How a Team of 3 Bootstrapped to $5M ARR - Esben Friis-Jensen, Userflow

I've just released a book from grassroots to greatness 13 rules to help you build iconic brands with community led growth. We cover stories from big brands and small all the way from Harley Davidson to HubSpot to Nike Disaster to Gainsight to give you the frameworks to build a community led business that will take you from an obscure idea to a movement to a cult like phenomenon. Check it out at from grassroots to greatness dot com. The digital copy is on for 99 cents.

I highly recommend more and more founders to try to think as lean as possible. Do you need to hire a big team? The classic startup move has always been let's go out and first raise a seed round. Why are you doing that? You don't even have customers yet. Focus on getting some customers that pay you before you go out and raise seed money. Even if you end up raising seed money in the long run, you can get a much better valuation if you have customers that pay right? So I think it's about that mindset of thinking as lean as possible and not over hiring and doing these things that we have seen now was not so good. That happened in 2020 and 2021 from a lot of businesses. Hopefully people have learned. I'm not sure we'll see the next time the market is good, but I definitely prefer this kind of more lean business where you make more smarter decisions, more founder led decisions. The founder mindset. It's a lot easier to keep in a smaller business than it is to keep in a large business.

I need some traction. You need some traction. Let's get some traction. Hey what's up innovators, entrepreneurs, visionaries and disruptors. This is your Traction podcast host, Lloyd Lobo. We're a community of over 100,000 people just like yourself on a mission to help you get the methods, the money and the madness to explode your business growth. Featuring stories and tactical advice straight from those who've done it before, like Shopify, Twilio, Asana and many more. Hey Traction fam. Excited for another episode with today, an entrepreneur who's traversed both worlds raising over 40 million for his first company and then now bootstrapped to millions in annual recurring revenue. With three employees and nomading around the world currently in Mexico. Let's give it up for the co founder and Chief Growth Officer of User Flow, Esmen. Welcome to Traction.

Thank you, it's a pleasure.

So I want to get all into your journey, but firstly, how did you get into entrepreneurship? Like walk us through maybe something in your childhood or was there some pain or some burning desire to prove the naysayers wrong. What was it that forced you into entrepreneurship because you grew up in Denmark? When I think about Denmark, think about, like, very stable place, people, you know, happy, not. And the life of an entrepreneur is exactly the opposite.

Yeah, no, for sure. In my childhood, when I was like 16, 15, 16, like many other Danish kids, I played a lot with computers. You know, not playing games, but also coding websites, like Fun Websites with MP3 files and stuff like that. And back then, you know, it was all like a hobby and we were kind of just. Just enjoying ourselves. But we definitely, you know, would earn money on banners and ads and stuff like that. So it was kind of a business, but not really an entrepreneur path was never something you thought about. It wasn't like something natural in Denmark. It was more, you finish high school, you go to university, you get a job somewhere, right? So that's what I did. And I got my first job in a company called Accenture, which is big to consultancy. And that was basically the path. That was kind of the obvious path. If you had. If you wanted to work a lot, had a lot of drive, you went into consultancy, right? That was kind of how people looked at it in Denmark. But then after three years in Accenture, the startup world kind of started to grow a bit in Denmark. More and more people started to do startups and there was like some early movements, early success stories there, and that kind of intrigued me to take the risk. And I joined my colleague in Accenture to basically start coding global together with his brother and one of their friends. I kind of always had it in blood that I wanted to do something in the web world. It just wasn't a natural path in Denmark. And that's why I didn't do it initially. But then when it kind of grew in popularity, I did.

Awesome. Now, you know that's what they say, right? You become the average of the people you surround yourself with. Show me your four friends and I'll tell you, you're going to be the fifth.

Of what?

If you hang out with fit people, you're going to be jacked. If you hang out with entrepreneurs, that's what you might end up being. I think my first job, honestly, graduating out of university, was working for a founder. And it was 2005 and nobody was working for startups. And when I wanted to move up and move to another location, nobody else would hire me. So I had to get my next job with a startup and my next job also end up working for a founder. And then Eventually, I started my company because I don't know anything outside of that. So you become the average of your surroundings. So I like how you conveyed that. What was it that led you to start Cobalt? I mean, it's an interesting idea. You guys raised 40 million. What drove you to that idea? Was it the idea? Was it the market? Was it just, hey, I want to get into entrepreneurship and a bunch of my good buddies want to do it?

