Episode 89
· 54:51
And welcome back to the Product People Podcast. Justin Jackson here. If you want to get me on Twitter, I'm the letter m, the letter I, Justin, m I Justin. So glad to be back again. We've been pretty consistent with publishing these mega profitable case studies.
Speaker 1:Again, if you want them to be emailed to you, go to megamaker.co/profit, and I will send you the previous case studies. These have graphs, revenue, expenses, and profit numbers for people like Nick DeSabato, Brennan Dunn, and this week Natalie Najelli from WildBit. And she got right into the history of WildBit, how they started as a web development agency, building flash websites for nightclubs, and eventually built the product empire that they have today. It's really great. You're gonna enjoy it.
Speaker 1:Let's get in to that conversation. Natalie, tell me about your business and how it started, and what kind of business you're in. Like, what does your product do?
Speaker 2:Sure. So I run WildBit, which is a software company. We build we have our own products. So WildBit is kind of a company, and then we have three products going on four, that help other software developers and designers do their work better or enjoy their work better. And so we have a product that turns 10 this year called Beanstalk, which is, git hosting and deployments, kind of like a collaboration workflow for development teams.
Speaker 2:We have a email product called Postmark that sends transactional emails for apps. So things like password reset emails, welcome emails, that kind of messed up. We have a little deployment robot called DeployBot that helps you ship your code from anywhere. So if you're hosted with GitHub or Bitbucket or whatever. And then we have a fourth product on the way that is in private beta right now called conveyor, conveyor.com.
Speaker 2:And that is our kind of reimagined beanstalk. If we were solving that problem today, what it looked like? And so after ten years, we think that problem would be a little bit different. Yeah. So we are trying to do it better.
Speaker 2:So that's our kind of new new iteration.
Speaker 1:That's that's awesome. Now so you started Beanstalk ten years ago?
Speaker 2:Yes. But the company's seventeen years old.
Speaker 1:Oh, okay. What were you what were you doing before that?
Speaker 2:So so yeah, so Chris started, so I run the company with my husband, Chris, and he started the business doing consulting work.
Speaker 1:Okay.
Speaker 2:Started with like flash awesome flash websites for nightclubs. Brilliant. Beautiful work. Beautiful.
Speaker 1:Okay. This is a piece of history that I did not know. I
Speaker 2:Oh, yeah. It's a great history.
Speaker 1:Is this on the wild bit about page? I'm gonna check right now. I wanna I wanna see
Speaker 2:I mean, I'm sure there's Flash nightclubs. Yeah. And, like, yeah. There's a lot of it's a it's a fun history. Mean, we like, when I met Chris, he had been doing it for three years, so we didn't have products yet, but we we doing a lot of client work.
Speaker 2:We moved on, graduated from like flash nightclub brochure site to building social networks, and we were doing that for a while. Really? So, yeah, and doing for customers, like for clients, the client work, and built some really great social networks for other clients. Well, that was like a big thing. We actually, we wrote out a social network report that became hugely popular.
Speaker 2:I mean, back in the day when that was like a big thing and people were trying to get in and create communities for their communities. Right? Mhmm. And then, you know, eventually got into product. So we started, we were doing consulting.
Speaker 2:We actually had an email marketing service in the early two thousands that we built for our clients. Mhmm.
Speaker 1:And I guess Newsbury?
Speaker 2:Mid two thousand. Yeah. Newsbury that so that was our very first kind of foray into products, and then that's no longer in existence. And then Beanstalk, we built because we were doing client work and Chris was managing the SVM repositories and, like, hosting them locally, know, trying to set permissions and doing all this crap, it was really annoying. And back then, there really wasn't anything.
Speaker 2:Like, there was CBS dude, if you remember what c
Speaker 1:Yeah.
Speaker 2:Yeah. Yeah. So we we started asking friends. We were like, hey, would you let somebody like, would you let me host your source code? And, we'll manage it for you.
Speaker 2:And they're like, no. You're crazy. I'm never letting you touch my source code. And Chris was like, whatever. We'll just try it.
Speaker 2:And so we would yeah. We just tried it. And that's kinda how we got into products. And so we launched this thing and just kept doing client work on the side. And basically the plan was always that we would never fire anybody.
Speaker 2:So we needed Beanstalk to make enough money so that everybody who was working on client work would just, it would support all of us, right? So we made it little migrate to all hands on Beanstalk.
Speaker 1:There's actually a few things I wanted to dig into there. Three things. Yeah. First of all, what gave you the imagination for products in the first place? Like how did you, you're running a consulting agency.
Speaker 1:How did you even know that that was a thing that that was possible?
Speaker 2:And products were starting to become a thing, right? Basecamp was a thing. You know, at that point, Mailchimp was a thing. Like, you know, so there there were things. Right?
Speaker 2:Like, there was a very slow kind of, I was just saying to somebody, like, apps were launching monthly, but they were launching. Right? So they weren't, like, complete it wasn't hourly like it is today, but there was this sense of, like, we can productize and create recurring revenue. I don't think we all maybe necessarily saw it for kind of the massive kind of capital efficiency that it is now and things like that, but there was this thing. Like, we could build a recurring product Mhmm.
Speaker 2:Like others were doing. So I think we just kinda knew it was this thing that we could do.
Speaker 1:Yeah. And why this philosophy? Where did this philosophy of never fire anyone come from?
Speaker 2:Oh, I just could never fire anyone. I don't know. I think it's like a philosophy. Was just like I mean, it's like, it's just I don't I mean, I think we've always known.
Speaker 1:In the agency world, especially to maintain profitability, firing people is quite common. So I'm wondering why you were why were you such deviants?
