Flodesk: Bootstrapping a $27M ARR Email Marketing SaaS – with Martha Bitar [416]

This is a machine-generated transcript.

[00:00:00] Omer: Martha, welcome to the show.

[00:00:02] Martha: Woo. Let's do this.

[00:00:02] Omer: Do you have a favorite quote, something that inspires or motivates you that you can share with us?

[00:00:06] Martha: Yes, and I cannot remember who said this, but it goes something like, when I stand before God at the end of my life, I would hope that I would not have a single bit of talent left and say, I used everything you gave me.

[00:00:19] Omer: Love it. Love it. That's super inspirational. So tell us about Flodesk. What does the product do? Who's it for and what's the main problem you're helping to solve?

[00:00:28] Martha: Of course, Resk is beautiful email marketing. So you can design emails. People love to get.

[00:00:33] Omer: That's gotta be one of the, the most crisp, concise.

[00:00:37] Elevated pitches. I've heard. Love it. So who's it for? And you know, what, what, what, what was the problem that you, you know, the main problem that you're helping solve to solve?

[00:00:45] Martha: Yes, of course. So the, who is it for? Small business owners. Marketers. Right. Ideally small business owners. And the problem we were trying to solve was ugly emails.

[00:00:55] Truly. I mean, we were just receiving really crappy emails in our inboxes that we weren't in love with. And then all of a sudden we were seeing. Really big brands like Airbnb or Anthropology urban Outfitters with the really cool designs that are just impossible for non-designers or for small business owners.

[00:01:13] So we wanted to level the playing field and bring those tools to the businesses that we really wanted to see succeed.

[00:01:19] Omer: Love it. And give us a sense of the size of the business. Where are you in terms of revenue, customers size of team?

[00:01:27] Martha: We are 27 million ARR. Actually, we just hit that number two days ago and we have 80,000 paying customers and 51 employees.

[00:01:38] Omer: Great. And is the business bootstrapped? Have you raised any money?

[00:01:43] Martha: We have not raised any money. It's fully bootstrapped.

[00:01:46] Omer: Wow. That, that's, that is awesome. You and I were talking about this briefly before we started recording, and, you know, it's, it's kind of mind blowing. Just, you know, what you, you and your co-founders have done with this business and a lot of the things, you know, are kinda like the opposite of what you're told to do when you, you build this kind of business.

[00:02:06] And so I'm looking forward to just unpacking that and, and kind of just figuring out like what you did and, and why you made some of those decisions. Let's start with. Just like where did the idea come from? What were you doing at the time and, and how did you come up with this idea?

[00:02:23] Martha: I was working in partnerships at HoneyBook.

[00:02:26] It's a CRM for small business owners and solopreneurs. And my co-founder Rebecca had her own template shop where she was designing. Email marketing templates that you could then buy and implement in MailChimp. And I kept running into people in the industry, creatives who were super crushing it at email marketing.

[00:02:47] They were just they just knew they were doing, but they had a designer and a marketer and like a very bloated team. Right. And then you would have the typical small business owner who is. Not they're doing everything by themselves, or maybe they have a team of four, but not, not really a team of specialists.

[00:03:04] And they were completely struggling with email marketing, even if they were completely crushing other channels. Right? Like maybe they had millions of followers. And Instagram, I. But they just couldn't get a newsletter out or an email campaign or an a basic automation. And then they, because I was in the space, they kept telling me about it and I'm very hacky.

[00:03:24] I'll just play with a tool and try to get it done. I. The dirty way or just Google like tutorials. So I started telling 'em like, just come by my house. We'll have coffee and I'll create a design for you. And that's when I started realizing that design was truly the problem. It, it wasn't that they didn't know what content they wanted to share, they couldn't make it look the part.

[00:03:45] And for a small business owner, their business is their identity, right? A lot of times the business name is their personal name. So if it doesn't look on brand. You could spend six hours on another platform and it just never sees the light of day. And when I was starting to see that this is a really big problem for a lot of people in this space.

[00:04:05] I talked to Rebecca. Rebecca is the best designer in the world. Truly like she started designing for rock stars like Rihanna and Lincoln Park, and then she started her own template shop and it was already. Super popular. So then I asked her, Hey, can I send you some people your way because they're really struggling with email marketing design and you have templates for these, so maybe you can help 'em out.

[00:04:27] And she said, Martha, don't you dare send people my way because this is a really big problem. I can create the most beautiful designs. And the moment they try to implement them in any platform, they just break because the platforms aren't really made for beautiful design. They're all very, like much dinosaur systems that work with the designs that we were able to create 20 years ago.

[00:04:50] And in fact, her number one ticket for support was. People buying the designs and then there's breaking in the platforms. And then she said, you know, I've actually been thinking that we should probably create something different like a tool where my designs could work. And that was, I think that was the moment of Spark.

[00:05:08] And I asked her, well, if you've been thinking about this, why haven't you done it? And she said she had been sitting on this idea for three years and she's. Rebecca is very much like a creative she can see the future of the world. I am an executor, right? If you tell me that you have an idea, I can imagine very clearly like, here are the paths that we can take to make it happen.

[00:05:30] So at that point, we decided to partner and make it happen.

[00:05:33] Omer: Great. Great story. So one, one clarification. The. A lot of the email marketing platforms. Let, let's talk about like MailChimp. 'cause that's the, that's the, it's kind of a pun, like the monkey or the gorilla in the room, right? The 800 pound gorilla.

[00:05:47] Right. Those type of products, they have built-in templates, right? So you, you don't have to go out and buy stuff. You could use some of those built-in templates, but it sounds like people were even struggling with those. But why do you think that was?

[00:06:00] Martha: Yes, because they're not flexible. So if you think about Canva, for example, right?

