How did you go from 0 to 20K mrr ? It's not really clear in the charts. Looks like the most difficult step for many boostrapers, the difference between "Default alive" and "Default dead" as PG says.
To be honest, the whole secret is in the product itself. At the very beginning we wanted to do everything faster - more features, more blog posts, more visitors, more backlinks etc. Did not work well.
Then we decided to stop - pause any ads and promotion and 100% concentrate on the product, improve everything we have, do not add any big features. We talked a lot with our customers, found out what they liked/disliked the most. I would say that this is what helped our product. At that time we completely rewrote the whole project.
At the beginning, a huge part of leads came to us through the partner websites (tools we integrate with). Now there is more organic traffic. Someone mentioned us somewhere, referred to a friend.
The most important thing is to achieve the Aha! moment as quickly as possible. When you client realize the profit from using your tool. Integrations in our case. New lead register an account in Everhour, finishes quick onboarding wizard and can immediately see the timer button and other controls in his/her Asana, Trello, Basecamp or GitHub interface. It takes maximum 5 minutes.
Cold emails doesn't work well for us. Or maybe we aren't doing it well. Anyways, we try not to bomb our clients with tons of emails. Today it's annoying. If you need a hand, we have a chat window or we offer a free one-on-one demo.
We were listed here before even had a product. Collected mailing list. After public release, this service brought us about (I don't remember exactly) 700 or 900 signups.
Try to spend a few hundred or thousands $$ on Google ads and add Intercom or Drift on your landing. Try to chat with visitors. I think you'll get some insight.
Be sure to read reviews about existing products on the market. What pros and cons their users write (Capterra, G2Crowd, TrustPilot, TrustRadius).
Question for this company / anyone who runs similar businesses - is $1MM ARR enough to pay 7 people? I'd be interested to know what they do in EBITDA and how they think about salaries.
This is actually a general question I have about start-ups. The economics of having a business that makes $1 - $10mm in revenue and hires 7 - 100ish people is still difficult for me to understand. Yes, you can raise equity or debt because equity / debt holders believe in a certain business model and then use that capital to pay people, but to be a standalone business without VC or bank funding, you need cash flow (not revenue) that can pay engineers market value.
Yes, I think $1MM is enough to pay 7 people, although it depends a lot on the specifics.
My business makes $2.2MM ARR and has 17 employees (counting the founders). We're profitable, although we try to put about as much money as we can afford back into growth, so we're right around break even. There are a number of factors to consider when thinking about whether this is "enough" money.
Location - We're based in St. Louis which has significantly lower cost of living than, say, the Bay Area (we moved from SF for this reason). St. Louis is much more expensive than some other parts of the world. So the amount of revenue a company "needs" is highly dependent on where it's located.
Types of employees - More than half of our employees are on the support team, and almost every came in as an entry level employee right out of college. We pay our support people very well (almost as much as the engineers) but it's definitely cheaper to employ a handful of entry-level support people vs. senior engineers. I think it's a common mistake to think that every startup is made up entirely of engineers.
Revenue per employee - Right now we're at about $130k ARR per employee, and like I mentioned, that's close to break even. If we keep growing somewhat quickly, we'll bring in enough new entry-level employees at lower salaries to bring the average down. But as our growth slows (which is happening, and happens to everyone eventually), our team becomes more and more senior and so we pay them accordingly. For this reason, I think we'll need to shoot for a higher $/employee. But not much higher I don't think. I bet $200k/employee would cover us long-term.
"Maximizing shareholder value" - One of the things that drives most tech companies to make so much money is that their primary goal (regardless of what their mission statement says) is to maximize shareholder value. When you're bootstrapped, you can choose not to do that. I work full-time as a founder/CEO and get paid well (probably about what I'd be making working for someone else, maybe a bit less). If I wanted to become a billionaire, then yeah, this business model wouldn't work. But that doesn't have to be the goal.
That's part of it, yes. The other part is that we pay engineers roughly market rate for our area, but we pay support significantly above that. Our philosophy is basically that everyone who works here should make a good living regardless of what their job is, so we're going to pay everyone that baseline. Certain employees (like engineers) might make more because the market demands it.
To be more specific, we start our support people at $53k/year and guarantee $10k/year raises for their first five years. We start engineers at $71k and guarantee the same $10k raises. So engineers are definitely making more, but in terms of the fully loaded costs to us, they're not that different.
hi I actually grew up in STL (now doing tech in SF) so its very exciting to hear your company is doing well over there. How's the tech community in st Louis these days?
