Hubstaff: Overcoming Early Struggles to Bootstrap to $22M ARR – with Jared Brown [390]

This is a machine-generated transcript.

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

[00:00:01] Jared: Thanks for having me. I'm excited to be on here. My pleasure.

[00:00:05] Omer: Do you have a favorite quote, something that inspires or motivates you that you can share with us?

[00:00:09] Jared: Yeah. Well, one of the quotes that stuck with me when I first read it was from Steve Jobs, and he talked about making a dent in the universe, and it, it's something that just really resonated with me of.

Like, you know, if you're gonna spend, like we've, we've spent 11 years now building hub staff and I think about like, why did we do it? And yes, one, start a business and, you know, make a, make a living off of it. But it's more than that. It, it's like, can we do, can I put something out into the world that actually makes an impact, like leaves a mark out there.

And you know, something I get excited about is hundreds of thousands of users getting to use our software and making an impact in their lives. So. That, that's a quote that stands out to me.

[00:00:51] Omer: Yeah. Great. So tell us about Hubstaff. What does the product do? Who's it for and what's the main problem you're helping to solve?[00:01:00] [00:01:00] Jared: Yeah, so Hubstaff is, it started out as time tracking and proof of work software. And what that means is not just collecting the time that people are, are spending working, but also how are they doing that work and answering those questions around how they're spending their day. That's how we started the business and that was the, the kind of the elevator pitch or the, the initial use case.

And we've since grown that to be more of a workforce analytics platform so that you now can, you can manage people's schedules. You can see how much time they spend in meetings. You can really get a, a real bird's eye and detailed view of where that time is being spent.

[00:01:42] Omer: Great. And give us a sense of the size of the business.

Where are you in terms of revenue, customers size of team?

[00:01:50] Jared: Yep. So we, we started in early 2012 in May of 2012. And we, we've grown that steadily now to a $22 million a RR [00:02:00] business. We have slightly over a hundred team members working at Hubstaff. And over 16,000 customers.

[00:02:07] Omer: Awesome. And we should also point out that the business was bootstrapped for the first 10 or 11 years.

[00:02:16] Jared: Yes. Yep. We were fully bootstrapped, never didn't take any investment dollars up until August of last year. And had no debt on the business either, which is something both my co-founder and I are very proud that we were able to do this in a customer funded way.

[00:02:31] Omer: Great. So let's talk about where the idea came from.

So you and your co-founder Dave you, so you said you set out in, in 2012, but where did the idea come from?

[00:02:43] Jared: He, he was running at the time an SEO business where they were doing video. Production and blog writing and basically back in the early days of Google when it was easy to try to game it and, and help clients get better rankings in Google.

So he had 40 people working [00:03:00] for him at that time through Upwork. And he looked at that and the business was doing just over a million dollars a year in revenue. He looked at the 10% markup that Upwork was applying on these 40 contractors. And thought to himself, I can find these people, I can hire them outside of this marketplace.

And he, you know, used LinkedIn, used job boards, but what he didn't want to give up by leaving Upwork was the software that they had put in place, which was this time tracking desktop app that also recorded some proof of work metrics to show that this person in Spain or Ukraine or. You know, wherever you hired them, you've never met them before.

You know, are they, when they send you an invoice, were they working for the time that they invoiced you for? And that was the simple use case. And he, he was looking for a tool. He thought he was just gonna search on Google, find some standalone tool that could do this. Didn't find anything in, this is late 2011 and thought, you know, I think there's an opportunity here to create a standalone SaaS [00:04:00] product.

Just taking that software component that he was used to using on Upwork.

[00:04:04] Omer: So he reached out to you on LinkedIn, right? He did. And did you, did you guys know each other?

[00:04:10] Jared: No, it was cold outreach through LinkedIn. And he he, he was looking at that time, he knew he, he'd already built a proof of concept using a, a development agency out of Russia that to build.

For $10,000 a, a basic version of this software to just to kind of prove out if there was a market for it. And he did. By the time he was reaching out to me through LinkedIn, he had 15 paying customers and he knew that, you know, to, to take this and turn it into a real business. He couldn't rely on this agency to do the development for the next several years.

So he was looking for a tech co-founder that, as in his words, somebody who would lay awake at night worrying about the technical issues while he laid awake at night worrying about the business and marketing [00:05:00] side of it. And he wanted somebody local. And I was in Indianapolis at the time where he lives, and it luckily, it was kind of a small pond of, of tech people in that space.

So he reached out to me.

[00:05:12] Omer: And what were, what were you doing at the time?

