S2E18 – How to become profitable as a bootstrapped SaaS? With Melissa Kwan

How to become profitable as a bootstrapped SaaS.

Building a successful startup, especially in the competitive world of B2B SaaS, is a challenging task. It requires dedication, strategic decision-making, and a focus on achieving profitability. Achieving profitability in a startup requires careful planning, customer focus, revenue-driven decisions, and adaptability.

In this podcast episode on the Grow Your B2B SaaS, host Joran Hofman interviews Melissa Kwan, a successful entrepreneur bootstrapping her third startup, E-Webinar. Melissa shares her expertise on how bootstrapped founders can achieve profitability and why they must do so. Melissa emphasizes that becoming profitable allows founders to have financial stability, pay their team, and have the freedom to focus on their own happiness and personal goals. 

Melissa also discusses her anti-VC stance, explaining that she prioritizes a particular lifestyle over financial gain and prefers to build a company where life comes first. She advocates for founders to enjoy the journey and find fulfillment along the way rather than solely working towards a big exit or financial success in the future. Melissa advises founders to focus on revenue generation and make decisions based on what will increase revenue, rather than solely focusing on product features or improvements. By thinking about their product as a revenue-generating machine, founders can ensure the sustainability and profitability of their business.

Melissa’s insights shed light on the importance of profitability for bootstrap founders and the potential for a fulfilling and balanced lifestyle while building a startup. She encourages founders to prioritize their happiness and well-being while also considering revenue generation and making informed decisions for the growth of their businesses.

We discuss strategies to increase revenue and profitability, such as focusing on add-ons and catering to power users. Melissa highlights the need to learn and implement marketing strategies, such as SEO and content generation, and emphasizes the challenges of transitioning from a sales-driven approach to a marketing-led one. 

She also shares her approach to building an audience on LinkedIn by crafting thoughtful, longer-form content. She provides insights into pricing strategies, revenue-driven decision-making, cost consciousness, and the importance of community and work-life balance. 

Key Takeaways

The Benefits of Profitability

Becoming profitable in a B2B SaaS startup offers financial stability and the freedom to shape your lifestyle. Achieving comfortable profitability allows you to focus on self-care and explore personal interests outside of work. Melissa Kwan, an experienced entrepreneur, highlights the importance of financial stability and mental freedom in creating a balanced life.

Pursuing a Lifestyle Choice

Melissa emphasizes the lifestyle-driven approach to capital in bootstrapping. By building a profitable business, founders can prioritize happiness, work remotely, and invest in their well-being. This philosophy ensures founders have the freedom to pursue their passions and enjoy life’s experiences.

The Journey to Profitability

Melissa emphasizes the importance of building an exceptional product that solves customers’ pain points. Bootstrappers focus on profitability by making revenue-driven decisions that enhance marketability and customer satisfaction. By optimizing product features, pricing strategies, and add-ons, entrepreneurs can drive sustainable profitability.

The Importance of Bootstrapping

Bootstrapping allows founders to enjoy profitability benefits without solely focusing on selling their company. Melissa highlights the significance of finding joy in the journey itself. By embracing a bootstrapping mindset, founders can experience wealth along the way, both financially and personally.

Strategies for Bootstrapping Success

In another perspective, practical steps for bootstrapping success include focusing on revenue-boosting activities, tailoring pricing to customer segments, acquiring existing businesses, emphasizing quality and reliability, and adopting effective marketing strategies. These strategies increase the chances of achieving profitability and sustainable growth.

Overall, this episode covers various topics, including profitability, revenue generation, marketing strategies, content generation, pricing strategies, and work-life balance. It offers valuable insights and advice for bootstrap founders and provides a comprehensive overview of Melissa Kwan’s experiences and perspectives as a successful entrepreneur.