[00:06:06] You could argue that Adobe had design tools. Since the beginning of Adobe, right? But they're not the design that you want to see today. It's not really modern design. And it's also really hard to use and MailChimp is the same. If you want to grow out the template and just send it that existing template, which let me tell you is not beautiful design then it might work for you, but it's really not.

[00:06:29] It doesn't stand out. Right. In today's world, and I like to think about this in like the old businesses, right? Where before we had internet businesses, you would walk down a street normal street where there's like food traffic, and if you saw a store that looked good, you'd probably come in.

[00:06:46] Right? And now we have online businesses, and that storefront is the design. And the design has upleveled, right? And what you see from other brands set a new standard. And if you're not meeting that standard, you're not actually standing out. And it's not just about getting people to open your emails or click in your emails, but it's also about trust.

[00:07:06] Right. If you are not looking the part, then unfortunately that becomes your storefront and people don't believe that you are a legitimate business. And what's worse sometimes that is tied to the business owner's confidence as well. So if you can't make it look good, then you don't believe that you look like a legitimate business, and that is a bigger problem, right?

[00:07:27] That we could have an entire conversation about that.

[00:07:29] Omer: So what did you do next? So you've got this idea that Rebecca's been sitting on for a few years. Both of you see that there's a need for something like this firsthand experience. How did you, how did you validate the, that there was a business here?

[00:07:51] Like just because there's a problem doesn't necessarily mean you're gonna be able to turn it into a business. And in many ways this is a very competitive space to get into.

[00:08:03] Martha: Agreed. So the very first thought we had was exactly that. There must be a solution for this already. And then we started exploring what was out there.

[00:08:12] And what we realized was that all of these companies were built first to create and send emails, right? Because back then. It was truly a hardware problem. You needed to have a database, right? And database administrators. And then it became a software problem where you needed to be able to create the software that sends emails.

[00:08:31] So most of these competitors were built to be able to send emails, and that's, that was a challenge, right? And now I mean, Amazon. Provides the server infrastructure, right? Like nobody really starts a business unless you really have to, and you're serving like maybe the government where you have to provide the servers and hire database administrators.

[00:08:52] Like the focus of the, of the business is different. The challenge is different, right? It became a design problem. So when you think about it from that mindset. It's very easy to see why the existing tools aren't working because they were built to solve for hardware and software problems and not design and experience problems.

[00:09:10] But now that hardware and software is commodity we could, we could solve for it in a very different way. So essentially building email marketing tools as if they were created today, right? Because we were creating them today fresh with everything different right from 20 years ago. So then the ne the next step was to figure out if people were truly experiencing big enough problems that they would try something new.

[00:09:35] And at that point that was a validation stage, right? So we said, let's go and talk to people and ask them if they would try something new. And we started talking to a lot of people and at first the conversations were so positive they were. Super into it. They said, I'm, I'm having, I'm struggling.

[00:09:51] This is, this is the one area that I can't seem to get right. Whatever you build, I'll buy. So then the very next step was for us to build mockups. So we were using Figma to build an envision right back. Back then we built some napkins, sketches. We were trying to not make it super pretty just to see if it was actually solving a problem.

[00:10:08] Because we can, we can make. Things look very pretty, very easily. But we also didn't want to bias people and just have 'em say yes because it looked nice. So then when we first sat down, our initial. I'd say like maybe 12 people. And by the way, these were people that were complete strangers.

[00:10:23] I actually went on Facebook forums and looked for small, like small businesses in San Francisco, for example, and posted, Hey, anyone struggling with email marketing? Can you check out what we're building? So we got a lot of people to reply. Fortunately, and that also validated that there was a problem.

[00:10:40] But then we sat them down and we showed them our amazing solution on how we imagined email marketing should work. And it was such a failure. I mean I remember Kelsey, she's a fashion blogger. We were in person with her and she was in front of our computer and we asked her to just try to create an email with a prototype that we had created.

[00:11:00] And she didn't even get past the first step, and all she did was slowly sink in her chair, like lower and lower until we asked her K, what's going on? And she's like, Martha, I have no idea what I'm supposed to do. This is so confusing to me.

[00:11:15] Omer: And this was somebody who was already using email marketing and as part of her business.

[00:11:20] Martha: Exactly. So we had been very successful at creating something that was even more confusing. And that was really hard because you don't want to have put all of this effort right, and get your hopes up, and then all of a sudden you're doubting if you have what it takes, right? So I remember for Rebecca it was very hard.

[00:11:38] I come from a sales background, so for me, rejection is. Like normal. And I think I built thick skin to handle rejection. But for her, like Rebecca's path had been success after success after success, right? So she said, Martha, like, do we actually really have something here? So we had to sit down and we had to change our mindset, right?

[00:11:58] We had to to focus on what we really wanted to learn, which is it's okay if this is not, real business. It's okay if we don't find an opportunity. What we want to know is if we have it or not, right? If the answer is no, that's just as fine, right? We'd rather find out early on than be hopeful and holding onto this thing that may or may not exist.

[00:12:18] Deep down, I don't think we ever really doubted it. But it's hard, right? To hear people that just completely don't relate. But we were holding onto that idea of people are having enough pain that strangers are responding to our forum comments, right? And and then change the mindset to say, okay, let's apply a little bit of a sales mentality here.

[00:12:36] Let's let's aim for the no. Right? Our goal is success is to get people to say, no, I don't like it, and to find out exactly what they don't like so we can build something that they like. And once we, we changed that mindset, it started becoming more like a video game where we were intentionally trying to drive people to the know.

[00:12:56] And I think our emotional connection to whatever we were building at that point got created, got a little more spacious so that we could truly understand what people were struggling with.

