For the past two years we’ve been hard at work building Outseta, an undertaking that was a direct response to our own experience launching and scaling a successful SaaS start-up.
As an early stage company, we found that a lot of stuff we had to build had nothing to do with our core product; authentication for existing users, lost password workflows, subscription management logic—that kind of thing. Then we did what everyone else in SaaS does—we evaluated, bought, integrated, and maintained a whole bunch of other SaaS products. A CRM. A billing system. Email marketing software and a help desk. Should we build our own subscription management logic again?
At the end of the day we decided to build Outseta because:
We saw an opportunity to help SaaS founders get products to market much faster.
The status quo was ridiculously inefficient—we saw an opportunity to give SaaS start-ups the tools they need to scale to about $5M in ARR for a fraction of the price.
If you’ve been following our progress something exciting happened since our last company update—we launched an entirely new SaaS product of our own. Here’s how we got that product to market about 50% faster while also gaining significant efficiencies that will help us scale well into the future.
Let’s get a few things out of the way first—yes, we launched this product partially to highlight how easy it is to launch a SaaS company with Outseta.
Second, while that was the case, this is a legitimate product that we only built because we realized a true need for it ourselves—this was not a creative exercise.
Finally, there are all kinds of “Launch your product today” or “Launch 10 products next week!” contests flying around the internet of varying pedigrees. The product that we launched is not a one page website, and it’s not a hack to validate your idea overnight. It’s a full-fledged, well designed, and fully functional SaaS application. You can call it a micro-SaaS project if you like or you can check it out for yourself by signing up for a trial at CompareRentalBookings.com.
The idea behind the product
My Co-founder Dimitris has built software products for the real estate rental market before, Co-founding Buildium in 2004. While he’s still actively involved in the company as a board member, more recently he’s been working on Outseta as well as an Airbnb rental business in his hometown of Athens, Greece.
Unsure of the nightly rate he should be charging for each of his rentals, Dimitris began using Airbnb’s own smart pricing tools. He found that the tool consistently told him to drop his prices down to his base price—the lowest nightly rate he’d allow his property to rent at. He had a hunch he was leaving money on the table.
Next, he tried a number of the other Airbnb pricing tools on the market. Again, he found his nightly rates were dropping prematurely. These tools were also expensive and they didn’t tell him anything about how often competitive properties were being booked and at what nightly rate. He wanted to know exactly how his property was performing against the properties he was most often competing with for bookings. He could get at this information but it was a manual process that he found himself performing over and over again—a perfect problem to solve with software.
That’s the problem we set out to solve with CompareRentalBookings.com—a tool for hands-on Airbnb hosts and management companies who, armed with the best data possible, can make better pricing decisions to maximize their Airbnb hosting earnings.
The very first version of the product pulled data from Airbnb’s API into a Google Sheet. Dimitris was finally able to see how much competitive properties were actually making, so he could benchmark his own performance and price his properties more appropriately.
Realizing that this data was proving valuable to him, he pulled together a prototype of what the product might look like in Moqups and shared it with Dave and I in late October.
“This is a product we could build pretty quickly, and it’s been really valuable to me,” Dimitris said. “What do you think?”
We were all a bit gun shy about taking time and energy away from our product backlog at Outseta, but we realized that by using Outseta we could dramatically cut down on the time required to deliver the product.
We looped in our design lead, James, and decided the product would consist of a SaaS application that allows hosts to choose the competitive properties that they want to track as well as email notifications highlighting new bookings. We decided hosts could track 5 comparison properties for each of their own for $5 per month—if hosts get even one additional reservation by using the tool, the product likely pays for itself 20 times over.
James delivered some final designs for the email and SaaS product using Invision. Here are the design files.
With the designs in hand, Dimitris and Dave began development in mid October. Dimitris had already requested access to Airbnb’s API, which we use to pull in the pricing and occupancy data the product relies on. In terms of technical architecture, the product is built using .NET and the base angular framework.
The product would likely have taken 3-4 weeks to build if we’d focused on it full-time—instead we built it over about 6 weeks in a very part-time capacity. Here’s how that time was split up.
1-2 days to setup the development environment
1 week to create the algorithm that downloads the data and creates summary data
1 week to build the APIs
2 weeks for front-end development
2 weeks to build the email notifications
Standing up the business and implementing Outseta
During product development, Dimitris and Dave were able to spend all of their time and energy on building “core” product functionality because they knew we’d be launching the product with Outseta.
As a relatively non-technical person, I was able to instrument much of the functionality they would have otherwise had to build. First, I bought the domain comparerentalbookings.com and created a Squarespace website using the “Bedford” theme. I paid $20 for the domain and the website is $18 per month.
Next, I decided that we’d offer a 14-day free trial prompting users for payment after the trial expires—I set this up as well a pricing plan to charge $5 per month per property tracked. I was able to do both of these tasks within Outseta, which can be connected to a payment gateway in seconds. If you have an existing Stripe account, here’s how to connect Stripe to Outseta (all you need is your “secret key.”)
Without using Outseta, we would have had to build the free trial logic manually. We probably would have billed manually for some time, as we would have had to write something automated to handle billing based on the number of properties tracked. This logic easily could have taken 3-4 weeks to complete and integrate with Stripe.
Next, we needed a way for people to sign-up and login to the product from our website. Using Outseta’s sign-up and login widgets, I was able to easily drop this code into our website pages.
Here’s documentation on how to integrate Outseta’s sign-up and login widgets with your website and product. I embedded the sign-up widget directly on our free trial page, which you can see here: https://www.comparerentalbookings.com/free-trial/. I used a pop-up for the login functionality so that users can come back to our website to login to their Compare Rental Bookings account.
Using these widgets also meant we didn’t need to build lost password workflows—realistically it could have easily taken a month to build the functionality that these widgets gave us out of the box.
We can also see who has registered for the product and who is logging into the product without needing to access our database or integrate with a CRM system. This is something we likely would have done further down the road if we weren’t using Outseta, but it’s a nice added benefit at this stage that makes it really easy to identify which accounts are engaged.
With the technical implementation of Outseta complete, I set out to prepare us to bring on and support new customers.
First, I set up our sales pipeline stages within Outseta CRM so we can track sales.
Next, I added Outseta live chat to our website. All I needed to do here was add a script to the <body/> tag of our website pages. I also set up our shared customer support inbox so users can submit support requests by emailing us at at support(at)comparerentalbookings.com.
I then used Outseta’s knowledge base to author some articles that I thought would be helpful to our early customers. We mapped the knowledge base to a custom subdomain that’s accessible here: http://support.comparerentalbookings.com/support/kb#/categories.
As a final step, I set up activity notifications so that Dave, Dimitris, and myself get email updates whenever an account is created or updated. Again, this callback functionality is free and available to us out of the box.
Just like that, we had a fully operational business ready to scale.
Using this process, we were able to launch CompareRentalBookings.com in about 6 weeks while working part-time. We have the tools in place that we can easily use to scale the business to thousands of users and millions in revenue. Perhaps most importantly, we have known, low overhead of $99/month and far fewer manual processes and disparate software tools.
How Outseta Helped Us Get Our Product To Market Faster
- We saved time by not needing to build free trial logic.
- We saved time by not needing to build sign-up (product registration) or login (product authentication) functionality.
- We saved time by not needing to build lost password workflows.
- We saved time by not needing to build infrastructure for activity notifications.
- We saved time by simply adding a script to our product that handles account upgrades, downgrades, cancellations, user management and permissions, and updates to billing information.
- We saved time by not needing to spend any time integrating software solutions—our CRM, help desk, marketing automation, and live chat tools work seamlessly together from the get-go.
Key Benefits Realized By Launching With Outseta
- We increased efficiency by not billing manually to start. We didn’t have to write an automated script to handle billing based on the number of properties tracked.
- We can now change pricing models and experiment with new pricing plans without any development help. We can change our pricing plans from within Outseta and our website and registration workflow will update to reflect the changes automatically.
- We can see who has registered for our product and who is logging in consistently (a useful barometer for user engagement) without accessing our database.
- Our technology stack is completely free and likely will be for several more months. Once we cross 250 contacts in our CRM, all of this functionality will cost us just $99 per month with no limits on users, contacts, emails, or conversations.
Have any questions about the process we used to launch CompareRentalBookings.com? Wondering if Outseta can help you get your SaaS product to market faster? We’d love to hear from you—just drop us a note as a comment below!
By Geoff Roberts 12 min read
When we first started building Outseta we stated outright that we weren’t interested in raising venture capital—instead, we planned on bootstrapping the business and remaining independent. It wasn’t that we had any issue with venture capital per se, it was simply a reflection of never wanting to have our hand forced in pursuit of growth if we thought it wasn’t what was right for the business. There’s a lot of advantages to organic growth that aren’t discussed enough.
Over the past 12 months there’s been an explosion of new financing options and models made available to companies that feel like us. And many of them are attractive to the extent that they’ve flipped our own internal dialogue.
This post is for other early stage SaaS companies who are similarly considering whether some of these new forms of capital make sense for their business. I’ve read the fine print to highlight the unique attributes of each fund and who they are best suited to—and I’ll share our own thinking in terms of each model’s appeal to our own business.
Key Personnel: Bryce Roberts
Revenue Requirement: Post revenue, but no minimum requirement.
Equity Stake: Yes, but diminishing to 10% of Indie.vc’s initial equity stake.
Board Seat: No
Investment Docs: https://github.com/indievc/terms
Application Deadline: March 1, 2019
Apply Here: http://www.indie.vc/apply
Indie VC is the OG on this block and describes itself as “growth revenue for post-revenue companies.” This is the company’s third fund, which is designed to support founders on their path to profitability.
The program is an accelerator that lasts for 12 months, with investments ranging anywhere from $100,000 to $1 million—the historical average for the fund has been around $285,000. Included in the investment docs is a predetermined percentage of ownership allocated to the fund should you choose to sell your company. Your company will begin repaying the fund 12 to 36 months after the investment is made.
Typically founders will pay 3%-7% of monthly revenue until they have repaid the fund 3x the amount invested. Each time a payment is made, the fund’s ownership stake is reduced with the founders’ ownership shares increasing. Founders can repurchase up to 90% of the fund’s ownership stake via these payments or lump sum payments, with the fund maintaining 10% of the equity that it was initially allocated.
How They Help
Indie.vc helps founders primarily by exposing them to one another and organizing quarterly events and retreats for portfolio companies. The fund also has monthly meetings with each portfolio company.
The Indie.vc model is really appealing to me—they’ve done this a few times already and I suspect they’ve worked out many of the kinks. I’m also attracted to the simplicity of their model—the predetermined equity stake in the business, the 3x payout that you need to return to the fund, and the fact that you can earn back 90% of the equity the fund initially takes.
I even like that the fund hangs on to a residual equity stake, so that they will continue to be in your corner for the long haul. The 10% of the equity they were initially issued that they do hang on to could potentially be seen as steep, particularly if they are funding companies that already have $20,000+ in MRR so that’s something to consider. But it’s always good to look at the companies and people that you take from money as long term business partners.
Revenue Requirement: No minimum requirement
Equity Stake: Yes—8%-15%
Board Seat: No
Investment Docs: https://tinyseed.com/faq/
Application Deadline: February 15, 2019
Apply Here: https://tinyseed.com/apply/
Like Indie.vc, Tinyseed is not just a funding model but a 12 month accelerator program. The fund focuses exclusively on subscription software companies and is willing to invest in pre-revenue companies.
Tinyseed invests $120,000 for your company’s first founder, then up to $20,000 per additional founder. The fund does take a permanent equity stake in your business of 8%-15%, although they do not take a board seat or hold any voting rights.
Of the money invested, a lump sum is delivered upfront to help out with start-up costs, with the remainder being paid out to the founders as salary on a monthly basis for the duration of the program. Founders agree to a salary cap (based off of the average salary of a software engineer in the nearest major city), and can increase their salary up to that cap as the business makes money. Any revenue beyond that salary cap is paid out as dividends, which are paid out to founders and the fund based on their percentage of ownership in the company.
The founders maintain complete optionality in terms of when to take dividends—if they prefer to invest revenue back into the business they have the option to do so. The idea here is that the fund gets paid when the founders choose to get paid. If the company sells, Tinyseed receives the initial investment back (minus any dividends paid to date), and then the proceeds are divided based on percentage ownership in the business.
How They Help
Tinyseed invests in cohorts of 10-15 companies at once so that portfolio companies benefit from exposure to one another—this includes weekly calls with other portfolio companies. They also have a network of mentors that’s about as strong as could be if you’re looking to build an early stage SaaS company. Mentors are available during scheduled office hours calls.
