"5 Dos and Dont's Lessons From My Bootstrapping Days" Wrike Founder and CEO Andrew Filev
Andrew Filev, Wrike's CEO, shares lessons from six years bootstrapping before raising venture capital. Do hands-on customer discovery yourself, hire high-ambition low-ego people, and use A/B testing to build predictable revenue. Don't try to outspend incumbents or raise money when you actually need it.
Chapters
My name is Andrew Filev. I'm the CEO of Wrike. I wanted to give businesses that visibility, complete visibility into what's going on. When you're running something at scale, at least 70% of that work is repeatable. I need to be able to act quickly and to do that, I need that information. The whole category and the whole market is hundred times bigger. We continue to grow rapidly. There's always both opportunity and need to continue to optimize and evolve. It's never the end of the journey. All right, good morning, everybody. How many of you here are fellow founders? Raise your hand. That's amazing. I affectionately call you fellow Grinders. I've been running Wrike for about a decade right now, which dates me. And about half of the journey, I bootstrapped the company. So there are plenty of lessons learned. I'll try to summarize some of them in the short 30 minutes that I've got. I've got plenty more, so feel free to come back after the session. And the later half of the journey, we actually raised money, so from some of the world's best investors. So I had a pleasure of having Rory Driscoll on my board. He's in. He was in Box and Docusign and many other iconic SaaS companies. And then in the last chapter that we started recently, we actually raised money from the biggest and most successful software investor in the world, vista. They got $40 billion of money under management. So, incredible journey. I've been humbled to go through that. It had plenty of ups and downs. Those of you who've been doing it for quite a while know that it's never smooth. It can be up and to the right. But at large at Micro, it's always, you always have your surprises. You gotta learn to cope with them and kind of grow a little bit of a thick skin as you go through your journey. So a couple of words about myself, right? I've been in the valley for about the same time that I've been building Wrike. Fun fact, actually, the first time World saw Wrike was in Paris. Some of you might remember there was a coin called levab. Raise your hand. Alrighty. I date myself even more. So anyways, I presented Reich to the world there got the award for the best B2B startup. That was the first time the world officially seen it. So it's good to be back now after 12 years and with some good traction under the belt. And as I said, we bootstrapped for about six years. And when we raised our first institutional capital we already had thousands of paid customers, so I had a pleasure to do both. So, first question, why Bootstrap in the first place? I think for me it was what you could call a mutual decision. So as a person who teleported into the Valley around 06 07, I didn't have any your typical Silicon Valley profile. I was not an ex Stanford, ex Googler kind of guy. I did have a business experience before, but it didn't count. I also used to say funny things. I still do. And then the other part of the story was that our market was a bloodbath. It is, it was, and it will continue to be. The short of that story is that our product is potentially applicable to every single company in the world. And so there are a lot of other companies that are going up to the same market, from the smallest of the startups to the largest of the corporations. And for their venture investors, it's a very, very hard bet. It's the market that's not differentiated enough, at least at the surface, unless you're deep in it. I was deep in it, so I knew why my product was better. Otherwise I wouldn't start the company. It would be suicidal. But it wasn't obvious for investors, and they always looked for the next step of the traction. You get to your first revenue, they're like, okay, could it be a little bit bigger? And then you get to the next side? And then could you be a little bit bigger? And then like, could you get to 10 million ARR? You'll probably collapse. And then you get, well, maybe you could get. Could you not get to 20? You get there and by the time they wake up, you're like, oops, sorry, I don't want your money. Right? And again, it was good decision on the investor side. The market is too competitive for them to kind of know it at the surface level. And then on my side, I didn't want to spend all the time in the world just fundraising. I was actually 10 times more passionate about solving customer problems. And so while I did kind of dipped into fundraising in the early years, I was always more passionate about building something that solves customer pains and also building the right team behind it. So my first lesson is related to that. Your customers are your most important investors. And that's the lesson that I learned through bootstrapping and that I passed on to my team. And that's why for us or for our company, those bootstrapping years were invaluable. We now again operate with their largest software investor behind our back. But we built the right culture from the day one, and that stays with us as we continue to grow. As we have hundreds of employees all over the world, that culture stays with us. And as if you, if you grow companies for quite a while, you would know and understand the value of the culture. It's extremely hard to change. So what you said from the get go, cherish that and grow that. So the lesson number one is again, I was more leaning towards customers and the bootstrapping by itself forces you to treat your customers best. And a couple of things there that helped me. So I was personally our first support rep. And while it sounds kind of funky now running the company, we have 50 people in support and things like that. But in those early days, while it was done out of necessity, looking in the rear mirror, I think this is one of the best things that could happen to us because my background is engineer, so by default I'm leaning more towards product and user interfaces and all those cool technologies and things like that. But being on the front line with the customer forced me to understand their pains and joys in the