Speaker 2:Yeah. I mean, I like the people I work with and and, you know, I I don't think Chris and I would have ever we never looked at WildBit as existing for anything other than the team. I mean, I know I say this a lot and it's probably getting old, but, like, I always say, like, wow. But it exists for the team. Like, we're very product agnostic.
Speaker 2:And so, you know, it was, like, together, we were building Beanstalk while allowing client work to kinda do its thing, and we were all really excited for the day we don't have to do client work anymore. Right? So it's, like, like you know? Yeah. And so it was for all of us.
Speaker 2:Like, how are we all gonna, like, let's do this. Right? Let's get Beanstalk big enough so we don't have to do client work anymore. I mean, it became very much the collective goal of the team. Yeah.
Speaker 2:So I don't yeah.
Speaker 1:And and when did Beanstalk launch?
Speaker 2:So it'll be ten years in October.
Speaker 1:Okay. So
Speaker 2:Or it is October next week. So October I forget the exact date, but October.
Speaker 1:February. 02/07.
Speaker 2:Yeah. Maybe November. And
Speaker 1:how much how much revenue and profit did it make that first year? Like, you're working on it on the side. Do you remember how much it made back then?
Speaker 2:No, I don't remember. It was enough. I honestly don't remember how much it was. Yeah. I know I borrowed money from Chris's dad.
Speaker 2:So just in case, borrowed like, we used to bill in weekly iterations, so we would bill everybody, like, for per person, per per like who they were hiring on our team per person per week. Yep. And so I basically asked his dad for like $20. Wow. Or however much it was.
Speaker 2:It was like and I said like, I'm only gonna pull out every week what I would have done for consulting work just in case to just kinda bridge the gap. Like, I wouldn't touch the money. Like, I put in one account and I would transfer it, like, week by week, like a crazy person. And then we didn't use all the 20, and we, you know, paid it back, like, within two months or something like that. But yeah.
Speaker 2:But I don't I don't remember everything. I don't know.
Speaker 1:When did you get rid of Newsberry? This is my third question.
Speaker 2:Yeah. So there's a blog post that circulated the Internet that people still ask me about at, like, random conferences that I don't remember the exact date you could
Speaker 1:put on twentieth, two thousand twelve, it says.
Speaker 2:That sounds about right. Yeah. Because my oldest was, like, two. Yeah. That sounds about right.
Speaker 2:Yeah. So at that point, we were, I think, almost all I mean, we were all in on on on apps, like products. We had Postmark. Yeah. We had Postmark, and so we had Beanstalk.
Speaker 2:And then Newsbury was kinda just sitting there. And the truth about Newsbury is that we were never we aren't good at building products, so we've never really kind of spent enough time to be good at building products we don't use ourselves. Mhmm. And at that point, like, we're not we're not marketers. Like, that's the antithesis of who we are.
Speaker 2:Like, now we're getting better as a company and we've hired great people to help us there, but we were not those people. We never sent newsletters to our own customers. So we had a very skewed perspective of how that process should work. And we were very stubborn. And so, like, we were never good at building that product.
Speaker 2:Like, it was a good product, and people really loved it, but it was a distraction. It wasn't making enough money to to to for the distraction it was causing. So so we to shut down.
Speaker 1:So part of that choice was this and is interesting, this is one trend that's come up, especially for folks that I've interviewed that have launched multiple things is one of the advantages to launching multiple things is you've got a bunch of horses in a race, and you really can see the slow horse. And so it sounds like Newsberry was your slow horse. You're like, compared to Beanstalk and Postmark, this thing isn't producing at all, right?
Speaker 2:Yeah. And I think you get to, I mean, I'm really, I love having multiple products and like, I've talked to friends who, you know, are like, you're crazy. You gotta go all in on one of them. Like, you'll get much bigger if you focus. But again, like for me, it's nice to kinda not to kinda hedge my bets a little bit and to kinda have things in multiple places.
Speaker 2:And they're all in different parts. They're like kids. Right? Like, they all have different needs. Like, thankfully, they didn't launch four at the same time, but we're, like, you know, all trying to just get the product market fit.
Speaker 2:They're all trying you know, like, they're all in different life cycles. And I think that was clear with Newsbury. It was, like, where it was to do anything bigger with it or to even just continue to grow it and to support it. Like, we needed to have, like, more brainpower in it. And it was either that or postmark or things.
Speaker 2:You know? It just it didn't like, we knew that we weren't building a great product, and we don't wanna use it. So it was like, you know, so yeah, you're right. Like you can see, you can see them all and I like having multiple and, you know, luckily you get to choose what you work on.
Speaker 1:So Beanstalk launches in 02/2007. Postmark launches in 2010.
Speaker 2:'10. Yes.
Speaker 1:And so what between 2000 and '7 and 2010, I'm guessing Beanstalk grew quite a bit.
Speaker 2:Yeah. It was definitely making a 100,000 the first year because well, I don't know. I mean, I don't I don't have them off the top of my head. I think, I mean, by the time we shut it down, it had to have been making or by time we stopped doing consulting, it was definitely making way past a 100,000 a year.
Speaker 1:Mean, we
Speaker 2:were doing consulting work. We were doing more than a million years in a million dollars a year in consulting work. So being stuck at that point was making a lot more than that. But you're right. I think the funniest part about growth for starting any app is, like, you have this you have very unrealistic expectations about what's actually gonna happen.
Speaker 2:And I clearly remember we had thousands of beta testers on Beanstalk, and when we turned on paid pricing, we sat, I'll never forget, had this IKEA desk, and Chris and I sat there and we sent the email, and we're like, yes, you can buy. And we were so excited. And we're like refreshing the admin and like nothing's happening. And we're like, why are these people giving me their credit card? I don't understand.
Speaker 2:They love this product. This is so great. And we're like, refresh again, refresh again. I'm like texting Dima, the developer, and I'm like, is it broken? He's like, no, Natalie.