Tinyseed is particularly attractive to me because of the money, the advisors, and the ecosystem it would plug us into—the companies Tinyseed is funding represent our exact target market at Outseta. While it would be nice to have some additional cash to invest into the business and begin taking some salary, the $160,000 total doesn’t go very far when split between 3 founders. It would probably allow us to each take a salary of around $3,000 per month—not nearly enough to live on—making the fund’s money a more attractive option for single founders.
The advisors are a huge reason, in my eyes, to apply to this fund but they are also probably the biggest variable. How much interaction does a portfolio company actually get with each of the advisors? It’s not like Rand Fishkin has the time to work with 10-15 companies on SEO or Hiten Shah has the time do so the same with each on product strategy. I know the advisors are more than names slapped up on a marketing website, but the extent of their involvement is certainly an open question. The ecosystem, for us, is a no-brainer.
It’s worth noting that Tinyseed takes and keeps the largest equity stake of any of the options on this list, but the stake seems reasonable given that they are typically making earlier stage (riskier) investments. If I was an investor, this model would be hugely attractive to me—spending $120,000 to buy a 8%-15% stake in a company could prove to be hugely lucrative if a company does reasonably well. I’m sure this fund will see a huge volume of applications from some awesome companies.
As an operator, I love the model of the fund gets paid when the founders get paid—I think Tinyseed nailed this aspect of their investment model. While I’m not crazy about giving up 8%-15% equity in the business, paying dividends based on percentage of ownership in the company makes logical sense to me. I’m comfortable with the equity stake because it means that the mentors and other folks involved in this fund are going to be on your side for the long term, which is a pretty amazing benefit.
Side note—we’re applying to Tinyseed. Here are our application answers.
Revenue Requirement: No minimum requirement
Equity Stake: Yes, but diminishing. In their default terms Earnest holds a small residual stake.
Board Seat: No—upon request Earnest can become a board observer without voting rights
Investment Docs: Shared earnings agreement V1
Application Deadline: Open applications beginning in January 2019
Apply Here: https://earnestcapital.com/apply/
Earnest Capital makes seed stage investments in “bootstrappers, indiehackers, makers, and real businesses.” Their investment model was developed to align with founders who want to build sustainable, profitable businesses.
Earnest invests upfront capital in businesses typically after a product has launched, but before the founders begin working on the company full time. The investment model has two main components:
Businesses pay back a “Return Cap” which is 3x-5x the amount invested in their company.
In their default terms, Earnest will maintain a small residual equity stake in the business even after their Return Cap is paid back—this amount scales down as the fund is repaid, but never reaches 0. This means that Earnest and their advisors are still incentivized to keep helping you grow the business after the Return Cap is fully paid because they would participate in a sale if it ever happened. “We will likely still offer and do deals that have no residual stake after the Return Cap is repaid, but that will likely entail a higher total Return Cap to compensate for the lack of residual stake,” says Principal Tyler Tringas.
Earnest calculates “Founder Earnings” which is net income + any amount of founders’ salaries over a predetermined threshold. Similarly to Tinyseed, this model is designed to give founders the option to continue investing profits in their business if they see fit and the fund is only paid when the founders are paid.
How They Help
Earnest also has a strong network of mentors, all of whom have skin in the game having invested in Earnest companies. There is no curriculum or prescriptive structure to mentorship; Earnest companies are expected to tell the fund what they need and ask for help. All mentorship is handled remotely.
I’ve really enjoyed following Earnest Capital’s story and the research that went into them coming up with their investment model. I also like that all of their advisors have skin in the game—it definitely makes me feel like they’ll be accessible and helpful. Like Tinyseed, I love the alignment of the fund gets paid when the founders get paid, but Earnest is much more appealing to me if returning 3x the amount invested to the fund rather than 5x.
As with Tinyseed, I understand the reasons for this as they are making early stage bets, so it’s sort of pick your poison—a bigger return multiple or a larger equity stake. But I’d be hesitant to take too much money; the idea of taking on $200,000 and needing to repay $1,000,000 is a little daunting.
We are considering applying to Earnest as well—we prioritized the Tinyseed application given the pending deadline. Earnest also asks founders for some additional materials including a video overview of the product that we’ve yet to film. Stay tuned.
Key Personnel: BJ Lackland
Revenue Requirement: $15,000 monthly recurring revenue and gross margins of 50%+
Equity Stake: No
Board Seat: No
Apply Here: https://www.lightercapital.com/apply/
Lighter Capital provides “revenue based financing” to SaaS, tech services, or digital media companies based in the United States. They have provided funding to over 300 start-ups to date.
Lighter Capital makes investments of $50,000 to $3 million—up to ⅓ of a company’s annualized revenue run rate. The money borrowed is typically repaid over 3-5 years, with payments ranging between 2%-8% of your monthly revenue. Typically the money returned is between 1.35x-2x the amount borrowed.
Companies do not need to be profitable to secure financing, but there should be a clear path to profitability in the company’s future. Funding is typically received within 4 weeks of application, and follow-on rounds can be distributed in 3-4 business days. Lighter Capital only funds companies based in the United States.
How They Help
Lighter is not an accelerator and does not offer a network of mentors—instead it’s more of a true financing option. “Aside from the reporting, where we are most helpful is planning out a company’s financing, frankly” says CEO BJ Lackland. “As opposed to a VC we don’t necessarily need to know the best VP of Sales candidate in healthcare tech in South Carolina. What we know is if you’re doing X million in revenue and have this kind of burn rate and this kind of growth rate, what kind of capital is available to you from which different sources? Whether it’s angels, VCs, or banks, we probably know how to introduce you to any of those sources. So we can help with strategy, mostly on the capital side.”
Lighter Capital is without question the most attractive of these models is you’re simply looking for financing given the speed at which they make funding decisions and that you’re only on the hook for returning 1.35x-2x the amount borrowed. That said, there’s a reason for that—they’re taking on far less risk by only funding companies with $15,000+ in MRR and otherwise healthy financial metrics.
Outseta isn’t there yet, so at the moment this option is out of reach for us.
Key Personnel: Mitch Kessler
Revenue Requirement: $10,000 monthly revenue
Equity Stake: No
Board Seat: No
Application Deadline: Open applications
Apply Here: https://metcalfe.fund/#signup
Metcalfe Fund is a new financing option that “provides growth capital to online businesses using actual business data instead of a credit score.” The company invests in SaaS, e-commerce, and other types of online businesses.
After providing funding to your company, Metcalfe is paid back over time using an agreed upon percentage of your future sales. Repayment occurs daily with a small fixed percentage of daily sales being automatically debited from your bank account—they refer to this investment model as a Structuralized Future Revenue Purchase, or SFRP. The company provides financing in the range of $10,000-$500,000, which is typically paid back within 6 months for a 6%-10% fee (12%-20% annualized). Loan decisions can be made in a matter of days.
I asked Founder Mitch Kessler what factors are considered when making loan decisions. “In general we are assessing a company’s marketing sophistication and their financial health,” says Kessler. “We can cross-pollinate marketing and financial metrics, such as conversation rates, CAC, LTV, AOV, and Revenue forecasts to get a better idea of their potential future revenues aided by marketing, and if they are able to do this themselves or if they will need help from marketers in our network.”
Businesses must be based in the United States and have been in business for at least six months to qualify.
How They Help
Metcalfe’s funding model is focused specifically on delivering funding to be spent on digital marketing and growth. Metcalfe is essentially a marketplace of vetted marketing agencies and talent, which it will in turn introduce to the companies that it’s providing funding to. By playing matchmaker, Metcalfe seeks to provide agencies with clients who have money to spend while providing companies with pre-vetted marketing partners who will deploy the provided capital as efficiently as possible.
Of the alternatives on this list many are new and Metcalfe is the newest. Like Lighter Capital, this option will be out of reach for earlier stage companies that don’t yet have the $10,000 monthly revenue that’s required. For businesses needing a short term injection of cash to spend on marketing, this is a strong option with reasonable payback terms. It’s also a model that’s well aligned with more technical teams that don’t have in-house marketing expertise. Taking financing from a company that’s also pairing you with an agency partner they believe in is reassuring.
A new generation of financing options is here
All of the alternatives on this list are new and interesting options that allow founders to raise capital while maintaining control of their businesses—and more alternatives seem to be hitting the market every day. Rather than being shackled by cookie-cutter financing models, a new generation of entrepreneurs is learning that if you can dream up a new financing structure you can probably make it happen. But more importantly, there seems to be a new emphasis on building real, profitable businesses. I for one believe that’s a good thing that will ultimately result in stronger, more durable businesses.
By Geoff Roberts 10 min read
Today marks the two year anniversary of when we published our launch announcement, telling the world of our plans to build Outseta. While we’ve consistently published monthly updates to keep our customers and audience abreast of our progress, the two year milestone is a good opportunity for us to share more broadly some of the decisions we’ve made and what we’ve accomplished. I hope this is a useful barometer of progress for other bootstrapped SaaS start-ups with equally ambitious projects.
Let’s get right into it starting with how much we’ve spent on the business.
We’ve written in the past about our decision to bootstrap the company and shared our operating agreement publicly so that customers and potential employees alike understand how we make financial decisions. Dimitris, Dave, and myself have yet to pay ourselves any salary and are instead trading our time for sweat equity in the business. We’ve tried hard to be extremely financially disciplined and fight the urge to invest in growth prematurely.
2017 2018 Total
To date we’ve spent $32,179.72 building Outseta - roughly $8,000 in 2017 and $24,000 in 2018. The majority of our expenses in 2017 were related to software and development infrastructure required to build the product. Food and dining represented our biggest line item for the year - we admittedly got a little carried away there so we pulled back heading into 2018. Remarkably, Dimitris is still invisible when he turns sideways.
In 2018 you’ll notice some line items grew significantly. The $11,123.75 we spent on consulting services was primarily design related expenses, as James Lavine began working with us. We knew we needed more design bandwidth than we could afford, so James has been working for a combination of salary and equity (more on this shortly).
Forte fees represent payment processing costs associated with one of the payment gateways we support, Forte Payment systems. We invested about $3,000 in marketing, the majority of which was related to paid customer acquisition experiments we ran with Linkedin, Twitter, and Google Ads. We also signed up to attend MicroConf for the first time - an expense incurred in 2018 even though the event is this upcoming March.
One of the reasons we’ve been able to keep our expenses so low is that Dave, Dimitris, and myself have not yet taken any salary. Any time and money we’ve invested in Outseta has been in exchange for equity in the business. When we added James to the team at the beginning of 2018, we asked him to help us out 20 hours per month. We’ve been paying him for 8 hours of his time each month and he’s been earning 12 hours worth of sweat equity in the business each month. Here’s how equity in Outseta shakes out today.
Dave and Dimitris spent some time setting up our development infrastructure at the end of 2016 and invested more time in the business throughout 2017 as they worked to deliver our minimum viable product. Our founding team worked an equivalent number of hours throughout 2018, but Dave and Dimitris also kicked in some cash to cover our operating expenses which explains the differences you see in the equity allocation between each of us.
Dave, Dimitris, and myself will begin paying ourselves a nominal salary in 2019 - more on that in our next company update.
On the product front, we’re all very excited about the progress that we’ve made. 2017 was spent entirely focused on delivering our MVP. We began marketing and selling our MVP on January 1, 2018 while continuing to build out the product’s core functionality.
Dimitris has focused primarily on back-end development while Dave does both back-end and front-end work. James’ design work dramatically leveled up the usability and polish of the user interface throughout 2018. So far, we’ve built functional product that includes…
Customer communication tools
Other “scaffolding” SaaS businesses need
Widgets to sign-up or login to a SaaS product
Lost password workflows
Lead capture forms
When we initially scoped Outseta, we envisioned SaaS metrics and reporting as a key part of the platform. While we still intend to build these features, we de-prioritized them as there were (and continue to be) a number of features more immediately relevant to our customers. We have the infrastructure and designs in place for reporting, but will be focusing primarily on additional improvements to the CRM moving into 2019.
Generally speaking the product’s core features are in place. We’ll now focus on taking each of them deeper by adding functionality to draw us closer to feature parity with the point solutions we compete against (as long as it’s specifically relevant to SaaS start-ups).
Marketing Strategy and Results
With the exception of about $2,000 spent testing paid online advertising, we’ve focused our marketing efforts over the last two years entirely on “free” channels. This has included:
Launching Outseta on Product Hunt and BetaList
Launching on Product Hunt and BetaList is worthwhile - these channels provided a one-time spike in website traffic and account sign-ups and are a great way to stir up some early users. The day we launched on Product Hunt we saw more website traffic than any other day in the last two years, and both the Product Hunt and BetaList launches resulted in 30+ account sign-ups each.
