Bootstrapping a SaaS in a Market with Well-Funded Competitors
In this episode, I talk to Michael Cooney the co-founder of WhatConverts, a product that lets you track phone calls, web forms, and web chats, back to specific marketing campaigns so you know exactly where your best leads are coming from.
When Michael was running a digital marketing agency, it was a real pain to track and report where leads were coming from.
He partnered with a former employee to launch a new startup with a simple idea to track any form on any website, just by adding some tracking code.
He showed the product to his agency clients who loved it. And it didn't take long to signup their first 5 customers for $30 a month.
For the next 18 months, the two co-founders still had to work their day jobs and find time in the evenings and weekends for their new startup.
During that time, they were able to keep growing and finding new customers. It looked like they'd be able to work full-time on their SaaS business soon.
But their honeymoon period ended abruptly when new well-funded competitors entered the market and spent a ton of money on marketing.
Michael's bootstrapped startup couldn't compete with those companies. They had to find another way to compete, differentiate and grow their business.
Today, WhatConverts has about 1,000 customers and is doing over $2M ARR. The company is still bootstrapped and has grown 40% in the last 2 years.
In this interview, we talk about how they've built their SaaS business, how they're competing with companies that have raised tens of millions of dollars in funding, and why they believe they can bootstrap their way to $10 million a year.
I hope you enjoy it.
TranscriptClick to view transcript
Omer Khan: [00:00:00] Welcome to another episode of The SaaS Podcast. I'm your host Omer Khan. And this is the show where I interview proven founders and industry experts who share their stories, strategies, and insights to help you build, launch and grow your SaaS business. In this episode, I talk to Michael Cooney, the co-founder of WhatConverts a product that lets you track phone calls, web forms, and web chats back to specific marketing campaigns so you know exactly where your best leads are coming from.[00:00:40] When Michael was running a digital marketing agency, it was a real pain to track and report where leads were coming from. He partnered with a former employee to launch a new startup with a simple idea, to track any form on any website, just by adding some tracking code. [00:00:57] He showed the product to some of his agency clients who loved it, and it didn't take long to sign up their first five customers for about $30 a month for the next 18 months, the two co-founders still had to work their day jobs and find time in the evenings and weekends for the new startup. [00:01:15] During that time, they were able to keep growing and finding new customers. And it looked like they'd be able to work full-time on their SaaS business soon, but their honeymoon period ended abruptly when new well-funded competitors entered the market and spent a ton of money on marketing Michael's bootstrap startup just couldn't compete with those companies. They had to find another way to compete, differentiate, and grow their business today. [00:01:44] WhatConverts has about a thousand customers and is doing over $2 million in annual recurring revenue, the company is still bootstrapped and has grown 40%. In the last two years in this interview, we talk about how they've built their SaaS business. How are they competing with companies that have raised tens of millions of dollars in funding and why they believe they can bootstrap their way to $10 million a year. So I hope you enjoy it. Michael, welcome to the show.
Michael Cooney: [00:02:13] Thank you, Omer. Nice to be here. Thanks for having me.
Omer Khan: [00:02:16] My pleasure. So do you have a favorite quote, somebody that inspires or motivates you or just gets you out of bed every day?
Michael Cooney: [00:02:22] Yeah. There was a book I read early on in my entrepreneurial journey by James Dyson, the guy that created the Dyson vacuum cleaner and he made a statement in there says, “It only took me 12 years to become an overnight success”. And that's resonated many times in my journey being a business owner.
Omer Khan: [00:02:41] Yeah. And we're going to talk about that and it'll become very clear to everybody why that quote is important for you. Let's start by talking about WhatConverts, what does the product do? Who is it for? And what's the main problem you're helping to solve.
Michael Cooney: [00:02:57] So WhatConverts was born out of a digital marketing agency. And the main problem to solving is when I was working as an agency, we'd run a campaign with generate leads for the customer, and we'd go into the meeting with a customer and say, Hey, this new campaign that generated 60 leads, isn't that great?[00:03:15] And they would say, well, I don't know. And we're a bit like a case. So yeah, I know, I know there were phone calls because we were tracking calls and I know there were forms, but they went into the customer CRM and I can't see. So it'd be, be less stuck, like, well, okay. Let me dig into it and get back to you. [00:03:34] So that was a problem that came up time and time again. So WhatConverts tracks all your leads for you, stalls all your leads in one place allows you to see them, manage them and qualify them and then easily report them. So when you go to a meeting now and you say to your customer, Hey, this campaign generated 60 leads and they'll say, were any of them any good, you have multiple ways. You can actually go look at the needs, or you can just look at the report where they were qualified. It's just makes it so easy to seconds and your customer's got the answer.
Omer Khan: [00:04:04] Great. And can you give us a sense of the size of the business? Where are you in terms of. Number of customers, revenue?
Michael Cooney: [00:04:12] So we actually service or our software is used on close to 20,000 websites, but we have a little over a thousand direct customers. So what happens there is we'll have a digital marketing agency users, and one agency might have 500 customers and another agency might have 10. So we have over a thousand direct customers, but we service close to 20,000 websites.
Omer Khan: [00:04:39] And revenue?
Michael Cooney: [00:04:41] With 2.2 million ARR at the moment.
Omer Khan: [00:04:44] And the business is bootstrapped.
Michael Cooney: [00:04:48] Correct? Yeah.
Omer Khan: [00:04:50] Love it. All right. So let's start by talking about where did the idea for WhatConverts come from?