Speaker 2:It's not broken. I'm like, well, why do you keep putting their credit cards? And then you're like, hours later, the first one rolled in and you're like, yes. And
Speaker 1:then Yeah.
Speaker 2:And, you know, it's slowly. But we're postmark, like our first month when we launched, we hit like $10,000 that month or something crazy like that, which was huge. But again, you can't replicate it because we marketed to our B style customers. I had an audience, right, who clearly needed the product. Month two was not $10,000 but month one was like, you know?
Speaker 2:And so, don't, I think it varies from, I don't expect Conveyor to make a ton of money for the first year. You know, like I've projected it to make no money for the first year as we figure out what we're doing and all this stuff. But yeah, How it
Speaker 1:big was the team in 02/2007? Are we talking about three people? Are we talking about 10? 10. Wow.
Speaker 1:Okay.
Speaker 2:10 ish. In the 10 ish.
Speaker 1:The other difference
Speaker 2:You're asking me history questions. Don't have a good I know.
Speaker 1:It's okay. It's okay.
Speaker 2:17 years old.
Speaker 1:I'm gonna tease it out of you. But the the other unique thing about you folks is a lot of people start as solo founders or them and another person and they're able to like profitability is, you know, we pulled in $150. We paid out $50 in expenses. And then I paid myself a $100, right? We're we're that's profitable for a one person shop.
Speaker 1:But when you have 10 people, that's a lot more expense that you're not your ceiling, your floor becomes, you you got it. It's a much higher, right? Why do you think you were able to do that actually when so many other agencies tried that and didn't, it didn't work?
Speaker 2:I think I've thought about this a lot because I talked to a lot of agencies who are trying to do this. And I think the biggest difference and what I tell everybody is you have to dedicate a person, Just start with one. If you don't dedicate so when we hired, we basically said, we're getting one, and that person cannot do consulting. And it's not an option, don't tease it, don't because you get addicted to that, right? Because the biggest challenge is like, I can work on my product this week or I can bill $3,000 and it's like, what do I do?
Speaker 2:And we really committed to one person. And so we were like one person, was Deema at the time, who's still a developer with us, you know, still works with us, but he basically like, you don't get to do anything else. Like, we're not we're not gonna we're not gonna, like, you know, sell you out to, like, a a a client. Yeah. And so what that allowed us to do and, you know, it's hard.
Speaker 2:Like, we still need a designer who was doing client work. So, you know, were different resources that we needed and we used on being soft that we did kind of still sell to clients. But you have to put a dedicated person because once you do that and once you promise yourself and you figure out the math, right? So that you can have that dedicated person, you can still survive off consulting without that dedicated person. Now you're building something.
Speaker 2:Now there's value. Now that product only has to make enough money to cover their salary. So it's cool. Now it covers their salaries, bring a second person in. And then third, and you can gradually wean yourself off that way.
Speaker 2:But if you dedicate what I see a lot of agencies do is like, they don't. They're like, they have this great idea and they wanna like spare spare cycles. And like, you don't have spare cycles. Right? Because the minute if you need those cycles to be profitable or or whatever sustainable, then a client comes along once that cycle and you're like, okay, but I can't work on my product.
Speaker 2:I gotta go back to the client. And then it never gets done. It never gets attention. It never gets iterated on. I think like you have to kind of, you gotta commit.
Speaker 2:I don't know. Like, I don't, I think that's the, at least that's the only way I see it as, as having worked for us.
Speaker 1:Yeah, no, I think that's right. I have seen that pattern in other agencies too. Cause every agency since thirty seven signals has looked at that model and has said, that's the model. That's, that's the ticket. Did you employ a similar strategy when launching new products?
Speaker 1:I've seen single product teams try to launch another product and they fall into the same trap of they keep everybody on the same product, and it's just hard to get the next person working solely on this new thing.
Speaker 2:So with Postmark, we hired somebody completely separate because one of the things that we did for Postmark is the back end, and that I think was convenient for us. The back end of Postmark was not built in Rails. Because of the email kinda mail sending piece, we chose a different a different programming language. And so Mhmm. We actually had to hire some specific.
Speaker 2:So we had the same situation. We hired a dedicated person to build out Postmark and they built it out in three months. And then, you know, you start, you know, our design resources were always the ones that we we have a very small design team. And so it's like the design resources are always kind of like passed around. Yeah.
Speaker 2:But we did the same thing with that. And then Deploy Bot, you're right. That was probably the closest to that scenario where we're kind of like, we can spin out deployment tools and create a new product, but who's gonna work on it? Well, person is working on Bean Stock, so how do you do that without and that I think that became a unique scenario where that team basically said, like, we just wanna try it. We're gonna do it on nights and weekends for a couple weeks and see what we can do.
Speaker 2:And so they kinda spun it out themselves.
Speaker 1:Interesting. Do you have You know, one of the things that I did when I was running teams is when I had to quickly budget for a team member, I'd always, add 30% to their salary. And that was kind of how I figured out the expense. Is that, do you have a similar trick? Is that sound right about right?
Speaker 1:About 1.3 times salary is kind of, and then if you multiply that across the whole team, you'd get about your expenses, or do you have a different trick?
Speaker 2:I don't think I use a trick anymore where too many peep like, I I plug it into like an actual spreadsheet and like payroll tax and healthcare. And so like, I don't I'm trying to think of what I did back in the day before it was a little bit more organ. And I have people to help me now with doing the finances too and stuff like that. But I think you're probably right. It's somewhere around 30%.
Speaker 2:I mean, we pay a 100% benefits. So for us, it's like their salary, their payroll tax, their benefits. Then I don't really have a good formula for anything other than that. I don't know what retreats cost cost us per person. You know, when we add a person, don't know what, like, you know, I guess I could think office build out and stuff like that, but that just kind of lives in like a, you know, I don't know what lunch costs us when we hire an extra person in Philly.