In addition to these launches the other major spikes in traffic were a result of another company’s blog post published on Hackernoon that did really well and linked to one of our own blog posts and one of the most successful articles that we published on our own blog, 4 SaaS Start-ups And Their Quest For Independent Growth.
Email prospecting was our second biggest undertaking from a marketing perspective. My approach to email prospecting is very time consuming, but it was effective in starting sales conversations.
Emails sent: 452
While email prospecting did start the majority of our sales conversations in 2018, in retrospect I wish I had spent less time here. While it’s a strategy that I think was appropriate given our stage - my goal was basically to stir up a small number of early accounts without spending any money - if I could do it again I’d focus more time in areas that would deliver longer term, sustainable gains. Like content marketing.
Content Marketing Results
Content marketing is where I’ve spent the vast majority of my time and energy over the last two years - I began these efforts a full year before we had any product to sell. Our strategy has been pretty simple - we publish a monthly company update (only if we genuinely have something worth our audience’s attention) as well as one other post per month on topics primarily related to growing SaaS start-ups.
We published a total of 27 posts in 2017 and 16 posts in 2018, including a few guest posts on blogs from companies like Kissmetrics, Crazy Egg, and Capterra. Here’s our content calendar with a history of all of the posts we’ve published or you can check most of them out on our blog. Most of the content we’ve published either highlights our own entrepreneurial journey or is heavily researched, long form content of 2,000-3,000 words. Our top performing posts to date are:
I chose to invest in content marketing for a few reasons.
We have some internal competency in writing. I was a writing major as an undergrad and see writing as one of my strengths.
We’re playing the long game - we set out to build Outseta with a genuine 10+ year mindset. We started to feel the impact of our content after about 18 months, which was OK because of this mindset.
I view content marketing as an investment in our brand.
I view content marketing as a long term investment in building sustainable, organic traffic.
So how has it worked out for us?
In short, I’m really pleased with what our content marketing has done for our brand. In a relatively small period of time, we’ve developed a small but highly engaged audience. I’ve gotten a lot of positive feedback on the articles we’ve published from people I admire and whose opinions I trust.
As we continue to grow tying our content marketing investments to revenue is most important, but as an early stage company I’ve bought into a metric called Unsolicited Response Rate (shout out to Jay Acunzo for popularizing this measure). This is simply a measure of how many people send me an unsolicited comment or note after each piece of content that I publish. We’re all busy, so if someone goes out of their way to send along a note that says, “hey this post is awesome and/or helped me,” that’s a pretty good indication that the content is resonating and providing value.
Coupled with our publishing cadence, I’m proud that we’ve earned a “these posts are worth reading” spot in many people’s inboxes. More importantly in terms of measuring ROI, almost every account sign-up in Q4 of 2018 was either a referral form an existing user or someone who specifically mentioned that they found us through one of the articles we’ve published.
While the positive feedback has been great, I definitely haven’t spent enough time investing in what I call “deliberate SEO.” I have spent very little time on deliberate link building outreach, further optimizing older posts for target keywords, or working on content projects that were designed primarily for their SEO benefit or potential. Earlier this year I asked SEO expert Neil Patel how much time I should be spending on link building and he suggested 5 hours per week - I definitely haven’t done that.
While I’ve promoted my posts fairly aggressively (without paid promotion), my hypothesis has essentially been, “Focus on creating awesome quality content and links and organic traffic will follow.” While that’s proven to be true and our organic traffic has grown, outseta.com is still a low traffic website - I know we can grow organic traffic much more quickly.
I think that we’re sitting on a golden opportunity in the sense that with a little more time spent in this area, it should be relatively easy for us to grow our site traffic substantially. As we look to grow more aggressively in 2019, this is an area that I need to spend more time on.
Without spending much time on SEO, our website traffic went from about 4,000 unique visitors in 2017 to over 10,000 unique visitors in 2018. More importantly, account sign-ups grew from 32 in 2017 to 279 in 2018.
Customers and Revenue
OK, OK, I know what you’re thinking. All of the above it great, but how is Outseta doing in terms of customers and revenue?
We’re not publicly sharing our customer count and revenue only because we haven’t really invested in growth yet. The majority of the companies that we’ve signed up so far have been opportunistic or inbound. Our numbers are still very modest, but we’re happy to share them with any prospect that asks.
Most importantly, we’re trying really hard to be patient and follow Mark Roberge’s framework:
Customer success. Then unit economics. Then growth.
Heading into 2019, the product and company is at a point where we’re now ready to invest more heavily in growth. We recently took on a project that’s essentially providing seed funding to support these upcoming investments - we’ll be detailing this decision in our next company update.
We’re also committed to sharing customer and revenue updates for the first time later this year in tandem with the launch of Outseta's reporting features. Stay tuned and you can hold us accountable to that!
We hope our reality is helpful
We wanted to share this information because topics likely equity allocation and expenses are so often secretive in the world of technology start-ups. Beyond that, our social media feeds are so often flooded with the outcomes and performance metrics of a small swath of successful, heavily venture backed companies founded by celebrity entrepreneurs.
While our metrics and expenses are in no way jaw dropping, we think from product to marketing we’re chipping away and making slow and steady progress in the right direction. If you’re a team of “normal” founders that’s bootstrapping a side project into a full-time one, we hope this post is both helpful and reflective of what reality often looks like. Any and all questions welcomed!
By Geoff Roberts 9 min read
Handling objections is something that has always been part of a salesperson’s job. The ability to overcome the most common objections that you hear about your product or service can make or break your company; particularly if you’re a start-up.
I’ve been marketing and selling a paid version of Outseta to potential customers for a year now and I’ve spoken with close to 1000 SaaS start-ups in the process. This post serves two purposes:
To share 5 specific, actionable tips to help you better handle your start-up’s objections
To highlight our approach by directly addressing the most common objections that I’ve heard about Outseta
Let’s start at the top.
5 Tips For Handling Your Start-up’s Objections
Here are some hard gleaned tips on how to best handle objections from your start-up’s potential customers.
#1 - Beware of argumentative language
Early on I found myself writing in email and saying during product demos, “I would argue that…”
I wasn’t trying to be argumentative or combative - at all - I was just trying to advocate for a different point of view. While that’s the case, using phrases like this can subconsciously create a sense of conflict that’s unnecessary - there’s no need to position your point that way.
When I first drafted one of the answers to our objections that you’ll read below, I wrote, “I would argue that this list is exactly what start-ups don’t need at an early stage.”
“This list is exactly what start-ups don’t need at an early stage,” loses that argumentative context, however slight, with the added bonus of coming across as more factual, direct, and confident.
#2 - Talk about your strengths, not your competitors’ weaknesses
Your product will almost always be evaluated alongside competitive products, so it’s only natural that you’ll field questions from prospects about how your product stacks up versus the competition. And if you’re in any reasonably competitive market, there will always be instances where your competitors offer features or functionality that you don’t or that’s better suited to the prospect you’re speaking with.
When handling objections about your product versus your competitors’, my advice is essentially don’t go there. Your competitors’ product offerings are probably changing quickly, much like your own, and staying up to date on exactly what each competitor offers is probably not the best use of your time if you’re working in an early stage start-up. Instead, focus on what you do know - your product and company’s strengths - and emphasize why those strengths are important to solving your prospect’s challenges.
#3 - Acknowledge legitimate concerns as legitimate concerns - step into your prospect’s shoes - and ask what would alleviate their concerns
Remember that prospects are people. If they’re looking to make any decent sized investment in a product or service, chances are they’re responsible for that decision. If you’re selling a B2B product it most likely impacts their job, their life, and their chances of a promotion. They should have objections!
Once you talk to enough potential buyers, you’ll quickly learn what the most common and legitimate objections to your product are - acknowledging them and showing a little empathy and understanding of your prospect’s concerns goes a long way.
But far too many companies stop short of one critical step - be sure to ask the prospect what would alleviate their concerns. Oftentimes the objection is something you can’t immediately do anything about, but sometimes prospects can surface ideas themselves that make them feel more comfortable moving forward. You never know unless you ask.
#4 - Encourage them to challenge the status quo - start-ups don’t win by doing what everyone else does
The proliferation of business advice and content on social media and the web has created a copy-cat society in the business world, one where companies flock to replicate the latest best practices. But if everybody’s doing the same thing, no one is innovating towards gaining a competitive advantage. Just because one strategy or way of doing things is widely adopted doesn’t necessarily make it the best.
That’s what start-ups are all about! Don’t be afraid to point that out and encourage your prospect to challenge the status quo, politely.
#5 - Recognize not everyone is an early adopter - leave the door open for later
Working with an early stage start-up in any industry typically comes with a greater degree of risk than working with a more established company - we’ve all heard the old adage, “Nobody ever got fired for buying IBM.” And that’s totally OK - not every prospect is going to be comfortable being an early adopter of your product or service.
Early adopters are a special breed so when you find them, treat them like gold. And for those that aren’t quite ready to take a leap on your start-up, make sure to leave things on good terms and let them know that your door is always open. You might be surprised who comes knocking a year or two down the road.
How We Handle Outseta’s Most Common Objections
With these tips under our belt, let’s look at how we’ve applied them to handling the most common objections we’ve heard about Outseta.
Outseta sounds great. But how do I know you’ll stay in business?
This is a classic objection that every start-up company must face. At Outseta we’re asking our customers to trust us with mission critical aspects of their business - their CRM records, their billing system, etc - so this is a very valid concern.
We’ve specifically built our business with painstaking transparency to help alleviate this concern. Everything from our business structure to how we make financial decisions has been designed for longevity. Ultimately, most start-up SaaS companies go out of business for one of two reasons.
They couldn’t find any traction for their idea and were never able to acquire paying customers. After a year or two the founders burn out or lose interest and shut down.
They run out of money - maybe they raised venture capital or angel funding - but their burn rate outpaced revenue growth and unable to make payroll they’re forced to shut their doors.
At Outseta we’ve done everything possible to insulate ourselves from these circumstances. First, our product competes in very mature markets like CRM, subscription billing, and email marketing - these categories represent known, validated needs of the companies we serve. The market for our product already exists.
Second, we have very specifically chosen to bootstrap Outseta and minimize all expenditures related to the business aside from our own time. Our growth is funded by our own revenue by design, rather than by investors. Our founding team is self-sustaining financially, meaning from day one we haven’t been relying on Outseta to pay us the salaries that we need to cover our living expenses.
For most SaaS start-ups salaries are by far their biggest expense - often 50% to 80% of total expenses - so this is a huge advantage and puts us in a scenario where it’s highly unlikely that we’ll go out of business for financial reasons. We’re in this for the long haul!
I’ll be sacrificing some functionality by using Outseta instead of building a tech stack of more specialized software tools. Why would I do that?
Yes, you will be sacrificing some functionality. No doubt. But for an early stage company, that’s actually a very good thing. Hear me out.
Let’s start by look at a report put together by another SaaS company, Blissfully. They’ve built a SaaS product to help you manage all of your different SaaS products, which I raise because their business relies on companies using a slew of specialized software tools. Yet in their Guide To SaaS Management they cite the problems associated with using a slew of SaaS tools as…
Human resources and finance challenges
This list is exactly what start-ups don’t need at an early stage. We all like to buy stuff. We all want more. We all live in a world that celebrates excess where nobody wants to feel like they’re missing out on anything. You want all the bells and whistles, I get it.
But is that what your start-up actually needs? When was the last time you used the seat warmer for the middle seat in the back row of your SUV?
When you piece together your tech stack at an early stage, you end up with a bunch of tools that are only fractionally used. There’s a core function or process that each tool supports and is used for, as well as a whole bunch of excess features that remain untouched. Mailchimp offers over 100 email templates - how many are you actually going to use?
This fractional use phenomenon makes logical sense when you consider what SaaS companies typically do as they grow or take on outside funding.
They build a bunch of new features to help them go “up-market” so they can sell bigger deals to bigger customers. So those extra features aren’t meant for you as a start-up anyways.
They build a bunch of new features to help them move into new markets. So those extra features aren’t really meant for you either.
They build lots of integrations with other complementary tools. You might use a few of them, but most of them won’t pertain to you.
We’re neither going up-market nor building integrations because our software tools have been built together from day one. So are those extra features really doing anything for you other than driving up the price tag? Is the price, integration, maintenance, and aforementioned problems with a slew of more specialized solutions really “worth it,” or do you just want to know that those extra features are there?
