Founder’s Journey: Building a Startup from the Ground Up

Earlier this year I failed to sell Baremetrics for $5m. But I learned a heaping pile of things from that and one of the biggest things I learned about was the world of asset sales and stock sales. This is about to get real nerdy but this is crucial if you're trying to sell a company. It could literally save you millions of dollars.

I failed to sell Baremetrics for $5m. While failure is 100% a part of success, it's only useful if you learn something. So, here are some of the things I learned from this little failure. Hopefully these are some things you can apply to your own company (present or future) that can save you a bit of pain.

In the past six years of Baremetrics' existence, I've received dozens upon dozens of emails from folks interested in acquiring Baremetrics. When you're running a transparent company that's growing, it just comes with the territory. Generally these conversations quickly fizzle once they realize I'm not even remotely interested in some quick, 1x revenue sale.

Intros, a product we launched to great fanfare three months ago, is being shutdown, having never made a single penny and costing our team months of work. https://baremetrics.com/blog/sunsetting-intros

Yesterday I wasn't feeling great, mentally. I had a level of anxiety I hadn't felt in a long time that started in the morning and really persisted through the night. I can't pinpoint it to any one specific thing. It was more the sum of a dozen small things. I felt like I hadn't been leading the team well through a big product change, parenting has been taxing lately, I was second guessing all sorts of life decisions, the things that typically bring me joy day in and out have just felt really uninteresting and on top of that, the weather yesterday was dark and stormy...which perfectly matched how my brain felt. https://baremetrics.com/blog/founder-mental-health

As founders, a lot of our identities get wrapped up in our companies. Certainly within our industries, but even to family and friends it’s how people know us. And over time, we sort of become our companies. Most founders or CEOs are the “face” of their businesses and eventually they’re inseparable. Being wholly consumed by your company hurts not only you and the people around you, but even the company itself.

A couple of years ago, we were in a hard spot. I had just realized we were mere weeks away from running out of cash and had asked the whole team to take a pay cut while we figured out how to get profitable. But in addition to cutting costs, we needed to figure out how to speed up growth. One of the things we did to speed up growth was figure out who our “perfect customer” was. We’d spent the first two years making some big assumptions about who our ideal customer was and who we should target, but had no imperial data to back that up. https://baremetrics.com/blog/perfect-customer

When you’re just getting started, everything feels like a big deal. Everything. The tinniest things can turn in to huge showstoppers that drain time and, in many cases, money. But the longer you’re in the game, the more you realize how few things actually matter.

Where to publish something has becoming a difficult decision for a lot of businesses. You read so many stories about using various channels to distribute content and grow traffic, it's hard to know what does and doesn't work. Medium, in particular, has become a major player in the world of startup content, but is it really that great? https://baremetrics.com/blog/medium-back-to-blog

When building a startup, so much emphasis is put on “the product” or even “the customers”. Everything else takes a backseat. On some level, and at some points in a company’s lifecycle, this makes sense. Of course you’ll make sacrifices and you’ll have to work really hard and work really weird hours. But eventually, you’ll have to stop. The downsides far outweigh the benefits and the damage done to you and your team can be detrimental. That’s what I’m writing about to day. Managing the long term health of you and your team. https://baremetrics.com/blog/startup-health-well-being

Last week I hit some sort of boiling point with life and work. July was an incredibly stressful month for me both, personally and with work. Just lots of extremes, and it wore me down. Every single founder is struggling with something. Maybe it's big, maybe it's not. But there's always something. Even the most successful founders deal with this stuff and don't know what to do. Everybody’s winging it. https://baremetrics.com/blog/winging-it

There can be some really exciting days when you’re building a SaaS company, but the large majority are a slog. Just one foot in front of the other, slowly trudging your way up the hill in the muck. The hockey-stick growth you’ve envisioned feels laughably far away. Amazingly, you are growing every month, but it’s just…so…tedious. This, my friends, is the long, slow SaaS ramp of death. It’s perfectly normal and par for the course for the large majority of SaaS companies. Check it out! https://baremetrics.com/blog/long-slow-saas-ramp-of-death

Founding a company is hard. You’ve got an infinite number of decisions to make while simultaneously trying to catch lightning in a bottle with creating something out of nothing. It’s even harder when you’re doing it alone. Being a solo founder, in many ways, stacks the deck against you. You’re left shouldering the weight of every single decision and don’t really have any one to share it with. However, there are some ways to make it easier and, in many cases, it can actually be a major pro to start a company solo. Let’s take a look at some of the benefits as well as drawbacks so you can figure out if being a solo founder is right for you. Then we’ll tackle some ways to make being a solo founder a pretty great thing. Check it out! https://baremetrics.com/blog/startup-solo-founder

https://baremetrics.com/blog/most-startups-are-not-crushing-it Ask any startup founder how things are going and they’ll tell you it’s “going great”. They’ll talk about some new feature they’re rolling out, or a new round of funding. Or maybe they’ll mention how much user growth they’ve had or that they just got covered in TechCrunch. All signs will point to “crushing it”. But, for better or worse, there’s a very high probability that they are, in fact, not crushing it. The exact opposite, actually. We’ve conditioned ourselves to fake it until we make it, but most companies never make it…so we’re perpetually faking it and never actually being honest about our struggles. That prevents us from getting the actionable help and feedback we need and just perpetuates the false narrative that you’re some sort of failure if everything isn’t roses all the time. “That’s great, Josh, but certainly things aren’t that dire, right?” Wrong, little Jonny. Let’s look at the numbers. The data If dig in to our live SaaS Benchmarks you’ll find a few of interesting data points about small to medium sized SaaS companies. Average User Churn is 7.7% per month Average Quick Ratio of 1.4 Average Monthly Recurring Revenue is $19,000 Then one additional, crucial data point not listed on the Benchmarks page: the average SMB SaaS startup has 12 employees. Now, let’s translate that. Average User Churn Average User Churn of 7.7%. You may think that’s not terrible, and you’d be right. The companies that have 25%+ user churn are in a much worse spot. But what does 7.7% user churn functionally mean? It means that every single year most businesses are losing all of their customers! Every 12 months, they’ll not only need to replace the lost customers but add new ones as well. There aren’t an infinite number of customers and at that churn rate, you’ll quickly plateau. Outgrowing your churn will becoming impossible. Average Quick Ratio We’re going to have a quick lesson in growth efficiency, because it really puts things in perspective. To measure growth efficiency, we use a metric called Quick Ratio. How reliable can a company grow revenue given its current churn rate? That’s the question the Quick Ratio metric answers. To calculate your Quick Ratio you simply divide new MRR by lost MRR. The higher the ratio, the healthier the growth is at the company. To put it in a formula: Quick Ratio = (New MRR + Expansion MRR) / (Contraction MRR + Churned MRR) Say a company has $10,000 in MRR growth. That growth could be made up of any combination of MRR types (New, Expansion, Contraction, Churn) and the Quick Ratio shows you the difference in “growth efficiency” between them. Let’s look at a few scenarios of how that company got its $10,000 in MRR growth and what the Quick Ratio would be. Scenario A $12,000 (New + Expansion) / $2,000 (Contraction + Churn) = Quick Ratio of 6 Scenario B $15,000 (New + Expansion) / $5,000 (Contraction + Churn) = Quick Ratio of 3 Scenario C $20,000 (New + Expansion) / $10,000 (Contraction + Churn) = Quick Ratio of 2 Scenario D $50,000 (New + Expansion) / $40,000 (Contraction + Churn) = Quick Ratio of 1.25 All four scenarios result in $10,000 of Net New MRR, but Scenario A is vastly more efficient at growth as the company is adding the same amount of Net New MRR with much less effort. So, now, when you see that the average Quick Rate of most SaaS companies is 1.4, you realize how untenable that is. There simply aren’t enough customers in the world for any company to survive when your growth efficiency is in the pits. Average Monthly Recurring Revenue + Average Team Size In the companies we benchmarked, the average monthly recurring revenue was $19,000. I want to be very careful here and not imply that “$19,000 a month” isn’t impressive or something to be proud of. It’s a heck a lot more than a lot of startups ever make and for you, individually, it may be exactly what you want or need out of your business. But there’s another metric that when paired with this number is just frightening: the average team size is 12. Let that sink in for a moment. The average startup is making $19,000 per month…with 12 people on their team. Sweet beard of Zeus. Still crushing it? Still think all those startups are crushing it? This is the reason founders and teams get burned out. This is why CEO’s become Chief Fundraising Officers. This is why so many companies get “acquihired” for the people instead of the business (because there wasn’t much of a business there at all). This is why the fairytale “everybody’s crushing it” mentality is insane. It normalizes terrible economics. Now look, if revenue isn’t your goal (or you’re delaying revenue in the name of growing another metric for a while), that’s cool. Everyone has different motivations and outcomes they’re pursuing. There are certainly multiple ways to get what you’re after. But can we just be honest for a change? Can we stop pretending everything is amazing when the economics clearly show they aren’t? What’s the benefit of that to anyone? Next time someone asks you how your startup is doing, try not sugarcoating it. Maybe say, “You know, we’re having a tough time with user acquisition” or “churn has been a beast to tackle”. Then, instead of the incessant high-fiving and pats on the back, you’ll get legitimately useful feedback. You’ll likely find others are struggling with the exact same things and they may even have some business-altering advice for you. Remember, we’re all winging it.

https://blog.baremetrics.com/startups-keep-it-classy-5bba13285cc6 Building a business makes relatively sane humans do some insane things. The past 10 years have been the modern day gold rush for tech. And I mean that in the sense where lots of people risk everything and make nothing while a few hit it big. And that “gold rush” culture makes people do some desperate things in the name of business survival. Every day founders have an infinite number of tiny decisions to make and it’s easy to get decisions fatigue. In a moment of weakness you may do something dumb that hurts you, your team, your company, your brand or any one of a thousand other things. So here’s an easy rule of thumb to help you when making decisions: keep it classy. Seriously. It’s that easy. Just ask yourself, “Am I being classy?” If the answer is anything other than “yes” you’re likely taking the route that may have short term gains but long term negative consequences. You don’t want to be a low class business. You never want to leave a bad taste in someone’s mouth. You’ll almost always regret your decision later on if you go the low-class route. Copying others’ product designs, badmouthing competitors, taking advantage of customers, overworking your team…there are just so many problems that aren’t solved but actually completely avoidable by keeping it classy. There are so many things working against the success of your business. So many variables out of your control. Don’t make it harder on yourself by choosing the low-class option. Successful businesses, the ones that survive the ups and downs, are built on having class. Sure, the occasional bad apple slips through and for whatever terrible reason the universe lets them succeed, but nobody actually wants to be the sleazy used car salesman. Deep down we all want to be respected by friends, family, peers, coworkers and customers. That doesn’t come from taking the low-class route. Make decisions you’re proud of. Decisions that, although maybe not the easiest route, don’t leave you feeling icky at the end of the day. Keep it classy.

https://blog.baremetrics.com/the-startup-echo-chamber-is-making-you-deaf-771eec220181 Being an entrepreneur is a lonely place, especially if you’re the founder/CEO. Sure, you may have co-founders, but the reality is, there’s a lot of weight on your shoulders, a lot of pressure (self-applied or otherwise) to not drop the ball. To combat this, we’re basically permanently in “problem solver” mode. Everything needs a solution. Which is a natural fit because most entrepreneurs are self-taught and love to learn! “The widget sales page isn’t converting? Well how about imma throw myself in to a hole and RISE FROM THE ASHES LIKE A WIDGET SALES PAGE CONVERSION PHOENIX!” Yes, it’s naive, but it’s also how we were able to make something out of nothing. We just figured it out. We’re really great at just figuring it out. But here’s the thing: solutions aren’t binary. There aren’t “right” or “wrong” ways of doing things. There are just “ways”. Yet, we treat business problems as if they’re all just a series of variables that we just need to find the right combination of and BOOM! #winning ##Startups are like kids I’ve got three amazing kids. The other night I was chatting with my oldest (she’s 14) and she asked, “Dad, what’s the hardest part of being a parent?” My answer? “That you’re not a robot.” I said it jokingly, but explained to her that so many times as a parent you ask your kids to do something and so many times they just don’t do it. They don’t do it how you asked them to do it or when you asked them to do it. And I explained that even after years upon years of making the best decisions we can as parents, there’s still not a guaranteed outcome. It’s all kind of a crapshoot. Running a business is very much like having kids. You so desperately want to control all the variables. You run in the startup rat race because everyone else is too, so that seems to help solve for many of the variables. You read every startup article you can and your “to read” list has a backlog of 1,000 articles that are sure to change your business. You follow, favorite and retweet popular founders and marketers and feel like you’ve done real work. Then after you’ve done that, you go get drinks at meetups for entrepreneurs. Then after you’ve had your free drinks courtesy of Blorg.io you head home and read Lean Startup for the 9th time and go upvote some stuff about AI and machine learning on Hacker News because #thefuture. You fall asleep after your iPhone hits you in the face lying in bed and then you do it all again tomorrow. ##The echo chamber You, my friend, are living in an echo chamber and you don’t realize yet, but you’re deaf. In your effort to become an amazing problem solver, you’ve become the worst. You can’t see the forest for the trees, because you’ve completely limited the scope of your thinking to random things you read on the internet from other people just like you who are reading random things on the internet! It’s a big nasty cycle of everyone regurgitating the same rehashed tips and tricks in the name of “content marketing” and #growthhacking and it just doesn’t make you any smarter or better at your job. Every business is different because every problem is different. The way Joe solves problems for his customers are not the same solutions that Sally needs for her customers. Yet founders spend inordinate amounts time surrounding themselves with people just like them doing the same things over and over and expecting different outcomes. ##How to get out of the echo chamber Getting out of the echo chamber doesn’t make you a bad founder. It makes you an exponentially better one. You know how all of your good ideas come to you in the shower? What if I told you that you could be in the proverbial shower all the time? Getting out of the echo chamber lets you do that. Solving problems isn’t linear. Your brain doesn’t just run along the same path, connect all the dots in perfect order and magically arriving at an amazing solution. You need input from lots of sources. In many cases, you actually need no input at all. Your brain needs a break. It’s why when you’ve been staring at a coding problem for four hours and then go grab lunch and come back you’re able to solve it in four minutes. So, how do you get out of the echo chamber? There are two easy ways. ###Get a hobby Seriously. Something just absurdly analog. Take up gardening or woodworking. Make stuff out of concrete. Teach yourself jazz flute. Doesn’t matter. It just needs to be away from a computer or anything related to “businessing”. ###Get friends who aren’t entrepreneurs This is crucial. Living outside of Silicon Valley makes this really easy for me. None of my close friends are in tech. My friends are filmmakers, teachers, writers, florists and print designers. Their jobs are fascinating and we never talk about the tech world. The key here is giving your mind a break and gaining input from seemingly unrelated areas. Stop reading business/startup books. Most are 90% fluff anyways and they’re not covering anything new. Stop surrounding yourself with people and things that are just other versions of yourself. Go be interesting. Not only will it help you actually run your business better, but when you’re done with that business or have moved on to other things, what’s left is that you’ll still be an interesting person and not just the shell of someone good at adding noise to the echo chamber.

https://blog.baremetrics.com/getting-out-of-the-startup-rat-race-66a5a0ca3055 I’m done. I’m tapping out. I’m bowing out of the startup rat race. No, we’re not shutting down Baremetrics. Very much the opposite. I’m just finished subscribing to and following the traditional startup mentality as we build our company. In June 2016, I realized we had less than two months of runway left. We had an existential crisis on our hands, the kind that you’ve read about hundreds of times. The kind where the business was there one day, then all of the sudden just…wasn’t. We were just burning money way too fast. We had to course-correct very quickly. The whole team took a 15% pay cut and I took a 30% pay cut. Long story short (a story that I’ll write about more in depth in the next month or so), we got back on course. Everyone is now back up to full salaries and we’re profitable on top of that. We’ll be a million-dollar company by this summer. But getting here has been quite the struggle. Playing the part The way that we ended up in that situation was just such a classic “silicon valley” scenario that I’m honestly embarrassed to even talk about it. Raising multiple rounds of funding (we had 2 rounds totaling $800k, which is honestly small by most SV standards), hiring fast, spending faster, pushing hard for the mythical “hockey stick” growth. Beating ourselves up when we didn’t have that growth. We were embracing it all. It wasn’t like our investors were breathing down our necks demanding this, they categorically were not. It was self-prescribed. I was choosing it. I was willingly playing the part. “Hey! We’ve got a bank account full of money! We should spend it! Right? Right?!?!?” I wasn’t trying to be negligent with the money. I was just overly optimistic about revenue growth. Our revenue was definitely growing month over month, but my eternal optimism believed that it’d magically start really growing in “just a few months”. Instead, our revenue growth has been annoyingly steady. There’s no hockey stick. Just good ‘ole fashioned “normal” growth. Baremetrics MRR for the past 3 years Then the lightbulb went off This past November I took a much needed break, completely disconnecting from work for 10 days. It gave me a chance to pull my head out of the startup hole and get some clarity on things. I realized that for the past couple of years we’d been in this weird quasi faux-startup “gahhhh we need growth!” mode. I say “faux” because we actually have revenue, which the majority of the typical SV startups don’t, but we needed so desperately to get profitable that we were just throwing out things left and right hoping something would stick and be the magic pill. We were launching things and immediately heading to the next big idea on the list because our time was running out. And yes, I understand, this is borderline comical to anyone in the bootstrapped world or really anyone outside of “startups”. But like I said, we had found ourselves fully embracing “silicon valley startup” mentality. The non-existent race That 10 day break gave me actual perspective. We’d been trying to build Baremetrics like there was this imaginary startup finish line. As though we could lose or even come in first. We were treating our company like we were in some race for time. But there is no race. There isn’t another runner we could lose to and we can’t “come in first”. Everything you read about building a startup implies there’s a formula. That doing X and Y gives you the highest probability of Z outcome. Jason Lemkin, who really does have some amazing advice around building SaaS companies (especially on the topic of sales), wrote this a couple of years back: Can you really, honestly, commit to obsessively thinking, worrying, futzing, stressing about how to do The Impossible. Every. Single. Moment of the day. Nothing else, but work. Even when you are playing with the kids. Having dinner with your husband. Because that’s what it’s going to take. What the actual hell. Not only is that not necessary, it’s incredibly unhealthy and completely unproductive. Do not obsessively think about your startup “every single moment of the day”. Doing that is what kills startups every day. Founders get burnt out. CEOs make terrible decisions inside of a vacuum. All because they lose perspective working inside their bubble. I get why people read stuff like that (or any advice from people who’ve had some big payout). We try to find patterns and formulas in everything to make sense of it. We think “well if they did those things, then I can do those things too and also succeed!” But that’s not how life works and that’s not how business works. Redefining success So many entrepreneurs think that the end goal is a big acquisition or going public. They model their actions based on the handful of atypical and statistically improbable stories they read about. They read advice like the stuff above talking about sacrificing every facet of their life for their business, and they think that’s some way to live. But it’s not. It’s not a way to live. It’s not healthy. It doesn’t make you interesting. It’s not fun building anything that way. It, statistically speaking, likely won’t even make you very much money. So what if you changed what “success” is? What if success was paying yourself $150,000 a year and building a real sustainable business that you build up for 10 years and sell for a few million? (No, that’s not considered a success in Silicon Valley.) Or maybe you never sell it? What if “success” was paying yourself $30,000 a year and traveling the world with your family? What if “success” is building an amazing place to work where your team is paid really well and actually enjoys working there (instead of having people who jump from startup to startup playing the equity game)? What if “success” wasn’t attached to team size but instead was attached to customer happiness? There are an endless number of ways to define “success” and it’s the definition of insanity to think there’s only one way to do it. Redefining success to something different than the way Silicon Valley defines it doesn’t mean you aren’t ambitious. I’d argue following a formula is the thing that isn’t ambitious. No, creating your own definition of success and doing things the way you want to do them…that’s success to me. That’s the ambitious thing. Because doing things your own way, on your own terms, is where you’ll find fulfillm

