
Growing Our SaaS to $1M+ ARR: 7 People, 3 Years, No VC Money - evermike
https://medium.com/everhour/growing-our-saas-company-to-1m-arr-7-people-3-years-no-vc-money-key-lessons-learned-2d53766507d2
======
ksahin
Congrats :) And thanks for the blog post.

How did you go from 0 to 20K mrr ? It's not really clear in the charts. Looks
like the most difficult step for many boostrapers, the difference between
"Default alive" and "Default dead" as PG says.

~~~
evermike
To be honest, the whole secret is in the product itself. At the very beginning
we wanted to do everything faster - more features, more blog posts, more
visitors, more backlinks etc. Did not work well.

Then we decided to stop - pause any ads and promotion and 100% concentrate on
the product, improve everything we have, do not add any big features. We
talked a lot with our customers, found out what they liked/disliked the most.
I would say that this is what helped our product. At that time we completely
rewrote the whole project.

~~~
andyidsinga
> We talked a lot with our customers,

can you say a bit more about your product and were you went to find relevant
customers to talk to?

thanks.

~~~
evermike
We tried a variety of resources. For example this -
[https://betalist.com/](https://betalist.com/)

We were listed here before even had a product. Collected mailing list. After
public release, this service brought us about (I don't remember exactly) 700
or 900 signups.

Try to spend a few hundred or thousands $$ on Google ads and add Intercom or
Drift on your landing. Try to chat with visitors. I think you'll get some
insight.

Be sure to read reviews about existing products on the market. What pros and
cons their users write (Capterra, G2Crowd, TrustPilot, TrustRadius).

------
pcprincipal
Question for this company / anyone who runs similar businesses - is $1MM ARR
enough to pay 7 people? I'd be interested to know what they do in EBITDA and
how they think about salaries. This is actually a general question I have
about start-ups. The economics of having a business that makes $1 - $10mm in
revenue and hires 7 - 100ish people is still difficult for me to understand.
Yes, you can raise equity or debt because equity / debt holders believe in a
certain business model and then use that capital to pay people, but to be a
standalone business without VC or bank funding, you need cash flow (not
revenue) that can pay engineers market value.

~~~
the_bear
Yes, I think $1MM is enough to pay 7 people, although it depends a lot on the
specifics.

My business makes $2.2MM ARR and has 17 employees (counting the founders).
We're profitable, although we try to put about as much money as we can afford
back into growth, so we're right around break even. There are a number of
factors to consider when thinking about whether this is "enough" money.

Location - We're based in St. Louis which has significantly lower cost of
living than, say, the Bay Area (we moved from SF for this reason). St. Louis
is much more expensive than some other parts of the world. So the amount of
revenue a company "needs" is highly dependent on where it's located.

Types of employees - More than half of our employees are on the support team,
and almost every came in as an entry level employee right out of college. We
pay our support people very well (almost as much as the engineers) but it's
definitely cheaper to employ a handful of entry-level support people vs.
senior engineers. I think it's a common mistake to think that every startup is
made up entirely of engineers.

Revenue per employee - Right now we're at about $130k ARR per employee, and
like I mentioned, that's close to break even. If we keep growing somewhat
quickly, we'll bring in enough new entry-level employees at lower salaries to
bring the average down. But as our growth slows (which is happening, and
happens to everyone eventually), our team becomes more and more senior and so
we pay them accordingly. For this reason, I think we'll need to shoot for a
higher $/employee. But not much higher I don't think. I bet $200k/employee
would cover us long-term.

"Maximizing shareholder value" \- One of the things that drives most tech
companies to make so much money is that their primary goal (regardless of what
their mission statement says) is to maximize shareholder value. When you're
bootstrapped, you can choose not to do that. I work full-time as a founder/CEO
and get paid well (probably about what I'd be making working for someone else,
maybe a bit less). If I wanted to become a billionaire, then yeah, this
business model wouldn't work. But that doesn't have to be the goal.

~~~
cm2012
I'm genuinely surprised you pay support almost as much as engineers. I guess
your support is a competitive advantage in your niche?

