Esben Friis-Jensen: Bootstrapping A 7-Figure ARR SaaS With Only 2 People Using PLG # 171

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Hello, hello everyone. This is your host, Akhil Jabbar, and welcome back to another episode of SaaS District. In today's episode, we'll be talking about bootstrapping a 7-figure ARR SaaS company with only 2 people using product-led growth. Today we have our guest Espen Friis Jensen joining us. Espen is the co-founder and CGO at Userflow, which offers the fastest and most user-friendly onboarding flow builder for SaaS and online businesses in the market. Prior to Userflow, Esben co-founded Cobalt.io to over 200+ employees, which he then stepped down from in the beginning of 2021 to focus on Userflow. He has a background as an Accenture consultant with more than 3 years of experience in test and deployment management, as well as for global IT implementation. So welcome, Esben. Super excited to have you on the SAS District Show today.

Thank you. I'm also excited to be here. Thanks for having me.

So I want to learn about this, right? This is your superpower, right? You found this product-led growth strategy that lets you build a massive company with only 2 people, which is fantastic. But let's start at the basic level. What is product-led growth, aka PLG? What is your definition of it? And maybe help the people who are new to this think about it.

Yeah, I think there are kind of 2 ways of looking at it. One is, and that's more cultural mindset. is that you should think product first in everything you do. That basically means you as a company, whenever you do sales, customer success, marketing, operations, whatever, always think product first. So how could we solve this with the product instead of maybe solving it by adding additional people? So that's one way I like to present it. Another way to look at it is to look at its opposite. Which is sales-led growth. So sales-led growth is basically where you involve people in your entire kind of buying journey, right? So the most typical example is when you go to a software as a service platform, the main call to action is request a demo. You then request a demo. Maybe you speak with a salesperson, maybe you speak even with a BDR, so somebody before a salesperson. And you do a demo and then you do another call maybe, and then you decide on maybe on buying, you negotiate contracts back and forth, and then you get to use the product. And then in a product-led growth motion, you switch that around and simplify it by basically allowing users to use the product before they speak with anybody through a free trial or freemium. And then they get to experience the value of the product. And then they get to make the decision either themselves completely alone, maybe as a self-service purchase, or maybe they schedule a demo after that. But the product becomes a key part of the buying journey. And yeah, so that's another way to look at it.

Yeah, that makes sense. So instead of like, if you have this capital and you're looking to invest to grow, right? So you can invest it in hiring a sales team and them doing the work of trying to build that relationship and show the value. It's like, let's invest in code and let these ninja code warriors do the work in the backend, and they're doing the selling for you, right? Is what you're saying.

Yeah. So you definitely need a strong product team in a product-led growth company. But I wouldn't say you completely have to exclude sales. As I said, there can still be— some people call it sales assist, or they call it product experts, or whatever you want to call it. But you can build a new type of sales team that is centered around the product, right? So the product is still the main driver for selling, but the sales team is kind of supporting that journey, right? But the sales team doesn't become the primary go-to and call to action. The product is, and then sales is kind of assisting that process.

Okay, so if I'm thinking of starting a SaaS or I'm trying to think of going this direction because maybe most are thinking about the sales-led growth strategy and they're like, okay, I want to optimize this and structure my SaaS like this. What are some tips you'll tell a SaaS founder that wants to create maybe not perfect, but the most optimized auto-selling product?

Yeah. So you actually do need a very strong product, right? That needs to be a core focus of yours. To build the best product possible is really the essence of product-led growth. You can't fake it, right? And I think that's a big part of it is really In a sales-led model, you can kind of fake it, to be honest, right? You can sell a lot of PowerPoints and stuff like that. And then when people get to use the product, it's not really what they expected, right? But in a product-led growth motion, you can't fake it. So you need to have a strong product. So that's definitely number one. When you then have a strong product, I think there are a couple of things you can do. So one is As I said, make products as part of everything you do. So that goes for your marketing material. Your landing page should highlight the product. You should have a free trial of some sort so the users can actually go and experience the product on their own. You should ideally have some kind of product-led onboarding. That's what we help with at Userflow, so users can kind of onboard themselves. So automate where you can and then ideally also self-service purchase using something like Stripe or something. So have that entire journey, allow the user to do everything self-service and have sales as a nice to have in the background.