Most importantly, whatever software tools you use are ultimately designed to support one of the processes involved in running your company. You need software to manage your sales pipeline. You need software to charge your customers and to help field customer service requests. These are core needs that are undeniable and important to fulfill.
But is it the software you’re using, with all the bells and whistles, that’s going to dictate whether or not your start-up is successful? Absolutely not. The start-up game is about staying alive long enough to win. You need to design and build a product that people actually need. You need sales people who can handle objections. You need to hire a great team.
The bells and whistles of your software products is not what’s holding you back, especially in an early stage company. Having more time to focus on the aspects of your company that really matter is what will dictate your success.
Won’t I outgrow Outseta? What do I do when that happens?
You betcha you will - in fact, we’re hoping you do! We’re not going up-market - we’re here to serve you better than anyone else can now. We’ve seen companies grow from nothing to $5M-$6M in annual revenue using software tools like Outseta - that’s the journey we want to ride along with you for.
Our founding team worked together previously at Buildium, a company that’s made the INC 5000 list of America’s fastest growing private companies 7 consecutive years. You know how long it took Buildium to go from $0 to $5M in annual revenue?
The point is even if everything goes well and you grow fast you’ll be using Outseta for a long time; all the while reaping the benefits of predictable, low financial overhead that companies swimming up-market can’t promise you.
When you do get to that point, we’ll be in your corner high-fiving with you and you’ll also have a major advantage when switching to new software tools…
Because all of Outseta’s tools are fully integrated from the get-go, we have one master database that includes all of your data - every CRM record, billing interaction, email exchange, customer support ticket, or live chat conversation that you’ve had. You own that data, not us, and we can easily export it for you so it’s not lost.
Try doing that when you’re changing from using 5 to 10 different software tools. That’s… well that’s SaaS chaos!
Last year Clement Vouillon of Point Nine Capital wrote an article entitled The Rise of the Non “VC compatible” SaaS Companies. It made the rounds in tech circles online. And it expressed a growing sentiment in the world of SaaS start-ups; for the majority of SaaS founders the traditional VC model is a clusterfuck that makes very little sense.
Fast forward 18 months, and the article looks downright prophetic.
In recent months some of the most well known names in tech have announced that they’ve decided to buy out their investors. First it was Wistia, followed shortly thereafter by Buffer; both buyouts a sort of declaration of independence that gave both companies back the ability to build their businesses on their own terms.
Rand Fishkin of Moz poured his heart and frustrations into his book Lost and Founder, then began building SparkToro taking a drastically different approach than he did in building Moz. Investment funds like Indie.VC have turned from a little known “isn’t it cute what they’re doing” blip on your Twitter feed to a highly regarded fund with an extremely passionate following.
If you’re reading this post, this probably isn’t news to you.
I’ll be the first to admit that all of the above resonates with me - I think more companies looking to stay independent and operate on their own terms is, generally, a good thing. But that said, the dialogue around the “VC compatibility” issue has quickly become very much divisive and polarizing.
Venture capital is not inherently bad or the manifestation of greed and commitments to impossible-to-deliver growth. And the companies choosing the independent path are not all hipster led lifestyle businesses choosing nobility over bankroll and operating with a chip on their shoulders.
The fact of the matter is there are countless ways that you can choose to build your business, and even amongst this new flock of independent SaaS companies there are significant, deliberate differences in the approaches these companies have taken.
This post will look at two more established companies - Wistia and Buffer - and two newer start-ups - Outseta (my start-up) and SparkToro - taking a closer look at the pros and cons of the unique decisions each company has made on their road to independent growth.
TWO ESTABLISHED COMPANIES CHANGE COURSE
Don't fret, we just bought out our investors and took on some debt
$650,000 from angel investors in 2008
$775,000 from angel investors in 2010
$17.3M in debt from Accel-KKR in November 2017
Wistia, a Cambridge, MA based video hosting company, made waves throughout the SaaS world this July when they formally announced that they had taken on $17.3M in debt to buy out their investors.
The company had for a few years prior followed a growth-first path, hiring aggressively and prioritizing projects designed to make an immediate impact on their growth rate. This newfound focus created cultural issues within the company, saw the company’s monthly burn rate dramatically increase, and did little to accelerate growth. At the end of the day, “We broke pretty much everything,” says CEO Chris Savage. Perhaps worse yet, long tenured employees of the company began leaving, saying the new focus on growth “didn’t feel Wistia.”
Wistia is certainly not the first tech company to suffer from over-scaling, but their story is both unique and illuminating for a number of reasons.
First, Wistia had for years taken a long-term approach to growth. They had built a highly profitable business that was generally adored by its customers. They had been very deliberate about not raising too much money, and to date the company has only raised a total of $1.4M. Their first round of Angel investment in 2008 had not been a round for the sake of raising a round, or funds really even earmarked to invest heavily in growth. Founders Chris Savage and Brendan Schwartz only raised money when after two years, “we admitted to ourselves we needed some help from folks with more experience than us.”
Despite taking this carefully considered, only-what-we-need approach to growth they began hearing advice and a narrative that you’d be hard-pressed to find anywhere outside of the traditional Silicon Valley tech bubble.
“As we grew the company and began sharing our story, we kept hearing the same counterintuitive advice from other entrepreneurs — Wistia was too profitable. We weren’t spending enough on growth, thereby limiting our opportunity.”
While I’m all for reinvesting in growth, it’s hard not to chuckle when you hear that a business is too profitable. In a for-profit business, isn’t making profit the objective? The idea of temporarily jacking up your annual growth rates so you can sell your business at a high valuation multiple is really a much more sideways approach to growth if you take off your tech blinders for a minute and use your head.
But after a few years of more aggressively chasing growth and realizing that they were no longer having much fun, Wistia’s Founders decided something had to change. If they were to get back to growing Wistia on their own terms, some serious challenges lay ahead.
They needed to provide a return to their angel investors
They needed to provide return to their employees
With no intention of selling their business, they needed to replace their stock option plan
They didn’t have enough cash on hand to buy back stock, so they had to raise money
They had to raise debt which increased their ownership in Wistia, but also their risk
The solution to the problem that gave Wistia back the right to grow on their own terms came in the form of taking on $17.3M in debt from Accel-KKR in November 2017, an enormously difficult decision that has since been generally and rightly lauded in tech circles.
“We felt confident that the profitability constraints the debt imposed would be healthy for the business. Spending or hiring ahead of budget to try to juice growth weren’t options in this model and we’d be forced to grow the way we wanted to: sustainably, with a focus on creative, long-term solutions for our customers and team,” said Savage.
As one of Wistia’s very early customers, I watched the company grow up from afar and had heard bits and pieces of this story from those both inside and outside of the company. But as I reflect on this story, there’s three things that stick out in my mind that I admire.
Wistia’s Founders made the decision to take on debt after they received an offer to sell their company outright. It was a large enough sum of money to change their lives, and their family’s lives, forever. Not many people choose to walk away from a pot of gold. Especially when you’re taking on $17.3M of debt in a business with an annual run rate of $32M.
In raising debt, the company chose to provide a return to both their investors and their employees. It was the right thing to do, but this is exceedingly rare.
Ultimately one of the major reasons Wistia chose to raise debt was so that they could get back to taking long-term, creative risks that had been hadn’t been prioritized when they were pursuing growth more aggressively. While taking creative risks may not be what’s most important to your tech company, it’s one of Wistia’s four core values and is deeply important to them. I applaud them for “knowing thyself” and serving their values above all else.
Curious how he felt reflecting on the decision to raise angel money - a decision that ultimately resulted in Wistia needing to take on $17M in debt - I asked Wistia Co-founder and CTO Brendan Schwartz if he’d do anything differently.
“That money brought us two phenomenal teammates, a really helpful mentor who's still on our board, and lots of connections and help from investors. I'm quite confident we would not be as successful without raising that money initially,” said Schwartz. “The only thing I think we would have done differently in retrospect would be to structure the deal with some kind of payback terms similar to what Bryce has been doing with Indie.vc. I think that's a great way to preserve optionality - you can pursue the venture track or you can aim for profitability, pay back your investors, and maintain full control over your business.”
$120,000 through AngelPad start-up accelerator in August 2011
$330,000 seed round in December 2011
$3.5M series A round in December 2014 (60% was from Collaborative Fund)
Bought out main series A investors (representing $2.3M of $3.5M raised) in July 2018
Just a few short months after Wistia’s announcement another household name in tech circles, Buffer, announced that they were also buying out their investors. While they didn’t need to take on any debt to buy out their investors - let alone $17.3M worth - their story is uniquely turbulent in a number of ways.
Buffer began as very much a darling child of the tech world - they had everything going for them. After raising a total of $450,000 in 2011, Buffer would raise a Series A round of $3.5M in 2014 - 60% of which came from Collaborative Fund.
Buffer was so hot at the time - revenues were growing 150% per year - that the terms they got for their Series A were insanely good. They were doing $4.6M of revenue at the time and the business was valued at $60M - a valuation multiple of 13x revenues. The $3.5M they raised only required them giving up a 6.2% equity stake in the company… and no board seat. The company even took $2.5M of the $3.5M and paid it out to the Founders and early team members.
Without question, Buffer was flying high.
After the Series A, Buffer fell into a similar trap to Wistia - they hired too quickly, specifically to accelerate product development. Shortly thereafter Co-founder and CEO Joel Gascoigne and team had to make the tough decision to layoff a number of Buffer employees to regain financial control of the business. Morale took one on the chin.
Shaken by this experience and unwilling to compromise on many aspects of his company’s unique culture (open salaries, fully-remote team) that he viewed as Buffer’s secret sauce, Joel began articulating a vision for the company that accepted a slower, more deliberate growth rate. This vision was not aligned with his investors, or his Co-founder and CTO, both of whom would leave the company.
As tensions with his Series A investors increased, the fine print on the Series A term sheet surfaced some additional challenges if Buffer sought to control its own growth trajectory.
They needed to provide a return to their investors
They had to layoff employees after hiring too aggressively
They could not provide liquidity to employees or seed investors without majority support from Series A investors. They had to buy them out first.
Their Series A term sheet provided downside protection for Series A investors, who had the right to claim a guaranteed 9% annual interest on their investment at any point 5 years after the initial investment.
Communication soon broke down with Collaborative Fund and Joel found himself in a meeting where he was being asked if he would step down as CEO of Buffer if he could not afford the 9% annual interest his investors were entitled to after 5 years. If Joel was not willing to pursue growth that was in alignment with his investor’s expectations, he could be squeezed out of his company altogether.
Luckily for Buffer, the layoffs and slowed emphasis on growth had helped Joel regain control of the company and start operating profitably again; so much so that he was putting $400,000-$500,000 of profit away in the bank each month. Buffer spent $3.3M - about half of the cash they had in the bank - to buy out their main VC investors (who had kicked in $2.3M of the $3.5M Series A investment). Those that chose not to accept the buyout proved to be comfortable with Joel’s decision to grow the company at a slower, more organic rate moving forward.
While Buffer’s path to independence did not require walking away from a pot of gold and taking on a large amount of debt, the company’s path was both turbulent and admirable in its own right. Laying off employees, watching your relationship with investors who believed in you sour, losing a Co-founder and a CTO, and having it suggested that you might be squeezed out of the company you’ve spent the last 7-8 years of your life building is all agonizing stuff that will keep you up at night.
To make matters worse, when you “had it all” previously these things are even harder for your team and employees to understand. Said Gascoigne, “Whereas in the past we’d had it all and achieved growth alongside creating a unique culture with a fully remote team and high levels of transparency, it now started to feel like we had to choose between those things. It was suggested that some of the fundamentals that I had come to value could be removed to create a productivity environment that would increase the growth rate.”
Another takeaway for me from Buffer’s story is how easy it is for Founders and investors to become misaligned, even when both sides have good intentions. When Buffer set out to raise their Series A, they knew they were raising an “atypical round” in terms of the round’s size, not turning over a board seat, and only giving up a small stake in their company.
Collaborative Fund, who looks to make investments that are “better for the world” and “pushing the world forward,” was open to this structure granted some downside protection. Said Gascoigne, “We shared openly that we may not want to raise further funding, sell the company, or IPO. We were transparent that we wanted to be able to keep questioning the way things are done. Specifically, we communicated that we wanted the option to be able to give a return via distributions, not an exit.”
The point is these conversations were on the table from the get-go and from afar this looks like a situation where neither the Founder nor the investor meant any ill-will or malice. But while stashing away $400,000-$500,000 of profit per month and accepting a slower growth rate made a lot of sense to Joel, it certainly didn’t jive with the expectations of his lead investor; previous conversations had or not.
