The SaaS Podcast
SaaS Help Desk Software That Doesn’t Want Your Customers to Know It’s There – with Nick Francis 
SaaS Help Desk Software That Doesn't Want Your Customers to Know It's There
Nick Francis is the co-founder and CEO of Help Scout, a SaaS help desk software product designed for small and medium-sized businesses. Help Scout was founded in April 2011 and now powers over 8,000 support teams in over 140 countries.
Its customers include companies such as Basecamp, Trello, and Grubhub. Help Scout has raised just under $13 million in funding. The company has offices in Boston & Boulder, but most of its employees work remotely in 40 cities across the world.
This is a story about three guys who started a small consulting company in 2006. They were building websites for their clients. And on the side, they were building small products for fun.
One of these products, a tool to manage your RSS feeds, got a little traction. It grew to over 200,000 users, but it was free and made no money. But it did generate a lot of support and feature requests.
And the founders realized that trying to use a shared Gmail inbox for support didn't work too well. They needed a helpdesk solution. But they couldn't find exactly what they were looking for.
And this wasn't an overnight thing. My guest spent about 2 years on this problem. He spent time thinking about the ideal solution. And he also tried out a number different support tools during that time.
My guest realized that he wanted to create SaaS help desk software that didn't feel like help desk software. He wanted people to be able to send an email and get a reply, without the need for a support portal, ticket numbers etc.
And that's how the idea for their business was born.
Today, they have a multi-million dollar business. They have over 8000 business customers in 140 countries. And they've raised $13 million in VC funding to date.
But for the first 4 years of their business, they survived on a seed round of a few hundred thousand dollars. They put a lot of focus into becoming self-funded and building an efficient business. And when they did raise money, it was the ‘rocket fuel' they needed to help them grow faster.
There are a lot of great lessons here. I hope you enjoy it.
[00:11] 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 strategies and insights to help you build launch and grow your SaaS business.
[00:28] This week's episode is a story about three guys who started a small consulting company in 2006. They were building websites for their clients and on the site they were building small products for fun and hopefully profit. One of these products a tool to manage your RSS feeds got a little traction. It grew to over 200 thousand users but it was free and made no money. But it did generate a lot of support and feature requests and the founders quickly realized that trying to use a shared mail inbox for support didn't really work too well. They needed helpdesk solution but they couldn't find exactly what they were looking for. And this wasn't an overnight thing. My guest spent about two years on this problem. He spent time thinking about the ideal solution and he tried out a number of different support tools during that time and he realized that what he wanted was a helpdesk that didn't feel like a helpdesk.
[01:27] He wanted people to be able to send an e-mail and get a reply without the need for a support portal ticket numbers and so on. And that's how the idea for their business was born. Today they have a multimillion-dollar business. They have over 8,000 business customers in 140 countries and they've raised just under 13 million dollars in VC funding. But for the first four years of their business, they survived on a seed round of a few hundred thousand dollars. They put a lot of focus into becoming self-funded and building an efficient business and when they did raise money it was the rocket fuel that they needed to help them grow faster. There are a lot of great lessons and I hope you enjoy this interview.
02:17 Before we get started if you need help building launching or growing your software business then check out SaaS Club Premium it's membership that I launched to help you get the insights motivation and support you need to succeed. Registration for new members is closed right now but you can join the waitlist and I'll let you know when we start accepting new members again. Just go to saasclub.co to learn more and join the waitlist. And I'm really enjoying working directly with the founding members as we shape the future of this membership and community. A number of you who are currently on the wait list have reached out to me asking when you can join hoping to open up enrollment again for the next round of members in a month or two. So I appreciate your patience and look forward to you joining us in SaaS Club
03:07 Again, just head over to saasclub.co if you want to learn more about that or join the waitlist. Okay let's get on with the interview. Today's guest is the co-founder and CEO of Help Scout a simple helpdesk product designed for small and medium-sized businesses Help Scout was founded in April 2000 and 11 and now powers over 8000 support teams in over 140 countries. Its customers include companies such as Basecamp, Trello and GrubHub to name a few Help Scout has raised just under 13 million dollars in funding. The company has offices in Boston and Boulder Colorado. But most of its employees work remotely in 40 cities across the world. So today I'd like to welcome Nick Francis.
[03:51] Nick welcome to the show to be with you Omer.
[03:55] I'm really glad that we're finally getting a chance to talk here. You know I've been aware of Help Scout and what you guys have been doing for a little while maybe not as intimate with the product as I like to be and I'm sure I'll be a lot better educated about it by the end of this conversation. But let's start by talking a little bit about you. So what gets you out of bed, what motivates you to work on this business every day?
