The SaaS Podcast

Profitwell: Bootstrapping from Zero to a $200 Million Exit – with Patrick Campbell [327]

Profitwell: Bootstrapping from Zero to a $200 Million Exit

Patrick Campbell is the founder and CEO of Profitwell, a suite of subscription revenue products that help to reduce cancellations, optimize pricing and get accurate revenue reporting.

I originally interviewed Patrick in 2017 (episode 134) at which point he had been bootstrapping Profitwell for 5 years and had grown it into a team of about 30 people.

Since then, Patrick and his team have grown Profitwell to 8-figures in ARR and the company was recently acquired by Paddle in a deal worth $200 million.

In this episode, we chat about:

  • How Patrick bootstrapped his business with a personal runway of 9 months and managed to get enough traction in that time to keep the business going.
  • How he figured out the right positioning for his product so he could effectively compete with well-funded competitors that were building sexier-looking products.
  • Why Patrick feels that bringing on part-time co-founders was one of the biggest mistakes he made and how that created an incredibly difficult situation for many years.

It's a great interview and Patrick talks openly about several mistakes and regrets that he hasn't talked about publicly before. It'll give you great insights into the reality and challenges of what's often really going on behind the success story headlines that we often read about.

I hope you enjoy it.

Transcript

Click to view transcript
[00:00:00] Omer: Welcome to another episode of The SaaS Podcast, I'm your host, Omer Khan. And this is the show where I interview proven founders and industry experts who share their stories, strategies, and insights to help you build, launch, and grow your SaaS business.

In this episode, I talked to Patrick Campbell, the founder and CEO of Profitwell. A suite of subscription revenue products that helped to reduce cancellations, optimize pricing, and get accurate revenue reporting. I originally interviewed Patrick in 2017 on episode 134, at which point he'd been bootstrapping Profitwell for about five years and had grown it into a team of about 30 people. Since then, Patrick and his team have grown Profitwell to eight figures in ARR, and the company was recently acquired by Paddle in a deal with $200 million.

In this episode, we chat about how Patrick bootstrapped his business with a personal runway of nine months and managed to get enough traction in that time to keep the business going, how he figured out the right positioning for his products so he could effectively compete with well-funded competitors that were building sexier looking products and why Patrick feels that bringing on part-time co-founders was one of the biggest mistakes he made, and how that created an incredibly difficult situation for many years.

It's a great interview and Patrick talks openly about several mistakes and regrets that he hasn't talked about publicly before. It'll give you great insights into the reality and challenges of what's often really going on behind the success story headlines that we often read about. So I hope you enjoy it.

Patrick, welcome to the show.

[00:01:48] Patrick: What's up man? It's been you were telling me it's been five and a half years.

[00:01:52] Omer: Five and a half years.

[00:01:53] Patrick: Yeah. And it's it's funny coz we haven't really talked since then, but I've listened to the podcast since then and so it's like five years of me learning more about you and me, me not really talking to you. So that's, that's an interesting world to live in.

[00:02:06] Omer: Well, that's my turn to catch up now, so it's great to have you back, so thanks. Why don't we start by just, I mean, I think most people who listen to this show are familiar with ProfitWell, but why don't you just start by telling us. What does the product do? Who's it for and what's the main problem that you're helping to solve?

[00:02:22] Patrick: Yeah, a hundred percent. So we, ProfitWell is , it's kind of funny coz because of the acquisition, this is all changing a little bit, but we exist basically grow subscription businesses automatically at ProfitWell. And so Essentially we plug into your billing systems or a Stripe, Braintree, Recurly, Chargebee, Chargify whenever you're using, and basically give you access to all of your financial reporting for free.

We have about 30,000 companies using that subscription metrics product. And then we make money by putting all that data through our algorithms and then give you tools that automatically lower your churn or optimize your pricing and we've since sold the Paddle and Paddle does basically everything to run a subscription company automatically.

So like this whole run and grow automatically. And the automatically is like the operative word there has been kind of interesting of why we came together because what we do for churn, they do for taxes and chargebacks and all this other stuff. So you don't have to deal with any of that stuff. So yeah, that's kind of the, the little bit of background, and I'm sure we're gonna go deeper on a couple of those things.

[00:03:22] Omer: Awesome. So we'll talk a little bit about the acquisition. Give, listen, a sense of size of the business, say, so where are you in terms of revenue, customers, size of team?

[00:03:30] Patrick: Yeah. So it's a little different now coz I'm, I'm no longer just a bootstrapper. I'm at a venture back company with like a proper board and everything.

We were into the eight figures in revenue at ProfitWell that's something I could say. I can't tell you what Paddle's revenue is. We're just not public about that. But, Prior to acquisition, we were about 85, 90 people. Post acquisition were about 350 people. Raised 275 million at Paddle total.

Didn't raise anything at ProfitWell, but you know, now, now we're all, all one big happy family. So that's kind of the, the structure of things.

[00:03:59] Omer: First of all, congratulations on the acquisition.

[00:04:02] Patrick: Thanks, man.

[00:04:02] Omer: So this was a deal worth, I think, like 200 million in, in a mixture of cash and equity. So, and, and you've now joined Paddle as its Chief Strategy Officer.

[00:04:14] Patrick: Yep.

[00:04:15] Omer: Tell us a little bit about, like, how, how did, how did the acquisition come about? Were you looking to sell the company? Was this like Christian or somebody just reaching out to you and how, how did it come about?

[00:04:26] Patrick: Yeah, so we were definitely not looking to sell. We were, we were heading into a stage of the business where we needed to raise, like we knew we needed to raise money for the first time, and we didn't really think about like, Oh, like getting acquired is another way to get the resources that we want.

And so we were like prepping for a raise, and then Christian and I were chatting and Christian was like, well, what if we, what if we join forces and we bought you. And we were like, no, you can't have our baby, blah, blah, blah. Like the natural feeling. But then it kind of became like, well, if all of these things are true, then like it was just the ego lot selling.