Yeah, no, it was probably the level, the most, actually, because we. We were all kind of looking to get into entrepreneurship, kind of found it interesting. More fun than working for somebody else to do something with a bigger impact. So we actually sat down, the four of us, and kind of looked at what kind of business do we want to build? We want to give it a shot. Let's spend four months trying to build something. And at that point in time. So first of all, Cobalt is a IT security software as a service company that basically does. Today, it does something called penetration testing as a service, which is basically get friendly hackers to hack your website and find the vulnerabilities. And then it's a software platform that facilitates that. But before that, it was a bug bounty platform. So kind of in the vicinity, but basically like where you do kind of these more like open public programs where you invite all the friendly hackers in the world to go and find security vulnerabilities in your website and then you pay them bounties. It was something Google and Facebook and so on, they kind of did. And then we wanted to be the platform that allowed everybody to do it. That was the initial idea. And we got that because security at that point in time, so none of us actually came from security. But at that point in time, security was all over the media. Bunch of websites were getting hacked. We were a lot into Bitcoin, and all the bitcoin exchanges were getting hacked. At that point in time, Pirate Bay, the PIP founder, had just hacked the personal registry of Denmark, so all the, like, Social Security numbers were hacked by him. So. So it was, you know, a very hot topic. And we found it super interesting. And then we had this idea, basically, invite a friendly hacker to hack yourself. And that was what we went with. And then we created this. We actually moved to Buenos Aires in Argentina for four months, and then we built the MVP of this bug bounty platform. That was a lot of fun. A good start to entrepreneurship. Not only building something in a brand new space, but also moving to a new place. And, yeah, just having a lot of.

Fun, you know, until the day Technology is progressing. The need for cybersecurity will always exist because there's good forces and bad forces, unfortunately in the world and somebody needs to provide security or on the web. So this is great. At what point did you leave the company? What made you decide to leave the company?

Yeah, so we went through a fantastic journey with Cobalt. After Buenos Aires, we moved to the States, got into an accelerator program, raised capital, and kind of just decided to build the company in the US So as we grew, we kind of, you know, started out in San Francisco, later expanded into Boston and Berlin, and became a remote first company at some point when Covid hit. So I was there for eight years and was a fantastic journey. But when we started to reach the 200 plus employees, it becomes a very different company. It becomes a lot more about building management teams, coordinating stuff. And I'm more the kind of founder who want to be hands on, move fast, make fast decisions, be close to the product and the customers. And that becomes a lot harder when you're a larger company. That was the main reason why I decided to leave it operationally. So I still have all my shares and so on, but I left it operationally to basically do a new startup where I could be hands on again.

So, yeah, you know, I've often felt the analogy that early founders are like pirates. We do whatever it takes, poke fingers, stick elbows, whatever it takes to get it done. There comes a time where you transition from pirates to navy, which is more process, more scaling kind of thing, which is much needed. So, I mean, I transitioned out of the day to day of our company, which we co founded and bootstrapped to 10 million boast. And, you know, until that decision, I was running product and GTM and partnerships and everything. That was fun because you get to reinvent your job in the job, right? You figure out something, you validate it, you get it to like working, and then you hand it off to somebody else. And that was a good cycle. And then eventually we grew to over a hundred people. We took in a growth equity round and then we brought in some big company execs to take us to the next level. And I'm like, oh man, you know, this is not my vibe. But I do think though, every big company ultimately needs to retain that founder mindset in many senses, right? I think we have this misnomer in society which says the founder and CEO has to be the same person. But like a founder and CEO in many ways are two different roles. Right. It's like the CEO's job is to Stabilize the company. And the founder's job is to inject new risk in the business. When you inject new risk in the business, you grow. And I feel like, you know, I would love to see a world where investors say, hey founders, go and create your own, like Google X kind of SWAT teams, gunk works and try new products, new projects, new markets and spend 25% of the funding just doing that. So you know, every company that gets to 100, 200, 300 million revenue is more than one product. It's more than one market. Right. Kind of thing. It's more than one channel. So just figure that out and we put the stabilizers. We're used to just optimizing for the end thing to run the 75% which is scaling. I want to see a world that operates like that, but it's very hard, I think, to get alignment on that. So that's great. How you transition. What led you to User Flow though? I mean, you could have thought of any number of answers. You could have just sat and do nothing. Did you take a sabbatical or time off between Cobalt and User Flow?