Speaker 2:Like, I don't think it that way, but I, you know, from a, from a quick, like, what's gonna really hit the bottom line? And that's gonna be that's basically salary and their payroll tax and
Speaker 1:health I think the history is important because there's different folks listening to this. There's some people that have They're already started. They have products out in the world and their problem is they're not that profitable. They're at breakeven. They're maybe making 5% margins and they're really not making a good return on their business yet.
Speaker 1:Not a lot of cash accumulating in the business account. I started in 2016, and so that's me, basically. You know I'm pulling out dividends and salary but there's not a good like chunk of cash kind of growing in the business that I could invest in growth or something else there's folks before that that you know they haven't launched, they've launched something that maybe has revenue but it's not even close to break even, and they're kind of at the beginning stage, maybe where you were at back in 02/2007, although that was a pretty good launch. You obviously had hit a nerve.
Speaker 2:It definitely And it was a different time. Right? Like, there wasn't a lot of app. I mean, like, we launched and, you know, like, people talked about it. Right?
Speaker 2:Like, I didn't I didn't I didn't need to go on product hunt and beg people to upvote something. You know? Yeah. It was like, oh, a new app launched. Holy crap.
Speaker 2:You know?
Speaker 1:Yeah. Yeah. It was news just because it was an app.
Speaker 2:Exactly. Yeah. So that's really what it was. Yeah.
Speaker 1:For, so for,
Speaker 2:and it was a nice design.
Speaker 1:So we've talked a lot about your journey to profitability with the products. What were some of the biggest struggles along the way? What are some of the things that people didn't see as you were building this, as you were doing this, what made it hard?
Speaker 2:So history So the interesting part of our profitability for us is probably the last five years where things have gotten interesting because we've always been very profitable, like extremely profitable, 35, 40% margins, like doing really well, probably higher at some point earlier. And I think that the challenge that we ran into is we realized that you do have to, like, you have to invest back because you can't kind of stagnate. And I think what we ran into and where things like our profit margins have dropped pretty significantly over the last three ish years. They're on their way back up, but you do have to invest and you have to reinvest back and you have to think about like my thing now is like, know my goal, like my goal is 30%. Like I don't need more than that.
Speaker 2:I definitely don't want less than that. And so like, when I hit 30%, it's time to look and say like, okay, where can we invest better? What can we do better? And for us, it's always like better salaries, better for my team. It's like my team, you know, it's not like I have some magical go to market strategy that I can put more money into.
Speaker 2:But yeah, but so we really didn't hire at all. So we didn't hire. We, like I said, we had no marketing. So we had like no kind of strategic growth initiatives. That's so dirty.
Speaker 2:So, and so like, you know, and so I think like when beanstalk started to slow down, which it did because, you know, a lot of other competition came into the market and we were basically, if you build it, they will come and, you know, and not hiring and being really stingy with our profits. And I think that realization that, like, no, that's not the right way to go. You have two great products, you have an opportunity to grow them and you have to be actively, you have a responsibility to actively pursue them if you want them to stay relevant, forced us to look at it again and start spending more money. And so I think like the profitability becomes a goal, but I can't say it's a goal in and of itself. It's the means to, I think, longevity, right?
Speaker 2:To make sure that we're sustainable and around for a long time, but that also means that we have to be thoughtful about reinvesting and making sure that we're thinking about getting what we need to grow the business.
Speaker 1:Yeah. And so would you say, in terms of what affected your margins, was that competitors coming in and taking some of your customers? You had some churn with Beanstalk?
Speaker 2:Totally. I think less churn and more on the like drops and sign ups. Right? So the the net new one, the the whatever that is. We didn't we weren't losing customers as quickly as we weren't gaining anymore.
Speaker 2:So we had built a product that was heavy on the low end side. So like, you know, dollars 15 a month, dollars 25 a month, and there was really good competition for $7 a month or free that came out, you know? And also just the shifts in the market. Like we were late to the game in some places and, you know, had some brand, you know, in hindsight, right? I can give you 3,000 reasons of why I think like, it slowed down, but absolutely, you know, we did not see a lot of things.
Speaker 2:And part of that was just getting comfortable. Like those margins make you real comfortable. Lack of effectively like trying to grow a product and just sitting there and enjoying this really comfortable, you know, growth in your MRR. And you're like, life is good. And we're paying out 10% bonuses every twice a year, you know, like it was, you know, it was crazy.
Speaker 2:Like things were just not certain. And, yeah. And then when it stopped, it was like, okay, time to be grownups again. Yeah. And so that's kind of what we have to do.
Speaker 1:So it sounds like new sign ups really slowed down. Was this both for Beanstalk and for Postmark?
Speaker 2:No, just Beanstalk. Postmark has a totally different story. This was just Beanstalk, but Beanstalk was the biggest for it. I mean, drove most of the revenue. Mhmm.
Speaker 2:Postmark's been big company for a really long time.
Speaker 1:Interesting. Okay. Postmark was more of a slow kind of growth?
Speaker 2:Yeah. That's our fault. It came in really hot and heavy in the beginning, but we had really significant product issues, like especially less feature stuff. The issues were infrastructure, like actually making the product run well, which forced us to focus so much of our attention on that, that we were not able to develop the product itself for a long time. So like we launched, it came in really hot and heavy, and then as a lot more competition entered the market, which is good, you're validating your market, but we were so busy heads down trying to keep everything alive.
Speaker 2:And so there's like, you know, we lost customers because like we were down a lot and just having like lots of foundational issues and spent years just kind of plugging holes and and and rebuilding it and making it a strong, you know, product again. And now it's like, it's growing so awesomely. You know, it's kind of shifting that. Totally different. Yeah.