~~~
the_bear
That's part of it, yes. The other part is that we pay engineers roughly market
rate for our area, but we pay support significantly above that. Our philosophy
is basically that everyone who works here should make a good living regardless
of what their job is, so we're going to pay everyone that baseline. Certain
employees (like engineers) might make more because the market demands it.

To be more specific, we start our support people at $53k/year and guarantee
$10k/year raises for their first five years. We start engineers at $71k and
guarantee the same $10k raises. So engineers are definitely making more, but
in terms of the fully loaded costs to us, they're not that different.

~~~
cm2012
Good on you!

------
evermike
Hey guys,

My name is Mike. I'm co-founder and product at Everhour.

I'd be happy to answer your questions if any. Feel free to ask here or on
Medium.

~~~
stevoski
FTA:

> 5) The advantages of annual billing

How do you encourage customers to choose annual billing?

~~~
jaxn
I'd love to know the same question. We are making our way to $1mm ARR and have
very low churn, but no annual billing option. Do you give a discount at all?

~~~
Cthulhu_
Not an entrepreneur, but, 12 months at 10 months of subscription fee is still
more than 6 months at 6 months of subscription fee. Always offer a "loyalty
discount" if it means they commit to paying for a minimal amount of time.

~~~
jaxn
But our churn is really really low with an average subscription length several
years long. So 12 months at 10 months fee is less than 12 at 12.

There is work to help people update info, etc. And an annual check or ACH
would save card fees.

But it doesn't sound like OP offered a discount, so just curious.

~~~
scrollaway
At the end of the day, you know your customer base better than anyone on HN,
so you are the best-placed to do this research. I will say that in SaaS,
unless you're extremely enterprise, a several-years-worth LTV is very rare. If
you are in enterprise, you might gain customers by having annual billing at
all.

If you're unsure then I second the other commenters' opinions, do 12 months at
full price. If you want to try a discount for some time to see if it helps
conversion, that gives you a comparison point. There are advantages in annual
billing beyond "it's cheaper", so you can't compare directly to monthly
billing.

------
giarc
>$1 million by itself isn’t a big thing.

Don't be so humble. $1 million ARR is f __ __ __hard. Take credit where credit
is due.

~~~
evermike
Thanks! It feels that you are speaking from your own experience. Indeed, it's
hard. But not everyone understands this.

~~~
charlesdm
Do you think having access to "cheaper" talent (I don't mean they're worse in
skill, but I guess there are less opportunities for capable engineers in
Belarus) is a huge competitive advantage?

Do you think you would have been able to build the same business in say
London?

~~~
evermike
Hard to say. Most likely the result would be the same, but more expensive.

We have good technical people here in Belarus. But we have other problems.
It’s almost impossible to find good Sales or Marketing talents here. I think
it's due to the fact that we still have fewer product companies and more
outsourcing. And of course English language. It's not native for us. While
these positions imply impeccable knowledge.

Therefore, perhaps in London we could build sales/marketing team from day one
and could sell better. But with the engineers it would be pretty much the
same. Or even worse. I can imagine that we would probably hire people
remotely, to save money, and this approach has some drawbacks.

------
jiveturkey
> $1 million by itself isn’t a big thing.

0-1 is a huge thing! Very humble presentation, great job. One of the very,
very, very few medium posts that are worthwhile to read.

I find this very impressive with only 7 people because probably 5 of them are
engineers and/or actually support the product. That leaves only 2 people for
the marketing aspects, which are difficult.

It would be more enlightening if you would post cash flow data.

> 4) Freemium can put you on the wrong track.

Sure, but this is very highly product-specific. Freemium can also win you mind
share and technical lock-in.

~~~
evermike
1) Actually right now we don't have anyone dedicated to marketing :) Our team
structure is the following: CTO and COO (two other co-founders), me (design,
product and marketing), 1 customer success, 2 front-end devs, 1 back-end dev.
We'll hire a few more people soon, but this is how our team looks today.