[00:13:07] Omer: I think there's so much to unpack in, in what you just said. I. I love the idea of just focusing on No.

[00:13:16] There, there's something I don't know magical about that I, you, you, you kind of compared it to a video game, but I. When you're having these conversations with customers, whether it's to get feedback or a sale, when you go in with the mindset of, I hope they say yes, it's really hard 'cause you're putting, you're creating such a sense of importance around whatever this this meeting is.

[00:13:43] And when you go in and say. I just wanna get to a note, right? So let me just figure out how to get there as quickly as possible. You, you kind of let go of a lot of the baggage that you might bring in and it's kind of funny because it's like, if you can't get them to say no, you're almost kind of disappointed because it's become this game, right?

[00:14:04] It's, it's like you have to try it to, to really, I guess to, to get it. The other thing was that you did all the right things from the sound of it. Like you didn't go out and start saying, oh, you know, we've seen this problem and people are replying, so let's go off and spend months building software and 'cause people are gonna love this.

[00:14:23] Right? You, you, you created these, these wire frames and you were very intentional about not making them look. Too nice. So people were focusing more on functionality rather than the Yeah, that looks great. You know, that kind of thing. So that sounds like you do all the right things. Looking back now, what do you think was the problem with, with that approach that what, what was not quite right with these wire frames and why do you think that happened?

[00:14:55] Martha: We were building I think we were. Fearing that we did not have email marketing expertise. And we were building with zero knowledge on software and zero connection to what the customer ultimately wanted to do, which is just impossible, right? Like, how could we have built something of value if we weren't directly tying it to the ultimate goal of the customer or ideal customer, right?

[00:15:21] Or the ultimate pain that they were trying to solve. So instead what we started doing was. Let's just break it down into each step, right? So what happens when someone first comes in, they want to find a template and they want to see if there's a template that fits their content structure. And that mindset is get shit done time, right?

[00:15:40] They don't want to be creative, they don't want to look at design options. They just want to know, is there a template here that will fit the, the structure that I have in my head? The very next step will be get fund on time, which is, can I customize this to look Unbrand? And that is where the bigger chunk of the pain was.

[00:15:57] So that's where we spent most of our time as well. And at that point instead of building everything and showing everything that you needed to see at the same time we started removing truly almost everything. And UN until the point where it was just functional. So we did not make assumptions anymore, and you are going to want to send a test.

[00:16:20] Or you're going to want to say, save these to favorites, or you're going to want to customize your subject line, or all of the things that if you go into MailChimp, for example, you see all of that in one screen. And for people, especially for people who had never done email marketing before, they just don't know.

[00:16:34] They don't have all of those learnings yet. So it's a lot. It's very overwhelming. So instead we were thinking, what is the very first thing that you want to do? And then we'd focus on that part of the experience. Keep on asking ourselves like, what else can we remove from the screen so we can get you to the goal action faster.

[00:16:50] And then once we were able to get people to the goal action, then we added the very next step and then the very next step. And the result was something that's a lot less bloated than even the most simple platform out there, because the truth is most of the power you don't really need to see. You just need to be able to find it.

[00:17:07] So, and then the way that we'd figure out where to place items, for example, we'd ask them where would you click if you wanted to change the background, for example? And then we'd actually spy where the cursor would go. So. And then that is how we would make the decision. Well then the button should be here.

[00:17:24] Right? If we ask them, where do you think the cursor would go? They're going to tell us what they think. But that's very different. Truly very different from where their unconscious mind takes the cursor if you just let them.

[00:17:37] Omer: You said something earlier about we try to remove everything. Can you just explain that a little bit more?

[00:17:45] Like what, what, what were you doing? Was this about simplifying. The, the user interface. So there was just like, just, you could just do like one thing and there was like one button you could click that, that type of thing.

[00:17:57] Martha: That type of thing. And in fact that worked so well in decreasing the amount of time that it would take people to complete whatever goal election they were doing in that moment.

[00:18:06] That instead of having one screen with everything you could do we created flows. And this is why Flodesk became the name, right? So you would just look at the templates and then click next, and then you would edit your template and then click next, and then choose your subject line and preview text.

[00:18:22] And it's all in the order of. How your brain would process information. But typically you see that in one screen or all at the same time, and you don't really think that way for the most part.

[00:18:34] Omer: Yeah. I've gonna say from my, my experience, I don't use MailChimp, but whenever I have used it you know, I've used a lot of email marketing platforms and I consider myself, you know, fairly tech savvy.

[00:18:45] But there's always this feeling in MailChimp that. I'm gonna do something wrong. Right? Because there's like all these, so many options right around that you're always like, and so I, yeah, I think it's a fair point that if somebody who doesn't, you know, their life isn't about just spending time in software all day.

[00:19:03] They just, they wanna actually do something. It, it's it can be like seriously overwhelming.

[00:19:08] Martha: And then the other, the other issue it creates is that your users never feel like experts. Because if you have all of these options that they never need they'll always, like, you'll survey them and we actually did this experiment.

[00:19:19] And they'll say, well, I feel like I'm under utilizing or I'm not utilizing Florida Institute's full potential. And then you start removing options, but still make them very easily accessible and they're feeling of expertise increases. And the more experts they feel, the more. How like the more confident they feel about your tool and the higher the brand loyalty as well.

[00:19:39] Omer: Yeah. Yeah. I love that. You know, I, I, I was talking to somebody last week about just this idea of one of the mistakes that a lot of products make is with the onboarding. They try to, they try too hard, and when somebody signs up, and I went through this experience where I was using a product, I was on a trial.

