As some of you may know, the largest european SaaS conference happened in Dublin on the week of the 18th of September.
If you don’t know about SaaStock, you should definitely check it out. This edition gathered 1 500 people from all over the world. Great content and awesome people!
I get the most out of conferences by meeting new people and it’s very hard to share these learnings with others. This time is different. I decided to record these conversations and write up a post about them.
Without further ado:
- Steli Efti (Close.io)
- Nathan Barry (ConvertKit)
- Thomas Smale (FE International)
- Connor Keppel (Phorest)
- David Tuck (Chaser)
- Rob O’Donovan (CharlieHR)
- Patrick Barnes (Advocately)
I’m sharing insights from these people, it’s not their actual words. The discussions were very free so you might not see a lot of links between them. However, I definitely think that all of them bring value that could help you to further your business.
Thanks to everyone for participating. Thanks to Alex Theuma and his team for organizing this beautiful event. Sorry for all the others that I couldn’t include. I’m sure we’ll see each other again very soon!
Keep on reading 🙂
- Don’t follow others. Don’t build a business for someone else. Don’t follow what others do and say because they’re different from you. Look deep inside of you and design the business that really suits you.
- Setup Process Oriented Goals instead of Absolute Goals, this will enable you to consistently execute towards your end goal (more info).
- Creating a freemium can have other advantages than just acquiring more clients, it can help you to run CustDev interviews and to get crucial data.
- Bootstrapping a business is entirely possible. You should only take VC-money when it makes real sense (e.g. R&D, competition).
- It doesn’t have to be sexy. It doesn’t have to sell for $200M. Selling a small business can already change your life. Don’t listen to the press too much!
- It’s hard to build a sustainable business if you only do it as a side project. If you really want to give it a try, you should go full-time.
- Getting traction with Marketing is extremely hard because you don’t know why people are rejecting you. Start with Direct Sales instead (more here).
- Start with a simple Lead Generation process and improve it as you grow.
- Branding becomes an absolute necessity the competition increases. Make sure you keep doing some Performance Marketing but don’t forget about building deeper relationships with your customers.
- Building (and selling) a business on top of another ecosystem (e.g. Xero) gives you a clear competitive advantage (you can rely on their user base).
- You can very well create a business that you’ll never want to sell.
Steli Efti (Close.io)
The main driver of growth was about caring for the end-user. Close.io is one of the only CRM to care about salespeople (the guys doing the job) and not as much about their managers.
From Services to Product
The funny part is that Close.io actually started as a service. They were an externalized sales team and they realized that the CRM they were using wasn’t good enough. That’s when they started developing the initial version of Close.io. Working with 200+ companies, they understood what makes a good sales software.
After a while, they realized that their software could also be used by others industry so they decided to release it to the public. They stopped selling services after a while.
What’s funny about this story is that it was all organic. They created a software that would allow them to scale the service. Just to realize that they could sell the software itself. For those of you who are interested into this journey Steli goes into more details about this in his podcast Transitioning From Services to Software Business.
Steli also mentioned that one of the key ingredient to success is to setup process goals instead of absolute numbers. It’s not about “Losing 10 pounds”. It’s about “being healthy and exercising everyday”. Doing so will enable you to systemize success and avoid forgetting what needs to happen (more info here).
They started by being semi-remote but the founders were travelling a lot which was tiring. Communication was hard because a small pool of people were still at the office. After a while, they decided to go entirely remotely. Now they organize a full month at the office and a retreat per quarter so that they can keep the human touch.
Building an Enjoyable Business
Something that isn’t well documented at all is about how you create the business that fits you and your lifestyle. It’s not about raising money or having 200 employees. It’s about “Why do you want to build the business? What gives you joy?”.
Ultimately, creating a business requires a lot of self-acceptance and awareness. Steli focuses on creating the next best version of himself and Close.io is one of the result.
Nathan Barry (ConvertKit)
Big round of applause for Nathan whose business is now making $10M ARR in less than three years. They employ 30 people and compete with MailChimp as an email marketing software specialized on professional bloggers.
The early days of ConvertKit weren’t as bright. Nathan considered it as a side project and it was making $2k of MRR after two years.