Key Timecodes 

• (0:29) Show and guest intro
• (1:16) Why you should listen to Melissa Kwan
• (1:34) Why is it so important for bootstrap founders to become profitable?
• (4:26)  Why didn’t Melissa Kwan go for an investment with eWebinar?
• (8:31)  Why building a startup to sell shouldn’t be your set end goal.
• (10:03) Common mistakes startups founders make while bootstrapping.
• (12:17) what are things which will increase revenue
• (13:54)  Melissa’s process and strategy towards profitability
• (18:06) The common challenges and obstacles companies face while bootstrapping 
• (22:08) Where and when to post content
• (25:35) Why Melissa doubled her prices and reduced support tickets by 70%
• (29:14) How to grow towards 10K MRR
• (30:58) How to grow towards 10 million ARR
• (33:31) Melissa’s crucial advice to SaaS founders

Transcription

[00:00:00.000] – Intro

Welcome to Growing a B2B SaaS. On this show, you’ll get actionable and usable advice. You’ll hear about all aspects of growing a business to a business software company, customer success, sales, funding, bootstrapping, exits, scaling everything you need to know about growing a startup, and you’ll get it from someone who’s going through the same journey. Now your host, Joran Hofman.

[00:00:28.790] – Joran

Welcome back to the Grow Your B2B SaaS podcast, where we discuss all topics on how to grow your B2B SaaS no matter in which stage you’re in. Becoming profitable as a SaaS is a big milestone, especially when you’re being bootstrap. Does it become easier when you’re bootstrapping your third startup? I don’t know, but we’re going to find out today. My guest is Melissa Kwan. She’s currently bootstrapping her third startup, E-Webinar, is profitable and just reached 1.5 million ARR. She sold one SaaS already. Next to running E-Webinar, she has her own podcast, which is called Profit Led, where she discusses proven growth strategies for bootstrap entrepreneurs. I can’t think of a better person to talk about how bootstrap founders are able to become profitable. Welcome to the show, Melissa.

[00:01:12.940] – Melissa

Thanks so much for having me.

[00:01:14.180] – Joran

I’m just going to dive right in. Why should people listen to you today?

[00:01:18.910] – Melissa

Number one, because I’m on your show and I’m here. I guess the second thing is if we’re talking about SaaS and growing companies, especially with very little resources, I feel like after 13 years, I’m an expert in that, having done three, I made a lot of mistakes as well.

[00:01:33.190] – Joran

Wow, 13 years. We’re going to talk about how to become profitable. Profitable is, of course, nice because of the money aspect. But why else is it so important for bootstrap founders to become profitable?

[00:01:44.120] – Melissa

I think the obvious is everyone wants to be profitable because they want to pay their team. You’re not dependent on third person for the success of your company. Of course, financially, that’s the most important goal. But having gone through this three times now and really hitting, I want to say, comfortable profitability. You’re not just covering the bills, right? How I define that is you’re paying all your expenses and all the main stakeholders, including the co-founders, are getting a livable salary. You’re not in survival mode. And having lived through this twice now, because I did hit that one for my second start of Spatio as well, I noticed that the biggest benefit I’ve gotten is that it frees up my mind to take care of myself and ask myself what it is I actually want. Because when you’re in survival mode, focusing on bills, trying to get to the next partnership or next campaign so you can make more money to pay more bills and not really living well, not being able to go to a restaurant with your friends when you’re in your 30s or your 40s, that I think mentally is really tough. So unless you get out of that, you really don’t have the luxury to ask yourself, What it is that I want that makes me happy?

[00:02:55.150] – Melissa

And having lived through that twice, ironically, I’ve come up with the same conclusion, which is, I want more adventure in my life. So in my last startup, I left New York to travel full-time after we hit profitability, did that for three years, eventually fell in love with Amsterdam, which is where we have our home now, but been here for four years now. Now that we’ve also hit comfortable profitability, I’m finding myself also wanting a new adventure, really missing the big city because really, David and I are big city peoples. In about a month, we’re going to go to Bangkok and make that our winter base, but also, I guess, more of a second home.

[00:03:32.880] – Joran

Yeah. It’s funny that you mentioned it, comfortable profitability because now you’re getting comfort that you’re looking for a new challenge personally. You got the challenges fixed within the company, and now you’re looking for a bit more chaos outside of the company.

[00:03:46.550] – Melissa

Yeah. I guess what I really realize is when work was so chaotic, I really needed every other aspect of my life to be stable. I can’t have any more unpredictability in my life. But as work stabilizes, then I’m craving more adventure and more chaos and things that are different because ultimately, I think founders are founders because they like taking risks and meeting new people and new challenges and travelings. It’s been interesting to live through that twice and just getting to know myself more in the process.