And then we were like, Yeah, but they're not gonna fill all the, the check boxes. Right? And then we went through like a whole process and ended up you know, Paddle was the beginning and the end of that process, which is kind of cool to think about. But yeah. And so, we kind of came to terms with it really quickly, and then all the check boxes were fulfilled. And we actually did, we did a documentary on it. It's at, we signed tomorrow.com. I don't know if you saw that, but it's like, kind of goes through like the, how it came to be and all that kind of stuff.

Obviously it's from us, so it's not like a, you know, like there's some, there's some major things, like my voice memo to him, like going through the numbers and stuff are, they're all like real, like they're all like shared, which is kind of cool. But yeah, that's kind of the quick and dirty way that it kind of came to be.

[00:05:42] Omer: So you have an interesting story and there's so much to try and unpack, and we're not gonna do it justice in the next 30 minutes or so, but I wanna try and at least get people to walk away to wanna understand, you know, just how you started this business and have basically took it from a bootstrap idea, which you are building on your own to this acquisition.

And then also about some of the mistakes you made along the way, some of the lessons you've learned, and then hopefully we can inspire people with this. You know, there's, there's lots of opportunities if, if you kind of build the right type of product and company. But you know, even Patrick had that great outcome, but he's also made a lot of mistakes along the way and, and there's a lot of stuff that people can learn from that.

[00:06:30] Patrick: I've made a lot of mistakes. Yeah. Yeah.

[00:06:31] Omer: Let's go back to, I guess 2011, 2012, like how did you come up with the idea for this, this business?

[00:06:39] Patrick: It's funny how linear we explain things like, it's funny how it's like, well, it was just A plus B in that equals C, and we're a giant company. You know what I mean?

And it's, it's, it's actually, so it's more stutter step. And I think that what I kind of found. Which is very similar to a lot of people, like, you know, find is like, there wasn't like this stroke of genius, right? Like in, in the back in, in the back end. It, it looks like, you know, Oh, like, of course this was the obvious thing, but I, my personal backgrounds in Math and Econ I started working in the government and then I went and worked at Google, two very large organizations, obviously.

And then I worked at a startup in Boston. They started working on pricing for the first time. They gave it to me just like this entry level plus kid. You know, like we would see these big swings when we would adjust pricing. So I kind of started putting two and two together where it was like, oh they gave it, they don't take it seriously, but it has a huge impact and it's really necessary.

I don't love the culture here. I'm young. I might as well try to do something. So I, you know, cashed out my 401k and gave myself, I think it was like nine months of runway to try and like figure it out. And it is a lot of naivety and that's kind of what I fear a little bit about. You know, starting something new or eventually starting something new is.

I, I appreciate so much in hindsight how dumb I was. like, and I, you know, I'm not like complete idiot, but like, I was so dumb in the sense of I didn't waste time trying to go raise money on something that was like just a hollow part of an idea, right? I like went after the idea. I started like doing content because we had a free HubSpot account, right?

Like there was all these things that I was doing that paid off in the end that I just thought, I guess instinctually, but maybe there was some like intelligence going after it of like, why this market? And, and it's just a really interesting thing to think about depending on where your journey is. It's not gonna be linear.

Like it's always going to be like start and stop and we just, when we talk about it, we paint a threat amongst all the things to make it seem like, you know, it was linear and very intentional.

[00:08:42] Omer: I think we should probably explain to people the difference between Price Intelligently and ProfitWell. Because there was kind of a bit of a naming thing, but there was also, there's a product component, there was also a services component.

Can you kind of just help explain that just so people understand how they fit together?

[00:08:58] Patrick: We used to be Price Intelligently the name of the company and the product. It was a pure software product. Then we found that everything was better if we put service on top of it, like the customer experience, our amount, we could charge all these other things.

And then we knew we wanted to get to a pure software product. So we started like learning about you know where we could go. We were helping a company that was about IPO at their pricing. We figured out they were calculating MRR and churn incorrectly, which was kind of like, holy cow, like a CFO taken a couple other companies public, and all of a sudden he's like calculating these numbers wrong still.

And so that plus like, you know, wanting to get to this better data product started with this sort of us building the metrics. And then as a bootstrap company, you have all this fear of over, you know, like, It's already hard enough to build this first thing. Now we're gonna start to try to build the second thing.

What if it doesn't work? And it like, it takes away from the brand and everything that we're doing. Well, let's start a separate site. And then all of a sudden this two sites started getting better and better, one at different speeds. And we were like, Okay, like what are we gonna do? Like, are we gonna combine these things?

Is it gonna be separate? And it was, it was never, like, we did have some conversations about like spitting these out into two separate companies, but that never really made sense to us. It was like, no, it. It's all part of this overall mission of like revenue automation, like automating your growth automatically that we talked about.

So it was just one of those things that we started kind of putting it together and then we were like, well the name that you know grows is not Price Intelligently. It's too long. It's too pricing focused. Our mission is starting to expand, and we were like, all right, let's change it to ProfitWell. Which like, changing your name is so hard, like, because it's not. You think it's, Oh, well just like change your name, send an email, do a good branding.

It's like, no, it's two years of explaining everything. And then you get this kind of fun kind of moment where, there's some people who always will know us price intelligently and don't even know this ProfitWell thing, even though the ProfitWell thing gets bigger. And then there's another group of people that they only know is ProfitWell and they're like, what's this Price Intelligently thing?

And then there's people who are just kind of confused coz they know both, Right? And now we're kind of going through it with Paddle, where we're, we're maintaining the ProfitWell brand for a while, but I would ProfitWell like next five years, the ProfitWell brand probably goes away. Right? And so it is just an interesting phenomenon that that is, is just funny to think.

[00:11:18] Omer: Yeah, I think I heard you say somewhere that, you know, don't, don't do that and get it right the first time. But even that's, that's hard. And, and I think a lot of times you have founders who kind of get, kind of hung up there, right? In terms of like, I can't build a product until I get the right name. And so it's like, I don't know if there is a, a good answer on how, how to handle that.

[00:11:36] Patrick: Yeah. It is hard. It is, it is really interesting.