https://baremetrics.com/blog/self-serve-cancellations-saved-our-business There may be no topic in the world of business that spurs such impassioned responses than self-serve versus manual cancellation of a subscription. Let’s just say the word “evil” gets tossed around a lot. There’s a lot that gets overlooked in the conversation about this, so I want to walk through the different sides of the arguments for/against and try to keep things as rational as possible. I sincerely want to have a constructive conversation about this topic as I believe there are in fact scenarios and reasons when removing self-serve cancellation makes sense for a business. So, we’ll talk through when it makes sense, how to do it in a way that is as customer-friendly as possible as well as how not to do it. I’ll also address some of the common concerns people have with removing self-serve cancellation. Note: This is a topic people feel incredibly passionate about. The one thing I ask is that you at least entertain the idea that the world isn’t black and white and that most businesses (especially small startups) aren’t inherently evil. Everybody’s winging it. One startups experience with removing self-serve cancellation Back in February 2015, we were having some serious issues with churn. It had been creeping up from an already-less-than-stellar 6% to an unsustainable 13%. If prior months’ trend were any indication, in a matter of months we’d be hemorrhaging customers at a rate that would have put us out of business. Something needed to change. We were trying all sorts of methods of getting feedback, from including a “required” open text area for feedback when cancelling, to requesting phone calls, and everything in between. Our one and only goal was to figure out why people were cancelling. But none of the feedback we were getting was actually actionable. Those open text areas would just result in either people slamming their hands on their keyboards at random or at best writing “cancel. bye.” The emails and phone calls we were trying to schedule generally fell on deaf ears. No matter what we tried, we just weren’t getting enough actionable feedback to fix anything. So, we decided to take a more drastic measure. We removed the ability to cancel directly in the app. You’d need to message us if you wanted to close your account. We certainly had some reservations about this. No one loves an extra step to cancel a service. But we were committed to handling cancellations requests as fast as possible while being as genuinely useful as possible (which I’ll talk about in a moment). The results were fantastic. Not only was the feedback actionable, but we were actually able to save about 15% of cancellations! People would write in saying they wanted to cancel because we lacked certain functionality, but in many cases we either had a feature they needed or were about to release it. For a solid year, the feedback from manual cancellations continued to be quite actionable and we could count on one hand the number of people who responded negatively to the process. We cut our churn in half during this period thanks directly to the feedback we received. And more importantly, this literally saved Baremetrics. But as our churn decreased and the major holes were plugged, we found the feedback less and less useful. The reasons for cancelling were boiling down more to things we had no control over (going out of business, changing business models, acquisitions, etc). After nearly 2 years of manually processing every cancellation, we reimplemented self-serve cancellation. How to do manual cancellations in a way that doesn’t bring out the pitchforks The reason our manual cancellation process worked for as long as it did is that we were committed to doing it in a timely and helpful fashion. When I say that someone was required to contact us to cancel, most people instantly think of some terrible experience they’ve had with their cable provider. Sitting on the phone for hours, getting transferred to a dozen different sales reps, being offered increasingly larger discounts to stick around. Nothing could be further from reality with our process. The key to doing manual cancellations correctly comes down to two things. Make it unbelievably easy to get in touch. We had a whole pile different ways to get in touch nearly instantly. You could live chat, send in an email, send an in-app message, tweet at us or yes, if you wanted, you could call us. Respond quickly. They’ve made the move to get in touch, now you need to reply as fast as humanly possible. Many times we’d respond within seconds or minutes, and almost always within a few hours (even during the evening). After someone would write in asking to cancel, we’d respond with something to the effect of… Hey Sally, happy to take care of that for you! Before we do that, would you mind letting me know why you’re canceling? Would love to learn how we could have served you better. Most of the time, we’d get great feedback about exactly what was going on and why Baremetrics wasn’t a good fit for them any more. We’d then promptly cancel their account (and many times refund them) and wish them well. What you definitely should not do is argue with the person to try and convince them to stay around. You should try to be as genuinely helpful as possible throughout the process. You want to understand why they’re cancelling and then act accordingly. This is why we were able to save some 15% of cancellations because we found that those customers didn’t want to cancel, we had just done a bad job of surfacing functionality within the app. So when we identified what was going on, it was actually more helpful to show them they didn’t need to cancel than it was to just go ahead and process without asking any questions. When to try out manual cancellations So when does it make sense for your business to test out manual cancellations? It certainly isn’t for everyone and I don’t believe it’s a great long term solution, but it can be a really effective tool. If you’re churn rate is double-digits and you aren’t sure of the exact reasons why, then trying out manual cancellations for a period of time is likely worth it for you. Churn is ultimately the result of your product not solving the problem the customer has. If you have double-digit churn that’s increasing and no clear path to reduce it, you’ll soon have an existential crisis on your hands. Manual cancellations can make a huge difference in your ability to grow (or to even continue existing as a business). John O’Nolan of Ghost said it well… Do A+ thing & go out of business Do B- thing & survive “Founder” means making this decision 100x per week. 1 user’s poor cancellation UX can fuel positive UX changes for 100,000 new/existing users to have a better experience. You should keep doing manual cancellations only as long as the feedback is actionable and you’ve pinpointed what needs to be done to fix your churn problem. Common objections to requiring a customer to contact you to cancel I believe I’ve covered most of the reasons why doing manual cancellations can be really beneficial to your business, but let’s tackle the two most common objections. “It’s a dark pattern” I’ve heard this one so many times, so let’s be clear: “I don’t like this” does not mean it’s a “dark pattern”. A dark pattern is “a user interface that has been carefully crafted to trick users into doing things.” Manual cancellations aren’t tricking anyone. They aren’t preventing anyone from cancelling their account. Are they the most ideal UX? No. Building a business is constantly making the “A+ and die/B- and survive“ decision. “It’s not customer friendly” Partially agreed. There’s more to it, though. Yes, being able to click a single button and be done is the easiest thing for the customer, but remember the scenario I mentioned above about missing features? Many times (15% of the time in our case) a user wanted to keep using Baremetrics but thought we were missing a feature they needed. Manual cancellations surfaced that in a way that “instant, self-serve cancellations” never would have. The feedback from those cancellations not only let us help those customers, but it helped us as a business improve the product in a way that future customers wouldn’t have those issues. Arguably that makes the practice “friendly” for many customers. Again, temporary less-than-ideal user experience for a few in exchange for long-term positive improvements for many. Business is a balancing act At the end of the day, you will frequently have to make tough decisions to stay in business. That doesn’t make for great marketing copy, but neither does “we’re shutting down because we couldn’t figure out how to make the product better”. The most dangerous thing you can do in business is assume that there’s only one way to do it, that there’s a formula for success, that what worked for Company A will also work for your company. None of those are true. Businesses are unique, living, breathing, ever-changing organisms. If you sit idly by assuming things will just magically improve, your business will die. Some decisions will result in unhappy customers, but no decisions will result in more unhappy customers than the one to shut the business down. Find the balance of doing what’s the “most best” for both the business and the customer. The two go hand-in-hand. Some days the scales will tip more towards one over the other and vice versa. But as long as you work on simultaneously improving both, you’ll be just fine.

https://baremetrics.com/blog/feature-framework “What feature should we build next?” Ain’t that the question of the year? While that next feature won’t save your business, it’s still important to actually improve your product and create more value for your customers. And figuring out what you should tackle next may be one of the hardest decisions you make on a regular basis. Most founders (heck, most people) are overflowing with ideas. The problem is, most ideas are, you know…terrible. But they seem great right when you have them. Mix an overflow of ideas with the difficulty of prioritizing what to do next and you’ve got yourself the makings of bloated, messy, hard-to-use software that lacks real direction and has little impact on customers. To help combat this, we created a simple scoring system that guides and influences what we tackle next. Our marketing prioritization system is geared towards marketers and marketing efforts, while this is geared towards product teams. This system is quite a bit more simple as it’s nearly impossible to fully quantify and measure the impact or effort required to build something. Building software is a mix of data and gut feelings. You throw everything together in pot, mix it up in the best way you know how, but at the end of the day, you just have to make a decision. So how does it work? The System All those ideas that you and your team have for ways to improve your product? You shouldn’t just throw them out the window. You should write them down. In a spreadsheet. Where you generate a DIE score for them. “A DIE score?!?! OMGBBQ, that’s scary!” Don’t worry little Johnny, it’s okay. Let me explain. DIE: Demand, Impact, Effort So my acronym on this is slightly morbid, but at least you’ll remember it. Whenever you have an idea for a feature, you add it to the spreadsheet and then assign three factors a rating. The result of those ratings is a score where the lower the number, the more likely it is you should proceed with that feature next. Demand Demand is how much your customer base and target market wants the feature. If you’re constantly getting a specific feature requested or frequently hear of a problem your customers are having that would be solved by a given feature, then the demand for that would be “High”. If you had some random idea in the shower that you just have a “hunch” people would want but have no tangible evidence of such thing, demand on that would be “Low”. Impact Impact is a factor that will mean different things to different companies, depending on what your primary goal is at the moment. It’s the thing you want to affect. Revenue, customer growth, product usage or any number of other things. How much will this feature impact that goal? That’s what this factor is about. Effort How much work will this feature require? Will your design team need to spend a lot of time doing research and customer interviews? Will you need all of your engineering team heads down on this for weeks or months? Effort is crucial as it ties back to your most scarce resources: time and money. We rate the amount of effort something will take on a scale from XS to XL (extra-small to extra-large). You could change this to some other unit such as number-of-days or even a dollar amount, but we’ve found keeping the unit somewhat ambiguous keeps us from getting overly critical of this step. The Score Once you’ve set the Demand, Impact and Effort factors, you’ll get your score! Again, the lower it is, the more likely it is you should tackle that feature next. As an example, the most ideal feature to tackle next would be High Demand, High Impact and Low (or XS) Effort. For us that’d be a score of 3. On the other end of the spectrum would be Low Demand, Low Impact and High (or XL) Effort, which would generate a score of 11. You probably want to stay away from these. Putting this to use The goal of this is not to create something that categorically makes decisions for you, or to somehow quantify exactly how much business impact this will make so that you can’t screw things up. The goal here is to help guide your decision-making process and reduce some of the unknowns. The purpose here is to systematically build out features in a way that appropriately balances the impact they’ll have on your customers and business with the effort and resources available to your team. Whenever you’ve got a feature idea, before you throw it at your team and tell everyone to start hacking away right now, put the idea in to the feature spreadsheet to give yourself a dose of reality.

https://baremetrics.com/blog/marketing-idea-scoring-system What if you could put a system in place that instantly scores and prioritizes any marketing idea you had? You could focus in on exactly the strategies that are most likely bring you a return on your effort while minimizing costs and increasing impact. #synergy amirite?!? Lucky for you, we’ve got a system for doing just that, and I’ll walk you through how to set it up and get going today! The implementation of this is in a Google Spreadsheet, which you’ll want to make a copy of to follow along. But, I’m getting ahead of myself! Looking for traction Earlier this year I read Gabriel Weinberg & Justin Mares’ Traction. It’s jam packed full of ideas for growing your business with a “3-step framework called Bullseye”. The framework really is great and got me thinking about all sorts of marketing channels and strategies I hadn’t considered before. The book mentions using a spreadsheet to put all of your ideas in, categorizing them and tracking a few variables to prove their viability as a strategy, so that got my wheels turning. I liked having a place to dump all the random marketing ideas. In a matter of minutes you can drum up dozens of ideas. But actually prioritizing what to go after first was much harder to come by. Given the size of our team (and that we don’t have a single person focused full-time on marketing) I wanted to be as efficient as possible with our time. To prioritize our marketing efforts, I created a scoring system that instantly priorities any marketing idea you’ve got. It tells you right away what you should be testing out next. This lets you knock out some low hanging fruit right out of the gate and help kickstart your marketing plans! Marketing Prioritization System You’ll want to make a copy of this Google Spreadsheet so you can follow along. At the basis of this is the Traction Bullseye framework, but we’ve added a full weighted scoring system on top of it to help prioritize what to go after first. I’ll walk you through the whole thing and then you can jump right in and start using it, or tweak to your heart’s content. Channel + Strategy The Channel column is for choosing one of the 19 channels mentioned in Traction. Targeting Blogs Public Relations Unconventional PR Search Engine Marketing Social & Display Ads Offline Ads Search Engine Optimization Content Marketing Email Marketing Viral Marketing Engineering as Marketing Business Development Sales Affiliate Programs Existing Platforms Trade Shows Offline Events Speaking Engagements Community Building It’s easy to write off some of these channels. “No way would a trade show ever work out for us!” But when you’re brainstorming ideas, it’s important to put it all out on the table. Mix in a scoring system for your ideas and magic! The Strategy column is where your actual idea goes. The Channel is just for categorizing them. Status You’ll likely be going through multiple ideas as the same time, so the Status column helps you keep track of where you’re at with a given idea. It’s options are Idea, Testing, Focusing, Abandoned. Testing After you’ve come up with a marketing idea, you need to test that strategy to see if it’s viable and cost effective. You’re basically starting with an educated guess on this. Not all ideas are testable or even repeatable in any sort of scalable manner, but if they are, there are a number of additional data points you’ll want to track. Customer Acquisition Costs (CAC) Response Rate Conversion Rate Customer Lifetime Value (LTV) These are numbers you can make educated guesses on from the start and then update as a test progresses. This can help you prioritize and purge ideas, especially when it comes to the economics of things. LICE: Lead Quality, Impact, Cost, Effort Now that we’ve established some baseline data points for you to collect and input as you’re creating ideas, lets look at the meat of this: scoring. Scoring here lets you quickly identify what you should try out next based on four factors. Lead Quality Impact Cost Effort LICE makes everything nice. :) We use these four factors to generate a score where the lower the number, the more accessible the marketing idea is. Let’s take a look at the four factors. Lead Quality Not all sources are created equal. Usually your highest quality leads will come from a source that sends you the lowest number of leads and the lowest quality leads will come from a source that just hammers you with traffic. Your AirBnB for Hamsters service may get lots of traffic from TechCrunch, but lets be honest…very few of those visitors will, you know, need that. But a writeup from Petco?!?! Those leads would be fantastic! Impact Impact will, many times, match up to your Lead Quality, but it’s geared more towards what the purpose of your marketing is. For instance, maybe brand awareness is a much larger focus to you as opposed to lead generation. In that case, a marketing idea could have a lower lead quality score but a high impact score. Cost Not all great ideas are expensive (in fact, many times your best ideas are actually dirt cheap). But the fact is, some ideas really can be pretty expensive (trade shows, advertising, sponsorships). If cost isn’t a big factor for your company, you can lower the weight of the “cost” in the final score (which I’ll talk about momentarily). Effort How much work will this idea take? Does the idea rest on convincing someone else to do something? Does the whole team need to get involved to pull off the idea? All of those things affect how much effort something takes. Multipliers Every company is in a different stage and what factors have an impact on you will vary. Maybe you’ve got all the time in the world but no money…that makes cost a huge multiplier. Maybe you’ve got limited time but lots of money, in that case effort would be a big multiplier. In the Settings for the system, you can set multipliers on all four variables to adjust importance. The Score Once you’ve set Lead Quality, Effort, Cost and Impact (and adjusted the various multipliers) what you get is weighted score that helps guide what marketing ideas you should try next! The lower the score, the more in line the idea is with the current stage of your company! Putting in to practice Using the Marketing System spreadsheet, you should be able to start scoring your marketing ideas instantly. It works right out of the proverbial box. I suggest jumping in and doing a brain dump of everything you can think of and then let the scoring system do its work. Don’t overthink the ratings you assign to a given idea, just go with your gut. This system obviously doesn’t actually do the marketing for you…it’s here to help you know what to go after next. If you don’t actually put it in to practice, you’ll be no better off!

https://baremetrics.com/blog/new-features-will-not-save-your-business As a founder, you ooze optimism. It’s a necessary coping mechanism to deal with the volatile up’s and down’s of creating something out of nothing. But that becomes problematic when you’re still finding product/market fit as it makes you believe that next feature will be the feature that solves all of your product’s problems. It won’t. Andrew Chen calls this the Next Feature Fallacy. Above is a chart of our Monthly Recurring Revenue since the beginning of Baremetrics’ existence nearly three years ago along with annotations of each feature release. I’ve overlaid vertical lines so you can see the exact points where those annotations correlate with the graph…which is almost meaningless because, as you see, those lines never directly correlate to a change in the graph. Features don’t grow businesses. Solutions grow businesses. If you throw a trend line over the graph, it’s just the most boring thing you’ve ever seen. Revenue continues to increase month-over-month, but there’s no single point where “everything changed”. That’s not to say features don’t matter, but progress isn’t made by shipping features, it’s made by solving problems. Like I said, solutions grow businesses, and ultimately solutions are the sum of all parts: features, marketing, onboarding, customer support…the whole bag. If you’re a designer or developer by trade, it’s easy to think that spending a couple of hours/days/weeks building something will be what turns your business around. It’s dangerous because it feels like progress. You’re doing something, right? But you’re likely ignoring the core issues if you’re just cranking out feature after feature while neglecting other parts of your business. Business is a never-ending process of tweaking hundreds of knobs. Many of the “wins” you’ll see will come from a random combination of knob-tweaking that you just stumble upon. Don’t just tweak “product” knobs. Make adjustments across every facet of your business so the entire customer experience is improved. That’s when you’ll find long term, sustained growth.