When you say that word great product, right, I think that's kind of broad, right? So you say, okay, you can optimize marketing so they'll come in, they'll understand what's happening. I have a free trial now. I can go in and use the product. And I have all these resources and there's a nice onboarding flow. Things are coming at me nicely. And then if I want to buy, I can choose to buy it. That flows nicely. But then the product itself, how do you think about this is a good product? If I'm looking at this like, well, this is exactly what I'm looking for.

I agree. It's very subjective, right? In some sort. But really, I see it as 2 things. One is it needs to solve a problem, right? So your product needs to solve a problem for the customer. That's number one. Of course, if it's not solving a problem, it's a useless product, right? So that's important. And it needs to be a problem that users want to pay to get solved, right? It needs to be big enough of a problem that they don't see it as like something that could be nice to solve, but it's not really a big thing, right? So I think that's number one. The second piece is then great UX. And that's where many products that actually solve problems Fail, right? They forget about the UX. They don't focus on having a great user experience. And really, you really need to be kind of fine-tuning all the time the UX, right? Listening to your customers, see where your customers are failing and upgrade your product to have a better UX in those areas, right? So UX is always this kind of afterthought or whatever, right? And features have the primary focus. But in many ways, if you solve a core use case with great UX, you have an amazing product. And that's what you see with many great products out there, right?

I love that you brought that up. So you're saying features, you mentioned that keyword because that's what most people think about when you say great product, right? You mentioned, no, it's actually UX. So if a user first comes in contact with the first time, what are some ways that you can roll out those features just in the right way where Where most people are thinking like, no, I just gave you all these features here. Look, you have all these shiny things and that's going to make it a better product. But rather it's like, no, hold on, let's walk you through this journey. What are some ways you can roll it out the right way to give the right solution at the right time?

Yeah, I think that's where kind of the main onboarding. So let's say a user signs up for the free trial for the first time, right? They go into your product. Your product might have 10 great features or whatever, right? But it often goes back to this kind of solving the product problem. You have some kind of main problem that this product solves and you need to identify, okay, what is that key aha moment, as you call it? Maybe it's more than one aha moment, but it's still like, what is that key use case that you want users to discover first? So to use Userflow as an example, our core use case is to build onboarding flows inside products, right? So we really want the user to experience how easy it is to build these kind of flows. So that's the first thing we focus on. The first time they log into our platform, we show them an onboarding flow to basically guide them to build their very first flow. And then you can say there are lots of other things to use the flow. There's like user tracking, theme editing, et cetera, et cetera, right? There's all sorts of things you can do with UseFlow. But we really focus on that core use case of building your first flow. That's the key aha moment we want to bring to first-time users. So that's how you should think about it, really. What is the core value of your product? Really bring users to that experience first and don't focus on all the kind of shiny add-on things. They will discover them later on, right? But really focus on the core of it and bring the users to that.

And how can you help them kind of see the differentiate? So if they're coming in, they're probably coming in on a free trial or, you know, free, free kind of lower pricing tier.

Yeah.

So you want to kind of limit them on how much features they're seeing. And you're saying eventually they'll want to see these other stuff and they'll be kind of curious and like, hey, maybe I want to upgrade. How can you help them during that onboarding or even during their journey, help them see it, learn about it, understand the value of the premium features without getting kind of Confused while still being on the lower plan.

