquisition process. As deals progress you can move cards through the various stages of your pipeline, making it easy to keep track of where each potential customer is in your customer acquisition funnel.
New Feature! Engagement index
Last but not least, we added a widget to our dashboard to help you measure your customers’ engagement with your software. If you are using Outseta’s subscription management widget for product registration and authentication, you can now easily see the aggregate and unique number of people who have logged into your software each day. By selecting the “Data View” you can see exactly who is signing into your product and when they logged in.
This has been really useful to us from a sales and customer support perspective, as it enables us to proactively reach out to users and offer help when we know they are actively engaged with our product.
At the end of Q1 our team got together in Boston to do a retrospective on Q1 and discuss our goals for Q2. Here's what we'll be focused on.
Improve the customer onboarding experience.
Implement a customer success program for early customers. This includes weekly meetings where we ask for product feedback, then help customers with their businesses however we can. We're looking for 100% customer retention.
Improve sales pipeline management tools; help sales reps spend their time in the right areas with better lead scoring, lead management, and engagement metrics.
Develop a Wordpress plugin to make it easier to capture website form data and send it to Outseta CRM and email lists. Our users often start by syncing newsletter sign-up, beta registration, or “request early access” forms with Outseta.
That's all for now.
-Dave, Dimitris, Geoff, & James
By Geoff Roberts 5 min read
An operating agreement is a key document used by LLC companies to govern internal operations. It basically lays out for the business owners how financial and functional decisions within the business will be made.
This past month Dave, Dimitris, and myself got together in Boston hash out the details of the operating agreement that we’ll use going forward. This post serves to break down the key decisions that we made in layman’s terms, so future employees understand how Outseta will operate moving forward. Our hope is that other start-ups can also benefit from seeing where we ended up, and maybe borrow some ideas as they consider their own operating agreement.
Here are the key details of Outseta’s operating agreement.
Who works at Outseta? How will decisions be made?
There are two different classifications for people working at Outseta - employees and members.
Anyone working at Outseta that is not a contractor is an employee. Well, duh.
All employees that have been with the company for more than 1 year will participate in our profit sharing program.
Members are employees who have an ownership stake in the company and are eligible to vote on the following decisions. A 66% majority is needed for an item voted on by members to be approved.
Dissolving or selling the company
Amending our operating agreement
Issuing more membership units (think of these like stock options)
Removing “managers” (more on this momentarily)
Every 4 years members will vote for “managers” who will serve a 4 year term.
Dave, Dimitris, and myself are Outseta’s existing managers.
All other management decisions (but not those listed above) related to the business will be made by the managers.
If there are 2 managers, decisions need to be unanimous to be approved. If there are 3 managers, there needs to be a majority vote for decisions to be approved.
Delivering financial rewards
When Outseta makes money, we think our employees should make money. Aside from salary there are two other ways to line your pockets when the business does well; profit sharing and membership units.
Profit sharing program
50% of the Outseta’s profits will be distributed to employees who have been with the company for more than 1 year.
The extent to which you participate in the profit sharing program will be based on how many years you’ve worked at Outseta. The longer you work at Outseta, the larger your portion of the profit pie.
Because Outseta is a LLC we offer “membership units” as opposed to traditional stock options or equity grants. This essentially represents an ownership stake in the business - if Outseta is sold, acquired, or in some other way liquidated all members working at Outseta will receive a payout based on the number of membership units that they hold (just as you would with traditional stock options). Initially membership units will be granted at the managers' discretion, but we’ll look to formalize a more scripted means of issuing units to ensure fairness going forward.
If a member leaves the company they do not retain any ownership or equity in the business. Instead, we offer a buy back program where Outseta will buy back membership units from departing members. Members who have left will receive a payout based on the number of membership units they held and how much the company is worth. The valuation of the company will be calculated as two times last year’s revenues. For example, if last year’s revenues were $5mm and a member had membership units that represented a 1% stake in the business, our buy back program would pay them ($10mm X 1%) = $100,000. We will periodically review this formula to make sure it’s fair. The buyback will happen over the course of a few years based on the financial reserves of the business.
