I am bad at marketing so it is good if the name of the company [Less Annoying CRM] describes the whole value proposition. [0:52]
[Courtland, the host]: The CRM space is not new. It is not unique. There are tons of companies working on various types of CRMs. Yet you have managed to do very well for yourselves. You have bootstrapped to 22,000 paying customers at $10 a month. You’ve done something well in a well trodden area - a lot of people think you can’t get started unless you have a totally unique idea. [1:28]
There is a risk you take by going into an industry that has a lot of competition. That risk is you can’t build a better mousetrap. But there is a different type of risk if you go into something brand new— and that is no one even wants it. [2:48]
If I have to pick between those two risks— I trust myself to build a better mousetrap more than I do to create a market that never existed before. [2:56]
One of the great things about the CRM industry is it is not a winner take all market. [3:45]
[What he learned from working at a failed startup that raised venture capital, grew fast and fired 90% of the employees]: If I ever start my own business I am bootstrapping. [8:01]
How do you evaluate an idea to know if it is a good one? It really helps to have constraints. If you have the whole world of options available it is almost impossible to pick something. One of my constraints was bootstrapping. There are a lot of businesses that can’t work bootstrapping. [10:32]
Know your weaknesses. I know I can’t do sales. This is why we go after small businesses instead of enterprise. [12:48]
In my personal experience the best way to come up with an idea is get a job at a company that is dysfunctional and one where software could make it more functional. See it, experience it in person, and fix it. That is what happened for me. I had that experience with a CRM from my previous job. . .At my previous job they put me in charge of setting up Salesforce. I spent a month on it. I have a degree in Computer Science. I got nowhere. This made me think: What does a company do that doesn’t have me? There are a lot of companies with no computer scientists. What do they do? [15:31]
At the end of the day it is a CRUD app. It is a spreadsheet with a slightly better user interface on top of it. No one wakes up dreaming of using their CRM. They don’t use it for fun. I think the business world took too much marketing from the social media and video game world. Products that people enjoy using. We don’t. This is a tool. It is going to do what the tool is supposed to do and then get out of your way. [22:22]
How long did it take before you could fully support yourself from Less Annoying CRM’s revenue and you could quit your jobs? Two years after launch we were making $5,000 in monthly recurring revenue. Instead of quitting our jobs we hired someone to work on the business full time. [27:00]
[Why do this?] We tried to figure out what moves the product ahead the fastest. We decided having a full time customer service person would free up more of my time for product. [This, is turn, would move the product ahead the fastest] [28:00]
We had a 2 year stretch where our growth just tanked. We didn’t shrink but growth stopped. We just weathered the storm and got back on track later. . .This year our growth has not been great. We were shooting for 30% growth. We are only going to grow 20%. That is still $500,000 in new annual recurring revenue. I’m not mad about that. [33:00]
I think of every marketing channel as planting seeds. Then the seeds grow into a network of people through word of mouth. Our main way to plant seeds was Adwords. Word of mouth has always been our main channel beyond that. [38:45]
One lesson I have learned is no marketing channel scales. Even a marketing channel that is working will stop working eventually. [39:10]
The one thing that is not temporary is word of mouth. Not only is it not temporary but it scales with the size of your customer base. Whereas everything else doesn’t. [40:00]
Courtland: One idea that stuck out from reading Zero to One. As a business you really don’t like competition. That doesn’t mean don’t enter a crowded market. It means you really need to differentiate yourself from other businesses. You need something where no-one else can really compete with you. [54:10]
I try to imagine if a private equity firm bought my company and wanted to turn it into a cash cow—what would they do? All the things they would do is our competitive advantage. They’d lay off most of the customer service people, they’d raise prices, they’d stop offering phone support. All these things—which no other company is willing to do—is our advantage. Let’s keep doing those. [55:55]
Patience is something we have that no one else has. If you have word of mouth growth all you have to do is wait. If you have investors you can’t wait. I love this job. I am making plenty of money personally so if it takes the rest of my career to get where we want to be then so be it. [57:20]
If anyone is interested in this [building businesses] the only thing you can do is do something. Then you will realize how dumb you were and you will do it better next time. Sitting around and waiting is never the right answer. [1:09:15]
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