How We Fixed Our Growth After Getting Stuck At $7m ARR

Kyle has built proposed by up to 8 million bucks in ARR he's going to dive into how he's done it tactics that work tactics that didn't over the next 20 minutes please tell me welcome to the stage Kyle [Applause] racky stage is here man [Music] Joy hey everyone it's been so inspiring to hear all these great stories from Founders who grew from zero to 100 million in you know two years five years

10 years um I'm going to share a story that's a little bit different than maybe some other ones that we heard because I'm going to be very raw and vulnerable and share a lot of my fuckups and hopefully you'll if if you're be you know if you're pre8 million Revenue you can avoid some of these pitfalls and I think some of these can still happen even when you're a little bit further along so to to kind of Set It Off I want to start with a story about two years ago it was the fall of

2022 I was in a state now for a couple years where I was really checked out in my business I was really bored I was frustrated things weren't going terribly well our rate of growth had been declining year after year and when the SAS Market changed around 2022 is when we actually started to decline for the first time really since we found product Market fit and I had been going through this m&a process where we hired an m&a banker and had strategics and PE firms lined up to to sell the company because

I was just trying to offload it I was trying to hit the escape hatch and get out while the while the getting was good um but everything kind of happened around the same time the SAS Market kind of crashed in 2022 investors and acquirers started getting nervous and suddenly I had this you know what was this big list of potential acquirers all pull out not get a single Loi from anyone and it was at that moment where I I really didn't know what to do and and I was in front of my board when they asked me like Kyle do

you have the the stomach to keep going I shed a tear for the first time in front of them and said I don't you know I think so I don't know but how did I get here and that's really what I want to share with people today is some mistakes you can recover from pretty quickly and other ones can you may not even feel the effects of them for a long time how did we get here so when proposify got off the ground it was around 2014 we started finding product Market fit we started to scale things were really fun you know it

was a kind of a new and emerging space proposal software online proposals Interactive quotes e signatures that kind of thing um and we were one of the first like SMB players in the market who were doing what we were doing with these highly visual um interactive proposals and then you know people entered the space pandadoc quiller and some other ones but you know for a time we were really leading in our category and um you know it was at that time growth really felt easy we were selling to digital marketing agencies we

were very niched down in that um in that market and had a very strong plg motion selfs serve trials that was going really well so around 2018 my co-founder I first um close our first round of actual you know major investment Capital we take uh we take a million each in secondaries you know put three million on the balance sheet it was uh it was a really fun time and I think what we started to do was we made the mistake

that I think a lot of Founders have made once they raise money which is they try to grow too quickly they feel this realer perceived pressure to um higher headcount and scale and build a sales team and go after the Enterprise and we completely fell into that trap so you know we we hired enough people that we were eventually around you know 100 people or so and for you know at the time I think only a five or six million doll business we went after the the midmarket before we really were ready we

didn't even really know what they wanted um and I'm going to share what started to work there but I think one of the biggest issues that we had was the speed at which we moved in the early days to build features and ship started to uh it started to slow down we started to kind of buckle under the weight of technical debt and Legacy that I didn't have an experienced engineering leader who really knew how to scale us past that um but I'll get there I'll get back

there in a second what I want to share here is you know what started to work for us as we moved up Market because we had the problem that a lot of companies have I think we talked uh you know heard Adam Robinson earlier today talking about the 10% churn you know we didn't have churn that that was that bad but as with all self-serve um you know small businesses free trial motion churn starts to eat away at your growth overall right even if you're at a two or 3% you really want to get that down low but it's tough when they're small businesses and it's a low

price point so when we started to experiment with um building a sales team and having you know going after larger businesses we you know I made also the mistake of basically just like hire a team and a VP a sales to figure it out instead of trying to learn that myself and try to sell deals myself but um after a few false starts what started to work for us is you know we realized that the product had to change significantly so larger businesses were mostly interested in like how does it integrate with