In short, we think that the profit sharing program incentivizes all sorts of good behaviors amongst employees - it encourages commitment to the company and financial discipline, while also giving all employees who have been with Outseta for more than a year the opportunity to participate in the financial successes on the business. And if members do wish to leave Outseta to pursue other opportunities, it also allows them cash out their membership units at a fair rate.
Why do we exist? How do we behave?
It’s unusual to see information around durable items like company purpose and values in an operating agreement. We thought it would be useful to include this information in ours because we hope to leverage our operating agreement as an asset that can help prospective hires understand the opportunity at Outseta, how the business will be run, and how decisions will be made.
Why do we exist?
To help small companies simplify the technology choices they have to make to run their businesses
To create a profitable company we are proud of and is enjoyable to work for
How do we behave?
We look to invest in, develop, and fill open roles with employees/members first
We optimize for the best people possible by embracing remote versus co-located work
We value flexibility, but we honor our commitments to each other
We think long term over short term and care more about the journey than the destination
We embrace self management, encouraging autonomy and empowering our people to make decisions openly and transparently without managerial oversight
We earn influence by consistently demonstrating great work and decision making
What do you think? We’d love any and all feedback on the agreement we’ve come up with. You can also view the full version (the actual legal document) of the operating agreement here.
-Dave, Dimitris, and Geoff
By Geoff Roberts 7 min read
You may have noticed that while we’ve kept a steady drumbeat of SaaS related content flowing, it’s been four months since we published our last Outseta company update. Long story short, we’ve been head down working on some of the most challenging aspects of building our product. We didn’t have enough to say that we felt was worthy of your inbox, but we’re back - here’s what we’ve been working on…
For the very first time, our product is publicly available - you can create a free account on our website and check out the product for yourself. Yes, we have some apprehension about this but as Reid Hoffman, the Founder of Linkedin famously said, “If you’re not embarrassed by first version of your product, you’ve launched too late.” The onboarding experience is still pretty rough, but the product functionality is there.
Outseta & Techstars
We’re excited to announce that we’re the newest member of Techstars' Perks Program. Techstars is one of the biggest accelerator programs in the world, currently operating accelerators in over 17 cities worldwide. Techstars has accepted over 1000 companies into its programs to date, with those companies currently having a market cap of over $8.1B.
Any Techstars company can now find Outseta in Techstars Connect, a private resource which portfolio companies are given access to. We're offering a free year of Outseta to any Techstars company that signs up by the end of June 2018.
Subscription management widget
A huge part of our value prop hinges on reducing the amount of time SaaS start-ups spend managing the technology infrastructure that their businesses depend on. This is important because it gives start-ups more time to focus on building their product and business, while extending their runway.
With that in mind, we built a feature we’re calling our subscription management widget. While this may not sound sexy at first blush, we believe this will come to be a real differentiating feature for Outseta because it’s not functionality we’ve seen built in competitive products.
So what is it?
This is useful because if a SaaS business has a subscription model that Outseta supports, companies can simply “drop-in” this functionality in minutes without needing to build this “scaffolding” logic that all SaaS companies need, yet is logic that doesn’t differentiate them in any way. This work represents busy work, not get-your-product-to-market work.
An additional advantage worth mentioning is that because this information syncs with Outseta’s CRM records, we can easily add a simple engagement index based on login activity to each person or account record in Outseta. This is a simple but effective proxy/indicator for product usage and engagement which we’ll make available to our customers in a subsequent release.
There are other services that will handle authentication for you (Auth0, Okta), and there are services that handle subscription management. However, we came up empty when searching for a service that offers a drop-in solution to automatically give your website this functionality in a matter of minutes.
We’re building our billing system
In order for us to charge our own customers - but more importantly, to enable our customers to charge their customers - we’ve been hard at work building our subscription billing system. We’ve made a couple of important decisions here:
We’ve partnered with Forte payment systems to process credit card and ACH payments. We have a pre-existing relationship with Forte, as they are also the payment processing partner of Buildium. Working with Forte allows us to offer the lowest possible payment processing fees (cheaper than Stripe!). The application process Forte offers our customers is also very straightforward, and will allow our customers to go live with their payment processing system in as little as a day or two. Here’s what the application looks like.