[00:04:21.370] – Joran

Nice. You mentioned, nick, a couple of times already you went through it twice. What is the reason, for example, you didn’t go for an investment with eWebinar? Because you already know how difficult it is to bootstrap a company. I think some people even call you anti-VC. What’s the reason for that?

[00:04:38.180] – Melissa

I’m definitely anti-VC. I think that a lot of people think about capital as a financial decision, but I think about capital as a lifestyle choice. When you take VC money, you are committing to a certain outcome of the company, a certain growth rate that dictates the lifestyle you’re able to live. When you take VC money, you can’t live the life I live. I just went to Turkey for 10 days, I worked very little. My team knows that. I’m there for my customers. I’m there for my team. But I’m not there eight hours a day because I actually don’t have a growth rate to chase. I don’t have a new round that I need to raise. Just from 10 years or plus of seeing my venture-backed friends and the life that they lead where everything is their company. Some people really love that, but I don’t. I’m really not built for that. I want to build a company where life comes first, where I get to go to all the weddings, all the parties that I’m invited to, where I don’t have to focus on a growth rate, where I can have everybody fully remote, where we work creatively, not more productively, where we work four days a week instead of five.

[00:05:48.300] – Melissa

That’s just the lifestyle that I opt for. I want to put happiness in front of revenue. I think when you take venture capital, that’s just not a lifestyle that you’re able to have without somebody breathing down your neck for the entirety of your company because it’s not, Oh, I don’t like this life, so I’m going to return your money. It just doesn’t work like that.

[00:06:10.470] – Joran

No, exactly. They were always wanting to have more basically. I like the lifestyle, but I guess in the early days, did you live the exact same lifestyle? So before you became profitable, was it the exact same lifestyle? Or does it happen after you became profitable?

[00:06:27.020] – Melissa

I think there’s always an element of it, right? Because even though before we become profitable, I’m not chasing a growth rate for the purpose of raising capital. There is like this zero cash date. There’s a day where you run out of money. So you need to chase revenue, but in a different way. You’re chasing revenue by building an incredible product that your customers cannot live without. You’re not spending money on ads to buy revenue, so you pretend to have revenue, and then you can raise the next round, right? What we care about is profit, not revenue. I think those are very different things, and there’s always an element of that. What I’m living right now is, I would say, very close to my ultimate goal of my lifestyle. There are elements of, I don’t set an alarm clock because I’m a night person. I never get up in the morning. I will stay up till 3:00 to 4:00 every single night, but I don’t get up till anywhere between 10:00 and noon. There are elements of that, and I always travel on the whim whenever I want to. We give our team the same benefits as well as long as the customer comes first.

[00:07:36.910] – Melissa

But I think the freedom that I have now is not an all or nothing. As you become more comfortable in your business, as you become closer to break even and then comfortably profitable, you can add more freedom in your life because you are really no longer chasing the zero cash day. Once you’re profitable, your company can just keep running, and then you can decide where you want to invest. And because we outsource everything, we’re able to hire people based on skills. So we’re able to hire in countries and in regions where we can actually afford to pay someone market rate. So we can choose to grow slowly but also be able to decide where we want to invest next.

[00:08:23.990] – Joran

Yeah. And growing slowly means like building the product indeed what your clients want. I think that’s the most important thing here you mentioned as well. And regarding, I guess, how I see a lot of SaaS founders, they work towards this end goal, right? They want to sell their company, but you’re actually already having the lifestyle you want before even think about selling the company, most likely.

[00:08:43.640] – Melissa

Yeah, I think that’s the most important. The whole building startup thing is so hard that you got to find a way to enjoy yourself. Some people love the chase and love the raising money and pitching investors and growing quickly, and they want to go for that IPO or $100 million exit, and that really excites them. But for me, the chase and working a lot doesn’t excite me. There are just so many things in my life that I want to do that is not work related. Really, my startup is a means for me to do things that I really enjoy: spending time with friends and family, traveling, sleeping in, watching a lot of TV, things like that. But I can’t not work at all. I don’t want to feel unproductive. I’m still pretty young. So how great is it that you’re not just going to build the startup so one day you can be rich? What if you can be wealthy along the way for the next 10 years and not just suffering and working a lot so that you can have that one big exit that you don’t know if you’re going to have? And that’s the thing that I advocate for with other founders as well, is just know the game that you’re playing.