[04:18] Well my goal in life is to make great stuff. It's very simple. I just I'm a product person and I love to make products that make a difference for somebody create an experience that they wouldn't have otherwise had. I live and breathe. Building great products and so everything I've done in my career has really set up this opportunity which is Help Scout t just to make a product that not only helps people but empowers business to provide a great experience for their customers. So for me it kind of checks all the boxes it's something that I'm super passionate about and energized by on a daily basis just seeing the kind of impact we can have not only building a product for people but providing educational resources and really feeling like we have a say in how companies work today and how they become more customer-centric. So it's all very exciting. And I have no problem getting up in the morning that's for sure.
[05:23] What's your background. What were you doing before you started.
[05:27] Help Scout so I've sort of been a career entrepreneur. I've started companies since I was quite young. I won't count the lemonade stand and the homemade art that I used to sell as a small child. But I started my first business in high school pretty much put myself through college with other businesses and really fell in love with the web as it was coming of age and was always a geek. My parents get all the credit in the world providing me my first Mac when I was in fifth grade which was a big deal back home. I'm actually older so it was a really formative experience and I started building websites pretty much as soon as I could. As soon as I was able and kind of went from there and I was super inspired by a lot of other companies like base camp we mentioned them already as a customer so it's gone full circle.
[06:21] But but companies like that that we're building really unbelievable products and just kind of the values that they held and still do hold our values that resonate with me. And so there were a lot of really great companies out there making great products. And I just wanted to be part of it. I wanted to work on things like that. I felt like it would give me a lot of fulfillment in life and I just so happen to find two co-founders that are wonderful at their craft. And so it worked out pretty well that we could build things together.
[06:54] So I give the audience a quick overview of Help Scout but it would be great if you could tell us a little bit more about the product in your own words like what is Help Scout and what is the problem that you guys are trying to solve with that.
[07:10] Yeah the much bigger thing we're trying to solve for is that we want to be your your business's communications hub everywhere you talk to a customer one to one we want to be the place where that conversation happens is stored is reported on. So basically we become a business as de facto CRM. When you're looking at a conversation from a customer at Help Scout, we pull up all the previous conversations you've ever had with them. All sorts of other information from outside apps whether it's Salesforce, Shopify, MailChimp whatever we pull all of the information you need to know about the customer your relationship with that customer and what what you've talked about in the past. It's right in front of you so that you can provide that personalized level experience at tremendous scale. So whether you've got five people on your team or 500.
[08:04] We've built a system that's able to scale to meet whatever needs your team has and can really give that personalized experience so why you might say it. We do make a helpdesk quote unquote. It's not your typical helpdesk in that there's no ticket numbers there's no robotic looking e-mails everything you get back from helps out is personalize the customer and everyone knows that they're interacting with a system they only know that they're interacting with a person which is what we really try to underscore with the technology. I think we recently we looked it up and we Help Scout has interacted with roughly 8% of the U.S. population. Wow. But most of those people have no idea because Help Scout completely invisible the customer we think the best most effective helpdesk is one that's invisible on one the put that puts the company and the relationship first.
[08:57] So in many ways you're trying to you have created almost a new product category. But if you don't call it helpdesk then will people really understand what it is.
[09:09] That's a great insight. Omer I wish I had you around six and a half years ago because when we started Help Scout we insisted even on the home page that it was not helpdesk. Because to me a helpdesk sounds like a really enterprise-level system that's meant to deflect as much customer support as many customer issues as possible and that's the antithesis of what we really wanted to build. We just wanted to create a scalable way for many people to share and inbox to provide any form of customer service. So it may not even have to be a support issue like there are teams throughout organizations that will use Help Scout for all sorts of other different things really more as a shared inbox or a way to collaborate on customer communication. So that's why I say customer communications hub because we find that support teams in an organization will pick up helps go out and start using and then other teams throughout the organization will also start using it for different churn and boxes and then it becomes sort of the de facto place where all the conversations with your customers are stored.
[10:14] And so we have really great reporting on all of that and a great a great open APIs where you can take that data and do what you want with it.
[10:22] I'd like to go back to the start of this story and how you came up with the idea for Help Scout and what you and your cofounders did to turn that idea into a product and a business so you know you launched in 2011 so some time before then you guys came up with the idea for this product so how did that come about.
[10:50] Yeah so it came about. I mentioned I've kind of been a lifelong entrepreneur I learn at the highest velocity when I am starting something new. And I'm just kind of learning through experience. And so when I wanted to learn how to make products and I wanted to learn how to build things for the web I started a company that built websites and web apps and all sorts of user experience work. And that's how I met my cofounders. So 2006 I started a little consulting company with those two guys and we built products we built websites for small businesses e-commerce operations all sorts of stuff across the board. And for five years we were behind our craft and on the side we would build little products so we built this one product called Feed my Inbox it was a really simple way to subscribe to any RSS feed over e-mail because we thought RSS feeds were kind of geeky.