[00:05:15] Jared: I, so I was doing some contract work for a local company there in Indiana and also running, and this was part of why he reached out. I was running a site called Talent Opoly, that it was a, a community for developers and designers and I was, you know, kind of playing around with that in nights and weekends, building that and trying to get that out into the world.

And he, he looked at that and said, because he told me this in subsequent calls, he was like, it stood out to him that I had been able to build something and get it done and released. And when he was looking at other possible tech co-founders, they had on paper, they looked good. But what if they put out there, how do they actually execute and get stuff completed?[00:06:00]

And that stood out to 'em.

[00:06:01] Omer: So I'm curious why you said yes to a random stranger who reaches out to you.

[00:06:10] Jared: It wasn't an immediate Yes.

[00:06:12] Omer: How long did it take?

[00:06:14] Jared: Three months.

[00:06:15] Omer: Yeah. I wanna know what the process was that you went through, because I talked to a lot of founders who. Are non-technical and they're looking for a technical co-founder.

And you know, I, I tell them that, you know, one, it's a really difficult thing to do to find the right person. And secondly, it's not just about, it's not like hiring a developer. You, you, you, if you're gonna bring on a co-founder, they've really gotta buy into your vision and believe in whatever you're doing.

'cause they're gonna end up spending. A lot of time on this thing, or even there's the opportunity cost of not, you know, giving up what they're doing to make time to, to even work on this thing part-time for, for a year or whatever. So what convinced you [00:07:00] to say yes even though it took like, you know, three months to get there?

[00:07:03] Jared: Yeah. So I, and I will admit, and I've told him this too, when he first reached out, I had, other people had reached out similarly, where they have a concept. They think it's a million-dollar concept. They would reach out to me being a developer, like just need to talk Jared into building this thing with sweat equity and we'll be off to the races and I.

All of those people, the difference between when they approached me and when Dave approached me, Dave got on a 30-minute call with me and starts off by saying, first you could easily describe the elevator pitch. What was the value prop, which is let's have time tracking plus proof of work. You get the invoice, you know they really worked for that time.

You happily pay the invoice. That makes sense. And then number two, he had already done a proof of concept. He had already. Basically followed the Lean Startup methodology that was, you know, really popular at the time. And I had read the book about that and you know, I asked him, I was like, so you know, [00:08:00] how'd you know to follow the Lean Startup methodology?

And you've read the book, right? And he's like, no clue what I was talking about. And just happened to like, just intuitively, that's just, he's all about execution. So he just. Like went from concept to like, I'm gonna hire the agency. I'm going to get something out there. I'm gonna run some ads. I'm gonna start doing some SEO, see if there's demand.

And when he is talking to me, he's rattling off, here's how many visitors I have coming to the website. Here's how many paying customers that are voting with their wallet that I already have. This was very different than other people that had approached me. So, and he'd already, he was running a business doing over a million dollars at the time, which was.

Like, you know, I couldn't even, I imagine running a business at that size at that time. So those are the things that hooked me. And then we, we realized what you were saying of if you're gonna start a business with some, with somebody, you're basically getting married to 'em. You better like them as a person.

And that's [00:09:00] why it took three months. And it like that was kind of our dating process that happened over the next three months.

[00:09:06] Omer: How much money did the two of you put in to the business to kind of get it to the next level, I guess, from what David already done?

[00:09:14] Jared: Yeah, so we, we each from that, from that point forward, we put it's $52,000 in between the two of us.

And I, I know it 'cause we've wrote it in like two or three checks. So it's like, it is a very specific number of like, and you know, not at that age and, and, you know, I didn't have tons of money, so like, using that amount of capital to start this business and I'm, I'm very low risk, you know, as an entrepreneur, a lot of people will be surprised the.

You know, like I, I don't want to lose money. I don't want to put this on the line. If I think it, it's not gonna work out. So that number stood out. Like it, it was $52,000 that the two of us put in and we were, that got us our first few hires and got us, we started writing [00:10:00] code in May of 2012, and in August of 2013, we were able to start charging for the product.

We released it into beta in November of 2012. And then in August of 2013, we began charging and that $52,000 got us through that, and then we were able to, to be customer-funded from then on.

[00:10:20] Omer: Okay, so let's talk about that, that first year or so, when you start to build the product, did you, did, did you look at what was already there and say, okay, I, you know, we can just continue the, the development or was this okay?

That was a great proof of concept, but really, I wanna do this my way.

[00:10:39] Jared: Yeah, yeah. It had to be, and it not in any sort of egotistical, I, it needs to be my code. It was just the, the people. So we were fortunate. I, I, I had gotten to meet somebody in my first job out of college who. I would describe as a, as a 10xer sort of developer, like it, [00:11:00] you know, you meet very few of these types of developers.