Speaker 1:This would actually be a good time to jump ahead to a question I was gonna ask later, but I think it's, you've mentioned competition a few times now. And one of my kind of criticisms of startup culture and even bootstrapping culture is there's sometimes this feeling that especially to people that are kind of boosters of those cultures, like you should build your own web app, you should start your own business, is that there's lots of space. Like that, you know, you can you can build something and you know, there's there's there's so many customers out there there's enough kind of for everyone and there's enough to go around etc and it just that never made sense to me because capitalism is completely based on competition. With most products, if I start using Beanstalk, I've got to stop using something else. If my team switches to Beanstalk we're switching off GitHub or we're switching off something else and so, yeah do you want to talk a little bit about how maybe some misconceptions around competition that you had or you see other folks having?
Speaker 2:Yeah. I mean, think the big I don't necessarily disagree with the sentiment because I think that on the flip side of that is like, oh my God, there's so many big competitors I can never make, I can never get in. But so much innovation comes from looking at the big competitors, seeing how bloated they are and seeing how slow they are and finding a niche. I think the challenge that I run into, or I see people running into is having a realistic expectation. So it is okay to pick a really niche market and say, I really wanna do something special for them and build a really nice business around that.
Speaker 2:But being realistic, they're like, I'm picking a very niche market. It's only X number of possible people. There's a market cap and that's okay. And so instead of looking at it and saying, I think project management sucks in all of these huge apps and I'm gonna take over the world and be the better project management app, but oh my God, can't because they're all so big and they have more money. Well, it's like, well, yes.
Speaker 2:All of that is true. So like, what are you doing to the world that's going to convince all these people, all that momentum to your point to switch to your much better project management app? Is it a thousand times better? Probably not. Is it, you know, do you need to be that massive?
Speaker 2:Do you need to replace JIRA right now? Is that your first step? Like, it's probably not a good idea. So, you know, I think, I don't think there's anything wrong with saying, I see a problem in project management, but what problem? Who are you solving it for?
Speaker 2:And like, start small, right? Like start thoughtful and figure it out. We've always competed always against 500 pound gorillas. Like Beanstalk, it's GitHub and Bitbucket and GitLab, Postmark, SendGrid and Mailgun bought by Rackspace, Mandrill, Mailchimp. I mean, like always, we are always the tiniest little, but I love that because I'm like, I don't need a lot of money.
Speaker 2:Like I don't need I need 10% of the market, 5% of the market because the market is software development and that's a massive market. Yeah. So, like, I'm okay with that. Yeah. You know what I mean?
Speaker 2:People ask like, how do you compete? And I'm like, well, do because I compete for this market, for this piece of it, for this type of user, and I'm very content with that. But I think a lot of people, they set out the wrong expectations, right? And so then they're really disappointed and then they don't know what to do.
Speaker 1:Do you think, what is it That's about
Speaker 2:a question.
Speaker 1:Yeah. What is it about going after that customer? Like you said, because software development is big, which is that's actually a good sign right away. There's a lot of money and companies and, you know, products in this space called software development. And then if we go down to source code repos and stuff like that, there's this kind of market.
Speaker 1:And you said, Okay, the gorillas are here, Bitbucket and GitHub. What is it about your customer that makes them seek you out, that makes them a profitable customer? Like, how did you find that customer? Or how why do you attract that customer?
Speaker 2:That's the million dollar question. Right? So that's like when you look at conveyors, so we're like building this brand new product. And I don't know what makes us think that we can continually launch products that are successful, but somehow we don't know how to stop ourselves. And so we're gonna do this again.
Speaker 2:And we looked at it very carefully because we're like, okay, well, it's competing against a those lot same things. And like, what is it? Who do we want to attract? Who are we solving this pain for? And I think what we've learned is like, we aren't gonna stop, like we ended up attracting an audience.
Speaker 2:Usually it's agencies or small ass, but basically people who realize that building software, they get paid for what they ship, not like the method in which they used to do it. Right? So if you're an agency or, you know, you're you're paid by the hour to ship stuff. You're not paid to sit there and mess around and get all day long and figure out how to branch and be in meetings to figure out process and do all this shit. Right?
Speaker 2:Like, that's not what you're paid for. One person pushes to the wrong branch, everything explodes, and nobody's paying you to sit there and try to untangle this mess for three days. Right?
Speaker 1:Mhmm.
Speaker 2:And so we may not invent new tech technologies, but we are very good at taking difficult, annoying things that you don't get paid for and simplifying them. And so that's this very niche audience, right? So Conveyor's gonna launch and we're not gonna let you touch your repository. Like we're not gonna let you push directly to your repository, right to the repo. You gotta write let us do it.
Speaker 2:You have access to it. We're not locking you, but we're gonna create a lot of process and workflow to prevent you from yourself and to allow you to focus on what makes you money instead of like all this other stuff that's like surrounding it. Which means that the person who loves to code in terminal is not going to want to use it. Right? Like, I know that.
Speaker 2:Right? Somebody who uses Linux is not for the most part going to want and I'm very much okay with that. You know? Like, there's something really, really comforting. And we're even trying to, we're trying to scale it down even more.
Speaker 2:We're like, well, who? What types of agencies? What do they do? Maybe it's craft, right? We're like big fans of craft right now.
Speaker 2:And so like, and that team's awesome. That audience is really interesting, and they have a pain, they have a need, and they appreciate what they get paid for, right? They're not the types of, I don't wanna generalize, but we are trying to build it for the people who aren't patting themselves in the back because they got themselves out of some tricky get situation or because they remember to create a branch when they want, you know, like that's not what we're building it for people who are patting themselves in the back because they've made a lot of money on that client and they delivered something really great and the client's really happy and it was fast and it was on time and whatever, Under budget, like that ever happens. And I think that's the things. So like we know who we attract.