[11:45] Most people don't really know what they are. They just all subscribe to a website and get e-mails whenever there's new content. And so we created that website and it went really well. It was free didn't make very much money even in the end when we were charging a little bit of money for it. But we had over 200000 active users. We had to learn how to build a service at some level of scale and deal with some of those challenges. And not only that but we also had to do customer support. We had quite a bit of people emailing it every day with questions feedback feature requests and sharing a Gmail inbox didn't get us very far. We were kind of stepping all over each other's toes and I spent about two years thinking about this just looking at different support tools.
[12:30] I wasted a few Saturdays trying to implement support tools and basically just turn off everything. I just wanted the inbox portion. I didn't want the customer experience to be a downgrade. If I adopted a helpdesk. That's why I didn't like the term helpdesk because I felt like the customer experience actually got worse if I adopted one. So I was just like you know what if we built a customer service tool that was designed for a great customer experience first. That's all that mattered was a great customer experience and then we work our way back. And build some of those scalability functions and features. I think we can do that. It would just take a radically different approach than what everybody else is doing and essentially long story sure that that's what we ended up doing.
[13:16] I felt like yes it's a market with a lot of different products but we're going to take a completely different approach to this. The help desk is a completely invisible there's no portal. There's no ticket numbers. It just feels like a personal email just like from Gmail but yet it provides so much kind of enterprise level scale on the back end for our team to collaborate. So that was kind of the initial idea and because we were solving our own problem we were able to pretty much nail it right off the bat. It didn't require a ton of research because I felt like I was pretty intimate with the problem and the pain we were trying to solve.
[13:51] So it sounds like there were two parts to this one was the back and functionality of what is and Help Scout today and almost this sort of CRM customer intelligence type information which allows anybody on a support team to be able to do a better job in serving that customer because they have a much better view of the customer's history they need. But whatever else information that you have in there. But then the other part of this was the customer experience and it sounds like that was the first thing that was driving you. Presumably because you'd been interacting with people on a one to one basis through Gmail and I think especially in the early days of a business there's something really powerful about having that personal direct engagement with customers both in terms of being able to learn from them about what they need saw how to build the better product but also in terms of really building those relationships with those people who have really put their faith in you early on.
[15:01] And I've done this is one I've seen you know when you move to a helpdesk system it kind of takes that away the experience doesn't seem as personal anymore from a customer perspective you almost feel like there's now a barrier between me and the people in this company and it may be there for a good reason. To try and organize this information and follow up with tickets and numbers and all that stuff. But it does feel like it adds a hurdle between this direct flow of communication between the company and the customer and was that the primary reason that you were kind of driven by doing this?
[15:40] One hundred percent. You said it very well. It sort of puts a system in between you and the customer and we live in a day and age where the customer expects to be able to have a one to one conversation with a major brand. And for that major brand to react in a very human and personal way. That's the world in which we live in. So as a business. If your goal is to be about customers to have a customer centric culture and set of values you can't put a system between you and the customer and you just can't. It's not okay and it wouldn't be aligned with your values. So that's what I was running up against I just refused to use so many of the other systems because I felt like it wasn't the experience I wanted to create.
[16:26] Yeah there was something that I saw on your website which said yeah that Help Scout was for businesses who make excellent customer service a priority.
[16:42] And when I first read that it was hard for me to really get what that meant because it's just you know five or six words right. But now I think what you're saying to me makes a huge amount of sense in terms of you don't want those barriers in place you don't even want people to know there's a helpdesk system you almost want it to feel like people are having it as you said the one to one communication. They just emailing somebody and getting an e-mail response back. But you're doing it at scale. And I think that's where this idea of this excellent customer service comes from right?
[17:19] Yeah and I wrote that statement. I know the one that you're talking about and the reason I wrote that is because we want to we want somebody to read that and just put their fist up in the air and say yes or we want them to say oh I don't really care. So I know that this system isn't for me and they really I would love for that to happen. Frankly we only want customer centric businesses using Help Scout because we design the product for those people. Those are our people. And I do believe the sign decisions you make the way that you create the product the experience that you're building doesn't like. You need to share values with the people that are using it on a daily basis in order for them to get maximum value. And so we're really just trying to focus on our people and the people that align with the values we have about how customer service should work and kind of disqualify the rest of them.