That's where UX comes in, right? Like simplifying your product so you have a great navigation that doesn't overload the user with information, right? I think that's key. And if you have a product with many functionalities, you can consider hiding some of the functionality to begin with, right? That's one approach you can take. I know tools like HubSpot and so on, they kind of hide some stuff and then you have to do a pro trial to actually see it. So they definitely know they have a lot of functionality. If we're going to show everything to first-time users, they're going to get information overload. Let's hide some of it. And then they actively have to go and select like a pro trial to see the additional functionality, right? So if you have that much functionality, you can do that. If you just have more limited functionality, one thing you can do is kind of show the functionality but kind of put a pro badge on it or whatever badge that kind of says this is the functionality that has an extra cost. You can look at it if you like, but it's not part of the base package, right?

Right.

So I think there are 2 approaches and it kind of depends on how much functionality do you have. Are you like CRM? style like HubSpot that is filled with functionality, right? Or are you a more basic product?

Right. Maybe speaking about, you mentioned HubSpot. Is there any examples of some other SaaS companies that you've seen who've done this really well in terms of their onboarding or even their customer success and sharing those features and why you think those have been so successful?

Yeah, no, I think there are many tools out there. I would like to think about some, but I think Slack always does a good job at highlighting new stuff, right, in their app when they're something new, they kind of highlight, okay, here's a notification, there's something new happening here, you can take use of it. And maybe it's an additional payment and you have to do it, right? So that's something I've seen. We use a tool called LogRocket as well, which I think does a great job at highlighting pro functionality. This is something they do the batch approach, right, where it's like clear, okay, this is there. And if you want to play with this, you have to You can see the functionality, but you have to activate like a pro trial to actually try it out. Right. So it's kind of like a mix where they show a badge and then you actually have to activate it to use it. Right. But they at least make it available so I can try it.

What was that tool called again? We'll just put it in the show notes.

LockRocket.

LockRocket.

All right.

LockRocket.

Awesome.

Yeah. And then we of course have all our great customers. So like indicative Yeah, into it and so on. Like, a lot of these tools are using Userflow to highlight new features with tooltips or modals or whatever and are doing a great job with that.

Nice. Makes sense. And then talking about your story, that's the last piece of this equation is like, okay, you're talking about how great this is, but you actually implemented it yourself because this is not just theoretical. You have a high-growth bootstrap business scaled to 7 figures. With only 2 full-time employees, and then you said you just hired your 3rd. Um, yeah, so what did you guys do? What were the effective channels to help you guys? What did you like? Like, were you guys just like 2 ninjas working, like, you know, coding in your basement for like 2 years, and then you came out, I was like, here, we have something here? Or, you know, you had all this money and, you know, walk me through that. Like, how did you guys do that?

It's probably a mix of that, right? It's, uh, you definitely need a strong engineer. So my co-founder Sebastian is an amazing engineer, kind of unicorn engineer in many ways, uh, that can do both product and engineering. But I think what you see in many startups or many successful startups is that that is the case, right? They have some kind of strong engineer, but they still end up becoming more sales-led over time for some reason.

Sure.

But in our case, that's the baseline, right? Have a strong engineer who can build a strong product. You need that. But then having said that, we always kept a strong focus on building product-led. And that means our landing page, the primary call to action is sign up for a free trial. And the secondary action is view a demo. And then the tertiary action is schedule a demo. Right. So we still offer the demo to be scheduled, but it's really the last resort. Right. So that's where it starts. Then when you sign up for the free trial, we have Product-led onboarding. So we use Userflow on Userflow, of course, to build our onboarding. And we have checklists also built with Userflow to drive the user through that initial realization of value and convert. We have self-service purchase on Userflow. So most of our customers just buy, sign up, buy with a credit card without ever speaking with us. We, of course, have support resources. So strong documentation. We have support chat. And all this stuff, right? And then I think another important aspect to support is, and that goes back to the whole UX conversation, is we always think, how can we solve this in the product, right? So whenever we have a support issue, we don't think, okay, we should probably hire some more support people to solve all these support questions we're getting. No, we instead think, okay, why are we getting the same question again and again and again? It must be something that's either hard to understand in our product or something we need to change. So we always are very focused on solving those kind of UX challenges that result in support questions. And that's how we've been able to scale to a large extent. I think the support burden would have been much higher if we hadn't had that mindset, basically.