No, I had actually done a sabbatical two years prior to that. So I kind of, you know, I think I was already a bit fed up with being in a large company earlier. So I kind of went on a sabbatical to see okay, can I do I just need a break and then I can come back. I went back, I had a bit of refreshed energy, but it only lasted for so long. Right. And then I made the decision to leave. So no, I use a flow. I joined because my good friend Sebastian, who I met in San Francisco, he's also Danish, he had actually started building a one year prior to me joining and he had asked me already back then, do I want to join in. And back then I was like, I'm not ready to leave Cobalt. But then when I got to the point where I was ready to leave, he was still kind of interested in having me on board, which was good. I'm happy about that. So that's why I first and foremost, I like Sebastian Locke. He's a fantastic engineer, product builder, so he can build pretty much everything. So that was a big reason why I wanted to join him. But then he was also doing the product use Flow is basically a no code platform for building in app onboarding and guiding users to get the most out of software. And it kind of fell into that whole product led growth world that I was actually very interested in. In Cobalt, we had done A couple of product led growth projects and I was always looking to make Cobalt more product led. So seeing a company that was actually helping other companies do that, that was very interesting. So those two things was what kind of made me decide on Useflowers and then third actually was the fact that Sebastian and I were kind of aligned on that. We wanted to bootstrap and we wanted to keep the business small. So I had already now tried that whole, you know, the billion dollar journey or what you call it like you where you raise capital. The ultimate goal is to become a billion dollar business. And maybe I was kind of ready to do something else, so wanted to just be profit first. Bootstrapped and becoming a billion dollar business. Yeah, I know that would be great, but it wasn't a need, just build a fantastic business. That was kind of the alignment we had.

You know, bootstrapping is very difficult. It's very fulfilling, but it's also extremely difficult. As somebody who's been there and you know, me and my co founder have had to sacrifice their family and money and you know, it's a lot of things. Right. And it's hard because you don't make money for years and then if you want to keep investing in the company then you eat last kind of thing. So it's a very difficult journey. Had you considered all these things like, you know, the financial impacts and kind of thing?

Yeah, I think every founder is kind of ready to take a pay cut. Right. I did the same with Cobalt. When I started Cobalt, I went from having a good salary in Accenture to earning nothing, doing the same for userflow. Didn't you know, I didn't have any like family or anything at that point, so it wasn't like a big risk for me. But having said that, I think the other advantage both Sebastian I had was that we had done companies in the past so we weren't like our bank accounts weren't empty so we, you know, we could afford to basically bootstrap for a while and then luckily, and I think that's something every bootstrap founder should always think about and actually any founder is that we charged for our product from day one. Right. So it wasn't like a long path to revenue. We became customer funded really quickly and thereby could pay ourselves salary based on the customer subscriptions.

I love it. That's precisely what we did. You know what's really funny is we got paying customers immediately and we were doing the offering manually. Right. What we provide is R and D money to businesses. We started with automating government funding. Over time we added lending and now we're adding R and D analytics. But we're like, hey, customers want an outcome, right? It's less about software, it's more about the outcome. Let's deliver that outcome. Like, I got customers and did the work manually. So we understand the flow really well. And then our first version of the software was building Zoho Creator and Zapier. And then when we were millions in revenue, we had to replatform. But it's a tough journey, right, because you're like, you know, I gotta eat. And so like the things of a boot, the decisions of a bootstrap company are very different. Like validation is not, oh, you know, I give you an mou. Validation is. No, you pay me to use the product. That is validation. Product market fit is not some NPS score. It's you don't leave because if you leave, I can't eat. Right? Product channel fit. Like figuring out a reputable scalable channel is not like, oh, some obscure number. It's, dude, is my CAC payback period lower than six months? If it takes it longer to pay than one year, I'm screwed kind of thing. Right. So like, you have to think and position very differently. What are some of your like top maybe three to five lessons from bootstrapping? How long you've been bootstrapping user flow?

We've been doing it now. So Sebastian started in 2020, late 2019 and I joined them in late 2020. So yeah, what is that now?

Four years.