[00:09:54.850] – Melissa

And just know that if you bootstrap your startup and you do become profitable, there are so many more things that you can do with your life right now and not just 5-10 years later.

[00:10:03.820] – Joran

Yeah, and I think that’s one of the most common mistakes other startups make while bootstrapping. So going for that one-day mentality, as you call it. Any other mistakes other startups founders make while bootstrapping?

[00:10:15.300] – Melissa

Yeah, I think that I’m very fortunate in the sense that I’ve always been a salesperson. Way before I started companies, I was always in sales, biz dev, inside sales, being cold calls. So in my career, I was put in a lot of sales trainings, but also surrounded by salespeople and read a lot of sales related books. I have a good foundation of what it means to be able to sell something and to be profit-driven and revenue-driven. A lot of founders, and not just bootstrap founders, but I think it matters more for bootstrap founders because you need that profitability in order to keep sustaining yourself is they focus too much on the product and not on the revenue. What I mean is, yes, of course, there are many different ways that you can build your product and there are many different features that you can put into it, but there are a certain set of things you can put in your product or service that makes it sell better or that make people more sticky or make them activate faster. So how we make decisions on our wish list and what we work on this quarter is, what are the things that are going to help us increase revenue or increase activation and lower churn?

[00:11:23.950] – Melissa

So every decision we make is revenue-driven, and I don’t think enough founders make that a priority. There are lots of things that we can put in our product to make it cooler and better, but maybe not make people pay for it more. So we started adding add-ons and putting limitations on our product so that we can make more money from the same set of users, but maybe they’re power users. So maybe they’re paying for premium integrations or to up their limit of number of attendees in their webinar. I think that’s probably one of the biggest mistakes is they’re not thinking about their product as a revenue-generating machine that it needs to be and making decisions based on revenue.

[00:12:05.780] – Joran

Yeah, and I think in Season 1, we have Patrick Kembal, who really explained also the analytics behind charging for add-ons or charging for certain parts of your app. For people, I would definitely recommend listening to that as well. Regarding the thing you just mentioned, what are things which will increase revenue? Real practical. So when you look at your roadmap, when you look at the list of things to do, you will probably just go through them and prioritize them based on the order of how much can it actually get to the goal, increasing revenue, decreasing churn, or increasing activation.

[00:12:36.490] – Melissa

Yeah. And for the past half year, we’ve been working a lot on add-ons as well. So really looking at our power users and how much they use the product versus everybody else. And the thing is, you don’t need everybody to buy an add-on, right? If 2-5 % of your customers buy an add-on, like even for a cheap product like us, our product starts at 100 bucks and then our add-ons range anywhere from 29-179, you’re still boosting your revenue 5-10,000 every month. And if you’re outsourcing like us, that’s 1-2 people depending on seniority that you can add on to your team that can help you build faster or help you do some support or things like that. And we also price add-ons differently according to the type of customer. So when I talk about premium integration, it’s like a direct Marketo integration or direct Salesforce integration. The people that are using Salesforce and Marketo are paying 100,000 a year for that CRM. So it makes sense that add-on is more than some other ones, right? So this is the internal conversations we have on when we try to decide what we prioritize.

[00:13:45.920] – Joran

I think always the Salesforce integrations are always the most expensive in any platform, I think. And always, almost you have to pay for them. It is interesting. Let’s say you have to bootstrap your completely new startup. What would be your process slash strategy towards profitability? What steps would you take?

[00:14:04.770] – Melissa

If I were to do this again, I would not start from scratch. So number one, I wouldn’t start from scratch because starting from scratch means that from branding to first line of code, that’s starting from scratch. If you know what you’re doing, which I knew what I was doing when I started your webinar, it takes a minimum of one and a half, but probably two years before you get out the first version of your product. Like if you want to do it properly. For E-Webinar, it took us two years before the first person even saw our product. Even the branding and coming up with the design of the website and all this, that took six months. Every single page of the app that took six months. So I would go to something like acquire. Com and look at what people are already doing, maybe something in my expertise or something that I have interest with, and I would buy something that is already generating some revenue. It doesn’t have to be a lot. It could be like a few thousand bucks a month, but something that’s already built that we can improve on because I want to cut down my time to market by one or two years.