Michael Cooney: [00:04:57] So my career actually started as with me being an electrical engineer in South Africa, building gold mines. So nothing to do with marketing, but as an engineer, I needed to source suppliers all the time.[00:05:10] And when the internet first became available, this is incredible. It's going to make my job easier to source suppliers. But then the suppliers weren't there yet. So that's how I got into digital marketing and I jumped all in. And from there I created a directory to make it easier for engineers to find these suppliers. [00:05:28] And then those suppliers would pay me. To be on the directory. So to justify the expenditure we had you know, show them leads and tracking leads was always a problem. Whether it was forms, whether they clicked to a website, whether they made a phone call, it was a problem. We then evolved into a digital marketing agency. [00:05:47] And the problem continues tracking these from our website who handled the phone call, et cetera, to ultimately, which I mentioned earlier, you know, finally, I've had so many meetings where we do these campaigns and we can't show our value in terms of what we've done. So that's what led to the journey of creating WhatConverts.
Omer Khan: [00:06:06] Awesome. So you had been running a digital marketing agency for a while and at what point did you and your co-founder Jeremy decide? We need to number one, we need a product like this, and secondly, we're going to effectively kill our agency business and transition over to a product business?
Michael Cooney: [00:06:37] So that's a really interesting, because when you're running a business, what happens is you see so many opportunities as you run a business and you quickly learn that if you chase every opportunity, you get nowhere.[00:06:50] So you have to focus. And I was very focused on the agency. And prior it was probably about four or five years before we created WhatConverts, we realized we need this call tracking problem solved. And this was before it was commonplace, but at that time it was focused on the agency and I was like, you know what? Yeah, I'm not, I don't want to get into it. You know, let's not do it. But what actually happened is Jeremy was actually working for the digital marketing agency. And he'd been working with us for seven years, somewhere around there. And he left her a nice big corporate job. And when he left, I said to him, Hey, I've come from the corporate world back from engineering days. [00:07:26] And I said, I didn't like it. Yeah. So I said, if you go, then you find you don't like it. Come talk to me. But I said, you know what they're offering you and it was a big package that I couldn't match. I said, you got to go, but stay in touch. So about eight months later, he came back to me and he said, yeah, Michael, this corporate stuff, isn't working out for me I'm not enjoying it. And he came up with some ideas, which was effectively to produce a Wix competitor because he was a developer and I looked at it, I was like, gee, there's so many big competitors in the space already. And there's also WordPress and all that. And I'm like, yes, it's not something I'll, I'd get behind. [00:08:06] So he went away and he came back two months later and he says, okay, do you have any ideas because I don't want to come work for you, but I want to work with you. And that's when I had an idea for a product catalog because we were having a lot of success with building product catalogs. And we looked at that. [00:08:22] And what we found is that it had such a long sales cycle. If we needed to build a product catalog for a company, they had to get all their product data. So we had to wait for them. And it was, there was just so many hurdles to making that work. So it would have been a great business, but the sales cycle we didn't want to. [00:08:38] And then we're starting to call tracking in are still having problems. So I said to Jeremy, I said, Hey, if you can figure out how to track any form on any website, just by adding a tracking code to a website. I think we've got a business. And so he went away and he came back the next week and he says, I've got it working. [00:08:59] And so it wasn't actually call tracking that got us started. It was the form checking component, which a lot of people are surprised about. And then our thought we would just integrate with existing call tracking providers. But Jeremy says, no, I looked into how this is done and we can do both. So I was like, awesome. [00:09:17] And I'm so thankful he did that because call tracking is a huge part of why we're successful today. So that's how it came about with Jeremy. The whole thing he says, I don't want to work for you. I want to work with you. And that's how it started.
Omer Khan: [00:09:32] And how much time did you guys spend building that first version of the product?
Michael Cooney: [00:09:37] So it was probably in August of 2014 that he, we had that meeting. And then once he got it working, we met on a golf course in September and we spoke about it and we says, how hard do we want to do this? And he says, look, I don't want to do sales and marketing stuff. So if you do that, I'll do all the development.[00:09:56] And I said, cool. And then we said, Should we just go 50, 50 and he says, yeah, let's do 50 50. And he says, I'll continue to in contract work to support me while we build this, I'll continue with my agency. So yeah, that's how we decided on the golf course. We went ahead with us that, so that was September, 2014, by March, 2015, we launched commercially officially.
Omer Khan: [00:10:20] What did you do to, to validate the idea? I mean, I know that this was a pain for you running the agency. So in, in many ways you were scratching your own itch. But, but how did you figure out if other companies or customers would be interested in this and whether they'd be willing to pay?
Michael Cooney: [00:10:43] So our first customer were one of my clients, you know, from back in the day and we put a few clients on there and we got it to working and an artist looked at from the point of view, other called upper my agency heads on a non-agency mode using the WhatConverts product and it was really valuable. That was just like, Hey, I go to this meeting, I show these guys. And they were like, okay, that's incredible. And it was a bit rougher in those days, but still then that was really valuable.[00:11:13] And then from there, we're just like, okay, this (inaudible) more of my clients. So the, probably the first five were my clients. And then from there we said, okay, let's get on the Google Analytics directory. We did, we did try a landing page, which I mentioned about prove the business value of your marketing and that flopped that was just too bigger concept to communicate quickly. [00:11:38] But when we tell the call tracking, we then went and added on the Google Analytics directory. It's a Google Analytics partners page, so we partnered with Google Analytics to send phone calls into Google Analytics, and we started getting ratings on there. And from there we started getting some customers. So there was the first trickle. And then we also put in a very small amount on Google ads in early days.
Omer Khan: [00:12:00] One of the, the interesting things about WhatConverts and you going out to, to validate this idea, is that from your experience, what your potential customers wanted and what they needed were two different things. Most of them would telling you that they wanted call tracking, but. You had different ideas.
