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The SaaS Podcast

Qwilr: SaaS Freemium Pitfalls and How to Avoid Them – with Mark Tanner [261]

Mark Tanner - Qwilr

Qwilr: SaaS Freemium Pitfalls and How to Avoid Them

Mark Tanner is the co-founder and COO of Qwilr, a SaaS product that helps you create design-perfect proposals, quotes, client updates, and more.

This story starts in 2013 with a designer/developer named Dylan. He was running a micro-agency and found himself wasting a lot of time creating proposals.

Like any self-respecting designer, he wanted to create beautiful proposals. But that meant a lot of work and back-and-forth using Word, Excel, and Adobe InDesign.

One day, out of frustration, he created a website as his proposal doc.

Not only did he get hired, but the client loved the website proposal and was impressed by how quickly he'd built a website for them. And that's how the idea for Qwilr was born.

Dylan and Mark teamed up and decided to give this business idea a try for a couple of months. They wanted to learn if they could find their first 10 customers.

In this interview, you'll learn how they turned that 2-month experiment into a business with 45 employees, $7.5M in funding, and around 3,000 customers.

We also talk in-depth about the pros and cons of a freemium business model. And you'll learn about the mistakes, failures, and successes that Qwilr had with their freemium plans.

We also identify some important considerations you have to make before choosing a freemium model and how you can avoid making some of the same mistakes Dylan and Mark did.

I hope you enjoy it.

Transcript

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Omer: [00:00:00] Welcome to another episode of The SaaS Podcast. I'm your host Omer Khan and this is the show where I interview proven founders and industry experts who share their stories, strategies, and insights to help you build, launch and grow your SaaS business. In this episode, I talk to Mark Tanner, co-founder and COO of Qwilr a SaaS product that helps you create design perfect proposals, quotes, client updates, and more. The story starts in 2013 with a designer slash developer named Dylan. He was running a micro agency and found himself wasting a lot of time, creating proposals.

[00:00:52] Like any self-respecting designer, he wanted to create beautiful proposals, but that meant a lot of work and back and forth using word Excel and Adobe InDesign.

[00:01:01] So one day, out of frustration, he created a website as his profile doc and sent a link to that. Not only did he get hired, but the client loved the website proposal and was so impressed by how quickly he'd built this website for them. And that's how the idea for Qwilr was born. Dylan and Mark teamed up and decided to give this business a try for a couple of months. They wanted to learn if they could find their first 10 customers in this interview, you learn how they turn that two-month experiment into a business, which now has 45 employees.

[00:01:35] They've raised seven and a half million dollars in funding, and they have around 3000 companies as customers. We also talk in-depth about the pros and cons of a freemium business model. And you'll learn about it, the mistakes, failures and successes that Qwilr had. With their freemium plans. We also identify some important considerations you have to make before choosing a freemium model and how you can avoid making some of the same mistakes Dylan and Mark did.

[00:02:06] So I hope you enjoy it. Mark, welcome to the show.

Mark: [00:02:09] Omer. My pleasure. Thanks for having me.

Omer: [00:02:11] So do you have a favorite quote? Something that inspires or motivates you or just gets you out of bed every day.

Mark: [00:02:15] Yeah. So, so I've actually had one on the mind of like, which is, I was recently listening to another podcast with Mike Cannon Brookes.

[00:02:22] One of the founders of Atlassian, who obviously I'm based in Sydney, they loom large in the startup ecosystem here. And I remember seeing Mike speak, this is very early in our journey at Qwilr, sort of 2015 before Atlassian IPO. And he was giving this talk to like local startups. And he just sort of had this moment where he was like, no one knows who Atlassian is and no one knows what we do.

[00:02:46] And he was just like, So I've had this sort of talk about, you know, they'd already, you know, by startup standards had huge amounts of success, you know, I'm not sure if they were a unicorn status yet, but you know, if not very close, but he was just sort of talking about like how large the market is and how gigantic it can be.

[00:03:03] And to sort of, you know, I'm going to cheat a little bit here and sort of drop in a second quote, but like one of the ones that sort of, I think that, that sort of thing at the same time, I was starting to read a bunch of the Lemkin sort of SaaS the blog posts. I remember reading his one about, you know, 10 customers is impossible, but if you can get there, you can definitely get to 20.

[00:03:21] And if you can get to 20, you know, well, you can definitely get to 50 and 50 to 100 and, and on and on. And I do think that like, as we've grown, instead of, you know, you sort of, you know, clip through, you know, 500 customers, a thousand, you know, a few thousand on and on. I think that there's this sort of nicely, I keep coming back to, which is like, We in our little world feel like we've know we've had a modicum of success.

[00:03:42] No one knows who Qwilr is, you know, this such this long way to go. And even now with Atlassian, I think if you ask a normal person on the street, they'd have no idea who they are. And I think just the size of the market that's available to you and, and sort of. The, the competence you need to have that you can keep going and growing instead of we're moving along.

[00:04:01] It's something that has always, you know, I think inspired me and sort of, as it pushed us to sort of, you know, keep going and keep dreaming and keep thinking about how can we continue this journey.

Omer: [00:04:12] So tell us about Qwilr. What does the product do? Who is it for? And what's the main problem that you're helping to solve?

Mark: [00:04:21] Yeah, sure. So Qwilr is a way for the sales and marketing teams to create all of their customer-facing collateral. So think proposals, quotes, pitch decks, presentations, you know, all that sort of stuff, even contracts. But to create that as web pages, rather than PDFs or PowerPoints, and so the problem that we're solving for is a few and I think, you know, one of the big things that we sort of really believe at Qwilr is that really in the power of the web and also that documents, you know file-based documents suck in the age of the web. And so really the problem we're solving for is these file systems that were built, you know, they were all built.

[00:04:59] Pre-web. Just really aren't interoperable with how the rest of the web works. And also they're sort of not designed for whether it's you think that your mobile-friendly world, et cetera, this is not designed for this of modern space that we're in. And so the problem we're solving is, is one of, you know, how in this modern space, should you be communicating with your customers and, you know, walking the web do to sort of actually really allow you to have a lot of leverage on that side.