[00:15:09.240] – Melissa

That’s the number one thing I would do. Then I would make sure that opportunity, that business is not a Blue Ocean opportunity. It’s not something brand new, but it’s not so commoditized that it’s a Red Ocean. It’s Purple Ocean, which is not a popular term, but it does exist. Purple Ocean just means that you’re taking a proven business model into maybe a vertical, like an untouched vertical, but at least that someone’s willing to pay for this. So that also cuts down time to sale. Then I would do what I do now, which is I’m super cost conscious, which is not the same as cheap. Cheap means you’re paying the least for everything, but you pay peanuts, you get monkeys. If you pay cheap, you get something cheap. We’re always looking to get the maximum ROI per dollar. Sometimes we pay a designer a $1,000 a day, but that person used to be the design lead for Apple. So that person completes things a lot faster and is the best in that category. So we’re willing to pay a lot for something that is super high quality because we can’t get that somewhere else. And then the next thing is we would focus always on building a super high quality product, meaning we don’t cut corners.

[00:16:20.870] – Melissa

We always put in the time to rebuild something if we need to, because only through quality will your customers stay if you don’t have brand name. So someone like HubSpot or Google or Salesforce, they can come up with a feature that’s half-baked. But people are going to trust them. They’re going to stick with them because they’re Salesforce. When you’re a small startup, you can only compete on integrity. And integrity is not just how well you treat your customers, it’s also the quality of product integrity that you give them so that your customers know that you’re reliable. And then, of course, we would I would constantly listen to customer feedback because as you’re building up a business, the only reason customers can’t live without you is you’re constantly pumping out new improvements that they can tie into their business or in their life. Then the last thing is, depending on whether you’re sales-led or product-led, I would just sell and market the heck out of it until you get to profitability. That would be my framework.

[00:17:23.560] – Joran

Nice. Okay, I’m going to see if I can summarize it, but basically go to a marketplace like Acquire. Com. We just had Andrew on the podcast, so listen to that one as well. Find a Purple Ocean, so not blue, not red. But I go in a proven business model in an untouched vertical, become cost-effective, so make sure you get max ROI out of the dollar. So don’t go to Fiverr maybe for a designer, but spend the money to a proper one. It’s going to be done right the first time, which goes into the next one. Build a quality product, be reliable, listen to customer feedback, and then market the heck out of it. I think it makes a lot of sense. I see a lot of things which we’re sometimes doing as you mentioned, or we might not have doing well. So we’re definitely going to make some changes internally to this one. It sounds easy indeed, but you probably ran into many challenges. Like any challenges, obstacles you face while bootstrapping now currently e-webinar, you can share and maybe also share how you overcome them.

[00:18:19.090] – Melissa

Yeah, I think the hardest thing about bootstrapping eWebinar is it’s the first time I’m building a product-led company. So my first company, it was supposed to be a product. We were bootstrap, so we were bootstrap. We said yes to everybody, and then it just became an agency. We just started building custom apps for real estate developers when it was supposed to be a real estate marketing app. And every deal was quite big, so we were able to sustain the team. The second company was also an enterprise app. Every deal was anywhere between $6,000 a year to 100,000. We didn’t have a lot of customers before we sold. We had 100 customers before we sold. But I hated building those companies because it was so much customer service. It was so much one-on-one sales, going to conferences, meeting people in person. There’s no free money. The more you pay, the more you maintain, and the more customizations you have, and then the more version of the app you’re keeping. Coming into eWebinar, I wanted something that was low-cost, self-serve, Mailchimp model. People come in, they try it, they can say if they want, or they can cancel.

[00:19:23.880] – Melissa

In doing that, I’m actually building the lifestyle that I want, which is no more conferences, no networking events, no phone support, no one-on-one sales calls. But it’s my first product-led company. I actually thought coming to this company that I knew exactly what I was doing because I’ve been in startups for 10 years. I know how to sell. Little did I know that to build a product-led company, it’s not sales-forward. It’s founder-led sales to get it started, but to grow, you need to know how to market. That was a huge realization that this is a marketing-led company and we have no idea how to market. Nobody on my team knows what marketing is. Todd, who’s my COO, had to learn SEO and content and keyword research on his own. So now we own that. We hired an SEO agency to teach him how to do what they do because we couldn’t engage someone. But we also didn’t want to put the fate of our company because SEO was going to be such a big part of revenue on a third party. So we wanted to own that. And for me, I had to learn how to write content, how to build an audience.