[18:16] Yeah that's great. So you mentioned that you spent about two years thinking about the product and what that experience should look like and that you also played around with other helpdesk tools and software along the way. When you guys decided that you were going to build something did you think of it as getting ready to launch a new business or was it let's build another tool like was it Feed my Box? Feed my Inbox. So was it kind of like another tool like that or did you guys decide pretty early on that you were setting out to build a standalone business?
[19:04] I was ready to move all the chips to the middle of the table. I had done the client work for five years. Frankly I wasn't amazing at it. We had learned our craft which was the goal was to become really good at the craft. But working with clients is not fulfilling for me because in the end I didn't own what I was producing and I didn't feel like I could make it as great as it should have been.
[19:31] On the day you launch something is the best day that that work ever sees and it's all downhill from there. So I didn't find it to be. It didn't use me. So I was ready to move all the chips to the middle of the table and say Guys I want to go all in and create this business. I know the market is there. I know the opportunities there we have the pain point. We know exactly how we want to solve that. Let's go in and so we spent six months just kind of pulled all of our money together six months fully focused on building Help Scout and trying to get it to the point where we can we can launch a first product.
[20:11] How big was the team behind sort of building that first product.
[20:16] It was the three cofounders so I had been working with these two guys at the time for five and a half years and we built it together and we complement each other perfectly in terms of building and designing products and so we had all the expertise we needed to create the product soup to nuts and we were able to do that.
[20:39] So one of the things that you know sometimes people ask me is like you I probably should spend more time on this but I really do. My bad but in terms of like the tech stack and the technology. What did you guys use I mean it was this like using Ruby on Rails. What did you use to build this product.
[20:59] So the cool thing was that we got to experiment with several different technologies over the years. We built product in rails we built a product in a framework that was called Cake PHP which was a very different approach a more of a rails approach to PHP as a framework at least then we settled in on PHP and as it was getting more modern we really liked a lot of pieces of it. We had already built a really sophisticated kind of building and plan management engine while before Help Scout and it was in PHP. So we said the easiest way for us to get to the 1 to get to a launch would be to build on the existing system we've already created which can do authentication, registration, billing and plan management monthly subscriptions. It can do all of that stuff already.
[22:53] We've experimented with all sorts of different things for different reasons.
[22:57] So this is like 2011. So is any of your original code still there. I'm sure some of it is at least the backend. So we call our backend Sumo. So the part that does all the registration of authentication billing and plan management. No doubt we refactored quite a bit of it but yeah a lot of it's still there and it still works really well.
[23:21] OK. So you said six months you set aside to focus on building the product. So when it comes time to launch what was the process you guys went through and how did you go about getting your first 10 customers.
[23:37] I loved the process of working on the product and I felt like we were working on something really special and because of that I read a book written by David Cohen who cofounded TechStars. It's called Do More Faster really appealed to me on so many levels. Told the stories of some really incredible companies that had gone through the TechStars startup accelerator and I just said this is the next step for us. I know we're close to launching this product but we have a heck of a lot to learn about building a business and what it's going to take to make this thing really sustainable in the long term and the next day I applied for Techstars and we just so happened. There was a program going on that we were accepted to in Boston. We lived in Nashville Tennessee at the time and I headed off with the woman that was running the program. Her name is Katie Rae. And so the business wasn't interesting to them. Katie had later told me. But the fact that I had been working with the same two people the same two cofounders for almost six years and we were quite good at making products together.
[24:48] That was sort of the kicker they said you know at least these cofounders are going to stick together. They have a really strong bond. Maybe the business turns into something completely different but we're going to make a bet on these these three people. So we moved to Boston we worked on the product for another three month and launched half way through. So it was April or maybe yeah May or June so launch the product. And from then learned a ton about building a business building a software business building a product that were building a business so we learn all about SaaS and economics and raising money which is a very complicated topic. I learned a ton. We're baptized and all sorts of all things start up for three months and at the end of the day the demo day where they have 500 investors they come and watch you sort of pitch your product for a little while.
[25:40] We did super well and within a couple of weeks we had kind of raised eight hundred thousand dollars to keep building this thing because you know we were running on fumes before we launched the product before TechStars and so TechStars really did give our business the opportunity to succeed. I'm not sure if it would've succeeded if it wasn't for the community behind that program and just generally the community in Boston that that's been so supportive of the product from day one and you apply to TechStars because of reading the book. I did also I think David knows that now. But yeah I read the book in an evening like I sat down at 9:00 p.m. in bed and finished the book at like 3 in the morning and just said yeah this is the next step it's very clear to me and we applied the next day and we're very lucky to have met the right folks that just were willing to make a bet on us.
[26:38] So you said they were excited about the product at the time. Was it very different from what we see looking at Help Scout today?