Michael Cooney: [00:12:28] Well, what happens is, and what you'll find is when you build a SaaS company, everyone will tell you, you got to talk to your customers, which is true. You got to talk to your customers and you've got to find out what they want.[00:12:39] But so product positioning is really difficult. I found it very, very challenging because what our product is and what we want to do and the full value offering that we offer, it's not easy to position in terms of what people want. So we go and talk to people what do you want and every person we've interviewed and asked, what do you want, they tell us call tracking. But I know from my experience that they don't want call tracking, it's like saying I'm going to the hardware to buy a hole. No, you're going to the hardware, you get a drill and the drill will give you a hole, but that's a bad analogy, but so
Omer Khan: [00:13:18] We've got the idea.
Michael Cooney: [00:13:19] Yeah. So what happened when you talk to your customers they'll tell you they want call tracking. So then if you do again, based on that, all you do is create a better call tracking product. But I know from my agency days, what you actually want is you want to prove the value of your marketing. You want to track the leads property. You want to report them better.[00:13:38] You want to get more insights into your marketing to improve your marketing campaigns and call tracking is just a very small part of that. The only reason call tracking is what they're looking for is, it's the one thing where you need a third-party software to track it. So you could essentially track your forums through Google Analytics. [00:13:55] But the problem with that is those are blind conversions, where with WhatConverts, we got the full marketing data, you know, who the person is, who know what they wanted, and you've got everything tied together. Whereas, so people aren't really looking for form checking cause they, they think they've got enough through Google Analytics. So getting back to it, I've been saying with positioning, like if I ask my customers what they want, they want a faster horse, you know, going back to Henry Ford days, but it's just knowing, rang the agency, knowing the full scope of what you really want to knowing what clients want. [00:14:29] I know that they want more than call tracking. But they're not searching that. And when I speak to a lot of people and we show them a product, they say, wow, I didn't know you could do that. So they didn't even know to search for that in the first place. And that's a big problem we have, we sort of have to come alongside people that are currently doing something that the one way and say, you're doing it this way. You know, how about do this way? Like you're currently using Google Analytics for your reporting you know, what about doing it this way? Yeah, positioning is difficult.
Omer Khan: [00:15:00] Yeah I agree. Yeah. It's it's I mean, we could do a whole topic on that. Right? You mentioned earlier about, you know being able to track leads through forms through web forms, and I think initially, even when I was researching. And I think people might who are listening to this might be thinking, well, yeah, you can do that with Google Analytics or any type of analytics software. Can you just explain how, WhatConverts is different? What else are you doing on top of the tracking a form that makes it a much more of a valuable tool for, for somebody versus using Google Analytics alone?
Michael Cooney: [00:15:42] Okay. So the key differentiator here is, identifying what is a lead and what is their conversion action? So a conversion action is saying somebody came to your website and they filled in the form, that's a conversion action. So what, you know, in general, you know, that 30 people perform that conversion action and those people may have come from Google ads.[00:16:06] So that's good data to have. You can even get down to keyword level, like for call tracking 30 people, search for call tracking, and then converted into a, a form signup, that's a conversion action. But when you look at their conversion action, you're looking at those 30 conversions and you say to yourself, well, were they good, were they bad, where they're ugly? You don't know. Analytics can't tell you that it's just a number. So if you go to the WhatConverts side we track leads. So a lead is who is the person, on an individual basis. What did they want specifically for that request and where did they come from? All their marketing data. So, you know, the who, the what and the, where they came from. [00:16:50] So with our reporting, if you're looking at an edit and you'll see Google ads delivered, you know, 30 leads, and then you ask the question, well, I wonder if they're any good, you just one click and we will show you each individual lead that came from their Google Ads campaign. And then you can filter it whichever way you can listen to call recordings. [00:17:10] You can see the transcription. There's a whole logic inducer. You can, you can qualify the lead. You can add a quote value. You can sum up the value and you can see the value of that marketing channel very easily.
Omer Khan: [00:17:22] Got it. Great. Well, thanks for that. I think that that's helpful too, to make that distinction. And tell me a little bit about how, how does that all work? Like what data sources are you kind of hooking up to, to be able to get all that information together in kind of one place?
Michael Cooney: [00:17:39] Yeah. So WhatConverts we have a tracking code. So if you install Google Analytics, they give you a tracking code or a tracking script that you put on every page of your website. It's the exact same process, but the tracking script is something we've developed. And what it does is when, when a user comes to your website, it tracks where the user came from. So if they came from Google Ads, that information is passed into a cookie, into, into a script and that store has marketing data.[00:18:07] It also tracks where they came from. And then we use that same script to automatically swap out telephone numbers so that we will show a unique telephone number for the time that that uses on there. So we can tie their telephone number to the marketing data. So when somebody makes a phone call, we tie the two together. [00:18:24] For form tracking, you have to identify the forms you want to check with us, but it's basically giving us the form ID or the form name. It's done very easily, but basically again, without tracking script, we capture the marketing data stores in the cookie. And then when a form is submitted, we get the contents of that whole form and we combine them with the marketing data storage as the lead in our platform.
Omer Khan: [00:18:48] Got it. Okay. So you've got this, the idea that you and Jeremy have come up with you, you've built out your first version of the product. You've realized that there's an opportunity beyond just call tracking and that this product can do more, but it wasn't a straight transition to a product business.[00:19:09] It took a couple of years for you to move from the agency into a SaaS product business. What, what was sort of going on there and how did you guys, what was your game plan in terms of, this is what we're going to do and how we're going to sort of go full time into this?