Right. We pay ourselves really well. I mean, we've been very successful now over the last years. Right. So bootstrapping for us has actually only had positives. I would say we make a lot smarter decisions. We're very product focused. I think that's something that maybe we're already that by default, but because we're so strapped on cash or have to think about that, we kind of been very conscious about solving things with the product. So I talked about product led growth earlier and we live and breed product growth basically. Right. We solve everything in the software. If we have a recurring support issue, we fix it in the software instead of fixing it by hiring people to answer the support tickets, you know, and that's kind of how we've been thinking, how can we automate as much as possible? How can we fix as much in the product as possible, of course, using user flow and etc. So that's been a really healthy mindset to always solve with the products, solve with automation. Instead of having to go out and hire people. And we keep asking ourselves, should we go out and hire somebody? So we are only three, right? But every time we come to the conclusions it's only going to add more overhead, it's going to add more management and it's not worth it, then we much rather just want to automate and make the product smarter.

What are you guys now, revenue wise? If you don't mind sharing.

So we're around 4.5 million AR with.

Three people and any contractors or that's just three people.

No, we don't use contractors. The designer we had the third employee, he used to be a contractor, but then we hired him full time.

So it's three full time employees. Nobody else?

Nobody else.

That is insane. So like basically you guys are making phenomenal money. There's no reason to sell the company or do anything, just grow it. Basically it's like a goose that lays a golden egg and maybe if you chop it to get all the golden eggs, there might be none. Right? I think if you decide to do it, because once you're 4.55 million in revenue, it becomes very interesting to growth equity, it becomes interesting to pe, where you can sell a good chunk of the company and get a lot of cash because it's high gross margin, very capital efficient business. The issue there is sometimes it's like they say, right, if you're gonna shoot me, make sure I'm dead, don't leave me alive kind of thing. So, you know, sometimes do I sell the whole thing or do I keep and keep running it? Because ultimately your companions I truly believe, right, it's neither the destination nor the journey. Your companions matter the most. Who you're with can make you feel like a rock star or a peasant, like the people around you. And you know, when you have a great sort of camaraderie and having a whole new person or organization join as a partner, it's having somebody else in your marriage, in your bed. And do you want to go on that journey? It's something for you to decide. It's a very interesting time because you're on the cusp of 5 million and at 5 it becomes literally interesting for a whole bunch of capital providers who are do any number of things.

I still am amazed by us being able to do this, but we just apparently hit something, did something right at the market, hit the market with the right product at the right time. And of course there's some luck to that. But there's also a lot of like smart decisions and how we think about product and so on.

So tell me about the early days specifically, like you land on the idea and how did you validate it? Like how did you figure out, okay, there's a need for this.

Sebastian, who was the one who built the initial part of the platform, he basically was doing another startup called, he called it Studio One at that point, which was basically like this video recording platform, a bit like Loom or something. But he wasn't getting a lot of traction on that. But then as part of that product, he had built a product tour inside the product to onboard users to understand the product. And all his early Studio One customers, they were asking him, how did you build that? And he actually had just built it himself. And then he went out in the market and looked and saw, okay, there's a lot of competition in this market, but none of the competitors can really build what I built for Studio One. Then he said, okay, then I can build something myself. Let's try to build a product that can actually build the kind of product to. I built, I coded myself. And that's what he did. And then he got some of those early Studio One customers to become user flow customers on the new product. So the first customers were actually the ones who kind of gave him that kind of input that they wanted, that feature that was basically just like a side thing in the Studio One product.

How did you get your first customers? At what point you thought you had like product market fit? What were those signals?

Yeah, I think product market fit is always hard. Right. I think the good thing is being in a competitive market and I love competitive markets. I would much rather that's something I'd learn. Copple was not in a competitive market. It was very wide ocean or sorry, blue ocean. So you had to do a lot of education and so on, which requires a bit more work. But if you're in the red ocean with a lot of competition, it's a lot easier to find that product market fit because there's already other businesses who have proven the market. So it's not so much about that, it's about creating a differentiation. And the differentiation we created was basically a better UX and a higher level of sophistication. So core focus on those two things and that kind of helped us get success. So after those initial customers via Studio One, we did first the product hunt, so got a few more customers from that. And then pretty early on we actually started doing SEM, so search engine marketing. And people were again, because it's a red ocean competitive market, people were searching for these kind of solutions. So doing search engine marketing in a competitive market actually makes a lot of sense and it's a lot faster than to wait for a long term SEO strategy and so on. That was the kind of key initial ways we got customers was through product hunt and SEM.

And what does growth look like today? Like how did you figure out a repeatable scalable growth channel?