Speaker 2:We attract people who like WildBit as a brand, right? Like who don't want to buy from a 500 pound gorilla. I'm okay with that too. So we talk about that, you know, that's nice.
Speaker 1:Yeah. I think that's actually very clear. There's, there's a really good lesson in that of, because people buy products for all sorts of reasons and they use products for all sorts of reasons. And often these reasons are not, as rational as people would, admit. So some folks love using GitHub because it is so sophisticated and they just love tweaking things.
Speaker 1:They love, they actually like the emotional, the emotional, thing that they get when they fix someone else's issue. So If they're the person in the office that's fixing everyone's issue, it gives them an emotional high of I'm the guy that fixes problems. If you went to that guy and said, Hey, we want you to switch to Bitbucket, he would say, No way. And he might not even articulate it or even know that the reason he's pushing up against it is if we switch to Bitbucket, I'm not going to be the hero anymore. I'm going to lose all this emotional validation.
Speaker 1:That's the word I was looking for. But you've identified this customer that isn't trying to get fancy with their process or their ideology. They just want to make money. That I think that's just a great picture of how you can be in a niche with big competitors. And you can still win because there's going to be folks that are like, listen, all I care about is shipping things and making money.
Speaker 1:And you could put that right on your homepage. We're WildBet. We help agencies ship things and make money. And people who don't want to get fancy with their process and their ideology. That's such a clear message, you know, in terms of who you are, what kind of products you build, and what kind of customers you want to attract.
Speaker 1:And I can see right away that those customers would be profitable because if you're making them more money, or you're enabling them to make more money, then it makes sense. Why would they ever leave? Postmark just works, right? Is that that's that's the sense I'm getting anyway.
Speaker 2:Yeah. Postmark just works. Yeah. Yeah. Postmark's funny because Postmark literally just works where people don't log in.
Speaker 2:Like, we can't measure our, like, customer usage, you know, or, like, happiness by, like, whether they log in because they never log in. Why do they need to log in? You log in to troubleshoot and Postgres is excited to forget it. That's good and bad, think. There's probably some bad to that.
Speaker 2:We're just trying to look at say like, hey, remember us? Like, you don't wake up one day in two years and you're like, what's this thing that I pay for? I don't even know why I paid for it. Right? Like, why did I pick it in the first place?
Speaker 2:Yeah. But yeah, I mean, Postmark just said it and forget it. The developer tools are interesting. And I mean, you know this, but like, you know, we've learned a lot over the years about how important it is if you're building a daily use tool, right? Like a daily use developer tool, not Postmark, but like a Beanstalk, like a Deploy Bot, very much of a lot of that depends on that emotional feeling people have that to your point, like, where do they get satisfaction?
Speaker 2:Because they have to open it and log in and do their work in it every day. And so some people get satisfaction from knowing all the intricacies of how git works and how to, like, change things and move things. Some people really get frustrated in that. And so if you give them something that shows them 3,000,000,000 options and it lets them get in trouble and all this stuff, they're not gonna get an emotionally pleasant even though it's not your app's like they're not gonna be happy. You're not allowing them to get that fulfillment that they need, right?
Speaker 1:Yes.
Speaker 2:I think that makes a big difference. You have to really know that. Where like postmark's different. Postmark's like you make the decision once. You know you're like, right, we're gonna pick an infrastructure prop.
Speaker 2:Not everybody has to be madly in love with it. Yeah. It has to work. Yeah. But Beanstalk and Compare are different.
Speaker 2:Yeah.
Speaker 1:So we've talked a little bit about you wanting to get back to 30% and a little bit about 30% profit margins and a little bit about it sounds like the slowdown was in new like acquisition acquiring new customers Have you done what other things because there's a couple of levers there, right? You can reduce your expenses, that can increase your margins. Or you can increase revenue, that can increase your margins. What kind of levers are you using to get back to 30%? Are you focused solely on acquisition or is there other things too?
Speaker 2:So, what dropped profit margins wasn't the beanstalk slowdown, it was our response to it, which was hiring. So, what actually dropped profit margin in this low was when we all sat down as a team and we said like, okay, we need to hire what I call like front of the house. Like we didn't really have a big front of the house. We were a team of designers and developers in QA. That's all we had.
Speaker 2:We fully product team. And so, and one support person, I think at the time. And so basically we're like, okay, we need to invest in what the front of the house, who's helping us actually grow the product. Because if you build it, they will come is not really, it just doesn't, it's much more crowded now, right? Much louder, it's much more crowded, it takes a lot more effort to bring the attention outward.
Speaker 2:And so what we started doing is we invested, we started hiring a bunch of people. So we hired ahead of growth, which we had never done before. And so we hired not when we were dying and on fire, we hired when we thought what we'd need in the next. And so took a big hit on profit margins, took a big hit on salaries for Chris and I, and basically said like, this is important. This is what's gonna get us out.
Speaker 2:And so we took this really big profit sharing went down everything, but as a team, we all agreed like, this is the only way to maintain the business. So that shut it down. And now it's, I mean, we've kind of spent, there's not really much, tell it to seem like there's not really much fat in what we do. We're all very kind of practical about how we spend money and what we do and things like that. So our lever is right now growth on the top end.
Speaker 2:So we just need to get the products again, to be like that capital efficient SaaS business that we all kind of aspire to be building. Yeah. Get back to that. Right? So we're we are maxed hired at this point, I think, at least till next year.
Speaker 2:And which means everything now is just increasing our profit margin. So all growth goes towards profits. So it's a nice place to be. And so we're getting closer. Made some good progress this year, and then by next year, we should be definitely at 30%.
Speaker 2:Yeah. And that's just kind of that that's the only lever I'm messing with. Expenses, I mean, I don't my number one expense is salaries. I'm not cutting salaries. Mhmm.