At some point in the future, we will also offer our customers the ability to process payments via Stripe. We’ll be offering this option primarily to support international customers.
Our billing system will be complete and we expect to start charging our own customers beginning January 1, 2018.
We changed our pricing model
The last company update that we published was focused 100% on the process we used to develop our initial pricing strategy. While we put a lot of thought into our initial pricing, as we thought further about our pricing model over the summer we came to the conclusion that we didn’t quite get things right the first time around.
Initially we proposed a blended pricing model, with our pricing tied to both number of contacts (as most e-mail marketing tools are) and number of users (as is the norm for most CRM and help desk tools). We liked the idea of tying our pricing to the number of users of our software because it seemed fair - as a start-up grew and needed to give more people access to our software, what they would pay us would scale in conjunction with their own company’s growth.
We did voice a mild concern with this - we know that we’re going to be selling into a target market (start-ups) where the majority of our customers will fail and in turn, churn. As a result, we need to plan for this churn and figure out how to make our product as “sticky” as possible so that we do retain our successful customers and extend their lifetime value to our business as much as possible.
By charging on a per user basis, we would be actively discouraging companies from getting as many of their employees as possible into our software. The more people who are accessing and using our software, the “stickier” the product ultimately becomes. Said another way, getting as many users as possible into our software benefits us more at this stage than monetizing each and every user.
We think our initial pricing was too focused on capturing revenue as our customers grew or from larger customers, when in reality for the first couple of years we’re primarily going to be successful working with companies with only a handful of employees.
As a result, we’ve made the following updates to our pricing.
We’re still offering a free plan, but it’s limited to your first 250 contacts. This is not a time bound trial, and it’s not a limited feature set offering. You can access and use all aspects of the product for as long as you like, but once you’re really ready to go and need to service 250+ contacts you’ll need to pay.
Once you move to a paid plan, you’ll pay us $99 per month or $999 annually. This hugely simplifies our pricing and makes it so start-ups will know exactly what their bill will be. No surprises at all, and we think $99/month is a fantastic deal for your CRM, email marketing, customer service, billing, and reporting software.
We’re offering all customers unlimited users, unlimited contacts, and unlimited emails. This is hugely disruptive as we think about winning business away from other companies in existing categories like email marketing, CRM, and help desk software where pricing is typically tied to number of users or contacts.
We think this pricing is aggressive and will allow us to compete and win deals. We are more interested in growing our user base than maximizing revenue potential. Shout out to Randy Parker, Founder of Constant Contact and Brevi, for sending us a note sharing this concern and giving us a gentle nudge in this direction. We appreciate ya.
By Geoff Roberts 2 min read
We’ve talked quite a bit on this blog about our desire to build a self managed organization. Self management depends heavily on transparency - everyone in the organization is enabled to make decisions, including spending company money, because everyone is operating with all of the information available. With that in mind we thought it would be both fun and appropriate to take a closer look at our expenses now that we’re six months into building Outseta. This exercise was a valuable checkpoint for our existing team, and let’s face it - we’d like to work with some of the people reading this post in the future - so we figured we’d start giving you access to all of the information available now.
The graph and breakdown of our spending shown above is from Mint.com. We’ve spent $4,702.85 to date. That includes $1,541.18 on “Food and Dining” - this is mostly Dave & Dimitris getting lunch together when they work from Dave’s house. The $178.88 spent on “Entertainment” was primarily a round of golf that the three of us played together when I was in Boston last.
Where this is most interesting (and hopefully valuable) to other SaaS start-ups is looking at what we’ve spent in the broad category of “Business Services.” It’s interesting to look at both the timing of these expenses, and the breakdown. Some highlights are below - they are listed in the order in which we first incurred an expense with each vendor.