[00:05:25] And so it's sort of, you know, to dive into it in a bit more specificity and obviously. When I say marketing and sales teams, we're very much B2B focused, got a lot of customers across, you know, professional services across SaaS, across, you know, software tech, it, et cetera. But really when you sort of look at it, what people are sending out, whether it's PDF, so, or proposals, proposals in power points and things like that.

[00:05:49] You have this, you have this space where there's no ability for the customer to interact with it. So like within Qwilr, you know, your pricing can be interactive sort of much more along the lines of eCommerce or your customer might say, let's say you've got a package of, you know, gold tier, silver tier, bronze tier, you might say, why should I want the silver tier, and I, you know, I don't want this optional extra, but I do want this one, and I want 14 of them. I should just like live, update the price in real-time, you can then accept a sign, pay on any device, you know, for Qwilr, we know that half of the views of Qwilr pages all around the world, it's actually just under half of viewed on mobile.

[00:06:26] And so like, you know, we're very much optimized for mobile. You can accept, sign and pay on any device. And then of course it syncs up with all your sources of truth, right? So iy immediately, cause it's, you know, in the cloud at ping Salesforce, it, you know, and says, Hey, this deal's closed ping customer success, et cetera, stats workflows there might sync up with zero and say, Hey, does new deal here? And it might, you know, go and ping the sales Slack channel and be like, Woohoo, we just closed this deal. And so being able to sort of bring files like truly into, into this sort of modern SaaS cloud world. As well as I think obviously trying not best to make them sort of use the beautiful design tribes of the modern web you know, really is what we try to do every day.

Omer: [00:07:07] Ok so the company was founded in 2014. As of today, you've got a team of about 45 people, 3000 companies as customers, and you've raised about seven and a half million us dollars. So I want to start the story from before you launched the business. Where did the idea for Qwilr come from?

Mark: [00:07:32] Yeah, so the idea came from my cofounder Dylan, and so Dylan had this little micro agency, you know, he was a, he was a software developer and designer. He's also just a very creative guy. He'd had a band and done some interesting art and other stuff as well. He and I have been friends since we were in high school and I'd sort of gone and seen his band played and they toured the States and done a bunch of other cool stuff.

[00:07:56] But of course, the whole way through, he was actually paying for it all by being a dev and designer. So Dylan had this micro agency and he was doing some pretty being like an outsource resource for like companies like Saatchi and Saatchi, Ogilvy, you know, various other sort of groups like that.

[00:08:13] And. He had this like pine point around proposals really, which was, you know, he would do his pricing in Excel. He'd do his copy and word. He'd moved them both into InDesign. He sends a client, the client would want all these changes and have to rip it all apart because InDesign is terrible like that, you know, and start from scratch.

[00:08:32] And this is sort of like, you're like this sucks. It's so long. It's so crap. And he just out of frustration one day just decided I'm just going to build a website for this. So he built a website for his proposal, which he knows is back in like 2011, 2012. And, you know, he won this, first of all, he won a particularly huge job out of it that he sort of didn't think he had a chance at.

[00:08:50] And he just started being like, you know, what, what I care about it, someone who lives in this modern economy is like actually producing something that looks excellent, that is digital-first and sort of, and that's sort of where the idea started. And so he ended up basically hand-coding these websites and slowly but surely in a first buyer, a series of bash scripts.

[00:09:08] And then later by like a little bits of micro product, He started building out a system where he could sort of, you know, push out one of these websites rather than in day, do it in a few hours. And so the turning point became came, you know, he had this pitch for Saatchi and Saatchi, New Zealand and the MD there, you know, they spoke in the morning and he sent in a proposal, a couple of hours up and the MD, they called him, how the hell did you send us like this beautiful website?

[00:09:31] Like as, as your proposal, a couple of hours later, like, is this the product, like, how could we use this? And initially, Dylan had a product, a software product business when he was a bit younger that went somewhat disastrously. And so he was very against the idea of another product business, but the more he thought about it, he sort of spent a lot of time sort of thinking about it.

[00:09:52] I think the more excited he got by it. When I became involved, I was looking to leave Google, looking to move back to Australia for a girl who's now my wife. So that was a great move on my behalf, but I was, I was very much looking to rejoin the startup ecosystem. I've been in a startup pre-Google. And, you know, when I met Dylan, there was a few lucky things that happened for us.

[00:10:11] And one of them was that. No I've been in sales and interest immediately saw just how much better this would be. You know, we'd been using Google docs and a bunch of other tools inside Google and made it sucked for this process. And so just sort of that became very exciting. Other part was. There's a bunch of people at Google Sydney.  Who've been working on this product back in the day called Google Wave. And I don't know if you remember Wave, but Wave was meant to be the sort of future of communication and collaboration. And, you know, if you were kind, you might say it was, you know, had some tiny elements of clever things that slacked it later.

Omer: [00:10:45] Another one of those products that. Came out with a big bang and then sort of fizzled out pretty quickly. Right?

Mark: [00:10:50] Seriously, seriously. Look at this was you know, this was built in Sidney's when I was in Google Sydney, before I went to New York, you know, it was, it was such a big deal. Cause we only had like Google Sydney, it was like maybe 150 people a time. Of which 50 people were engineers working on this project. Wow. And it was led by Lars. Who you know founded Google Maps and had done an amazing job there. And like Wave was technically unbelievable, but like never, never found it sort of it's sort of product market fit.

[00:11:17] The thing was lucky for us was that one of the lead engineers there who was a friend of mine, Dan had been the lead, like he'd sort of done all their work around the sort of their text editor and actually, you know, back in the day, like creating a content editor in the web was actually really, and it still is actually, it's a very, very challenging thing to do well, especially to, you know, to have a beautiful, you know, what you see is what you get editing experience.

[00:11:40] And so Dan, I introduce Dan and Dylan and Dan was so impressed what Dylan had built. But he ended up joining our team in the early days and sort of helping us, helping us build out that editor experience. No. We were using a beta version of angular at the time when we were first building it out. And Dan had even written like a little framework and a library to sort of, you know, help solve some issues around dependency, injection, all this sort of other stuff that kind of actually made it possible for us to get going.

[00:12:05] So the stars, this, this sort of problem was there. You know, I sort of had sort of felt it, you know, visually myself as had Dylan. Dylan had built this beautiful first version of it. And we were just lucky enough to find some really strong technical talent to sort of overcome. Some very, very real technical problems that existed back in 2014.