You know, you know 'em when you see 'em and they, what they're capable of and the architecture and the amount of code that they can create like that I think was very important for us to have in the, in the very beginning stages of the business. And the reason Dave was coming to me in the first place was because there were bug, because there were issues with the software and he was already starting to see that, that it wasn't a good foundation to build on.

So we knew we needed to rebuild it. We had good talent to be able to do the server-side programming to come in and do the desktop application as well. It was actually this 10xer programmer named Ed and I asked Ed, 'cause he is, he's very much on the server side of development. I asked him who's going to, who's gonna build the Windows application.

'cause my background is in tech. I have computer science degree. I was, but mine, my background's all on the server side as well. So we had server side tied up and [00:12:00] he goes, well I have a brother who's a pretty good programmer too, and I think we can talk him into doing the Windows, Linux and Mac. Desktop app and we were able to do that and it was really the three of us in those early days that wrote all of that code.

And we knew because of the type of code we could write, we could, we could create a scalable foundation for the software. So we never had to, you know, fortunately we've never had to make another version. We've always just added to and evolved the software. We never had to do a V one and then a V two of the platform and move customers over.

And so I, I think that was because of that decision to start it the right way in the beginning.

[00:12:42] Omer: How did you spend that $52,000? 'cause it's, it's, I mean, even, even back in 2012, it doesn't sound like that would even pay much for a developer's time.

[00:12:54] Jared: No, it, it doesn't go very far. I, it was almost [00:13:00] all spent on Ed and his brother on development.

That's where almost all of it went. So we, I think our ad budget back then was maybe $500 a month. Dave and I obviously are, are working for free, and so we, it, it, you know, Dave's just handling all of the, he's writing the content. He's wrote an ebook, he's writing the blog posts At that point, he's doing all of the SEO, he is managing the books.

So it was just, we knew that we were gonna live or die by the product. We had to get. This to a certain point. And we felt like we were onto something that we knew it's not gonna be too long before others start to recognize that there's an opportunity here. So there's a little, a bit of a race component of like, let's get this product to a, that next stage of features that, that are immediately being requested from users.

[00:13:54] Omer: You mentioned that I think August, 2013 you began charging for the product, but how long did it [00:14:00] take for you to actually have users on the product? Like when, when did you get to a point where you were able to ship the first version?

[00:14:07] Jared: Yep. So we, because Dave had already started the website before even approached me, and we, we ended up keeping the name, we went through a list of probably 50 different possible names and.

Once and decided at the end of the day, Hubstaff was, was the name that we really both still liked, so stuck with the name. It already had some SEO it already had some traffic coming to it. We, we shut that agency software down and put up a wait list because it, it just, we were not getting enough new customers to make it worth the distraction of trying to support that software and handle support requests for it.

While being heads down writing the correct version of the software. So we made that decision to shut the website off, basically put up a wait list, and then we had probably a thousand or 2000 people on the wait list by [00:15:00] November when we had a ve, you know, our first version, our beta version, ready to go and put it out there.

And it was late October, early November. Turn the website back on the marketing page to it. Invited these users in and we were, I remember it distinctly because in previous, like I, ever since graduating from college, I had always tried to get, I. You know, being a developer, I would work on these projects and that I would get very excited about the potential for them.

And, you know, be very convinced that hundreds or thousands of users are gonna want to, to try this software. I'd build it, I'd put it out there, and it was like, I. A real struggle to get them to use this thing versus with Hubstaff, when we turn that website back on, we're getting a hundred users signing up for it.

Almost in the first day that we turned it back on, it would be at a, it was at a run rate of about a hundred users signing up a day from that first day.

[00:15:58] Omer: Okay, great. So [00:16:00] you, you, you get the product out there, you've got some traction, some momentum with the, the waiting list. But it's still a free product.

Right? So that's, you know, the jury's still out. So you come, August, time comes and you decide you're gonna start charging for it. One, what was the first, how much did you start charging initially? And, and two, what happened when you turned, turned that on?

[00:16:28] Jared: Yeah, and, and I would say of all of the debates that Dave and I had through the years, the, probably the healthiest debates were we.

We would come at it from different angles was probably around pricing. Dave had the mindset that, let's we go volume, we go low price, high volume. Let's, let's try to get we, the virality was something that he would think about a lot too, is what every customer that we get in here, every account that gets created for you to get real value of the [00:17:00] software, you're gonna invite other people in.

So we want to give it away as much as possible. Let people invite their team members in. They're gonna learn about Hubstaff. Maybe when they move on to the next job, they're gonna recommend it to their new, you know, employer or their clients. So we started off with a, I believe it was a free forever plan for, for up to three users.