Michael Cooney: [00:19:32] Yeah, I think that's the side that most people don't get to see about running a SaaS company that's successful. Is that it takes a lot of time. There's a lot of doubt. There's when you're starting out, you've got a thousand questions that you don't know the answer to. And there's a lot of people online, whether it's Twitter or, or YouTube telling you how to do things. And then later you find out that yeah, what they told us, wasn't really true.[00:20:00] But at the end of the day, it's you got to find the product. You've got to believe that it's producing value. You got to understand the value of the product. And one of the questions that helped me frame it in my decision-making is I think it was Mark Cuban there said it. He says, you've got to look at your product and see what was true a hundred years ago and what will be true a hundred years from now. And that framework helped me make decisions. Like when you look at call tracking, we're not teaching ourselves to call tracking because we just think in a hundred years, call tracking is just going to be part of a platform. [00:20:35] That's not going to be the thing it is now, but when you look at leads, a hundred years ago, people were advertising to generate leads or opportunities to make sales. And in a hundred years from now, people are still going to be advertising and generating opportunities to make sales. So that sort of framework helps us make those decisions. [00:20:53] So in that, that framework helped me know what product we building and where we're going, because you can go in so many directions and you're customers are telling you, you need this. And the amount of customers that have told us, like, dude, if you implement this, your company's going to explode. It's just going to grow like crazy. [00:21:14] That's not true. So you got to, and you get those requests all the time. So you've got to have a framework to decide. Okay, what did a bit of, what direction do you go to the other thing is that was a challenge, we're bootstrapped so, it's it's a slow burn, it's the it's the gentle grind, you know, to, to increase the revenue. [00:21:33] So early on what Jeremy and I did, we mapped out revenues per steps. So at certain revenues, when would we start paying ourselves? So for the first 12 months, we paid ourselves nothing. So Jeremy contracted, you know, like web development contract work and developed WhatConverts he is working two jobs. I was running the agency and then do my WhatConverts stuff at night or during the day. [00:21:57] So we, we were both effectively working long hours. And it was for a good 18 months before Jeremy went full-time into WhatConverts. And we love it. Now, when, you know, we talk to people and they said, wow, you're so lucky. And we like you didn't see all the early days.
Omer Khan: [00:22:15] Yeah. I mean, it can be, it can be scary, you've got a services. Business is generating revenue. And you're basically saying, well, I'm going to go and do something else. And I'm going to put, putting in less energy into this business. I'm going to be attracting fewer customers and kind of, I'm making the bet that this new thing is going to be even better than what I'm doing right now.[00:22:40] And, and for you, and we talked about this earlier, you know, you had kids going to college. So great time to jump in and do something like this.
Michael Cooney: [00:22:53] Yeah, I mean, I remember it was like, okay, I've got to pay $30,000 a year for my kid's college. Starting a business, so I've got to keep the agency going, but it's, you know you don't want to produce a service because to me the enjoyment I get or the the reward, it's very rewarding to me when you run a campaign and you have success.[00:23:14] To me I just love that reward, really motivates me. So when you're running a, an agency and things start going on the decline, it's not a great feeling because you're turning people away or you not as involved. But I got into a stage where I had a small core team because the team also reduced as well. So it's not a great feeling when something you've spent so many years building is now reducing and as by design, but it's still there still doesn't feel good. And then at the same time, knowing you've got to keep going with it at a certain level of while starting something new, that's consuming all your time and is a lot more exciting. [00:23:53] So yeah, I personally struggled with that quite a bit. Yeah, and always say, but I think that it was great that I was, and that's what I say to people doing, I have people that I know that like to do everything themselves and that, you know, the whole business is them. And that's great, but I just think starting a team is also one of the hardest things to do, getting a team going. [00:24:16] And sometimes when you employ somebody, it doesn't work out. And our early support people it was only a third support person before it stuck. The previous two didn't work out and it's such a time suck. And you, you just feel it, you could do it quicker, easier, but the benefit at the end of it, once you get through that, having a team is just such a blessing. That's amazing.
Omer Khan: [00:24:37] Yeah. Yeah. It's a, it's a, not an easy thing to do. So you, you finally made the transition into the product business. The Google partner directory was the first way beyond your existing clients from the agency that you were able to find customers from. You also some success with PPC and Google Ads, at least for a while.
Michael Cooney: [00:25:08] Yeah. So 2016 and 2017, those earlier days and our competitors, most of them were bootstrapped at that stage. And I remember looking at our Google Ads, there were 11 competitors and we were getting some good leads. We're getting great conversions. And some of those people are still with us today from those campaigns.[00:25:30] But then as more funding came in as our competitors got bigger and they had a five-year headstart in us as well. They just jacked up the cost per click to the stage where they were, they were bidding a hundred dollars per click on the keyword term for call tracking. And we were like, how do you compete with that? [00:25:47] Our, our plans are $30 a month. How, how do I pay a hundred dollars a click? And that's just, you know, they got funding, they wanted market share. That's, you know, they want to squeeze people out. So we realized we needed to go find a…
Omer Khan: [00:26:01] Yeah if they would be a hundred dollars a click, what do you think? Like just ballpark? What, what was their customer acquisition cost at that?
Michael Cooney: [00:26:08] I think the mind wasn't all there. So I'm probably thinking 20 to 30,000 in those days was their monthly budget?
Omer Khan: [00:26:16] No, I mean, in terms of like, how much were they paying to acquire one customer?
Michael Cooney: [00:26:20] Probably 600 to a thousand dollars.
Omer Khan: [00:26:24] And price point-wise, they, their products were similar?