https://baremetrics.com/blog/product-launch-sequence Our 7 day launch sequence for announcing anything If you launch something on the internet and no one is around to hear it, does it make a sound? I know. Deep. But seriously, how do you launch/release/announce/publish something and make sure people do in fact hear? Here at Baremetrics we have a launch sequence that we use variations of for basically anything we put out: articles, products, features, news…anything. It’s a repeatable set of steps done over 7 days and one we’ve been optimizing over the past couple of years and one you can likely copy and use for your own company! Who doesn’t like copying?!?! Not all of these items will be applicable to everything you put out (you wouldn’t do a press release for a new blog post). Note: I’ll be using the words launch, release, publish and announce interchangeably here but ultimately I’m referring to “getting something out there”. Setting a launch date Whether you’re publishing a new article or releasing a major new feature, you need to give yourself a little lead time to get your ducks in a row. Usually, one week out is sufficient. If it’s something just absolutely huge (initial product launch, for instance), then two or three weeks would be more appropriate. Now, for the 7 day launch sequence! Day 7 Write out the story you’re telling When it comes to features and products, everything you do needs a story behind it. The mechanics of the thing you’re releasing aren’t the story…the problem you’re solving is where things get interesting. What you write for this isn’t necessarily something you’ll publish directly, but it helps focus how you present things, the copy you use on landing pages, what you pitch to PR folks, etc. Initial press outreach Not all things you put out will warrant a PR push, but if you can put a compelling spin on what you’re doing, getting some press coverage can go a long way. There’s not really any magic sauce for getting the press to cover you. So much of what does/doesn’t get covered boils down to the whims of the reporter and what else is in the current news cycle. Your best bet is to just cast the net wide and hope for some bites. Some tips for doing press outreach: Email journalists who’ve covered similar topics to what you’re announcing before as that means they’ve got at least some interest in what you’re doing. Make the subject line informative and compelling. Being spammy or vague won’t get you anywhere. In your first line reference their writing on the topic that you think is tangentially related to what you’re doing so it’s clear you’re not just blanket-emailing everyone. Keep the email to 4-5 sentences and mention when you’re launching and if there’s an embargo on the announcement. People need deadlines and including a hard date/time helps them prioritize your email. Partnership outreach Some of the things you may launch likely involve another company in some form or fashion. Start coordinating announcements or guest posts now. For example, when we launched Open Startups, I worked with our pals at Buffer to do a guest blog post for them, which gave Open Startups a huge boost and got it out in front of a much larger audience. When we launched our Slack App, we worked with the fine folks at Slack to be a featured app in their directory. If what you’re launching makes use of another company’s technology, they’ll likely want to help you promote it. Case Studies are a great format for this and something we did with Clearbit. Day 6 Create launch video Video is a great format to show off a new feature and give a bit of backstory on why you created it. We try to create short demo videos for both landing pages and general sharing for any major feature we release. You can see some examples videos here… Baremetrics Home Dunning Plan Insights These videos don’t need to be complex or overly polished…the more human they are, the better. Day 5 Create a landing page When you’re launching a new feature, having a direct landing page is crucial. It allows you to reference a feature from the perspective of “solution to a problem”. It’s also the perfect segue to a call-to-action (such as starting a trial or subscribing to a newsletter). We create landing pages for everything under the sun. Here’s a handful of them to get your creative juices flowing… Growing a Million Dollar Company Book Dunning & Retention Slack App Plan Insights Date Compare Stripe Analytics Recurly Analytics Braintree Analytics Subscription API Day 4 Press follow up The key to getting a response to anything is in the follow up. Send a follow up email to all the journalists you reached out to a few days ago. Trickle out a little more info about what you’re doing and why it’d be super interesting to them and their readers. Your goal here is to get some commitments to cover what you’re doing and to get them to write something the same day or the day after you launch. Create animated GIFs and images Creating shareable images and animated GIFs goes a long way towards getting additional traffic from social media. They’re also a great way to quickly show off new features to your customers in-app. We’ve got an entire guide to creating animated GIFs, and our pals at Buffer have an amazingly thoroughly guide to properly sizing social media images for various platforms. Day 3 Influencer & industry outreach You don’t get what you don’t ask for. Most people don’t mind you reaching out and asking them to help share something that you’re launching in a few days. There are a couple of big kickers here, though… Offer to help them when you mention what you’re launching In your first email, ask if it’s okay to share the link with them. Asking for permission goes a long way to not looking like a jerk. Use this type of outreach sparingly. Save it for the really big stuff, maybe 2-3 times a year max. Try to build up a relationship with these people well before you’ve got something to ask from them. Write article Whether it’s just a regular blog post or an article about the release of a feature, having it written a few days ahead will give you time to tweak the content and make sure it’s as error-free as possible. Day 2 The day before the launch is all about relieving launch-day duties. Pre-schedule as much as you can so you aren’t drowning in todos. Schedule a newsletter Ideally you’ve got an email list that you can send announcements to. A blog with regularly posted content is a really great way to build up a list that will pay dividends in the long run. Keep your email blast short (1-2 paragraphs at most) and include a link to both the thing you’re announcing along with a pre-populated share link (using something like Click to Tweet). Schedule in-app messages We’re big fans of in-app messages. We use them for all sorts of things (like increasing annual upgrades by 30%)! We also use them for major announcements. There are a number of tools for sending in-app messages…Intercom is our weapon of choice. Queue up social media Queue up social media posts to go out throughout the day using variations of images and bits of content. On a typical launch day we’ll post to social media 10+ times with different pieces of content. This is also the time to schedule additional posts throughout the coming weeks and months so coverage doesn’t just fall off a cliff! Day 1: Launch day! Publish/release/launch/announce Deploy, merge, pull, click, publish! Do all the things that make the things do things! Influencer follow up Follow up with those “influencers” (i.e. internet friends) who’ve agreed to help you spread the word and let them know everything is live and that they can share to their heart’s content! Submit to Product Hunt (and/or other communities) Not everything is worth submitting to Product Hunt, but it can be a huge influx of traffic for the right product or feature. I suggest submitting it first thing in the morning (by 8AM EST). We’ve had pretty great success with it, especially for free tools we’ve put out such as Open Benchmarks, Build vs. Buy Calculator and The Business Academy. Here’s a full list of all the things we’ve had on Product Hunt over the past couple of years. Depending on what you’re announcing, there are likely other communities such as GrowthHackers or Hacker News that are applicable. Respond to blog comments, social media, customer emails Finally, after you’ve put everything in motion, if all goes as planned you’ll spend the rest of the day interacting with the community and everyone’s response to what you’ve just put out. You should respond to blog comments, social media, emails, etc. quickly to keep buzz going as long as possible. Making it your own We do variations on these launch steps for nearly everything we put out. And while we’ve been using this for quite a while, we’re constantly making little tweaks to it. Try all the things we’ve mentioned, figure out what’s worth your time and effort and come up with a repeatable plan so you squeeze every last drop out of everything you put out!

When you’re building a business based on recurring revenue, what you want is predictability. The “recurring” part has a pretty strong measure of that, but getting more of that recurring payment upfront reduces churn and improves cashflow, letting you spend more money now to acquire customers faster. Most companies are very low-touch with annual plans. It’s offered as an option on pricing pages, and that’s usually where it’s left. But you can drastically improve conversions to annual plans by having a slightly higher touch option. What we see a lot of companies do is a once-a-year email push in the fourth quarter to try and squeeze out a single influx of cash. We took this a step further and started sending out emails within a few months of a company signing up. This worked relatively well, getting us $14,000 in 7 days. But we found the emails didn’t the response rate and, more importantly, the conversion rates that we believed we could be getting. So, we did a little experiment. A better way to converse with customers We’ve increasingly been moving the ways that way converse with our active customers out of email and in to in-app messages (courtesy of our pals at Intercom). We’ve found those message get a much higher response rate and the quality of the response is generally higher. We decided it’d be worth testing moving these annual upsells to in-app messages as well. It’s the same offer to the same people, just in a different format. The result? We saw a 30% increase to annual plans. Hot dog! So, why? What we’ve learned as we transition a lot of customer interactions to in-app messages is that context matters. And I believe that applies strongly here. With an in-app message, the annual offer is present right smack in the middle of the user soaking up the value they get from Baremetrics. How context changes sentiment When a message is presenting in a value context, it changes the customer’s sentiment towards the action requested. With an in-app message: User logs in to Baremetrics User looks through metrics, growth, breakouts, trends, etc. User has warm fuzzies from all the insights they’re getting User presented with offer to keep getting warm fuzzies for 25% off User says “heck yeah!” With email: User, potentially in the middle of some eye-gouging meeting or worn out at the end of a really long day, desperately wanting their inbox to be zero, receives an email asking for money User scoffs and hits “delete”. The end. The “cloud of value” they’re surrounded with while inside Baremetrics does not exist in their inbox. It’s also more work to take advantage of the offer and feels weird to reply to an email to upgrade to something (in many cases spending thousands of dollars). So, whether it’s annual upsells, feedback or feature education, try changing the context of the message to see if the relevant conversion rates are improved. For us, it’s been a consistent improvement for all types of messaging. What are some ways you’ve improved annual upsell conversions?

https://baremetrics.com/blog/reflection-business-updates It’s easy to focus on forward momentum. Looking to the future naturally has an optimistic flair and so we spend more time thinking about it and planning it out. But if we don’t stop to reflect on the past, we’ll miss out on things we could learn. Mistakes that we could, inadvertently, be repeating and best practices that we might fail to adopt. I don’t spend a lot of time reflecting on the past, but once a month I sit down and spend a morning writing out a business update that forces to me to look at what we accomplished, what goals we didn’t hit (and why), progress on important metrics and any other observations that come to mind. Accountability One thing I think that’s actually really important here is to send this report to people who are outside of your business. And do it consistently each month. This could be investors, a business coach or just a couple of other founders who are committed to helping you grow your business. You need outside perspective from someone who can ask hard questions and notice where you may be dropping the ball. You’re also less likely to slack off and skip writing the report altogether if there’s someone waiting for it. Format Now, for the format! There are five sections you should include in each monthly update. Having a consistent format forces you to cover the same areas of your business each month, making it really easy to spot trends and changes month-to-month. Key Metrics There are a near infinite number of metrics you could cover, but it’s important to narrow down on one to two that are your key metrics. That’s all you should include in this section, along with brief observations on why those numbers are what they are. Right now we’re focused primarily on revenue growth, so for us MRR and MRR growth is what I usually include (along with some tangential numbers like trial-to-pay conversion rates). Product If you’re building software, you’re likely shipping lots of things every month (big and small) and it’s easy to forget how much progress your product has actually made. List out the features and updates you’ve made along with any customer reactions or feedback to them. Then, list out what you plan on shipping next month to help set some goals. Finances Your books are one of the most boring aspects of business to keep up with. They’re also one of the most sobering sources of truth. It’s imperative you regularly keep up with things like cash balance, burn, expenses and runway. Observations & Experiments Building a business isn’t linear. It’s lots of hills and valleys. Lots of trial and error. Recording all the random observations and outcomes of the hunches you’ve had or the marketing experiments you’ve tried will help you see what’s working and what’s not and adjust accordingly. Asks This ties back to the accountability I mentioned earlier. The people who help keep you accountable also likely have some unique set of skills or experiences that you can and should tap into. Wrap things up by including a single “ask”…some specific and tangible way they can help you. That might be feedback on a marketing idea, or maybe an intro to someone or perhaps some insight in to why you may be having trouble with growing one of your key metrics. You won’t get what you don’t ask for.

When I hear the words “company culture” my gut reaction is generally to contort my face in some way that conveys “Ewwwwwwww”. It’s just one of those buzz phrases that gets thrown around without anyone knowing what it actually means. But as our team has grown and my role has changed, I’ve been able to step back and spend more time looking at the big picture. As I began to look at what other companies and founders had to say on the topic, I decided it’d be a healthy exercise to actually try to define what “culture” means for us. What resulted was a document that has become a cornerstone in how our company approaches building everything from our team to the actual product. What I put together isn’t some 50 page document full of fluff or corporate jargon. It’s two pages…just under 500 words. It lays out what drives us and how that trickles down to things like values and goals. What I’ve realized is that “culture” is still a really ambiguous word and that it can, and should, mean different things at different companies. Culture is really just the sum of all the parts. It’s not diversity or location or pay or benefits…it’s all of those things and more. Culture is a stew of sorts and everyone’s will taste different. And while it’s a bit ambiguous, it’s still crucially important as it’s what ultimately drives your company. Defining what it means at your company puts everyone on the same page and gives everyone guiding principles for decision making. So, let’s take a look at what a culture document should/could look like for your company. I’ll walk you through ours, which you’re free to copy and use as you’d like in your own company. Just remember that your company’s culture will be, at least in part, different from ours, so I suggest making it your own. Mission The mission is the engine behind it all. It’s the north star. It’s what guides everyone down the same path. The mission isn’t a milestone, it’s not a feature and it’s not a goal. It’s not something to be achieved. When defining your mission, think far outside of where you’re currently at. This is “big picture” thinking that you should be doing. As an example, Baremetrics’ mission is to equip businesses with the tools they need to grow. Everything we do needs to positively answer the question, "Does this help businesses grow?" That drives all product decisions, all marketing decisions and even the people we bring onto our team. Values Next, you need a set of shared values and principles. These are the things it will take for you to accomplish your mission day in and day out. Values are non-negotiable. Every single person needs to embody your values or the mission becomes harder (if not impossible) to accomplish. Values are more in line with the things you probably think of that define the surface of the culture of a company. As an example, here are our set of values and principles: Be entrepreneurial - Think like an entrepreneur. Make decisions like an entrepreneur. Constraints bring out creativity - Whether it's deadlines, money or technology, we embrace constraints and use them to fuel creative decisions. High bar for quality - We sweat the details. Our bar for quality borders perfectionism. The result of obsessing over the small parts is the whole becomes exponentially stronger. Relentless focus on success - The only way the businesses we serve can succeed is if we succeed. Strong sense of purpose - We're here to make a difference and that purpose drives us each day to make a better product and a better place to work. Team Ah, humans. Your company is driven by the mission, the mission is driven by the values and the values are embodied by your team. Patrick Lencioni’s The Five Dysfunctions of a Team presents a model about five things that cause teams to breakdown and we want to avoid that at all costs. Using that model as a guide, we essentially have the inverse of those things as a way to put some parameters on team dynamics. Create an environment of trust — It's hard to be vulnerable and unless we create an environment of trust, we won't take risks. Asking for help and admitting mistakes resolves problems much more quickly. Have healthy conflict — It's important that everyone feel safe to disagree. It hurts the company and the mission to never push each other to make better decisions. Commit to decisions — Once a decision has been made, the team commits to support it fully. Accountability to decisions — We are accountable to decisions, deadlines and commitments. Our decisions affect other people (team, customers, etc) and we are each responsible for owning what we commit to. Focus on results — We are measured by our output, not our input. The process matters much less than the product of that process. Results are our measure of success. People I’ll let this section of our culture doc wrap things up… Without people, our company can't exist. Our team can't exist. The businesses we serve can't exist. Yes, we're on a mission. We hold that mission in high regard and everything we do is influenced by that mission. But that mission shouldn't mask the people. If we haven't served the people well, then we haven't served at all. Don't lose sight of that.

Today we’re launching the biggest update in Baremetrics history: we’re expanding our platform to support Braintree and Recurly, in addition to the Stripe support we’ve always had (with more data sources on the way!). A chapter I didn’t plan on writing One of the most interesting parts of being an entrepreneur is the constant evolution. So much of my role is just putting things in motion. It’s sort of like pushing a snowball down a hill. Maybe it gets huge. Maybe it crumbles before it gets to the bottom. Maybe it makes it to the bottom then hits a tree and explodes. The fun part of that is you just don’t know how things will play out. And I think that’s exhilarating. What we’re launching today is a chapter in our book that I legitimately never planned on when I had the idea for Baremetrics nearly three years ago. The scope of my thinking was just, “I need this thing for my business that uses Stripe, so I’ll just stick to that.” It was going to be a side project to two other SaaS businesses I had at the time. What I didn’t anticipate was the nerve this would strike with founders. Every founder wants easily accessible insights into their business, and Baremetrics is equipped to do that. I also didn’t anticipate how much I’d thoroughly love helping other founders. I’ve had thousands of conversations with founders over the years about every facet of business, and if I’m being honest…helping other founders is just plain fun. And really that extends deeper in to our team as a whole…it’s not just me, it’s all of us. The intersection of those two things puts Baremetrics in a really great spot to serve the needs of a lot more businesses. There’s no reason we can’t help all online businesses. And today marks our first step towards bringing that to fruition. Using the mission to steer the ship Our mission is to equip businesses with the tools they need to grow. By providing tools, insights and education with minimal effort on the business's part, the barrier to making actionable business decisions is lowered dramatically. Everything we do is driven by this mission. Everything we do needs to positively answer the question, "Does this help businesses grow?" And that mission shouldn’t be limited by data source or business model. That’s really the impetus for our expansion. Today, we’re launching support for Braintree and Recurly. In the coming weeks and months we’ll also be adding support for PayPal and Chargify, as well as our own API for sending us your data directly. I’m seriously giddy about getting to meet and help out so many news (to us) businesses. Sign up for a free trial today. And if you have any questions, whether it’s about Baremetrics, business in general or just want to talk about life, please reach out!

It’s a common startup benefit to have a “loose” or “unlimited” vacation policy. “Take all the time off you need!” “We don’t babysit you, take off whenever you need off!” But does anyone actually take off any more time than if they were working somewhere that had a “strict” or “limited” vacation policy? My hunch was that if we said we had unlimited vacation then the lack of limits would prevent anyone from actually taking off enough time. They’d self-impose boundaries and instead end up taking off a lot less time than they should. And it turns out, my hunch was pretty spot on. Article after article covers the downsides of “unlimited” vacation. Turns out, humans need guidelines. They want boundaries or rules to follow. Order is a good thing. So, with a clear message that unlimited isn’t great, how do we make sure the folks our team have the freedom to take care of themselves and their families and make sure they’re not working themselves into the ground? Minimum Vacation Putting a hard limit on vacation didn’t feel like the answer. Everyone has different life events that vary from month to month and year to year. Marriages, adoptions, illnesses, births…every person won’t have all of these things every year (hopefully). Our hope is that the flexibility to do what you believe is best for you, your family and your ability to get your work done is something each person on our team is mature enough to handle. So what we’ve decided to do is implement a minimum vacation policy: each team member is expected to take at least 4 weeks off throughout the year with at least one week-or-longer vacation. Accountability “Unlimited” tends to imply lack of accountability…do what you want, when you want, for however long you want. Instead, with our minimum policy, we track all time off. We track days off to surface any trends and to ensure time off is being distributed and managed as fairly as possible (again, knowing that every team member is different). As a CEO, tracking allows me to have a conversation when people aren’t taking enough time off. It also allows me to see if there is any correlation between time off and productivity and address any potential abuses of our vacation policy before they become a real problem. Public Time Off Board To make it easier for us to track all of this, we have an internal spreadsheet that the whole company can see. It shows who has taken off when, how many days everyone should have taken off thus far and who’s on target for an appropriate amount of “minimum” vacation. Everyone can see who has taken how much time off and we’ve found that it actually helps us keep each other in check on vacation…specifically with who isn’t taking enough time off. We’ve now decided to make that internal spreadsheet available for everyone to see! You can see how much time off each team member has taken, along with if they’re on target or not. Likewise, you can copy the spreadsheet and use it for your company as well! The spreadsheet automatically tells how many days each team member should have taken off by now (assuming 28 vacation days) and visually highlights if they’re on target or not (green = good, yellow = cutting it close, red = take some time off!). How this affects the team As with any instance of making raw data public (whether internally or to the whole world) there are some pros and cons and unique ways this can affect teams. Feeling guilty for taking too much time off As you can see in our spreadsheet, Tyler has taken over double what most of the rest of the team has at this point. But like I mentioned before, every person has different circumstances and in this case, Tyler got married and went on a honeymoon. Literally no one in the company is mad that he did that. In fact, I think the slight imbalance is actually a good thing as it helps others feel more freedom to take time off. Seeing where you’re failing as a CEO As we were putting this together, something became very clear: I’m doing a terrible job of leading my team in this area. I’ve taken a measly 4 days off in the past 4 months and if we tout “minimum vacation” then I should be leading the charge with regularly taking time off. I owe it to me and my team to take care of myself. What’s your policy? What’s your policy at your company? How have you seen unlimited/loose vacation play out (negatively or positively)? What are some other setups that you’ve seen work well?