[00:20:38.290] – Melissa

What is content? And that’s why I write daily and now weekly on LinkedIn to build my audience, but also figure out how do you come up with creative partnerships so you can market each other? How do you get in people’s newsletters? How do you run a podcast? How do you get on other people’s podcasts? I didn’t know that content generation was going to be 90% of our time, which was really the biggest challenge and still a challenge because everything we do is new. We’ve never done it. And getting to the revenue that we’re at now is also a new milestone that I’ve never hit in the past. I would say the biggest challenge is like, every day is new. We’re just figuring it out as we go.

[00:21:18.460] – Joran

That’s nice because you mentioned what the beginning of a startup and still everything is new because you’re basically taking a completely different approach by doing a product at the company.

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[00:22:08.840] – Joran

I do see you a lot on LinkedIn. You just mentioned it between lips. As in first you said daily, but now you’re posting weekly. Did you change the interval?

[00:22:16.980] – Melissa

Yeah. I started posting a year and a half ago. I took Justin Walsh’s LinkedIn operating system course just to get a foundation of what this even is. I was seeing a lot of executives and founders and creators posting on LinkedIn and I didn’t know what they were doing. Then I was like, oh, wait, I think these people are actually building businesses out of it. I found this course, it wasn’t that expensive. I think it was like $200 or something. I started following Justin Walsh’s content and then understanding what the philosophy is behind building an audience, but specifically a LinkedIn audience. I think he now has built an audience on Twitter as well. But I realized that I was posting once a day, but I wasn’t getting a lot of engagement in the beginning, right? And then as I was building my audience, I was getting more and more engagement on a single post. But the problem is if you’re getting a lot of engagement on one post and you post the second one, it actually kills the one previous because LinkedIn gives more visibility to a new post. In starting in July, I was doing at least one viral post a week just by accident, like total fluke.

[00:23:28.810] – Melissa

And I was starting to post longer form content, not just instead of 100 words. I was maximizing every single word and treating every post as a thoughtful article. I was maximizing the 550 words that it was giving me. Then I had seven or eight viral posts in a row. But when you have a viral post, the engagement actually runs for 3-5 days. Now I actually either post Monday, Wednesday, or Tuesday, Thursday, just because I don’t want to kill the engagement of the previous one. Because if I do, I’m just wasting content. That’s why I switch from four to six times a week to like right now I’m doing two a week.

[00:24:10.900] – Joran

Yeah, makes sense. Especially probably at the beginning, you postit a lot. So then you identify what is working for you, what’s working for your audience, and then you can switch the interval, so you maximize it.

[00:24:23.240] – Melissa

Now that I’m actually writing such long-form content, it takes a long time. Previously, when I do, when I share, I always share my own stories and experience bootstrapping three companies. Previously, I would share short stories and advice and things, my own conclusions. But now that I’m writing each post as a long article, it probably takes me 10 hours just for that post. So it takes me 2-3 hours to write the first draft, and then another 5-7 hours to edit it and cut it down so that it fits. I simply don’t have time to write so many and then also run my business. I’m just more thoughtful now about what I put out there. Whereas before it was just like trying different content styles, learning what works, getting my thoughts from my brain into a Google Sheet and then into LinkedIn. But now I feel like the things that people care most about are really detailed stories and experiences and just really transparent experience about building companies.

[00:25:28.830] – Joran

Nice. I think that’s a really good bridge to the next question because you shared something really transparent, as in that you mentioned in the LinkedIn post that you doubled your prices and reduced support tickets by 70%. How and why did you do this?

[00:25:41.960] – Melissa

When we started the company, and I think everyone ends up at the same place is you can’t be the cheapest. We don’t want to be because if you’re a cost leader, it’s like a race to the bottom. But we couldn’t be the most expensive. Other than the gates, we had zero integrations. We weren’t learning from our customers. So we picked a price point that we thought we could justify, and that was like $49 and then all the way. We had three plans. It was like $49, $99, $199. But about a year and a half after launch, so the product’s been live for three years now, we started getting a lot of people sign up that were not tech savvy, needed a lot of handholding, and then they just wouldn’t convert because they didn’t have a business of their own. Because at that point, our product was so good that it was cheap. In the beginning, it was cheap because it wasn’t as good. Now people are comparing us to other options and are like, Oh, this one is the best, but it’s the cheapest also. We started hearing over and over that people chose us because we were the cheapest, but we never wanted to be the cheapest.

