AMA: I built a software business to 40 employees, then sold it (and I don't know how to code).
I have experience at just about every part of the software company lifecycle. From launch, to security scares, year-over-year rev. growth, hiring, inbound marketing strategies, selling using investment bankers, etc.
Just don't ask me anything about coding. I don't know anything about it. 😅
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How do you get clients?
Do you have a partnership program (I.e. with design studios)?
Top 3 lessons learned?
Got initial clients through content marketing and word of mouth because support was A+ and that made people really happy (that's an important takeaway: people will care less about flaws in your software if your support is responsive & friendly). The blog ended up having 1000s of blog posts so that pulled in a lot of people. Paid ads did too (but those came later). Sponsorships did a little. Having a presence on YouTube helped as well.
No partnership programs, but an affiliate program. That was pretty lucrative for a while. At one point, 7% of all sales were referrals from affiliates. I wanted that number to stay below 10% (it always did) because keeping it lower meant having more control over customer acquisition.
Top lessons learned:
Don't hire someone to help them out. I hired the spouse of one of my employees, and that did not go well at all.
Hire before you are ready. I waited far too long to get out of the day-to-day activities. Once I got out of it, I could think creatively and network more effectively.
Put in work to create a positive team environment, even in a remote team setting. I enjoyed employee loyalty for a long time because of the fun but hardworking culture. Treating people like people, giving them freedom of their time.
Stay the course. Be vision focused and believe in it. Tell people why you are the best and deliver on that promise. You have to push, push, push to stay competitive and continue to stay relevant. Initially, my company was "new and sexy". When it survived past 5yrs, it was old news and I had to work hard to keep it fresh!
Hi Justin !
I'm the former Co-Founder of (https://bounteous.com) Canada's largest eComm agency, which we sold to PE. Now I'm the founder of https://www.getoutput.io/ - where we help business owners get the Perfect Sale of their business. Basically we help business owners - sell, get financing, or raise capital - for their business.
Two questions.
@MrJustinF maybe some confirmation bias ! but I agree, we had the same experience selling. Also part of the reason we started https://getoutput.io
The Investment Bankers had their own very refined process. Likely we would need to modify and/or find additional info anyway. We had several systems unique to the business. It would feel like double-work trying to do something for the service, then modifying and doing it again for the firm I contracted for the sale.
Just my personal take.
If I understand correctly, did most of your marketing in the early days came from blogging and community?
My team's building a API/http request gateway that gets businesspeople & devs excited through meetings, but we're discussing internally how to gather users/beta testers who aren't personal connections.
Yes. Blogging for years. It wasn't until I saw competitors bidding on my brand name in Google that I decided to start with paid advertising. Even still, the company published 3 blog posts per week like clockwork.
Hey Justin,
Congrats for your success!
Would it be possible to get the 40-page prospectus you prepared? Or is it top-secret already? :)
Thanks,
Roland
Thanks Roland! No, I can't share it due to nondisclosure and the fact that the business isn't mine anymore.
Congrats on the success!
How did you come up with the product roadmap / iterate based on user feedback in order to retain users?
How did the eventual sale come about? Acquirer reached out or did you reach out?
Roadmap was a combination of intuition and then keeping tabs on commonly requested tasks. I had a suggestion board for a bit where people could submit and vote on desired features. That was pretty helpful in years 1-3 to be honest. I eventually knocked out all of the low-hanging fruit. The requests got more complex (or just weird) over time, so I had to be selective on what made the most sense. Eventually, I scrapped that submission board because it was just too chaotic.
The sale took nearly a year. I hired investment bankers and went through the process (which they handled most of the heavy lifting). The rough timeline was as follows:
3mo preparing financials and data
2mo sending out one-page prospectus to get interest from 500 investment firms, those that responded got full 40pg brochure on company
1mo giving management presentations to really interested parties.
1mo to receive offers from those parties
45 days due diligence with selected buyer, but they backed out for internal reasons at the 11th hour.
45 days due diligence with new buyer and then closed.
Process went from October 2020 - September 2021. It was incredibly difficult at that time to run the business and go through this process at the same time.
Well done! How did you know how to hire good technical people?
Trial and error, and luck. What I valued the most was good communication. I would look for software products that had mild success and check out the support response from the dev. If he/she was responsive and friendly, I would offer them a test project (roughly 50% would take me up on it). Then I'd offer them a contract position if they were good. My thinking was they needed extra income since their product wasn't quite at the level they wanted yet. It worked well.
Regarding luck, as my network and brand both grew, I was able to get access to devs who were looking for something new. I hired an agency to do some small project work, and their own contract dev left. I reached out to offer him a job at that time, and he jumped on board as the lead dev, working his way up to CTO.