[26:47] It was in that it was really focused on sharing an inbox. So we even had the nerve to call it Gmail for teams at one point at least in the way that we pitched it to people it was just it was like an e-mail client but it was built for teams so you could collaborate you could add notes you could assign to different people there were statuses and you could easily see previous conversations with people so yeah it's changed a lot. It's really changed a lot. And David Cohen again was the one that told us Look I don't think you have the desire to raise the amount of money it's going to take to educate a completely different market.
[27:24] Let's face it you're building it helpdesk just call it what it is and they helpdesk. You have a different approach. That's all good but call it a helpdesk do not create a new market just for your little product that's going to require a ton more funding and all this other stuff to make work. And so that's what we ended up doing and turn it up turn out to be the right advice at the time.
[27:48] So how did you go about getting customers. You've got a product you've got through TechStars you've learned a lot about building the SaaS business. You've got funding comes all your seed funding comes pretty quickly after that. But what about the customers. How did they come along.
[28:06] Well that's sort of my expertise is user experience research and design. So from very early on not only were we designing a product for ourselves which was immensely helpful we were solving our own pain point. So a lot of times I could use my gut and get pretty far but I was also throughout the development process talking to anybody that would be willing to talk about their customer support tool. And so I was not selling I was not even talking about our product. I was just asking a ton of questions about how the support team worked how they were structured how many conversations they managed every day what pain points they had what they liked what they didn't like about the product they were using. It had nothing to do with Help Scout. I was just researching my ideal customer and until I could finish their sentences I didn't feel like I knew enough.
[28:59] So I interviewed literally hundreds of entrepreneurs and support professionals and support team managers. Over the course of probably nine months just asking a bunch of questions about what their workload was. Not even talking about my product so that I could just be able to finish their sentences understand who my ideal customer was what the opportunity was in the market and really focus in on that. What I discovered which was pretty much my thesis is that helpdesk tools are really built for enterprise level needs and enterprise level values upon on us. Small businesses differentiate with great support. That's part of the fabric of their culture and their business and not the product where I didn't feel like there was anything in the market to really serve those people who I would consider my people.
[29:51] That's who I am. So I talked to hundreds of them and that was really the process through which we got to know the product. And by the end of it when I would actually say oh and we built this helpdesk it would totally resonate with exactly what they needed and so we were off to the races pretty quickly had several hundred people using the product within a couple of months.
[30:13] How did you decide who to focus on who were your target customers at the time.
[30:18] They were just like me. If I'm honest I mean it's so much easier to build a product when you're the ideal customer. So I was just trying to find more companies like me or like the company I was trying to build that were having some of the same challenges I was. So it started out very narrow and then broadened based on different things that I learned so I learned that and e-commerce and online retail. It's a volume game so usually the support teams are much smaller. The businesses themselves are pretty small but the volume is immense. So they do a lot more volume than e-commerce and so I was able to make design decisions and product decisions based on that knowledge and an opportunity with online retailers as opposed to software companies who tend to have a sort of a different use case. So learned a ton along the way.
[31:09] So I know that a lot of the certainly the early growth came for the product and the focus on on building the product and putting the right features in there and kind of. No matter how small they were for your customers.
[31:26] Can you talk a little bit about that maybe kind of give us an example of the kind of things that you were doing to really drive home that sort of product focus.
[31:36] I think it was really just about being super responsive to whatever questions they were asking or whatever feedback they had. So it was really important to me to focus less on building those big feature that we knew we were going to need eventually but being unbelievably responsive to the customers we did have at the time and the feedback that they were giving us that was it wasn't really marketable. It was just about the customer experience and so somebody would say hey I really wish there was a keyboard shortcut for this one thing because I know I'm doing it probably 50 times a day. I wish there was a way for you guys to add an fact that is a keyboard shortcut and later that day it would be in the product deployed as a keyboard shortcut. So we were unbelievably responsive to just those little tiny details because I felt like man if we get all of these little tiny details right I'm going to make a bet that most companies don't respond that way.
[32:38] A little feature requests and that's going to be my way of differentiating. We might come up short on some of these big features. But when it comes to the execution of the product in those tiny little details we're going to be the only ones that execute on them in the right most consistent way.
[32:55] That's very interesting because being a product guy I've worked in enterprise environments and that's not the kind of the process that I've seen most teams goes through when you get a lot of feedback from customers and you end up with a long list of features and bug fixes and whatever.
[33:19] But inevitably the way that you end up prioritizing this means that the features that are going to have the biggest impact for the business for the largest number of users kind of bubble up to the top and those small things that one person asked for.