[00:20:03] And they were trying to tell me about everything that I could do, and there was tool tips and popups and way too many emails. And you know, I just got to the point where it was just like, I feel more confused now than I did before I started using the product. And it really boils down to what's the one thing that you want people to do when.

[00:20:26] They sign up that's gonna get them to that, you know, that aha moment. And then once, you know, once you're clear about that, why are you showing them everything else? You can do that later. Right? But I think maybe there's just this, this I, I, I don't know this, this thinking or this, this, this kinda misconception and it's just like, well, we've got all this great stuff here.

[00:20:46] Like, we've gotta tell people about it. Otherwise this is our only shot. Because otherwise after this, you know, they've onboarded and they don't know, maybe they're not gonna stick around. Right. But I, I just think it's just so counterintuitive, but simplifying it is actually a much smarter way to go. I.

[00:21:03] Okay, so the second time around what happened? So you've, you've really thought this through and what was the feedback from people this time?

[00:21:09] Martha: It wasn't a second time around. It was a second and third and 14th and 30th. Right. We were just, we were iterating daily. Right. So even the second time around was the very same day, just later in that evening.

[00:21:20] And things just started changing, right. Little by little we started getting. Fewer nos and more people excited. And then we heard somewhere on Twitter that you should start building product when you make someone cry, because that's when you know that you're solving a really big problem. I. So we, we were very serious about that.

[00:21:41] We said, let's start, start building product when we make someone cry. And and I think a few months went by and nobody cried. People were very, very excited. And I started fake charging them as well because I wanted to see if they were ready to pay. So at the end of our demos. I would, again, like looking for the no making them comfortable with saying no.

[00:22:03] I would ask, why wouldn't you use Flodesk? And the reason why I wasn't asking why, like, do you want to use it, is because that creates this compromise, right? Like then they don't want to let you down. So maybe they say yes, but if you give them full permission to say no, and they still say yes, then you know you have a winner, right?

[00:22:20] So I would ask, why wouldn't you use FLOTUS right now? And people started saying I can't think of anything I, I want to use, can I use it? And then all of a sudden they were asking to pay. So then I said, yes, you can use it, you can pay us. I think at the beginning we said something crazy like a hundred dollars, right?

[00:22:37] For the next amount, like however many months until we launch. And then we started testing more specific numbers just so that we can start learning what our sweet spot would be for pricing. And people just said yes like truly most of the time, but we still didn't make anyone cry. And then eventually we did someone.

[00:22:58] Mary is her name and she has a creative business, and she did actually start crying, like, happy tears, but we saw a tear and she said, I, this has just been such a pain for me and I'm so excited that I'm finally going to be able to do these. And for her it meant not just sending beautiful emails, but actually converting and making sales and creating a profitable business.

[00:23:18] Right. So that was really nice. And then we knew we needed to start coding.

[00:23:23] Omer: Wow. How many iterations did you have to do before you got to make Mary cry?

[00:23:30] Martha: I, I'm, I have no idea. Honestly. It must have been hundreds, but these iterations would happen, like from one call to the other, we'd already make an iteration.

[00:23:39] Right. We weren't trying to get statistical significance, like the feedback was very clear for the most part. And we were having, I was booking 12, a minimum of 12 customer calls per day. Not everyone would show up, but assuming like nine people show up, that's a lot of information. So we went through the motions very quickly.

[00:23:56] Omer: How did you figure out, like, you know, let's, let's kind of try to get to the know or let's ask them why they wouldn't use it. Was this based on, you know, your, your sales background in terms of thinking about objections and, and how to deal with. You know, customers just kind of, you know, whe whether they're, they're actually, you know, committed to this thing or not, or was it, was it something that you learned during this process?

[00:24:23] Martha: I think it was just common sense.

[00:24:25] Omer: Well, not everybody has that common sense.

[00:24:28] So you were just like, you, this was just something that you just felt like, just intuitively as you went through this process, you've just figured it out. Yes. I was reading something yesterday where somebody was saying that, I don't know if it's like, like how important intuition I. It's not just all about rational and, and numbers and logic and this person who's, who's a pretty successful entrepreneur, he was saying that he thought women were a lot more intuitive.

[00:24:53] And you know, like I think, I dunno whether men just have this thing about is gotta be like logical and, and whatever, but I, I think we've all got to learn to, to trust our gut a little bit more, I think, or whatever you call it.

[00:25:07] Martha: I love it.

[00:25:07] Omer: So great. So Mary starts crying. And you're like, okay, great, so we've got the green light.

[00:25:12] We're gonna go and build this product. Now how did you build it?

[00:25:17] Martha: Okay, so this is where the real struggles started happening because we had no idea how to build software and we had no idea what email mark. I think if you, I. Anyone who actually knows what it takes to build email marketing software probably does not want to build it.

[00:25:32] So we built it because we had no idea what we were getting into. And I think that was a really big plus for us that ignorance. Once we started building it we needed someone who could code and we, Rebecca had built her template shop with Trunk who eventually became our CTO. And we just called him and said, Hey, we think we have a really good idea here and do you want to be part of it?

[00:25:52] And he said. No. He said, I, I don't really and I'm working on something else for myself, but I can get you a team of developers and I can supervise them and does that work? And we said, yes, we'll take it. Right. Like, we'll take. Whatever at this point. And and then we started building the, the platform and the design.

[00:26:14] We, we knew how to do and getting the customer's needs, we knew how to do, but the infrastructure was just completely new and tricky. I. And we were doing it so wrong that as we started, like this is post-launch, but once we launched and we started getting more and more people to use it and started sending emails Amazon kept shutting us down because we were just violating all of the rules, right?

[00:26:37] Like we were getting spammers in, we were getting bought. Some people were just sending like, like content that would get flagged as spam, but they were legit business owners. We weren't really creating the right, like send from addresses. We did not allow for custom domain verification or DKM or any of those things that we just had no idea that existed.