I love it, but that's sort of because it's not a real tech scene. I was in SF for five years before moving back to STL and while I love the city, the tech culture kind of wore on me. Things are a bit less like an echo chamber here I think.
St. Louis has a tech community, but it's pretty small, and there aren't very many people who have already experienced success. As a result, while there are a lot of the normal startup things like co-working spaces, networking events, etc., it isn't a particularly big part of life unless you really want it to be. It's easy to meet people who work in other industries, and I think people generally don't link their personal identity to their employer as much. I also think more people find satisfaction in non-tech work (like customer service, teaching, etc.). I consider this to be a more healthy and hopefully sustainable environment.
Having said that, it's a bit funny because many people in the tech scene here haven't experienced the Bay Area and they think STL is sort of "the next silicon valley" which is just so hilariously not true. I view that as a good thing because I left SF for a reason, but I do wish people would stop pretending that it's a first-class tech hub. It's just a great mid-sized city with roughly the same number of tech jobs as any other mid-sized city.
I bootstrapped, ran, and left a 3-year-old $1MM ARR SaaS. It's more than enough to pay 7 US engineer salaries if you don't have offices to worry about.
1mm is their revenue. It will be reduced by cost of goods sold, rent/electricity, taxes, payment for services like AWS, etc. before employees are paid.
They are a belarus company, selling to mostly US companies, so probably pay little sales taxes. other taxes are paid on profit, so explicitly after employee salaries are paid.
Salaries are usually the largest expense in many IT companies. They don't collect monitoring data or otherwise huge ingest of data from users, their server costs are probably low.
Their main channel of acquisition is partners, I believe Basecamp+Asana doen't take money for being on their partners page. Both just link out to the websites of partners without any means of "tracking", so that seems a right assumption.
If renting an office is more expensive than one monthly salary for one employee you have got yourself a palace, or you strategically choose the wrong city like SF or NY.
65% of my costs are salaries in my company. Looking at Buffers transparent cost report they are similar. From my experience talking to other business owners it is about the same, sometimes higher.
Now depending on what profit margin you are targeting, lets say 20% pre-taxes for a bootstrapped business in growth mode (it is "low" because you are re-investing money into the company by hiring people) that leaves 800.000$ * 70% => 560000$ for salaries. More than enough for 7 people.
No, it’s really not - you’re either forgetting or are unaware of payroll taxes, insurance, etc. not to mention rent, electricity, capital expenses, and every other expense needed to run a business come out of that $1m.
No. In fact I run a bootstrapped SaaS business and am able to pay more than 7 employees on 1m. Do you have a source for your claims? My accountant can verify mine.
Some of your list is silly. My electricity bill is $25 per month. My rent is $800 per month. I choose a smart place to open a startup, not SF.
1. Can you talk more about the ramp up from the idea of Everhour to actually working on the project full time. Did you guys slowly wean yourself off of consulting work, or was there a decision to jump into Everhour as a SaaS early on?
2. How do you handle nonpayment for annual subscription renewal? Do you reach to the company, or shut them down immediately?
3. What kind of features do a free vs paid userbase generally request?
1) It was a gradual process. We would not have enough money for the whole team, besides, we could not at one day say goodbye to our existing clients. We had quite interesting companies. Therefore, we gradually ceased all new quotes and when some project was ending, we switched employees to the product.
2) We contact them, ask what was the reason, but in general, if they don’t renew, they no longer use the product. Often there is no such a company anymore.
3) Well, for example internal invoicing. They ask better design, more templates, while larger ones used Xero or Quickbooks and they just need integration.
Thanks for sharing your story and congratulations on your success.
I have two questions:
1 - How should I reconsile your statement that you should be the user of your own product, with pivoting several times due to misunderstanding market demands? Were you still your own customer after those pivots?
2 - Since you mention pivots, have you been applying lean startup / customer development practices?
1. Let me give you an example. We were using GitHub and all the embed functionality was working fine because we were using it every day. But we did not use Asana or Trello. Then we decided to use this platforms as well in order to check UX there. And as soon as we did it, we've noticed performance issues, bugs etc. As soon as we redo those integrations, we noticed better conversion. Besides, it happens that an external tool changes something in their interface and our embed controls may disappear or simply will look bad. We can't wait for customers to point on this. In addition, we asked e.g. Asana to include us into an early adapters list when they do some A/B testing or release Beta feature.
2. I can not say that we strictly adhere to some methodology. Just trying to think over any new feature, ask the opinion of our customers, early release with the limited functionality. If there is a demand - we are refining. If not, we think what we did wrong and can redo it completely or even deprecate.
Hey, congrats!