You’ve plastered your job listing on every job board and social network known to man. Now comes the fun part: sifting through the hundreds or even thousands of applications. But how? How do you narrow down a seemingly endless stream of folks who all want to be a part of your team? Baremetrics is a remote company. We have no main office. We use Earth Class Mail to scan, process and store all of our incoming mail. We all work from a mixture of coffee shops and home offices. Most of us only actually meet in person at our company retreats. With a remote-only company like Baremetrics, when it comes to hiring, the bulk of the work comes in the interview stage. Most earlier stage startups don’t have an HR department, and so hiring usually falls largely on the CEO’s back. Hiring someone is, many times, the primary and full-time job of a CEO and so efficiently narrowing down who’s a good fit is the name of the game. Challenges faced hiring remotely Remote-only companies face a unique set of challenges when it comes to hiring. In general we have a much larger pool to hire from, but that’s not always a good thing. The “I want to work from home” crowd is…substantial. And arguably is made up of people who have, in fact, never worked from home. So what you end up with are hundreds upon hundreds of applications from people who aren’t qualified at all but think they are because they saw the word “remote” in the job listing. But even once you’ve got it narrowed down to people who are qualified, figuring out if they’re actually a good fit is quite difficult. All you’ve usually got to go on are a series of emails and a couple of phone calls or video chats. So how do you overcome those challenges? What are processes, tools and questions that can be used to streamline and make the process as painless as possible for both sides? The hiring process for remote companies is a human psychology obstacle course run on overdrive. It’s not about skill or ability. It’s about understanding how both sides approach problem solving and the faster you understand how someone approaches problem solving, the faster you can make a decision. Step 1: The Job Listing The “obstacle” is the job listing. It’s your responsibility to set the tone here. Yes, lots of people will skip over the contents of of the job listing completely and just read the position name and then look for the “apply” button, but the goal here is to help the person set proper expectations about what the job entails, what they’ll be responsible for and why they’d be a crucial part of your team. You’re trying to balance selling people on the fact that this is an amazing opportunity with also weeding out all the people who are just looking for a paycheck and nothing more. The more you detail you can give, especially around compensation and benefits, the better. But avoid being dry and clinical. Drive home that it’s a great opportunity and that your team genuinely needs someone in this role. Properly setting the tone here will make the interview process much easier. Step 2: Application questions The last thing you want are 1,000 resumés in your inbox. The resumé is, for all intents and purposes, completely useless and should be ignored forever and ever amen. Burn them all. At the same time, you need some sort of measuring stick to quickly narrow down if someone will be a good fit or not. What we do is include a handful of what I call “filter questions”. These are questions that don’t require much work on the applicant’s part but give you a quick mechanism for moving someone on to the next stage. The questions you use will vary slightly depending on the job, but here are questions we used recently for a Designer position we were hiring for: What is your work experience? — I don’t actually care where they’ve worked, I just want to see that they do in fact have some experience. For engineering positions you’ll get a lot of applicants whose only experience is some 4-week Rails bootcamp, and that’s just not our bag right now. Every position has some sort of quick indicator that the person simply doesn’t have the relevant experience you’re after. What city & country are you located in? — For a remote company, we can hire from basically anywhere, but there are locations that may make it more difficult. For instance, a 12+ hour time difference is a big hurdle that, unless there are some amazing benefits, probably won’t work out. Link to your portfolio or Dribbble profile — You’d be amazed at the number of people who don’t have a portfolio or any sort of prior work to link to. Include links to 2 specific examples of how you've used design to solve complex problems, along with how you solved those problems. — This question actually has three purposes. One: following direction. People love to just throw a single link to their portfolio here and call it a day. I didn’t ask for all of your work here, I asked for specific examples. Two: proof that you can in fact solve complex design problems. Three: a look into how you communicate. This is crucial in a remote environment. Why do you want to work at Baremetrics? — I hate asking this question only because I know I’d hate answering it. But holy moly is this a great one for filtering out folks. We’d double our MRR if we got a recurring nickel for every time someone just answered “because I need a job”. How would you make Baremetrics, as a product, better? — It’s important to find good problem-solvers. I don’t actually think someone will be able to effectively figure out how to make Baremetrics better without having really used the product. I just want to know how they approach problem solving. Again, these questions will vary slightly depending on the job. The key here is to give you a set of answers that you can use to quickly use to filter out people that don’t fit with what you’re looking for so you can focus on those who could be a fit. Step 3: Follow up questions From the initial filter questions, one of two things will happen. If it won’t work out, I send a stock email thanking them for their time and encouraging them to check back in the future. Hey __________, Thanks for your application to Baremetrics. We don’t think there’s a great fit at this very moment, but I encourage you to keep an eye on the Jobs page on Baremetrics, and also keep us updated and consider re-applying as your skills grow and expand. Thanks so much! If I do think there may be a good fit, I send a follow up set of questions. These are a mix of questions around working remotely as well as questions specific to the position itself. It requires a bit more work on both ends, but this gives me significant insight into how they communicate via text (which is unbelievably crucial in a remote setting). It’s also additional insight into, again, their problem-solving process. Here are those follow up questions using the Design position as our example. Tell me more about your current job. Are you happy there? — What’s their motivation for applying? What kind of projects are you working on there? — Will this new role be a big change for them? Or will they be able to jump in without hesitation? If you could be anything but a designer, what would you be? — This is about identifying healthy work habits. Do they have any hobbies? What other things do they think about besides their job? Why a startup over an established company? — This helps me understand their expectations. Sometimes people think “I want big piles of equity that’ll be worth hundreds of millions one day!” and that’s not healthy. Have you ever been self-employed? — Running your own business, even if just as a solo freelancer, is a big bonus as you’re much more likely to jump in and do the work and help out even if something is “technically” outside of your job description. Have you worked from home/coffee shop/co-working space before? — Hiring people that have not worked remotely in some capacity is an uphill battle that can present a lot of issues. I ideally want to hire people who have systems in place so they don’t get burned out. What's your typical approach when presented with a feature that needs to be designed? — Yet another identifier of problem-solving ability. :) I also, at this point, always ask if there are any specific questions they have about Baremetrics or the job and we’ll usually exchange a couple of emails about that. Step 4: Video chat Assuming all the previous answers checked out fine, it’s time for a video chat! The video chat step is a mix of figuring out if they’re decent at making themselves available for a quick chat (which is especially important if there is a major timezone difference), along with just making sure they are who they say they are. We use video chat a lot within the team and being able to clearly communicate verbally in English is part of the deal. Doing a 5-10 minute chat verifies that and also gives you an opportunity to get to know the person a bit more. Step 5: Test projects One of the hardest parts of hiring, at least for me, has been this idea that someone is potentially quitting another job to come work with us. That’s just a lot of weight and responsibility (as it should be). So having as strong of an idea as possible of what it’s like to work with someone is a big deal. Just about every job type lends itself towards some type of test project. Doing the test project isn’t necessarily about getting some sort of useable deliverable. It’s about figuring out if they can hit the deadlines they set, if they’re actually able to do the calibre of work they’ve shown before and if they respond well to criticism. Also, it’s also perfect insight into how they, you guessed it, problem-solve. Worth noting: We’ve gone back and forth between doing paid test projects and haven’t really seen a difference one way or the other with willingness to do the work. Usually we try to keep the project limited to a few hours of work. Generally something they could knock out on a weekend or over a couple of evenings. After the interview After the test project, I’ve got everything I need to make a decision on that person. It’s usually at this point that we’ll get really specific with salary and equity as I’ll have a much better idea of their abilities and what they’ll be bringing to the table. If all goes well, we’ll add that person to the team! If not, we’ll head back to the drawing board and keep repeating the process. Every company is different and what criteria works for one company, won’t necessarily work for another. As the founder, or whoever is heading up the hiring, efficiency is the name of the game unless you want to spend a whole year processing job applications (you don’t). Identify ways to quickly narrow things down. The more you do it, the more comfortable you’ll get with finding good markers for who would/wouldn’t be a good fit for your company.

There’s a lot of talk about “work/life balance” and figuring out how to find some sort of perfect equilibrium wherein your personal life is completely divided from your work building a startup. This is not about that. In fact, it’s about the opposite. It’s about accepting they can’t possibly be separated, and that perfect equilibrium doesn’t exist. However, it’s not all doom and gloom. There are quite a few ways to help mentally process and sort through running your own business in a way that’s actually healthy for you and those around you. Hero mentality There’s this hero mentality that is pervasive in startup culture where you’re expected to be all about your company. You eat, breath, sleep and poop your company. Maybe you can have a hobby or two outside of your startup, but as far as perception goes, you’re a human being with a singular focus: your company. I see it most often in first-time founders who are fresh out of school and legitimately are 100% about their company. On the surface this feels like the right move. Many times there’s a lot on the line. You’re either playing with your own savings or someone else’s money. You’ve got a whole team of people depending on you not to blow it. This particular company is your “best idea ever” and you treat it like your life’s work. Of course you want to be 100% about your company, anything less would seem irresponsible. You get this urge to try to completely separate “work” and “everything else” so you can have some sort of superhuman focus and hit whatever seemingly impossible goals you have. The problem comes when life happens. And when life happens, if you don’t have certain habits and systems in place, it can ruin you and your company. Life will happen I think a lot of founders have this view that if they can just hold off on non-startup stuff for long enough, they can get their company to some mythical, self-sustaining-machine status and then they can get back to friends, family, hobbies, etc. I don’t know of a single case where that’s actually played out well, though. Everybody’s got something they’re dealing with. Every. Single. Person. Founders included. Right this moment I know of founders who are going through divorces, grieving the loss of siblings, fighting cancer, helping their kids fight cancer and everything in between. Welcome life events also require a certain amount of ‘dealing with’. A year ago, we adopted two older children from another country who didn’t speak our language, and the life change that came from that event has had a profound impact on me and the way I run this company. The fact is, you can’t separate work and life. My kids and the struggles we’re facing obviously make their way into my head during the day. A fight you have with your spouse, a sick family member, financial troubles…all of those things you’re going through will permeate your thoughts. If you don’t face those things or accept that they influence your decision making and the way your run your company, you’re in denial. I made some mistakes in the past year with how I handled our transition from a family of three to a family of five, but I also think there were things I did correctly before we adopted that prevented the struggles we’ve had with our adoption from bringing me (or our company) to a halt. Regularly take time off There’s no prize for taking the least amount of vacation. Your team will function just fine while you take some time off. Arguably, they’ll likely function better in the long run when you’re properly taking care of yourself. I’m not talking about taking an afternoon off here and there, I’m talking about taking multiple days (or even weeks) off with zero interaction with your company. Burnout is real and once it hits you, it’ll take a lot longer to get out of that funk than just a couple of days off. Your brain needs time to disconnect and organize all the junk you’ve got bouncing around in there. You’ll come back refreshed and in a much better spot to make the decisions you need to on a day-to-day basis. Have a non-startup support system Yes, having a bunch of other founders around you is great for learning how to grow a business, but it’s not so great for dealing with life. You need people around you who get your head out of the startup world. You need to build relationships that will persist long after your company is gone. You need a community who will help you grow as a human not just as a founder. Take up a hobby, or three I can’t overstate the importance of interests outside of your work. Not only will it make you unboring as a human being, it also has the added bonus of making you a better problem solver…which is essentially all being a founder really is. Having hobbies gives you a mental break while also giving you new perspectives on your product and your team. My current hobbies of choice are gardening and [Arduino]. Be transparent Acting like you’ve got all your junk together is the last thing you should do. Yes, there’s a certain level of stability you need to provide for your team, but that “hero mentality” I mentioned earlier doesn’t help anyone. Be clear when you’re struggling with things. If anything, it keeps your team from playing the hypothetical “I wonder if something is wrong?!” game in their head, which is destabilizing for everyone. Let your team know what’s going on. You’ll be less stressed for it, and have the added benefit that your team will be more likely to come to you when something is going on in their life. It’s about people Building a company isn’t about a product, it’s about people, and trying to somehow fully divide “work” and “life” will leave you feeling pretty lonely. Abandon the hero mentality, embrace the fact that as a founder, “work” and “life” fully bleed into one another.

https://baremetrics.com/blog/founder-mistakes Bless our little founder hearts. We’re eternal optimists who have great intentions paired with a propensity to try things that common sense would say is a bad idea. That means we try a lot of things, most of which don’t pan out. But it’s the things that do pan out that keep us motivated. Having talked to and seen the businesses of thousands of entrepreneurs, there are a few mistakes I’ve seen crop up regularly. You should always keep trying things that likely won’t pan out…but at least you can increase the chances that some of them will. Building solutions in search of a problem As part of the “eternal optimism” I mentioned, we tend to think just about every idea we have is great. An idea pops into our head of some cool thing to build and we instantly assume that OF COURSE there’s a market for it! We build our “solution” based on the assumption that there’s an actual problem somewhere. It’s a solution in search of a problem. Go check out Product Hunt on any day of the week and 99% of the stuff you see is this exact thing. Product Hunt is a directory of solutions in search of problems. Focus on identifying problems and from there you’ll know what solutions actually need to be built. If the thing you’re building doesn’t save time, save money or create revenue, then there’s likely no problem in need of a solution. Customer acquisition plan is just “Product Hunt” Speaking of Product Hunt, if your entire customer acquisition plan at the start is just “get on Product Hunt” (replace “Product Hunt” with whatever popular site/person/publication you want), you’re in for a bucket of ice water on your head. Even if you do manage to get some significant traffic from that source, it’ll be a flash in the pan. You’ve got a years-long slog ahead of you and your product isn’t going to sell itself. Focus on sustainable and repeatable acquisition channels and you’ll win big in the long run. Chasing the competition Seems every week there’s some new tool to “monitor the competition”. But here’s a little secret for you: the competition does not matter. If you’re genuinely building something that is solving a problem for your customers, the only people you should care about are your customers. Give yourself some credit. You’re uniquely equipped to solve the problems your customers have and that’s why they’re paying you. Focus on solving the problems of the customers you have (or the customers you want to have) and what your competition is doing is at the bottom of the list of things you should care about. Building internal tools When you’re just getting started and you’re strapped for cash, you typically do all sorts of things to pinch pennies. It’s just part of surviving, and it’s a healthy thing to do when you’re not actually making any money. The danger, however, is keeping that mindset after you’ve got a steady stream of cash flowing. Startups waste inordinate amounts of time building little internal tools just because they can. Especially early on. The value of time is grossly undervalued and the amount of time any given thing takes to build is grossly underestimated. There are very few things that are worth building internally when an external tool will get you 80% of the way there. But if you’re on the fence, throw your numbers into the Build vs. Buy Calculator and see for yourself. Waiting too long to monetize I got email last week from a B2B startup saying they were coming out of their “2 year free beta” and would be launching “pro plans” soon. WHAT ON EARTH HAVE THEY BEEN DOING FOR THE PAST TWO YEARS?!?!? Maybe they’ve been propped up on 12 rounds of VC funding, but my friends, that is categorically the worst idea anyone on the planet has ever had. Waiting basically any amount of time to charge for your product is simply delaying the inevitable. Most people do this in the name of “getting feedback quickly” but the feedback they’re getting is worthless. Feedback from users who aren’t paying you is like asking for feedback on that new quadruple-stack burger from a vegetarian. Who cares what they think, they aren’t buying! You aren’t running a charity. You’re running a business. If people won’t give you money for your product, you have an existential crisis on your hands and the longer you wait to find out, the worse it’ll hurt. Charge something from day one. Waiting too long to delegate Most founders are some form of a jack-of-all-trades. With Baremetrics, for the first six months I did 100% of the work: design, development, marketing, support…the whole bag. But that was a mistake. I waited far too long to make my first hire. Hone in on the things you’re really great at and hire out the rest as soon as possible. One particular role that I think most startups wait too long to hire for is an office manager. Mark Suster actually thinks it’s a key hire, and I agree. Having an office manager/company-wide assistant frees up you and your team to get out of the minutiae and focus on the things that you are all uniquely qualified to do that makes an actual dent in the growth of your company. Not talking to customers I’m always surprised at how scared founders are to get on the dang phone and talk to customers. I don’t care how introverted you are or if you aren’t great at carrying on a conversation. Get over it and have a chat with other humans. I try to schedule a call with every new Baremetrics customer as well as check in once or twice a year. The feedback you get from exchanging audible words will change your product and how you run your business because you get a level of honesty that gets distilled away with short email exchanges. Stop what you’re doing and go email 10 customers right now and schedule a phone call. Faking progress with busy work Deep in the minds of most founders is the fear of rejection. Heck maybe it’s not even all that deep your mind. Maybe it’s at the forefront and it keeps you up at night. That’s normal. It’s what you do to fix it that matters, though. What happens time and time again is we trick ourselves into thinking that random pet project or networking event or conference or Twitter exchange is real, actual, tangible, needle-moving work. It’s not work, it’s procrastination masked as work. Real business progress happens with saying “no” to things, not “yes”. What you choose to reject defines your growth. I’ve found having a solid routine and organizational system in place helps me avoid doing dumb things that don’t matter. Charging too little How much did you spend on coffee this morning? What did that fast food meal cost you? How much did that season of The Walking Dead set you back? Entrepreneurs spend hundreds of dollars a month on completely inconsequential things yet are afraid to charge even $20 for their product that creates thousands of dollars in value for other businesses. If you’re solving real, actual business problems, there’s no reason you can’t charge hundreds or thousands of dollars a month for it. And what’ll surprise you even more is that those customers who are paying you a lot more are almost universally more pleasant human beings. Some of your worst and most demanding customers will be the ones paying you $5/mo. Instead of dealing with them, just charge more. A whole heck of a lot more. You almost certainly will prefer having 1,000 $100/mo customers than 10,000 $10/mo customers. Waiting to launch the “perfect” product Our LinkedIn overlord, Reid Hoffman, hits the nail on the head: “If you are not embarrassed by the first version of your product, you’ve launched too late.” There are graveyards full of startups that flopped before they even launched, all because they had the flawed idea that they needed to wait until things were “perfect”. Wake up call: there’s no such thing as perfect software. The longer you wait to launch your product or feature, the more assumptions you have to make, and incorrect assumptions are what kill businesses. The first version of Baremetrics was launched in barely a week of development. It was a hot mess of basic metrics that gave you very little business insight…but it got us thousands in revenue and gave us the feedback we needed to work towards what more of our customers wanted, allowing us to grow much faster than sitting around for months or years trying to build what we’d have assumed was the right product. Mistakes need to be made I want to be clear: you should be making mistakes. If you play the “safe” card every time, you’ll likely lose. You have to take risks on some level. That’s just part of the game. I think most entrepreneurs are actually risk averse. Most of us are not adrenaline junkies that do insane things because it’s fun. We take on risk because it’s necessary and we’re willing to do it in ways others aren’t. But what you should do is look for ways to mitigate that risk. Learn from other entrepreneurs and figure how to avoid overly risky moves and focus on risk that has the proper balance of potential reward. Take smart risks and they won’t all turn out to be mistakes. What are some mistakes you’ve made as you’ve built your business?