[00:26:43.570] – Melissa

When you are the cheapest, you attract the cheapest customers who are most price-sensitive because they’re still figuring out their own business. They don’t have money, they haven’t generated revenue. Because we have a 14-day free trial and we do all of our own support because we’ve just last week hired our first tax support person we’re training her. But it was sucking all of our time to help these people set up their accounts and their integrations, but then they wouldn’t pay. It was actually really frustrating. Then we realized that people that were paying more on the level two and three plans, we almost never have to hear from because not only are they’re more tech savvy, like when they’re paying 100 to 200 bucks, it’s so little in their business. We actually made the strategic decision to double our prices for people that were coming in that were new customers because we wanted to cut down what I call dumb support for customers that really aren’t great customers to begin with. We want someone to invest time and money into integrating our product into their business and not people who are struggling themselves. Now I would say, because our starting point is 100 bucks, you’d be surprised what a difference it makes and how much more time people are willing to put in to actually set up their accounts because they’re actually thinking about, okay, do I want to invest 100 dollars?

[00:28:02.000] – Melissa

Now we don’t get any dumb support, and the people that we want to support are people that are well on their way in their business. Our conversion rate actually dropped quite a bit. Our conversion rate from child-to-paid, I think, went from something like 60% to now it’s anywhere between 30-40%. But people stay a lot longer and they’re paying us more.

[00:28:27.170] – Joran

Yeah, and in the end, you’re getting the clients you want. This has really… How do you say it? We have the exact same issue at the moment now with us where we’re thinking about dropping the freemium plan because we’re exactly having the exact same issues as you just mentioned. I think for people listening, we are going to double our prices probably.

[00:28:44.260] – Melissa

Pretty soon. The best thing we did for our last business was take away freemium.

[00:28:49.200] – Joran

The only thing I love about our freemium is it’s actually helping our network to grow. We’re a marketplace. The freemium model has something which is really nice for the network we’re building. But then we might drop it as well because in the end, you are not attracting the right clients, as you mentioned. That is an interesting discussion we’re going to have really soon. Guys, we’re going to come into the final four questions. I always like to ask these questions as in stage-wise. What advice would you give a SaaS founder who’s just starting out and trying to grow to 10K monthly recurring revenue?

[00:29:19.960] – Melissa

I guess I mentioned this a little bit already, which is focus on making revenue-driven decisions like profit-led decisions. Don’t focus on the shiny object. People are not going to buy your product because it’s cool. They’re going to buy your product because it helps them make money. Money can come in the form of time-saving. For us, it’s you can stop doing live webinars over and over. Because you have to choose. In order to choose what’s good, you have to say no to a lot of things. So choose the thing that people are going to pay you for. That is literally the most important thing right now. The second is, of course, be really cost-conscious. And being cost-conscious means like, don’t hire employees if you don’t have to. Hire contractors for their expertise to only do the thing that you need. Make sure that if someone, and this is something I’m still trying to get better at, is if someone doesn’t work out, stop beating the dead horse, just fire them. You do not have the capital and the time to try to make a mediocre person really good. Firing fast is something that I know we hear a lot, but sometimes you just know, right?

[00:30:28.650] – Melissa

Your gut feeling this person is not going to work out. That’s why in the beginning, especially it’s so good to work with contractors, because if it doesn’t work out, you just end the contract. But those are the two things I would focus on is profit-driven decisions and be super cautious with how you spend your money.

[00:30:46.960] – Joran

Nice. For the next question, you’re on the pot yourself. Let’s assume for SaaS founders, they pass 10K MRR and they’re growing to 10 million ARR. What advice would you give here?

[00:30:59.530] – Melissa

I’m definitely on that path myself. I wish I could be giving that advice in hindsight. 10 million is where I want to get to as well. But I guess just based on my own experience, especially for people who haven’t done this before, is it’s okay to admit and to embrace the fact that everything’s new because we’re all making it up as we go. I think if you only look at social media and things like that, it almost makes it seem like everyone knows what they’re doing. But the people who love to sound most like they know what they’re doing are consultants who have never done it themselves before. So never take advice from someone who’s never been in your shoes. It’s super easy, as a consultant, to be like, Oh, you should do all these 10 things. But if you’ve never been a founder, if you’ve never had to figure it out on your own and you don’t have the money to hire people from big companies who have actually done what you’ve done, you have to figure it out yourself. So I think the best advice is just embrace it. Embrace the fact that you don’t know what you know, but just know that it’s normal and everyone else is also figuring it out.

