How to Compete As a Bootstrapped Company Vs. VC Funded Competitors | With Expert Peldi Guilizzoni

How do you guys compete with the— so you guys are a bootstrap company. I know there's other— you have competitors who are VC-funded. They have a lot more funding behind them. How do you guys stay ahead of the competition there?

Well, the stroke of luck, not genius, but luck, is that the market that we chose is pretty small. So it's too small for big players to go after and fairly big for tiny players that are coming now to be able to compete with us. So, you know, we do have big competitors, but they do much more. They do prototyping, so where you can build a fully functioning fake application or fake website, right?

Yeah.

And those are complex tools, pro tools, and they cost 10 times what we charge. We don't go there. We are a wireframing tool, so only We compete with pencil and paper, so we only let you do these sketches, and then after that, if you want to use a prototyping tool, you can. If you want to go straight to code, that's what most of our customers do. But, so by focusing on this smaller market, the big players leave us alone. They think that we're a feature of their software.

Hmm.

But, that's not actually true because we are perfect for non-technical users that have an idea, but they have to express it somehow, and the fact that we're so focused means that we can stay simple even for non-technical users.

Makes sense, and so your original vision, you know, stay lean, keep growing, you know, not focus on the money, focus on the craft, where are you guys today in terms of the size, and now, You know, 12 years later, what would you say is your end goal or vision with the product or the company?

Right, yeah, so like I said, we're 33 employees, last year our revenue was $6.7 million.

Nice.

This year, we should easily pass $7 million, which is plenty for us, it's a lot, we have Around $1 million in profit every year since the beginning, sometimes more.

Nice.

So, you know, it's going very well. Now the vision is to more of the same, continue to serve our customers, make them more awesome at what they do by listening to them, talking to them, giving them what they're asking or what they need, you know. And my— I like to grow maybe 2% a year for revenue.

Okay.

Seems like a nice sustainable growth. And my main goal is to build a company that will outlive me. So the focus has always been on longevity rather than growth. And so That's why I like small growth, because if you grow too fast, it's like burning a candle at both ends. You don't last as long.

Right. It escapes underneath you. So, yeah, that's kind of interesting that, you know, you stuck to your values where a lot of people may push, or you get an external pressure if you did have to take investment, or, you know, whatever the case, you have partners, you know, the mentality is always grow, grow, grow, push. Sell, make more money. So I mean, the fact that you're very like, I'm OK with 2%. Most people are like, what's wrong with you? Why not go for doubling every year over year, right? And you probably could if you really wanted to. But you're like, no, I'm good. I'm sticking to what I have.

That sounds really stressful. I'm very happy with the profits we have right now.

OK. So is this something that you see—

And we're lucky that the market is allowing us to take our time and be the size that we want.

Right, yeah, you have nobody coming in taking over, you know, all markets.

We have very little competitive pressure. So yeah, you asked about VC, uh, this— how to compete with VC companies. Well, uh, our market is not VC-friendly because, uh, the wireframing— the total addressable market for wireframing tools is maybe, I don't know, $10 million worldwide. We take $7 million of it, that's plenty. But it's not going to grow 10 times in 5 years by itself. You would have to either bundle us with a bunch of other tools and make us a complicated suite, or make us move into the prototyping world, and then you're competing with Microsoft, Adobe, you know, giants. And in that world, of course, you need VC, because that's, you know—

Yeah.

But in our small niche, So, we have had direct competitors that were VC-funded, and they last a couple of years, and then the VC pulls the plug, because they realize that by itself, it's not going to grow at the speed that the VC needs.

Right, yeah, so I know what comes to mind to me is something like a Figma, and that becomes overwhelming, because I'm not a designer, I'm an engineer, but very technical, analytical, so I like that. something, a tool like this, it's, yeah, you say it's, you know, a pool of this kind of people, but you could also reach other people who are maybe like curious and they want to learn and, but they don't have that kind of, you know, design mindset. So that's kind of curious.

Right, we decided to not focus on designers, even though a lot of our customers are designers and they use us as, together with Feedback, together with InVision, together with XD, together with Axure, And that's fine because we are still the fastest way to do wireframes because we're so focused.