[00:26:58] So. Every, it was like almost a daily occurrence at that point where people were already using the product, they were paying for the product, and and then we just get shut down and all of a sudden our platform was completely gone. And this was really hard actually, because I. We could not get ahold of anyone.

[00:27:16] At AWS it's every time we'd call support, we'd get someone somewhere in the world picking up the phone who had no idea if we ever got anyone to pick up the phone, they had no idea what we were doing. They would think that we were a customer, like a, an entity instead of an email service provider.

[00:27:33] So. There was just no way to get them to give us any insight into how do we do this. Right. So that was probably the hardest most critical point because we could have just disappeared as a company.

[00:27:48] Omer: How often was this happening?

[00:27:50] Martha: Truly, almost on a daily basis for a while.

[00:27:51] Omer: Oh my gosh.

[00:27:53] Martha: But we wouldn't, we wouldn't go, we wouldn't be completely shut down.

[00:27:56] We'd get shut down and then we'd quickly call support, and then we'd explain again. That we're in ESP and these are our customers and that we're, then they sort of give us an insight into what we were doing wrong. But they never want to tell you fully what you're doing wrong, just in case you're truly a spammer.

[00:28:13] They don't want to give you the keys to the kingdom. Right? So so we we're sort of guessing, right? And, and doing a lot of analysis on our end, catching the issue, and then giving them this long brief, telling them how we solve, solved it. And then within maybe. Anywhere from 20 minutes to four hours, we'd be back up.

[00:28:32] So yeah, this was really hard. And then eventually we started learning. We, we just started learning so much. And every time, I think in, in retrospect, it was probably a really good thing for our business because it forced us really quickly to build a better platform and. Every time we went from maybe within one week we got shut down three times to, we didn't get shut down for a few months and then all of a sudden it happened a couple more times and then it just was crickets for a while.

[00:29:00] So we were we'd keep asking each other like, are we out of the trouble Right. With Amazon? And eventually I think we gained enough traction that the volume and also the spend that we were having with them, got someone that knew what they were doing to contact us, and then we started working with them as a customer.

[00:29:19] And that got fixed, thankfully. But we really had to be resourceful and learn fast, right? And build a better platform.

[00:29:28] Omer: You know, there's this they call it the curse of knowledge and. I think you, you sort of touched on this earlier where a lot of people who know about building a platform like this.

[00:29:42] Either wouldn't do it as you said, or they would spend a really long time trying to get all of these things right before they shipped the product. You know, fortunately for you it worked out fine and it worked out very well. It was, I'm sure it was very painful at the time. It's kind of funny where you were saying like, you know, sign of success in those early days was like, yeah, we didn't get shut down by Amazon for a few months.

[00:30:07] Right? But. What would, what would you say to, 'cause there's always a school where you, you, you, you know, you have people who, your founders who might be thinking, you know, I know I should launch. You know, quickly, but it's got, you know, I, I don't want to put a crappy product out there. And but, but the danger with that is sometimes they take like way too long to get it out there.

[00:30:34] And I think many people would be really terrified of experiencing what, what you guys went through. What, what would you say to them? Like, you know, I think partly you said you, you, you learned to, you know, build a better product much faster. But what, what, what, what other benefits do, do you feel you got from just, you know, just shipping fast?

[00:30:57] Martha: I think the key here is to forget the idea of. The day of launch because we, I mean, when did we launch, right? Did we launch, when we started building campaigns manually for people? Did we launch when we had the Figma prototype? When we started charging people? That was before we even had a website, right?

[00:31:14] So, or did we launch when we created like a growth channel? To me it's like you're, you're launching all the time, right? And the moment when you, it, it depends on what lunch means to you. But I do think. You can launch too soon or think that you're launching too soon. And I do think that you can wait longer.

[00:31:32] But the challenge is if you launch too soon, worst case scenario, you get people like Kelsey who sink in their chair and say, I have no idea what I'm doing and this is not a solution that I want to, I. Use, right? And the worst case scenario, if you waited too long, I mean, there's a lot of problems with that, right?

[00:31:47] Like maybe you miss the market. Maybe I don't know, like the economy changes. Maybe like another tool comes in and they steal your market share, or you're just like spinning your wheels and not getting enough learnings fast enough, right? So. To me, the moment someone tells you that they're willing to pay you that like, go for it, accept it, right?

[00:32:05] And then bring them on as customers. And, and that is a timeline that you can control, right? Because from the very first moment that you talk to someone about it, even if you just say, I have this idea, you can say, and they, they're excited about it. You can say, okay, pay me for it. And worst case scenario, they'll say no.

[00:32:19] Right? And I think on the launching. Too late. This is so common because you have your vision in your mind, right? So whatever we ended up launching with, and I'm quoting air quoting because again, like where, where is it? Launch, whatever we ended up launching with is so far from what we had in our mind, right?

[00:32:40] That we, we were set out to build what we have today out there. In the market is so far from the vision that we have, right? From what we really want to build. So if we wait for that vision to be complete then yes, that's too late. Right? And if we wait for a super clear differentiator, for example, or for a full feature parody or full expression of our capabilities, then that would've been too late, right?

[00:33:05] We launched with. A very clear differentiator, which was beautiful emails and ease of use, but we don't have all the features that other companies are going to have. We didn't even try to get to feature parity, right? We were a tool at that point in a lot of different areas that we thought some people are not going to necessarily need right now, but if they really need the design and if they really need the ease of use, we've got it right.

[00:33:30] So that, that wasn't the right balance for us.

[00:33:33] Omer: So, so you ship the product. I think it was August, 2019.