[00:11:39] Omer: What was the first version of the product? Like, what did it do and, and how did you, how did you get it built?

[00:11:47] Patrick: Yeah. So the first ever product was this, Well, I think I'll talk about the metrics product cause it's a little bit more interesting. The metrics product, we were kind of going along. I, I was just alone for the first nine months. Then we hired Peter Zotto, who's still with the company. And he ended up kind of taking over sales in the revenue part of the business. And then it was like the original idea was, well, what if we hosted every pricing page on the internet. Interesting, right? Like that gives us an in that allows us to like do a bunch of stuff and it's an idea we might come back to actually, coz there's some really interesting implications given what we do now.

And then it kind of became like, okay, well let's go for this metrics data. Well, either way we're gonna need like development and I'm, I can poke around code, but I'm not an engineer by any means. And so, got introduced by a guy named Chris Boulder. I like to shout him out because he introduced us to Facundo who's still with us.

And he started off as a contractor and the idea was like, well, let's just build this metrics product. You know, figure out how that could look, build that out. And then solely over time as we started getting traction, he was like, Oh, I wanna come on full-time. So got him on full-time, all these other things.

And then what was really difficult being a bootstrapped company is like, we're kind of building two product lines to companies, as I was kind of explaining, right? So it becomes this weird trade-off, weird prioritization exercise, right? Because all of a sudden, like Facundo it's kind of building this metrics thing.

We're not giving it enough like distribution and growth lab because we're worried about like cashflow over here by like making sure we hit our quarter and do all these other things, right? And so we kind of like built these in parallel. And then products got really far ahead because all we were doing is we were reacting to make sure the business kept afloat and he was kind of building on his own island, right?

And so he could like develop everything, develop the planning cycles, do all that stuff. And so he got so far ahead and this was another mistake where it worked out, but it was like it got so far ahead that we had to make sure that we caught this up, which is not the easiest thing to do while you're trying to obviously make sure you hit the quarter as well, so you kind of like two steps forward, one step back, which, you know, you're still making progress, but it's, it doesn't make it easier, if that makes sense.

[00:13:53] Omer: You had, you said you had a runway of about nine months.

[00:13:56] Patrick: Personal runway.

[00:13:57] Omer: And so you hadn't raised any, any money. How long did it take to get the product built and then how long did it take to start selling it and, and getting customers?

[00:14:07] Patrick: Actually a lot longer than you think because the MVP was terrible. And it wasn't terrible because like if, it had been like a basic space that didn't have any competitors, it would've been fun.

The problem was, is like we were literally about to, like, we started actually sending. Like we, we weren't gonna like just launch and be flashy and like send it to a bunch of people. We were gonna try to get like 10 people on, learn from them, be happy, then go to the next hundred. So we had gotten the 10, made them happy, figured out a bunch of stuff when we were about to go to the next like 50.

Soon as we started sending emails Baremetrics launched, like Baremetrics and they had all these graphs and everything was pretty, and the website was pretty and all this other stuff. And so the Hacker News and the Indie News crowd like loved them. And then like shortly thereafter, Chart Mogul and First Officer and like, and Baremetrics raises from Stripe.

ChartMogul raises like a bunch of money for the time. And so all of a sudden we're sitting there and we're like, Okay, we thought we were billionaire idea. We were like, Oh, analytics. Like, that'll be a billion-dollar company, right? Well, no, but also we were sitting there and we went, okay okay, what do we do?

And so we went and started, you know, kind of thinking about the product and what we came up with based on some data and we collected a bunch of research on like pricing and stuff coz you know, that's what we did for a living at the time was we started realizing like, oh, this is a terrible business, minus the competition like, people aren't willing to pay that much for analytics.

Even the larger companies, like normally you wanna see like a 20X difference or more between like your largest customer, your smallest. At most, we were getting 5X. And so it was one of those things where it just didn't make sense. And the result of that was like, Oh, well if we're gonna build this, it should be free.

Right? And that was like the kernel of making us free. Well, you're a bootstrapped company now has venture-backed competition. You have this other product that's funding the business. And you're gonna do a free product that needs to be a hundred percent accurate. Way too many, like, like areas there to like focus on.

And that, and that's probably like in hindsight and you know, it all works out and maybe weren't mature enough of the time to like, take advantage of this, but we probably should've raised money at that point because that's when like, it would've been useful. It would've like, helped us a bit, but like obviously it worked out and so there's probably like, It's gotta be two years before we had a monetizable product on that free product.

We basically went after keeping the Price Intelligently product moving and growing, thankfully, and then expanding the team slowly but surely to like build out this this free product. And then, you know, we woke up and we're like, cool, now we can monetize. And then those first dollars like, you know, we, we had one sales guy doing everything right on that product, and then it was like, Oh, we gotta fix it, do this. And then we were building out marketing, which we didn't really have. And so there was just a lot of stuff that came from that.

[00:17:01] Omer: How did you figure out how to deal with the competition and how to position ProfitWell? Because it's, you're right. It's a tough place to be, especially when you've got competition is venture backed.

It's, they're investing in it, they've got money, they, the product looks, you know, sexy and you're kind of having to say, Well, you know, we believe we have a better product, but you've gotta kind of convince the market about it as well. And making it free is, I guess, is one way of doing it, but that can also work against you.

You know, you may not attract the highest quality, you know, types of customers and, and people may not value it as much. How did you think about that and how did you figure out the best way to position ProfitWell, and what was happening in that competitive landscape?

[00:17:52] Patrick: So there were a couple of bets that we made, and these were kind of bets on like the market. So for one, accuracy, we, we would had these conversations with folks and we'd be like, Yeah, but their numbers are inaccurate. Like it's wrong. We know it's wrong. Yeah. But they have this graph, like additional graph, right? Because they were expanding their product. We were deepening our product. Right? And we'd be like, Yeah, but it's wrong.

And they're like, Yeah, but they have the graph, right? And so that was hard because we were like, people just not care about this. But what we noticed is like as the company got bigger, they really cared about it, right? Like they cared about it more and more. So we were sitting there and we were like, interesting.