Omer: [00:12:25] So at what point did it become a business? So you said that Dylan was resistant to do this because of bad previous product experience and every, for every success story, there's always some, one of those disasters it's somewhere, but what was at what point did. Did this become a business? Was it just driven by that first client asking about using this product?

[00:12:52] Did other things happen? Did you guys go out and start talking to other people to really make sure that this thing had some legs? Like how did that happen?

Mark: [00:13:00] Yeah, so, so this all sort of nicely coincided with, so I just moved back from, from, from New York and I. I was sort of looking around and Dylan had built out this first prototype version.

[00:13:11] He'd actually started the second product. The first prototype version was basically a WordPress-ish version of this, which he quickly, it just wasn't good enough. And it really did need to be beautiful, you know, again, like just what you see is what you get editing experience. It's very simple and clean.

[00:13:26] And so he sort, of scrapped it all and rebuilt it from scratch, which I always, to be honest, it's had enormous respect for, and. I think that, you know, the way we started, I think a lot of I've stopped this way. We just were like, look. I've just moved back. I know I want to work in a startup. I think this is a really interesting idea.

[00:13:41] Why don't we just work for free for a few months and see what happens? And so while Dylan kept building, you know, my entire job was around, you know, validating the idea and getting it in front of as many people as possible and just sort of testing it out, seeing what they thought, trying to make some little improvements here,  getting feedback. You know, we'd had a few friends who were a friend of ours who was a PM at Atlassian, some other people who were doing some work at Canva. And again, they were very early at the time, but just like trying to sort of get feedback and thoughts on how it would be better. And then also going and speaking to potential customers.

[00:14:12] And like, you know, I think we had a hell of a lot of no's in those early days. I've once drove, you know, like about 45 minutes just to have like a half-hour coffee with someone and show them the product and then drive back. And actually they're still a customer today, which is awesome, they sort eventually converted. But, you know, I think we sort of really did have a period of time validating it.

[00:14:32] And after about three months of not even three months, I would say two months of work. We were both like, this is real, this is something we should, we should actually commit. And at that stage, you know, I tipped in a little bit of money. You're not, not very much like 20 grand or so, and also putting a little bit of money, the engineering friend, and then, and then Dylan tipped in all of his IP and we sort of went to the lawyers, and actually sort of probably kicked it off.

Omer: [00:14:55] So you've got the basis of a product. It feels like this is real there's, you're getting no's, but you're getting enough yeses to keep you moving forward. What did you do to get those first 10 or 20 customers was talk about the first 10, because that's the, the number that you said earlier and that sort of Jason had talked about and being the impossible numbers of how did you get to the first 10?

Mark: [00:15:17] Yeah. So the first thing for us is, so we look, we put it back, put out a free version of the product and just sort of reached out to anyone and everyone that we could, that we knew. And also just did a bunch of cold calling and in various spaces, one of the things that happened relatively quickly for us was that, you know, one of, sort of friends who we'd reached out to was a video producer.

[00:15:38] And this is a very small thing, but the ability to embed content inside webpages is obviously meaningfully different than the experience on it on PowerPoint or PDF. And if you're in video production and being able to embed a few of your example of videos or potentially if I was doing it today and you're in podcasting and you could embed a few of your podcasts inside your proposal, like that was like a big deal.

[00:16:01] And so I think one of the things we sort of found was, okay, here's this tiny little niche that has this particular pain point that. You know, we hadn't necessarily solved all of the clever embedding things. And some of the things that, you know, the most popular embeds for us now, like, to be honest, things like Calendly and other stuff like that for sales teams be able to book more meetings.

[00:16:19] You know, weren't really invented, but video was always a very powerful part. And so we just started just pretty much to be honest, like cold calling and, and sort of introducing ourselves and finding anyone who could refer us into anybody on that side. And that was like one of the first little areas we found a nice little nation too, but then also, as I said, we had a freemium product, so we did get a little bit of nice traction through that. And we have a product that is likely viral. So, you know, every time you send a Qwilr proposal out to somebody else, it's, you know, it might be, you know, theSaaSpodcast.quilla.com and just that, that little URL or a little badge on the page would lead them back to us. And so we sort of found that and then really.

[00:16:58] We just spent a lot of time, handholding those early customers, giving them as excellent customer support as we possibly could. And just trying to help them have a great time the product. And that's really sort of become a natural for us as we grew. So those were sort of desperately important parts as we went to serve that first 10.

[00:17:14] And I do remember when we hit, I think it was when it was 10 or 20, but like 20 sort of unaffiliated people who we'd never sort of met before this journey started, who were paying customers and look, they were only paying us, you know, I think maybe 20 bucks a month at the time, it wasn't anything huge, but it did sort of all of a sudden, suddenly feel quite real and quite possible.

Omer: [00:17:36] So let's talk about. Freemium, because I know you guys have had a sort of love, hate relationship with it as well. And we can talk a little bit about that, but the freemium model is it's appealing when you're starting out, because you know, there's like no barrier to entry. Anyone can sign up, it's easier to get people signing up and, and, you know, at least.

[00:18:00] Becoming a user, but there's also a lot of downsides that, you know, number one, there's no guarantee if they're actually going to use the product, just because they signed up, how would you monetize free users into paying customers? How do you deal with, you know, hundreds or thousands of free users who are never going to become customers yet you still have to support.

[00:18:24] So, so there's, you know, there's a whole bunch of, you know, pros and cons here and. Freemium comes with a lot of challenges that I think people don't always think about because they think about, well, it's going to make it easier for people to get in and use my product. So what was the thought process you went through and what have you learned from that?

[00:18:43] Because you've sort of used freemium stopped using it, tried it again. What are some lessons we can learn from your experience?

Mark: [00:18:50] Yeah, for sure. And I think everything you've said is true and I'd say on the sort of, you know, the appealing side, it was sort of doubly true for us. But because of that live virality that we had, we kept being like, wow, look at all these leads, like everyone who came in from viral as a channel.

[00:19:06] I mean, in a way, the first thing they saw of us, the first touch point we had was someone sending them a black Qwilr page. You know, they, when they arrived in the website, they converted to sign up in a far better, rate. They converted to, through the activation at a far better rate that converts through to customer to far better rate.