Ultimately what I appreciate most about Buffer’s story is similar to what I appreciate about Wistia’s.
Buffer chose to pay out $2.5M of the $3.5M they raised in their Series A to their Founders and early team. I applaud the decision to pay out those who were responsible for the company’s early successes and the company’s ability to raise that round in the first place.
While Wistia wasn’t going to sacrifice their ability to take creative risks, Joel wasn’t going to compromise the remote workforce and highly transparent culture that he’d built at Buffer. In fact, he saw these aspects of the company as largely responsible for their successes. I admire his recognition of this part of their culture as a strategic advantage and something that he would absolutely not compromise on.
TWO NEW COMPANIES PLOT THEIR COURSE
Our start-up structures are new and daring, we distribute wealth through profit sharing
Sparktoro, a Seattle based company that’s building a “search engine for audience intelligence,” is a product of Rand Fishkin (formerly Co-founder of Moz) and his Co-founder Casey Henry.
$1.3mm from 35 angel investors in June 2018
When Rand Fishkin made the decision to start building his next company after Moz, he came out of the gates swinging with his book Lost and Founder followed shortly thereafter by a very atypical funding round.
The traditional VC model was not a fit for his new business, and he wasn’t afraid to say it. He’s hell-bent on showing that there are alternative paths for Founders who want to retain the right to grow their company on their terms.
Rand and Casey chose a corporate structure and investment terms that are a departure from the norm - the company is a LLC and can pay dividends to employees and investors when the company does well. The company has the option to pay profits out to investors or choose to invest profits back into the company’s growth. On the surface, this structure looks similar to the deal Basecamp made when they took investment from Amazon.com CEO Jeff Bezos - a no control stake in a LLC that has now returned (via profit sharing) more than 5 times the amount Bezos initially invested.
The structure is also specifically designed to hold the Founders accountable; neither Casey nor Rad can take any profit or raise their salaries above the market average for Seattle until they have returned all invested capital to their investors.
Changes to this structure require that 80%+ of outstanding units (think of these as stock options) vote for the suggested change. If the company is sold, investors get to greater amount between the amount they invested or the worth of their outstanding units.
They wanted the ability to stay independent and profitable vs. seeking an exit or IPO
They wanted the ability pay out invested capital as dividends when the company did well
The Founders had different financial situations and didn’t want to wait to start working on SparkToro full-time
SparkToro’s path is most interesting to me because the decisions they made were very much intentional and deliberate. While Wistia and Buffer had existing investors and lots of success before they were faced with the financial restructuring of their businesses, if they wanted to plot their own independent course their hands were somewhat tied and they had to figure out how to best make that happen. Casey and Rand were starting with a perfectly blank slate.
The first thing that I like about what they did is they made a deliberate effort to highlight their new course in the hopes that others can follow or at least derive some inspiration from the decisions they made. This is evident in their one page term sheet, their investor prospectus, and even their mention of using tools like Carta to distribute units. All of this is helpful fodder and they took the time to make these documents clean, understandable, and generally as useful to others as possible.
But what’s really most interesting to me about SparkToro’s path was that behind the term sheets, financial figures, and equity structures they took the time to share the human element behind some of their decisions.
They could have bootstrapped the business, but they decided not to because that wasn’t an option for Casey’s family or financial situation. Rand had previously funded Moz in the early days via consulting revenue, and was well aware of the hidden costs and tradeoffs that come with bootstrapping.
And let’s face it - between Moz’s success and Rand’s standing in the worlds of marketing and VC-backed technology companies, money wasn’t only available but it was available on their terms. They got a decent valuation with very little traction and were able to add a number of key investors with a vested interest in their business without giving them voting rights.
While this scenario is exceedingly rare, it definitely removes the majority of the drawbacks often associated with raising money. While SparkToro did give up a good amount of equity, the only other real downside in this scenario is adding some complexity around reporting and legal costs earlier on than they might otherwise have. And while their investors don’t have voting rights, they still represent stakeholders that need to be considered in future decision making.
With these realities on the table, I appreciate the deliberately frugal approach and agreements Rand and Casey made regarding how their funding would be spent. By agreeing to take market level salaries and not allowing themselves to raise their salaries or dip into any profits themselves until all capital is returned to their investors, they’re demonstrating self-imposed financial constraints that show investors they’re being responsible and judicious with their investment dollars.
It was also cool to see the one area where they admittedly splurged - high quality health insurance through WTIA. They weren’t afraid to call out their needs in this area or compromise and put their families at risk by skimping on their healthcare until a later stage. Personally, I was not aware of programs like these and while WTIA’s program only serves the state of Washington, this set me on a course to exploring options like this for California residents (where I live).
All of which brings us to my start-up, Outseta, a fully remote team that’s building a suite of software tools specifically for early stage SaaS start-ups. We’ve been in business since late 2016, and since the get-go have been building our own intentionally independent path. Like SparkToro, we also open sourced our operating agreement in the hope that it would be helpful to others considering a similar path.
My Co-founder, Dimitris, also Co-founded Buildium, where we met. Buildium (founded in 2004) was set up as a LLC with a membership units plan to help drive employee retention and deliver financial rewards to employees in the case of a liquidity event. It was certainly one of the few SaaS start-ups I was aware of with this structure at the time. Buildium bootstrapped for its first 8 years, well past $5mm in revenue, before eventually raising money to keep accelerating growth. The path we’ve chosen at Outseta certainly reflects this past experience, but with some notable changes.
We wanted the ability to stay independent permanently and have all employees reap financial benefits when the company does well via profit sharing rather than pursuing an exit that makes a small number of shareholders wealthy
We wanted to to embrace self-management, a structure that rewards autonomy and focuses on rewarding employees for their contributions to the company rather than their positional authority or job title
We knew we’d be bootstrapping against heavily venture-backed competitors in a particularly competitive market
Our founders have very different financial situations, which we knew would predicate us taking a long term approach to building the company
The first thing that I’ll note is that by deliberately choosing to bootstrap in such a competitive market, we knew that we had to take a very long term approach to building Outseta. We have and are continuing to ramp up the amount of time we spend on the company - Dimitris is still involved with Buildium as a board member, and my Co-founder Dave and I both continue to take on some consulting work.
There’s obviously a trade-off here, one that was questioned recently when I was interviewed by Nathan Latka on his podcast. “If you’re so confident in what you’re building, why don’t you go all-in?” he asked. In short, our answer is…
We’re building a product with key functionalities - CRM, subscription billing, and customer communication tools (email, live chat, help desk) - that don’t need to be “validated.” These are established categories and known needs of the companies we serve - there’s no “first mover” advantage in this market and there are already players of all shapes and sizes.
Like Wistia, we think that needing to operate within the constraints of our own profitability is actually a good thing and will keep us financially disciplined.
I would argue that the path we’ve chosen is much more “all-in” than building the company using someone else’s money. We’re putting ourselves, our own time, and our own money on the line.
Perhaps most importantly, I’d say our ability to take this long term approach is only possible because of the relationships our founding team has with one another. I worked with Dimitris for 5 years previously at Buildium, Dave and Dimitris worked together previously at Sapient. In addition to the prior working relationships, there are friendships. While that creates challenges of its own, what it’s meant for us is a high degree of confidence and philosophical alignment in how we want to build Outseta.
Secondarily, it’s really important for us to share Outseta’s financial successes with our team without requiring an exit event. As such, all employees at Outseta are eligible to participate in profit sharing once they’ve been with the company for one year. We also issue membership units (like stock options) to employees and offer a buyback program so that if an employee gets a great opportunity elsewhere they can take it and still cash in on the value of their units. This program pays back employees based on the number of membership units they hold and the valuation of the company, which we calculate as 2X the past year’s revenues.
Finally, as Rand and Casey did it’s worth acknowledging that our founding team has different family and financial situations. This is certainly a potential source of misalignment, but at the same time it’s a reality that’s forced us to consider how we wish to structure and operate Outseta that much more.
Since day one, every hour spent working on Outseta has been tracked and everybody is earning sweat equity in the business commensurate with their time invested in the company. The plan, absolutely, is for us all to go full-time when we have the revenues to support our own salaries.
In the meantime, I have all the “normal” financial challenges that you might expect; I have a mortgage payment each month, school loans to pay off, and a fiance who wants to remodel our bathroom. On top of that, I simply need to “keep the lights on” as well as pay for my own health insurance. All of the above is without question stressful, especially when you look at friends with big-salaried corporate jobs and growing 401ks.
My advice for anyone considering bootstrapping that doesn’t have financial freedom is this; don’t fall into the trap of viewing bootstrapping as this noble endeavor that’s going to impose some short term limitations. Manage your burn rate obsessively, and create a plan to keep yourself financially afloat for 3 or 4 years.
I’m coming up on two years now making about a 50% salary without any benefits. I’m 32 years old and generally healthy, so I opted for a “good enough” health insurance policy that really just provides coverage were anything bad to happen to me health-wise - it costs about $280 month through Covered California.
Bootstrapping for 3 months is very different than bootstrapping for 3 years, so do some soul searching ahead of time to figure out if this is feasible for you.
Wistia and Buffer are two very admirable companies that have done well for themselves already. Outseta and SparkToro are really just getting started. But while all of these companies have made very different decisions to get to where they are today, they all share a common belief - that the right to grow your business at a more organic, deliberate pace can actually be one of the biggest advantages to long term revenue growth that’s out there.
If you’re considering a similar path I hope this provided some inspiration, and I’d love to hear about your company’s path via a comment below.
By Geoff Roberts 8 min read
At Outseta almost all of our customers are early stage SaaS start-ups; in many cases just a single Founder or a small group of Co-founders. Every single one of these companies knows they “should be doing SEO,” but between building your product, incorporating your business, testing other marketing channels, and hustling to make some early sales SEO too often gets pushed by the wayside.
That’s too bad, because the sooner you start taking SEO seriously the sooner your business will realize the the benefits of sustainable organic traffic. Even if you’re investing heavily in SEO, this often takes 12-18 months.
With this very challenge in mind, I decided to ask three leading SEO experts about two of the biggest SEO related challenges I see early stage SaaS start-ups face; both of which I'm wrestling with at Outseta.
Let’s meet our experts.
Neil Patel, Co-founder of Kissmetrics, Crazy Egg, and Neil Patel Digital
Let’s do it.
Question #1 - Link building with limited resources
Geoff Roberts: We are an early stage, bootstrapped SaaS business. I am the Co-founder responsible for go-to-market strategy; I own all of our marketing efforts as well as sales. Link building is a very time consuming task, so I’ve basically chosen not to spend time deliberately building links and am instead focusing on content quality and occasional guests posts on other sites. I feel like I should be spending more time specifically on link building, but it’s such a time-suck and I have other competing priorities (sales for one!). What’s your advice for other bootstrapped start-ups when it comes to link building - how much time is “enough,” and how would you recommend they tackle link building in a more deliberate, cost effective way?
Miguel Salcido: Well, it's never ‘enough’ time. Link building needs to be an ongoing effort, like any marketing channel. You will need to prioritize.
Focus more on content for third-party sites like LinkedIn, B2B blogs, and Medium which seems to be a great place for start-ups. Because at this point, your product is fairly unknown and very niche. You need to get the word out and build brand. So put most of your energy here to start out. Use ghostwriters if necessary to save time. Once you’ve established the brand and traffic to your site, you can shift the focus to more content for your own site.
Make sure that you have at least 2-3 very high quality guides or content pieces that you can use to drive people to, making sure to have a lead magnet (tools/checklist/calculator/etc.) that you can offer with each piece of content so you can capture emails.
For your content, try to focus on use cases for your software if possible. And interviewing SaaS startups is also a good route.
Create “teasers” for every piece of content you have and post those out through your social channels, focusing on LinkedIn. Schedule these to post regularly. The teaser should entice readers to “click here to see the full article” in order to get them to your site. Schedule all of this using Buffer + Quuu.
Neil Patel: I would follow the tips in this video. And as for time, I would spend at least 5 hours a week building links. After a year you can slow down.
Marty Martin: Link building is a hateful, extremely time consuming, onerous task, and not one that many people have a real knack for. Being successful in link building is all about your creativity, process, and breaking it out into manageable tasks. Otherwise, it can take an unending amount of time.
Link building at scale, as a siloed task, can be broken out roughly into the following steps that can be run in parallel, saving you time and frustration:
This is typically the realm of agencies, and not something a bootstrapped startup can pull off on its own.