And just to clarify, you said your co-founder is more focused on Product, great engineer. What was your role in this? And then how long did it take you to get to 7 figures? And did you have other people you're kind of contracting out or some engineers here and there kind of building, or you guys are doing everything?

The product was officially launched in 2019. I joined in 2021 to build out growth. So basically built the entire product growth flow. Of course, Sebastian had made a lot of baseline stuff like the free trial and the website. But I built all the surrounding things around it. So basically like email onboarding on the side, some kind of touchpoints, the support process, all these kind of different things that helps both convert and retain customers, but also a bit more marketing and stuff like that. But from 2019 to 2020, Sebastian, you can say, was in primary build mode, right? So building the product, making sure it's a great product.

Okay.

I don't think you need to spend that. Like, he still launched the product, so he had customers and stuff. So it wasn't like he was building in stealth. I think way too many companies build way too long time in stealth where they should really launch their free trial a bit sooner so people can— and you can learn from customer feedback and so on. So he had some baseline revenue, but really in 2021, that's where our growth took off. We grew like 6x in ARR that year and hit the 7 figures just in 2021. And this year we are on a trajectory to grow not at the same pace, but at a similar strong pace.

And what were some of the primary marketing channels that you focused on that you saw really pick up that huge growth?

I think one, we are kind of in a red ocean. There's a lot of competition in the user onboarding space. So a good thing in a red ocean market is things like ads, because people actually search for that thing, or they search for your competitors or whatever they search for, right? So ads is a— Google Ads is like very good for that purpose. But then we also did a lot of thought leadership, right? So a lot of thought leadership on the product-led growth space, on the user onboarding space. is something we've been very successful at, at sharing best practices. Product-led growth is this kind of new thing that everybody's trying to get into, but they're finding it kind of hard because it's really a culture change and you need to think product first. It's easier said than done, basically.

Yeah.

And that's a big part of what we're trying. We're very opinionated. And I think to drive culture changes, you need to be very opinionated. You need to have strong feelings about Why this is the right thing and why this is the future. And I think we're doing a good job on that. So I would say those have been our 2 primary channels. But then we also have done a bit of outbound, like maybe some email campaigns or something, but it's not really been the big factor for us. It's really the inbound engine. So customer referrals is of course a big thing as well.

Makes sense. So running some ads and once you have a solid product, really focus on hitting the ads and then doing some thought leadership, SEO, PR, and getting your name and brand out there. Makes sense.

Exactly. I think as outbound gets harder and harder, that's the way to go, right? But you can only do that if you have a great product, because otherwise it's hard.

Yeah, I agree with that.

Cool.

Awesome. This has been really good, Espen. Love your kind of story and the value you gave. I think there's a lot of value that people can get from it. If they're looking to think about, you know, SaaS, you know, this is a new way of thinking. And I, I agree that, you know, maybe people should start thinking about this way. It's not as, you know, challenging that you don't now have to build a whole sales team and invest in, in, uh, you know, really, you know, all that overhead. Um, and just, you know, just, just be that engineer and look into your product and solve your problem really, really well and, and let that— let the, the product sell itself. Right. Um, yeah, I want to shift gear. Um, yeah, uh, love, love to shift, you know, talk a little bit on your— a little bit on the personal and rapid-fire, you know, the fun part of this, this interview. So, um, should be just, you know, you know, a minute each or less for each of these, these answers. So are you ready to roll?

Let's see, let's see if I can answer it.

All right, all right, let's do it, let's do it. All right, so, um, outside of work, um, because, you know, it's easy to run into that, people say, you know, I love my job, that's cool, but what's one activity you enjoy outside of work that gets you into flow state?

Uh, so it's basically hiking and biking. So I, I do hike Over the last, what, 1.5 years during the pandemic, I've been traveling around the US, living in different states close to national parks and just hike in the weekends when I'm not working.