My initial reaction to this table? It’s fairly remarkable how little overhead is needed to start a SaaS company. It’s worth noting that we’ve chosen to bootstrap the company, and have made a pretty concerted effort to keep expenses low to date. For example, we are all using computers we had purchased on our own and we are not yet paying ourselves at this stage (we are working for sweat equity).
Oh, and Dave and Dimitris really like Pure Cold Press in Brookline - they’ve eaten lunch there more than anywhere else (6 times!). They even brought me once the last time I was in Boston - good place.
We’ll circle back at the end of the year and publish a similar update focused on our total expenses in our first year of building Outseta.
By Geoff Roberts 9 min read
This month’s company update is focused entirely on pricing. Our goal is to share the process we used to come up with our pricing, to publicly share Outseta’s pricing for the first time, and to share our thinking and values around how we’d like to price our product well into the future.
Let’s start with our process.
When thinking about pricing, there are three useful barometers that we considered:
Pricing based on persona
Pricing based on the market or competitor pricing
Pricing based on value delivered to the customer
Let’s tackle each of these one at a time.
Pricing based on persona
Considering our pricing based on the persona of our potential buyer was relatively easy - we are going to be selling to early stage, SaaS start-ups. We want our pricing to be accessible to bootstrapped companies (like ourselves). The companies we’ll be selling to may even be pre-revenue, so we know that they are going to be highly price sensitive.
On top of that, there are a slew of point solutions out there already targeting this buyer persona and it’s the norm for these products to be free or very inexpensive. Hubspot CRM, for example, is free. Mailchimp’s email marketing software is also free for up to 2,000 subscribers, with a cap on the number of emails that can be sent. You get the idea. This led us to...
Decision #1 - We wanted the eliminate the barrier to entry and allow companies to start using our product for free.
We think this is important in allowing us to effectively compete against the other point solutions in the market. Perhaps more importantly, we know that we’ll be competing against more established and better funded competitors - as a result, we’re designing our go-to-market strategy to keep customer acquisition costs as low as possible from the get-go. Rather than relying on a time-constrained free trial model with an inside sales team following up on those leads, we’re going to focus on building a product qualified leads (PQL) model where users can access the software for free and essentially qualify themselves based on their engagement level with our product.
Pricing based on the market or competitor pricing
Pricing Outseta against the market or our competitors was a bit trickier, as we had to look at the overall cost of a handful of point solutions against the cost of our platform. There were countless permutations, but here’s a pretty representative view.
*This table does not include subscription billing pricing
Let’s start by acknowledging the above table is imperfect - these companies all price their products based on different value metrics and have different thresholds for users, contacts, customers, etc. Beyond that we’re not talking about complete parity of features or functionality.
All we’re trying to do here is illustrate that there are countless different permutations, options, and prices… and I think the table speaks for itself in showing that it’s very easy for a start-up to lose sight of what they’re actually paying at any given point in time for the combination of point solutions they select. Which led to...
Decision #2 - We wanted our pricing to represent a great value against even the least expensive combination of these point solutions. This is important because we won’t offer true feature parity; just the basic, core functionality that a start-up actually needs (we don’t and will never support emoticons, sorry). And we wanted our pricing to be easy to understand so you’re never surprised when you look at your bill.
Pricing based on value delivered to the customer
More than anything, we wanted our pricing to be based on value delivered to the customer. We think this is simply good business and if our customers are truly getting significant value out of our product they will have no problem paying us for it. The difficulty here was deciding on how we can measure value delivered to the customer - what was our value metric going to be? With such a broad range of functionality within our product it could be anything from number of users, contacts, customers, revenue, support tickets answered, or emails sent.
We initially came to the conclusion that users was the value metric that made the most sense. As a start-up begins to grow, they inevitably need to give more salespeople access to their CRM, more customer service people access to their support ticketing system. What our customers pay us should scale up in parallel with the growth of their business, and users felt like a more real-world indication of growth than simply growing the number of “contacts” in your database.