We just rolled out a change to Buffer’s very public revenue dashboard that resulted in a $25,000 increase in MRR. This article provides some backstory in to how we originally calculated metrics and the transition to a greatly improved version of metric calculation we’ve been building over the past year._ Very few things in life are black & white, but we so desperately want them to be. Life’s just easier when the choices are obvious. And that certainly holds true with entrepreneurship. Every day you’re faced with hundreds, if not thousands, of choices to make, most of which lack obvious answers. You make an educated guess, you move on, and you address any potential problems that arise from said guess. I wanted to build a service that removed a lot of those decisions you had to make when it came to your business data. Constantly making decisions about how to calculate this, which formula made the most sense for that or figuring out how to get all the data in one place…it can be incredibly overwhelming. So, in 2013, I started Baremetrics to address that very thing. The premise being that you shouldn’t need to make so many decisions. You should just be able to get the information you need to grow your business and carry on with actually growing your business. If only it had been that easy… Endless options As a founder, you’ve likely spent an inordinate amount of time learning How to Business™. You may even have a degree saying you’re a Master at Businessing. But it turns out all that research and reading doesn’t replace just getting in there and doing it. In fact, I’d argue that spending too much time learning the minutia actually hinders your ability to grow and build a company. For example, there are endless articles on how to calculate X metric, why this formula is better than that formula and what the “right” way to calculate it is. After you’ve read all of those things you’re essentially back at square one with a burning heap of conflicting information. Take the Pacific Crest SaaS Company Survey: it outlines nearly 50 different ways that companies calculate retention rates. 50! That’s nearly 50 different formulas for a single metric. For 99% of founders, it’s an epically terrible use of time to sift through all that information to learn the detailed intricacies of metric reporting and the pros/cons of each calculation formula. There are just a thousand more profitable uses of your time. I’m on a tangent now, so let’s get back to my original goal with Baremetrics: How do we make decisions so founders don’t have to? It’s Complicated I knocked out the first version of Baremetrics in a month, based primarily on my own needs building a couple of SaaS products. Within a few weeks, as more and more businesses started using the service, I started realizing just how different businesses can be. When you read “SaaS company” you likely think of the traditional set of 3-5 monthly plans with customers that regularly and reliably pay. In practice though, that’s just not how it works. It’s never that clean. For any company. Ever. Business is messy and subscriptions are insanely complicated to address properly. Customers change their minds, they grow, they shrink, their payments fail, they demand refunds, they want coupons, etc. We currently cover over 30 different possible subscription “states” to address this. Who knew simple subscriptions could vary so much?!?! All of these things (and thousands of other scenarios) need to be accounted for. But how do you account for them appropriately and usefully? That’s the real question. What’s most useful from a decision-making perspective? Changes Over the past 2+ years of serving thousands of businesses, we’ve seen a lot of use cases. And over those years we’ve learned an immense amount about what’s useful and what’s actually needed to run a business and make decisions. When we initially launched, we based most of our metrics off the idea of a “charge”. If there was a charge and that charge was tied back to a subscription plan, then we’d consider it “Monthly Recurring Revenue”. That worked pretty great initially, and covered a lot of use cases. But over time we found that method was a bit too volatile for a metric as important as MRR and it was hard to make the connection between “charges” and “subscription activity”. That’s what most founders are actually after because the subscription conveys what their customers were actually doing. It was during this time that we had a bit of an epiphany: we are not an accounting tool—we’re a business decision making tool. That’s a very important distinction because the expectations of those tools are entirely different. “Charged-based metrics”, as we called it, was built from the accounting perspective. But we decidedly did not want to be an accounting tool. So we started a shift that’s been nearly a year in the making. We’ve been moving over to what we call “subscription-based metrics”…which is based on the states of subscriptions rather than the charges themselves. This lets us build the history of a customer and their subscriptions from beginning to end, telling a more complete story. It lets you dig in to your numbers so when they change, we can show exactly why. And the answer to “why” is where real business insights are found. So why do you care? Well, for most customers, it means their metrics will have a slight shift. Which when you’re talking about “data”, sounds like the worst possible thing on earth, because traditionally “data” is viewed as black & white. It is what it is. But our goal isn’t simply to provide “data”…it’s to provide decision-making insights. It’s to surface trends, to see progress, to find the driving force behind revenue, to learn what is and isn’t working. And that's what the shift to subscription-based metrics allow us to do. To our customers I know it can be disconcerting to see numbers change, but this shift allows us to not only give you more accurate metrics, but also more actionable insights. At this point, about 70% of you are actually on the new system already and taking advantage of all the new features this change enables (revenue breakouts, cohorts, trendlines and more). The remaining 30% should be moved over in the coming 2-3 weeks. As we’ve been rolling this out, we’re hearing time and time again that it’s much more in line with how businesses want to view and use their data. Deeper insights, better views into trends, more answers to the “why’s”. In addition, this lays the foundation for much faster development, much more stable numbers, and many more useful features that we’re excited to get working on. If you have any questions about this, we’re always an email away: hello@baremetrics.com.

When you’re building a business, cash is king. Cash lets you do things like hiring and customer acquisition, and the more of it you’ve got at any given time, the faster (theoretically) you can grow. We recently tried something that got us an extra $14,000 in cash in seven days. Let’s take a look at how we did it. So, what’s great about subscription businesses is the relative stability. You get a steady-ish stream of revenue that slowly increases over time and is much less susceptible to the whims of other business models that are based on one-off payments. But what can be slightly frustrating is the “slowly” part. Many times, those customers will be paying you every single month for years, yet you have to patiently wait for that money to trickle in. Or do you? What if you could get the benefits of a pile of cash and the stability of knowing your customer will be around for longer than a month? Well, my friend, you can, thanks to one thing: annual subscriptions. They’re the magical unicorn of the SaaS world. There’s a catch, though. The way most companies approach annual plans is to just slap it on their pricing page and hope the customer picks it over the monthly option, maybe enticing them with a little discount. That’s the passive way to make yourself feel good about “doing something” but I guarantee you’re leaving money on the table. The annual upsell Instead of thinking of your annual plan as just a different payment option, think of it as a feature to upsell. “Sell” is the operative part of that word. It requires a little bit of work, but if you do it right, it will pay off. For nearly two years we’ve been prompting users, via email, to switch to annual a few months in to their subscription. Unfortunately the results were always a bit dismal, with the average conversion rate to annual being around 4.75%. On the surface that looks like it’d potentially work just fine. It highlights the benefits and makes it a quick, self-serve “click the link and be done!” switch. But it always felt a bit too salesy, so I decided to try something a bit more personal and informal. How’d this puppy perform? The conversion rate on this email is 11%…a whopping 131% increase! It generated over $14,000 in revenue in the first seven days. That’s the stuff you write home about! There are a number of things different about this email. A 3-month discount, instead of 2 Manual process — No one-click, self-serve switch process Personal — Doesn’t include automated “here’s how much you’d save” info Urgency — “We’re testing this out and only offering it to a subset of customers” (which is true, we don’t offer this to lower paying plans) The open rates were basically the same between the two emails, so subject line didn’t seem to matter. Ultimately, the combination of urgency, personal touch, and a bit larger discount pushed this one over the edge. I do think the additional discount played a role in increased conversion, but from talking with other founders, most tests point to the size of the discount actually not being that big of a deal. Future testing The problem with this format is that it’s not really repeatable over the life of the customer. I suppose you could send it to them once a year, but then the “urgency” factor gets lost. Testing out a series of these emails is certainly worth our time, as is testing out the size of the discount itself (number of months, percentage discounts, etc). What are some things you’ve tried to increase annual subscriptions? Any formats you’ve found work really well?

Three months ago, we introduced a Free plan…and it nearly brought Baremetrics to its knees. Let’s take a look at what we did, how it affected our business and how it was ultimately a failure. When I first built and launched Baremetrics over two years ago, I charged from day 1. No free plan and no trial. You signed up with a credit card and were charged real actual money. Not happy? No sweat, we had a 60 day money back guarantee. We kept this setup for almost two years and grew the business from $0 to over $30k/mo in revenue using it. Then we decided to shake things up. Our free plan setup In August, we launched a totally free plan. No time limits and no limits on the number of customers (which was a major segmenting factor for the paid plans). The only limit was on the feature set. Want full historical metrics? Upgrade, please. Want powerful tools to dig deeper in to your metrics? You’ll need to upgrade for that. Want to automatically collect on failed charges? You guessed it: upgrade. We didn’t require a credit card until you were ready to upgrade. There was essentially zero commitment to actually doing anything other than signing up. The results We launched the Free plan on August 18 via a slightly atypical manner: Beardmetrics. The results of our Beardmetrics marketing experiment is content for another post, but ultimately we didn’t actually make a huge “BAREMETRICS NOW HAS A FREE PLAN!” announcement. We sent out an email to 7,000 people and tweeted to a few thousand more as a way to create some buzz around Baremetrics. We then attempted to convert as many people as possible by making it super easy/fast to sign up. Over the course of 11 weeks, over 1,000 free accounts were created. To be clear, that wasn’t 1,000 “potential paying customers”. We’re still geared strongly towards “subscription” companies. That means a company needs to have subscription revenue and, more specifically, has to be using Stripe’s Subscription API. So, of the 1,000 accounts, 461 were actually eligible to even think about becoming a paying customer. Of the 461 eligible paying customers, 53 actually upgraded. 53 as a % of 461 = 11.5% Our Free-to-Pay conversion rate over the course of almost 3 months was just over 11%, and with an ARPU of $90, that meant nearly $5000 in new MRR. Honestly, that’s pretty amazing. The average B2B conversion rate is around 3-5%…so we were killing that. But as these things go, it wasn’t quite that simple. When free started breaking down We were adding over a dozen new accounts a day, but that’s about where the fun stopped. Quickly, we started coming up against a lot of performance and database issues. Within a few weeks our “free” customers were outnumbering our “paying” customers and the amount of data were both storing and processing had doubled. Because we have to pull down and store your entire data set from Stripe and then generate the metrics for every single day for every single plan on your account (and store that as well), there’s just simple a crap ton of data processing that happens. We had over two years to slowly work our way up to the amount of data we were processing before the free plan. We then found ourselves needing to double the processable load in a matter of days. Needless to say, it didn’t work out in our favor. We were dealing with day-after-day and week-after-week of progressively more complex server and performance issues as we just kept piling on the new free accounts. In addition, the number of customers we were supporting tripled. We found ourselves spread really thin, unable to provide the same responsiveness as before. And on top of that, our regular support load was increased due to the aforementioned server issues. Then, to make matters worse, we were so focused on putting out server fires, we found ourselves making zero progress on the product itself. To say the issues were compounding would be an understatement. Calling it what it was: failure The net result of those compounded issues led to what was at the heart of our free plan failure: churn. We started losing customers left and right because day after day they were experiencing down time, delayed data and inaccurate metrics, which is absolutely never okay. On top of that their support experience was less-than-ideal and the product itself was becoming stagnant and buggy. We lost nearly 60 customers during the 11 weeks we had our free plan, doubling our revenue churn and resulting in a net loss of customers. Our free plan was causing our business to slowly implode. When free doesn’t make sense People talk a lot about how the support load for free customers is one of the main negative factors of freemium. That was certainly part of it for us. The bigger issues came down to the fact that our resources are finite. We’d been able to scale our infrastructure slowly because our growth before had been predictable and we could figure out ahead of time when certain bottlenecks would become major issues. The free plan threw all of that out the window, though. When your available resources, whether it be team size, performance caps or money, are tight, then “free” has a real possibility of causing more damage than providing any real benefit. Things we could have done differently There are a couple of things we could have done differently that may have resulted in a different outcome. Limited how much historical data we imported and processed — If we’d only imported the 30 days of data we were showing for free plans, that’d have saved us quite a bit of processing, but I believe it would have also made for a crummy upgrade experience as you’d have to re-import all your historical data. Provided a full-featured trial to start with and then just downgrade to free — Theoretically this would have resulted in more upgrades, but it wouldn’t have solved scaling issues. Limited the number of paying customers on the free plan — This would have preventing huge accounts from hogging resources, but ultimately this would have just delayed the inevitable by a week or two. There are all sorts of setups we could have tested, but at the end of the day we needed to course correct as quickly as possible. We can revisit some of these things later on. What we’re doing now In the past week, we’ve switched to a free trial. For 14 days, you get full access to everything, after which you can pick a plan. If you chose not to pick a plan, we stop processing your data. This puts a hard limit on resource hogging and keeps us from having compounding performance issues. We’ve also made significant improvements to our infrastructure to avoid these issues in the future. I’m not going to write off freemium completely. I believe there are definitely situations where it can work. But right now, in our situation, it definitely did not work. I’d love to hear your candid feedback on things we could have done differently as well as your own experiences with freemium.

While customer feedback is crucial to your startup, it’s also something most founders have a love/hate relationship with. How do you decide if feedback is valuable or not? How do you keep complaints from dragging you down? Where do you draw the line on letting feedback steer your company? We’ll take a look at answers to those questions, along with a story and announcement about how customer feedback is directly changing a core part of Baremetrics. Types of feedback There are two types of feedback you should be collecting: solicited and unsolicited. With “solicited” feedback, you’re actively going out and asking questions of your customers. You’re sending surveys, emails, and in-app messages. This type of feedback happens in more predictable intervals as you’re the one initiating it. NPS surveys have been the most consistent way for us to get regular feedback. In addition to those, we send a series of lifecycle emails to onboard customers (and collect feedback about their experience) as well as product research messages via Intercom’s in-app messaging feature. “Unsolicited” feedback is what you’ll receive most of the time. It’s the random emails, help desk tickets and tweets that come in at completely erratic times. Both types of feedback are valuable, but how you collect and take action on the feedback is even more important. How to organize feedback If you just read feedback and never act on it, you’ve wasted everyone’s time. There isn’t one “right” or “best” way to organize it. The key is to just do it and do it consistently. We have two places we organize the feedback we receive. Asana We use Asana for project management, but any list-making or project management tool (Trello, Basecamp, etc.) will do the trick here. We have a Product Ideas project in Asana that we add items to as customers’ (or our team) suggest things. Then, we can add comments to those items as necessary and prioritize them based on the number of requests we receive or the business value they’ll add. Intercom Intercom is great for understanding the context in which feedback was given. Was it the result of a bug? Were they frustrated when they sent in the request? How did we leave the conversation with them? When doing product research, we’ll tag messages that customers send in, so it’s easy to find them all later. We also will tag customers for beta features so we can automatically message the correct segment of users when we start beta testing something. Many points of feedback in Asana end up linking back to conversations in Intercom, so there’s a decent amount of overlap. How to decide what feedback is valuable You’ve got all of this feedback, but how do you decide what to do with it? Between our “Product Ideas” board, thousands of Intercom messages and innumerable Twitter conversations, figuring out what’s actually important can be difficult. “Value” is a relative term, especially when it comes to new businesses. Your metrics for success, or what you need to get to the next goal in your business is highly unique to your stage of business. While the answer to what is “valuable” may be relative, the need for establishing what the next milestone or success metrics you need are not, as that’s how you determine what feedback is valuable. It’s easy to let the vocal minority pull you in the wrong direction, but happens much less frequently when you know what you’re shooting for. Once you’ve solidified what the next steps are that your business needs to take, determining how to value feedback becomes very simple and takes very little time to decide if you should ignore or give weight to a customer’s feedback. Maybe what you need more than anything is profitability, so doing anything that delays that is bad feedback. Maybe you need users more than money, so any feature that slows down signups is likely a bad move. You get the idea. Let’s take a look at a real world example here… How we changed Baremetrics based on feedback When I built the first version of Baremetrics, my goals were simplistic. I just wanted simple revenue metrics for the business I was running at the time. It solved my problems, and then I came to find out it solved problems for quite a few other businesses as well. The foundation of nearly all of our metrics came down to two things: Monthly Recurring Revenue (MRR) and Customers (namely if they were “active” or not). For the past year and half of our existence, we based these metrics on “charges”. Internally we called this “charge-based MRR.” My thinking was that this was the most accurate way to calculate MRR and decide whether a customer was active or not. If they paid you, they were “active” and counted towards MRR. If they didn’t, they were no longer active and did not count towards MRR. Sounds easy enough, right? Then as we started growing and hundreds of businesses started using our platform, we started noticing unusual holes in this method. Failed charges would cause unexpected dips and spikes. Delays from Stripe with running the charges wreaked havoc as it was unpredictable about when you’d see charges drop off. And then there’s the whole issue of months not having an equal number of days. February 28 would cram as many as four days of charges into a single day, showing a big spike in revenue. There were just so many weird things that would happen because of this “charge based” method and the more we talked to customers, the more we realized it was a major source of distrust. Many were, understandably, wary of the metrics because they were all over the place with no obvious rhyme or reason. Finally, at our team retreat in January, we started throwing around the idea of changing the basis of MRR and Customers from “charges” to “subscriptions”. The more we researched this and the more we tied back the pros as solutions to the complaints we were seeing from customers, the more it just made sense. Using this method lets us surface significantly more detailed and reliable insights, which is ultimately what customers wanted. So what’s the takeaway here? It’s crucial to not only listen to customers but also to understand the motivation for their feedback. Without understanding the motivation, you could very well build the wrong product. None of these changes would have happened had we been overly dogmatic about the path we were on. Listen, understand and take action.

I’ve long considered myself a “maker”. Heck, it’s the first word in my Twitter profile, so you know it’s official. I’ve been making things for the web since the late 90’s. When I was splitting my time between building my own products and doing consulting, I’d tout myself as the guy who could do everything. I took pride in my ability to do design, frontend, and backend, selling myself as the quintessential “maker of things”. Then, Baremetrics started taking off. I quickly realized that being the only “maker” wasn’t going to cut it, and started hiring. As I hired out all of the things I had been doing, I found myself transitioning from “maker” to “manager”. I started the transition a year ago and, while I’m certainly no expert, I thought it might be useful to other entrepreneurs making the transition to get some insight into what it has been like for me and how to apply to your business. How a manager is different than a maker I’ve struggled with what exactly it is that I do here, which is a good thing. We’re a small team, but everyone here has very specific, clear-cut jobs to do and have each filled very specific needs. I’ve hired people who are each exponentially better at their craft than I ever could hope to be. So where does that leave me? I rarely “make” things anymore, at least in the “honed craft” sense. Instead, I’m a manager…an enabler of sorts. Instead of making things, I enable my team to be makers, with as much efficiency as possible. The job of a manager At the end of a lot of days, my wife will ask what I did that day and half the time I have a hard time answering. “All the things?” It can be hard to actually feel productive since, to some degree, my job is to make others productive. Pinpointing the things that you, as a manager, need to do on a daily or weekly basis can go a long way towards you actually being productive. If I’m honest, there are lots of days where I think, “what is it that a CEO/Founder even does? This post is part me helping other CEO/Founders out and part verification of my sanity and worth. :) Here are some of the things I do and the roles I fill in a typical day or week and how they can apply to you and your business. Product management A big chunk of my time is writing project briefs and figuring out our product roadmap…essentially a “Product Manager” role. What comes next? What problems need solving? How do we solve those problems? What bugs need to be fixed and when? Who needs to be working on this? What’s an appropriate deadline? What customers should I talk to about that potential feature? My day is packed to the brim with answering these types of questions. To the best of my ability, I’m decisive and borderline dogmatic about these answers. You have to be. Otherwise, you’ll be buried in half-answers that get you half-results with no real progress on anything. Apply it The more clearly you define projects and work to be done, the less time product management will take you in the long run. Define the problem and what the success metrics are (increased signups, decreased churn, etc.) and then work with your team to figure out the solutions. Writing Our blog is a significant source of traffic and customer referrals for us. Thus far, minus a couple of great articles on customer support, I’ve written all of the content. It takes up a large chunk of my time (roughly 20% of my week), but we’ve tried really hard to avoid the typical generic content you think about when you hear the phrase “content marketing”. Our market is founders & entrepreneurs, so the best way we know to reach founders & entrepreneurs is for our local founder & entrepreneur (me!) to write about the up’s and down’s and what we’re learning as a company. Things that are harder for others to write without having been there and done that. Apply it Not everyone has a target market of “founders” so this game plan won’t necessarily work for you, but I do think it’s crucial to actually produce genuinely helpful stuff if you want to use content as a marketing channel. Find your content niche and own it. Customer support I don’t do nearly as much typical customer support these days since Kaegan came on board last year, but I try to schedule a phone call with all of our customers regularly. As part of the lifecycle emails we send, I try to schedule calls with customers at the two-week, six-month and 12-month mark to see how business is going. It’s not a sales call on any level. I genuinely love to hear how other founders’ businesses are going and to see if I can help in any way. This is high-touch and not scalable in the long run, but as long as I can do it, I’ll keep having calls with customers. Apply it Being the “face” of your company will go a long way in the early days. Do this as long as humanly possible. Team happiness While making our customers happy is crucial, making sure my team is happy is arguably even more so. Right now, I do a lot of “information gathering” with bi-weekly 1-on-1’s and tools like 15Five. But I’m admittedly not great at putting the feedback into action consistently. The feedback I get from our team affects decisions I make on a day-to-day basis and I spend a lot of time pouring over Slack chat logs looking for signs that people are frustrated or in need of help with something. Apply it Pay close attention to your team both in passing conversations and in “feedback sessions” like 1-on-1’s and look for signs that anyone is unhappy or feeling burned out. Hire It comes in waves, but every few months we need to hire someone. Hiring can be a lengthy and time-consuming process (our Customer Support role had over 800 applications and took three months to fill). When I’m in the middle of hiring someone, I spend a lot of time reading applications, doing video interviews and pouring over test projects (for engineering & design positions). Apply it As best you can, try to organize and standardize the hiring process. Use tools like Workable to keep the pipeline in one place and use a simple set of starter questions to quickly weed out applicants that are clearly a bad fit. Financial planning I think we make a pretty great tool for staying on top of revenue, but at this point I still have to spend a lot of time in spreadsheets to look at the full picture of both revenue and expenses (of which you can peer in to). I currently use two spreadsheets to forecast the upcoming 12-18 months, and I revisit them on some level every week or two. Apply it Knowing where you stand financially seems like a no-brainer but a lot of startups fail because they run out of money. Use a service like Bench to automate the bookkeeping (as manual entry on almost any scale is a bad use of your time), and then spend your own time forecasting the upcoming months so you know where to adjust things. Learning from others I think the most valuable way to learn is simply by doing. When it comes to business, I’d argue most degrees are useless. You just need to jump in the trenches and start making stuff. But I think there is a lot to be learned from the successes and failures of others, whether that’s having a few mentors, regularly chatting with other founders or reading. Apply it Find a group of people who are a couple of steps ahead of you in particular areas and meet with them regularly. They won’t be so far ahead that it’s a one-way relationship, and the advice they give will likely be a lot more applicable. Also, get a subscription to Blinkist. All business books are mostly fluff. Blinkist distils the fluff down to the juicy bits, and you save yourself a massive amount of time. What about you? I’ve read books and talked to other founders about ways to manage and build a team more efficiently, but at the end of the day these are just the things that I’ve personally found to be useful for me. They could very well be the most inefficient things you’ve ever done, so I’d love to hear the things you do as a manager on a regular basis. Do you like the role? Do you miss being a maker? Have you found a way to be both a maker and manager?