At that time, Nathan met Hiten Shah whom told him to either shut it down or go all in. He knew that he’d probably have regrets if he didn’t give it a real try so that’s what he decided to do.
Nathan now realizes how hard it is to grow something if you’re not giving it your full attention. After going full time, it took Nathan 1 year to get to $100k of MRR. Then another year to get to $500k. They’re now on their way to get to $1M of MRR.
Besides going full time, Nathan decided to change 3 other things:
- Hiring a small team and giving equity to the CTO
- Focusing on a niche so that he would differentiate in a crowded category
- Start doing direct sales
Nathan says (and I agree) that it’s extremely hard to get early-traction with Marketing. That’s why he decided to focus solely on organic growth and direct sales. It’s not until $100k of MRR that Nathan decided to experiment with other channels (webinars and affiliates).
When you do Marketing, tons of people decide not to buy from you and you’ve no idea why (I’ve said it before). With direct sales, your customers will tell you exactly why they aren’t buying from you. You’ll get rejected and that’s exactly what you should be looking for.
You can do whatever you want to grow this thing but if Marketing isn’t working, go out there and make the sale yourself.
When Nathan started, everyone told him that the market was way too small. When we hang out in the tech ecosystem, we fail to realize that there are blogs on a wide variety of subjects.
There are blogs teaching people on how to get fit or how to cook. These have huge audiences and Nathan couldn’t have grown ConvertKit in what it is today without them.
When you get into a Market that you don’t really know, look at it with a fresh perspective and measure your TAM accordingly.
Email Marketing is a very crowded space. He believes that ConvertKit will win on:
The Ease of Use: You could hire an expert on InfusionSoft who will take an hour to set it up. Or you could very well do it in 3 minutes on ConvertKit. Do you want to use a software that’s going to help you with your craft or a software that you can’t actually use yourself?
Branding: MailChimp built an incredible brand. Even when people switch from MailChimp, they’re so reluctant because they love the brand so much. Nathan invested tons of resources on creating a brand for his clients. One example of how they did that was to host a conference. People said they were crazy but they still did it to build the brand and showcase their customers.
Being self-funded is also a strength, we answer to ourselves (are we proud of what we’re creating?), and to our customers. If our growth plummets, we don’t have to do crazy things. That’s why we have the idea of “never raise, never sell”. That’s how our customers we’ll win.
Nathan once received an acquisition offer. Since the offer was on a multiple of the MRR, Nathan realized that he could wait and sell it later for even more money. At that time, Nathan realized how quickly they were creating value and he thought “Why not never sell and create this for the long-term?”.
The biggest advantage is that we can make actual business decision. We spent $75k on shooting a documentary on how bloggers create content. They lost $100k on their conference. No one at a VC-backed company could do that. Being self-funded allows Nathan and his team to take decisions that they believe in. And Nathan believes in building a brand.
We also do profit-sharing. Some people got 25% of their salaries as a bonus. By doing so, people treat every expense as if they were spending their own money. Nathan wants an efficient and effective business.
Congratulations to Nathan for growing ConvertKit. It’s quite interesting to see such an emphasis on branding when most people today focus mainly on Performance Marketing. Again, raising VC-funding isn’t the only way and it seems like all of this is working pretty well for Nathan.
Thomas Smale (FE International)
When building a business that you want to sell, Thomas is the man to know. Thomas is the Founder of FE International, an M&A advisory firm that assists with exit planning, valuation, growth development, and finding potential acquirers to sell the business (see FE International for more details).
Please note that this is an opinion piece, as it includes Thomas’ perspective, but the ideas being shared make total sense to me.
Why & When Sell
The businesses that Thomas’ company sells are generally self-funded or have raised a small seed round. Businesses that make the headlines on Techrunch tend to not be as good a fit for FE, because their method of exit planning doesn’t adhere to the VC model (liquidation preferences + they want to 10x or 100x their investment which is hard to do on the secondary M&A market).
Thomas started investing in online businesses because he wanted the freedom of being in charge of his destiny. When working for someone else, you could be incredibly valuable but never get promoted because you’re unwilling to play office politics. Running a business, however, is pure meritocracy. But freedom really shifts once you start hiring.
Most owners sell because they either have something else going on or they don’t feel capable of bringing the business to the next stage (most of them don’t want to hire people because they like the freedom of having no staff).