That said, we are a new email marketing provider and need to be cognizant of building a strong “sender reputation.” Basically what this means is we need to safeguard ourselves from bringing on companies that will try to use our platform to send email broadcasts to large lists of people who did not give them permission to email them. When this happens the emails inevitably have high bounce and complaint rates, which in turn hurts our sender reputation and lowers the deliverability rates of our email marketing tools. This risk led us to...
Decision #3 - Our value metric is going to be a blended model of both users and contacts, because both the number of users and the number of contacts should naturally grow as a start-up gains traction, begins to hire more people, and begins to market to more folks. Our plan is to give our users more than enough contacts for the stage that they are at, but to provide some sort of cap in the vein of building a strong sender reputation and ensuring our email marketing tools aren’t abused.
Outseta’s Pricing - Where did we end up?
Reviewing the above decisions, we know that we wanted to…
Offer a free plan so there’s no barrier to entry to get started with Outseta.
Offer a fantastic value, even in comparison to the least expensive combination of point solutions. And have an easy to understand pricing structure so you always know what you’re being charged.
Use a blended model of users and contacts as our value metric to effectively mirror the traction and growth of a start-up.
Without further adieu, here’s a link to our first pricing page.
Let’s unpack this a little bit - everybody who wants to use Outseta will start on our “Founder’s Plan” which is free forever for 1 user and up to 500 contacts. This is not a time constrained free trial, or a limited functionality offering - you’ll get access to all of our features until you outgrow this plan. As a small, bootstrapped start-up ourselves we’ve been working on Outseta for six months now and would still be on this plan - we wouldn’t have paid a penny, and we think that makes sense given our stage.
Eventually as we start bringing on more salespeople, more support users, whatever it may be we’ll need to scale up. Or maybe we’ll simply have grown our database beyond the 500 contact limit. Whatever the trigger is, the price is the same - you’ll pay $30/mo (billed annually) for an additional user which includes 2,000 additional contacts. Free to start, easy to understand, and it scales with growth.
Now, let’s look at how our pricing scales as a start-up grows versus that least expensive combination of point solutions (Hubspot CRM, Groove, MailChimp, Profitwell).
Total Price Per Month - Outseta vs. Point Solutions
We think any way you cut it, Outseta is a great deal.
What we think we got right and what we’re not sure about
Any time you release a new product into the market for the first time you’re taking an educated guess at best in terms of how the market will respond to your pricing. Despite the fact that we’ve given this a lot of thought (enough to devote a 2000+ word blog article to it), that is absolutely true in our case as well. There are three things that we feel really good about that we haven’t discussed yet.
We’re giving a 25% discount for selecting an annual versus monthly plan. While the dollar amounts here are small, that’s a significant discount. We’re selling to start-ups, which we know is a population that will naturally have a high churn rate. As such, we want to incentivize people to make that larger commitment to our platform which will help us raise our average customer lifetime value (ACLTV).
Despite the fact that we already win on price for the price sensitive customer, we think our customers will realize enormous value from gaining a single, “360 degree” view of their customers. They’ll be able to better understand their customers and their business, which is imperative to an early stage start-up.
Our customers will also realize significant savings in terms of time spent evaluating, integrating, and maintaining a handful of point solutions. Over time the cost of these activities becomes, very, very real in terms of employee time. Your VP of Engineering has better things to do.
All of that said, we do have a mild worry which was rightfully raised by Patrick Campbell of Price Intelligently in his article Stop Per User SaaS Pricing You’re Killing Growth. In short the point that Patrick makes is if your pricing is tied to the number of users, then companies will try to limit the number of users to limit their costs. If you think about it, you should want everybody possible to be using your software because that increases the stickiness of your product and makes the customer less likely to churn. We absolutely buy that and it’s something we’ll monitor closely going forward, but our thinking is that with our blended model companies that are growing will either need to genuinely add more users or increase their number of contacts.
All things considered, we’d betcha we didn’t get our pricing perfectly “right” this first time around. Almost nobody does. FrontApp published an article we found useful on derisking your pricing strategy that gives an interesting perspective on the path they took to optimize their pricing. It’s worth the read and started an internal discussion amongst our team around the commitments we’d like to make to our customers when it come to pricing.