As an entrepreneur, one of the biggest sources of stress you have with your startup is likely your competition. It’s easy to become really paranoid about each move they make, each feature they launch and each piece of content they’re publishing. Everything can feel like it’s aimed directly at burning your castle to the ground. So how do you deal with that? Or do you even deal with it at all? A competitive change of mind Back in 2008 I built a hosted ad serving platform. Publishers could sell, manage and serve ads and I’d take a cut. But shortly after it launched (one week, actually), Google launched Ad Manager…essentially solving the exact problem I was out trying to solve. A few weeks later, I decided to just sell it off and move on. The mere thought of competing with Google was depressing. A couple of years after that, in 2011, I built a survey platform. But unlike the ad serving industry (which had virtually zero competition when I started it, minus some crummy self-hosted stuff), the survey industry was overwhelmingly crowded. There were quite literally thousands of competitors. What changed in three years? What mental barrier dropped that made me okay with going head-to-head with such a crowded industry? The change was the understanding that competition does not matter. In fact, I’d go so far as to say you should completely ignore it. A touch dogmatic? Maybe so. But I think the inverse is much more dangerous. What happens when you watch the competition It’s so easy to fall in to the habit of checking up on what your competition is doing. You start checking their blog regularly to see if they’ve released any new features, you add their name in Google Alerts, you follow them on Twitter…all so you don’t miss out on their next big move. But here’s the problem: doing this puts you perpetually one step behind. It makes you reactive instead of proactive. When you built your product, you built it because you were able to solve a problem in a unique way. When your customers signed up for your service, they did it because they also believed in the way you were solving a problem. Once you start trying to feature-match your competition, you’re no longer solving your customers’ problems. You’re solving your competitors’ customers’ problems. And chances are you’re not even doing it that well. Stop solving problems for people who aren’t your customers. Sure, you may have some feature parity with your competition, but when you build a feature and how you build it should only come from and be prompted by the needs of your customers. When to pay attention to competition I do think there’s one instance where it makes sense to pay some attention to competition, and that’s when your own paying customers leave for a competitor. Namely, when you start noticing it happening regularly. It’s important to do exit interviews with your customers to better understand exactly why they’re leaving, and if they’re switching to a competitor, you need to understand what it is about the way your competitor is solving a problem that you aren’t doing well. You need to be careful here. You definitely don’t need to build out new features solely to try and save a handful of customers. That may make for a tiny short term gain, but likely has bad results in the long term with a bloated product that lacks direction. The key is find the commonality among all the customers who are switching to learn what exactly it is you may be able to improve on. Laser focus What you and your customers need is focus. Having a strong belief in what you’re building and how you’re helping your customers ultimately results in a better product that solves real problems. You won’t figure it all out right away. It takes years to build a solid product. The way you solve business problems on day 1 will be vastly different from the way you solve the problems on day 1,000. Competitors will come and go. You’ll likely find yourselves heading down different paths the longer you’re in business. You’re each incrementally improving your product and doing so in different ways. If you’re in it for the long haul, as long as you’re laser focused on solving your customers problems, you’ll do just fine.

If recurring revenue is a rainbow leading to a pot of gold, then churn is the dirty leprechaun trying to keep it all from you. Okay, so my rainbow leprechaun metaphor is a little weak, but you get the idea. SaaS products are amazing because of how recurring revenue has a compounding affect. That $100/mo customer keeps paying…over and over again. Until they don’t. And that’s where churn comes in and why it’s so vicious to the growth of a company. I’ve written before about how to reduce churn in SaaS, so I won’t rehash that here. But what I want to talk about is how we, in the past few months, reduced churn by nearly 70%. Our churn problem At the start of the year, we started noticing our revenue churn and user churn creeping up. At its worst, we were at about 10% user churn and 13% revenue churn. We’ve certainly seen business with much worse churn, but neither number were acceptable and they were just making it harder to grow. The problem was, we just didn’t really understand why this was happening. So, at the end of February, we started Operation Churn Reduction™. The result of this was a 68% reduction in user churn to 3% and a 63% reduction in revenue churn down to 5%. But what did we do to reduce churn so much? How we fixed it We needed to fix our churn problem ASAP, so I didn’t write any content on the blog for all of March and ignored most email and phone calls that didn’t have a direct correlation to us figuring out what was wrong. Then we did three things over the course of two months. Removed self-serve account cancellation The very first thing we did was remove the ability to cancel your account yourself. I know. Gasp! Heresy! Treason! But the reality was, our free-form “let us know why you’re canceling” text box wasn’t cutting it. We just weren’t getting anything remotely useful when it came to understand exactly why people were canceling. Instead, when someone wanted to cancel, we just made it really easy to contact us. You could live chat with us on the spot or send a message to us directly from in the app. Most of the time, we’d respond in a couple of hours, sometimes within minutes (or instantly, in the case of live chat). At that point, we’d say something to the effect of… Hey Sue, happy to take care of that for you! Before we do that, would you mind letting me know why you’re canceling? Would love to learn how we could have served you better. The large majority of the time, we’d get great feedback about exactly what was going on and why Baremetrics wasn’t a good fit for them any more. We’d then promptly cancel their account (and many times refund them) and wish them well. But! Where this gets really interesting is that we were able to save about 15% of cancellations from actually canceling at all! These were people who didn’t realize certain functionality existed already or that we were about to launch the very feature they were looking for. In some cases we’d offer a discount on their next month of service to tide them over while we finished up what it was they looking for. These were the same people who would just put something to the affect of “Didn’t fit my needs” in that cancellation text box and we’d never hear from them again. Definitely a huge win for us on both understanding the “why” but also actually saving a substantial number of customers from churning at all. Now, the common assumption here is that making users contact you to cancel will result in lots of angry customers beating down your door and setting your house on fire. For us, this hasn’t been the case at all. There’s been literally one person who was slighlty upset, while many more actually used contacting us to cancel as a way to thoroughly talk through how they wished we could have served them better. Talking with a number of other companies that do this, their experiences have been nearly identical. I can see this not working well with a B2C product, but with B2B I’d suggest trying it for even just a few weeks to get some solid feedback on why users are churning. Shipped highly requested features There were a couple of features that users had been requesting for quite a while and we buckled down and made those happen. One was Plan Insights, which lets you see a breakdown of all your metrics on a historical basis. The other was Data Intervals, which let you group your metrics by day, week and month. Both of those were quick responses to what we found through cancellation feedback: that users were having trouble digging in to their data and understanding it. Provided more education Another piece of feedback from users was that they didn’t know what to do with the data, so we started spending more time educating customers. A few of the ways we invested more time on education: Expanded our Help Desk Webinars Adjusted our lifecycle emails to send at more appropriate times Reached out to users more to make sure they understand how to use Baremetrics to its fullest Why it’s so crucial to reduce churn I can’t stress enough that you have to reduce your churn. It’s a literal cancer to your revenue growth. As an example, say we started the year with $30,000 MRR and were adding $5,000 in new MRR every month for the next year. That’d be great, right? Well, with the 13% revenue churn we previously had, in 12 months, you know what our MRR would be? $37,000. That’s frightening. Just by reducing churn, not even increasing our revenue growth rate, the outlook is much different. Taking that same example, but reducing churn to 5%, our MRR after 12 months is a much nicer $62,000. If your churn isn’t in the single digits, it’s absolutely the only thing you should be focusing on fixing right now. 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When you’re just getting started and you’re strapped for cash, you typically do all sorts of things to pinch pennies. It’s just part of surviving, and it’s a healthy thing to do when you’re not actually making any money. The danger, however, is keeping that mindset after you’ve got a steady stream of cash flowing. It’s a danger that creeps in to a lot of startups and never goes away, causing generally sane people to do insane things in the name of not spending money. How the story goes You’re just getting started building some amazing, life changing software. You’re either building everything yourself, or you’re part of a small team. Money is tight (or maybe non-existent). You’re doing everything as cheaply as possible and, for the most part, you’re spending nothing other than your time. Things like A/B testing, analytics and support software aren’t even on your radar because you don’t actually have customers yet. At this point, you’re entirely self-sufficient, providing everything your business needs. But then you launch. You start getting actual customers. You start growing and your business starts to have needs past your core product. You realize there are tools that would be really beneficial for growing your business even more. You start doing research in to ways to better handle support requests, you find your Google Spreadsheet is a pretty painful (if not impossible) way to track your revenue growth, conversion tracking turns out to be pretty crummy with just Google Analytics and you’ve got an idea for your signup page that you’d love to A/B test to see if it increases conversions. You start looking in to popular tools for doing some of those things. And you freak out. $200 per month for conversion tracking? $400 per month for revenue insights? Or maybe it’s something even less. $30 a month for a tool that, on the surface, seems to just be glorified email comes across as a waste of money. You initially just decide that you’ll do without. You’ve made it this far without those tools, so why not just keep plugging away like you always have? But more and more you find that you could really use these other tools (much like your own customers need the tools/services you’ve built). This is where paths fork and two different types of people manifest themselves: Buyers and Builders. Buyers Buyers are the ones who decide to just spring for existing tools out there. They realize that, while spending $250/mo for A/B testing stings a little, it will ultimately help them make more money. Builders Builders are folks who balk at that $250/mo A/B testing suite and decide to use their engineering resources to just “whip up a little homegrown A/B testing suite” during a weekend hackathon. That $250/mo stings far too much and “can’t possibly be worth that”. The Problem But here’s the problem. That weekend hackathon turns in to a few weeks of “getting it just right” which turns in to a couple of months of distractions for the engineers as they tweak all the random edge cases no one considered. Next thing you know, you’ve spent literally hundreds of hours building a tool that’s not core to your business. Hours that really hardly saved you any money. But worse that that, it was hours that weren’t spent making more money by improving your core product. Not only did you save an insignificant amount of cash, you actually stifled future cash. /facepalm How the math works out Let’s take a look at some numbers here to give you a real world example of why building is generally an epically bad use of your resources. You’ve got a team of three engineers. You want to build a “simple” business analytics tool to analyze all of your revenue, what plans folks are on, how much money you made last month and should make next month, upgrades, downgrades, etc. A dumbed down version of Baremetrics. ;) Say you’ve got a few thousand customers, so you’d be on the $250/mo plan at Baremetrics…and no way on earth ever in your life would you pay $250/mo for anything ever anywhere. Absurd! So you decide you’ll get your team of engineers to build something internally. How hard to could it be, right? In reality, it will take at least a month of engineering time. Maybe not all at once, but the fact is, building an analytics tool correctly is difficult. Especially when you get in to the really useful stuff. It’s just time consuming, whether you like it or not. Let’s assume those three engineers are getting paid, on average, $90,000/year. My 6AM-in-the-morning math tells me that’s $7,500/mo…per engineer. Multiply that by 3 and we’ve got $22,500. Congratulations, you just spent $22,500 to save $250/mo…a Baremetrics account for 7.5 years. Statistically, your business won’t even exist in 7.5 years. But! It gets better! Not only were your engineers focused on building that internal analytics tool, they were not focused on making your actual product any better. Say you were at $50,000/mo in recurring revenue and growing at a steady 10% month-over-month. That means in 12 months you’d be at roughly $155,000/mo in recurring revenue. However, spending a full month, heads down, building a major addition to your product that reduces churn and expands your market size could have potentially bumped up that growth to, say, 11% month-over-month. That would have meant roughly $175,000/mo in recurring revenue within a year. An extra $20,000 per month in revenue. And, if we take the actual earned revenue over that 12 months, in both those growth scenarios, there’s an $85,000 difference. That means, in the first year after your cost savings experiment, you spent $22,500 in engineering resources plus $85,000 in lost revenue, for a grand total of $107,500. Sweet goodness. Why does anyone do this? For a long time I racked my brain on this. I just couldn’t think of any scenarios where this ever made logical sense. But I started looking at my own experiences over the years of building companies and noticed some commonalities among all the past customers who’d had major price objections. Across the board, nearly every single time someone got hung up on price, they were a consumer-focused business. Most were charging less than $10 a month for their product. Many were charging more like $2 a month (in the form of a $25/year plan). The interesting thing is that these companies weren’t struggling on the revenue side. Many were making 6-figures per month. Instead, it was a value problem for them. Their entire business revolved around selling a relatively low-value product to a high-volume of customers. They were primed to not place a high value on things that solved business problems for them. This is a realization that’s held true across four separate companies in four separate industries that I’ve run and, talking to other startups, this has also held true for them. Be careful who you take product roadmap queues from. All feedback is not equal. The value-perspective your customers come from is crucial when deciding how much weight to place in their feedback. No money but all the time in the world What about startups who are “pre-revenue”? It’s easy to get in this mindset that having certain tools at your disposal will somehow make a big impact for you. But here’s the thing: tools exist to augment and assist with making money. They, generally speaking, don’t actually generate new revenue for you. A situation I see a lot is when companies want to A/B test their home page when they’re only getting a few hundred visits a day. Even if you had a 50% bump in conversions…it just doesn’t matter at that scale. When you’re that early in the game, you need to do things that move the needle in big ways. So what’s the takeaway here? It’s simple, really. Either spend the money to get the tools you need, or just focus on making your own product make more money. But don’t waste your engineering resources on things that don’t make a big, long term impact.

As a Founder, you’ve got your hand in everything imaginable, from legal paperwork to hiring to product management to support and everything in between. You’re pulled in every direction from everyone who’s got your contact info and you feel obligated to chase every rabbit you think of. But one of the hardest lessons to learn is that “busy” does not equal “productive.” All of those random things you’ve got your hand in, all of those rabbits you chase in the name of “traction” aren’t necessarily the most important things to be working on right then. And that can be a critical mistake. The catch here is that figuring out what those “most important” things are can feel like trying to spot a unicorn breakdancing over a double rainbow. What you’ve probably tried before The typical line of thought here is that the solution is to somehow rate things (mentally or otherwise) based on what is most impactful and go from there. But the fact is, that’s just not practical and has a lot of mental overhead. Certain things may not have direct high impact but are still necessary and can’t be pushed off to more convenient times (yay taxes!). The other extreme here is to just have a simple to-do list with no priority at all, but that’s too basic and leaves you feeling overwhelmed. What you need is something that’s quick to add to and doesn’t overwhelm you with all the things that need to get done. Showing you everything under the sun helps no one. Showing you what’s available and important given your current context? Golden. To pull that off, I use OmniFocus. But how do I use it without it being overwhelming? I’m glad you asked. The system for getting things done OmniFocus is one of those tools that, on the surface, seems absurdly complex. But let’s go ahead and be clear here…I use all of maybe 10% of its features. So, hang with me. My little system here really isn’t that complicated. Despite all the nooks and crannies in OmniFocus, there are only two sections you need to know about: Contexts and Projects. We’ll take a look at those two things then jump in to how the pieces fit together on a practical level. Contexts In OmniFocus, there’s the concept of “Contexts”. These can be anything: a place, situation, mindset…whatever. These are my Contexts: Waiting — Tasks that are waiting on someone else or some event before I can proceed. Home — For when I’m at home doing non-work tasks. Office — For work-specific tasks. Errands — When I’m out running errands. Someday — Things I’d like to get done one day. Mainly a catch-all so I don’t forget about random ideas. GTD — For Daily Review tasks (which I’ll talk about shortly) You can go really fine-grained with the Contexts, but I prefer to keep them higher level. Contexts are the way to answer the question, “What should I be doing right now, given my current location/situation/mindset?” Projects Projects in OmniFocus are simply collections of tasks, but there’s one little thing that makes them really powerful: the project type. You can create Parallel or Sequential projects. Parallel projects are the equivalent of a big bucket of tasks where you can pick and choose the items to do at random. Sequential projects are only done in order. Meaning there’s only one to-do available for you for that project at a given time and you can’t do the others until you’ve done the task before it. And this is glorious. We’ll cover why momentarily. You don’t have to put everything in a Project, but if any higher level task requires more than one or two steps, I typically create a project for it. Tasks, to-do’s, items, actions…whatever you want to call them What to-do app would be complete without things to do?!?! Adding an item to OmniFocus is really easy, but there are a few things you should set as it will keep things much more organized. Action — The action you need to take Project — What project it’s associated with Context — What context it should show in (see note below) Defer date — When to hide the task until (see note below) Due date — When you absolutely need to have this done by Notes — Any notes, links, attachments you need to get it done. With OmniFocus, every new item should have a Context. Otherwise you just end up with a really expensive generic to-do app. Adding a Context has the benefit of you not seeing that office-specific task when you’re out running errands, for instance. Now, what if you’ve got a task that you know you don’t even need to think about again until next month? That’s what the “Deferred date” is for. When you set that, OmniFocus won’t even show you the item until that date, keeping your to-do list nice and tidy! The hidden power of sequential projects & deferred dates The key to staying sane when building a startup is getting everything out of your head. You will forget things. Every single day. Then you’ll drive yourself crazy trying to remember the thing that you forgot. Stop that. Put it in OmniFocus the second you think of it, and then never think about it again until it’s time to do it. Sequential projects are a beautiful thing because they only show you the task that you can actually work on right now. They’re showing you the next bite of the elephant…not the entire elephant. Deferred dates have a similar effect in that they hide the item until it’s actually relevant. Pulling it all together in the Daily Review I’ve been talking about lots of disparate bits and pieces of OmniFocus and the process I use. Let’s bring it all together in to how this functions on a daily basis. Each morning, before I do anything else, I do a Daily Review. I have a Daily Review project set up that includes six items that I need to get done before anything else. I typically do them in order, but it’s not necessary (it’s set up as as Parallel project, FYI). I have a “GTD” context that I use just for this project. Review Calendar — This is to remind me of any meetings or phone calls I have. Process Trello Inbox — We use Trello religiously and many times there are things that need reviewing before they can keep moving forward. Doing this first thing in the morning means my team can keep moving forward as well. Process Intercom Inbox — We use Intercom for both support and automated emails and usually there are a few tickets/emails that need a response from me. Process Email Inbox — I try to keep my email inbox empty and the key to that is not using it as a to-do list. OmniFocus has the Clip-o-Tron tool for Mail on OS X that makes it dead simple to create items out of your emails. Check all projects have a Next Action — You should always know what needs to be done next on a project, otherwise you need to “pause” the project until you’re ready to pick back up on it. Without a next action it will sit there for all eternity and you’ll feel bad about yourself. Flag priority actions for today — The last thing I do is go through and “flag” items that I plan on getting done today. Anything that’s flagged gets done and if I finish all of the flagged items, then I can move on to other items. The set up here is that the “Daily Review” project is set to repeat every week day. Then you tick the “Complete when completing last action” checkbox for the project and it will hide the items until tomorrow! Magic! The Daily Review is crucial because it’s the time where you plan out your day. It’s your time to be proactive instead of reactive. You decide what needs to get done based on your context and when something is due, and you get it done. Simple as that.