But don’t despair! As a startup, there are other options to consider. If you’re getting a lot of press because you’re amazing, ask for the links. One option is to use a tool like Ahrefs’ Alerts. It will notify you of any mentions of your brand name, where the citation is not linking to you. Then simply email the journalist or website editor, thank them for the mention, and ask for the link back to your home page so their readers can find you. That’s an easy, manageable, once a week type activity that will earn you links over time.
Another option, is using Ahrefs (as mentioned above), or another tool such as Majestic that will show you your competitors’ broken links. A small amount of checking and you may find a resource your client used to have that now 404s, and that’s an opportunity for you. Build the same resource, download the list of broken URLs, use an intern or other internal resource to find contact info for all of those websites, and write to them to tell them their users are missing out as the site they’re linking to no longer has the resource in question, but your site does. Ask for them to update their broken link to your website. This is a task that can be broken out into a process as described above, and tackle a bunch of links at once. We’ve found broken resources with thousands of link opportunities this way.
Does your college or university have an online magazine and/or alumni magazine? Pitch them to write about your recent advancements as an entrepreneur. Do you have business partners and other principals? They should pitch their schools as well!
Build a useful asset, driven by data, that can be a useful resource to journalists or other websites. For example, the government has tons of freely available, regularly updated datasets you can use to build a data driven piece of content on your website. We have used data from the Census Bureau, US Patent & Trademark Office, and other resources to build amazing pieces of content for our clients. They attract links naturally, and with a little outreach effort, you can draw in additional links.
Having the right tool helps as well. We use a tool called Pitchbox to manage our outreach and follow ups. It makes the outreach and response process a breeze.
Question #2 - Keyword selection in established, competitive categories
Geoff Roberts: At Outseta we offer a platform that integrates CRM, subscription billing, email marketing, help desk and knowledge base, and reporting tools. “CRM,” “Email marketing,” and “Subscription billing” are insanely competitive keywords - to the extent that I feel like it’s not even worth us really targeting them. Also, we sell a platform solution that isn’t nicely categorized as “marketing automation,” for example. As a result, I haven’t been very deliberate in selecting keywords to date; our SEO strategy has instead primarily been…
The “normal” build your first few links stuff that start-ups do - building social media profiles, an Angellist profile, some start-up directories, reviews sites, etc.
Creating very high quality, long form content - the idea being if the content is good enough, it will naturally build backlinks.
Guest posts on other topically relevant blogs.
What’s your take on this approach? How would you recommend start-ups in established, competitive categories get more deliberate with keyword selection given these challenges?
Miguel Salcido: You are a hyper-niche B2B SaaS startup. There are no keywords to describe everything you do. So you will have to focus on the solutions your platform provides, and yes those are super competitive terms. I’d also focus on “startup” related terms (startup tools, SaaS startup tools, etc).
If you can find a similar company and see what they target, using SEMrush, then that’s a good idea for keyword research.
Your approach so far is solid, just make sure the content is in fact really high quality and you do that by measuring engagement, email signups, links, and sharing. If you’re not getting those things, then your content is not resonating.
Neil Patel: I wouldn’t worry about keywords. Just blog about content that is super highly relevant (to your audience) and you will start to rank for terms. Next, place banners and links within blog content to landing pages to drive signups.
Finally, go into Google search console and see what pages get the most traffic. Look at the list of keywords that you are getting impressions for and then sprinkle in the keywords you haven’t mentioned on your site yet. The key isn’t to just add keywords, but it is to also expand the content.
Marty Martin: If you are starting a new niche or opportunity with your SaaS product, why not come up with a catchy industry name (think how Rand Fishkin of SparkToro and Dharmesh Shah of Hubspot coined the phrase "Inbound Marketing"), and start using that name in all of your marketing. Eventually, when people start searching for that phrase, you’ll already be the dominate player. Now, this isn’t an easy thing to do, but if it catches on, you’ll be set.
I think your approach above is time tested and can pay dividends with time, but most startups don’t have the luxury to wait for good content to become seasoned and linked to. Good, long form content can draw links over time, but it is a very slow process without outreach.
One thing that may get you more awareness is to build integrations for Zapier, IFTTT and similar services. I’ve become aware of many amazing tools just by browsing their integrations.
Thank you to Miguel, Neil, and Marty for weighing in on these questions. For any SaaS start-up that’s resource constrained, I hope this provides some clarity on your approach to link building. And for any start-up competing in an established and extremely competitive category, hopefully the advice this group shared will help identify the keyword targeting strategy that will yield the most meaningful results for your business.
By Geoff Roberts 10 min read
In recent years much has been written about the "death of email marketing," the basic premise being that everyone's inboxes are more inundated with emails than ever before. Spammers are a problem and response rates are on the decline as we all get better at ignoring the noise in our inboxes.
Email prospecting is a blunt instrument, they say. At best it's a spray and pray game where you blast a sizable list of targets and pray for a 20% open rate and a 2% response rate.
The day I sat down to write this post I stumbled across the following Linkedin update from Larry Kim, Founder and former CEO of Wordstream. Larry has Founded and acted as CEO of successful tech companies, has been a mentor in Techstars, and is the type of guy with a Twitter following of 35,000+. I must admit it put a smile on my face to see him openly vouching for sending cold emails.
I would even argue that with all the lousy emails people are receiving, there's never been a better time to stand out from the crowd with a well designed email prospecting strategy. This article will outline step-by-step the approach that I've been using at Outseta to achieve a 40% response rate on prospecting emails. My hope is some of these tactics will help you in your prospecting efforts, too.
A "cold" email list does not equal a low quality list
When I say that I've been sending emails to a "cold" list, what I mean is that not a single person that I've emailed knows me or anything about Outseta. What that does not mean is that I'm emailing a low quality list - if you are sending emails to undeliverable email addresses, or have out-of-date contact information, that's on you.
Step 1: Find a data source that contains information on target companies
The first step in successful email prospecting is finding a data source that contains information on target companies. At Outseta, we sell to early stage SaaS companies so sites like Founder Dating, Gust, AngelList, and Product Hunt are a great place to find target companies. AngelList and Product Hunt even let you sort specifically to find SaaS businesses, then filter by "Joined" or "Created Date" making it easy to find newly added leads.
There's 13,357 potential leads for me right there on AngelList alone!
If you sell to colleges, an example of a data source could be the Princeton Review. If you are looking to sell your product to yoga studios in San Diego, you can simply Google "San Diego yoga studio" and begin building your list of targets that way.
I recommend building a list of at least 50 target companies to start.
Step 2: Find relevant contacts at your target companies
Now that you have a a list of target companies, you need to find the right person to reach out to at each of your targets. Here are a few tricks that I recommend.
About Us pages
Lots of companies today have "About Us" pages on their website. This often acts essentially as a directory of company employees. Here's an example from our own website.
Look up the target company on Linkedin
By looking up your target company on Linkedin, you'll find what is essentially a company directory of Linkedin member profiles. Simply search for the name of the company, then click the link that says "See all employees on Linkedin."
Google Search "Company name, title"
In this example, I searched for "Mailchimp CEO."
One of these three tactics usually does the trick. Now you should have a nice list of target companies and specific people at those companies that you'd like to reach out to. Which brings us to...
Step 3: Find email addresses for your targets
The best way to get started with finding email addresses is simply looking the person up online. Check their Twitter profile. Maybe they have a "Contact" page on a personal website, or an About.me page that contains contact info. If you visit the person's Linkedin profile, you'll find it says "Contact and Personal Info" in the right hand side bar. By clicking "Show more" you'll expand this section, and oftentimes find contact information readily available.
If none of the above tactics work, your next best option is searching for the email address of anyone else at your target company. Most companies use a consistent structure for their email addresses - something like firstname.lastname@example.org or email@example.com. If you can figure out what email structure the business uses, you can then use a tool called Hunter.io to guess at what the person's email address might be, and verify if you are correct or not. In this example, I verified that geoff(at)outseta.com is in fact a valid email address.
If you can't find a valid email address for someone on your target list, remove them from your list and move on. Again, your success will depend on the quality of your list!
And a final note; when you first start this process, you should build your own list. It's your responsibility - nobody else is going to assemble the list with as much care as you will. Once you've proven this process and that it can generate results, you can absolutely train someone else to do this for you... but you should do it to start.
Crafting prospecting emails that get responses
Now that you've assembled a high quality email list, it's time to craft your approach.
Step 4: Your subject line needs to be something your recipient cares about
This sounds obvious, but it happens all the time; prospecting emails are sent with a subject line that the sender, not the recipient, cares about. "Sign up for Product XYZ" or "Can we connect for 15 minutes"...
The recipient has never heard of product XYZ, or you for that matter, so why would they want to connect?
Much has been written about email subject lines - yes you should avoid words like "Free" or "Sale" to avoid spam filters - so I'll just leave it at you need to mention something that the recipient genuinely cares about, that peaks their interest in a non-gimmicky way.
In the case of the prospecting emails I've been sending, I came up with a very simple solution - make the email subject line the name of the company that I am emailing. Nothing more than "Subject: Start-up Name."
This sounds simplistic, but in this case it works - start-up companies are by definition unknown. They have little-to-no brand awareness, and are starved for attention. It makes sense that when you email a start-up Founder with the name of their company in the subject line, they get excited - "Someone knows about us!" and they open the email.
Step 5: Personalize your approach
This is probably the single most important step in this process, and it's the one that everybody skimps on. I like to start all of my prospecting emails with...
My name is Geoff Roberts, I'm a Co-founder of Outseta."
After that brief introduction, I immediately make some sort of personalized comment about their business. Everybody has been on the other end of generic email blasts, and it's immediately obvious when you receive an email like that. So take five minutes to learn about the prospect you are emailing and try to add value to them in some way. Consider...
Asking them a clarifying question about their product or service - show genuine interest in them.
Providing a tip that might be useful to them based on your past experience.
Drawing parallels between their business and your own.
Offering to help them in some capacity.
The number of ways you can go about doing this are endless, but you need to do your research first. Check out their website, look at content they've shared, and look at their social media interactions. If you can't genuinely add value or personalize your approach in some other meaningful way, take them off of your list. Here are a few examples from emails I've sent.
This was a company that provides real estate websites to real estate investors.
"I stumbled across (Company Name) on AngelList when I was researching SaaS companies in the real estate industry. I was previously head of marketing at Buildium, a property management software company so I've spent a lot of time thinking about how to market websites and software tools to an audience of real estate investors."
This email got a response and we ended up talking both about Outseta and about how the start-up could best market their business.
Another company I emailed was building a network for start-up Founders to share their objectives and drive accountability.
"I came across (Company Name) on Angellist and I love the concept of providing collaborative workspaces in order to set objectives and drive accountability. One of our idea validation interviews at Outseta was conducted with a very similar company called OpenCompany, which has since rebranded and pivoted a bit to become Carrot.io."
Again, I likely got a response because I was familiar with a company that was tackling a very similar problem. The recipient checked them out, was curious about why they pivoted, and I was able to peak his interest because I shared something very relevant to him.
Ultimately, I had a strong hunch that the personal approach I was using in my prospecting emails was one of the primary drivers of the strong response rate that I was seeing. I decided to test this hypothesis - the results were pretty astounding.
Personalized Approach: 117 emails sent, 48 responses, 41% response rate.
Traditional Email Blast: 437 emails sent, 7 responses, 1.6% response rate.
That's right - I saw a 39.4% increase in response rate when I took the time to personalize my email approach. Same quality list. Same call to action. The only difference was I led with a personalized comment based on researching the recipient's business, rather than sharing a more generic comment with a larger audience.
Two or three sentences of personalization is enough, but it's an absolute must. Here’s one of my favorite responses that resulted from this approach.
Step 6: Clearly and succinctly articulate your value proposition
Now that the recipient knows that they aren't on the end of an email blast and that I've actually taken the time to understand their business and engage with them in a meaningful way, it's time to tell them what I have to offer and why it's important to them. Again, 1-2 sentences should suffice - get to the point! Usually I go with something like...
"Anyways, at Outseta we've built a platform that offers fully integrated CRM, subscription billing, customer communication, and reporting tools. This allows SaaS start-ups to launch "leaner" with less technical overhead."
Step 7: Ask for permission to send them additional content or information
I will admit, this is a practice that I was initially skeptical of - start-up Founders tend to be insanely busy people, so why wouldn't I just send them information right away? Do they really want me to send them another email?
Turns out, this works really well. I end each of my prospecting emails with...
"Would it be OK if I sent along more information on our approach?"
This works for a few reasons:
I've already grabbed their attention with a personalized approach.