most kind of visceral way. I felt their pain. I'm a very affectionate person and so that helped me even without doing separate standalone customer discovery customer search that help me have that contextual understanding of what the customers need the most. And then whether you do that or not, it's extremely important that you spend that extra time with the customers. First of all, when you just start a new company, that product market feed is literally critical. Think of it as like this second derivative of your growth trajectory. So slight changes in that compounded over five years would mean whether you're sort of bust or billion dollar company. So it's extreme. And those things are set in the early days through the product market feed. So that customer discovery is extremely important and very simple advice. There is that once a week, give a call to a customer who either loves you or hates you, right? And mix both, right? So call to your best customers and understand why did they buy you, how are they using you, what do they like and why did they pick you rather than competitor. And then also call the customers who did not pick you either in their upfront, so kind of look through your funnel, or they kind of picked you and then churned and do one call a week and that knowledge will help you. You will continue to build the understanding of your customer base and the more calls you do, the less biased it will be. And so that will set a good foundation for you on the product side and Then the other lesson from there, a little bit of a counter lesson, is that you should think if you're building the business at scale. I knew that I wanted to build a large company. So while I was bootstrapping the business, I was not building kind of a sideline for income, I was building a company, I was building a product that I wanted literally millions of users to use. And if you do that, you need to avoid the trap of becoming a custom dev shop for a single or large customer because our go to market, we were spared that. But if your go to market is very high touch sort of enterprise field sales, you will be under incredible pressure in the early days to become that custom dev shop for your largest customer or your largest product. And so it will take a lot of gut to avoid that trap and still try to force sort of less biased approach to product market fit. The other thing, and this one I did step into, is that when I was in the very early days, one of their fellow very successful founder told me that he doesn't believe much in partnership. And I didn't understand this at the time. And so in the early days there's a tendency to believe that, oh, if you just list your product here or there, it's going to make your day. So we invested over the years into multiple partnerships that ultimately brought us literally nothing. And all of them had great premises. Like in one case it was a company where we were the first and only app listed in productivity category and they had like 50 million users or something like that. But their trick is that there was no feed with the audience. And again, going back to that product market fit, unless you have that great feed, it doesn't really matter. And I have at least four stories like that for you. So again, this is nothing that I say is an absolute truth. I know there are stories that are completely opposite of mine. I'm just sharing my story. So in my story, one thing I've learned is that your best bet is yourself. Once you grow to a certain scale and size, then partnerships are extremely important. We have our full blown BD team, we work with strategics, we work with smaller companies, we works with work with integration partners aside. So once you get the scale, partnerships become very important multiplier. But when you're small, I would take a hard time betting on like a single partnership as the main driver. And then the other trick that I've seen with other people's companies is sometimes founders are a little bit scary to test, to truly test the market. It's kind of a Little bit of a fear of rejection. So some companies go too far with just the freemium model. Freemium model is amazing to spread the word out, but it also delays the time when you truly test whether or not your product delivers the value to your customers. So this one, we were pretty like, we had our pretty capitalistic philosophy right from the day one. We said, hey, if our product delivers value to the customers, they should be willing to pay for it. And we went even further back in the time when I started the company, one of their most popular project management tools was Basecamp. And so it was all the rage. All the media wrote about it. And so people ask me things like, oh, why is your product so why do you charge more than basecamp? My answer was very simple. We deliver more value, right? People ask me some weird questions like, why is your product different than Basecamp? I was like, well, because there is a basecamp. Why would I build something similar? There's already not just the basecamp, but about hundreds of clones that looks exactly like it. I'm not in that sort of business. I'm building something that solves a more scalable problem and has a different audience and has, in my opinion, more value for that audience. So just avoid that freemium trap, if you will. The sooner you get that feedback loop, even if it's harsh, the quicker you learn and the bigger you'll ultimately become. Lesson number two, failure comes from anywhere. Success always comes from people. So in terms of that, failure can come from timing. You can have incredible idea and fairly good product. It's just that the timing might not be right. It could be product market fit, it could be something else. But your success at least I can always trace to the right people in the company. And so I always over invested in hiring the right people. My hiring playbook is very simple. I'll share it with you. It's not proprietary. I love working with smart people. And by smart, I don't mean just like, you know, academic iq. I mean also kind of street smart and being able to apply that smarts to work. I love working with people who are fired up and motivated and can sort of go that extra mile and who have that sort of good energy around them, who can work with you and multiply your energy. And then I like working with people who