Michael Cooney: [00:26:28] The lowest thing was $30. So the secret to call tracking is if you get a big customer that uses a lot, and they use a lot of phone calls and numbers, you can have customers that are spending 10 grand a month, but you don't know that a front. So what happens is and that's, that's one of the big lessons I've learned in, I could go into a whole story, but recurring revenue is one of the superpowers of SaaS. It's just allows you to continue to build on your success. So even though they're paying $600 per customer, some of those are going to turn into big customers, but the ones that can, they just accumulate. So you just building you, you continue stacking up on top of the previous customers that you've have acquired. So it doesn't make sense, you know, in the long run.
Omer Khan: [00:27:18] How long did Google Ads work for you before the well dried off?
Michael Cooney: [00:27:23] Probably a good year.
Omer Khan: [00:27:24] About a year.
Michael Cooney: [00:27:25] Yeah, it worked yeah for a year and we still use them today. They still bring us a decent amount of leads, but it's not as good as those early days.
Omer Khan: [00:27:35] So when that started to happen and you can see the the leads declining. You can see the cost per click going up and it's becoming a much harder channel to acquire customers. At, at least at a reasonable acquisition cost. What did you guys do? Did you have other channels that were working? How much of this, how much of an issue was this for you?
Michael Cooney: [00:27:58] It was an issue, but we had really good word of mouth that sent us really high value customers. So we'd work with one marketing agency. And then at one they had 500 customers, you know, under their plan with us, and then they would spread the word to other agencies. So those agencies would come to us.[00:28:18] They would say, look, we will, with their competitor, we moved to WhatConverts and it's been great, we recommend WhatConverts. So we've got a lot of those. So that's really been great Google organic, because you know, as we've been around a year or two years, three years, you know, we've got more people coming in from Google organic as well. [00:28:37] We also the review websites now I've got a love, hate relationship with review websites because when you start with them know, I remember Capterra, we were the one and two. So our competitor and us we're the first ones in there. We started paying, it was a dollar, a click and we were in second position. [00:28:59] But now I think we're paying $6 a click and win ninth position. So what happens with those sites is you funding them to compete with you, and then as they become successful, your results get diluted. And basically a lot of their traffic comes from Google organic or Google PPC. So they become direct competitors to you. So, yeah, that's my love hate with them as the. They ultimately end up competing with you.
Omer Khan: [00:29:27] Yeah. And you use a market to know that this kind of happens with most, nearly all marketing channels, right. That if you can get in early enough, that's where a lot of the opportunities are. Acquisition cost is low, you know, kind of like what adWords was like 10 years ago or Facebook was like four or five years ago. And then as more and more people come in and start figuring out how to use that channel, it kind of becomes less and less interesting. And then it's about figuring out, okay, what's what's the next thing or just figuring out. Okay, if I'm going to stick around, what, what are some more creative ways that I can make the acquisition costs? You don't work for my business. I could acquire customers in some sort of profitable way.
Michael Cooney: [00:30:09] Exactly. Yeah. And I will say looking back at it, the growth rate is continuing increased as you get more customers more get added, so it's not.[00:30:18] So as you earn more, you can put more to that Google Ads or to other channels. So it's just a steady, consistent growth. So You spend more, you get more. So now we're getting more customers per month now than we were a year ago than the year before that. So, but it's it's, we haven't hit the hockey stick growth that some people hit. [00:30:37] We've just been this gradual. Now the last two years, we've grown at 40% and now we're at a stage now where we expanding our team. We want to hit a target of 10 million in three years. So we were putting in infrastructure and adding team members to ramp that up.
Omer Khan: [00:30:55] Yeah. You told me earlier that. When you guys were starting out, you and Jeremy would have like, Hey, if we can hit 2 million ARR, we're going to be all set. Life's going to be good. We won't have to worry about anything. And, and now I think you realizing that this is just like the first chapter in the story in many ways.
Michael Cooney: [00:31:15] It's been amazing because yeah, when Jeremy and I started, we're not one of these people that just want the biggest bank accounts out there. We, Jeremy, he's a workhorse. He loves working and doing his work. He gets rewarded at there, but he likes playing golf. So it's like, we'd work hard with Ah, play hard by the way, how hard is golf? Golf is hard, but we thought to get to 2 million getting those kind of revenue, we're living a great life and we are, but we are too many than we'd like, you know, we're only just starting.[00:31:45] And then if we look at our competitors we've got competitors who are doing 60 million a year. Some are doing 40 million. So the market's there. And then you look at someone like HubSpot, that's doing a billion a year in, in the marketing automation space. So we're looking now and we saying 10 million in three years is doable. [00:32:04] And then I just feel that when we get to 10 million going to be like, there's no reason to stop. We just think that the product that we building, we haven't even tapped into the full potential yet. And it's funny how your perspective changes over time. That's fascinating.
Omer Khan: [00:32:20] We talked about the business being bootstrapped and you from the start didn't want to raise money and, you know, bring on investors.[00:32:32] And I want to kind of figure out, like, what was your thinking? There a lot of, lot of founders sort of assume, Hey, if we want to be a SaaS company, we have to raise money. It's just something that you have to sort of check off and be able to do. And recently in a couple of interviews ago, I spoke to a founder who the company is doing over 50 million ARR. [00:33:01] Now he giveaway away about 25% of the company in the early days for, for about 5 million, didn't really need the money, but sort of felt like he had to be doing that. Now he regrets it because big chunk of the company is gone. So tell me a little bit about your thinking there, why you didn't want to go down that road. [00:33:22] And I think this is helpful for a lot of people who may be just be thinking, yeah, I need to do that. But, but do they really, is it, is it really the right decision for them and their business and where they want to get to, you know, how did you guys think about this?