So it's still very much SEM. Who's the. That's the main controllable channel because everything else is now SEO and word of mouth. So when I joined them, we scaled up SEM, but we also started doing more thought leadership around product led growth, authentic content about product led growth and onboarding and so on. And that helped scale ISO. And then as we continued to build out a fantastic product, we got more and more word of mouth. Today it's a mix between those three SEO, word of mouth, semi that have been the scalable acquisition channels and then that is combined with our whole product led growth setup. So we have a free trial automated onboarding using user flow and user flow we have an AI assistant for answering all the support questions combined with our self answering of course, it's a very product led growth approach. Also with self service procurement, all that kind of stuff.

I've just released a book from grassroots to greatness 13 rules to help you build iconic brands with community led growth. We cover stories from big brands and small all the way from Harley Davidson to HubSpot to Nike to Saster to Gainsight to give you the frameworks to build a community led business that will take you from an obscure idea to a movement to a cult like phenomena. Check it out at From Grassroots to greatness. Com. The digital copy is on for 99 cents. I like one thing you said and this is a very important insight because to me advertising always seems like a drug, right? Like meaning like it costs twice as much to squeeze the same ROI from the same ad. Channels like CPMs are always up year over year across Facebook, TikTok, LinkedIn, you name it, right? But you said one thing which is a very valuable insight for people here. If you have product market fit, which is like high retention and you're in a red ocean where the search is extremely high for that keyword, direct response might be the way to go, which is SEM, right? Like literally this is the quickest thing where what else is direct response? Cold calling and cold emailing, right? Look at all the direct response channels, cold calling, cold email and you got SEM. Everything else is a longer payback as long as your unit economics are right. And with three people, I think you have phenomenal unit economics. Right. Against your competitors, you can price to literally usurp the market, can you not?

Yeah, I mean, we can. And I would say there is a limit. Right. We played a bit with you hit some point asem limit where the return on investment is not worth it anymore. We try to scale up to a certain point, and then we saw the return on investment was really low compared to that increase. So now we found a good balance, like a good balanced level where we stay at, so we don't waste money, basically. And we look, as you mentioned earlier, we look a lot on the CAC payback period, basically. Right. Which is six months for us. So overall, that's great. I want to add a comment around the whole outbound thing, because when we started Cobalt, I think we could have done something similar, actually, because we were in the blue ocean. But there were like incumbents where we could have done ads towards the incumbent services. But back then it was very much the salesforce, you know, predictable growth model. So we did a lot of cold emailing, cold LinkedIn, and that worked wonders 10 years ago. But what I saw in Cobalt and what I also experienced in user flow when we moved to those channels, the return on investment on cold emailing and cold LinkedIn is a lot lower today than it was 10 years ago. And that's why I saw it as something where we would spend a lot more time and wouldn't get the same return on investment as we would with the more inbound channels. And that's why we decided to do what we did.

So what was the key learning before you went and invested in SEM, Right. Like, there must have been some key insights, which is because now I've been in situations where if people are not using your product, for example, is the worst time to invest in acquiring more, you know, spending on direct response, because you're basically burning money, you're flushing it down the toilet. So did you test a couple of channels before saying, okay, you know what, it makes sense. What were like two or three channels you played with in the early days before you said, let's double down on SEM? This is crazy.

I mean, we tested a lot of channel. Like, we even tested cold email and so on. But SEM, the way we did it was more. We scaled it up slowly, right? So we started putting in a little budget, then put in a bit more budget, a bit more budget, a bit more budget, until, as I said, we kind of Hit the limit of return on investment. And then we scaled down again. So it was a very iterative approach. So it wasn't like, okay, now we go all in on this channel now it was more like, okay, let's scale SEM. But we're also testing out these other channels on the side to see if they give anything. And what we were seeing was just cold emailing, cold LinkedIn was not giving by even close to the same results as SEM. It was kind of like at some point it was more about us stopping to do cold emailing, cold LinkedIn and just say, okay, those things didn't work, but we're going to continue doing what we works, basically.

What has been your growth rate? Are you sustaining that?

Yeah, I mean this year has been tough, all right. I think it has been for everyone, but we're still growing. So we grew in two years ago we grew six eggs in revenue, then two eggs last year, and then this year is going to be a bit lower maybe, but still growth. So I think if the market had been better, we'd probably done two eggs again this year. The market has just been bad in SAS in general. We haven't had a month without growth basically. So we're growing month by month now.