https://baremetrics.com/blog/startup-guide-to-1-on-1 If there’s one thing I’ve found to be true over the past year and half of building this company, it’s that I’m completely winging it. Sure, I’ve read articles and books on how to build a company, but I've never actually done this before and I learn best by doing. So, every time I come across something that works for us, it’s a huge win for me. Doing 1-on-1’s has been one of those huge wins. A few months after I started building our team, I really wanted a regular way to make sure everyone was happy. I pick up on little grumbles and or frustrations in our Slack chat, and would make a mental note or would just talk to that person right away. But I wanted a consistent and predictable opportunity for our team to talk about things. Enter the 1-on-1. What is a 1-on-1 and why do them? Prior to building up the team around Baremetrics, I’d honestly never even heard of a “1-on-1”. I’ve been blissfully self-employed for nearly a decade and never really had a “real” job with a manager, so the concept has just never been a part of my career. Essentially, a 1-on-1 is a regularly scheduled time for you, as the founder/CEO/manager/person-in-charge, to meet with the individuals on your team to learn more about what’s going well for them, what’s not, what their long term goals are, how you can help them and how you, as their manager, can improve. After you’ve done a few 1-on-1’s with the same person, you’ll start picking up common themes that are important to them, small frustrations they may be having and ways they want to grow. Plus, it gives you an opportunity to learn more about them as humans and not just employees. So, how do you do a 1-on-1? How to do a 1-on-1 with your team Actually pulling off the 1-on-1 is easy. I mentioned earlier about a 1-on-1 being “regularly scheduled” and that’s very intentional. How often do you do a 1-on-1? I do them every 2 weeks. I know some companies that do them every week and others that only do them once a month. Your team size will likely dictate the frequency, but I find every 2 weeks is the perfect amount of time to keep issues from falling through the cracks while not constantly being in “meeting mode”. Schedule them, and show up on time You shouldn’t just drop in or send a message saying, “Hey let’s do our 1-on-1 now!” You need to schedule it and then stick to that scheduled time. Don’t be late. Don’t push it off until later in the day. It’s one of the most important times you’ll have with your team and you need to be clear that it’s important to you. I automatically send a team-wide message in Slack every 2 weeks with a link to schedule a time that works for them. Most 1-on-1’s typically last about 30-45 minutes for us. What to ask and talk about Okay, so you’ve scheduled your 1-on-1…now what? What do you talk about? I typically ask about 5-8 questions each time when meet. Or rather, I let those drive the conversation. I try to ask question from a few different topics. Goals — I want to know what their short term and long term goals are, both professionally and personally. And then I want make sure I help them make those goals a reality. Business — Even if everyone on your team hasn’t built a business before, they’ve likely got some solid perspective that you don’t, just because they’re not you and don’t think the same as you. Hearing how they think the business could be improved or ways it could grow are always good things to get feedback on. Happiness — At the end of the day, if your team isn’t happy, what’s the point? If they’re really happy, is it because of recent progress on the product? If they’re unhappy, is it because you’re overworking them? Find out what’s making them happy (or unhappy) and you’ll get a lot of perspective on what makes them tick and how you can help. Team — Making sure your team is moving along as one cohesive unit is crucial and 1-on-1’s are a great time to find out if there are any issues you can help resolve before they become a real problem. Management — This one topic is about you. I specifically ask about ways that I can improve as well as things I can do to help them work better. Performance — Talk about a job well done, or an area that needs improvement. Each week I try to ask a different set of questions. Here’s a sampling of some I’ve been asking over the past few months. Is anything in the pipeline unclear or confusing? What could I do to make your work easier? How’s your workload? What are 3 things you would like to see when you show up to work every day? Do you feel challenged at work? Are you learning new things? What is something I could do better? How could we make our weekly stand-ups more effective? What do you want to be doing in 5 years? How do you feel your work/life balance is right now? Do you feel like you’re on the same page with the team as a whole? How well-received do you feel your opinions are when you offer them up? What are the top 3 things that you feel waste your time during the day? Are there any projects you’d really like to work on if you had the chance? Is everyone pulling their weight on the team? Are there any big opportunities you think we’re leaving on the table? More than anything you just want to have a conversation. Try to keep it as laid back as possible and open yourself up as well. This isn’t you grilling them on their performance, it’s you genuinely wanting to understand what they need and how you can support them better. Follow up on what you’ve talked about If you ask all of these questions and then never do anything, you’ve missed the point. You need to follow up and take action. I keep track of all of the questions and answers in Evernote and each week I review what my team has answered and make sure to fix anything that they’re having issues with, or follow up if there were specific things they were having trouble with. Additional reading & resources The main thing here is to not overthink it. Just start. You’ll figure out after doing a few 1-on-1’s what works for your team and what doesn’t, but the only way to do that is to actually do them. That being said, here are a number of resources that can help a lot as you get up and running. 101 Questions to Ask in One on Ones Quora: What are some good tips for 1:1's with your employees? Better One On Ones Newsletter What about you? Do you do 1-on-1’s? What has worked well for you and your team? Share your tips in the comments!

A few weeks back I wrote about our experience going from bootstrapped to funded as we raised a $500,000 round, why it was good for our business and some of the things we’ve learned along the way. Now, I want to give you an in-depth breakdown of why and how we spent $250,000 in the months after receiving our funding. The purpose of this post is to give some insight into the costs of a small team building a startup. Maybe there are places you’ll realize you’re spending too much, or areas where you could stand to spend more. There were certainly times we could have done things cheaper or instances where the money I spent was a bad idea or won’t payoff for many more months. I’m definitely not an expert at building a company, so you may very well balk at some of this. If you do balk, please balk in the comments…no sense in internalized balking. It’s unhealthy. Payroll: $200,000 The large majority of our expenses have gone to payroll for our team and contractors. We spent roughly $50,000/mo on payroll, payroll taxes, payroll processing and contract workers. In the 4 months since the funding, this added up to roughly $200,000. This is the biggest internal struggle for me. We aren’t spending Silicon Valley-amounts on salaries, but we’re certainly not on the low end. From the perspective wanting my team to love where they work and not have to worry about money, I’m very happy with the salaries everyone gets. From the perspective of making our funding stretch as long as possible, we’re spending too much here. This isn’t a topic that’s black and white, though. We could have gone the extreme-cost-savings route of outsourcing the entire development to a dev farm on Elance for a microscopically small amount, but I guarantee you we’d have an awful product. We can all agree that’d be a bad idea. On the other end of the spectrum, you can certainly spend too much on salaries. We fall somewhere in the middle of that spectrum, probably on the higher side. This has unquestionably been the area I’ve had to learn the most. Figuring out what everyone’s salaries should be is unbelievably difficult. In hindsight, doing what our pals at Buffer do with their Salary Formula would have been really nice. Infrastructure: $8,500 The infrastructure to run Baremetrics, while not huge by any real measurement, still isn’t cheap. It takes a decent amount of computing power to crunch the numbers for our data set, which is over 55,000,000 records and just over 65GB in size, and growing daily. Most of our hosting costs are tied up in Postgres (on Amazon RDS) and background workers (on Heroku). We’re working on moving away from Heroku, which should reduce hosting costs a good bit. We typically don’t hold back on spending more money on infrastructure as that’s a key part of making sure Baremetrics is useful. We certainly haven’t aced this yet, but we’re worlds better in this department than we were a year ago. We also have a surprising number of domains (34, to be exact). Between purchasing the .com, a few variations on the domain (to handle misspellings), and domains for some big marketing campaigns in the future, we’ve spent around $1,500 on snagging the domains we needed. Tools: $6,000 We use a lot of tools to make running our business easier. Tools that, in many cases, replace the need to hire people. Tools are an area many founders get hung up on. They make the mistake of thinking it’s a good use of their time to build internal tools as a method of cost-saving instead of focusing on adding more value to their own product. It’s one of the things we fight against here at Baremetrics. Some companies leave saying, “We’re just going to build our own internal revenue tools.” Then, 3 months later they come back having wasted hundreds of developer hours and realized how hard it is to do correctly and they reactivate their account. Building something for weeks (or months) just so you can save a couple hundred bucks is an intensely bad use of your team’s time. You’re much better off spending that time adding more value to your product, which in turn makes you more money. Travel: $8,300 The large majority of our travel expenses were wrapped up in the plane tickets and lodging expenses associated with the retreat we did last month. Yay plane tickets! Teams of our size that aren’t remote won’t have these types of expenses, but it’s a necessary part of the game for us and something I’m happy to spend money on. Job Listings: $1,900 Turns out job listings on major sites adds up quickly, with some listings costing as much as $450. I broke out some of these expenses in our Guide to Hiring Remote Customer Support. In hindsight, the large majority of the job posts were useless. None of our full-time, paid job listings lead to hiring anyone. Advertising: $7,800 The primary form of advertising we do is retargeting (via Perfect Audience). In the past it’s gotten us new customers for as little as $6. Lately it’s been more expensive, but it’s still very much worth it for us. We’ve tried Twitter Ads and Google AdWords, but in general those require sacrificing a limb per click and aren’t worth it. This is an area that in hindsight I could have saved a solid $3-4k, especially on AdWords. I wanted that to work so badly and didn’t cut ties soon enough. Accounting & Legal Services: $9,600 Accountants and lawyers are people I happily pay for, and in my experience you get what you pay for. I have zero desire to learn the in’s and out’s of tax law or figure out the right way to word a contract. It’s an epically bad use of my time and I’d screw it up. A big chunk of this total was spent incorporating Baremetrics and handling all the paperwork for our round of funding. Insurance: $2,000 You need insurance for your business, regardless of size. We spent roughly $2,000 to get our policy off the ground. We used Founder Shield for that and it was entirely painless. I don’t have more to say about this because Founder Shield literally made it a no-brainer. Employee Benefits: $5,000 I want my team to be happy, and part of that is having various perks/benefits. It’s important to equip your team to not only work well, but also live well. For us that means everyone gets a Kindle Paperwhite with unlimited Kindle books, a Jawbone UP, minimum vacation days, random gift cards and a $250/mo “remote stipend” that can be used for anything (phone, internet, food, gym membership). Runway Above I broke out how we spent money for the 4 months following our funding round. Thankfully, we’ve brought in over $100,000 in revenue during that time frame as well, and we’re growing revenue about 10% month-over-month. A common scenario when you take on funding is that you operate at a loss for a while. The idea being that spending a bunch of money now results in making more money later. More than you would have otherwise. You obviously can’t operate at a loss forever…you only have a limited amount of money to burn through. This is your runway…the amount of time you have until you either need to be profitable or find some new influx of cash. At our current rate, we’ll actually be profitable again well before we burn through the cash. The only real scenario that would change the situation is if we make another full-time hire soon. In that case we’d effectively end up with a 12-month runway. This post is honestly a bit scary for me. It opens the doors wide for extra scrutiny from potential customers, competitors and other entrepreneurs. My hope is that offering some insights in to how we’re spending money will help both other startups and us to spend our money more effectively instead of all things “money” being kept private.

Most days now I wake up before my alarm goes off (at 5am) and I immediately hop out of bed, excited to get the day started. But that wasn’t always the case, especially when things weren’t going so well. It’s easy to be excited when the skies are blue, but what about when they’re gray? How do you stay motivated then? Or is there even such thing as “motivation”? For 10 years I was on a perpetual journey to kick the consulting habit and just focus on my own products, but minus a few 3-month spans here and there, it just wasn’t happening. I couldn’t get over that hump. A couple of years ago, before Baremetrics was even a spark in my brain, I had 2 other SaaS products I was building and I was having a rough time on the consulting side of things. It was such easy money but I was over it and just tired of working on things I wasn’t fully invested in. Procrastination masked as hobbies So, I took a break, though not deliberately. At the time I didn’t even realize it and in hindsight, I wouldn’t call it a break at all…I’d call it procrastination. I started filling my days with anything but work. I started devoting significant amounts of time to my hobbies…namely gardening. I spent countless hours researching square foot gardening, and started a large garden from seed, building 400+ sq/ft of raised beds. I even rented a skid-steer and flattened land in my backyard to make way for our little family farm. Now, all of that on its own is obviously not a bad thing. Gardening is actually a really good thing, and it’s something I still love doing with my family. But at the time I wasn’t doing all of those things as fun hobbies. I was doing them as a form of procrastination. “Procrastination is the most common manifestation of Resistance because it’s the easiest to rationalize. We don’t tell ourselves, “I’m never going to write my symphony.” Instead we say, “I am going to write my symphony; I’m just going to start tomorrow.” — Steven Pressfield, The War of Art I was running away from the work that needed to be done to move my business forward. I was waiting for some magical beam of motivational light to come down from the sky. But what I found was that motivation isn’t a feeling…it’s a choice. Choosing motivation A few months after, I realized I was just procrastinating and made a conscious effort to change that. I buckled down on the 2 SaaS products I had at the time and vowed to simply make them work. Part of that determination was getting a handle on what metrics were or were not working…and that’s when Baremetrics was born. Had I not resolved to show up and work and ignore my feelings, had I waited for motivation to knock on my door, then Baremetrics wouldn’t exist. Heck, a whole industry of platform-specific analytics tools might not exist. It’s easy to be excited about showing up and working when you’re growing fast and when customers love what you’re doing. But what about showing up and getting the job done when you’re not even sure what that job needs to be? “I write only when inspiration strikes. Fortunately it strikes every morning at nine o’clock sharp.” — Somerset Maugham Many days you’ll show up, sit down and not know the “right” thing to work on to make the most impact, but that is the fallacy. There’s no “right” or “wrong” when you’re in a rut. There’s just movement and until you put one foot in front of the other, you’ll stay firmly in that rut. Unfortunately, all the motivational books, articles and speakers in the world won’t help you. Sure, you’ll get warm fuzzies and a little boost in productivity for a few days, but it’ll fade. And when it fades, the only thing that’s left to do is to show up and choose progress.

In mid-January we did our first retreat as a team. Since we’re completely remote, this was the first time most of our team had met and worked with each other face-to-face. I’ll take you through how we planned and budgeted for the trip, what we did, what worked and what didn’t. https://baremetrics.io/blog/startup-retreat Why do a retreat at all? Since growing our team from little ol' me to 6 people, with the exception of me meeting a couple of our team members, no one else had ever done more than video chats with each other. And while video chats work fine for quick conversations, they don’t give a great sense of everyone’s personalities. Doing a retreat let us spend a lot of time together and learn those things. Also, being in one place gave us the opportunity to really brainstorm and plan out the coming months as well as hash out some bigger design, development and marketing problems. Purpose: Figuring out the point of the trip We decided for this retreat that we’d primarily use it to work in the same place and tackle some projects that would just be easier in person. Some companies use retreats as a time to vacation together, others use it primarily to work. We opted to go the “work” route since we rarely get the opportunity to do that in the same location. Location: How to pick where to go After making the decision to do a retreat in January, we needed to pick a location. The general consensus was that everyone wanted a warm place, given it would be winter. That basically left two areas: Southern California and Southern Florida. Average temperatures in both of those places in January is mid-70’s which was as good as we were going to get without leaving the country. Given we were doing a work-focused retreat, having a great location was crucial since we’d be spending so much time there. The actual city was less important (in hindsight I should have put more emphasis on the city, but we’ll cover why shortly). I then headed to AirBnB and HomeAway and just started digging around until I found a handful of cool houses. We got super democratic and let everyone vote. Majority ruled and we ended up with a great house in Palm Springs, CA. The house set us back $4,200 for 7 nights. Lodging: Picking a place that works What makes for a great space to work for a week? How was that house in Palm Springs useful for us? Sleeping space Make sure you’ve got enough space for everyone to have their own bed, and if possible give everyone their own room. We weren’t able to quite do that in the house we choose. Everyone had their own bed, but a couple of people had to share a room. Fun Make sure there are things to do around the house to blow off steam and clear your head. This place had a pool, hot tub, pool table and putting green and everybody definitely made use of those things. Space to spread out Even if you’re doing a work-focused retreat, most people still like to have a place where they can sit down and knock stuff out by themselves. Our rental had a plethora of that. Kaegan even attempted a Darwin Award by working from the hot tub. The weather all week was perfect, so a lot of time was spent with our feet propped up outside working. Kitchen Cooking was a big part of the retreat and a great way to spend time together. We had both an indoor and outdoor kitchen and spent a lot of time (especially at breakfast and dinner) cooking. Make sure your team eats well…don’t skimp and buy cheap junk that leaves everyone feeling bad. Travel: Getting everyone there So after figuring out a location, the next step was getting everyone there. We’re spread out across the U.S. and Canada, so figuring out all the right flights to get everyone there at about the same time without spending a fortune could have been a huge stressor. But as luck would have it, there’s a great service called FlightFox that handles all of that for you. I gave Alex (my FlightFox “Expert”) everyone’s city and he figured out what airlines and which flights worked best. We were all scheduled to arrive within about an hour of each other, and minus a few flight delays, we all arrived pretty close together. Here’s a breakdown of what we spent on flights from where each team member flew out of: Birmingham, AL - $335 Lexington, KY - $664 Denver, CO - $491 Santa Fe, NM - $411 San Luis Obispo, CA - $327 Vancouver, Canada - $320 Yes, the Canadian’s plane ticket was the cheapest. Sigh. After we got to the airport, we thew down mom-style and rented a minivan. Side note: I love minivans.That set us back $418. As a team we spent an additional $300 on taxis and airport parking. Total for travel: $3,266. Eating: How to plan for a team’s food needs The topic of food was initially the biggest stressor for me. We had 20 meals to plan for, which is a nightmare when you start taking in to consideration food allergies, foods that people just downright hate, etc. I realized I was overthinking it, though, and went really lax with it. We paired everyone up for dinners each night and so if it was your night to cook, you chose the meal. Then we went out to eat 2 of the nights. Dinners: solved. That left breakfast and lunch. For those, we just went to the grocery store and loaded up on whatever anyone wanted. Eggs, cereal, bread, bacon, sausage, salad, fruit, vegetables, etc. We made a few grocery runs throughout the week to stock back up as needed. Ended up being really laid back and easy. So, don’t overthink it. Everyone will figure it out. In the end, between groceries and going out to eat, we spent $1,260, which averaged out to $30 per person per day. Itinerary: Making the most of your time We opted to do a 1-week retreat, specifically a Friday to Friday. Overall everyone seemed pretty happy with that length of time. Too much longer and I think we would have felt overworked, too much less and we would have lost some of the usefulness. But what does one do during a retreat? Have a rough idea head of time and giving some high-level structure goes a long way. I roughly planned out each day by “Morning,” “Afternoon” and “Evening,” but didn’t really get more granular than that, especially for the “Morning” section, since everyone has slightly different sleeping habits. Day-to-day Most of each day was just us, as a team, working together in the same place. Mixed in there I’d do 1-on-1’s, people would take breaks and go for a swim or go to the gym, we’d talk through programming and design problems…things like that. The kind of things you’d do in an office setting. Be careful not to over schedule your time. We did have a few times scheduled out for specific things though… Kickoff On the morning of our first full day, we had a retreat kickoff. I did a short presentation on all the things we accomplished in 2014 and then our goals for 2015 and how we’d reach them. Everyone jumped in with questions, suggestions and concerns and we hashed all that out. Doing that helped get everyone on the same page for the week. Discussions A couple of days in we had set aside one afternoon to talk out some bigger company-wide processes and issues. Things like figuring out a better way to handle bugs, ways to reduce distractions in Slack, how to better manage the product as a whole in Trello. We spent a couple of hours focused purely on this and got a lot of things nailed down that we’re now putting in to practice. Big project Initially I hadn’t intended to do a big project push, but early on we realized we were really close to having our new Forecast feature done, so we did a 1-day push and launched our Revenue Forecaster mid-week. I’d be careful doing a project that takes the entire week to pull off, though. I think it’d probably take away from the team as a whole spending time getting to know each other and just hanging out, given everyone would be so focused on getting the project done in time. Story time Each night, after dinner, someone from the team would tell their story. Generally a mix of your personal story but also how you ended up at Baremetrics. Super low pressure and lighthearted. Almost everyone mentioned to me afterwards that this was their favorite part of the retreat and that it helped a lot with getting to know each other. Getting out of the house We went out to dinner one of the evenings and a few people got out to go get massages or go to the gym, but I did a really bad job getting everyone out of the house. Turns out Palm Springs has a lot of 2 things: golf courses and retirement communities. Neither of which were very appealing and we had a really hard time finding fun things to go do. There was a lot of “hey, what do you guys want to do tonight?” when in hindsight I should have pre-planned some things to go do. Definitely will change that for next time. After the retreat Once the retreat was over and everyone was home, I surveyed everyone about what they liked/disliked and what they’d do differently next time. There were two big takeaways from everyone: Pick a location with more to do Get out and go do those things It wasn’t that I was forcing everyone to work, work, work, it’s that I didn’t do a good job forcing everyone to not work. So, next time we’ll pick a location with more to do and I’ll make sure we actually get out and go take advantage of that. This was our first retreat, but my hope is to do one every 6 months or so. Grand total for this retreat was $8,750, which is quite pricey, but we actually came in under what I had budgeted for ($10,000). Having a single house to rent instead of separate hotel rooms saved a lot of money. In the end, it was unquestionably worth the trip and the expense and we’ll start planning our next one soon. Have you done a retreat for your startup? What worked or didn’t work for you?