Okay, so we're making a bet that accuracy is important. Second bet, if there can't be a 10X product in a space, like if there only can be like a 3X or a 4X product or like if that like free is a really good way to undercut the market as long as you have a philosophy of free that it should be better than the paid competition, or at the very least on par with the paid competition.

I think freemium that's worse than the competition is like just, you can't really do that anymore unless it's in a really commoditized space. But like for us, it was very much like, All right, well if we're gonna make it better, then all of a sudden you confound those expectations of like, wait a minute, this is free?

And that was our favorite thing is like, I feel bad for not paying. I feel bad for not paying you. That's like the trigger. We get that all the time where you're. Oh, don't worry about it. Well, can I just like pay you for this? No, don't worry about it. Well, I can't use this thing because I can't use your paid product because of xyz.

That's fine. Like we'll build something eventually that you'll buy. Right. And I think that's, that's the thing that it's, it's a very long-term bet that I think a lot of people don't appreciate that like freemium has to be a strategy. It can't be a tactic. And so I think those are the two things, and I think what happened is, our content marketing, which was really strong and a lot stronger than I would argue the, the other competitors we had.

What we ended up doing is like talking about these things in, in our ads, talking about these things, our content. Like yeah, like accuracy's, super important. You should make sure your metrics are accurate. You don't wanna like live in a world where it's 5% off and you didn't hire fast enough. Right? And all of a sudden you see the doubt.

And this is why all three of these, the big competitors and all the, like other competitors basically talk about accuracy now. It's because we just hammered them on it. Right? And I think that's the answer is like, being smart about, you know, what makes the most sense.

[00:20:31] Omer: So how are you generating revenue at the time? If, if the, the product is free? Where was revenue coming from?

[00:20:38] Patrick: So from Price Intelligence. Yeah. So that product was still going, and so that product was growing and the margin on that is, you know, thankfully really good. And so that margin allowed us to like pay for the free product or the development of the free product if that makes sense.

[00:20:55] Omer: Got it. Let's talk about one thing that you have spoken about before. One of the first mistakes that you say that you made when you started this business, was bringing on part-time co-founders. And this is something that initially when, when I heard about this, I was like, Oh, that, that sounds a bit of a mess, but how bad could it have been?

And, and then once I kind of unpacked it and, and realized what you went through for about, I think four years, I was like, wow we have to talk about this.

[00:21:26] Patrick: It's interesting coz everything's good now. Like those guys made a good amount of money. Everything's like good. I think it was, it was, it was good before that too.

But like the first few years what happened is I got introduced to a couple of local Boston Tech guys and they're great, they're smart, all that kind of fun stuff. But I didn't really know them and I just kind of trusted and, and not saying, Like, I have to assume no one knew anything and they were ignorant because if I don't assume that, I have to assume that they're like trying to screw me over and then like my decisions and how I act with them has to change, right?

And so I think what happened is like they, they were thinking, Oh, well let's start something on the side of our jobs and if it takes off, we'll join that thing. In the most negative way, they were thinking, let's get this guy to like go run it. And like, we'll like give him a bunch of help and you know, go from there and we'll have sizable positions because like, we'll give a bunch of help. Right?

And I think the reality was, okay, like I'm doing all this work. They're not really helping that much. They're helping a bit and they probably, like, they probably think they're helping more than they were. I probably think they're helping less than they were so on and so forth, but, There was no like proper vesting set up.

There was no, like, I was like, they theoretically could fire me like on paper. These two guys that aren't in the business at all, and it was like anything that affected them. it would, that would be a drag on me. What I mean, But like, Oh, our taxes weren't filed or like, we're doing an extension. Oh, I don't want to do that.

And it's like, Oh, you should hire an ops person. It's like, well, we're not, it's, we're not even there yet. You know what I mean? Like, we're not even, you know, as a place for that even makes sense, but because that's the squeaky wheel for them. That's the vice I'm getting, right? So it's just one of these things where it was like such a breeding ground for distrust and consternation and just emotional terribleness.

And the problem was there was no, like, there was no leverage I had besides saying I was gonna tank the business. And this puts me, put me in a really tough position where I'm like, Well, I need to like grow because that's what you do. We wanna build something big. But I also. Like I'm also like, every time we grow, I'm making it harder and harder to like fix this wrong, Right?

And I think what I should have done, and I didn't say this in the previous episode because I didn't know this, and I think what I should have done is I should have sat down with them and I would've do that now. And she's like, Hey guys, when we did this originally, this just doesn't make sense. Like you guys thought you were gonna do this.

Great. Good intentions, this changed. Here's where the new cap table should look like. Here's what we should look like, all these other things, and this is what we need to do to move forward. And instead, the approach that I had was like incrementally, like diluting them over time. In, in there, you know, with, with their approval obviously by like, hiring on Facundo, making sure Peter got more every single revenue milestone getting things like I did have to threaten to tank the company a few times, like to get, because again, there's no incentive. Like once they have something and that thing is growing, it's basically a game of chicken, of like if Patrick's really gonna leave, like Facundo, we like for the longest time, didn't sign his employment agreement because we were like, worst case scenario, like we're just gonna copy and paste the code base and leave.

Right? Like it got that back right. And so it's just a really hard thing because again, If I assume the worst in them, they were trying to screw me over and like they're trying to, It was called a Dave Balter deal in Boston. Dave Balter is this guy who like, he'd start companies, but he would, I think he like, he would end up like going in and taking over again.

But he would like start it as a part-time thing and then all of a sudden was like, you know, he's just get the itch because it always like makes sense to start part-time and then you're like, No, you're in or you're out. And if it's valuable you have to go in and, you know, one of the guys it was like, Hey man, like you said you were gonna come on board.

And it was like, well I'd be, I'd be crazy to leave my current job right now. I'm like, Yeah, but this is where you have ownership and all this other stuff. Right? And so I think at worst they were trying to screw me over, but like, I don't know, I think we were just naive. They had never founded companies before, all that kind of stuff.