And then we charge something like $5 a user for every, if you were four plus, you'd get charged five bucks a user. And I think we might even back then have said your first three users, even if you're beyond three, your first three are free. I mean, we, we were bending over backwards to try to make price not an issue.

We, we didn't want to, you know, lose this momentum that we had built up. And I think we probably over indexed to being a little too inexpensive. But it, the conversion rate was very high because it really kind of a no brainer if, if this thing could save [00:18:00] you from one extra hour being invoiced to you, that wasn't really worked then it, it's well worth the, the money to, you know, $5 a month.

[00:18:10] Omer: And, and what happened when you, when you started, you, you put the, the payment option and they're like, how long did it take for that, that first. Customer paying customer to sign up?

[00:18:20] Jared: Oh, probably. I mean, well, we converted people over that were on the free plan too. So that was all of our existing customers.

We had been messaging them that the beta's gonna come to an end, you're gonna start getting charged. So we, we had that first customer start their 30 day trial that day and become a paid customer 30 days later. And then also all of the existing customers switch over, over that. You know, we, we probably did it over a 30 day period as well.

But it was o it was immediate.

[00:18:51] Omer: So I think you told me that it took about two and a half, three years to get to your first million in ARR. [00:19:00] What was the biggest growth driver? Was that SEO?

[00:19:04] Jared: Yeah. Yep. SEO. It continues to be. The, the biggest driver for us today and back then it was 99% of our customer acquisition channel was SEO and I, I really credit that to Dave coming up with a concept that like, I think, I think of it like a totem pole of pain points.

We were at the very top of that totem pole of these, our, our typical customer back then was somebody who was starting their own business. They were funding it out of pocket. They were hiring these developers that were less expensive overseas. Maybe they're not technical in nature, so they, when this developer says, it's gonna take me two months to build this WordPress plugin, and now you're in month three or four and it's not finished yet, I.

You don't have much recourse to know what's going on. Are they, are they really working for all of that time? Are they working for multiple [00:20:00] clients? And so these people, I believe, are really having like sleepless nights and they're waking up in the morning going, there's gotta be a solution to this problem.

They're going to Google and they're searching for our type of software. And so the name of the game was just get found, just be in the top three. For that. When they do the searches, figure out what those various keywords are that they're searching on, and just do whatever you have to do to be in the top three, and then the product will take care of the rest.

[00:20:29] Omer: Do do you think SEO worked quicker for you guys? Well, it wasn't really quicker, right? Because it was, Dave was already. Kind of doing some of this work before the two of you even joined forces, right? Yep, yep. So that'll kind of help you to hit the ground running fairly quickly with once you had the new product built.

[00:20:47] Jared: And he was still able to do some of that while we were a, you know, once we set, we shut the website down, he was still writing blog posts.

He started. He worked on an ebook, you know, he's doing all of that type of stuff still. So I [00:21:00] generally, you know, you won't see results for that three to six month period of like putting that content out there. It's gotta take a little while. But we already had that head start. So

[00:21:09] Omer: Dave was focused on growth and SEO and content, and you were focused on the product and continuing to evolve that what was going on?

Competitively. 'cause it sounds like, you know, the, the SEO you've, you've identified keywords. There's, you know, fairly decent demand. Once people find you, they're signing up. Was there a lot of competitive offerings around at the time?

[00:21:41] Jared: There were not. No. No. That was another, that part of that three month dating process was of us evaluating the space in more detail and really coming up with like a checklist and saying.

Is there a virality piece to this? Is there, are there gonna be a lot of, are there a lot of competitors now? [00:22:00] And do we think there'll be a lot of competitors in the future? And something we've been very conscious about from the beginning was this is not a solution. At least what we started with isn't a solution that everybody's gonna look for.

It is. You know, there, there's an aspect to the software that some people may not want to use this type of software because of the proof of work piece to it. And it, it worked for us in keeping a lot competitors to a minimum. It wasn't like when you, when you ask yourself is, or one of the incumbents, one of the big software companies gonna move into the space.

We were pretty confident that they weren't gonna want to touch the space, at least for a very long time. So then we knew we're just gonna fight against other companies that would be our size. And how many of those did we see out there? They were like one or two, you know, in late 2012. And they were all getting, they were getting started right around the same time as us.

So it, it was [00:23:00] not a highly competitive space and luckily for that next five years, it, we didn't see a huge influx of competitors come into the space. So it allowed us to cut our teeth and, and learn. 'cause we, we, we started from step one, like learning how to do, how do you create a good product? How do you do SEO Well, we certainly didn't start out doing those things at a, at a very high level.