We are going a similar path with https://fulfilli.com/. We haven't raised funding to this day, hence a few questions:
1) do you plan to raise money from now on?
2) Do you have any traction in the US and is your ambition to become a market leader there?
3) Do you think it's possible to get a significant traction in the US without "being local"?
(1) We do not consider investments ATM. We have enough cashflow to implement all short-term ideas. But of course I do not exclude such an opportunity in the future. We always start with small experiments and increment.
(2) We have no ambitions to market leadership. Moreover, I'm not sure that this is possible. The requirements for ideal time tracker are very different based on industry and company size. If we want to be a leader, we will have to add all the features. But then we will become difficult to use and this will have a negative impact on existing customers. While our main market is the US, we have customers from 70 countries. We will continue our expansion on top markets, instead of focusing on one.
(3) I think it depends on the product. We have a fairly low ARPU - about $50. Our main client is SMB. They don't visit us and no personal meetings required. If you do enterprise - I think it makes more sense.
What's the venture capital market like in Belarus? What kind of options are there for a growing SaaS business, in regards to either angel investors or traditional venture capital firms?
I agree. I have not listed many cool companies. It is a long and IMHO impressive list.
TargetProcess, PandaDoc, FriendlyData, Eightydays.me, Maps.me (was acquired by Mail.Ru Group), SplitMetrics etc. Plus the biggest company is Epam (Market Cap, 7.406B).
I dunno specifically about this particular instance but our CFO encourages us to select annual plans for apps that are cheap enough to not impact cashflow in a meaningful way and where we get a discount if we choose the annual plan.
No special tricks. Firstly, it's cheaper and we try to emphasize this in our interface, and secondly, some do not want to receive an invoice each month, they want to pay only once.
One way is to only offer annual billing, but couple it with a 30 day trial. Hubspot operates like this and it results in a more invested user and substantially reduces churn and lowers support costs. It lowers churn because of you are going to pay for a year of something, you are going to be really sure it solves your problem. This approach only works though if you have a clear product-market fit.
I would like to note that in my opinion 30-days is a bit long. It's more efficient to offer 14 days. This motivates leads to try your product ASAP without postponing at a later date. Some people ask to prolong their trial and we do it, but again, in general it helps.
I'd love to know the same question. We are making our way to $1mm ARR and have very low churn, but no annual billing option. Do you give a discount at all?
If you are in B2B segment, try offering annual plans (or even multi year plans) without any discount. It is very tough to get approval for spending any amount of money on products in corporate setting. But the amount in the approval request is not something any one cares about.
Not an entrepreneur, but, 12 months at 10 months of subscription fee is still more than 6 months at 6 months of subscription fee. Always offer a "loyalty discount" if it means they commit to paying for a minimal amount of time.
At the end of the day, you know your customer base better than anyone on HN, so you are the best-placed to do this research. I will say that in SaaS, unless you're extremely enterprise, a several-years-worth LTV is very rare. If you are in enterprise, you might gain customers by having annual billing at all.
If you're unsure then I second the other commenters' opinions, do 12 months at full price. If you want to try a discount for some time to see if it helps conversion, that gives you a comparison point. There are advantages in annual billing beyond "it's cheaper", so you can't compare directly to monthly billing.
Do you think having access to "cheaper" talent (I don't mean they're worse in skill, but I guess there are less opportunities for capable engineers in Belarus) is a huge competitive advantage?
Do you think you would have been able to build the same business in say London?
Hard to say. Most likely the result would be the same, but more expensive.
We have good technical people here in Belarus. But we have other problems. It’s almost impossible to find good Sales or Marketing talents here. I think it's due to the fact that we still have fewer product companies and more outsourcing. And of course English language. It's not native for us. While these positions imply impeccable knowledge.
Therefore, perhaps in London we could build sales/marketing team from day one and could sell better. But with the engineers it would be pretty much the same. Or even worse. I can imagine that we would probably hire people remotely, to save money, and this approach has some drawbacks.
> Do you think having access to "cheaper" talent (I don't mean they're worse in skill, but I guess there are less opportunities for capable engineers in Belarus) is a huge competitive advantage?
0-1 is a huge thing! Very humble presentation, great job. One of the very, very, very few medium posts that are worthwhile to read.
I find this very impressive with only 7 people because probably 5 of them are engineers and/or actually support the product. That leaves only 2 people for the marketing aspects, which are difficult.
It would be more enlightening if you would post cash flow data.
> 4) Freemium can put you on the wrong track.
Sure, but this is very highly product-specific. Freemium can also win you mind share and technical lock-in.