Salesforce and do you have SSO and what's your security policy we we had to check a lot of boxes in order to win deals and it took us a while to get there the other big thing was our positioning um you know we heard Eric talk about that in terms of pendo like how they'd position against competitors and what we realized was that you know the customers who bought proposify to send beautiful proposals and get faster sign off that messaging didn't really resonate with the mid Market because they're like we have cool PowerPoint

decks like we know how to send proposals what they really wanted was control right sales reps using the wrong materials sending out proposals with Stakes the management team not really having any visibility into what's going out the door and getting in prospect's hands that's what they were buying and so once we shifted our positioning to that sales became a lot easier um and then the the third really big thing was pricing so we did again the classic startup mistake of like put everything on the Enterprise plan um

give it all away and so we were just capping our ability to sell larger deals once we were you know moved to a per seat price um that also became easier and we went from you know being able to sell at most a $3,000 a year ACV contract up to now where we have a couple in the six figure range but average would be more 10 20 30k deals so that that started to help us and what you know when you look at this graph what you notice is this is the black lines the total AR growth of the company

um the orange was the small self-service segment which grew and was you know the majority of the revenue for a long time but then that started to decline and the um you know the other graph ended up being like stuff that came through the sales team the midmarket deals started to almost U reach the same amount in terms of ratio of Revenue but you know what was happening was because we raised we didn't raise a massive amount but we raised enough and

we deployed it too quickly we were at a point where we were just burning a lot of cash but still not growing fast enough we weren't moving quick enough from a product perspective and there was just friction between every Department like sales was pissed that engineering wasn't delivering things faster and um you know customer success were frustrated with products so there was a lot of internal friction happening you know as I mentioned our our growth was pretty good during the

the early days um but really we noticed the rate of growth started to decline and we got to the point where we because we weren't moving fast enough on product to stay competitive you know Nathan said just before this it's a competitive space contracts we didn't feel the effects of it right away but we were starting to feel this this compounding of really not changing our product a whole lot um you know we were sort of in this game of like whack-a-mole where you know

you we were just in maintenance mode the engineers were just keeping the lights on but we weren't innovating anymore um and there was no quick way to fix this for for a number of reasons it felt like the more people we added to the company the slower we got and I think we were AC a lot more like a big company than we actually were right we had too many layers of management um we had managers with like one or two reports like we we were just buckling under the weight for how small we still

were and so this is the burn chart you see in 2021 we raised or that was the last time we raised a round of investment and we were just like okay let's let's add more people to the company because that's how we're going to move faster um and you can see at one point we were actually burning 400k a month which you know it depends on your size right that might not seem a lot if you're 100 million AR but if you're under 10 million that's a lot of money to be burning you know the other thing that happened here with with growing

headcount too quickly was really like the organizational debt we talk about technical debt but organizational debt cultural debt starts to build when you're not winning and there's all of this misalignment between departments and what we realized was like our values weren't really serving us anymore the values that worked in the beginning were you know people were reluctant to have tough conversations people didn't like to hear the word performance or accountability right it was kind of um

an overly positive culture where people got used to losing right and so we wanted to fix that finally in 2022 so you know around this time um actually in 2021 I brought on a COO and CFO Cathy um who's who's really amazing and she kind of looked at what we were doing we had this you know huge burn rate she looked at the growth and she's like you're running off a cliff like you're going to be dead in nine months if you don't change something had to make one

of the toughest calls but also one of the easiest and most logical calls which was we had to reduce headcount quite substantially so January 20 um 22 is when I had to cut a quarter of our staff and announce that and obviously this helped us you know longer term just be able to survive and keep cash in the company but what it also started to do was serve as a organizational shift if you will um you know we obviously had less people so we had to do more with

less but it also meant that people who didn't want to who weren't on board with that approach um were going to move on and we weren't going to backfill them and managers moved on we you know we didn't we weren't quick to fill seats because we knew that we wanted to get to break even cash flow and eventually profitability um but we we had to fix a lot in the company first so we introduced new values um you know that's easy to say on paper very hard in practice to model them and