And so I think it was more of a like trying to work through that. And I could have handled it a lot better in order to, probably wouldn't changed the outcome much, but it would've changed a lot of those calories and a lot of that consternation over the past or the first four years basically. But then the past, like five years, like they've been super helpful. They like, you know, like not, not like, oh my God, they've changed the direction of the company, but like advice and that type of thing, and you know, everything's good and Gucci and made them rich and all that kind of stuff, so it's good.

[00:26:11] Omer: Did they ever come on board full-time or was this always a part-time thing?

[00:26:15] Patrick: No. Yeah, they never came on.

[00:26:18] Omer: I mean, I know you say everything's kind of all good. Is there any kind of resentment from that, that, you know, you are the guy who is kind of having to, to basically do it all and, and drive and put this together and, and they still kind of got the benefits of the, the acquisition?

[00:26:36] Patrick: I will never fully trust those guys, and I've never said this publicly. I don't know if I've ever said this to them, so maybe I shouldn't say it publicly, but like I've never, I will never fully trust these guys ever again because it's, and I don't know if it's fair to put that on them, or maybe it's on me, but the situation it's kind of like one of those situations where like, you know, I the only, this is such a dramatic metaphor, but like if a child dies, the spouses, even if neither spouse had any fault in it, like the relationships, a lot of times the relationships break up in the modern age because there's just so much pain around the thing.

And so for me, it's like, my life was hell for the first four years and a lot of that was on me, but they didn't make it easier. Right? And they were also maturing as human beings. And so like I think that they might not remember like how they acted back then. But I also don't remember perfectly how I acted either.

And so the way I looked at it and going into the deal, like there were a couple things where I was just like, Hey guys. You know, if this doesn't happen, like I don't want it to deal. Like I'm willing to like walk away. And it's not that they weren't for that, it's just they don't think in that manner because again, there's like no, like there's different information on how they look at the business and how I look at the business.

Like in terms of like I think there's a world where they look at the business, where like, we wouldn't be here without me. Like that type of thing. Which I don't know, objectively is insane, but like also, I don't know, like maybe that's how they look at it. Right? And like, who am I to judge? So like, I think I've matured a ton on this and I kind of look at it as like when I look at the final numbers, I'm like, Could I have had more? Should I have more? Probably.

But like, It's my first time doing this. I hit a home like, I don't know how you, like a bootstrapped home run a, a triple for a venture-backed company or a double for a venture-backed company. I don't know, like, I'm not gonna complain because I've learned so much that like, I'm gonna keep going and these guys have been helpful and I think they're gonna continue to be helpful, like their, their stakeholders and Paddle now on some level as well.

And so, yeah, it's just a weird, it's a weird feeling because it's almost. I have to give them what I like to call the most charitable interpretation because if I don't like, what am I gonna do? Like curse them out. That's only gonna make me feel better. It's not gonna pragmatically do anything and it's all in the past.

So, I don't know, like it's, it's interesting. It's a really interesting thing and. I did, I did make sure the team got taken care of as well. Like that was one of the things, like if I got it a lot and they got some money and the team got screwed, that would've weighed on me. And then, and, and a lot of things over the past, like eight, nine years, it's been like I have to choose myself for the team.

Like in terms of comp and stuff like that when it comes to like suck. And it, it just, at the end, I was like, I don't wanna have to choose between the two. I want both. Right. And so those were some of the like last conversations. I mean, I love those guys. They're like brothers, but they're like brothers that like you've had like deep fights with and so you're family, but like there's still something underlying there and you know, we'll always love each other, but it's, they'll be like a, almost like a film of like, Like something that, that, that was there.

Like we'll never be truly over it. We'll always remember it for better, worse and everything in between. So, yeah, it's a good question. I'm at peace with it. I, I look at it as like that's my naive, it's tax and everything worked out and like, let's go. You know? That's kind of how I look at it in the end.

But yeah, thanks for asking coz this is, you could kind of hear me thinking through it and I think that it's one of those things that like I am at peace with it and it's kind of cool to be at peace with it because I think like six years ago, if this would've happened, like I wouldn't be at peace with it. I'd be like, fuck those guys. Right. Like I would just be like very aggravated about it. Yeah. But I feel good about it.

[00:30:25] Omer: I'm big into these days. Like the idea of just letting go. Like we hold onto so much stuff emotionally and you're kind of like, what good is it doing anybody? Right? And you know, I'm probably suffering more by just kind of holding onto some of these things.

[00:30:39] Patrick: And I think with those, with the situation, it's like there's no right or wrong. Right? And like when I was saying, What I should have done is X, like that would, I think, would've solved a lot of things. And then it would've been very obvious that they were like either being like assholes or like. We have gotten to the same, same result without all the like, pain.

And, and they, I think, I don't know if they realized the pain that they put us, put me through and put us through. Right? Because I wasn't having those conversations. Right. And so that's, that's what's really hard about, It's like, I think it's really important when you have co-founder disputes, team disputes, personal disputes, whatever it is, it's like having this idea of like your interpretation, like your, your interpretation of the situation is very self-centered and is definitely wrong, but theirs is also wrong. And so it's like trying to find like where do you have that balance and where do you have that communication and yeah, it's just, it's just interesting. It's just interesting on how you handle this type of stuff.

[00:31:34] Omer: So that was like the first four years, I think you said it took to kind of.

[00:31:38] Patrick: To get out from underneath. Yeah, and like, it, it, it worked through even up to the sale. Like there was stuff being solved on that access. But yeah, it was definitely like, you know, it took, it took a long time to kind of get over the major hump and then to, to kind of keep going from there.

[00:31:52] Omer: And then, you know, I don't wanna kind of keep going down sort of a downer path here.

[00:31:56] Patrick: That's fine.

[00:31:57] Omer: But I think this is important to talk about that you, you were at Google when you were you diagnosed with cancer. Yeah. And then two years into launching this business when you don't have all the benefits of, you know, great healthcare and, and you've cleared out your 401K and you're trying to build this business. You, you got diagnosed a second time.