[33:39] Everyone goes yeah that would be great. But this other stuff is more important.
[33:45] Did you have that kind of conflict happening where you were trying to say okay let's really figure out what are the most impactful things we could be doing in this product versus these really small things which are there or they might not take up a lot of time in and you know a short cut like that you know you can pretty. It's great that you were able to get that on the same day but if you're trying to do a 100 of those things every week then does it become a distraction.
[34:13] It can and that's a really tough push poll still to this day because let's look at the other side of it.
[34:21] You may not end up working on the big money features. You may be seen as less innovative in the market because all of the big things that you're working on may take longer because you're taking the time to worry about all the little details of the experience along the way. So there are certainly compromises you have to make. But this goes back to my life goal and the reason I get up in the morning and it's to make great stuff. It's not the make a lot of money. Not to build the biggest team it's not to take a company public it's to make a really great product that people love to use. And for me that means focusing a little bit more of my time and effort. And teams are on the details. The experience in making something that people really enjoy using and if it means we launch a feature a little bit later or we're a little less innovative.
[35:16] But when we do actually launch that thing and it's executed on an in a much better way than I'm willing to make that tradeoff. Because my goal in life is to make the best possible products again.
[35:28] I love that I love working with people who have that mindset where it's not just about throwing the kitchen sink at the product and putting everything in there. But it's almost about sometimes how you can take things away which make the product better.
[35:47] Yeah you're totally right. And frankly it's a lot harder. I'm in this for a challenge making a kitchen sink. Saying yes to everything is frankly just too easy. It's not really worth it for me.
[36:02] OK I want to talk about content marketing because I know that was an area that you guys made a big bet in terms of how you were going to grow the business. Can you tell us a little bit about that like how did that come about and what sort of results is that helped you produce.
[36:17] Yeah whenever I look at the market I'm always looking for ways in which we can differentiate and be created like any entrepreneur. And when I look at the customer support customer service space I see a bunch of good companies with good products with a lot of funding and a lot of people and a lot of resources. So I'm going to be outgunned at every turn. What is it going to take for my business to differentiate. And very early on I realized okay every way in which we differentiate from a brand standpoint is going to have to be something you can't write a check for. Because if our check can be written there's plenty of other people that can write bigger ones and we can write so that eliminated a lot of different marketing and branding tactics in the arsenal. And then I want to do something that's aligned with our brand.
[37:08] Like I don't want to ever compromise the brand for short term growth and short term gain. So that eliminates a whole another set of marketing tactics and sales tactics because I wanted to build something for the long term. I'm not really interested in doing anything else so in the end what seemed to align most with our values the brand we wanted to build and us being able to differentiate on a creative basis in a way that you can't just write a check for content marketing was that perfect fit for us. It's something that takes a lot of work to do very well to build a brand on that sort of thing and to become a thought leader in the space takes a lot of sweat equity and investment and we can make people better. Right.
[37:55] Like I could actually feel really good because I'm helping people before I ask for anything in return. This is not self-serving. I'm genuinely trying to be a helpful and additive to the community by creating this content. And as a byproduct of that maybe learn about our product maybe try our product maybe start using our product. But I really like how it's just kind of a reciprocal circle that feels really good and really helpful and really additive to the community and so we said Okay if this is what aligns most with what we believe as a company then let's go all in. We bet the company financially at least on content marketing working and we just so happened to hire some really good people that made it work. I can't take a whole lot of credit for it other than the fact that I was willing to make the bet.
[38:47] And since then we've really invested a great deal of time effort and energy into content marketing so much so that I think of helps Scout as a 50/50 business. One edge free educational resources that try to advance the community in the support profession as a whole. And the second part being the product but they're sort of equal. It's not just a marketing tactic for it really is something that we want to get back because we feel like it makes a significant difference in the way small businesses operate moving forward.
[39:22] How did you figure out how to differentiate your content marketing. Because there's no shortage of content out there as we know and it's not easy to create unique differentiated content that people will want to consume and come back regularly to get more of what was the thinking behind the way you came up with your content making strategy to stand out from the crowd.
[39:56] When you're kind of starting at zero standing out. Those tactics evolve very quickly at the time standing out meant doing a ton of guest posting. So taking a topic that we knew was ranking in search engine terms that we knew didn't have a lot of coverage. The opportunity for us to really really high was there and we would guest posts on that specific topic 25 different times. We'd also post an article on our site that was a bit more comprehensive and thorough linking back to that article. Every one of those guest posts in order to kind of give ourselves the one that permanent CEOs standpoint. And then once we give ourselves a little bit of leverage from an ethical standpoint it just takes over because the content has to be really good the way it has to be excellent. Actually there's no way around that. And so we did a lot of guest posting in order to just kind of build up our own community and once the community got to a certain point and we were ranking for for a certain number of articles every month where we could pretty much predict 400,000 unique visitors every month.