Love it.

So that's been amazing. That's something I love doing. And also going on my bike, bicycle, the same thing, right? So getting out in the nature, enjoying life. I'm not quite ready for the metaverse. I think we have a pretty nice planet, so I'm enjoying it. a lot. And it definitely gives— it's my way to meditate, right? It's like hiking or going on a bicycle.

Exactly. There's a metaverse and there's also Mars. We're not ready for Mars yet. Let's just— there's still lots to see there. What's one piece of advice you wish you had known, knowing what you know today, and would tell your 25-year-old self?

Yeah, it's probably to start a startup, right? When I got out of university, that was about when I was 25, the only path was to go into consultancy. If you were an ambitious person back then, that was the way to go, right? Like, you went into an IT consultancy or consultancy of some sort because you got diverse mix of tasks and all that stuff. And yes, that is amazing. But I think you can get exactly the same thing from a startup, if not more. You learn about business and all sorts of stuff. So I think, yeah, start a startup and try it out, especially if you feel you have the privilege to do it right, like, not going to lose your home or whatever. You can still survive by doing it.

Yeah.

But in Denmark, for instance, where I'm from, we have a great welfare system. So it's like, it would have been super easy to start a startup without much risk, and I could have learned A lot from that.

Right.

So I ended up doing it, but I ended up doing it as a 29-year-old. And when I then got to the US, I saw all these 25-year-olds kicking ass. So, yeah, I'm a bit envious of that.

Love it.

Yeah.

Get into the weeds and learn from doing it yourself rather than doing it for a big company. Yeah. What are some of the biggest challenges you're currently facing in order to continue to keep growing Userflow? Meaning, or even just what's keeping you up at night these days if it's not about growth?

I think it's really— so as I said, we're in a red ocean, right? So it's always important that we attract more customers towards Userflow. So how can we attract more customers? But also how can we keep retaining the customers we have and bring value to them so they love our product, right? I think those are the two main things we focus on is always customer-centric. How can we build the best product for both new customers and existing customers?

Great. Who or what are the best 3 resources? This can be books, people, mentors, or just people you follow in the space who you'd say have been the most instrumental to your success over these last few years.

Oh, that's a lot of questions in one. I want to give one resource to product-led growth, and that's Wes Bush. Book on product-led growth that I think have inspired many companies to move in that direction. And if you haven't read it, highly recommend reading it. It's a great book. And Wes in general has a product-led community that's very strong with a Slack channel and so on. So that's definitely one person I looked a lot at. Then you have my Danish friend DHH, David Heinemeier Hansson, who made a company with Jason Fried. Basecamp, which is also like almost bootstrapped. I think they raised a bit of money from Jeff Bezos at some point, but that was a strange one. But they've managed to build a really strong SaaS company without being VC-focused and really also keeping this mindset of don't hire just to hire, really only hire if you need to hire. And they have a very small team, but a very successful company. And I think besides from them, they've written— the reason I mentioned them is, of course, DJ's is Danish, but also they wrote a lot of good books like Rework and so on about this stuff. So that's something I recommend checking out. But there's been a lot of success stories lately. Like Aha is another big one and Mailchimp, both bootstrapped companies who bootstrapped to very successful businesses. So some companies That inspires me a lot. And then I would say maybe last person. This is going to be hard. It could have been— I think I'm going to give him some credit because he was a big resource for me in the early days of SaaS is Jason Lemkin.

Oh, yeah.

I think he's more on the sales-led side and I hope he will transition a bit because I think he needs to see that the world is changing towards product-led growth more. He's very much from the sales-led SaaS world. So a lot of his advice is sales-led, but still I think he has helped a lot of SaaS businesses out there to get great insights. And his SaaS Story community is fantastic.