[00:32:20] Patrick: The hard C came back.

[00:32:21] Omer: While all the other stuff that we were talking about here.

[00:32:24] Patrick: Yeah.

[00:32:26] Omer: I don't think anyone can even understand what it's like to go through something like that.

[00:32:31] Patrick: Yeah.

[00:32:31] Omer: But in the middle of all of what you just talked about with the situation, with these part-time co-founders trying to get this business off the ground, was there a time there that you just, you just thought about just kind of packing it in and, and doing something else?

[00:32:46] Patrick: Yeah, that's a good question. Thankfully, depending how you look at it. When I was at Google, like that was the hard, I had like stage one, which is not, you know, it's not something to be like, Oh, it's nothing. Right? But I, like, I, I had a very treatable like, you know, “relatively easy cancer”, right?

I had chemo, I had surgery, some more chemo, and it was, it was good, right? And then I was about to be, and the best place to get sick. I think I said this in the first episode, Google best place to get sick. I didn't even see a bill. Not only like did I up pay anything, I didn't even see a bill. Right.

Which was kind of cool. So that's why like I wanted to make sure once we had health insurance, that we always, we had great health insurance. And so what ended up happening at ProfitWell is like, I had decent health insurance as much as, as, as great as we could afford as a bootstrapped company, which was not amazing, but like good.

I was just about to be outta remission or in remission. And then like, it, it, it popped back up. Right? And so thankfully it was just radiation, so it wasn't like going back to full chemo and everything like that, and it was very contained, but it was a mind screw. Obviously, I have a team of like 15 people.

Those 15 people like, you know, like now there's like obviously, like are we gonna survive? And then there's like, even though Patrick says it's okay, like, is he okay? You know, that type of a thing. So there's all this like indecision and you know, that kind of stuff that I was describing before with like the team dynamics and then just trying to survive. There's all these distractions, right?

So it, it, it kind of, it sucks, but it isn't, I never wanted to quit. Not cause like I'm some, I am very resilient like I know that, but like, it's kind of, I've just learned it's not like the founder way, right? Like it's more, there's a problem. Like it's really funny cause other podcasts are like, well what's, what are the biggest mistakes? Or what was like the oh crap moments, you know, in the history. And it's like, well it couldn't have been that bad because we got through it. Right? And so it's really hard to think of those mistakes, not because there's plenty of them that happen. And we've talked about a couple of them right now, but it's like, Okay, cool.

So I have to go to radiation this many times a week at this location. That means I can't have meetings before then, and then I have to do this. And like, it's just like, it's just part of the calendar, which I don't know in some ways is very healthy and in some ways is like not healthy at all, . So I think that's the thing to kind of think about is like, I, people who just wanna break through walls or at least handle walls, you know, and get through them, it's like a very foundry thing.

And that's where it wasn't. Oh my God. And yeah, I don't know. I, I've never had, I, I've had five days in the history of the company where I haven't wanted to go to work. And those were mostly major arguments with like Facundo. Facundo specifically, Peter a little bit, but like, those are the five days I haven't really wanted to come to work.

And it has nothing to do with like the company or the business. It was just like, you know, loving business partners so much and dealing with, you know, stupid interpersonal bullshit with them.

[00:35:46] Omer: You talk about the founder's way, but you were a first-time founder, right? Yeah. So this was, you were just learning everything along the way and like.

[00:35:52] Patrick: That's the naivete, right? Like, I don't know that like, like I know getting cancer and like dealing with this stuff is not like normal, but I'm also like, Okay, well there's plenty of people that must have gone through this, right? Like, okay, let's just keep going. Right? And you don't really know until hindsight, where you're like, Oh, like even, even just this conversation, I'm like, Oh yeah, we could have, we could have like died then.

Like, because there was, there was definitely. At least eight hours a week that I had to be, you know, I had to be in like a location plus an hour of travel time, all that kind of stuff. And then, you know, doing anything with this. And I was running this team at that point, and that team was kind of screwed.

Like there. There's definitely that, but like the founder ways like, All right, let figure it out. Let's figure it out, you know, and kind of go from there.

[00:36:42] Omer: When we, when we talked last time, it was around early 2017, I think the team was about 30 people at that time. Do you remember like roughly where you were in terms of revenue?

[00:36:55] Patrick: I couldn't tell you. I honestly couldn't tell you. Yeah, that's a good question though. I could, I have an app that I could look it up in, but yeah.

[00:37:04] Omer: Yeah, I'm sure you do. What we just talked about was, I guess the, the first five years and so then what's happened in the, in the next, in the, sort of the last five years of, of this business, because you've gone from a team of about 30 people. I think you, the, the, the team's probably like triple that size now, right? Just, I guess at least was before the acquisition close to a hundred people. Eight figures, ARR what were some of the, the biggest drivers of growth? What happened that helped you to build some momentum and start to get more traction with this business?

[00:37:43] Patrick: So the last five years, probably three or four things. One, we, we did, we, we covered the, I think we were the first B2B software brand to do media. So inbound media, basically where we built a, our own network called Recur. And so we have eight podcast shows or, or video shows. That was a really big thing and, and that came from studying the market and realizing inbound marketing is just becoming really good SEO.

Some people would quibble with that definition, but just for the sake of time. And then inbound media was about building audience, doing, you know, it's been five and a half plus years you've been doing this, right? And, you know, you build an audience, right?

And, and you build relationships. And so that was something that worked out really, really well for us because soon as we started putting a video on each blog post, , like if I went and talked, I talked to a room of people before we did that and I said, Hey, have you heard of ProfitWell or Price Intelligently, people, a couple people raise their hand and be like, Yeah, you guys write a lot of good content.

As soon as I like did that, after we started publishing videos, it was like, you know, the whole room shut up, right? Because it's just different type of content that people share. So that helped a lot. The free products got to parity plus with the market, and so that helped a lot because all of a sudden, every time one of our competitors would raise their prices, we would get an influx of users because they would be like, Well, there is this one feature they don't have, but they have all these other features that this other tool doesn't have and it's free.