One year after Baremetrics was launched, we hit $25,000 in monthly recurring revenue. I’ve tried a lot of things to grow the company over the past year. A few things have worked well. A lot of things have flopped. We grew quickly, then stagnated for a bit, and are on the upswing now. So, what worked and what didn’t? It’s worth mentioning that I’ve written about our journey to $5,000/mo as well as growing to $14,000/mo, both of which may be worth your time if you’re at those stages of your business. 5 things that worked Here are five things that worked well for growth on our way to $25,000/mo. 1. Hired people smarter than me It doesn’t matter how amazing you are at design, development, support, sales or marketing. The fact is, you can’t be amazing at any of them as long as you’re trying to do more than one of them. When you’re just getting off the ground, the more you can do yourself or with a bare-bones team to prove that your business has a fighting chance, the better. But after you’ve proved it, it’s time to start delegating. The world is full of people smarter than you and you need to do everything you can to have them on your team. They’ll not only do a better job specializing in one area of the company, but they’ll push both the product and the business to better places. This especially rang true when I bit my pride and hired an engineer to take over the development work. Within weeks Baremetrics was more stable and faster and we were able to get to work on making the product more valuable. 2. Increased value (and in turn, ARPU) There’s a common theme among all successful businesses: they create value. That value may be in the form of literally creating monetary value (a CRM that helps you close sales, an ecommerce platform) or, more commonly, it’s in the form of a painkiller. A painkiller solves a big problem that saves customers time and, in turn, money. Businesses happily pay for products that create value. A key metric for determining if you’re creating real value or not is ARPU (average revenue per user). A low ARPU can even be a sign that your SaaS business is dying. We spent much of the year focusing on increasing value and it paid off. We grew ARPU by nearly 70% from $55 to $93. Everything from more features to solid customer support all contribute to a higher-value product. We've dropped back down to $88 now as we reintroduced our $29/mo plan, but it's still much better than it was a year ago. 3. Wrote actionable & relatable content One of the biggest drivers of new customers has been the blog. A couple of months after I started Baremetrics, I began writing regularly about things I was trying and learning along the way and it resonated with other startups and entrepreneurs…which is handy given that’s our exact market. ;) Here are the articles that contributed the most to growth: How Hacker News Generated $1,500 in Monthly Recurring Revenue Idea to $5,000/mo in Recurring Revenue in 5 Months How We Got Our First 100 Customers 4 Signs Your SaaS Business is Dying How Retargeting Gets Our SaaS $650 for $6 How We Increased Customer Loyalty by 125% in 6 Hours The key takeaway here is that just generic content marketing is not the stuff that worked well for us. What did work well was when I laid out very specific things I did and gave tips that other startups could put to use. 4. Embraced transparency by making our dashboard public In February, after rebuilding Baremetrics from scratch, I needed a live demo of what Baremetrics could do. I was faced with two options: spend an inordinate amount of time meticulously putting together a bunch of data for the demo…or I could just make our own Baremetrics dashboard public for all the world to see. Baremetrics for Baremetrics. Laziness won the battle. It opened so many doors and started so many conversations that even if it wasn’t a direct driver of new customers, it would have been worth it. But it is direct driver of new customers. People who visit the demo are 5.5 times more likely to become a customer. 5. Partnered with Buffer on their public dashboard And speaking of opening doors, the biggest door opened by making our metrics public was for Buffer to do the same. It had an immediate positive effect and nearly a year later continues to be the biggest consistent referral of traffic. Our partnership with Buffer permanently changed the growth curve for us, all thanks to a 10 minute conversation on the way to dinner at a conference. Things that hurt in the process While there were a number of major things that helped us get to $25,000, there were a couple of things that slowed us down. Raising money It’s slightly counterintuitive, but the process of raising our $500,000 round of funding had a noticeable impact on growth. Raising was definitely the right move, but the process of wrapping that up was draining at best. As Paul Graham says (paraphrased), “either you’re raising or you’re building…but you can’t do both.” That was definitely the case for me. All the paperwork, calls with lawyers and the mental roller coaster of the entire experience took a toll. Hiring quickly I hired four of our five employees in less than two months. Given I had nearly no hiring experience, there was a major learning curve. Getting all the things in place to properly support a team is a surprisingly huge amount of work. Payroll, benefits, on boarding, design and development processes, and a thousand other things. Bringing everyone on was definitely a good move, and we’re now starting to see the byproduct of having a really solid team in place, but it was basically my only focus for 6-8 weeks. Tack that on to the tail-end of raising money, and there were about four months there where growing the revenue part of the business just couldn’t happen. Thankfully we’re on the upside of that now. The coming year So, what’s on the docket for the coming year? $25,000/mo was a big milestone for us, but this year we’ve got an even bigger milestone we’re after: $1,000,000 run rate. That translates to about $83,000/mo. Everyone on the team is firing on all cylinders and the big features we’ve had in the pipeline for the past few months are about to start rolling out. Those big features, plus a slew of other things in the works, will make that $1M run rate a real possibility. So, what are some things that have worked for you as you’ve grown your company?

Last week I wrote about our experience going from bootstrapped to funded, why it was good for our business and some of the things we’ve learned along the way. I mentioned there were some big shifts for me and one of those shifts was the transition from being a solo entrepreneur to managing a team. I have 10 years of do-it-yourself mentality to undo, or to at least adjust, and that’s been an interesting process. I’ve moved from a pure maker to more of a manager…an enabler. Instead of doing all the “making”, it’s now my job to make sure my team is well equipped and fully supported to do what they do best and for me to stay out of their way. So, what are some lessons and tips I’ve learned along the way? The sooner, the better You should start building a team as soon as it makes financial sense. I’m technically capable of pulling off the high-level development of things, but I’m not an expert at it. I quickly found myself in over my head dealing with the huge amount of data we manage and for a couple of months was in a perpetual state of putting out server fires. Ben, the first person I hired, came in and within a matter of weeks had fixed the large majority of the major issues. I should have hired him months earlier. Having someone to focus on development freed me up to focus on growing the business, which is a much better use of my time. Team communication is key We’re a 100% remote team, covering all four U.S. timezones. We miss out on office chit chat and the little opportunities here and there to throw an idea by someone in passing or to discuss something over lunch. That means we have to be very intentional about communicating with each other. Even as a team of six it’s easy for people to go a whole week without talking to someone else on the team and at our size we have to try and avoid that. We use Slack to quickly talk through ideas and questions as well as for the liberal sharing of GIFs…because GIFs = culture. Right?!?! We also use Sqwiggle for indiviual and team video chats. It shows who’s working at any given time and helps give a bit of a “we’re all here working and making junk happen” feel. Trust your team’s expertise I don’t consider myself a micromanager, and I certainly don’t want to be that. But it’s definitely a struggle to let go of something that’s been your “baby” for months and trust that others will want what’s best for it too. It’s really important to step back and let the people you hired do what they do best. You hired them because they’re experts. They are (hopefully) better than you at the job you hired them for, so quit telling them how to do their job. Your role at this point is to steer the ship. To instill in your team the direction things need to head and then step back and let them work. There’s a ramp up period Once you start hiring, even if it’s just one or two people, it will take time before the things they’re working on will start to make a major difference in your business. It’ll take time for everyone to get in step with one another and to start really producing things together that make a big impact. That’s par for the course. It’s also something to consider from a financial standpoint. Can you afford for the work they’re doing to not pay off for 3-6 months? If not, you may not be ready to hire. Equip your team Every position has different needs. Heck, every person will have different needs, even within the same job. Make sure everyone has what they need to do their job well. On a granular level, that means answering questions and giving feedback on work as quickly as possible so you aren’t the roadblock. On a higher level, that’s making sure everyone’s happy. Some of the things we do to help in that department is giving these to everyone: Kindle Paperwhite Unlimited Kindle books Jawbone UP $250/mo “remote stipend” that can be used for anything (phone, internet, food, gym membership) Loose vacation policy Those are small things, but they can go a long way in making sure people don’t get burnt out. Give everyone opportunities to speak their mind You can’t make the assumption that everyone is happy all of the time or that they never have any ideas they want to run by you about how the company & team can be better. There will be times that people are unhappy with certain things and they will have great ideas for how the company and team can be better. But most people won’t just come out and say those things. You have to give them opportunities to say them and directly ask for that kind of feedback. We do this via 1-on-1’s every two weeks. Each time I ask specific questions (the actual questions vary week-to-week) to get a better idea of where everyone’s head is at and if there’s anything I can help with. We even have a bot (MomBot!) to schedule them so they don’t get missed! Some of the quesitons we ask each time… How’s your work/life balance right now? What’s a recent situation you wish you handled differently? Are you happy with your recent work? Why or why not? Are there any projects you’d really like to work on if you had the chance? Do you feel over-worked, under-worked, or is the workload just right? Do you feel like you’re on the same page with the team as a whole? How could we improve the ways our team works together? Is everyone pulling their weight on the team? What could I do as a manager to make your work easier? Is there any feedback you have for me as a manager? Honestly, as someone who’s been self-employeed his whole career, a lot of those questions feel icky. Like I’m sitting in a room in my suit with slicked back hair talking down to my minions. But in reality, they work really well for getting feedback. Learning process I started hiring barely 8 months ago. I’m still a complete noob at this, but I do think being mindful of the fact that managing a team is very different from building a product goes a long way towards not only a happier, more capable team, but also a better product. Have you built a team before? What are some things you’ve learned?

I’ve been building products and creating businesses for a solid decade. Prior to Baremetrics, I’d started just about every type of business imaginable: consultancy, ecommerce, content, software and more. And while the business models have all been different, the one unifying factor is they were all 100% bootstrapped to the end. So, what’s it like going from a decade of bootstrapping to running a funded business? And what’s it like transitioning a business that started out bootstrapped to having a pile of cash at my disposal? Has it been worth it? Is VC money evil? Gahhh, so many questions!!! Let’s find some answers. Naivety Prior to 2011, I honestly had never given VC money a single thought. I was blissfully unaware that it was common. My entire thought process behind building something was “here’s a problem, now let me figure out how to build it.” I’d teach myself the skills necessary to get it off the ground and then charge money for it. I then started building a survey platform and my co-founders put a bunch of money into it and we started looking to raise a small seed round. I was dropped into shark-infested waters and it was intensely uncomfortable. Lots of meetings with VC’s who were nice enough, but I always felt like my goals for the company never jived with their expectations. I had also only surrounded myself with people who thought like me, which is great when you want a single line of thinking, but not great when you want full perspective. So, after that, I was staunchly opposed to raising money. I went from being naively unaware of VC money to naively categorically opposing it. Neither of which were particularly useful or healthy. Then I launched Baremetrics. Coming around Things took off much quicker than anything I’d previously done. After making our metrics public, and then Buffer doing the same, Baremetrics began to get a lot of exposure. Our financials were public, which meant our 30%+ growth rate was also public. Quite a few investors started reaching out. At first I dogmatically turned down all the calls. I was laser focused on building Baremetrics and I wasn’t about to let some sleazy Silicon Valley used car salesman try to force my hand. Then I realized I was being too harsh. Not on the focus part, but on investors in general. I was talking to a few pals who’d taken on seed rounds and instead of it being an awful experience for them, it was completely positive. It wasn’t the nightmare scenarios I’d pictured or read about and I realized that there are actually great investors out there who aren’t greedy and overbearing. So, I started taking some of those calls I had previously turned down. I started having some legitimately great conversations with investors who had interesting insights. Investors who had perspective and experience in certain markets that I didn’t and many who had built quite a few businesses themselves. It changed my entire view on investors. A unique position The more conversations I had with investors, the more I realized I was in a relatively unique and favorable position. I had the power to walk away. I didn’t need their money. I was a one-man show with very little overhead who was profitably running a fast-growing business. I was clear about the types of deals I wasn’t interested in and was able to avoid wasting time trying to make deals happen that just weren’t in my best interest. I wasn’t interested in giving up board seats or lots of equity and so until I found an investor who was inline with that and could agree to those terms, I would walk away. This past July, I was having a conversation with Patrick at Stripe, which led to conversations with the good people at General Catalyst. They were completely on board with the way I wanted to run things and the type of deal I wanted to do. We closed a $500,000 round of funding with really great terms. This was the deal I wanted. Why take funding at all? Wait…if I was a one-man show with very little overhead who was profitably running a fast-growing business, why take funding at all? The high level answer is that it lets me grow faster and larger by hiring more people who can in turn build a more full-featured product that in turn brings in more customers and the snowball continues. But it was more than that for me. I’m a maker. For me, the process is the rewarding part. The overall experience is what fuels me. And after 10 years of building things on my own, I was ready for a new experience. A new process. Something unfamiliar. That, really, is what my primary motivation was to take on any funding at all. But really, what’s changed? So, here we are with a big pile of cash. What’s changed? What’s better? What’s worse? Am I happy I did it? Money The most obvious/literal thing that changed going from bootstrapped to funded is that my bank account…grew. Having more money at your disposal is unquestionably freeing. I still pay attention to the bank account. On the first of every month I still update our 12-month profit & loss projections. I still cringe when I see how much Uncle Sam robs us. But now I don’t sweat the small stuff. Worry whether I should spend $200 on a quick Twitter Ads test? Just spend the money. Buy Kindles for the team as a perk? Just spend the money. Put together a company retreat that’ll set us back $10,000? Okay, ouch. But still completely worth it and made possible this early in the game because of that investment money. Maker to manager Growing from a team of one (me) to a team of six…that’s been such a major shift for me. I went from literally handling all design, development, support and marketing to…almost none of that. I now spend my time making sure our team has everything they need to keep moving forward, planning the future of the product and marketing. If you’d have told me a year ago that I’d be doing employee 1-on-1’s and planning a company retreat, I’d have laughed at you and kicked you in the shins because that’d have been ridiculous. High stakes Most of the time, building a startup isn’t stressful. Sure, it can be nailbiting at times, but for the most part I’m 100% stoked to be building something that people love. That being said, there is certainly more I worry about. Or, worry may not be the right word but…I certainly have a lot more I need to take in to consideration. There’s just a heck of a lot more at stake now. The biggest thing being that there are now 5 people on our team who are depending on me to not run this ship in to the ground. As much as I want to build a great product, I want even more to do right by my team…the people who’ve chosen to make Baremetrics a major part of their lives. I want them to look back on their time here and to have loved it and for it to have been absolutely worth it. And what about high stakes with our investor’s money? That’s the argument many times against VC money is that you become a minion for the investor and have to make every decision based on their unreasonable desire for wealth. That may be true in some situations, but that’s completely a byproduct of the deal you do and who you do the deal with. That’s just not the case for us. General Catalyst isn’t that type of investor and the terms of our deal simply don’t allow for that. Who you do a deal with changes everything. All money is not equal. Going bigger One surprising thing the funding has done is changed my perspective on what Baremetrics could be long term. Baremetrics started out as a side project and for a while I had a bit of imposter syndrome, each month thinking “surely this is the best Baremetrics will do, this can’t become an extremely profitable business.” But what I’ve realized as the team has grown and our customer base has grown is that Baremetrics can in fact be a very big business. It’s motivated me to build something larger than myself and to me that’s one of the most exciting parts. Bootstrap vs. Funded. What’s the answer?!?! Okay, but really. Bootstrapped vs. funded. Which is better? There are literally thousands of articles about “bootstrap vs. funding” but that’s about like asking “hammer vs. paintbrush”. It’s the wrong comparision. They’re just different tools for different jobs. So the answer to that question is: whatever you think is best for your business. There are so many people who are bootstrapping and feel like “VC”, “funding” and “investor” are all dirty words, or that taking on funding is somehow admitting defeat. That taking on cash somehow says “you weren’t capable of doing this by yourself.” And you know what…maybe that is the case. Maybe funding helps get you over a hump in a way that you couldn’t do by yourself…and that’s okay. The key is to do it how you want to do it on your terms. Taking on funding isn’t failure, it’s simply a different path.