Michael Cooney: [00:33:39] Yeah, I think to me I've always followed, you know, the entrepreneurial people in Parthenon. I love stories that success founders and people that have pulled things up. I've paid a lot of attention to things, but there's a company, moz.com. You've probably heard of them, you know, SEO, Moz. Yep. And Rand Fishkin wrote a book Lost and Founder, and I'm not saying it's the best business book out there, but it's what makes it so valuable is how transparent Rand Fishkin is about his journey and what he built and how he built it in. Basically in a nutshell, he built this awesome business that's doing really well, but he's been kicked out as a CEO. He's got shares that are locked up, you know, essentially on the, how you value the company now, but he's got shares that are worth close to a hundred million that he can't touch. Because growth rate stopped growing at a certain rate because competitors came in. And that's the thing if you're taking the investment you increase your risk exponentially. So when you take investment, your other got to be so sure you're going to hit a growth rate because their investment is based on (inauduble) rates you're going to hit.[00:34:50] So if you have any hiccup, you can lose your company very quickly. If you get the money and you burn through it because you have to make it work. You may have just been a year or two early cause sometimes, you know, we, we start down a path and because we're very careful with the money we spending, we don't have the money to make these big mistakes that you can't recover from. [00:35:12] So that's what I like the organic thing. The other thing for me is. We really like a product. We like control of our products. You know, they're having the autonomy of building something you want and we'll just see where our competitors who've got funding now, all of a sudden they have to impose these big pricing increases. [00:35:29] They have to impose additional things that aren't beneficial to their customers, but they have to do to hit growth rates for the investors. So it was just a whole lot of risk is add that on. So if you don't have to do it, I just think. You can be autonomous. You can do what you want to do, build what you think is genuinely going to help your users. [00:35:52] Instead of building something that's going to hit this growth rate, that's going to allow you to keep your company in a sense. And I know that I know that's a very dramatic way, but that Lost and Founder book there's a key example of what happens when you get funding. And the crazy thing is here's an opportunity to sell moz.com to HubSpot at one point. [00:36:12] And he would have maybe taking it, but the investors were like, no, we want to, the bigger multiple, we don't want to sell because they were currently on a good growth rate. But then SEMrush came in, ahrefs came into show competitors and their growth rates instead of doing this, just sort of plateaued. And because they plateaued, they couldn't get any more funding because of the valuation decreased. [00:36:35] So anyway, long answer, but it's just, I think you gotta be so sure it's going to be work. And I think if I did have to take investment. I would have to have proven that if I apply money to the strategy that I'm going to get solid growth, if I can prove that, then it's too risky for me.
Omer Khan: [00:36:57] Yeah. That's, that's very, very useful perspective on that. And I'd encourage everyone who's kind of in the early stage thinking, about, you know, they, they must have funding to maybe take another look at that and think through whether that's still gonna be the right decision in five or 10 years time. When, for the dealt with the business. You, you talked earlier about positioning and the challenges of that and the importance of getting it right.[00:37:23] And you've obviously been doing a good job with the product. Where you're, you're getting more word of mouth referrals coming through, but you're now in a, in a place where you've got competitors that are heavily funded. I think so the numbers that you shared with me earlier, like, you know, between they've raised between 30 million to over a hundred million, how do you compete in a market like that with these, these heavily funded competitors? How, how do you differentiate yourself and stand out?
Michael Cooney: [00:37:58] I think first off you have to have a, a really good product. So funding can do two things. They can put funding into the development and just create a better product quicker than you can. Or they can put funding into sales and marketing, which gets a lot of growth.[00:38:15] A lot of the the funders companies, we find, they put a lot of effort into the sales and marketing, the product development is okay. So he hasn't. Okay. So this is how we able to compete. I suppose, approach is better and I can, as I know, I'm biased, but it's, it genuinely is better if you're a marketer wanting to track all your leads and report on them. [00:38:43] Our product from the bottom up from the foundation has been built to achieve that function. Our competitors are more a direct competitor in the call tracking space. And then they've tried to bolt on form tracking, which has its problems. And they so far down the line. They've got so many customers that for them, they've got some technical debt. [00:39:04] So there. Yeah, there's, there's a lot of funded companies where we get into their product because we have somebody coming over from them and they said, please log in and help us figure this out. And to me, it's, it's almost unusable and these guys have a hundred million dollars to create this product. So we've just got a really good product. [00:39:23] And I think it's because of a care. We know the problem we want to solve. We are very clear in who this is for. And. How are we building it? And I think some of those companies, what happens is they build a big team. And what we found as well is if you've got one person doing a great job and you think let's add a second one, you'll get double the throughput. [00:39:43] It's not the case. And I remember in the early days of Apple, something that absolutely floored me. It's one of the lessons that I learned early on when Apple, I think it was Apple 2 came out. They had a very small team that built Apple 2 and they sold a million. Others, Apple 2 then when Apple 3 came about their team went from, I think a was a core team of another 10 or 20 to 4,000 employees. [00:40:10] And they couldn't deliver Apple 3, Apple, 2 continued outselling, Apple 3 and how is that? And it comes down to, as you add team members and this, you have communication and this and this, everyone is flying in the same direction. It can actually create more confusion, less clarity, and your product is not as good. [00:40:29] So with WhatConverts, I mean, I am in my head and what we communicate and our viewpoint is so crystal clear, and even with team members, I've found that I have to always bring them in line because it's like herding cats sometimes. And we've got a small team. Can you imagine having a team 10 in size and trying to keep them in flying in the same direction. [00:40:52] So with Jeremy, just being an awesome developer and our viewpoint being very aligned and we've never veered from that. And we've bolted from the ground up and that's focus, hasn't changed. It's just that artists to provide a product is so much better than the competitors, even though they have so many, so much more resources.