2) I agree, many successful companies grew via freemium modal. So our case
can't be applied to everyone.

~~~
MuffinFlavored
> me (design, product and marketing)

Who drafted the layout for your landing page + integrations pages + wrote the
content? They are very, very good and look like the work of multiple people,
not just one person.

~~~
evermike
I did all of this (except HTML/CSS coding). But it wasn't accomplished in one
day. There were several rounds of improvements.

------
beilabs
Huge congrats to you guys. I've been using your product for at least two years
now for a particular client and they seem very happy with it (especially the
pivotal and chrome integration). Keep up the great work guys!

~~~
evermike
Many thanks. I am very pleased there are people on HN who heard about us (we
are still such a small company). This means that we are doing something
important. Will keep doing our best.

------
evermike
Dear HN community. Just wanna thank everyone for such a warm feedback and
interesting questions. I'll do my best to reply everyone. Although sometimes
it's not easy to notice a new comment :)

~~~
allannienhuis
this chrome extension: [https://chrome.google.com/webstore/detail/hacker-
news/geancn...](https://chrome.google.com/webstore/detail/hacker-
news/geancnifhbkbjijfkcjjdnfemppmcjmk)

does a nice job of highlighting new comments since your last view.

~~~
evermike
Looks like it doesn't work. Or I'm doing something wrong :(

~~~
allannienhuis
sorry, my bad; I linked the wrong extension. I forgot I had two installed.

Try this: [https://chrome.google.com/webstore/detail/hckr-
news/mnlaodle...](https://chrome.google.com/webstore/detail/hckr-
news/mnlaodleonmmfkdhfofamacceeikgecp)

I use the collapsable threads feature a lot too.

~~~
evermike
Thanks, will try.

Meanwhile, I found this - [https://chrome.google.com/webstore/detail/hacker-
news-enhanc...](https://chrome.google.com/webstore/detail/hacker-news-
enhancement-s/bappiabcodbpphnojdiaddhnilfnjmpm)

------
yazr
> CPC for the best keywords might be up to 10–15 USD.

Is this for real ? 10$ per click ?!! That's really depressing, and completely
shuts out all the small players.

~~~
elorant
$10-$15 isn't the most expensive. There are industries like insurance or loans
where it can get as high as $50.

~~~
bochoh
So for sleazy payday loan ads if you were to click them for a half an hour a
day it could impact their bottom line?

~~~
Cthulhu_
Probably not, that'd be click fraud and the clicks wouldn't be counted.

------
nakodari
Huge congratulations! I noticed there was a constant revenue at 20K MRR but
then starting January 2017 it picked up in growth. How did that happen?

~~~
evermike
Not an easy question. I think I can write a separate blog post about it. But
generally speaking, we completely redid the whole system. In the beginning, we
did not understand correctly what customers really need, and our architecture
did not allow us to make this "pivot".

The hardest thing is that we could not learn it without failing. We got it
only after we showcased the product to the market and after talking to
hundreds of customers.

~~~
nakodari
Thanks for sharing your knowledge! I noticed that one of the books that
inspired you was Traction. Which growth channel worked best for you?

~~~
evermike
For us, the best growth channel was partnerships and listing on 3d party
marketing pages (Asana, Basecamp, ClickUp etc.). It is not difficult and costs
nothing (if you have a good integration) while the traffic quality is awesome!

------
gazarullz
Hi, out of curiosity what tech stack have you used for your product and why ?
btw kudos for your successes :)

~~~
evermike
No problem. Our main tech stack is the following:

PHP (Symfony), Angular, MySQL, Redis, Nginx

Of course it's not an entire list, but if there are any additional questions -
ask, will try to clarify.

~~~
yazr
I know PHP is really common in UKR.

Can i ask what other languages/frameworks are common for web apps / dash
boards ?

~~~
evermike
I think it's very important to choose the stack with which you have the most
experience. In this way, you will protect yourself from the situation when
something went wrong on PROD and you do not know how to fix it. I generally
for reliability and predictability.