We know that we don’t want to be the company that nickle and dimes you, raising prices every time a new feature is delivered. We also don’t want to be the bait and switch company, whose prices start out low and then increase almost every year in an effort to keep up with investor’s revenue expectations. But we do want to reserve the right to experiment with our pricing consistently; it’s too important not to. Our thinking is simply that as we run future pricing experiments, we’ll do so only for new customers and will honor the pricing that our customers originally signed up for. Across the board pricing changes will be very few and far between.
So now to put the ball in your court… what do you think? If you are someone who has purchased the point solutions we’ve reference in this article or just someone who has thought quite a bit about pricing SaaS products, we’d love to get your take. Please share you thoughts with us via a comment below.
By Geoff Roberts 6 min read
We’re back! Here’s what our team has been working on since our last monthly update.
We built our customer support and knowledge base tools
While we focused primarily on building our email marketing tools (email broadcasts and drip email campaigns) in Q1, we shifted our attention to building our customer support and knowledge base tools moving into Q2. The knowledge base tool is a searchable and easily organized home for product documentation and “how-to” content. It will be home to our own product documentation content shortly - we’re focusing on building out the “must-have” content that we’ll need to support the launch of our product. This will mostly focus around things like how to register for an Outseta account, how to reset your password, and documentation around how things like People, Accounts, Segments, and Custom Properties work in Outseta.
On the customer support side, we built a customer support ticketing system. Dave, Dimitris, and myself got together in Boston and spent a couple of days tearing apart customer support tools including Zendesk, Intercom, and Groove to inspire our own design. Here’s how our own ticketing system works.
Any customer of ours can email support(at)outseta.com with any sort of customer service inquiry or question. They don’t have to navigate to any particular URL, screen, or form to submit a customer service request; they can simply send us an email from their email client.
We receive the request in the “Support” section of Outseta. The email’s subject line displays as the topic of the ticket, and the body of the email shows up as the content of the ticket. We can then easily assign the ticket to anyone on our team and respond to the inquiry.
Our response shows up as a personal, 1-on-1 email in the customer’s email inbox from whoever responded to the ticket.
While the support ticketing system is our first customer service oriented tool, it’s also worth noting that we’ve already taken into consideration how we are going to layer in support interactions from other channels in the future; for example chat requests and social media interactions.
We’re working towards a September launch date
One of the challenges that we face as we’re building our minimum viable product is that we can’t truly deliver on our stated value proposition until we’ve built basic tools across all the different functions of our product; CRM, email marketing, customer support and knowledge base, subscription billing, and reporting. While that remains true, we’re eager to get some real world user feedback. On top of that, we feel like what we’ve built so far - our CRM, email marketing, and customer support and knowledge base tools - would provide real value to an early stage SaaS business.
With that in mind we’re planning to launch the first paid version of our product including those components in September. There are a few reasons that we made this decision.
We think there’s value in what we’ve built. We’ll be able to start getting real world user feedback and testing our initial customer acquisition strategies sooner by taking this route.
While this functionality is already built, this gives us some time to work out details around things like account registration, product documentation, pricing, and billing.
By publicizing our intention to launch this first wave of functionality in September, you will all help hold us accountable to that date!
The plan thereafter is to focus on our subscription billing and reporting functionality. By the end of 2017 we should have our minimum viable product complete, we should be delivering on our stated value proposition, and we should be ready to make waves.
We need your help! We’re looking for referrals to a handful of beta users.
With our September launch date officially out there on the horizon, we are starting to look for a handful of companies that would like to be “beta users” of our product. I put “beta users” in quotations because I think it really undersells what we’re after... “congrats, here’s your opportunity to be our test dummy!” Here’s what we are able to offer to any company that is referred to us.
A basic, functional tool encompassing CRM, email marketing, support, and knowledge base tools.
No cost - your Outseta account will be free for life.