get shit done. I've had unfortunate pleasure of interviewing people who knew how to talk the talk, but do not, did not kind of know how to walk the walk. And I'll share some tricks on that side and then my personal one, one of the defining characteristics of a good Riker is that high ambition but low ego. So we prefer to not hire jerks. They become toxic for the company. And so even our most senior people are eager to learn. I just had a call, for example, with my CRO yesterday and we were discussing some adjustment to the sales model and he was the first to say, hey, in all my career I've never done it. But it's an interesting idea. I'm going to seek out some benchmarks to see if we should try. So you should look for people who are, regardless of their level of seniority, are always eager to learn, get the feedback and can take it constructively. And then so in terms of getting understanding, if people have those qualities or not specifically, can they walk the walk? A couple of tips. One, for almost every position I like to do deep dive. The form of that deep dive might be different. So for example, if it's a content marketer, we'll give them a written test. If it's a marketing, if I'm hiring a cmo, it will be very different. I will ask them very but I still will ask them very specific question. We're very transparent companies. So I'll give them under NDA access to any data they need. But then I'll ask them to come back and whiteboard with me and present the solution to a fairly tough problem. And I'm not looking for a perfect solution. There's no, it's not a multi choice answer, there's no right or wrong. But I will be looking to understand how they think, how they operate, and not just on the idea level, but also what's their management style, how do they operationalize things, given that doesn't always solve it. Again, I had unfortunate pleasure of doing a couple of references where you're extremely impressed by the candidate and you call their previous employer and they tell you, yeah, they're telling a great story. They've been telling this story for me for six months straight and nothing was done. That's a rare occasion. But I did have at least three or four of those. And so be careful. I'm still a big believer that references are one of the most important parts of the interview process. At least that they're referenceable. Level, your individual contributors might be harder to reference, but your executives, they should be very referenceable. And then when hiring, that last thing is especially common when people are coming from larger companies. So it's not about them, it's more about how they used to operate. So they may be very smart and good Willing. It's a different culture in a very large company they're hard to run the existing playbook rather than do a transformation and build the playbook. And so if you're hiring somebody who only worked at large companies, one, they can make a great hire. But be careful and figure out your way to test that culture fit because you don't want it to kind of learn three months in that they're operating at a different cadence. And then in terms of selling your jobs, you have something unique that nobody else has. There's a value of equity. You should definitely hire people who are fired up by your mission. They really want to join the company, they want to take charge and they want to take their bigger equity and participate in the upside. And a lot of them also come for career growth. So for example, they might have been a director level person at LinkedIn and there might be another thousand directors and then they come in at your company to, to be your next head of marketing a product or something like that. So for them it's an incredible opportunity. And for you it's an opportunity to hire somebody who on one hand seen the movie, but on the other hand you can still attract them with your frankly smaller comp package than they got before. So next lesson, use your size as an advantage. As was briefly mentioned, I trained in Brazilian Jiu jitsu. My coach who is our 12 times world champion, his favorite phrase is technique conquers all. So it's not about overpowering. And you definitely cannot overpower Oracle, SAP, Salesforce, Google, what have you. Your size is your advantage. In my first company before Wrike, I printed on the wall the word velocity printed three times. So like velocity, velocity, velocity. That's something that larger companies don't have. Even at Rightscale with 800 employees, I still try to keep that high velocity startup culture. But I do know that we don't pivot and move and adjust as fast as when we were a 10 people company. And we're also frankly not interested in some small opportunities. So there are some opportunities where I know we could make like million dollars, but at our scale that doesn't make or break our annual growth plan. So if I distract my team on that small opportunity, actually it's not a good thing. I can miss the bigger goal. It's very hard to maintain high growth rate at a scale. So you gotta stay very focused. And so there are plenty of opportunities on the sideline both in terms of product and in terms of go to market that larger companies are not and shall not be interested in. And if you tap into those opportunities, it gives you a very good growth rate. And it also frankly sets you up if you're interested in exit, sets you up for good exit. Because then if that opportunity tends to be bigger than anybody expected, then the easiest way for a large company to source it is to equihire or acquire you and kind of get that into their portfolio. And then when you're looking for those opportunities, definitely focus on something that's differentiated. Again, you're not trying to out Microsoft. Microsoft. That's suicidal. Don't do that. So think about things that are truly different. Think about things that customers are seeking out and not finding an existing vendors and use that to your advantage. And then I'm a big believer in execution as a big part of a success. Even in my early days, I learned very quickly that ideas a dime a dozen. I literally woke up every day with a new idea and my business partner back in the days taught me that it's not productive. You gotta stick to something, you gotta focus, you gotta operationalize and you gotta get to those goals. So I'm very big on goal