Speaker 2:So after that, you're looking at, like, software that you know, the apps that we pay for. So on a quarterly basis, I do review and I'm like, who owns this? Why are we paying for it? And somebody's like, oh shit, forgot to cancel. I'm like, okay.
Speaker 2:So we cancel that. And then my second biggest expense is hosting because we run infrastructure product. So it's a big expense, we manage to actually sell. We own all our own stuff, so that kind of helps with our costs. So that's kind of it.
Speaker 2:There's not really much on the expense side, it's all on the top line.
Speaker 1:Yeah. So you said, especially this past year, you really had to kind of learn some sales and marketing, and some of that's helped. What were some of the things that worked? What are some of the things, some of your kind of successes this past year?
Speaker 2:Yeah. I would say you can see a very direct correlation or a shift in the growth rate about two years ago.
Speaker 1:Okay.
Speaker 2:Well, maybe a year and a half, I'd say March, April. Building up to that, I think, one, we had never just the act of doing things is really useful. So we just started to do we started a regular newsletter, we started to blog more. We started to, you know, write better guides and things like that. So that no I can't say there was, like, some specific plan at the time, but just having people to think about that really really helped.
Speaker 2:And this year, in January, we sat down and we kind of looked from a marketing standpoint or kind of, you know, what what's the what are we gonna do next standpoint? We read the book Traction. Mhmm. Have you heard of that book? Yep.
Speaker 2:Yeah. And so we we did the 19 step, or the 19 method process, we sat down as a team and we kind of looked at it said like there's 19 different ways to hit your next level of traction. What hit me with that was that looking at growth as a kind of, of ramp up plateau, ramp up plateau was really useful because I was like, okay, that's true. We probably maxed out word-of-mouth to some degree to hit our next level of traction. We could probably grow a couple more percent, but is that our next level up?
Speaker 2:And so we looked at it and said like, probably not. So like, what is our next level up? And what we decided to do, and what I think was so good about that was we decided to do things that would make us happy. So we basically, everybody was kind of all in on, or seems to be going all in on content. And it was just never my thing to get excited about like 17 ways to better transact actual email.
Speaker 2:Yeah. Yeah. I just, I don't know. There's nothing wrong with it. I promise.
Speaker 2:It's just not me. Right? It's not, it's not gonna get me pumped. It's not gonna get me like jumping out of bed in the morning, but we love making personal connections. Like, love meeting customers.
Speaker 2:It just it brings me and the team such energy and excitement when we, like, talk to people. And so we had hired actually, like, not a salesperson, but somebody who used to be in sales to come in to kinda join the success team, but doesn't really do reactive support, does a lot of, like, inbound calls and things like that. We have a phone number now, and, he talks to people all day long, and it's brilliant. Right? So we're making those connections.
Speaker 2:And then we started doing like an outbound sales thing, but I'm on the receiving end of all those awful outbound sales emails, and I could never imagine like us being the facilitator. But I said like, there's obviously an opportunity to do sales, right? Like that's a real thing. And so we decided instead to do what we called the creative outbound and basically mail people packages and handwritten notes. We like hand select companies we wanna work with.
Speaker 2:Horrendously not scalable process, but it worked. Right? Like, sent these packages, talked to people, made connections. And we started going to conferences, talking to people, making connections, sending entire delegations. We're not just throwing money around.
Speaker 2:Mhmm. We're, like, gonna show up and talk to people and shake their hands. And so that's been working. Well, you know, like, just being present. I started speaking more.
Speaker 2:I I never did this before until, like, of an adviser was like, your job has to be a little bit more external. Like, you gotta go out there and talk to people. Mhmm. So that's helped. So I think, like, just kind of actively pursuing it, right?
Speaker 2:Instead of for years, was like, oh, we gotta build another feature. So when we hit our plateau in Beanstalk, Chris and I got we were bad place emotionally because up until that point, we were just building features. And so, like, you can't correlate how I'm gonna get out of this with, like, building features. Like, that's it just doesn't work. Right?
Speaker 2:Like, I everyone's like, well, how do you get out of this? I don't know. Like, build another feature? I obviously know that's not gonna help.
Speaker 1:Mhmm.
Speaker 2:But when you don't have control over the actual way you are growing Mhmm. It's a really scary place. Now just being more in control is really helping.
Speaker 1:Wow. That's and you've already kind of commented on this, but I just wanna ask you again. Because so much of the problem is when you're in a plateau is just having an imagination for what's possible. So what was it? Was it just reading traction that helped or was it, were there other things that gave you an imagination for what was possible that made you feel like, Okay, can there is another step.
Speaker 1:Like, I often feel like folks are just like, they're in a plateau. They know they need to grow. They know they need to, you know, increase their profit margins or whatever, but they just can't see anything above them. There's, it's just black. So how did you, when you were in that emotional distress, were there some things you did to calm yourselves down, to get in a place where you could figure that out?
Speaker 1:Did you have advisors that were, like, you know, helping lead the way? What was it that got you out of the darkness there?
Speaker 2:The first thing that I think really got us out of the darkness was after Well, a very practical sense, Chris took a month off work when I put on with his dad. I mean, was 2010. This is before Traction. This is just last year. And then no.
Speaker 2:02/2012. '12. '10. '10. 2012.
Speaker 2:And I guess I'm trying to think. So that helped from a physical standpoint, emotional standpoint. I think what really helped was at some point, we have a lot of friends in the industry who run businesses much bigger than ours, that we're able to talk to. And There was a realization at some point, after all this was happening somewhere in 'thirteen, where we were like, why are we doing this? We had to ask ourselves the question, why are we running a business?