[00:19:21] And that's still true today. So we were like, wow, well, you know, how can we supercharge that? And like, one of the things you sort of come back to is like, let's make it free instead of, you know, push that out. And so I think that, you know, from our side freemium is a, look, we are still enamored. We don't have a free product currently.

[00:19:40] We're still enamored with, with the model and we, we do constantly have sort of discussions and debates about it and whether we should be diving back in and then I'm sure at some stage we will again. But I think that the thing that sort of happened for us. So in the first instance, if we sort of moved away from it, First one was, you know, we were friendly with some people into common fact.

[00:20:00] One of our advisors is Matt Hodges who used to run marketing and Intercom. And, you know, I think, you know, they'd had a pretty compelling thing around like this sort of putting like this, this 14-day trial and having like this sort of, you know, hard conversion event actually sort of drugs and value. And so we sort of experimented with like, what if we turn, you know, again, when we were learning, we had this good experience with free to get going.

[00:20:21] We're like, well, what if we turn that off into sort of third 30-day trial? And they're like, Oh, Nope. Well, conversion improved, you know, quite nicely. And we sort of moved to 14 days and actually conversion improved even again in a sort of very marginal sort of stance. As we sort of, again, I'm saying this with like 20, 20 hindsight now we'll come to the mistakes we made later.

Omer: [00:20:39] Of course.

Mark: [00:20:40] And I hear the sales cycle was obviously faster and, and, and stuff like that. And so we, we sort of, you know, so that was so started going pretty well, but then as far out became more, yeah, and more important to us, we started having a little growth team, you know, so part of our team who ran growth for us for a long time, and still do run some parts of our growth, you know, they started exploring the, you know, okay, well, how can we do better at this?

[00:21:00] How can we supercharge it? We were lucky to, we have a close relationship with the team at Typeform. And Robert from Typeform is with one of our investors. And we were introduced to Pedro who ran their growth engine and like they have a real viral loop. And so we sort of, we're trying to perfect all the parts of that, you know, of that loop that, you know, different conversion points there.

[00:21:19] And to be honest, we had an excellent job at the core parts of it. The real issue for us was as we sort of went back to freemium a bit later on was that we were growing at like a really nice rate. We were growing at, you know, well over doubling a year, we were sort of, I don't think we would quiet tripling at this point.

[00:21:35] But maybe we were actually all in a very, very nice clip. And just in terms of sort of in terms of revenue, revenue growth, and when we turned on freemium, a few things happen. So that's the first thing was that virality went up and like went up like quite significantly. And we actually did manage to get like quite a lot more users.

[00:21:54] I mean, we know we did a few little things like we sort of, you know, back in the day when it was easier to sort of get attention on Product Hunt and do well there and get a lot of leads. And so we did that and a few other things as well. We actually, we got a fair bit of traction, but then, and as we sort of kept going on this funny thing and happened across a few different areas.

[00:22:14] So, so one part that perhaps shouldn't have been a shock. But, you know, one thing that happened was by virality went up, which was great. And we were very happy with that. But our sales set, obviously, our sales cycle elongated quite a lot. So we, you know, with a 14-day trial, our sales cycle was like, I think 14 and a half days, was that an average conversion time.

[00:22:34] And then all of a sudden that blew out to something closer to 60, which, you know, I think has had an impact on velocity and speed. And also just like, even like things, little things like the confidence of the team, and there's this sort of little out, very micro inside sales team at the time. And then we had this other part, which was like activation, which actually was by far the biggest problem, because activation, it didn't fall off a cliff, but it dropped pretty significantly.

[00:22:57] And there is like a little bit of magic with the 14 day trial in that, like, if you go on and really this tax back to the very first interaction, but if you know that you've only got 14 days, you know, the amount of time that you spend in the app in that first instance, you know, just clicking around and trying to make it work, trying to figure it out.

[00:23:13] You know, is this going to add value to my life? That time in-app, actually, when we have a 14-day trial, is it like it's a bit of a 50% longer on average, are people spend a bit more time? Cause they're like, Oh, I've only got 14 days really better. You know, rather than taking spending 15 minutes, I better spend 20 or 25 in here trying to make this work.

[00:23:33] And that extra bit of time is like important in like a few little things, sort of clicking in their mind and this understanding, forming and sort of allowing them to get to this space where they can really, you know, get to wow. You know, it gets that sort of, that sort of first moment of, Oh, I see how this could have a big impact for me.

Omer: [00:23:51] And was that full Qwilr like, was it getting to the point where they sent out a document or they got to a point where they had created a document that they were happy with? Like where were you trying to get them to for this activation?

Mark: [00:24:07] Yeah. So activation for us is a third party viewing a document that you've created.

Omer: [00:24:13] Got it.

Mark: [00:24:14] And that was sort of the magic that this is, and this is a very simple, small thing, but the magic is, is that you get a notification for us. You know, if you send me a Qwilr page, And as soon as I open it, you'll get a little notification being, Hey, Omer, you Qwilr page has been viewed, and then you can sort of click through and see some analytics about like, when it was opened, how many times, what sections they looked at and little things like that.

[00:24:39] And like, you know, if they clicked on any links, you know, blah, blah, blah, all that sort of basic stuff. But it's just like a little bit of magic of being like. That sort of, again, helps them grok this thing of like, Oh, it's a website. If I'm going to be able to have analytics. And obviously, you know, through that flow, you've tried to sort of show them how you can add video or you can add, you know, you can embed your Calendly or embed a map or what have you, or a form.

[00:25:00] And so that was our sort of core metric of getting there, but actually, you know, to go and create. You know, a document creates to create a proposal like it takes a bit of time and effort, and there is this, you know, there's a little bit of a tabula rasa problem of coming in and having a clean slice and sort of, how do you sort of get past that, which we actually now refer to as like the zero to one problem internally, which is still, you know, I think a real problem we spent a lot of time thinking about.

[00:25:22] But this is funny thing with freemium, but like, if you've got it for free, well, I can just come back any time, real pressure on me to sort of solve this, this Qwilr problem now. And as I think a lot of people in growth will know, like once you leave that first time, the chance of you coming back for a second visit that drops and, you know, third to fourth, et cetera.