Omer Khan: [00:41:11] You know, I think a lot of people can look at your, your story and say, you know, you had a services business. And a lot of people who run a services business that I talked to want to get into a product business, right? That's, that's the, that's the path they want to take and really figuring out how to do that is, is a huge challenge for many people.[00:41:29] You are able to make that transition and over the last six years, you you've bootstrapped a business. You're doing over 2 million ARR. You've now set your sights on 10 million in the next few years. And I know you mentioned it that, you know, people say, Oh, you're, you're really lucky. [00:41:47] You know, you kind of got this all figured out, but you know, earlier you told me it's been a continuous struggle and, and always sort of doubting yourself and not knowing whether you're doing the right thing. Can, can you talk a little bit about that and, and maybe give an example, because I think it's something that so many. [00:42:09] People struggle with, but we don't always talk about, and it's easy to talk about it when you're, you're trying to find your first customer, but we know with the perspective of hindsight in terms of where you are, what have you learned from that?
Michael Cooney: [00:42:24] Whew. That's a big question. That's a big one. And, and it's, it's real because when you starting, you listen to these podcasts and the story usually goes, yeah, we bootstrapped. We went like that. Now we're doing 10 million. That was awesome. What marketing did you, ah, we did a bit of Google ads and it was good. And then tell you, you know, the dots of the early days and you know, I remember running the agency. So before the agency, I had a directory for engineering companies to connect buyers and suppliers, and it worked very well and it actually started in South Africa, but The Google came around, where everybody was just go Google it.[00:43:03] You know? So the directory business started to suffer. And from there we had to re what do they call it? Where to pivot, you know? So there was a pivot to a digital marketing agency and then with a digital marketing agency, it's, there's so many digital marketing agencies. You know, so you're always trying to, you know, find the way or the best way to do it. [00:43:24] And there's all these questions and doubts you have. And then you listen to these podcasts and these successful people, like, I suppose I'm coming on saying, Hey man, we did this and we got 2 million now, but I used to listen to those and think, okay, I'm going to try that. And I listened to the interviews and I'd try new things and it wouldn't work. [00:43:42] And even with WhatConverts like, they'll say, you know what, your pricing strategy, this is a big one pricing strategy. You just need to. Try a pricing strategy, then go away and then come back and try it again. Or you got to do AB testing and they'd tell you, I changed my blue button to a green button and I had a 30% conversion. [00:44:01] It turns out that's a con it's complete BS. Okay. When you're doing AB testing, unless you can get a thousand visitors as a sample, you know, in a short amount of time, you're wasting your time pretty much. And no color of button is going to change your conversion rate, but people tell you that all the time and it's, it's like you've got a full throughout the Crip. [00:44:22] Pricing as well they said, okay, well, what we did is we would like charging $25 a month and we put our pricing at the $50 and we found we had an increase of 30%. Yeah, no. Unless you converting a thousand customers a month doing those quick little pricing changes. It doesn't work like that. You know, it takes time. So many times like we'd run a new campaign. [00:44:44] Like, Hey, we got a new messaging, we want to AB test it. And it's like, okay, we got to wait for a thousand conversions. That's going to take months. And so it doesn't just work like that. And you, you find out there's a lot of pseudo-experts out there. And so it's just, I think, just knowing in yourself, like if you're a user, what you would like. [00:45:07]I mean, for instance, one thing that's always a question is, should we do cold emailing like bulky bulk emailing. And Jeremy and I, we hate receiving cold emails, so we've never run a cold email campaign still to this day we've never done it, but it is a strategy that people say work. And I look at it and even though we know it works for some people, we just can't get behind it. [00:45:29] But reaching out to very targeted people, we think there might be room for that, you know, like, Hey. If we can reach to people and offer some value, we may do something like that. So it's even decisions like that. Like, okay, we want to get to 10 million. How do we do that? We can't use Google Ads, Google organic, you know, we, we dealing with these well-funded competitors to do that, you know? [00:45:51] So how do you make that work? So there's a number of strategies that I don't want to reveal to our competitors. Yeah, we have to try, but it's, it's very much. Just, you know, think it through, don't go by what people are seeing on social media. Just, you know, try and verify what people are saying and try and understand that in context, if somebody is getting a million page views a month, that's very different from your website, they may be getting a thousand page views a month. You can't apply the same logic.
Omer Khan: [00:46:22] I think that there's always this tendency to look at somebody's story and what they've done. Number one, I think you're absolutely right. You need to take that with a pinch of salt. And that's one of the things that I, I try to do here is to get below the surface and try to find out what really went on, what worked, what didn't, what was the struggle because one that's how we really learn. And secondly, that's what makes an interesting story.[00:46:48] But, beyond that. I think even if people looked at everything you've done, they can't replicate that. I mean, there's no point going to the Google partner directory now and then try and run Google AdWords, and then going down that path, it's more about what are the principles? What were some of the different approaches that, that you took, what are those things that we can extract out? And you sort of mentioned this earlier in terms of like timeless, you know, that even in, you know, a hundred years time, people are going to be generating leads and so on. And I think it's the same here is what are some of those principles and, and ideas that you can figure out how to apply to your own situation, your own product, your own market. [00:47:30] And it's not about, you know, coloring in by the numbers, but about understanding, if I've got this toolkit of different things that I can try and different approaches. I can take that. At least I'm armed with some useful stuff that I can go and figure out if I can make it work in my market. And don't waste a lot of time trying to change the blue button to a red button and all that stuff.