[00:33:38] Martha: That's right.

[00:33:38] Omer: And you got the first 500 customers like within days, and it's like, how, how did you do that?

[00:33:48] Martha: Okay, so this is the beauty of, it's not going to be applicable to everyone, but if whatever you're building has the potential of a viral footer, you have to do it right, because we didn't do it, our users did.

[00:34:02] So if you think about email marketing, right? If you think about an email, you send it and somebody sees a result, the beautiful email that you've created in Flodesk, and at the bottom we inject a footer that says. Made in Flodesk, right? And this is not something that we invented. This is a Hotmail model, right?

[00:34:19] This is how Hotmail became the number one like email platform back in the day. And anytime there's a viral footer opportunity that's a machine that's just working for you. And it also allows you to not focus on growth, but to really laser focus and making every new user successful, right? So if we only get like a good chunk of our new trials.

[00:34:40] To not even pay, but just send their first email. Then their entire audience is going to see the result and what better way to sell it. Right. Nothing we say about our tool is going to replace the impact that you see when you see a float, this email in your inbox.

[00:34:55] Omer: Yeah. IIII love that. So you, I know you told me that the first 10 customers was mostly outbound.

[00:35:01] You were going into the forums and, and finding. Customers there. And then the, the first hundred or the 500 that, did they mostly come just from getting a few early customers, successful sending out emails? Was was it as simple as that?

[00:35:22] Martha: Yeah, it was as simple as that. In fact, the viral footer alone. Got us from yeah.

[00:35:28] 500 to well, okay. Yes. And we also added another growth channel, which was an affiliate program. So we created our affiliate program before we even had a website. We just didn't launch it. We launched it at the same like time that we launched a website because when we were working with these outbound customers, very often they would ask us if they could refer somebody else.

[00:35:52] And we had no website. They couldn't sign up, right? So they had to come to us and say, Hey, can so-and-so work with you as well? And we realized that this was going to be something that, and, and this is a small business owner characteristic, right? They make purchasing decisions based on what other small business owners are doing.

[00:36:09] So. We recognized this very early on and we created an affiliate program where you could come in, grab your affiliate code or your referral code and share Flodesk and make $19 when someone joined through your link and paid. So when we launched, I. There were two engines at work, right? The first engine was the viral footer.

[00:36:29] So Natalie, right? One of her first emails that went out funny because now she's our head of marketing, but back then customer and she sent her first email to 16,000 people. 16,000 people were exposed to an email that was so beautiful, unlike anything that's seen before. And we actually got a lot of people clicking on her link.

[00:36:48] Then they signed up, right? And when they came in to create their account, we showcased these share floes with a flying cash emoji. And then when they clicked on it, it would take you to your affiliate page that showed your referral code and your ability to make. $19 and because they were so excited about a new email marketing platform that was beautiful and easy to use they were very quick to share it.

[00:37:11] So it was a compounded effect of the viral footer. Right. And also the affiliate program. And then we did something pretty drastic. So we linked. The footer to their affiliate program. So now anytime, let's say Natalie sends her email again to 16,000 people and somebody clicks on the footer and then they sign up through the website and they pay us, all of a sudden we have another viral loop because we're sending Natalie an email saying.

[00:37:37] You just got paid because you referred someone and she didn't do anything. Right. So all of a sudden we're giving you the dopamine before you even take action. Right. And that just creates more activity and it's all like, again, a video game. So it's just really fun. We just made it fun.

[00:37:52] Omer: So just with, with the viral footer and the affiliate program, you basically went to the first million in a RR in about four months by the end of 2019.

[00:38:07] You were there, which is pretty amazing for a bootstrap business. I, I know you're saying that these were the two main things that, that helped drive the growth and not everybody will be able to do something like this or have some kind of virality built into their product, but I think it's also because.

[00:38:29] Of the time you spent doing these wireframe iterations and getting this feedback, and even though the product didn't have a lot of features, you had picked one thing sending beautiful emails that you knew people cared about, and you'd made that easy. And I think that that was also a big thing because if you had just.

[00:38:54] You know, being a copycat of MailChimp with this, you know, viral footer, I'm not sure it would've had the same outcome as people wanting to share this because they really feel like their life is better and or when people come to the site, they can clearly understand how this product is different to what else they could be using.

[00:39:20] So let's let's talk about pricing now. Typically, you know, the, we, we talk about having like a SaaS product. It's gonna have three tiers. You're gonna have different plans for different people. Something very common with email marketing platforms is you will pay more. As you get more subscribers on your email list and you didn't do any of that, you basically had one plan, and I think you still have one plan.

[00:39:54] Is that right?

[00:39:55] Martha: We have two now.

[00:39:55] Omer: Two? Okay. Well, right. And it's like $35 a month and you're not charging people, it's a flat fee. So whether they have 10 subscribers or a hundred thousand subscribers. They're still paying the same amount. So why did you do that

[00:40:15] Martha: Very complex answer. First, we did it because we didn't want to distract with pricing.

[00:40:19] Both the user but also ourselves. We didn't want to have to spend time figuring a pricing model when we could be spending time talking to customers and building product. We really didn't think that this was going to scale to the extent that it has scaled. Then when it started working, we started looking at why hasn't it broken yet?

[00:40:38] And our our margins super high as well. And we realized that the pricing model works for two reasons. One the, like, what, what other people have specifically. So the tiered pricing model is in place because. It's a very good way to maximize your revenue and grow linearly with the size of your customer.

[00:40:55] So it's a really brilliant pricing strategy, but it's not necessarily needed because the cost of sending emails has gone down so much from 20 years ago when MailChimp, for example, started that in a way. It could be outdated, right? So if you think about Squarespace for example, they're not really charging you in tiers based on how many visits your website gets, right?