[00:25:41] And so we actually found that to be like, quite. Obviously, it was a thing you can work on improving and get better at. And there's a lot of things you can do on that side. And again, and I do think that that freemium can work well, but it was an area that we hadn't sort of properly figured out. And it really sort of did pretty negatively impact our activation rate, thus our conversion rate.

[00:26:01] And you know, that combined with a slower sales cycle time dramatically dropped out, you know, our growth from let's imagine it was like we were growing three X year on year two growing at something like, you know, 70, 80% year on year, which for us at the time was like, Oh my God, the will is ending. So I think, you know, there were a few sort of moments along those lines.

[00:26:20] The other thing just to sort of highlight here is like,  free users are very viral for other free users. Paid users, even though their virality is maybe not always as high, a much more likely to sort of be a referral engine for other paid users. And look we've every other viral company we've spoken to has had a similar experience where, you know, they might have a million free users and yeah, they'll, they'll sometimes that definitely still drive in people who convert to paid, but typically they'll, if they convert to paid, they'll convert to the cheapest tier.

[00:26:54] Whereas people on like, you know, the cheap tier or the mediums here with the top tier, when they sort of act as a sort of viral driver, they more often refer people off their same level. If that makes sense, which is also I think quite a powerful thing. And it's something important for us as we sort of went forward.

Omer: [00:27:09] That's really interesting. I'd never come across that before, but when you think about it, I guess it does make sense. Because a lot of people would say, you know, well, the freemium is great because it gives me the virality or I've got a great, you know, viral coefficient or something. But if it's attracting more people who just use your free plan.

Mark: [00:27:33] I think this speaks to, you know, what is your, like, what is your strategy here?  And what is, how are you sort of building a product that is free in an area that that's going to drive future growth and. You know, there are products out there that have like a free for education, you know, which is a sort of an interesting one. Or, and it's like, Oh, you might get as huge growth of usage on that side.

[00:27:58] But like for what benefit? You know, the school kids and the teachers, you know, often aren't going to become your core customers or at least not for a while. It's quite a long play. And actually, when I was at Google, I worked for the Google for Education team and like it wasn't when you're Google size and you're giving everyone free Gmail accounts, you actually can track it, making a difference to the bottom line.

[00:28:18] But over a number of years, like over a sort of four to five year period, not over some sort of short term thing that would matter for a startup. And so I think that, like, as you think through this, you need to have a way of, of doing it that aligns to your core customer group. That also is the enabled sort of really drive expansion.

[00:28:36] And I look, this is a classic example, but HubSpot's free CRM. It's this thing of like, it was a lightweight tool that was very, you know, value additive. To their, their marketing automation play. And now it's know, I don't know what the official number is, but let's let's guess that there's a million people well using that free CRM.

[00:28:58] Well, that's like, that's just a perfect spot for them to sort of engage up to, you know, with their selling up Salespro or they're selling up marketing or even their customer service product. Now that is something where it's like, adds a heap of value, but also is sort of directly doesn't compete with your core product actually directly leads into your core areas that you want to sell.

[00:29:21] And I think that's the, that's sort of the magic. The other thing I would also say again, my mistake here is like, if freemium is just a downgraded version of your core product, well, then you're giving people, their first impression of your product is, is not as good as it could be. And so I think you need to also be careful about that. If you're just going to sort of feature limit freemium, it definitely can work. We know companies where it works quite well, but again, you know, that HubSpot path, and there are other companies who do this well of sort of offering this sort of secondary related product and sort of make that excellence, make it even better.  You can buy Salespro. And if you want to drive more leads. You can go into the marketing path.

Omer: [00:30:02] Yeah. And, and I think another thing I've seen with, with a number of companies is that even if they have a freemium plan, you often start off with some kind of trial where you're on the higher end plan, getting exposure to all of those features, and then they sort of disappear and you're back to the free plan. And now you're sort of missing out on what you had.

[00:30:20] So, okay. So, you turned off, you learned some really valuable lessons. You turned off freemium. But you've gone back to it again. Right. So, you've, you've at least traded once or twice again. So, what was the rationale for doing that?

Mark: [00:30:33] I sort of messed up the story here a tiny bit Omer and that like, I've sort of merged a few of those examples together.

[00:30:38] So, you know, I think we went back initially the last time we did it properly was that time where we were sort of really working with the, you know, talking with the growth people at Typeform and. And focusing on that freemium path. And we sort of did a deep dive analysis. So since then we did a little experiment around basically having a free version of Qwilr that was exactly the same as the paid version, but then only limiting it by just the number of documents you could create, which actually did work a little better instead of a little bit more aligned to that sort of usage-based pricing. But that also coincided with us playing around with pricing and sort of actually to be honest, moving upmarket a bit.

[00:31:21] And in the end we just decided that that as we were moving upmarket and sort of starting to do. You know, rather than the S of the SMB deals doing much more of the M and then, you know, some early level, mid-market deals that really like, you know, it's sort of, that didn't make sense for us as we were sort of going down that path at that time.

[00:31:40] And yet I still, you know, we, we still definitely do think about it and ponder how we can find the right way for it to reenter our lives.

Omer: [00:31:47] So before we started recording, one of the questions I'd asked you was what was one of the biggest mistakes that you think you, you made an and immediately, you said, you know, focusing for too long on the wrong customer.

[00:32:01] And originally you sort of started out focusing on this SMB market and moved into sales and marketing teams, but at what point did that happen? And when you said focusing on the wrong customer for too long, how long are we talking about?

Mark: [00:32:18] Years! So look, I sometimes refer to this as Qwilr's original sin, which I think was, was done with good reason. And we sort of touched a little bit on this earlier, but, when we started Qwilr look, so first of all, when we started Qwilr in 2014 in Sydney, the startup ecosystem, wasn't quite what it is today. We just had one of the funds locally announced a $500 million VC round. At that time, that fund, it was one of the very, very few that were out there.

[00:32:47] There are now, you know, a handful of tiers one funds locally in Australia that, you know, managed well over a billion dollars. At that time, there was almost none that fund did exist and it had a 29-million-dollar fund. I'll see again. So, like, you know, $20 million US funds, something like that. And you know, there really just wasn't that much capital around.

[00:33:07] And our first check was for a hundred thousand dollars, you know, AUD, which is, you know, maybe about 70,000 us. And so as we were sort of, you know, Dylan and I were thinking about this and started, and then we raised like a sort of, you know, half a million dollar Angel round relatively shortly after that.