[41:05] We still can then we were able to say just for lack of a better phrase ethic we're going to write about the things we love now. And the people that love this community and love this profession are going to resonate with it. And so that's pretty much what we do now. We pay attention to search engine ranking but it's really about just trying to give back what we can and the community and trust that it's going to come back to us in a reciprocal way. So we're investing really heavily in communities like support driven who are a community of thousands of support professionals.
[41:37] They put on a couple of conferences every year. We're doing our best to invest in that community and forwarding it and we're building our own educational resources through a community that we built called HelpU just helpscout.net/helpu completely free educational resources all about advancing in your career as a support professional and what it takes to build a customer centric business as an entrepreneur are all sorts of those topics. And so now it's just all about trying to give to that community and build the community be as big as we can make it. It's less about trying to get more traffic.
[42:13] And do most new customers come through your content marketing. Not as many as you would think.
[42:20] I mean we have just heard a story this morning and this is actually a problem that we face but somebody had reached out to us on chat and said hey I've been reading your content for two years and I had no idea that you offered a product.
[42:35] So that's actually the opposite of what we want to do. We should be a little bit more forward with with our product but maybe I haven't looked at it recently but probably about 20 percent of our customers come from that channel. But you know there's tons and tons of word of mouth that you just can't measure. I don't bet my business on the spreadsheet numbers.
[42:58] I know that there's a lot of other qualitative inputs that are not accounted for in a spreadsheet. And so I don't need to know the numbers to know that our content marketing strategy works are word of mouth brand, branding is very strong amongst the support customer service community. And I'm just going to keep investing in those things because typically the qualitative inputs are the ones that you can't read a check for. And again that's our most important way to differentiate from the other guys who are just looking at a spreadsheet and they can't make sense of the math and so they don't invest in it. That's our opportunity. And so we try to invest in those qualitative things.
[43:33] Okay. We've talked about the journey in terms of where you came up with the idea and the process you went through to build the product and learning about SaaS through TechStars raising a seed round and the growth that's happened over the last few years. When you look back are there any things that you wish you had done differently.
[44:02] Oh of course too many for this interview over but I can give you a couple. It's really hard because I can't say that I would have done it differently. But hiring a great team and establishing the culture and the sort of people that we wanted to work with on a daily basis was really challenging. Building that team is something that the three of us had never hired anybody before. We just had to kind of learn how to hire and we made several mistakes in the first couple of years I think we had to let go of a roughly 30 percent of the people that we hire because we just didn't have good hiring practices. But by way of making those mistakes we really refined the hiring process to the extent where I feel like it's amazing now and the biggest learning from that just to kind of sum it up would be test people's work.
[44:51] The work is really important and it's shocking how many hiring processes don't actually look at the work. They talk to somebody they get juiced by the interview they feel like hey this person thinks like I do. They have the same values as I do. But you don't actually work with them. So typically we have every single person we hire goes through some form of project or we can work collaboratively with them to create something and we can review what they created. And that's a big part of the process. I mean it's unbelievable how many great interviews I've had that had crappy projects. So just being able to judge the person not only by their interview skills or what they say they can or want to do but by their capabilities and what they've been able to prove right now and not what they want to prove but what they can do.
[45:50] Right now. It's just shocking the number of companies that will hire folks without going through a project like that. So that was the big big learning there and then more recently a big mistake that I made. And I take full responsibility for it was just not understanding in the last couple of years I misjudged the segment of our customer that was most important. I just don't feel like I was close enough in hindsight and I ended up launching a freemium product to Help Scout so free version of the products and we just wanted to get as many sign ups as possible. And that proved not to be an effective technique for a lot of different reasons but it basically came down to not understanding who our best market segment was and to give you a hint it wasn't the three person startup that's willing to take advantage of a freemium plan and then grow into it which by the way hardly ever happens at least in our world.
[46:50] What we've found is that the companies that are already 10, 15, 20, 25 people that are happy to pay for a really great product that solves their pain points is much more important. And so for a lot of reasons premium just didn't work out we didn't understand persona well enough and we we learn from it.
[47:09] That's a really good insight. And also the fact that you are somebody who has spent many years really trying to understand your customers and your market and talking to people and it just shows that it's something that you have to continually do and stay on top of because even with all the successes you've had it's still relatively easy to make a mistake like that.
[47:36] Yeah and market change too. Right.
[47:38] So even if your product remains the same the market and the customers in that market the different segments that make up the market will continue to evolve. That's the ships that I missed.