[00:41:15] Tr serving traffic is not that expensive, so it's not really necessary to anchor your pricing model to it, but people still do it because it's a very brilliant way to increase your average revenue per user. So we might still do it at some point but we might not, and we really need to be smart here because if you think about it, MailChimp made things easier, but that wasn't their only radical differentiator.

[00:41:41] They also created a free plan. Right. And that is how they completely disrupted constant context. So one of the learnings, and this is to be written and discovered, but one of the learnings we're having is that pricing unintentionally has become a differentiator. And I think we still need to figure out how do we scale it.

[00:42:01] Eventually we're going to go up market and as we go up market, we can also go down market because we can afford it. But for now, starting from the core instead of from one of the edges. Has allowed us to build a very profitable business that just gives us all of these options, right? And and we might, there's a chance that we might just keep it this way and create pro tiers that still keep the unlimited subscribers and unlimited emails because again, it doesn't have to be anchored to the pricing model.

[00:42:29] But maybe we find another way to add value. It could be something like API calls, I'm not sure I'm being completely raw and transparent here. But people, we know, people love it. We know that economics make sense. So that was a very fun surprise discovery.

[00:42:44] Omer: I, I think it's brilliant. I think that conventional wisdom would tell you you can't bootstrap charge $35 a month, unlimited usage, and even get to, you know, a million a r and you have like.

[00:43:03] You are closing in on 30 million a RR with doing exactly that. And I guess you're right, there are some things unique about your business and, and you've been smart about how to, how to, you know, take advantage of those. But yeah, I always, I just wondered like, it's like it's. Like, was it an intentional thing?

[00:43:24] Like, you know, I, I know you said, Hey, we don't wanna get distracted and this is why we did it. But it's many ways, it's like a lot of the things I see you doing, it was like, it was almost like, Hey, this is what everybody else is doing. I. We're gonna do the opposite, right?

[00:43:38] Martha: Well, okay. It was intentional in a way that we knew we didn't want to support free users, right?

[00:43:45] And because we don't have a free email plan, we can actually afford the unlimited pricing, right? So if you look at. Other companies around our size, right, that are targeting the same amount of customers. The large majority of their users, and I'm going to say like 80% plus are on their free plan.

[00:44:04] So they're not actually paying them anything, right? And they're depending on enterprise, right? Or upscale marketing up market customers to support 'em. And we wanted a more direct pricing approach, right? Like you're getting, you're paying for the value that you're getting as a customer. So. We can afford to do that by not having a free plan.

[00:44:23] And that part was really intentional. The, the pricing the actual pricing, right? The total was very intentional. We did a lot of research there. And then the unlimited piece was because we also found that there was a pain in, every time I grow my list, I have to think about pricing. And people don't want to start email marketing because they have this huge, like dark cloud over their heads that they're going to have to pay more.

[00:44:46] And that's painful, right? So. So, yes, it, it was an intentional experiment, but I think we're still in experiment mode, if that makes sense.

[00:44:53] Omer: Yeah, yeah, yeah. Totally. Let, let's talk about, you know, I think when somebody's hearing this story, well, first of all, I'd say, you know, you, I think you've, you've done a great job to just share, you know, both the, the ups and downs of this, this journey.

[00:45:08] And it wasn't, you know, easy by, by any means. But I think when people, you know, kind of listening to this might be thinking. You know, it sounds like you know, you, you, you guys got lucky. The three of you came together, you had this great team and that's why you were able to get through these, these hard times and, and, you know find product market fit.

[00:45:34] But behind the scenes there was even problems just figuring out how to work with each other. Right.

[00:45:41] Martha: I think the human part of building a startup is. Probably the hardest. And I, I think I heard somewhere that that's the number one reason why startups fail. Just like founders not getting along with each other instead of not finding product market fit or getting paying customers.

[00:45:57] Right. And I can see why at the beginning we struggled with this a lot because we, you have rega, you have strong, and you have myself, and we never worked together truly, and especially not in SaaS. And we're all new to the space and we want to be perfect in front of each other, right? We're, we're showing up and we we're in the fake it till you make it mentality, right?

[00:46:20] I don't want to come across super junior. I want to seem like I know what I'm doing right. And the challenge is that because we were trying to show up so perfect, we weren't talking about the real issues, right? And the real issues along with the fact that we did not really know what we were doing and we didn't have our act together and problems kept happening where, like, for example, we were approaching our first Black Friday, right? So we launch in August. A few months later, it's November, and we didn't even think that we knew Black Friday was an important date for users. We didn't think this is the high season for email marketing. Anyone that works in email marketing will tell you like you have to have your act together for this day.

[00:47:03] So I thought, oh, maybe I should be pushing our CTO to like make sure that we have a super scalable assistant, but I didn't really want to rock the boat. We were all very conflict avoidant as well. I didn't want to imply that maybe he doesn't know what he's doing. He didn't want to share that. He didn't like, spend a lot of time making sure that we were hyper scalable, that testing our solution to make sure that it was actually scalable.

[00:47:28] We were building on Mongo database. And they have this auto scale feature and we turned it on and we thought, okay, well we've got these right. And Black Friday comes along. And remember we have a viral footer, right? So people start upping their activity and sending more emails, more eyeballs start getting exposed to the fluid disk footer.

[00:47:49] More people start signing up. And this is a very fast viral loop, right? So within hours you can get a lot of people to your website and. We did get a lot of people to our website and the demand, the usage increased a, a much faster pace than we expected, and also a much faster pace than the database needed to upgrade itself.