I'm so like fascinated by this insight of making SEM work, right? Because it's not something that I've ever able to do successfully in all my career. And when you say SEM, is this search marketing or like now you adding.

We tried all these other like things so people would ask should we do retargeting, should we do display ads, you know, this kind of thing? And all of that had way too much noise. So we just dialed in on the pure Google search engine marketing. If people search for these keywords, then we're going to do it. And we followed best practices. So we did one solution based campaign, one alternative campaign and one branded campaign, right? That's kind of the best practice Google set up. So one is focused on kind of the solution you're providing, one is focused on the competition and one is focused on just if people search on user flow, right, then you need to catch them. And then we did a lot of kind of negative keywords, right? We kept reviewing like what are the bad keywords? What are the bad search terms that are landing people on our websites? Let's remove those. For instance, if you think about user onboarding, there's kind of two kinds of onboarding, right? There's the kind of onboarding that is the kind of more traditional Employee onboarding, where you onboard somebody into your company and these kind of things. And then user onboarding is about onboarding somebody onto your product. Two very different things. But when it comes to keywords, they might, you know, be similar. So it was about like, how do we remove the employee onboarding stuff? How do we remove those keywords? So really doing a lot of work to clear that up. So that was one work with it. The other work we did was look at geographies, which geographies are really bringing in the right payback period. Right. And we actually in the end decided to only go with two geographies and remove everybody else, even though we had customers and all the other countries. And you could argue, yeah, shouldn't you just go after all those countries? Not really. If it doesn't fit the payback period and you're not getting enough customers from those countries, then don't spend budget on them. It doesn't make sense. And those are hard decisions because when you're first setting up SEM, you feel like, yeah, we need to target all of our target market, but really not. You should really narrow it completely down and make it super sharp.

So, yeah, I like it. Niche down before you niche up.

Exactly. Us being very focused on one channel, SEM means that we can do that, right. Instead of having to focus on all sorts of other channels and have to look at LinkedIn ads and whatever, we just focused on Google. Google SEM.

Did you try other things over time? Have you?

Yeah, we tried it and it didn't have. We got way too much noise from display ads.

I think display is different than search. Right. Like, the thing is, I think the one very magical insight you gave on, like, it just hit the bulb. If you're in a blue ocean where the search volume is so high and you're priced to like literally destroy the market, given your unit. Economics man. Go all in on this, right? Because the thing is with like social advertising or display, you're more educating, right? You're educating. And so then that goes into this funnel of visibility and then you create credibility and then eventually buy. And then you look at that flow and you're like, well, I may as well do content marketing instead, because content marketing then gives me some other benefits. Like it gives me an audience, it gives me SEO. I have the opportunity to build community over time. I can funnel that into PLG to create a referral mechanism. I can do a bunch of things. But displays like the money spent there is just gone there versus with content, you accomplish the same thing. But like it lasts a longer cycle. I love this, man. I mean, you're like energizing me. I want to now get back and start another company just from this conversation now. I mean, it can't all be like sugar canes and candies and rainbows and unicorns, right? I mean, what were your toughest, lowest points in this past couple years and how did you navigate them?

We honestly a lot of low points. I mean, you always lose a customer that you should have kept. I think one of the things when you have a very product LED model is that you choose to be low touch, right? And sometimes you will lose customers that wanted either wanted a high touch or you lost them because they didn't know about something and you didn't give them the high touch answer that they needed to stay right. And that sometimes can feel hard. But then you always have to look at the macro picture and see that your business in general is doing amazing. So losing that one customer, it's not as important as you think it is. But it is still hard always to lose customers that you felt that you could have kept if you had just written a certain note or something like that. I think it's only been things like that. We haven't had any major low points. It's all been amazing.

Great stuff, man. You can't sugarcoat it. I hope you're not.

I know this is special because we have really. Sebastian is a fantastic engineer. So that's an unfair advantage. I've done another company built go to market another company before. So again an unfair advantage. But this is really something I highly recommend more and more founders to try to think as lean as possible. Do you need to hire a big team? Right? Do you need to go out? The classic startup move has always been let's go out and first raise a seed round, right? Like why are you doing that? You don't even have customers yet. Focus on getting some customers that pay you before you go out and raise seed money. Even if you end up raising seed money in the long run, you can get a much better valuation if you have customers that pay right? So I think it's about that mindset of thinking as lean as possible and not over hiring and doing these things that we have seen now was not so good. That happened in 2020 and 2021 from a lot of businesses. Hopefully people have learned. I'm not sure we'll see the next time the market is good, but I definitely prefer this kind of more lean business where you make more smarter decisions, more founder led Decisions as well. You spoke a bit about that. Like the founder mindset, it's a lot easier to keep in a smaller business than it is to keep in a large business. Some are trying, Right. You see Airbnb, now, the CEO and founder, he's really stepping in to almost lead the company back on a better path. Right. But it's not. Most often you don't see that you.