Speaker 2:Why? And then when you realize that you don't have to grow for the sake of growing, that you're running a business for a lot of reasons, and then you're like, okay, well why do we wanna grow? Right? And then there was this very clear, like, we wanna grow to stay competitive to make sure the team grows, so we can get All those reasons we wanted to run a business were going to be a result of getting out of this plateau. However, you know, when I say plateau, like Beanstalk plateaued from a growth standpoint, or started to plateau, like slowed, never like actually, but you know what I mean?
Speaker 2:Like basically plateaued. And it was the largest product. We our our decision out of it was not to actually invest in Beanstalk, but it was as a whole, like, WildBit was plateauing because Beanstalk was plateauing. But we stood back and said, what is WildBit for? Why do we exist?
Speaker 2:What are we doing this for? Mhmm. And then I was like, okay. Got it. I get what we have to do now.
Speaker 2:Let's look at all of our pieces. What do we do with this? What do we do with that? And then slowly of weaned ourselves out of the darkness. Yeah.
Speaker 2:No, it was a scary time.
Speaker 1:Yeah, it's so funny to see the different stages because, again, I think in the beginning, you're just trying to build something that matters, that resonates, that brings in some revenue. And then you get to the point of growth and hopefully profitability. And then there's, you know, a plateau there and then you've got to figure it out again. Depending on your stage, you know, if you're just starting out, you know, you're, you're the things you're wrestling with are way different than what you might be wrestling with over here. Although what's interesting is the trend in terms of how people kind of level up at each of those stages always seems to come down to personal health relationships, and then eventually answering the bigger question, which is why are we doing this?
Speaker 1:So like at the beginning, I think for me personally, why why did I start, you know, building products and going independent? It's because I didn't wanna work for anyone anymore. So that was just like a a really kinda short term, like, don't wanna work for anyone anymore. I wanna live in a ski town. Okay.
Speaker 1:And now you've achieved it, but now I have to say, okay. Well, I've achieved that. What is what's next? Like, why am I doing this? Am I just doing it for you know, what what's the bigger thing?
Speaker 1:And so it seems like the answer for you folks is that you just love your team. Like, want to support the team, want to pay them good salaries, And it sounds like you do a lot with the team. This isn't a normal disconnected workplace. My sense from knowing people that work at WildBet is that it's a community. There's a lot of life sharing going on there.
Speaker 2:Yeah. That Yes. I mean, call ourselves a family. I know we're not supposed to do that. We got lucky.
Speaker 2:I mean, WildBit didn't come together to your point around a product, right? So there's this like big difference, I think, when you're like a founder or two people and you're like, I have this idea, right? And you're like, okay, now you're rallying, you exist right now because of this idea that's your glue. Then you add more people who you've sold on this product idea, right? Because that's what they're there to do.
Speaker 2:And so like slowly that balloons and it's a product that holds all of it in the center. And so if that, and a lot of times the products in the business are the same thing, right? So it's like this one thing that holds it. So if that fails, the thing falls apart. But wild, because it didn't start with a single product, the glue is wild, not any product.
Speaker 2:And so when Chris and I, I mean, like our reasons for running a business are simple, right? Like, obviously we wanna make money, right? Like we want our financial freedom for all those things. We wanna do things our way. We wanna be in control of our future.
Speaker 2:We wanna be have fun and like, like what we do, right? And what we realized was like, to do all of that, we needed to build a company that we were really proud of. And the only way I know how to build a company is to make sure that it supports the team. It supports the human beings in it, right? Because the business is not real, right?
Speaker 2:Like we just invented this thing. I call it the beast. And so like, if the beast is like trying to constantly convince you that it is real and that it's important that you're supposed to follow it, but in reality, it's not real. The only thing that's real is the humans, right? So the who are the humans?
Speaker 2:It's me and my team. So then everything in the world I do has to be for those humans, Right? And so like, and then that becomes a very simple, like it's very easy to draw the line because I'm like, okay, well, the team's the one that actually works with the customer, not me. So then I do everything in my power to create this entire support system them, right? Make them happy, secure, safe, all of those things, so that they go confidently charging forward and making sure the customer is happy as possible.
Speaker 1:Yeah. So
Speaker 2:I focus everything on the team. The team will focus on the customer. They have to put the customer first, but I have to put my team first. And that's it. And that's it.
Speaker 2:Right? So that's like everything. Yeah. Not that's my happy place. I don't know.
Speaker 2:I have That's my secret sauce. I don't know how or or my invincibility. Right? Is that a word? That's what'll keep us invincible because with them, can build anything.
Speaker 2:They can all implode. And WildBit will rally. We will sit down at the table and we will figure this shit out and we will build another product. But like that's what'll keep it around forever.
Speaker 1:Yeah. I just find that perspective so refreshing. Thanks a lot for your time, Natalie. We're going to, we've been talking for an hour, so I think it's a good time to end it. But just on that point, I just the, it is very counter to conventional wisdom of product first, product first, product first.
Speaker 1:Some teams are process first, process first, process first. Some teams are technology first. I just love that you guys are people first. I just think that's an interesting model that people should consider. Maybe you could start with a group of people and do things, you know, really make that sure that group of people is awesome.
Speaker 1:And then they can do anything. They can figure out the product and the process themselves. Yeah, so I just, I'm thankful that you're able to kind of share that with us. I think that's really, really awesome.
Speaker 2:Thanks.
Speaker 1:So that is my conversation with Natalie. My thanks to her for sharing her collective wisdom from all of those years in the trenches. Go check out what they're doing at wildbit.com. And if you need transactional emails or if you are looking for something like Beanstalk, they have incredible products and also great customer support. I'd also say if you're looking for a job, there's no better company to apply for.
Speaker 1:They don't open up positions that often, but when they do, it's worth applying. Alright, again, megamaker.co/profit. Go sign up there to get the case studies, and I will see you next time.
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