Sorry, maybe it does not answer your question?

~~~
yazr
I meant to ask which frameworks are most used in Ukraine and makes it easier
to recruit programmers ?

We cant use PHP.

~~~
evermike
We aren't from Ukraine, so I don't know. We are from Belarus.

I'm not an expert here. To get the right picture, I would recommend searching
for some kind of UpWork report. Like this -
[https://www.upwork.com/press/2018/05/01/q1-2018-skills-
index...](https://www.upwork.com/press/2018/05/01/q1-2018-skills-index/)

But if you consider remote employees, you want have problems with any
framework.

------
andyidsinga
> (6) Finding your promotional Channel

This is really interesting and helpful.

We've found generating leads for our SaaS [1] difficult, with similar results
from google ad words and really bad results from LinkedIn ads.

In retrospect, talking to some friends about google ad words, the results
aren't so surprising, but I'm glad we went through the experience. This note
from the article rings very true:

> Plus you should constantly optimize your landings, banners, texts etc.

constantly looking at your landing pages, keywords and ad configurations is
not a trivial task - it requires a lot of thought and discussion.

we've figured out the content marketing approach (blog posts and relevant SEO)
and will be doing that; but we've also been looking for better lead generation
approaches.

great post ..thanks.

~~~
evermike
Yep, that's true.

I would also advise you to devote some time and collect feedback on such sites
as Capterra, G2Crowd, TrustPilot, TrustRadius. Firstly, people search and read
reviews before making their final decision. Secondly, reading about the
competitors, they will find you. Third, sometimes bloggers use these sites to
select the top 10 tools they will write about. If you are there - awesome. And
finally, these sites sometimes do their own reviews and marketing campaigns.
You better be there :)

~~~
jwr
Have you had any success with Capterra?

I've been considering investing some time/money there, but I have doubts as to
whether any customers actually visit those sites.

~~~
evermike
We did not try their PPC listing. Just keeping our profile up-to-date and ask
our customers to share their experience about us there.

I cannot measure impact directly, but I think it worth my time to maintain a
good looking profile at a resource with estimated monthly visitors = 7.4M
(according to SimilarWeb).

Also, if you search for example "best time tracking software" in Google, they
are on first page. And it costs $0.

------
docker_up
I would love to know how the revenues/profits are shared among the employees.
Is there an equity plan or profit sharing plan with the non-founding
employees?

~~~
evermike
We do no offer any revenues/profits sharing for employees. Just very
competitive salary. But maybe we will consider this in the future. In
addition, it is still not very common in Belarus. Even in terms of
legislation.

------
leowoo91
So out of nowhere, people wanted use your product because you outstand as a
way way different product? How is it much different than Jira with few
plugins?

~~~
evermike
In truth, Jira is not our main platform. Our plugin isn't so valuable in this
case, because Jira has a built-in ability to track time.

Such platforms as Asana or Trello or Basecamp converts much better. Yes, there
were other solutions, but our clients decided that we are better. And
objectively we offer some very unique and competitive benefits.

------
ernsheong
Browser extensions are underrated, and ideal for such use cases! More people
should consider it as part of their tech arsenal. Congrats!

~~~
briandear
I really hate browser extensions because the product now forces me to use a
particular browser. Rarely do products like this support Safari for example.
It also requires a strong level of trust as well.

~~~
k__
Aren't extensions standardized for a years now?

~~~
ernsheong
Safari hasn’t joined the standards yet. You can do one code base for FF and
Chrome, but Safari is a totally different beast.

~~~
evermike
Moreover, Apple is deprecating legacy Safari Extensions now and pushing
developers to transition to Safari App Extensions – which are offered through
traditional Mac apps via the Mac App Store.

More here - [https://9to5mac.com/2018/06/09/safari-12-extensions-
more/](https://9to5mac.com/2018/06/09/safari-12-extensions-more/)

It's another headache for us. So far we did not find any good step-by-step
article on how to do it.

~~~
maio
We have pretty complex extension so we decided to write Chrome API
compatibility layer. It allows us to run our existing Chrome extension as an
Safari app. extension.