Michael Cooney: [00:47:52] Oh, yeah. And that's that specific challenge is real. I mean, I've, that's something I've dealt with. And and, and to tell you, it's a, I'm sitting now 2 million and we set the goal for, you know, 10 million over the next few years. So you look up and you're trying to figure out how am I going to get there?[00:48:12] And a lot of people you'll see that there is advice is saying, what got you to 2 million, won't take you to 10 million. And I've always been this entrepreneurial scrappy survivor mentality. So a few months back I headed like say, okay, I have to adapt are going to change my mindset before we're like, man, I'm an engineer, engineers love problem solving. [00:48:36] So it's like, okay, we're not getting up in the Google organic results for something let's learn about it and do it ourselves. Now my approach is we've got revenue, we've got income. Let me go and find the best out there and employ them. To do a job that they focused on and do best because I realized that ideas are plentiful and they, you know, ideas are like assholes everyone has one and they're usually stink. [00:49:01] So an idea is valuable and, but on this, you can execute it. It's not worth it. And what I've found with myself is I might get 10 ideas in a day. But if I follow those, those ideas, I'll get nothing done. So now it's like, I've got this idea, like video I'm doing video ads or doing more video work is a great idea. [00:49:23] Doing more webinars is great. So now there's a framework. That is a good idea. Let me put it out there. Once I've achieved this, then I can do that. Or video ads, that's a great idea. Who can I find who will do it? So it's a mindset change from it's no longer me doing it. It's now creating the team that can do it. [00:49:45] And it's a huge mental shift. And it's now going from, well, yeah, I can get a blog post done for $300 to, while I'm employing an agency. Now that's going to cost five figures a month kind of thing. That's a hard pill to swallow. But if you don't adapt, you know, worse than I'd rather, I'd rather try things and fail, and you're going to fail at a lot of things, but fail quickly, you know, with the new sales team we adding on, we've never had a sales team. [00:50:14] We adding that on. So I went and got a sales consultant. Who's already worked at this level. And he's, you know, helped coach me to those to get that going. So there's those kinds of things. And, but their mental change has been pretty hard for me. And from all this being a doer to now saying you can't do it all you have to build a team and teams are, you know, teams have their challenges, but teams have awesome rewards as well.
Omer Khan: [00:50:40] Yeah, I agree. All right, let's start to wrap up. Let's get onto the lightning round. We've got seven quick-fire questions for you. All right.[00:50:49] What's the best piece of business advice you've ever received?
Michael Cooney: [00:50:52] I think it's a one way, look back a hundred years and then look forward a hundred years. I think, I think that really helps. That's one of the best pieces of advice.
Omer Khan: [00:51:01] What book would you recommend to our audience and why?
Michael Cooney: [00:51:04] Like I've already said these, but the Lost and Founder, , I loved Good to Great that's that's good as well. But let's just think the Lost and Founder for the transparency and to seeing the real journey with full transparency is invaluable.
Omer Khan: [00:51:16] What's one attribute or characteristic in your mind of a successful founder?
Michael Cooney: [00:51:21] It's just grit, persistence, taking the long view. Nothing too sexy.
Omer Khan: [00:51:28] What's your favorite personal productivity tool or a habit?
Michael Cooney: [00:51:31] Oh man. This one is Loom Video doing screen share videos quickly. It saved me so many hours in meetings. I can't tell the, I love their product.
Omer Khan: [00:51:44] It's a new, crazy business idea. You'd love to pursue if you had the extra time?
Michael Cooney: [00:51:48] I don't have, I don't have a good one because I'm just focused on doing what I'm doing and I'm loving it. But if it was one of my hobbies, maybe doing something there, but then it's like not a hobby, so I don't really have a good answer there.
Omer Khan: [00:52:00] What's an interesting little fun fact about you that most people don't know?
Michael Cooney: [00:52:04] People would usually know everything about me. I just tell everybody everything. Yeah, other than, you know when people meet me, I don't drive a fancy car. I don't wear fancy clothes. Pretty, I think if you meet the, I come across pretty humble.[00:52:18] So people are surprised when they see that I've owned several companies in three different continents and doing what you're doing with WhatConverts. So maybe that's surprising to some people I don't know.
Omer Khan: [00:52:29] And finally, what's one of your most important passions outside of your work?
Michael Cooney: [00:52:33] At the moment, my passion is running marathons. I've done the, the New York. I've done Boston. No, I haven't done Boston. I've done Chicago I've done Berlin. So I'm getting Boston and London the next.
Omer Khan: [00:52:46] Nice. Well, good luck with that.
Michael Cooney: [00:52:48] Thank you.
Omer Khan: [00:52:49] All right. Great. Well, thank you, Michael, for joining me and you know, thank you for being, being so open and transparent about your journey and the lessons that you've learned along the way.[00:53:00] And like we said, don't just. Yeah, try to copy what you've done here, but, but figure out what are the principles or the patterns that, that, you know, we can learn from what you've done. And some of the mistakes that people can avoid that maybe you made. If people want to find out more about WhatConverts they can go to WhatConverts.com and if people want to get in touch with you, what's the best way for them to do that?
Michael Cooney: [00:53:22] Probably my email, just michael[at]whatconverts[dot]com
Omer Khan: [00:53:27] Awesome. Thanks again. And you know, I wish you and the team all the best of success.
Michael Cooney: [00:53:32] Oh, thank you. And thank you for having me on enough. I enjoy talking about this.
Omer Khan: [00:53:36] My pleasure. Cheers.
Michael Cooney: [00:53:37] Doesn't bite.
- “Lost and Founder: A Painfully Honest Field Guide to the Startup World” by Rand Fishkin