[00:33:22] But as Dylan and I was thinking about, you know, what we could do here and also working with Dan and things like that. There was this sort of. These two very big technical challenges. One was, can you build a beautiful content editing experience in the web that looked and felt, you know, as good as what you could do in a file.

[00:33:44] And, but you were able to create these beautiful web pages. Again, this is like, you know, 2014 and, you know, make that smooth and easy and delightful, and it makes the output truly excellent. And then sort of second to that. Could we make it truly collaborative? And like collaborative editing on documents in the web is like a really complicated technical problem.

[00:34:03] And there's all sorts of issues of concurrency and whatever else we can dive into or not that we should happily avoid. But like, I think that, you know, our original sin was to say, we're not going to build Qwilr for teams originally. It was, it was really a single player at product and I don't regret it.

[00:34:22] It was really, I think the only correct choice for us to make, but. It did sort of push us down a path of, you know, all of these sort of, you know, hundreds of little product decisions, because, you know, we had to, you know, as we go down into prosumer path or we're selling to, you know, really the S of the SMB was sent to micro businesses to freelances, you know, we really have to, you still have to hit product-market fit there, right?

[00:34:45] Like you have to click into gear and actually, you know, stop growing and building new building customers and, and all that sort of stuff. And to do that, you start making hundreds of little product decisions that are aligned to that customer base, which again is isn't wrong, but it sort of has this longer term impact.

[00:35:02] And then you also make a bunch of, you know, go to market decisions and like, you know, one of our channels that worked wonderfully well for us was around SEO in the early days, you know, sort of, but again, SEO very much targeted at the S of the SMB. And so, you know, as we'd sort of grown and we sort of, you know, w w went from, you know, 10 customers to a hundred to a thousand, you start sort of ticking up, you know, our average span went from being, you know, maybe 20 bucks a month to, towards 40 bucks a month to towards, you know, maybe 50 or 60.

[00:35:31] We sort of eventually got to this stage though. We were like, we actually started closing a few. Sales teams, you know, to be editing the ability to do collaborative editing and, and, and, you know, and team structures and permissions and folders and all, all this sort of stuff that you would expect in a product like this.

[00:35:48] But I think there is something to be said for like being able to move to sort of turn the tanker if you will. And that's a terrible analogy because Qwilr like only, still today on the 40, 45 people, it's not like we're a huge oil tanker that needs to be turned, but actually it does take a hell a lot of effort to really reorient yourself around a new customer segment because there's all of these things to do with, you know, model and product and channels that sort of aligned to that new market and that needs to be realigned.

[00:36:19] And that actually, you know, we were still doing well enough on this sort of smaller side that it sort of took some people a little while to sort of, you know, really be brought around to how important this change was. And I definitely think that we stayed, you know, with a bit of focus on that side for a bit too long.

[00:36:34] And one of the things we did actually was to drop our cheap plan. We sort of, and actually partially killed freemium finally, to sort of actually force us to be a way and say, because every look more and more of the sales teams that are coming in, we were like, huh, people coming by, you know, 10 seats to start with.

[00:36:50] And then they expand to 12 and then they expand to 18. And then they expanded the entire sales team of, you know, what about they able to say this, let's say the 30. And then they're very happy and they pay us a lot more money and they don't share it. And you're like, Oh, this is, this is wonderful. But also I think it speaks to where we kind of always knew that product should be, you know, really from the start.

[00:37:10] This is a tool that's fantastic for how to teams communicate well, you know, their sales and marketing collateral and especially, you know, I think the pain point around that is large. It was very large for SMB customers, but it's even larger as your organizational complexity scales. And the ability to have like your proposals and your, all of your sort of sales and marketing collateral sync up with the sources of truth that matters to your company.

[00:37:36] Be that Salesforce be that HubSpot be that Zero. Be that you know, even to things like tools like Slack or whatever else, or just like via Zapier to Anyware. Those things become more and more important as does automation as that's all this sort of stuff. And so I would say that like, You know that again, I don't regret it necessarily.

[00:37:57] So I don't think we, we couldn't, we just wasn't available for us to go and do a, you know, one or $2 million round and spend a year building out the perfect product. We kind of had to get something to market. We had to start proving revenue relatively quickly, which was the mindset of the Australian investment community at the time.

[00:38:14] And I think, you know, again, I don't necessarily regret it, but I would say that like, there was something important about when you do know, you have to make that change. I actually think we would talk about the change a lot and talk about the importance of it. But the forcing functions of actually killing freemium of actually killing our cheap plan of doubling the price of our top tier plan of investing more in sales, as well as again, just eternally communicating it to the team and showing them why it mattered and proving to them and saying, well, look at these customers as a cohort.

[00:38:43] Look at how much more valuable they are to us. It's, it's not a matter of like, you know, two X or three X it's, 10 X, or 15 X, more valuable over the lifetime. You know, those things were all things that we, that we sort of assumed that just by saying the founders saying, Oh, we're going to go in this direction, that would be enough. And I would say that, you know, if you are doing, I think it is very common for, for SaaS to move upmarket and to maybe move to adjacent markets. And I do think that as you do that, you really do need to. Focus on how you are going to actually incentivize and push and structure the team so that, that move to happen as quickly as possible.

Omer: [00:39:17] You make a good point that when you, when you pick a target customer or a market, there are hundreds of decisions, small decisions, but they all add up for the product, as well as marketing, your positioning, your messaging, all of these things. There's this knock-on effect.

[00:39:35] And. When you then say, okay, we're going to move upmarket, or we're going to focus on a different market. There's a lot of things you have to reverse engineer. And it probably does feel like even if you know, the companies and thousands of people, it does feel like you're trying to turn a tanker around.

[00:39:51] But I think as you, you sort of touched on this. That this was probably a difficult time and you, you may be focused on that market for too long, but it was almost, you needed to go through that to get to where you are today. And it would have been great if you had, you know, millions and millions of dollars, right at the beginning.

[00:40:09] And you could say, we're going to focus upmarket and on sales and marketing teams right away and build this amazing product. But that wasn't the reality of, of where you were. And I think that's a great lesson for other founders as well is you know, the, the market that you pick may not be the market that you, you serve in five years or 10 years time, but you need to pick a market. Right? And if you try and serve everyone, you're going to be in more trouble.