But we were able to survive because it wasn't a super competitive space, and it gave us the room to learn that.

[00:23:29] Omer: Okay, so you get to the first million, I, I guess if we just counted 20, somewhere around 2016, I'm guessing, is when you get there. SEO's being the, the biggest driver. I, I know you, you said that, Hey, you know, the product has also been.

One of the, one of the reasons why we've been able to get to where we are today and the importance of building the right product. And we always hear, you know, building a great product is super [00:24:00] important, but what does that actually mean? What does that mean to you?

[00:24:04] Jared: Well, number number one, and I think this is the right mindset to adopt, is.

To not, not think that you have a great product. As, as soon as you start thinking that, then you rest on your laurels. You're like, alright, you know, we, we just like, you want to iterate on what you're doing, whether it's the SEO, whether it's, it's your parts of your product. I believe just rapid iteration is a superpower.

And when we looked at, even from the beginning when, when you're fa we were faced with. We have 10 more features that customers are asking for. We can spend all of our time over the next three months building those 10 features, or we can do five or eight of those features and spend some of that bandwidth.

Building test systems into the software building data collection, integrating tools like Segment [00:25:00] or Mixpanel or at that time it was KISS metrics, get insights into how users are flowing through the pathways of the software that you've created, and then work on iterating on that. So something we did with like the onboarding flow, we wouldn't take the approach where we would.

Improve the onboarding flow and then be happy with it and leave it alone for six months. We would do a project to improve it, and then next month we would revisit it and look at the, we're looking at the data weekly along the way and do another version of it and another version after that, and just never stop improving the onboarding flow and how you're acquiring these customers.

So. I think that when you, when you look at how do you create a good product, I think understand what the features are that solve the pain points your customers need. Yes, you need those, but then how easily do they get through into the software and get to those [00:26:00] features, and how are you improving that flow?

[00:26:02] Omer: Yeah. You were doing product led growth before. It was a thing.

[00:26:07] Jared: I remember when that really started getting coined as a term, you know, five or so years ago. And it, like, it just seemed like yeah, right. Isn't, wasn't everybody doing that already?

[00:26:19] Omer: So you, you mentioned Kissmetrics and, and, and Mixpanel. I, I'm curious what, like maybe if, like, if you were doing it again today, you were starting over, what, and you were using one of those tools or something similar, what are some of the things that you would be tracking in terms of metrics to, to get some of these fundamental things in place?

Because I, I, I see this a lot with teams like, yeah, we're gonna use Mixpanel, and then it's like. They're overwhelmed with data and they're just like wasting so much time just trying to make sense of it. And so like from the, from the experience that you've had, and if you're doing this again, how would you do it in a [00:27:00] way where you could use these tools, get the instrumentation in place, get the, the, just the essential data that you need to be able to make faster decisions?

[00:27:09] Jared: Yeah, and I, I really liked KISS Metrics I think was one of the first that popularized. Like an easy to look at funnel of, here's step one, you hit the sign, you, you go to the marketing page, then you go to the signup page. And then we've, we've always had three, four or five steps in the, in the post signup trial, like getting your trial started.

And I would say, just start there. I wouldn't look at a lot of other, like we, we would play with Hotjar off and on throughout the years, trying to look at recorded sessions and see how people are using, like actually using the software. And I feel like you're right, you, you can get paralyzed by looking at too much data.

Figure out that that initial flow coming into the software and just event those steps. Just even if it's just page view data and [00:28:00] not even events, you don't need the buttons, evented, you don't need all of that detail. You just need. Step one, step two, step three, and what's the falloff percent between them?

How many are getting to the end of the wizard? And then look at, you know, how many of 'em are then going to maybe one, two, or three key pages within the product after they get through the wizard? And then how many are going to the, like subscribing to a paid plan. There's your funnel and just now go through six iterations of how to improve that over the next, you know, half a year to a year.

[00:28:38] Omer: Great. So it sounds like you got pretty good at that in terms of, you know, you're attracting the traffic, you're. You're basically getting these people to sign up, go through the process, and come out on the other side and become a, a paying customer. What about in terms of usage, like, so once they're [00:29:00] actually a customer, what, what are the, some of the things that you looked at to make sure, like, are they actually still using the product?

How frequently are they using the product? Why did you do that?

[00:29:11] Jared: Yeah I think they're, again, simple as kind of king. Just look at daily active users, weekly active users. What, what is that kind of histogram that da over a month of somebody's usage pattern. So they use it a few times every day for the first three or four days, and then you see this drop off and, you know, why are they not coming back seven days later or 10 days later?