Like, and I can pay for this other thing that's gonna help me make money. Like that's cool. So the free product really started compounding like our word of mouth. We built Retain, which first solved payment failures like automatically. And I think this is the thing that's really interesting is like when I say automatically, here's, here's what I mean, and this is like some magic that I don't, I think is gonna be really helpful over the next decade.

When I say automatically, it's not inbound marketing, marketing automation, HubSpot automatically where like you log in and here's a WYSIWYG editor and let me connect that email to that email or that sort of stuff. What I'm referring to, and I said this in the beginning of the episode, is like you just plug it in and it does it for you.

All the decisions around copy, all the within set of parameters, all the decisions about when to send, where to send, translating this stuff what the offer is, all that, all of that has taken off your plate, and I think that this really helped us because. Not only was our pricing pay for performance on that product, but it was also like, and you don't have to become an expert in it and you don't have to do any work.

Right? And this is that suite of products that's coming up right now, which is like, you know, why Paddle and ProfitWell came together too, which is like, we do that for not just payment failures, but also for active cancellations and other parts of retention. But we also, you know, with Paddle do that for chargebacks and taxes and all those other things, right?

And so, I think that was a really big thing that we probably don't appreciate yet, because I think like we're still early in that part, being in the market. And then we started building out like a proper sales work. That was the other thing. Past five years, it's just like getting, I think our BR's like they're yield right now for contacting accounts to calls is like 15 to 20%, which is insane. But that was really growth mindset that we thought through those things.

So yeah, I think those are a couple things that like pushed us. I can get into the problems too, but those are the things that like really like pushed us forward.

[00:41:04] Omer: So let's talk about problems because when we were talking earlier, you said, you know, people warned you that people were gonna be one of the biggest challenges in terms of the success of the company.

And you were, you kind of had different views. You were kind of like thinking about now it's gonna be the product, it's gonna be the marketing, it's gonna be whatever. So tell me a little bit about that. What was the problem? Why were people, the big issue for you?

[00:41:32] Patrick: The one problem of the past five years has been people, and that problem breaks down in a couple of ways. And it's really funny, kind of like the co-founder, part-time co-founder thing. It's like funny reflecting on this now. I don't, I think people tell you in the beginning, Everything, culture is everything that matters your people are everything that matters. And you kind of hear that and you go, Yeah, yeah, okay.

Right? And you're like, Yeah, it's really the product. It's really the market. Those are the things that are gonna make or break us, right? But then like it's just a logic problem where all of a sudden you grow to a certain size and it's like the organization, the very nature of the people that is the product.

Like that's the thing, right? And so I think that the way we started ProfitWell because we couldn't afford really expensive people who could go somewhere is kind of selling the mission, right? Like here's this mission. You get equity, the equity's worth a lot more because we're bootstrapped blah, blah, blah, blah, blah.

And that's how we attract a good number of people. And what it really helped with was attracting really young talent and what was a beautiful thing, but also really painful thing, is we got a false sense of accomplishment, by taking a lot of young talent who was really hungry, wanted to work their butts off, get feedback like a fire hose, and developing them.

Like this guy Eric, who's still with the company he's been with, he was technically the like third employee. He was a marketing intern. He's now like a director of engineering and he's done that in 10 years, which is like unheard of, right? And so it's one of those things where we got really good at that.

So we just kind of assumed very well-intentioned, Oh, we can help anybody. We can like develop people, Right? And. What, what's different between like a young kid who's a blank slate and like someone who's seven to 10 years into their career is that person who is seven to 10 years into the career. They either assume they're good at everything, which, you know, maybe they're, they're good, but like so are like baked emotionally.

And so the problem is, is that the way they handle conflicts and feedback is like so baked into them that we would be like or let's just say objectively they're at a 10 out of a hundred on critical thinking and we're like, Okay, let's get them, they need to be at a 50 out of a hundred. We're gonna, we're gonna get them there in six months.

And it's like, that's so hard. Like it's so hard to get someone there in six months in general. But like that means constant feedback and that means them rolling with the feedback and us helping them and them refining something six or seven times that they only wanna refine three times. And that would just cause a lot of resentment.

And so one of the first things we came to terms with, which I, I think something that everyone comes to terms with is you. You, if someone doesn't have the skillset and there isn't a path, like it's not a form thing or a style thing, it's truly they don't have that skillset for that role. They gotta go.

Right? And there's a number of people that we would move them into roles because we had such success with that, where they were a really high performer in one role and they'd go to another role and they would be a really low performer. and then it ruined the relationship because we were like, Well, they were good over here.

Let's make them good over here. But they didn't wanna go through those feedback cycles. And so we got really quick at firing really quick BDRs, if they're not working out. Gone within six to eight weeks, probably six weeks. We made so many poor decisions with director on up levels because again, we thought we can develop them, but as a bootstrapped company, you think, Oh, I'm gonna get this director for 150.

Well, the venture-backed company down the road is giving them 300. So do you really want the person who's okay with 150 unless they're a missionary? Probably not. And so that was a big thing. And then I would say the third thing that was really kind of tough was kind of similar to the first piece, which was.

I think we learned to be just unapologetic about our culture, which took six, seven years. And what I mean by that is we would talk about things like feedback is non-negotiable or transparency, or the most charitable interpretation principle that I was talking about before. And. We would talk about those things, but we wouldn't necessarily fire on those things.

We would have someone who would struggle with it and instead of going, Hey, I, I, it seems as if you struggle with this, that's totally fine. It doesn't mean we're better. You're better. Anything like that. But this prob like, we're not going to change this and this is how we're gonna make decisions. Let's find you another job.

Right, and we'll give you plenty of time to find another job. We can part as friends, all that kind of stuff. Like we didn't get to that maturity until a couple of years ago. And it, it, it cost us in a lot of ways because plenty of terrible Glassdoor reviews of people who just don't think the way we do and that's fine.