While most of FE’s sales don’t break headlines over at TechCrunch (“Company X was sold to Adobe”) founders and online business owners still get a life-changing amount of money through the sales.
For most online business owners, a 2-4x multiple of their yearly revenue is a significant sum of money that could radically change their lifestyle.
It’s interesting to note that people who bootstrap businesses aren’t usually in it for the money. They want a lifestyle with freedom, not (necessarily) sexyness or a ton of money.
Raising money isn’t the only way to go. The vast majority of products don’t actually need money to grow. Most people raise money because they “can’t do anything”. They don’t know how to build a product, nor how to market it.
If your product requires years of R&D, maybe you need money. If your industry is very competitive, maybe you need money. But the reality is that most online businesses just don’t need that much.
Plenty of these businesses were built on top of another product (e.g. Shopify Apps, Word Plugins) because they’re easy to build and market. The main benefit is that you’re able to tap into their customer base to acquire clients.
It might not sound as sexy as selling for $100M to Adobe, but Thomas’ clients are doers. They’re building businesses in the shadow, designing their own lifestyles and enjoying the freedom that they want.
Thomas has some interesting thoughts as to what it takes to build a sellable business. We should all remind ourselves about why we’re doing what we do and how we can achieve it. FE International shows that raising VC money isn’t the only way to go.
Connor Keppel (Phorest)
Phorest isn’t one of these businesses that will make the news but it’s definitely an interesting one. It’s a software that help hair beauty salons with managing their business. They position around helping their clients to make more money by getting people to come back more often and spend more.
The company is about 7 years old. Connor started very early in the business (roughly 5 years old) and when he arrived his main task was to discover the channels that would fuel growth. After about a year in, he discovered that Content and Events were going to be his main drivers. He decided to hire two full-time persons to manage each channel.
Content worked straight away for Phorest. Pipeline (SQLs) doubled in 3 months. So Content doesn’t always need months to kick in.
They didn’t see one channel performing much better than the others. They saw 5-6 channels that would work really well. Some other things (like Capterra) worked really well for a while but became more expensive as competition increased.
Scaling the Team
Forward later, Connor gave his collaborators the possibility of hiring and to manage these people. Giving this opportunity to his people enabled Connor to dig much deeper into strategy which is mainly around:
- What channels work?
- What do we need to do in the next 2 years?
- What do we need to do in the next 5 years?
Connor is a little frustrated because they’re over-reliant on Inbound Leads which doesn’t scale extremely well. They’re now looking at outbound.
Connor also mentioned that it was hard to build a business in Dublin because the price of real estate is rising and companies like Google or Salesforce offer huge salaries.
They’re therefore looking at doing the remote thing as well. Never forget that your environment will definitely impact the way you should manage your business.
Finally, to all the Marketers out there, Connor can’t stress enough how important it is to focus on data and to create a great brand. The latter becoming a huge source of differentiation for them. It’s also a great source of growth once you’ve finished tapping into existing demand and that you need to create more for your business.
David Tuck (Chaser)
Chaser is an accounts receivable automation and intelligence solution. It’s similar to Pardot / Marketo to get invoices paid on time.
Chaser launched in August 2014 so the company is just over 3 years old. I wanted to speak to David because they built an entire business by relying on an existing ecosystem. Chaser connects to Xero (accounting solution) only.
Xero invested quite a lot in building this ecosystem. They now have 600 apps and David even shares an Airbnb (here in Dublin) with a friend he met thanks to Xero.
The number of apps didn’t impact Chaser in any negative way. It’s actually one of the most reviewed products with the highest rating of 5-stars for 200+ reviews. They even won the Add-on partner of the year 2016. Congrats guys!
Integrating solely with Xero enabled them to:
- Limit the cost of entry because they didn’t have to integrate with all the accounting solutions out there.
- Being the recognized leader in this new category: they weren’t first but they worked on redefining the category with their customers.
- Rely on a growing user base to acquire customers: Xero used to have 270k customers when Chaser started, they have now more than 1M.