And usually the, the barrier to creating the habit, it happens very early. So if you can get somebody to come back every day or every other day to your software for just five to 10 days, then they're typically, that's gonna be very highly correlated to them. Continuing to use it for months, even years at that point.

So it's just get them to [00:30:00] use it for that first week or two. That, and that we started off with a 30 day trial and we decreased that to 14 days and actually saw conversion rates go up. By decreasing that, it created that sense of urgency for the customer. They knew, like, I don't have all month to try to figure out if I want to use this or not.

Let's get into it. Now, the more you can front load and push them to go and try things out, like iterate on the getting started system, try a lot of different ways to get them to go and use the different features. At least go to the page. You know, we've experimented with welcome videos when welcome mats, when you go to a new feature.

Try it as a popup versus on the actual page itself, just really trying a lot of different things and looking at what the data is telling you there.

[00:30:49] Omer: I think some people listening to your story might be thinking, you got this idea, you built this product, you already had a, a waiting list growing. [00:31:00] You start charging for it, people start paying and within a few years you hit your first million in ARR.

you told me about. All the times that you had tried to do this and it failed. So can you just talk about that? Because I think that really is, I, I think that really helps, will help people to understand like the, the reason things went so much better for you guys this time was I.

Because all the reps that you had put in before you got to this point.

[00:31:32] Jared: So it, it, it has always stood out to me and it's something that I share with other entrepreneurs when they, they ask, you know, what are, what, what's something that you can tell me to, you know, kind of set me on the right path? And the number one thing I say is, don't get too married to your concept.

I, I'm a big believer, come up with five or 10 concepts. And try those out. And I feel like that, [00:32:00] that's kind of what my journey was of, you know, being a developer, I could go put things out into the world. I didn't have to go find a, a dev to make what I was envisioning. I could envision it, I could work hard on it nights and weekends.

And I did that from like through college out, graduated from college, working my day job, still doing stuff at night and on the weekends, and. And built inventory software. I built Talentopoly that designer, developer community. And I learned through that, what it felt like to have to try to, it's like pushing that boulder up the hill of like trying to get people to care enough about what you care so much about.

You feel like this is gonna be amazing. You put it out there and you're having to pull people to it. You, you know, you know the feeling when it's happening of like the, this isn't coming easy. I'm having to car create the market for it. And there are some concepts you do, like they're brand new. There's not a, there's [00:33:00] not latent demand out there that's pent up, ready to be tapped.

That's not every concept, but I, having been through both sides of it, feeling what it was like to try to create that demand and then over here where it was just, let's go meet that demand where it is and go to that and provide the solution. I can, the feeling is night and day different and it like I, maybe there's that extra bonus points for like you created a brand new market and that's even cooler, but I'm a big believer in go find where there is the demand that's not being satisfied today.

And go create something to meet that. It is incredibly rewarding and you know, while you're doing it, you know it, 'cause it, it feels that way. You can tell the difference. Yeah. Yeah.

[00:33:51] Omer: Yeah. I think that that's a, that's a great di distinction I in terms of if you're going out there and, and effectively creating a new category.

[00:34:00] You've got a whole set of other problems to deal with because no one's even looking to solve that problem. So you've gotta educate people and, and if you, if it's not really the right problem, it's, it's a very, very, you know, it is pushing a boulder uphill. And then you've got this other situation where it's like you find a problem that exists.

But it's not the most painful problem. So people tell you, yeah, I, this is a problem, but they don't really feel motivated to do anything about it or haven't really invested a lot of time and effort trying to solve it. Right? And I've seen founders like who find that problem and they talk to customers and it's like, and, and that's the thing they try to go and solve.

And then they still struggle because people just don't care that much about solving it. But once you get to that point where you find this. This, this bleeding neck problem. It's like you don't have to do a lot of convincing, right? You just need to get the solution in front of [00:35:00] people. And, and so I think that it's, it's a, it's a, I've talked to many founders about this and I think it's a very difficult thing to, to explain to somebody who hasn't experienced it, but it is like night and day, right?

In terms of. The, the reaction and how people lean in and, and, and, and wanna use the product or want to pay for you, they pay you for it before it's ready. Right. It's like, it's a very different type of experience when you find that Right problem.

[00:35:29] Jared: Yeah. And that the old adage about and MVP, that, you know, if you weren't embarrassed when you put it out there, you waited too long.

You, you, if it is not where there's pent up demand. You will like it won't work. You'll put something out there that is embarrassingly basic and yeah, it doesn't work because it has to be that much better to even have a chance of like creating the demand. But over here, like that first version that we put out, yes, technically the foundation was [00:36:00] very good.