setting. I could literally talk for 30 minutes about the importance and tricks and tips around that we use objectives and key results. If you never heard about what it is, please read up on that. That will save you years of your life. And I'm very big on measurable goals. I will keep pushing my team until they come back with something measurable so we can set up sort of a progress tracking for that. I'm also a big believer in templatizing and automating the work. There's only so many hours in the day. If you get to scale, I know a good solution for you. You can guess what it is later. And then it's also extremely important for me as a founder, especially in the early days, to get visibility into our most important initiatives. I'm not a micromanager, but I like to understand my business and I like to know what's going on so I could better connect to people. And I can adjust early rather than late. Lesson number four, I'm an Agile guy through and through. Raise your hand if you remember what's extreme programming. I dated myself even more so. It was the first popular Agile software development process. It was kind of funky. You were supposed to program together in pairs, but it set in the motion that Agile Revolution Scrum came after that. And I'm through and through Agile Guy, not just in software development, but across the business. So I carried that into marketing. I was our First CMO if you will, for the first eight years, not officially, but I was a big part of building our marketing machine and I applied purely kind of engineering and quant approach to that. We a B tested everything, we optimized everything. That again art of goal setting is extremely, I can tell you about some tricks that we did early in the days where we built predictive revenue machine that like later there's, there's a whole category of tools right now with the companies trying to do that. So that scientific approach and agile approach to marketing was instrumental for our growth. I think it's, it's foundational for any digital marketing programs that you do. And I went as far as literally testing the sales process. I didn't have sales reps until again we had thousands of customers. And the way I approached it very unconventionally, your more conventional approach, you hire a VP of sales, they hire a bunch of sales reps, you set the comp plans, targets and so on and so forth. I picked a couple of folks from customer success, didn't give them any comp plan, said hey, here's a bunch of trials, go call them, figure it out. And I baselined it with the trials that were not given to them. So it was, it was a pure AB test. And I did the math or as I call it, or the proper word would be economics. And it turned out that the money I paid them versus their uplift that they got in conversion and deal sizes, their ROI on that was positive. And that's before they had any sales plans or training or anything. Just purely putting them on the funnel made a difference. And that to me was an answer. And from that point on I did hire proper sales reps and property VP of sales and CROs. And we're at the point now when we have more than 100 quota carrying reps and very sophisticated machine. But it all started with a very simple a B test. And then last but not least, at some point you gotta switch from growth hacking into building sustainable machine that is very predictable in the revenue generation, right? So. And you will have to start thinking about things that are scalable. When you're bootstrapping, you still have to do a bunch of one offs just because your bank account cannot go negative. So you still need to be able to make the money and process the payroll. But at some point you gotta start thinking bigger and think about how do you build things that scale and that are predictable. And last but not least, in terms of fundraising, again I had a very successful journey there as well. Their biggest lesson That I learned is that it's easiest to raise money when you don't need it. I know it sounds like a harsh truth, but it is the case. Investors are not a charity, they come there to make money. So the easiest way to raise is to come to them and show very provable model of how they can put $1 in in the business and get three out. And hopefully it also scales up at least till the next round, if you will. It's not kind of fully saturated yet. So that was my lesson on the fundraising. As soon as I get to that predictability and as soon as I get to that traction, I was able to name, literally name the terms of the fundraising. It became became much easier. And even there, going back to that agile thing, I did something that I personally call agile financing. So every round I did, I raised less than I could. And I try to raise as little as possible. Like a lot of people try to raise as much as possible, I try to raise as little as possible. So if you look at our revenue size, to the amount of capital we raised in the burned, we were usually literally 3x better than direct comparables or competitors. So we built that culture of efficiency that allowed us to on one hand to retain more equity on another hand. What is even more important, it just build the right set of economics and the right culture that ultimately worked best for everybody, for our customers, for our investors and for our employees. So I'm almost out of time. Just to summarize, the first and most important lesson is to focus on the product market fit. Talk to your customers, use your agility and velocity to quickly adjust and navigate. I don't like the word pivot. If I look at our product, it gradually evolved over the years. I like to say that I like rapid evolution as opposed to revolution. But those very quick agile adjustment can actually carve you path in a different direction than you originally thought about. Focus on hiring the right people. This will literally make or break the business. I told about the good stuff, but there's also some scars earned in the journey. Like some of their toughest things also come from your team. So I cannot emphasize how important it is to hire the right people upfront and invest enough time and effort into that. Differentiate and leverage your size for that. Invest in what works and test it and do that very rapidly. And then when the time is right, turn that traction into the value. Thank you. I'm two minutes ahead of time.