Sell to what size of company? Because if you're selling to enterprises, how do you do support with three people?

Yeah, no. So we sell to our target market is B2B SaaS companies. So that's kind of the majority of our customers and it's product managers and customer success and it's all sizes. So everything from the five person startup to we have amplitude and netlify and so on. So large SaaS companies using our service in general, you know, we do have an enterprise package, but that's more about paperwork and whether we want to. We basically charge for paperwork. So if they want a custom contract, security questionnaire and all that, they have to pay more. But really what we're seeing when it comes to support is enterprises don't need more support than other businesses. We solve it in the same way by having a great, easy to use product and by solving support issues in the product. So whenever we have a recurring support issue, we just fix it either through a knowledge base article or by fixing a certain UX thing in the product. So our support load has stayed the same and actually has only decreased over the years.

Now you have no contractors, you said, how did you build the product? Who built the product?

Sebastian built everything. So the last employees are designer Jonas and he is supporting Sebastian and making it user friendly and look good and so on, but Sebastian builds it all.

And your pricing though, is it targeted to what level of person?

It's in the mid tier, I would say. Right. So our startup package is 250amonth, pro package is 850amonth and an end price is more than that. So yeah, it's like a mid tier kind of tool, I would say. But even people sign up and buy the pro package all the time without speaking with anybody. So it's been great.

What are some of your top learnings to operating Lean Automations, productivity hacks and whatnot?

Yeah, no, so I think I actually done a video series about this that I recommend everybody check out. We share how we do product LED at userflow, but basically it's a lot about that. Like we fix it in the product. If we cannot fix it in the product, we solve it with automation and that can be either automated email or automated onboarding using userflow. And userflow, that's always the mindset, first fix it in the product. If we cannot fix it there, then automate. If we cannot fix it there, then at least make it some kind of scalable manual process. That's always the mindset we go into things with. So we have really minimal manual work, which means we don't spend a lot of time to operate the business. It's very self service and automated.

Any top learnings here, like any failures, any mistakes that you can talk through?

I think my entrepreneurial journey has been one big learning, right? I think the whole thing about of course without Cobalt I couldn't have done user flow. So I wouldn't say COBOL was something I shouldn't have done because it very much brought me to where I am today with userflow. But I would say that more businesses, and that's how I think about it myself, should consider whether it's best for them as a founder to actually do a VC backed startup. Because I can tell you that with cobalt, they're 10 years into the journey. I still haven't gotten anything out of that other than my experience and the possibility to do user flow. Right. So if you're looking to get rich from building a company or something like that, it might be smarter to just build a smaller company that can get, you know, acquired at some point or something similar. Because that VC backed journey of becoming a unicorn, it's very few startups that actually succeed in that first of all. And the ones that do succeed, it takes many years. It's like a 10 plus year journey. Right. And I think that's what many forget when they go out and raise capital. They think they're going to build a unicorn in five years or something like that, which was maybe possible in 2021, but definitely not possible in 2023.

You know, the media has perpetuated this addiction to unicorn porn. In reality, the world is built by horses, camels and donkeys. And what that means is we just glorify the unicorns. And you know what happened in the last two years, right? Like the interest rates were low because there was a black swan event. Everybody needed to digitize and go online. So if you're selling offline, you need Twilio and Snowflake and Shopify and who knows what, like AWS and user flow and whatnot. And then we started seeing obscene growth coupled with low interest rates or 0 from the pandemic money started flowing in and started investing in startups that were seeing obscene growth. And because of the competitive nature, more and more startups started raising at high valuations and at the turn of, what was it, 2022.

Mary?