An advisor to your business. Dave, Dimitris, and I will make ourselves available to help you with your business in any way that we can. Just as you are helping us work out the kinks with our technology, we’ll lend your business our collective experience in everything from engineering to go-to-market strategy.
Here’s the ideal profile of the initial users we’re after.
Ideally an early stage, SaaS business. If you’re at day one, that’s great. If you’re a little further along and are already using some point solutions but are willing to make the switch to Outseta, that’s great too - we’ll work with you to make that transition as painless as possible (we recently went through this process ourselves).
If not a SaaS business, other subscription businesses could also be a great fit. Subscription “box” businesses (think BirchBox or Blue Apron) or subscription content businesses, for example, would likely be a good fit.
If not a subscription business of some sort, any early stage business with a need for basic CRM, email marketing, and customer support tools could also be valuable to us.
So to put the ball in your court… do you know anybody that we should be talking to? You can email us or send introductions directly to either geoff, dave, or dimitris @outseta.com. If we start working with someone that you refer to us we’ll be A) forever indebted to you, and B) will pay it forward in some awesome way when Outseta takes off!
Further validation of what we’re building
While we’re eager to bring on some beta users and start running some customer acquisition programs to further validate our idea, it always feels good when external sources provide validation that we’re on to something. That happened a couple of times recently. The first was an unsolicited email from the Head of Growth at a Boston based start-up. Perhaps most importantly, this email came from someone that neither Dimitris, Dave, or I knew.
That one felt good! Another came from Zak Pines, VP of Marketing at Bedrock Data. Bedrock Data is solving a similar problem to Outseta, but with a different approach and generally a focus on later stage companies. I recently interviewed Zak on our blog (check it out!), but the excerpt from the conversation below stood out.
That’s our progress report for May - if you are willing and able, please remember to hit us with any referrals of beta users that you think could benefit from our product. Thank you in advance.
-Dimitris, Dave, & Geoff
By Geoff Roberts 2 min read
March company update… ready, set, go. Here’s what’s happened at Outseta over the course of the last month.
We built our email marketing tool
We’re not going to waste a ton of breath one this one, as there are plenty of email marketing tools out there. That said, this is the first major piece of functionality that we tackled - largely because this is the first piece of functionality that we (as an early stage SaaS start-up ourselves) needed. Our email marketing functionality includes support for both email blasts and drip email campaigns out of the gates. For those of you who are on our mailing list, this update was delivered via email using our own email marketing tool - we had been using Mailchimp prior. We’re doing some additional testing and adding just a touch of polish, at which point our email marketing tool will become publicly available.
Dimitris was accepted to Alptitude
We haven’t yet written a lot about how we’re planning to operate Outseta embracing the principles shared in Reinventing Organizations (that’s coming), but suffice it to say we’re looking to challenge the status quo when it comes to how we operate the company. One small step in that direction is Dimitris will be attending “Alptitude - the week that dreams are made of.”
What does that have to do with anything, you might ask? To start, Dimitris is wagering on this being much more productive than the typical industry conference where you meet a few folks and have mostly superficial conversations. Second of all, we’re looking to steal some ideas from the event - we’re thinking this could be a great format for a user conference in the future.
So yeah, Dimitris will be running around the French Alps June 3-10. As for me, I’m just jealous. Very, very jealous.
We designed our first logo
We’re a bootstrapped company with no design chops, so we turned to 99designs.com for help with our logo. I’ve used 99designs in the past, and to be frank I’m not a huge fan. That said, if you host a logo design contest and consistently leave feedback on each and every design submission you can end up with a pretty decent end product.
We like the simplicity of the logo. The orange rectangle around the word “Outset” visually shows that we’re an all-encompassing solution, and the rectangle creates a link with the “T” that represents connectedness.
You can now find Outseta on Twitter, Linkedin, Angellist and Gust
Check us out! We’d appreciate the follow.
That’s a wrap! Happy Wednesday.
-Geoff, Dave, & Dimitris
By Geoff Roberts 4 min read
Every month from here on out we’ll be publishing a monthly company update. If you’re interested in staying abreast of our progress, you’re in the right spot. Here’s what we’ve been up to since we published our launch announcement.