But UI wise, we're all like architect developers. The three of us, the UI was atrocious and it didn't matter.

[00:36:08] Omer: Yeah. All right. So the 20, you, you get to the first million 2016 you, you continue to grow, but you know, growth is relatively slow. Then we get to. Covid, what was the, before we went, we sort of went into the pandemic.

What was the size of the business where, where were you kind of roughly in terms of revenue or

[00:36:30] Jared: Roughly six, 6 million in ARR. And like you said, the slow climb, like we were slowly climb, steady, slow, and steady towards seven and eight. You can kind of see the trajectory. But you know, we were on the 10 year path or 15 year path to becoming a $15 million a year business.

[00:36:52] Omer: And then what happened with Covid?

[00:36:54] Jared: Yeah, COVID. Basically we, we had been, I think this is another key [00:37:00] point too, with that demand that we had tapped into that demand was also tied to a, a trend, a growing trend that is remote work. And hiring people to work remotely just even globally for, for your workforce.

And so that, I think that that was growing on a, the similar steady linear path and then Covid with the great experiment of having everybody work from home showed a lot of companies that this can be done. For some companies it's maybe not ideal. Yes, they should be back in the office or go hybrid. But for many companies, it opened their eyes to, this is really a way you can run a business and you can save a lot of capital running a business remotely.

And so it accelerated. What we saw is accelerated this trend that was up until the right, but on a linear path. It stepped it up probably 10 years overnight and just set it as a new, here's the floor for it [00:38:00] now. And we doubled in size over the next, just over 12 months because of it.

[00:38:05] Omer: Wow. So I mean, that, that turned out to be just the shift towards remote work turned out to be a, a really good thing for, for you guys in the business.

One of the things that I've also seen with, with many startups is, you know, they, they got a, a great bump during covid and then after the pandemic. It was like back to reality and, you know, in many cases they were like in the same place or maybe even slightly worse off than they were before they went into the pandemic.

What, how, what was that experience for you guys?

[00:38:43] Jared: Yeah, and we, we were slightly worried of what, what would happen, you know, naturally we knew. Not everybody's gonna be working remote, a hundred percent going forward. So what, what's gonna be the new normal is how we refer to it. Where, where is this gonna settle out?

And what, what we have [00:39:00] found is that it has really, in the two and a half years or so, three years afterwards, it, it really normalized at about three x what it was before Covid. So you had seven to 10% of the workforce working fully, remotely, pre covid. Now it's 30% plus. Where we had confidence that we weren't gonna return back to, to pre covid levels was just a lot of companies shed their offices.

They, they're like, look why we don't need to pay for that anymore? Look at productivity stayed the same or went up. And we're not having to incur that cost. We also knew that that trend that we had been riding since 2012 when we were, we've been big believers in from day one, that trend's not going anywhere.

That trend's gonna keep growing. So yeah, it was gonna come back down from, from that height, but we were pretty confident that, you know, we had stepped it up and like, how could we ever have guessed that we are gonna create something that was so [00:40:00] uniquely positioned for that moment? Very unfortunate.

Moment that, you know, the silver lining was, it was a huge boon to the business and just like you couldn't even plan it to be that well positioned for. I really do think that work, the remote trend in global hiring trend is the biggest shift in the in business and how businesses have been run since the advent of the pc.

This is like the second major moment and we were able to capitalize on it to some extent.

[00:40:30] Omer: So the business as you, you told us at the, at the start is doing about 22 million in ARR today, you basically bootstrapped all the way, and other than in the, I guess in the last six months, you raised some, some money through private equity.

When you. You said yes to Dave in 2012. You know, we, we all have hopes when you start some new, [00:41:00] new thing, what you wish it could become or what you hope it could become. But realistically, like what was, what was your realistic goal at the time that you thought if I could just. Get to this, I'd be happy.

[00:41:12] Jared: Yeah. In, in those few moments where we weren't chained to our computers and we get together in Dave's basement and have a beer, and we're like, oh, you know what, could this become it? I'll, I can clearly tell you what we thought. We were like, we are gonna be ecstatic if this gets to 40 k of MRR, you know, $500,000 a year run rate.

Like we're set. We can't ask for anything more than that and that's, we would sit in his basement and say this. That's amazing.

[00:41:41] Omer: And what do you think, I mean, we, we talked about some of the factors along the way at the, the, the product and, and covid and, and move to remote work and whatever. But what do you think, like when you look back, right, so what, what's, what's contributed to your success?

Because this is a [00:42:00] space where you talked, there were a couple of competitors at the time, but I also know that. Other competitors have come and gone in the market here. Right. So it's not like you were just the first, so therefore, or one of the first, you, you made it work. What was the difference? Like why, why do you think you guys were able to, to, to kind of win in this space?