Yeah, the black swan event ended. If you didn't digitize in 2020, 2021, you're not going to. You didn't create a bigger market. You just rolled for the market a couple years. And so the growth started slowing down, coupled with the interest rates going up. And every time the interest rate goes up, the stock market takes a hit and follows a recession. And that's exactly what happened. And so now what you have is a bunch of overvalued unicorns who can't raise because you're going to literally forego their whole cap table. And you're in this messy situation where like, you can't raise and you can't grow. And so a lot of silent shutdowns, a lot of asset sales that nobody talks about. So I think what you said hits the nail right on the head. I think your experience is unique in that being a part of a company that raised 40 million grew to over 200 people. And just seeing that journey of being a part of a larger company, wanting to have more control and wanting to be more involved, be more hands on is something very interesting. Right. How many customers you guys have?

Close to 700 customers.

You got 700 customers. How do you handle like huge volumes of support or demo requests or like feature requests? What is this rubric? Because three people is just insane.

Yeah. So support, as I mentioned, it's basically we fix it in the product. Right. But. And also by using userflow and userflow but for demo requests. I actually did. I started an experiment two years ago. So the first year I had a lot of demos, but then I kind of felt like, oh man, it's so boring to do these cookie cutter demos. And it doesn't seem like people are listening anyway. Right. It's, you know, it's kind of feeling like a waste of time. And the best conversations are the ones that are with people who already did a trial or at least have some good info about your company and are asking the more advanced questions. So what I started to do two years ago was to basically say more or less no to the cookie cutter demo. I started to share a video demo that people could watch and said, you can watch this video and I also recommend you do a trial. So we still kept, we always had it like free trial is the primary call to action. View demo is the secondary call to action. And then we did have a schedule a demo as a tertiary kind of action on our website. But even the ones who then requested a demo, I started just sending them the video demo to see what they kind of would do. And so far, so good. I've been able to more or less cut away. I have maybe one or two demos a week now. It's much better because it's basically the people who are generally interested in the product will do the trial or will watch the video and then ask questions and you end up not having all these like. I think there are way too many demos with people who are just like justifying their time or something by setting up demos with random vendors and never moving forward. Right. I've had way too many of those where just, yeah, we did this demo. Are you going to move forward? No. Maybe in six months we're going to move forward. Right. That's the classical kind of thing. So now I'm kind of vetting it out beforehand by forcing them a bit to be genuinely interested in the product before I want to jump on a call with them. I might lose some customers on that, but in the end it's much more effective and efficient.

Any parting words of wisdom as we close out?

Product led growth is something every business should consider as their growth market model. It's definitely been successful for us. And then I think the B2B software world is still amazing and more founders should get out there and build stuff and try to bootstrap it at first to see how far you can get. I think that's something I would recommend any new founder to try, at least for a while.

Fantastic, man. Where do we follow your Wisdom?

I'm on LinkedIn mostly, so just connect with me on LinkedIn or follow me on LinkedIn. Yeah, sharing a lot on product growth, bootstrapping, onboarding, et cetera.

Fantastic. This has been a great conversation, very eye opening. A couple of interesting points. One question actually that I had that I probably didn't ask is when you build the platform, you built it from the ground up or did you like start with no code, low code to validate?

So because Sebastian is an amazing engineer, he built it from the ground up. So that's an unfair advantage. Right? I think with Cobalt, none of us was engineers. We had to learn. Two of the founders learned to code while building Cobalt, but so back then we built a super simple product. But with UserFlow it was, you know, Sebastian, he already knew how to build a great SaaS product, so he built it from scratch. I also been in the other situation with Cobalt and there we just started out smaller, right? We still coded the platform. We didn't use like no code tools, but we just coded that very simple interface. So back then it was basically just like a form to report a security vulnerability. That was it. And then everything else was handled via email. So it seemed like a website, it seemed like a software product, but a lot of manual work on the back end. But we still charged for it and we had paying customers from day one.

Great stuff man. Thank you so much for your time. Wishing you great success. A couple more zeros to that revenue number up into the right. I need some traction I've just released a book From Grassroots to Greatness 13 rules to help you build iconic brands with community led growth. We cover stories from big brands and small all the way from Harley Davidson to HubSpot to Nike Disaster to Gainsight to give you the frameworks to build a community led business that will take you from an obscure idea to a movement to a cult like phenomena. Check it out at from grassroots to greatness.com the digital copy is on for 99 cents. Thank you for listening and we hope you enjoyed this week's episode of the Traction podcast. If you enjoyed the show, please leave us a five star review and you can find more information and all the resources mentioned in today's episode at. Boast AI that's B O a S T AI slash blog. We're trying to get some deal flow. You got to have the same thing. If you want to make it real though, you got.