Product marketing, when you don’t yet have a product...
Product marketing, Take One. When you don’t have a product yet, it’s tough to take screenshots… so we went with a cartoon. Illustration by Stephanie Vecellio.
Optimizing for profitability, and profit sharing
For people outside of tech it may seem weird to see “optimizing for profitability” in our first company update. Well, duh! you might be thinking. But in tech circles it’s all too common that start-ups raise funding from outside investors, spend wildly, and run the business at a loss in an effort to jack up their annual growth rate and subsequently their valuation. Josh Pigford, Founder of Baremetrics, wrote an article that really resonated with us pointing out that there are other ways to build a business and to define “success,” even if you work in tech.
With that in mind, we made two important decisions.
We’re going to focus on long term profitability instead of focusing on growth rate
We’re going to distribute 50% of our profits to employees who have been with the company for more than one year
While it may seem weird to be talking about profitability pre-revenue, these decisions are important to us for a couple of reasons. First off, the decision to focus on profitability will impact almost every decision we make. It will force us to be financially judicious, and will ensure that we’re deliberate about the investments that we make. Particularly when it comes to hiring, it will force us to consider the ROI of each new team member that we bring on. And sharing profits with employees will incent everyone to be as productive as possible - a smaller headcount means everyone gets a bigger piece of the pie.
Additionally, as co-founders Dimitris, Dave, and I need to know what “success” looks like for one another. While we’re not pursuing a “growth at all costs” path leading to an exit event, we do hope that Outseta is financially rewarding for us and our employees. These decisions set expectations in terms of how those financial rewards will be delivered. We think these decisions provide tremendous benefits in terms of alignment.
We made a number of important product decisions
Here are the highlights…
We’re building our email marketing functionality first. You’ll be able to send out e-mail blasts and setup automated drip email campaigns. One of our goals is to send our March company update using our own email marketing tool.
We decided to build the product using .NET 4.5 rather than .NET Core. Dimitris and Dave are .NET guys, and while the engineer in them wanted to move to .NET Core there would have been a learning curve associated with making that move that would slow down development. Our desire to get a product to market quickly and validate what we’re building trumped our interest in moving to the latest technology.
We decided to host with AWS over Azure. They offer the widest array of services, are the market leader, and are innovating faster than than any of their competitors. We decided to use the AWS RDS MySql database service on the back end, as we’d rather have a hosted RDS service managed by AWS than install and manage MySql ourselves.
On the front end, we’re using AngularJS. Minovate will provide the early look and feel of the application. I had to ask Dave to explain this to me - basically it’s taking a pre-defined, templated approach to the user interface - the navigation style, menu bar style, controls, buttons, fonts, and colors.
Most of the product decisions we’ve made so far have come down to productivity. Outseta is an ambitious undertaking, and getting a product to market as quickly as possible is our priority.
Marketo’s new CEO just validated our idea
Former SAP exec and new Marketo CEO Steve Lucas came pretty darn close to validating our idea in an interview with SiliconANGLE. Steve’s a smart guy, so that was pretty cool to see. Here’s an excerpt highlighting what Steve had to say...
“What’s crushing the marketer right now is that every time there’s a new consumer touchpoint, there’s a new point solution for it,” Lucas said. “It’s overwhelming the marketer.” The problem with that, he said, is that “you lose any context on who the customer is.” It’s a problem marketing clouds ranging from Oracle’s to Salesforce’s to Adobe Inc.’s are trying to address — in fact, it’s a prime driver for their own acquisitions. Marketo is trying to offer a range of services that, at least according to Lucas, may be able to provide that unified view more simply than can the marketing clouds with their disparate acquisitions that take time to integrate.
Steve’s comments resonated with me in a big way as both a marketer and someone trying to get a SaaS start-up off the ground. Outseta is very much trying to provide a “unified view of the customer more simply” - and we agree that marketers are getting crushed by too many point solutions.
That’s a wrap on our first company update. See ya in March!
Geoff, Dave, and Dimitris