[00:42:22] Jared: Yeah. I, I think something that has been crucial for us, number one, having the right recipe to start this with. And I think. Dave being, having the SEO background know in that being what was gonna be our number one customer acquisition channel. And he had the background, he was an expert in that, so we didn't have to go out and rely on some, you know, agency or hire people to do that.

He could just do that himself and then I could do the tech side. I, I didn't write all the code, but I could oversee it. I knew how to steer that. I knew how to make sure we had the right. Product design and the right tech in [00:43:00] place. Between the two of us, we could cover the jobs that needed to be done over time.

We had to find people to come and take those jobs and do it even better than we can do it. But in the early days, you've gotta be able to do that all in your foun, your co-founding team. And I I, for a software business, I'm a big believer that you need to have a tech co-founder. Right there in the mix that has the equity that is gonna work until two in the morning, night after night for years to get this to where it needs to be.

And I would say that's point number two is just willing to roll up your sleeves and do the hard work. When people come to me and they say, I've gotta I, I want to bounce something off of you, I've got this concept for a business. It's like you don't know it until you've been through building a business that the, when they say the concept is 5% or 10% or whatever, you know, a small portion of like what's gonna determine success.

It's like 90% execution. [00:44:00] It's so true. It's like, is once your excitement in the honeymoon period wears off, call that three or six months, are you still gonna work until two in the morning, night after night? 16 hour, 18 hour days for years to make this a reality and grind your way to that success. And that's where you get separated from, from the rest.

That's the companies that came and went. They just, they, I think they didn't have the right starting formula and they didn't have that perseverance to just, I don't even know how we did it. Looking back on it, I don't know that I can do it again. But it is just tirelessly grinding it out.

[00:44:39] Omer: Love it. All right.

On that note, we should wrap up. Let's get onto the lightning round. I've got seven quick fire questions for you. What's one of the best pieces of business advice you've received?

[00:44:50] Jared: I, as I mentioned earlier, I would. I would say if your MVP doesn't embarrass you, then you spent too long polishing it, get it out there quicker and start [00:45:00] validating your concept much faster.

[00:45:01] Omer: What book would you recommend to our audience and why?

[00:45:04] Jared: I love the High Growth Handbook, big fan of it and open it regularly to specific chapters to consult things.

[00:45:12] Omer: What's one attribute or characteristic in your mind of a successful founder?

[00:45:16] Jared: Be willing to put in the hard work day after day, month after month, year after year.

[00:45:21] Omer: What's your favorite personal productivity tool or habit?

[00:45:25] Jared: I started doing this in the last year and I'm a big believer now is blocking out focus time. Don't let anybody take that over, have multiple hours consecutively of focus time once or twice a week.

[00:45:38] Omer: What's a new or crazy business idea you'd love to pursue if you had the time?

[00:45:42] Jared: So, yes, this one is, it is out there. It's transparent ole windows. So especially if you live in a city. You could you, you can turn your window into whatever landscape or picture you would really wanna see looking out there instead of the building next to you.

[00:45:58] Omer: Wow, that's, I haven't seen [00:46:00] those. What a cool idea.

What's an interesting or fun fact about you that most people don't know?

[00:46:04] Jared: So my, my hobby when I do have a few moments of spare time is to do sim racing.

[00:46:09] Omer: Interesting. And, and finally, what's one of your most important passions outside of your work?

[00:46:14] Jared: I, I am all about like helping my kids and helping other kids at, at our school and in, in groups, get excited about steam and get them into robotics, get them to do coding challenges.

Compete in state tech fairs, anything it can do to help kids get excited about going into engineering.

[00:46:33] Omer: A great way to spend your time, a worthwhile thing to do. Love that. Great. So thank you so much for joining me. It's been a pleasure talking and, and unpacking the story of what you and Dave and, and the rest of your team have done over the last.

You know, 11 or 12 years. A lot to uncover love. Would love to continue the conversation, but we only have so much time. So I hope we did justice to, to telling your story and, [00:47:00] and what you guys have done. If people wanna learn more about Hubstaff, they can go to hubstaff.com and if folks wanna get in touch with you, what's the best way for them to do that?

[00:47:09] Jared: Yeah, they, they email me at jared[at]hubstaff[dot]com. It's J-A-R-E-D at Hubstaff.

[00:47:15] Omer: Awesome. Jared, thank you so much. It's been a pleasure and I wish you and the team the best of success.

[00:47:21] Jared: Well, thank you. It was great being on.

[00:47:22] Omer: My pleasure. Cheers.