1) Actually right now we don't have anyone dedicated to marketing :) Our team structure is the following: CTO and COO (two other co-founders), me (design, product and marketing), 1 customer success, 2 front-end devs, 1 back-end dev. We'll hire a few more people soon, but this is how our team looks today.
2) I agree, many successful companies grew via freemium modal. So our case can't be applied to everyone.
Who drafted the layout for your landing page + integrations pages + wrote the content? They are very, very good and look like the work of multiple people, not just one person.
Huge congrats to you guys. I've been using your product for at least two years now for a particular client and they seem very happy with it (especially the pivotal and chrome integration). Keep up the great work guys!
Many thanks. I am very pleased there are people on HN who heard about us (we are still such a small company). This means that we are doing something important. Will keep doing our best.
Dear HN community. Just wanna thank everyone for such a warm feedback and interesting questions. I'll do my best to reply everyone. Although sometimes it's not easy to notice a new comment :)
Yes it is. Asbestos illness related clicks are at $800 per click. Insirance can be at $600. Thats how Google makes thier billions of dollars. And you are absolutely right - noone will help you with google ads if you dont have minimum $5,000 and they want constant six month of commitment to tweak their algorythms to be able to produce some good traffic for your brand and landing page/s. Someone says you need to be creative with keywords. Sure. But then dont expect nice chunk of leads as obviously most people searching for something will not be creative with their search keywords.
That's likely for the top, most obvious, biggest keywords. Google Ads is very winnable if you're creative. Skip the obvious keywords and find other inroads. It can (and has) work for "small" companies not looking to brute force with deep pockets.
Not an easy question. I think I can write a separate blog post about it. But generally speaking, we completely redid the whole system. In the beginning, we did not understand correctly what customers really need, and our architecture did not allow us to make this "pivot".
The hardest thing is that we could not learn it without failing. We got it only after we showcased the product to the market and after talking to hundreds of customers.
For us, the best growth channel was partnerships and listing on 3d party marketing pages (Asana, Basecamp, ClickUp etc.). It is not difficult and costs nothing (if you have a good integration) while the traffic quality is awesome!
I think it's very important to choose the stack with which you have the most experience. In this way, you will protect yourself from the situation when something went wrong on PROD and you do not know how to fix it. I generally for reliability and predictability.
We've found generating leads for our SaaS [1] difficult, with similar results from google ad words and really bad results from LinkedIn ads.
In retrospect, talking to some friends about google ad words, the results aren't so surprising, but I'm glad we went through the experience. This note from the article rings very true:
> Plus you should constantly optimize your landings, banners, texts etc.
constantly looking at your landing pages, keywords and ad configurations is not a trivial task - it requires a lot of thought and discussion.
we've figured out the content marketing approach (blog posts and relevant SEO) and will be doing that; but we've also been looking for better lead generation approaches.
I would also advise you to devote some time and collect feedback on such sites as Capterra, G2Crowd, TrustPilot, TrustRadius. Firstly, people search and read reviews before making their final decision. Secondly, reading about the competitors, they will find you. Third, sometimes bloggers use these sites to select the top 10 tools they will write about. If you are there - awesome. And finally, these sites sometimes do their own reviews and marketing campaigns. You better be there :)
We did not try their PPC listing. Just keeping our profile up-to-date and ask our customers to share their experience about us there.
I cannot measure impact directly, but I think it worth my time to maintain a good looking profile at a resource with estimated monthly visitors = 7.4M (according to SimilarWeb).
Also, if you search for example "best time tracking software" in Google, they are on first page. And it costs $0.
I would love to know how the revenues/profits are shared among the employees. Is there an equity plan or profit sharing plan with the non-founding employees?
We do no offer any revenues/profits sharing for employees. Just very competitive salary. But maybe we will consider this in the future. In addition, it is still not very common in Belarus. Even in terms of legislation.
So out of nowhere, people wanted use your product because you outstand as a way way different product? How is it much different than Jira with few plugins?
In truth, Jira is not our main platform. Our plugin isn't so valuable in this case, because Jira has a built-in ability to track time.
Such platforms as Asana or Trello or Basecamp converts much better. Yes, there were other solutions, but our clients decided that we are better. And objectively we offer some very unique and competitive benefits.
They integrate with Jira, so my thinking is that the answer may be that they are not any different to Jira with a few plugins, because their solution IS Jira with their product as the plugin.
I agree. And once again I will note that browser extension was the crucial idea behind our growth.
But there are some difficulties. For example, sometimes our customers do not understand that the extension is needed and delete it :) Or, for example, they have several computers and on each, they need to install our extension. And they simply forget it.