[47:49] Now I want to just give people a sense of the size of the business. Do you talk about revenue or is that a secret number for you guys.
[47:49] It's a secret a secret number for us.
[48:01] So can you you just give us you know if there are any other metrics that you can share. Just to give people a sense of the size of the business I mean we talked about 8,000 support teams using the product some of the companies I think in terms of employees you're around 60 people.
[48:18] Yeah around 60 today. And well I can tell you this we're operating to the last three months we've been cash flow positive. So we're operating the business in a very efficient and sustainable way. So if you start to put together some of the math that's required in order to run a 60 person team and a product that's serving over 100,000 people every day and still make it work economically that may help you with some.
[48:48] And yeah you can get good guests that way. Now we're going to have to wrap up this conversation. So we're going to get a lightening rod in a second. I
[48:55] just kind of feel like there's so much more I would have loved to talk to you about.
[49:02] And the fact that you know yes you guys have raised 13 million dollars but for the first four or five years you had a seed round of you know six, seven hundred thousand dollars and you were basically very focused on being self funded being profitable and there was so many good things so it's unfortunate we don't have time to do that but you know I'd love to get back some time and maybe continue that conversation because this thing is just so much that people could learn from what you went through in terms of building this business.
[49:36] Yeah I want to talk about funding and just to give sort of a tilders to that conversation. One insight is that you have to think of especially any form of institutional funding as rocket fuel. And it's going to propel you in a certain direction very quickly. And if you are just even slightly not pointed in quite the right direction at the time you take on that funding then there's a good chance the rocket fuel is going to propel you've been to a place that maybe undesirable in the future. So the reason we waited for four years is to really understand the market really understand our product and have success without needing that money to have a little bit of our own rocket fuel. Our customers sort of fueling the business for a while and then once we see a big opportunity and we know we're pointed in the right direction then we take that fuel so I have no regrets about waiting four years to do a series that.
[50:32] I like that analogy a lot. He's very easy to remember as well the rocket fuel thing. So yes it's in love. OK let's get on to the lightning round. I'm going to ask you a series of questions just try to answer them as quickly as you can. All right.
[50:46] OK what's the best piece of business advice that you've ever received?
[50:51] Treat your spouse or partner like a co-founder.
[50:55] What book would you recommend to her audience and why?
[51:00] How to Win Friends and Influence People. Because entrepreneurs have egos and they need to learn how to deal with people.
[51:08] What's one attribute or characteristic in your might of a successful entrepreneur?
[51:13] And insatiable desire to learn new things.
[51:16] What's your favorite personal productivity tool or habit?
[51:21] When I wake up every day I want to get one project done. So one really important impactful thing done before I do anything else that the rest of my day goes to hell. I've accomplished something important.
[51:34] What's new or crazy business idea you'd love to pursue if you had the extra time?
[51:41] I wish I had time to think about. Right now I want to do this for a long time so it's not even on my radar.
[51:50] What's interesting or fun fact about you that most people don't know?
[51:57] I am a beginner surfer. That's one of the things that I'm trying to become good at right now even though I live in Colorado I have to travel there.
[52:04] I was going to say. And finally what is one of your most important passions outside of work?
[52:12] Being outside some introverts. As much as I can run and hike and snowboard and anything else by just being outside especially with my dog and my wife. That's something that will give me so much fuel and energy for her business and everything else.
52:29 Awesome. All right. So now folks want to find out more about help scout. They can go to helpscout.net or helpscout.com. Ok cool. And if people want to get in touch with you what's the best way for them to do that.
[52:55] Cool. Awesome. Nick It's been an absolute pleasure. I really would love to get you back at some point because I just feel like we just scratched the surface in kind of getting inside your head and sharing the story of help scout I really have enjoyed having you on. And I wish you and the team all the best for the future.
[53:15] Thank you so much. I hope it was helpful. It was awesome. All right.
53:19 Thanks for listening to the SaaS podcast. You can get to the show notes for this episode by going to the SaaS podcast. Don't come if you enjoyed the episode then please do me a favor and leave a five star rating on iTunes and if you're in a really good mood leave a review to it's your support that keeps his podcast going and leaving an iTunes review is probably one of the best ways to show your support. So if you want to do that just go over to thesaaspodcast.com and click the iTunes button. Thanks again until next time. Take care.
- “How to Win Friends and Influence People” by Dale Carnegie
The Show Notes
- Help Scout
- “Do More Faster: TechStars Lessons to Accelerate Your Startup” by Brad Feld & David Cohen
- David Cohen on Twitter
- Katie Rae on Twitter
- Nick on Twitter
- Omer on Twitter