Yeah, I also think his main reason for that is because I think when Adobe was very enterprise-focused, so I think that was like, how do we get to these big guys and get the decision makers? So I think the sales-led might make more sense at that point. Yeah, yeah, yeah. Awesome, awesome. All great resources. We'll add those links to the show notes for people to check out and hopefully get some tips from as well. So cool. What does success mean to you today? Like, obviously, you know, you've had success, you know, consulting, you built a startup and you decided to get back into the game, start all over again. But what does it mean to you today, whether it's personally, business, financial, life? I mean, there's no right answer.

Yeah, no. So from a business perspective, Back in the days with Cobalt, we wanted to build like a big unicorn and stuff like that. And I think I realized over the years that, yeah, that's great. And I hope Cobalt becomes a unicorn. They're definitely on that journey, right? That's awesome. But for me personally, it doesn't mean so much anymore right now. I just want to build a great business that brings value to customers and can help make me financially independent, right? Like, I don't have to worry about The finances. So that I think is most important to me now. It doesn't need to be a unicorn necessarily. Right.

So it's just practicing your craft more. Right.

Exactly. Like building a great business, but not necessarily this kind of VC way where it's like either you hit the stars or you do nothing. Right. You can build a great business that is somewhere in between. So I think that's from a business perspective. From a personal perspective, it's, as I said, have time to do other things than work, right? I think the people who say, oh, I'm going to do that when I retire, right? That's the worst excuse ever because you basically end up working your entire life. And then when you finally retire, you don't know how to live your life. Then you want to go back to work, right? So I think it's important to enjoy life and And not just work during— before you retire, right? So yeah, go out, travel, take holidays. You know, I love actually the things the pandemic have done to the world where people have, especially here in the US, which is a very, compared to Europe, a very work-centric society. I think in the US even now they have changed to be less work-centric and be more kind of realize there's more to life than just working. And I think that's awesome.

Yeah, I recommend you— I don't know if you've read this book, it's called— I just read it recently— called Die with Zero. And the premise of that is like, yeah, you mentioned it's like, yeah, you spend all this time working and then you get to a point where you're older and you try to now experience all these things. You have the money, but you don't have the health, right? And what you find is there's an optimum time. I think it's between your 20s and up to like 38, 8 or 40, um, where that is the best time you should be spending your money because you're, you know, you can make it, you have the energy, and you also have your health. And the, the, the result of the, of the experience is gonna be so much better versus when you're older and you're like, uh, yeah, I wish I could have done like this, you know, crazy trip. I was like, you know, backpacking to Europe when you're like 70 is not the same when you're 20, right? So just an example.

No, I agree, agreed. Uh, you should climb Everest before you're 75.

Yes, exactly, exactly. Cool. Cool. Espen, thank you so much for being on the podcast. I think this was fantastic. I really enjoyed talking with you. Where's the best place if people want to talk to you, get in touch with you, learn more about Userflow? Where should they reach out?

So LinkedIn is probably the easiest way. I'm on LinkedIn with my name, of course, and then I'm also on Twitter. And then if you want to find out about Userflow, we're on userflow.com. And we also actually have 2 video series there that are quite interesting. One about how we do product-led at Userflow. So basically from end to end, how we approach product-led at our own company. And then we have one on onboarding best practices, so where you can learn about how to build product-led onboarding for your own business.

Awesome.

Cool.

You guys listening in, check out userflow.com and make sure to reach out to Esben on LinkedIn. All right, thank you. Thank you so much once again, Esben, and appreciate you joining us on SaaS District show today.

Thank you. My pleasure.

Cheers.

Thank you all for watching this episode and joining SaaS District today. Don't forget to like, subscribe, and hit the bell for future episodes where we interview top leaders in the SaaS industry. If you're a SaaS company looking to grow and unlock the true value of your business, get in touch with us at Horizon Capital and myself or one of our consultants will provide a free assessment to help you get there and hit your goals. If you have any feedback or suggestions for this podcast, please comment down below and help us improve our content for you all. Thanks again, and see you on the next one.