Check out [https://github.com/avast/topee](https://github.com/avast/topee) \-
It's work in progress (but already complete enough for our use case).

------
jirenandcell
What books do you think helped you become successful and how did you cope with
the more challenging aspects in running your startup?

~~~
evermike
I can see two questions. Let me start with books I can recommend:

(1) Traction: A Startup Guide to Getting Customers — Weinberg, Gabriel (2)
Scaling Up: How a Few Companies Make It...and Why the Rest Don't — Harnish,
Verne (3) The Lean Startup — Ries, Eric (4) 100 Days of Growth - Sujan Patel &
Rob Wormley (5) Delivering Happiness: A Path to Profits, Passion, and Purpose
- Tony Hsieh

------
ericintheloft2
Hi! Very interesting read and congratulations on the success. How you every
had a higher price tag, or have you thought about raising it? It feels like a
very low price, but I don't know what the average your customers are ending up
paying - I guess they most often have several users per account?

~~~
evermike
Our ARPU is about $50.

Most of our clients are fairly small or just at an early stage. And this is
natural. Bigger companies mostly have time tracking process in some form, and
they do not want to change the tool (something that already works).

For small teams our pricing is ok, although we've being often told that this
is too much. People want everything free today.

When we thought about our pricing, we looked at competitors, but also
considered how much we ourselves would be willing to pay for such a tool.

~~~
ericintheloft2
Ah I see, interesting!

------
sleepless_on
Congrats with your milestone and nice landing page you have there. Did you
start a business before everhour?

~~~
evermike
We were running a small web development company - Weavora for a couple of
years. At first were 100% dedicated, then tried a few ideas (i.e. combined
existing business and new initiatives) and only now we are mostly a product
company.

At some point just stopped accepting new quotes and switched employees to the
product.

------
brianbreslin
Congrats! Love to see more and more of these stories. Is this a trend lately
to see more companies going for cash-flow at the outset?

~~~
evermike
It seems to me that everyone understands that personal experience and
especially everything money related is way more interesting. Secondly, more
and more people believe in transparency. Today you helped someone, tomorrow
they helped you.

Lastly, I can not say that time tracking is kind of "sexy" topic. We are not
changing the world, thus top news resources aren't particularly interested in
this field. Investors neither see us as an opportunity for good "exit".
Therefore, businesses like us do not have other choice as to move towards
"work-life balance" business. Where being profitable is a must!

------
jirenandcell
Congratulations on your success. Have you ever worried about VC funded
competitors doing what you are doing?

~~~
evermike
Thanks!

I did not study 100% of our competitors, but the most known like Toggl,
Harvest or Hubstaff did not get investments. Perhaps only some small amount on
seed round.

I continue to believe that VC money needed for explosive growth. We believe
that it is a little too early for us. We are still continuing to pay a lot of
attention to the product, communication with our customers, finding our
product/market fit and not marketing. Our current revenue is enough for this.

And no, we are not nervous about our competitors :)

------
elvirs
wow what a short, on point and helpful article. very impressive story too.
good luck guys, not that you need it:) keep kicking ass!

~~~
evermike
Thanks! ;)

------
mrhackerpoland
5 million USD revenue: adplexity.com

Enough to pay 3 fulltime engineers.

100K yearly AWS expense.

Running several scraps....scraping ads and listing them on site.

Most developers don't know where the market demand is, so they don't make a
lot of money.

------
mrhackerpoland
What if you guys are reported to the dictator and the officals sieze your app
and revenue?

~~~
evermike
Sorry, such a discussion is not very interesting for me. I think you have a
distorted opinion about our country. Read about the "Belarus Hi Tech Park"
initiative and conditions for IT companies. A very serious and important work
has been done here.

~~~
mrhackerpoland
My partner was multi millionaire from Belrus who owned a steal rolling
company.

Now, he took whatever he had and moved to states.

He got his company raided and government officals took over it.

Anyways, if the situation has improved, that's a good news :)