[00:32:06.930] – Joran

Nice. You mentioned before, you’re not going to a network events or you’re not going to many events right now. Do you have a mentor? Do you have people you talk on a daily, weekly, monthly basis where at least you can share stories with each other?

[00:32:19.910] – Melissa

Yeah, absolutely. I have a very curated group of founders just on WhatsApp. It’s highly curated. Everyone’s in the same stage. It’s just a private group where we can talk about or ask things that we wouldn’t post publicly. I definitely have a few founders that I’ve just known for many years. They’re eons ahead of me. Anytime I have a question or anything like that, I just either post it in the group or I just reach out to them directly. But your community is super important. And before I had that, I just joined these Slack groups. Nathan Leica has one that’s founder-led and then product-led has a community that’s really good that West Bush runs. There are a few of these Slack groups that are very industry or role-specific. I joined on deck as well when they were early on, and it’s really just a community of founders or people that are behind or in front of you that you can post questions to. Yeah, nice.

[00:33:15.930] – Joran

Yeah, and I think that’s definitely key. I’m, for example, part of the SaaS talk founder membership group, and we had Alex on the show, we had Nathan on the show, and we’re going to have Wes on the show soon as well. I think all the guests might have some relationship to some community, so definitely look out for that. Can you offer, I guess, a more general advice or maybe encouragement to SaaS entrepreneurs out there which are now on the same journeys as you are?

[00:33:40.980] – Melissa

Yeah, don’t forget to live. Just have fun, right? Building this thing is so hard. You don’t have to work evenings and weekends to feel successful. Working more doesn’t mean you’re going to be more successful. It just means you’re working more. We don’t need to work more. We need to be more creative with our time. We need to work more creatively. There’s so few things that can’t wait until tomorrow. So make sure you have your boundaries and just live and have fun and focus on hitting that profit number.

[00:34:11.520] – Joran

Nice. Good advice. Then the final question. What is one thing you wish you knew 10 years ago?

[00:34:18.840] – Melissa

Outside of putting all of my money in Bitcoin and then never have to work again, I would say because my first two companies were in Blue Ocean opportunities, I wish I had known earlier that being second mover can give you a huge advantage in building companies.

[00:34:36.990] – Joran

Nice. Thanks. I guess for the people who want to get in contact with you, they don’t have to do it in the mornings, at least in the Amsterdam time zones. But if they want to get a reply, where should they contact you?

[00:34:48.760] – Melissa

Yeah. So if you want to connect with me best ways through LinkedIn, my last name is Belquan, K-W-A-N. It’s Melissa Kwan. I post, like I said, weekly about me bootstrapping three companies, all personal stories and conclusions that are personal to myself. And if you want to check out eWebinar and how it can help you or your business, if you’re sick of doing the same demo, same webinar over and over again, just go to ewebinar. Com, join the demo. That’s, of course, delivered through eWebinar, and I managed to chat myself. So any questions about my journey or the product, shoot me a message.

[00:35:19.170] – Joran

Nice. We’re definitely going to add links to posts. We’re going to add a link to your LinkedIn profile. We’re going to add a link to eWebinar. And I like that you probably, it sounds like you automated the process even of giving the webinars, which is really nice, which is clever. That’s why you can work four days a week. I definitely are going to check it out how you do it. Thanks for coming on to the show, Melissa. For me, it was a real pleasure.

[00:35:39.060] – Melissa

Thanks so much for having me.

[00:35:40.550] – Joran

Cheers.

[00:35:41.400] – Outro

You’ve been listening to growing a B2B SaaS. Joran has been ahead of customer success before founding his own startup. He’s experiencing the same journey you are. We hope you’ve gotten some actionable advice from the show, and we hope you had fun along the way. We know we did. Make sure to like, rate, and review the podcast in the meantime. To find out more and to hook up with us on our social media sites, go to www. Getreditus. Com. See you next time on Growing a B2B SaaS.