Yeah.

But a lot of our customers are people who can't afford to hire a designer yet. They're founders, entrepreneurs, product managers, right? They, um, they have ideas, uh, they want them— they want somebody to build them. Or developers, they buy, they buy our tools in order to talk to their clients, right?

Right. So, you don't have a number in mind for use, like, I'm going to hand this off to my kids or family, grandkids, and I want this to keep lasting forever? I don't know if you have kids or not, but yeah.

Yeah, I do, but I don't know if my son is interested at all at this point. He isn't 14 yet, so he doesn't really know. But no, the dream is to be able to build a company that is so well-run and so solid that it can fully function without me.

Mm-hmm.

So that should one day something happen to me or whatever, or should I get bored and want to do something else, I could leave and continue to own it and continue to get dividends every year, and the company would do even better without me than with me. And even if I fail, I think it's a good goal to have because it just makes the company just Stronger and smoother. So this is my 5-year project right now, to try and see if I can get to a point where I'm not actually needed for anything. And it's also, it sounds fun because then once I reach that point, then I can work on whatever I want. I can help, help out whatever, whoever I want inside the company.

Exactly. You get to decide and choose what you want to focus on. Cool. Love it. Can you attribute to really what drove the growth to Balsamiq in the very early stages, and then what's continuing to work right now, you know, 12 years later?

It's hard to tell because I don't track anything, so I don't really know how it happened, but I attribute it to, you know, from the beginning we say we compete on usability and customer service, and And it's not easy to do those things well, especially for a small company or, you know, in our small market because we had competitors before I started and they were clearly made by programmers for other programmers. You know, they did not, they were like '80s and '90s kind of software, right? So Balsamiq Wireframes was the first tool that was easy enough to use for non-technical users. And so, that was, I think, a big competitive advantage.

Mm-hmm.

We also use a sketchy UI. The designs that you make with Balsamiq look like they're hand-drawn, which was pretty unique at the time. It's been copied a million times over, but— And so that gave it character immediately. There was a virality built into the product because as soon as people saw a wireframe made with Balsamiq, they immediately asked, how did you do that? That's very unique, right?

Cool.

So the product was well-built, easy to use, it was somewhat viral, and then the customer service we've always invested a lot in. So, very close feedback loop with our customers, releasing all the time, fixing bugs all the time, cultivating the forums. I live in Italy, but the second employee was in California, so we could cover more time zones.

Mm-hmm.

Answering the phone, you know. So, I think that that's really been our formula for success, which is just Continuous iterating in close contact with customers.

Love it. So it's more very product-led growth where you just focus on—

Oh, absolutely. Yeah, absolutely. We've barely done any marketing ever. Our marketing is our product itself and our customer service.

Love it. Can you share it? So I know sometimes it's important to share what works, but then there's also, I think, equally important what people don't share is what What didn't work? Can you share any failed growth experience that you tried over the last few years that didn't work as much as you hoped?

That's the thing, we've never tried any growth experience.

You haven't tried anything?

Growth is a consequence, it's not a goal.

Okay.

So, there's stuff that we do that fails, of course, but features that were not well designed originally, and we've had to do them again, or a couple we've actually managed to remove. You know, we make mistakes all the time, that's part of the fun. But yeah, I can't tell you about a growth experiment because that's not—

You don't have a marketing team? So you don't have anybody doing SEO, anybody doing paid ads, anything like that?

Well, so we do paid ads because there's a consulting company called Software Promotions, In England that manages the whole thing for us for free, 'cause we're friends and we did a case study for their website. And so they take care of it, they tell us how much we should spend, and they, you know, I have no idea how that works. I think it's helping, they tell me our numbers are good, but I don't like that stuff, so I talk to them once a year.

So you don't even pay attention to that, you're like, okay, this is— No, zero.

And then SEO, we do, but we don't do it for the search engine. We do it for humans. I mean, having clear titles, having clear descriptions, having clear web pages, that's good for our readers. The search engine is supposed to emulate what a human does. So we focus on making it as good as we can for humans.

Mm-hmm.

And then whatever happens with the search engines.