[00:48:12] So the demand was faster than the actual database process. So the Autoscale did not work for us and we completely crashed. And this time, I mean, if you crash on a random like Monday, it doesn't matter. But if you CR crash on Black Friday. Oh my gosh. Like we were, we were crying, we were emotional. It was horrible.

[00:48:29] The worst part was that. We had these, like at this point, thousands, right, of customers who, who had put their faith in us, right? They had switched from another platform that was reliable. And guess what was like having uptime during their most critical sale of the year. And this is, this is how they make money, right?

[00:48:49] So we were getting in the way of the livelihood of our customers and that was not okay. So we, we fixed it quickly. Thankfully, we were down for four hours, but it was so early in the morning that the impact was was little. It was recovered. But even then, I, I thought that we had fully lost our the trust, right, of the customers.

[00:49:09] Like to me, everyone was going to cancel and we were going to lose everything that we had built. And you don't really recover from a lack of trust, right? Like it's really hard. So all of a sudden I start getting a lot of tags because I was managing our Instagram and people are tagging us, right?

[00:49:24] And people keep tagging us. And in my mind I'm thinking like human right? Worst case scenario, I'm thinking, okay, all of these customers that we failed are probably going online and telling everyone, do not use flotus. They massively screwed me over, right? And I'm scared. And I remember for like a good 10, 15 minutes, I.

[00:49:42] I tried not to open them because I thought, okay, we have to just like be in problem solving mode and then we can go and deal with all of these like super angry customers. And they were right, right? And being angry. And then something really crazy happened. I opened the app and I started looking at the videos and one after the other.

[00:50:00] It was these phases that we had, you know, interacted with at some point because they were new and we were just calling them and asking them like, why are you here? What attracted you to Flotis? And it was these faces that were sharing. And they're Insta stories. Something like, guys Flores broke the internet, like they are having so much demand that their site is down.

[00:50:21] As soon as they're up, you have to go there and you have to sign up because they're, they're onto something big. And I'm not kidding, like, oh my God, the. That just marked our lives forever, right? Like that level of loyalty and trust, right? And support. Oh my gosh, I'm getting like chills. You don't break that anymore.

[00:50:42] You don't fail them again. Like that was the motivation to get up every single day and say, we're going to build the best platform ever. Not the better platform, the best platform ever. We're going to disrupt ourselves every single day for these people. Just change everything.

[00:50:57] Omer: Love that. Wow. That is not what I expected you to say.

[00:51:01] Like, I thought there was videos ago, like, you guys suck and whatever. But that's, that's, that's awesome. I think it just goes to show the kind of you know, if you, if you, if you're open and transparent about the, what you're doing, if you're listening to feedback, if you're making people feel like they're part of something.

[00:51:22] You can't underestimate that. And I think you know, I think Intercom did something similar where they built these, these, you know, these loyal fans by just being very transparent about, you know, how they were going about building their business. That's that. That's awesome. All right. I, I think on that note, I think we should wrap things up.

[00:51:45] Let's get onto the lightning round. I've got seven quick fire questions for you. You ready? Yes. All right. What's one of the best pieces of business advice you've received?

[00:51:54] Martha: Build a painkiller, not a vitamin.

[00:51:57] Omer: What book would you recommend to our audience and why?

[00:52:00] Martha: Blink by Malcolm Gladwell? Because it tells you that sometimes your intuition tends to be right, and it's a matter of when do you need to seek that extra validation.

[00:52:09] It's back to what you were just saying.

[00:52:11] Omer: What's one attribute or characteristic in your mind of a successful founder?

[00:52:16] Martha: Execution. A lot of people have the right idea, but they just never take action.

[00:52:20] Omer: What's your favorite personal productivity tool or habits?

[00:52:23] Martha: Shower markers because the best ideas come, you know, it's like when your to-do list just comes back to mind.

[00:52:30] Omer: I tell you. It is just like I, like I, I, I, I do the same. It's just like that's, it's like showers and driving, going nowhere, right? Those are the two things that get my best ideas. What's a new or crazy business idea you'd love to pursue if you had the time?

[00:52:45] Martha: Oh I love escape rooms and I love this video game where you have to detonate a bomb and it's by solving several different puzzles.

[00:52:53] So a real life escape room where you detonate a bomb would be a hundred percent it.

[00:52:59] Omer: Wow. And what's an interesting or fun fact about you that most people dunno.

[00:53:03] Martha: I grew up in Mexico and my first language is Spanish.

[00:53:06] Omer: Cool. And finally, what's one of your most important passions outside of your work?

[00:53:10] Martha: My almost 2-year-old baby girl.

[00:53:14] Omer: Oh yeah. So it's not like you know, you're not busy when you're not at work. Right. That's, it's like two years there. There's a reason they call them the terrible twos. It's like, from my experience, it's like,

[00:53:28] Martha: really? Okay. We're about to get into the, into the, she's still 21 months.

[00:53:32] One month old a month. I never get used to it, but she's not terrible. She's really just perfect.

[00:53:39] Omer: That's awesome. Martha, thank you so much. It's been a pleasure. Thanks for unpacking the story and, and sharing so much about the, the ups and downs and, and hopefully I think, you know, people can walk away feeling a little bit more inspired and go and try something in their own business today that can help them, you know, get to get to the next level.

[00:53:56] So really appreciate you doing that. If people want to check out Flodesk, they can go to flodesk.com. That's ffl o desk.com. If folks wanna get in touch with you, what's the best way for them to do that?

[00:54:07] Martha: hello@flodesk.com

[00:54:09] Omer: Wonderful. Thank you so much. Congratulations on everything so far, and I wish you and the team the best of success.

[00:54:15] Martha: Thank you. This was really fun. Thank you so much.

[00:54:18] Omer: It's my pleasure. Cheers.