Mark: [00:40:35] When you asked about that quote earlier, there was, there was one that my cofounder said all the time that I nearly gave up. If you from Seneca, which is, “He, who is everywhere is nowhere.” You know, I think if you're trying to do all things you're destined to fail and that focus and clarity on that side and attempting again, like.

[00:40:54] One of the things that we just have sort of thought about over the years with regards to like, you know, sort of concept of product-market fit is that I'm just a big believer that product-market fit is sort of like gears in a car. And most startups never click into first, you know, and you've just got to.

[00:41:10] You've got to get a first channel working. You've got to start growing. You've got to start having paid customers who come back and use you and, and all that sort of stuff, but you can't get to where you're going in first year, you know? And so you've then got to sort of figure out how do we click into second?

[00:41:24] How do we click into third? And sometimes you may stay with the same customer cohort, but just need to find new channels or ways of upselling or ways of improving churn or whatever it is. But you, you do need to sort of often have these sort of step changes in your, in your business. I think, you know, right now we're going through a thing, you know, maybe we're in third gear and we've worked West of trying to figure out how do we click into fourth?

[00:41:44] And I think it's sort of, you know, you then have this period of like six to nine to 12 months of just elation as things are working and you're growing and it's doing well. And then. That's, you know, I think you then sort of often had this mother of like, ha I think we're actually sort of trending towards the end of this sort of growth spurt.  How do we sort of click into the next level?

Omer: [00:42:02] Yeah. Alright. Let's move on to the lightning round. I'm going to ask you seven quickfire questions and just try to answer them as quickly as you can. So you ready to go?

Mark: [00:42:11] Cool.

Omer: [00:42:12] Okay. What's the best piece of business advice you've ever received?

Mark: [00:42:17] I think one of the early ones we got from a family friend, which was, you know, it's so important to have a clear delineation between, you know, what I own in the business and what Dylan, my co-founder owns.

[00:42:29] And so Dylan obviously, you know, coming from a product design background, you know, it looks after engineering and product and design and I'm much more sales focused on operational. So those sorts of pieces and, you know, every time we've broken, that rule has sort of been the times we've sort of gotten into trouble.

[00:42:44] And I really do think, you know, maybe a bit more of an early stage advice, but it was so clarifying. I think this is just generally true of like having clear delineation of, you know, even as leaders in your company, as individual contributors as to like what they own and sort of make that sort of very clear and understood. And I think that that's just when done well is so incredibly powerful and empowering and clarifying.

Omer: [00:43:08] What book would you recommend to our audience and why?

Mark: [00:43:11] There a book called Crucial conversations? I was sort of a little bit torn between Crucial Conversations and Radical Conduct, but, but I think one of the biggest problems that a lot of startups face, certainly that we face is there were a lot of hard decisions you have to make in a startup, but, and sometimes there's some really hard conversations and Crucial Conversations. It's just a book, all about those conversations. You know, you have to have that give you that sort of sinking feeling in your stomach and stress you out.

[00:43:38] And if you can become good at them, even if you can become great at them, like it truly is a superpower. And it's not about being a bastard. It's about being very empathetic and understanding the other side, but also still having that tough open honest conversation and sort of trying to have that regularly.

[00:43:57] And I, I really do think that there really are a lot of, you know, companies who just are bad at sort of making tough decisions or having tough conversations. And I think that, you know, again, truly getting better that just phrase so much stress from your life. And again, allows you to clarify important parts of your business.

Omer: [00:44:17] What's one attribute or characteristic in your mind of a successful founder?

Mark: [00:44:23] Look, this is just very biased based on my thing, but I just have like just a degree of inbuilt optimism that I just can't get away from. And I do think that, you know, having a bit of an optimistic personality is just a wonderfully useful thing.

[00:44:37] You know, it just, I think it allows for it sort of flows into things like persistence, a degree of openness to new ideas and excited by new ideas. I think it allows me to seek a path towards yes. And sort of just generally viewing the world with a bit of a Rose-colored tint. I think that, I don't think you have to be an optimist, but, but I do think it can be a helpful, useful thing on the journey because there are some, as you, you know, I'm sure well, no, there's some bloody roller coasters and speed bumps and painful parts along the way.

Omer: [00:45:08] Yeah. But you just reminded me of this book called Learned Optimism, which I was just trying to kind of think about that. There's this is it. It's great. That there's something that you've got built-in, but I think it's also something that, you know, the founders can certainly develop a nurture and then it can become an important characteristic for people.

[00:45:23] What's your favorite personal productivity tool or habit?

Mark: [00:45:26] So at the moment I've got a relatively new, Calendar Cadence that I hope people will enjoy. So, I'm happy to share this one with you. So, there's a little bit of a cheat Australia. So, all of my US team don't come online until my Tuesday. So, my Monday is almost entirely meeting free. I usually touch base with my cofounder and go through a few things there. So, it's a very nice space to start the week, get all the things I need to get done at the start. have some space to work on some projects. My Tuesday's the kickoff day. So, we do our all-hands company call.

[00:46:00] We do a bunch of team meetings on that day. Really. It's a sort of more of a team meeting focus day. Wednesday is my, like my sacred day. It's blocked off in my calendar and it's illegal for anyone to book time during that day. So I sort of get a nice sort of fresh start to the week. I didn't have a very, very meeting heavy day on Tuesday, which these days is very zoom heavy.

[00:46:21] But then out of that comes a bunch of work, which I can largely push through on Wednesday and also have time for a few big projects then as well, Thursday is my one on one day. So, everyone one-on-one my team and also skip levels. And again, You know, I sort of back to back that and, and to some degree and give a few bits of spaces here and there, but it's much more individual focused, sort of getting that mindset for an entire day, which is useful.

[00:46:44] And then, and there's still some space, obviously on Tuesdays and Thursdays, but for doing work. And then Friday again is largely free and we're recording this on a Friday. So I get to do interesting things like, you know, I have lots of customer calls on Mondays and Fridays. If I want to be involved, I might do a wonderful podcast interview.

[00:47:02] I might sort of meet a few candidates and things like that, but it's more for that for sort of, you know, again, projects and other things on that side. So I think having these sort of two days of the week that. Anyone in the company kind of knows that it's sort of almost like office hours. They can book in time with me.