I've clearly (and quickly) mentioned what I'm offering and why it matters to them.
I'm building some credibility and trust by not jamming marketing materials down their throat that they didn't ask for.
My goal with this initial prospecting email is simply to get a response from the person - any response! If the person responds I know that they are alive, that they read my message, and the door is open to engage with them further.
By ending the email with an open ended question, recipients that are interested in what I'm offering will usually reply with a "Sure, send some info over." Those that aren't interested tend to send along a polite "No thank you," which is equally valuable and let's you know that you should spend your time elsewhere.
Here are the actual responses from the examples I shared earlier.
Step 8: Consider the timing of your emails
Don't get hung up trying to find the mythical perfect time to send prospecting emails, but do use some common sense and whatever information you have at your disposal.
At Outseta, I've found good triggers to be when companies launch their product on Product Hunt or publish their company profile on AngelList. These indicate early stage businesses that are just getting a product to market or are embarking on their start-up journey, and that's the time that we'd ideally like to intercept our prospects.
If you were selling a product to colleges, chances are it's best not to send prospecting emails on graduation day. You get the idea.
Last but not least, a little experimentation is a good idea. I saw particularly strong response rates during the "dead" week between Christmas and New Years, when start-up Founders had more time than usual to unbury themselves from their email inboxes.
Yes, this is a time intensive process and it's easy to make excuses as to why your email prospecting efforts aren't working. But for bootstrapped start-up this is a strategy that costs nothing, that can yield significant results.
Start small. Send 10 emails that are absolutely the best emails you can craft.
I think the responses you get will surprise you.
By Geoff Roberts 6 min read
In the past few months I've been involved with launching a number of SaaS products on Product Hunt, a community where early adopters discover the latest new technology products. Product Hunt is the best site of its kind, followed by Betalist; both sites represent a unique opportunity for early stage start-ups to gather product feedback and land their first users.
There are plenty of "How To Launch On Product Hunt" guides already out there, and I've devoured most of them at this point. My first piece of advice is to take it straight from the horse's mouth - Product Hunt has published two guides on the topic themselves.
The reason for this post is twofold; first, the best way to launch on Product Hunt has changed pretty dramatically, so a lot of the content that's already out there is outdated. Second, I'll give an honest assessment of my own experience in terms of what worked for us and what didn't.
Let's do it.
Is Product Hunt's Ship product worth it?
Product Hunt's Ship product is a suite of tools designed to help you gather product feedback and build an audience prior to officially launching your product on Product Hunt. I will admit that I was at first skeptical about Ship, but I decided to pony up the $79 per month to give the product a whirl. I realized a few benefits from using Ship.
Ship allows you to schedule your launch on Product Hunt. Honestly this is mostly a convenience thing, but it's a nice perk of using Ship. Without Ship, you need to fill out all of information required to launch a product in real-time per se; what this means in practice is that it's been the norm for people to wake up at ungodly hours to launch their product, maximize the amount of time they have to accumulate upvotes, and get something of a first-mover advantage.
This is definitely helpful in terms of planning your launch; you can set expectations with your internal team in terms of exactly when your product will launch, and you can easily schedule other promotional activities to work in tandem with your selected launch time. This was also helpful to me because it allowed me to reach out to the Product Hunt team in advance and let them know exactly when we were planning to launch (more on why I did this shortly).
Ship represents a massive opportunity for influencer marketing and virality. In all honesty, there used to be a pretty fool proof way to all but guarantee a successful launch on Product Hunt if you could just pull it off; getting an influencer with a large following to "hunt" your product. I'm talking a Jason Lemkin or a Hiten Shah type. In the past if you were able to recruit an influencer with a large following to hunt your product on launch day, it would automatically notify all of their followers via email that they had hunted your product driving a ton of traffic and upvotes to your page.
This tactic doesn't work anymore... unless you use Ship. So if you have a personal connection to a major industry influencer, or have someone like that on your board, or can simply convince an influencer to subscribe to your product then you can still reap this benefit. This is a pretty smart monetization strategy by the team over at PH.
How this works today is if you are using Ship, you are allowed to build an "Upcoming Product" page that Product Hunt will also help promote. Get your influencer to subscribe to your upcoming project page, and all of their connections will be automatically notified. Bingo, you've tapped into the virality benefit that PH used to offer. If you know someone with a significant following on Product Hunt, Ship is absolutely worth the $79 per month.
Ship allows you to directly communicate with people interested in your product prior to launch. Ship captures contact information for anyone who subscribes to your upcoming page and allows you to email them directly. The number of people who subscribe to your upcoming page is a decent barometer for how much interest there will be in your product, but on top of that this is useful in terms of gathering feedback on your product prior to launch and communicating updates to your subscribers to keep them in the know as your launch day approaches.
Tips for launch day
The mechanics of writing a good Product Hunt listing are covered well elsewhere; tips for writing solid taglines, adding relevant images, a descriptive GIF, etc. What follows are additional promotional tactics that proved valuable.
Email "Upcoming" page subscribers. If you did take advantage of Ship, PH gives you the tools to directly email all of your upcoming page subscribers. This is a no-brainer, as these people have already expressed interest in what you are working on. On launch day take the time to send every subscriber a personalized email letting them know about your product launch and asking them to upvote your product. I think you'll find that just about everyone will oblige; this represents low hanging fruit.
Email else anyone who has expressed interest in your product. At Outseta we are pretty protective of the audience that we've built. While lots of "how to launch on Product Hunt" guides suggests blasting every email contact and social channel that you have at your disposal on launch day, I think this is overkill and can lead to lots of people being hit with duplicate, poorly targeted messages.
As with any marketing campaign, you need to consider your audience. You might sell to an industry that is altogether unfamiliar with Product Hunt; if that's the case, you're going to get little value emailing that audience about your PH launch.
If you have contacts that you feel are likely to be Product Hunt users, by all means notify them of your launch. Beyond that I'd advocate for only reaching out to contacts that have expressed legitimate interest in your product in some way, perhaps as beta users. In this case even if the contacts aren't PH users, they may be invested enough in your idea to create a PH account in order to upvote your idea.
Product Hunt allows new users to login with existing Twitter, Facebook, or Linkedin accounts. They must then complete some configuration settings around their name and title, as well as the types of products they are most interested in. This is a pretty easy process, but spell it out in your email approach so that you recipients know exactly what your ask is of them and how they can go about delivering on your ask.
Tweet at Product Hunt. Tweet a link directly to your listing @ProductHunt. Don't include any other hashtags. It's in PH's best interest to also share particularly well designed and launched products.
Share a relevant "collection" of related products. Product Hunt allows you to assemble "collections" of related products. Prior to your launch, take some time to build a collection of products that are relevant and useful to your own product's potential users. For example, when we launched Outseta I compiled a collection entitled "The Day One SaaS Start-up." Every product in the collection is relevant to our audience and complimentary to our own product.
Once you've assembled your collection, reach out to Niv Dror who is in charge of community at Product Hunt (Niv@producthunt.com or @Nivo0o0 on Twitter). This is a good way to get your collection in front of the team at PH, in hopes that they will help promote the collection that you've assembled.
Product Hunt is just one channel to get the word out about your SaaS start-up, but it's an inexpensive one that can serve as a serious catalyst for finding your product's initial users. Follow the guidance outlined in this post and you'll have a better chance of making your Product Hunt launch as impactful as possible.
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 20 min read
As the SaaS business model has matured over the course of the past decade, it's fair to say that awareness of the importance of the customer success function has escalated dramatically. Any SaaS business' success is intrinsically intertwined with the success of its customers - and if you think about it, this is a good thing. It creates alignment as an imperative.
Enter Aaron Fulkerson, CEO of MindTouch.
I was fortunate enough to be introduced to Aaron a few years ago now, just as MindTouch was beginning to hit its stride. MindTouch offers "customer self-service software" to customers including Optimizely, Zuora, Wal-Mart, Accenture, Whirlpool, Zenefits, and Intuit, to name a few. In early 2016 the company raised a $12mm Series A led by PeakSpan Capital to accelerate growth, largely on the back on fantastic customer success oriented metrics. These metrics included negative gross revenue churn - a measure that speaks to a company's ability to grow revenue from existing accounts at a faster rate than revenue is lost from cancellations.
Needless to say, as I was beginning to think about how we can build customer success into the DNA of Outseta from day one, I immediately thought of Aaron.
If you're interested in listening to the audio version of this interview, here's what you'll find...
First 10 minutes - Aaron shares how he and his Co-founder failed to find a suitable self-service product to disseminate research to internal staff when they were working together at Microsoft. He then details the journey that MindTouch took from being an extremely popular open source offering to making a somewhat terrifying pivot to a traditional SaaS business model.
10-25 minutes - Aaron shares how MindTouch now uses a customer success blueprint with each of their customers, which drives alignment not only throughout the sales and onboarding process but also across departments and with relevant executive sponsors. But simply having a customer success plan is not enough - you'll also learn how to hold your customers accountable to the agreed upon plan.
25-31 minutes - Aaron offers his advice on how SaaS start-ups should be thinking about customer success from the get-go, and what they can do to build a customer success oriented culture.
If the audio version of the interview isn't right for you, a slightly trimmed down transcription of the interview is available below.
Geoff Roberts: Hi everybody. I'm Geoff Roberts Co-founder of Outseta and I'm here today with my friend Aaron Fulkerson who is CEO and Co-founder of MindTouch. How's it going, Aaron?
Aaron Fulkerson: I'm doing terrific.
Geoff: Fantastic. Why don't you start by telling us who you are and what you're working on at MindTouch.
Aaron: Well like you said I'm the CEO of MindTouch and I'm also one of the two Founders and my responsibilities, they've evolved over the years from being everything from operational to tactical, running different departments, to now I feel like I'm actually CEOing. What's involved with that is I focus on the development of strategic partnerships, helping the market understand how our technology is disruptive for businesses. And of course being the principal person for communicating internally with our team. But it's around finding strategy, communicating the outward facing vision to the market, the partners, the analysts, the journalists, and then internally making sure that there is a steady drumbeat that keeps people focused.
Geoff: At this point MindTouch has had quite a bit of success and operates in the customer success and customer experience space.
Aaron: I like to think of it as what we do is customer self-service and that impacts success, support, and other business but it's really focused on the idea that 80 percent of the population wants to self-serve when they have a support question or when they're onboarding; they don't want to talk to somebody. I know that I don't want to. Turns out 80 percent of the world doesn't want to either. So that's what we're solving for; self-service.
Geoff: Makes sense. What can you tell me about the success that the company has had today in terms of customer count, revenue, and those sorts of things?
Aaron: Well we have about 350 customers. I don't know the exact count but it's approaching 400 customers and our customers will range from a lot of the software unicorn's from Domo, Zenefits, Zuora, Sprinklr, and Docker to more mature companies like Whirlpool and Electrolux that are in the consumer goods space all the way to the largest travel conglomerate on the planet which is TUI. It's really across the board the kinds of companies that we service but it's all very specifically focused on helping their customers self serve.
Geoff: OK. So today I want to talk about early stage startups and what they can do to build a customer success oriented culture and customer success into the DNA of their business from the get-go. I know MindTouch took a bit of a long path to get to where you are today. Can you talk me through the evolution of the company up to this point?
Aaron: The technology began as an open source project that my Co-founder Steve and I started to solve for a specific problem that we'd experienced when we were doing research at Microsoft in distributed systems. We were frustrated that we didn't have a means of disseminating our research out to the rest of the product teams in a way that was effective. So what it meant was that we spent a lot of time talking to people, giving presentations and we thought that there had to be a better way to disseminate our research.
I was the Program Manager of a 14 person team. My responsibility was to take these brilliant minds' research and package it in a way to get it to the product teams. So I went around to the different product teams. This was in 2003 or 2004, and we were spending $2B dollars a year in research which is nothing by today's standards but it was for the most that was being spent at that time. I thought surely somewhere at Microsoft somebody is developing a technology that's going to be useful for what we were trying to achieve, which was self-service. I went to the Sharepoint team and they were not working on this. I went to the Office team - same thing. I went to a bunch of different internal research incubation teams and there was nobody trying to solve this problem of how do you deliver an effective self-service experience.
So that's when we decided we should do this. We came up with the idea of doing it and then we said well let's do it as an open source project. That's where we started with this idea of how do you deliver self-service. We released it as an open source project and it became wildly popular within a year. It was a top 10 open source project and before we knew it we were getting thousands of downloads a day. That was around 2008, and that's when we started selling a commercial license.