Plenty of terrible, you know, kind of experiences of people that were brilliant for the business, but moved into another role and just the relationship just got frayed because we were trying to help them and they just didn't see the way the world that we saw. And I think as soon as we started doing that, not only emotionally did it feel good because all of a sudden we had alignment, but we, we started to get confident that, oh, no. It's okay to believe these things and, and we're not talking about anything dramatically. We're just talking about, you know, feedback's really important. It's important to share it. We're talking about, you know, this most charitable interpretation thing. We're talking about, the, the last place you go, unless it's a dramatic thing, not the first place you go.

Right? Those types of things. And. It's not that we're better than another company that believes the opposite of that, but we got comfortable being, being in our own skin with this is how we think. It's not better or worse, it's just how we are. And we wanna hire people who align with that, if that makes sense.

[00:47:06] Omer: Yeah, yeah. Totally. Well, what's next for you? You've joined Paddle. Are you still focused on, on Profitwell, and kind of, is it just more about thinking about integration or what the future looks like or bringing the two together?

[00:47:20] Patrick: Yeah, I, what's kind of funny is I don't have an earn-out but I intend on being here for, you know, through the IPO.

Like that's, that's kind of how I think about it because I think there's an enormous amount of leverage that that, that I have as a leader and enormous amount of leverage like just this company has in order to succeed. And I think what's interesting is, the way that Paddle thinks about the world. And this is what made the the acquisition so easy.

Like to, from a decision standpoint, which is obviously incredibly hard but relatively easy, was Paddle sees the world very similarly than we to, to what we do. And I remember, I actually interviewed Christian for a podcast six years ago, and the, that was the first time we met and the minute got off the phone, I called Facundo and I said, This is the only person in billing who thinks the way we do and the, the way that we think is very do it for you, right? You know, you should just plug it in and it automatically takes care of your currencies. It automatically takes care of your tax, those types of things. And so yeah, what's next is, you know, trying to scale, you know, 350 person, you know, newly unicorned company to, you know, an IPO and maybe beyond.

And I'm really excited to kind of go through that experience. There's a lot of like opinions about, you know, growing a company. There's a lot of opinions about, you know, growing a public company, those types of things. I just kind of wanna experience those to see like, do I like it? Do I wanna do that again?

Do I wanna try to do something else? Or do I hate it and wanna, you know, build, you know, a Basecamp or something, which, you know, it's easier said than done, but, you know, hopefully get the, get the gist of it.

[00:48:53] Omer: All right, let's let's wrap up. I'm gonna go to the lightning round. I got seven quick fire questions. You've done this before. I'll compare your answers later. See, whether they're the same or not. Ready to go?

[00:49:01] Patrick: Let's do it.

[00:49:02] Omer: What's the best piece of business advice you've ever received?

[00:49:04] Patrick: Nothing is binary or like very little is binary. Best business of advice.

[00:49:09] Omer: What book would you recommend to our audience and why?

[00:49:11] Patrick: It's, it's probably the same book I recommend, cause that's the answer to this question. High Output Management by Andy Grove. I read the book at least twice a year. I used to read it four times a year. It's so good for not only management but also understanding like how to train and how to go after that group of people who make or break your business, which is your middle management core. And so I think that's, that's, it's a really powerful book to read.

[00:49:35] Omer: What's one attribute or characteristic in your mind of a successful founder?

[00:49:39] Patrick: Resilience.

[00:49:41] Omer: What's your favorite personal productivity tool or habit?

[00:49:44] Patrick: It's really hard. I, I wake up every morning at like four to four 15 that past couple years. I'm not a morning person. I'm not naturally built this way, but I just found when I do it, I'm both happier and more productive. And so I, I just committed to do it and now it's, now it's a pretty good habit.

[00:50:01] Omer: What's a new or crazy business idea you'd love to pursue if you had the extra time?

[00:50:05] Patrick: There's, there's like two or three, one, I have an, I have an idea in the defense world that I don't have enough time to go into. There's something in debt like figuring out how to you know, both make it a profitable business but also reduce everyone's debt considerably, I think would be really cool. And then the third one I've been thinking about is like a way to solve money in politics problem, but through a business lens rather than like relying on politicians to like, decide to give themselves less money basically for their, for their elections.

[00:50:40] Omer: Interesting idea. What's an interesting or fun fact about you that most people don't know?

[00:50:44] Patrick: I think it's the same one I used last time, cause it's kind of what I answer. I don't have a sense of smell. I was born without one. So that's kind of fun. My IQ have a sense of taste, but it, I don't get aroma, like everyone who has a smell does. I get like just my taste buds, which, you know, is kind of a blunt, blunter kind of taste.

[00:51:00] Omer: And finally, what's one of your most important passions outside of your work?

[00:51:03] Patrick: I don't really have any, unfortunately. I think I'm starting to produce personal, personal content. I like hanging out with Jenny, my better half and our dog.

Those are, those are probably the, the answer, the real answers.

[00:51:15] Omer: Thank you for joining me again and, and for being, you know, such an open book. I think there's so much more we could have talked about and I need to make sure that I don't take another five years to get back to you and, and we have a follow up at some point because I think there's so much that I think other founders can learn from your experience and, and just the way I think you, you know, you think about things and the way you've reflected during this conversation.

I think it's, it's the type of stuff that we don't always talk about. So I, I think there's a lot of value in that. I appreciate you, you doing that here. If people wanna learn about more about Profitwell, if they don't already know it, go to profitwell.com and paddle.com now as well. And if people wanna get in touch with you, what's the best way for them to do that? Where are you hanging out?

[00:52:01] Patrick: I'm just @patticus, P-A-T-T-I-C-U-S on Twitter. I'm also on LinkedIn, but I don't really reply to LinkedIn messages, but yeah, happy to help.

[00:52:10] Omer: Awesome. Thanks, man it's been a pleasure and congratulations again and enjoy your time in Puerto Rico.

[00:52:18] Patrick: Will do awesome. Thanks, man.

[00:52:20] Omer: Cheers.

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The Show Notes