I really hate browser extensions because the product now forces me to use a particular browser. Rarely do products like this support Safari for example. It also requires a strong level of trust as well.
I'm asking because we do our best to support the most popular browsers: Chrome, Firefox and Safari. We do not force you to use one. I.e. we offer same functionality in your preferred browser.
But each browser has its own features and ecosystem. Chrome is the easiest from tech perspective. Safari for example has a very strange review policies. Judge for yourself, as soon as we release a new version of our extension, Chrome releases it within an hour and does it automatically. In Safari, we need to send it for review each time and wait for a week or two. During this time we can release a few more updates.
Moreover, Apple is deprecating legacy Safari Extensions now and pushing developers to transition to Safari App Extensions – which are offered through traditional Mac apps via the Mac App Store.
We have pretty complex extension so we decided to write Chrome API compatibility layer. It allows us to run our existing Chrome extension as an Safari app. extension.
I can see two questions. Let me start with books I can recommend:
(1) Traction: A Startup Guide to Getting Customers — Weinberg, Gabriel
(2) Scaling Up: How a Few Companies Make It...and Why the Rest Don't — Harnish, Verne
(3) The Lean Startup — Ries, Eric
(4) 100 Days of Growth - Sujan Patel & Rob Wormley
(5) Delivering Happiness: A Path to Profits, Passion, and Purpose - Tony Hsieh
Hi! Very interesting read and congratulations on the success. How you every had a higher price tag, or have you thought about raising it? It feels like a very low price, but I don't know what the average your customers are ending up paying - I guess they most often have several users per account?
Most of our clients are fairly small or just at an early stage. And this is natural. Bigger companies mostly have time tracking process in some form, and they do not want to change the tool (something that already works).
For small teams our pricing is ok, although we've being often told that this is too much. People want everything free today.
When we thought about our pricing, we looked at competitors, but also considered how much we ourselves would be willing to pay for such a tool.
We were running a small web development company - Weavora for a couple of years. At first were 100% dedicated, then tried a few ideas (i.e. combined existing business and new initiatives) and only now we are mostly a product company.
At some point just stopped accepting new quotes and switched employees to the product.
It seems to me that everyone understands that personal experience and especially everything money related is way more interesting. Secondly, more and more people believe in transparency. Today you helped someone, tomorrow they helped you.
Lastly, I can not say that time tracking is kind of "sexy" topic. We are not changing the world, thus top news resources aren't particularly interested in this field. Investors neither see us as an opportunity for good "exit". Therefore, businesses like us do not have other choice as to move towards "work-life balance" business. Where being profitable is a must!
I did not study 100% of our competitors, but the most known like Toggl, Harvest or Hubstaff did not get investments. Perhaps only some small amount on seed round.
I continue to believe that VC money needed for explosive growth. We believe that it is a little too early for us. We are still continuing to pay a lot of attention to the product, communication with our customers, finding our product/market fit and not marketing. Our current revenue is enough for this.
And no, we are not nervous about our competitors :)
Sorry, such a discussion is not very interesting for me. I think you have a distorted opinion about our country. Read about the "Belarus Hi Tech Park" initiative and conditions for IT companies. A very serious and important work has been done here.
The community doesn't need me to tell you that these comments don't pass muster around here, but I do need to say that this is a pattern with the account and it needs to change. Could you please refresh your memory of the guidelines and try not to post dismissively? Even if you would be “right” it doesn't make for good discussion.
Products never start with $1M revenue. It is a certain bar. And to be honest it is hard. In the article we share our experience, what decisions we made, what worked for us etc.
I think that for many entrepreneurs it might be useful.
I can not agree. Salary of an engineer here is $3000-4000 per month (after tax calculation). Still less than in USA, but I can not call it a trifle.
As for our revenue, I told the truth. If you do not believe it, well, I will not persuade you. I think a knowledgeable person can check math. BTW, in the article I attached a screenshot from our analytics platform (ProfitWell).
I don't think folks realize how cheap Eastern Europe is and how low non-tech salaries are here. I imagine $3/4k goes a long way in Belarus. For example, where I am in Russia, my entire rent + utilities are less than just my utilities were in the US. Ukraine and Belarus are even cheaper.
Also, random side note - there are many "продукты из белоруссии" (Belarussian food product stores) in Russia with even lower prices than local goods. They have a bit of a Soviet feel including grumpy women in funny hats behind the counter, but have very cheap beer and sausage (колбаса).
How did you go from 0 to 20K mrr ? It's not really clear in the charts. Looks like the most difficult step for many boostrapers, the difference between "Default alive" and "Default dead" as PG says.