Geoff: So the open source model very much validated the concept for MindTouch, and you knew you were working on something worthwhile. Talk to me about making the transition from the open source product to a traditional SaaS offering.
Aaron: It became clear that we were trying to address a market where the use cases were so broad and vast. We didn't have an addressable market that we strategically decided to attack. So we found herself in this position where we were like "what are we trying to do?" We're trying to compete with SharePoint and Dropbox and Box. It was at that point we were just like you know we've got a ton of distribution. In 2008 we did $1mm in cash receipts with an average deal size of $3000. In 2009, we did more than twice that - it was like $2.5mm. We were growing but we were clearly trying to address too big of a market. And all of us sudden we started to get all this competition in this category. So it was clear we didn't have that business model.
At that point we said look we don't have a business that we can scale because we're trying to be everything to everybody. So it was like, "OK why don't we divert our attention away from this broader use case and let's just focus on self-service," and it was Steve my Co-founder that was like "OK, well let's sharpen up the feature set and by the way we're going to do it in the cloud." I was initially really hesitant because when I started talking to our customers at the time they were mostly IT guys who had done installations for businesses. And for many of them their job, their sole purpose was to maintain that install. We were certainly at odds with the people who recommended us. I'm like Steve I don't know; I get that delivery in the cloud is faster and it's better for the customer. But at the same time I'm scared because all of our customers right now aren't there. So it was it was a scary proposition when we set out in 2010 to launch a cloud version, but we pulled it off.
Geoff: If you look back over the course of those 10 years and could shake your younger self and give yourself some advice on how the path forward could have been smoother, what would you tell your younger self?
Aaron: We were lucky that we actually turned what was a very popular project and a failing business into a successful business. If you look at what we did wrong, it's what I see so often when I talk to entrepreneurs - they have 10 businesses that they're trying to take to market instead of one. So they're trying to solve 10, 20 different problems instead of one. And there's no way you're going to do that; it's hard enough to solve one problem and build one business.
Geoff: So let's talk about MindTouch today. What does customer success look like within the company - where does it fit within the organization, and why?
Aaron: The idea that it is the success of the customer should be the central focus of the business. And that if everybody's economic incentives should be aligned. We have as part of the sales process this idea that we're going to develop a plan or a blueprint for customer success. So the customer success blueprint maps out the customer's objectives, their challenges. How we measure success. Who are the stakeholders. And this became something that helped me work deals, close business, and inform the customer success team after we close them so that they have a very sharp focus around launching the client. It also became something that informed the marketing team so that they could go back and develop case studies based on the impact that we had on the business. It also informs the product team so that they know which features to emphasize or de-emphasize. And of course as I said already it impacted our ability to close the business because it helped our sales efforts be very focused on the customer's needs and how they measure success.
So for us the idea of customer success back in 2010 became really the central aspect of our business that drove all our deal flow, all of our product development, and all of our marketing efforts by understanding this customer success blueprint that we put together for each client.
Geoff: What do these blueprints actually look like? Is it a Google doc? How do you actually distribute that plan amongst your team and amongst your clients?
Aaron: So this has become a thing in our industry now because a lot of our customers like Salesforce, like Gainsight - they've adopted the same model. Their CEOs and heads of sales have said "Hey straight up this is really effective, I'm going to use this model too."
In the beginning this just looks like a summary e-mail; you don't want to have a formalized document because then it makes it less likely that the prospect is going to actively participate in creating the document and you want them to actively participate - you want it in their words. So in the beginning it's really a series of summary emails after your conversations that say, "Hey I've updated what your objectives are. Your objectives are to improve the efficacy of your support team that's measured in cost and net promoter score. And and then our objective is to increase your renewal rates." Well how are we going to do it? So then it goes into challenges. What are your current challenges? Well our customers are upset because they don't know how to use the product or onboarding takes too long. So it really becomes this summary email that then later gets formalized into a document. Another key section is who are the stakeholders who are involved in the project? That's very important - who are you talking, who's measuring your performance, who needs to be involved to get the deal done. And what are the strategic objectives - if you're selling business software that's a considered purchase, there better be a strategic objective that ties into a board level issue. If it doesn't then you've got to hope that it's some kind of transactional software sale for a couple thousand dollars.
Geoff: Sure. So I would argue an entire generation SaaS companies, let's call them SaaS 1.0 companies, invested too late in customer success programs and churn caught up with their businesses. Then as SaaS 2.0 companies began to emerge you heard a lot more about customer success plans, onboarding programs, all those sorts of things. These of course are only effective if the client takes them seriously and commits to them. What sort of things are you doing at MindTouch to hold the client accountable to the plan or blueprint that you put together with them?
Aaron: That's a good question. I mean one thing I'll say is that when we started doing this our prospects thought it was a sales tool. And it took a lot of effort and literally years to help them understand that this is a tool that is useful to you whether you by MindTouch or not. This is something that frames up for their own internal team their team's thinking around a particular set of objectives and challenges.
So let me start now to answer your question - what techniques to use to hold them accountable. What we've done is map your success plan to a customer success program that ties in with a maturity model. Over the last five years we've collected all of the best practices and put it on like a continuum of effort and value for how do you deliver an effective self-service experience. That aligns with our customer success program; the maturity model you can use whether you buy MindTouch or not. It's just this industry best practices, it's unimpeachable. This is exactly what you should do in the kind of value you should get out of it, but we layer in our customer success program that's enabled by our software to drive them along this value continuum which is this maturity model. So by having a maturity model that ties back to value delivered for the company and having one that is technology agnostic is, I think, the best thing you can possibly do to help the company understand why they need to go through the series of steps.
Now you will always run into, periodically... what will invariably happen is that you have stakeholders at your client who don't give a crap. They're like, "Man, I just I want to collect my paycheck. You're making me do things and I don't want to do things. Leave me alone." And again it's by having a maturity model that ties back to very specific value, and having had that communicated to the executive team who are involved in the purchase before it got handed off to the team to operationalize you can hold them accountable.
There's things that you can do to hold them accountable because then you go back to the Vice President or C-level Executives and say, "Hey, you bought us for these reasons, we've got these plays and the guy won't follow through." So having that all sewn up with with look you've got your your customer success plan that maps to your success program that ties in with your maturity model those are the different pieces. I remember Joe Payne who, he's a great guy, he's the CEO at Code 42 but he was the CEO Eloqua too - Joe told me that at certain stages he had like these, I forget what he called it, but like a nuclear e-mail. If the stakeholder who was operationalizing Eloqua didn't follow through with their commitments, it would automatically send to their boss. It was a way of holding them accountable to the different stages of the maturity cycle. So I thought that's another interesting one that that I don't know if we fully adopt it, but I I know I laid it out for the team. I don't know if we're actually doing it, but it's basically like hey when you have somebody who we think of as a Jar-Jar here which is somebody who's like a stakeholder but totally ineffective like Jar-Jar Binks, he's useless right? Who doesn't want to follow through the steps for whatever reason probably because they don't care. Then you have these nuclear options that send to their boss and their boss is already informed because the tools you used earlier.
Geoff: Understood, but you're kind of walking on a tightrope at that point though - you're trying to drive accountability, but at the same time you don't want to come off as, you know, tattling on somebody who isn't taking this plan seriously. That that must be a challenge.
Aaron: Sometimes it is. But I would rather us aggravate somebody than us be shelf-ware. You know when we enter into a commitment with a client we're SaaS, and some people think that second "S" is about hosting but it is not. It is about the expertise that our team brings to the table in an engagement. Because we are the experts on this; when it comes to customer engagement, when it comes to self-service, there's nobody on the planet that is more dialed in, more capable, more competent, more informed than MindTouch. And we take that very seriously - the technology is just an enabler of those best practices. It's the best practices where there is the value. It's the second "S."
Geoff: Sure. I would imagine when you bring on a new client you're going to hold their hand a little bit more at first during the onboarding process, you need to get them up and running with the software. What does outreach to that client look like going forward? How often are you checking in and who at MindTouch is actually having those conversations and doing those routine follow-ups?
Aaron: Well we have a customer success team and an accounts team and both of them are hyper focused on the success of the account. Meaning that there are certain milestones and a four stage process that we expect our customers to be moving along. The customer success team tends to take more of a proactive support approach around training and "Oh you've done these things now do these things." The account management team comes in and they're compensated based on upsells. But the only way to get the upsells is by moving them along a maturity model. So if we aren't delivering value they can't upsell. So everybody who interacts with the client post-sale is focused on moving them along the value continuum.
Now what are the check ins? We do a quarterly business review. But last time I was checking it was more frequent than that; it was like every four to six weeks there was a check in with the QBR and the QBR was about assessing where they were on that maturity model.
Geoff: Let's shift gears for a moment and talk about culture within an early stage SaaS company. One of the things that I've admired from afar when it comes to MindTouch is just the culture that you've built here within these walls. What would your advice be to other entrepreneurs, other founders who are looking to really create a culture where customer success is embedded in the DNA of the company from day one.
Aaron: Well, I think about it in terms of MindToucher success and a MindToucher could be somebody who's a client of ours or it could be somebody who's on our team and why that's important is that I think about anytime somebody works with us, it's our goal, this is Steve my Co-founder and I, it's our sincere desire and our goal that that person's career is accelerated. And that's true whether the MindToucher is a staff member or a client. That's our business. It's really about advancing the careers of all MindTouchers.
Now there's a very specific way we do that; it is for our clients moving them along the maturity model. For our staff it's about making sure that we're making the hire that puts them in a position where they have growth opportunities etc. Right. But I think that whether it's a SaaS business or any business if that's what your focus is, on the success of your version of the MindToucher, you know your team and your clients, then you're going to succeed as a company. And that's how you build a lasting culture, a lasting company. It's being hyper focused on that. When somebody leaves here I take it as a personal failure if they haven't moved on to a better position. If it's a lateral move or a step back I failed.
Geoff: Now that you're a more mature company, how have you sort of formalized all those sentiments that you just expressed. Have they made their way into your core values as a business, for example?
Aaron: Yes. So we have our core values that we're very vocal about. We go through a new MindToucher orientation. We walk them through it. They're embodied in samurai's sculptures on the walls, there at the beginning every one of our all hands presentations. Those are kind of the cultural pillars. And then the other thing that that we've been really focused on is our guiding principles. Number one is having a culture that attracts smart, good people who want to work hard doing great things. And the second is delivering to market a product that our customers love so much that they recommend us.
So we have our values, grit, integrity, beginner's mind, passion for process, and incremental improvements. Those are our core values that really guide everything that we do and those are the guiding principles that we keep going back to and reminding ourselves, "Hey look are we building a culture that attracts good people that want to work hard doing great things? Are we delivering a product that our customers love so much that they recommend us? So those are kind of the things that we really focus on around culture.
Geoff: Sure, so in tying it back to customer satisfaction, customer success - do you use things like NPS or CSAT scores here at MindTouch?
Aaron: So we use NPS. I don't know that we've got our NPS dialed in. When we're posting scores in the high 70s, I question is that a function of their last interaction with support? Or is that something more holistic across the entire engagement? Maybe it is. You go to G2Crowd or Trust Radius and we have really, really great reviews on there. So we do use NPS. The thing I caution about is that the way we capture tends to be at interaction points with humans. With MindTouch humans, so I always question like is our NPS score ridiculously high because of that? I just don't know.
Geoff: Fair enough. Lots of actionable, good tips there for other SaaS start-ups. Any final words for new founders starting a SaaS business as they think about their customer success plans?
Aaron: Well, we've covered customer success plans, we've covered having a maturity model... just make it up to begin with. You know we started with this just feels right and then we iterated, iterated, iterated, iterated over the last five years to now something that Accenture uses in their customer engagement plans, our maturity model.
One of the things that I think is really important for us Founders is I think that there's a lot of misconceptions about the importance of, "Oh, if I build a great product then I've got an opportunity in the market." Most of the people who come to me seeking investment or introductions to get investment, I look at what they're trying to do and my response is do you have $500mm? Oh you don't? OK. You have no chance of succeeding. The reality is that there is so much capital flooding the software market that the broader the market opportunity you're trying to address the less likely you're going to be successful. So focus on a very, very boring, boring niche. Focus on something really, really small that you can really crush because nobody else has noticed it and then expand from there.
That's the most important piece of advice that I find myself giving entrepreneurs who are starting companies; it's "Dude you are going after way too big of a market opportunity." Focus on something much much smaller that you can actually be successful in and grow from.
Geoff: Well thanks for the time and the tips Aaron, I very much appreciate it.
Aaron: My pleasure, Geoff. Always great to talk to you. Take care.