[00:47:16] If it's a meeting, ideally on a Tuesday, if it's just a one on one session, ideally on a Thursday, it's just freed up my time and I had this rhythm of a date or really, you know, dive into some more deep work and then a day more social interaction. And then again, another day off, if you want sort of, you know, off that sort of side and more focused, and that cadence is just mental work for everybody but. It truly has been revolutionary for me.

Omer: [00:47:41] It kind of reminds me a little bit of Jack Dorsey. He does something similar, right. In terms of like defining a day for, or a theme for each day. And some people said that's how he's able to run Twitter and Square at the same time. so there you go. Maybe there's another company in the waiting for you and, and talking about that, what's, what's the new, crazy business idea you'd love to pursue if you had the extra time?

Mark: [00:48:03] This is a particularly crazy one, but. I have this weird desire to do a turnaround at some stage in, in some sort of old school industry. I'm not entirely sure what it would be, but I think it'd be very fun to, you know, I've been involved in a bunch of startups and sort of things like that.

[00:48:22] I have this sort of interest in experiences. What would it be like at a sort of, you know, 200 or 300 or 500 person company? There was sort of going through a big sort of dramatic change and like how you would try to sort of turn that around and maybe bring in new technology and new ways of working.

[00:48:40] And I think bringing all the wonderful things that we really do think the way that the tech industry works is. Not in all areas, but in a number of areas often, you know, I think sort of, I think the best methodologies currently, I think I'd find that very interesting and fun and weird

Omer: [00:48:58] That, that reminds me of, there was a TV show in, I grew up in England and there was a TV show in the nineties.

[00:49:03] It was called Trouble shooter, I think. And there was a guy called John Harvey Jones. And then anyway, every week he'd go into this new business and it was usually, you know, a traditional old business, a factory, something like Shat. And they were kind of. Struggling and he'd kind of helped to turn them them around.

[00:49:25] And the transformation was interesting, but it was also how, for me, it was just really fascinating how he was going into these really boring, dull businesses. But there was this, almost this science and art to this transformation and this turnaround. So maybe a, maybe you should be doing a TV show of your own at some point.

Mark: [00:49:46] That sounds fantastic.

Omer: [00:49:49] What's an interesting or fun fact about you that most people don't know?

Mark: [00:49:53] This is a very topical one. That's going to date this podcast massively, but I don't know if you saw there was that amazing Donald Trump interview with Jonathan Swan on axial recently that went around Twitter and it was sort of Trump.

[00:50:06] He sort of pushed him on all sorts of things. So he was in my high school. We were in the same class. We, we rode together. I know him incredibly well. There's this very, this is incredibly surreal moment going on for all of us who went to school with him because. A. He is having this insane interview and it, God, it's, it's just him like that. It's just his personality. He's been the same, his whole life. And I can remember him speaking to teachers that way. And then. At the moment in Australia. So his dad is also a journalist and he's, but his dad's a doctor, Dr. Norman Swan, and he has become the, sort of the media personality around COVID in Australia.

[00:50:47] So he works for our national broadcast of the ABC and he's their lead person on Covid stuff. So John who I went to high school with, and Norman, who was like one of the dads. I have become these like two huge, you know, one, a national figure, one, an international figure. And it's just been a completely surreal couple of weeks as that that's all been happening to be honest.

[00:51:10] That was definitely a memorable interview that he did. What's one of your most important passions outside of it,

[00:51:18] Mate, I'm going to give you a generic one here, but I have a son Henry and he is about to turn two and look, we live in a time of, Covid and quarantine and the time of a lot more time with family.

[00:51:30] And it's just been so wonderful to see him grow and learn. And you know, he's in this space now of that sort of, you know, 18 months to two years zone where his vocab is exploding, his understanding of things is just getting so much more. I mean, it's still early, obviously, but so much more sophisticated.

[00:51:50] It's just been. I mean, it's my most important passion outside of work to some degree. And I just, it's an awesome experience being a dad. And, and I've just really, I was actually, look, if I'm honest with you, I was, I was relatively nervous about being a founder and a father at the same time. And it's just been the best really has been.

Omer: [00:52:09] Yeah, I think you're smart. This is exactly the time to make the most of it. I mean, my, my two kids are, are now, you know, teenager and sort of preteen and already trying to get them to hang out with you is becoming harder and harder. They're very, they're very polite about it. You know, it was fine. Something else to do. So my, a friend of mine always used to say like, make the most of your kids when they still think you're cool.

Mark: [00:52:33] Yeah.

Omer: [00:52:34] I think that sort of that age between like, when you're just kind of, I guess, 10 is probably the sweet spot from my experience. Alright, Mark, it's been a absolute pleasure. Enjoy this conversation. Thanks for sharing the story of Qwilr and some of the lessons that you and Dylan have learned along the way. If you want to check out Qwilr or they can go to Qwilr that's Q-W-I-L-R.com and I would definitely like recommend like, just at least, even if you don't sign up, take a look at like the templates and you'll get a sense of the kinds of things that you can produce.

[00:53:09] And, and I won't even describe these things as documents. They're more like, you know, sales pages that you'd find on our website. Which I think kind of really speaks to that, that experience that I think you're trying to get across with these and in terms of, you know, moving away from just a Google Doc or a PDF or something. So I think people get a good sense of that. And if folks want to get in touch with you, what's the best way for them to do that.

Mark: [00:53:33] Yeah. So I'm, I'm just @marketanner on Twitter. And I obviously you can find me on LinkedIn as well. And, look, I'm just, if you've made the end of the podcast bravo, you I'm mark@qwilr.com.

[00:53:45] So you should feel free to shoot me an email too. Hopefully I don't get on too many families, but always happy to chat about startups, about sales, about, you know, about Qwilr as itself, obviously as well.

Omer: [00:53:57] Awesome. Thanks so much. I wish you Dylan, and the rest of the team all the best and thanks for making the time today.

Mark: [00:54:05] My pleasure, man. Thank you so much for having me.

Omer: [00:54:07] Cheers.

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The Show Notes

Omer Khan

Hi, I'm Omer, the founder of SaaS Club and host of The SaaS Podcast. I help early-stage founders and entrepreneurs to build, launch and grow successful SaaS businesses. Join me on this journey.