I think people overlook the networking part. That's how you find talent. Even now, I just tap my network and always get quality recommendations for people (as I have done with GapScout already).
I'm working on a staff retention tool and to make them happier at work, so would you have cared about retention and staff happiness?
What would have been your blockers to working on retaining staff with software?
Cool concept, that's definitely needed in a remote workplace. Having workplace culture when you're a remote team is hard to do. I was able to create this by getting everyone together, in person, 2-3 times per year at conferences. I'd host a team dinner, and we'd all just get a chance to see each other and talk in person. Naturally, this becomes a bigger challenge with more people. When the company was under 15ppl, creating a tight, friendly environment was easy. As it grew, it became less like that and people did leave for other opportunities from time-to-time.
Interesting, how did you get the conversations going between the people at the team dinners? This is something that this software helps with.
No, we were all friends b/c we interacted all the time in slack. Convos were easy going.
Could you expand on some growth/marketing hacks you used to get brand awareness?
How did you come up with your Saas idea; from real world pain while at a company or an idea you simply just thought of?
For awareness, I blogged a lot. Like 10mo worth of it while I found developers for version 1.0. It's all I could do. My articles were just in my niche, and overtime became more useful (as I got better at blogging). Naturally, there was an option for people to sign-up to be notified when the software was ready to be released. I then did this little strategy which helped me to recoup my initial development investment and put me into profit from the very first day.
The idea was based on spotting an opportunity, but related to what I was doing at the time. I was an e-learning consultant for large companies, helping them to implement large scale learning programs. I worked with many learning management systems (LMS) and they were all so clunky. I saw an opportunity to bring an LMS to the everyday person or business. This was before Teachable (coincidentally, Ankur, the guy who started Teachable... spammed my customers when he was starting. We had a conversation, and it didn't go well haha). I should clarify too that this was on WordPress, so billing was yearly, not monthly, and not a traditional "SaaS".
what things are important to grow a software business?
The ability to think OUTWARD and not just pick away at your own software all the time. Marketing and brand positioning are too often overlooked. I was constantly looking into my market to get ideas and see what the people wanted (I did this by looking into reviews, which is where I got the idea for my new software company, GapScout).
Start content marketing and never stop (blogging, YouTube, podcast, etc.) and supplement with paid ads when the time is right. I did both, and never stopped on that end. As a smaller business, you will always be more nimble in your marketing capabilities. Take advantage of that. Interview customers about their success with your product and distribute that content to your other customers, for example.
If you're able to create a community, even better. People buy into communities. My software company had a Facebook Group of 25K people or something like that. This was huge for the business because people would stick with the software because they had the community, whereas competitors did not. I'm not saying it has to be a FB group though (I actually despise them).
Did you need to hire developers at the start? If so, how did you fund that?
Yes, I hired an agency. I had a corporate job and saved for it. While saving, I did other things (like marketing via blog posts). I blogged a lot and built an email list during that time.
Great! Would be very interested in knowing your strategy behind blogging and email list building.
Blogging was different at the beginning of that business. It was normal to have posts that were only 500 words or so, and you didn't need to focus on a keyword as much. Over time, I had a content strategist who was a lot more intentional with the articles created. The article length went to minimum 1000 words and keywords, inter-linking of articles, external linking, images, etc. had more intention and were in line with what "Google likes" (if anyone can actually claim that).
I'm using these same strategies now with GapScout's blog. In the first 30 days, the blog has brought in 2K unique visitors. So, the strategy still works, though is definitely harder than before.
Impressive. Did you take over the code base with your own in-house Engineers in time?
In time, yes. But for 2yrs I used a dev who lived in Nepal, so it was pretty cost-effective (and he was good).
Still have their contact info?
He no longer does freelance work, has his own product line and employees.
Awesome, thanks for sharing.
Hey JustinMF!
Congrats on successfully exiting your business!
In the first year, how often did you pivot your audience? What were the reasons for pivoting if so?
Also, how did you expand your customers beyond the initial group you were building for (which may have changed depending on your pivots)?
Thanks!
Austin
Hey Austin, thanks!
I didn't pivot much because I sorta knew the audience from the beginning. Back in 2012/2013, creating online courses was sorta impossible, so everyone would use membership solutions but those were clunky too (piecing together the course materials). I came from the e-learning space, so I understood the needs of entrepreneurs, schools, and professional educators.
While it wasn't a "pivot", a number of years later I expanded the net to market to developers/designers/agencies so that they would choose my software for their own clients (that worked well).