Focusing on a specific integration is hard because most people see that as a limiting factor. There is a lot of room to grow with them thanks to their huge customer base. It’s limiting from a Marketing perspective (e.g. we can’t run AdWords), but focusing on Xero allowed them to find Product / Market Fit and the right messaging. Focus is at the source of their success.
The discussion of opening up more integrations sometimes comes up but it’s not on the short-term roadmap because they haven’t exhausted the entire ecosystem.
David scratched his own itch and it worked well. He mentioned that it’s an awesome way to build a business. However, you should always complement industry knowledge with strong Customer Development.
Finally, it’s an interesting story about a business that won’t make it to TechCrunch. The story of a business built on top of an ecosystem that can empower everyone to grow at their own pace.
Rob O’Donovan (CharlieHR)
Couple years ago, Rob created a Marketing agency. Running a service business meant that Rob and his team were always split between stuff that they loved doing and things that they had to do (which weren’t always enjoyable).
By running that company, they realized that hiring and managing people was a pain.
They felt in love with that idea so they put managers on the agency side and they focused on creating a great software business.
They always wanted to have an impact in the way people do things and Charlie soon became their primary source of focus. Rob knows that they aren’t changing the world (“It’s HR software”) but they’re definitely helping others who’re changing the world in a more meaningful way (e.g. solving cancer).
Charlie is a solution that helps you to manage your people in one single place. You can have a team directory and manage time-off all in Charlie. It’s quite handy when your team grows.
Charlie is a freemium product and it provides them with a huge competitive advantage. They have thousands of people using the product. These people give tons of insights to the team on how they use the product and how to make it better.
The vision is very different from everything that we can see. They want to become a platform around your business. It’s not about building everything themselves. It’s about letting others integrate into the ecosystem so that they can leverage their data.
This vision enabled Rob to differentiate Charlie from the other software in the industry. It’s a crowded category but because of the entire model, Rob was able to grow Charlie in what it is today.
It’s interesting to see more and more platforms emerge. Charlie might become the go-to place for anything HR (like what HubSpot is to Marketing) and they decided that they’d do so while playing nicely with others. It’s not the direction others behemoth took (e.g. HubSpot) but I think that it’s a better approach.
You can’t be awesome on 100 features. Other software will be awesome where you’re weak and integrating with them ensures a positive experience for the end-clients.
Patrick Barnes (Advocately)
Patrick has been one of my good friend since SaaStock last year. Patrick was just starting out last year and it’s incredible what they’ve achieved in one year. Congrats to you dear friend!
Advocately automates the process of reaching out to your best customers (measured by NPS) so that you can gather marketing materials from them (e.g. reviews on SaaS directories, case studies, testimonials).
One year after starting, Patrick now gets more than 100 trials per month. It’s a bit of a smaller business than the others but it’s still fascinating to hear about the early days.
They started by creating a free product that their ideal customers could get value from (send notifications to your Slack whenever you get a new review for free). This would then allow them to email people directly with something of value to them (thus increasing conversion rates).
Patrick emphasized that it’s not a 3-months project that you should undertake. The free product was created quickly with almost no development time. It should be as simple as possible and the onboarding should just take a few minutes.
Patrick started by building a list of customers that could need their free product. He didn’t try to sell his big vision, he just looked for people who could be interested right now.
Things started working and they decided to experiment with Facebook Custom Audiences and Google Display Network to show ads to people within the list to pop into people’s mind before they read the email.
Patrick mentioned that if people weren’t replying to you, you were probably doing something wrong so either the list isn’t relevant (you are emailing the wrong people) or your product isn’t interesting to them.
What I really enjoy is that Patrick didn’t start by saying “Let’s do Content, PPC and Events”. Patrick decided to focus on a repeatable and scalable process. It’s as simple as that to launch a Lead Generation program during the early days.
It’s even more interesting that Patrick decides how many leads he wants in a given month. That will allow them to onboard everyone with the same quality of service.
SaaStock was great and I look forward going back next year. It’s fascinating to see the wide variety of businesses attending.
You could start the day by speaking to a new founder, have lunch with one of the fastest growing SaaS and have a few beers with the French Mafia (there are a lot of french people in the industry).
Marketing is evolving and building SaaS businesses as well. It’s an interesting time to be an entrepreneur. These guys definitely did a few things right and I hope that you were able to learn as much as I did.