actually change Behavior within an organization but we started to get back to our scrappiness that we had uh at the beginning now fixing the product was still very difficult and we still had a lot of technical debt and really our Engineers had gotten into this state where you know it was so hard to change things in the product that you know you'd spin your wheels for a few Cycles come out with not really a working solution and just move on to the next thing because you did like I don't want to invest anymore in this so we had to

get out of that um but this is where we get to the point where I started at the beginning which was at this point I was so checked out you know and I was so demoralized that I just started to kind of you know get interested in other things and I didn't really have my head in the business as much and then you know when it when all the doors closed so when I tried to sell my company and nobody would buy it and basically I was trying to hit the Escape patch I got to this point where you know

there was no other doors to to go through there was one only one door in front of me which was like you've got to fix the business this is the only path in front of you and I think in hindsight that was probably the best thing that ever happened to me because what it did was it reinvigorated me and you know I think a lot of Founders who want to sell their business you know they think about what they'll do with that capital in the future like I'm going to buy a bunch of other businesses and help them improve and help them push through growth challenges and I just thought like how could I do that for somebody else if I

can't even do it for my own business right like how do I actually develop those skills and get that experience so I started to become grateful for the challenges and I thought what better place is there to work on um you know fixing an 8 millionair our business rather than starting over from scratch or starting with a much smaller business so only this week we we you know we we've been talking about founder mode I know we weren't calling it that you know before this week but that's essentially what I started to do is I started to get

my hands dirty again um my vpa product quit my vpa marketing quit I didn't replace them I just got in and started running product and marketing again um just like in the early days so I was just starting to get my mojo back and then in 2023 um we you know we went from burning Millions to actually being profitable mind you not by very much about 58k in profit um but still not burning which was a good place to be we didn't have to

raise more money we knew that we could at least least survive indefinitely if we had to now we had to fix the cultural debt so I talked about we formed new core values we started to you know make radical cander in actual value like we have to have tough conversations we have to be able to challenge each other we had to build the plane while flying it right so we Engineers want to model the perfect solution that takes two years to build no we had to figure out the shortest path to Value um we had to

start experimenting more so we started to try to create more Nimble culture but my you know the problem was I still didn't really have the right engineering leader because I had had my early CTO who was just a good developer and hadn't managed anyone before who kind of got us to this place but then I swung too far in the other direction and hired an engineering leader who was much more of a middle manager and really didn't know how to get in there and AFF change and I also let those people stayed way too long at the company right

like when I knew it wasn't working out I kind of avoided making that hard call but I did know we had one developer who had come in and he was really different than everyone else he's from Quebec his name's Matthew and he was just able to like you know we we were losing deals because we didn't have single sign on and you know every you you'd go into jir and you'd find this ticket a mile long with all these comments of like why it's so hard and we can't do it and there's too much

technical debt and he just comes in and like in a week he's just like here's your working proof of concept it works we're like how'd you do that he's like I just got it done so he started like unlocking things within the product and eventually I was like Matt who trained you like who was your boss before he goes oh you should talk to him his name's Mark Mark lome he's also french guy from Quebec and he had worked at like mind geek and like worked at scale before but also worked at startups and I

had a couple conversations with him and I quickly knew that like oh that was the missing piece I just didn't have the right engineering leader so I brought Mark in said goodbye to my old VP and he's only been at the company a year and it's had a transformative effect so you know one of the things that he did was he he brought this you know mentality of shortest path to Value right it's like become his catchphrase he's got a little slack icon for it it's

really just helping the developers go like okay what is the shortest path to solve the customer problem and then we can go and figure out how to add to it and make it more secure and scalable and all that kind of stuff very easy to say very difficult to change and Coach that mindset within your whole engineering department the other thing he brought was a technical Vision so Engineers were always complaining we can't change the product because there's too much technical to that there's too much Legacy he was able to say okay here's what we're going to do we're going to you know break certain things out into microservices we're not going to get too

you know we're not going to add too much complexity we're going to use event driven architecture like he actually knew what scale looked like and he was able to find opportunities as as we rebuilt our product to bring that new um engineering mindset but also technical architecture to the product knew that we weren't going to just stop building features and just you know start addressing technical debt knew that we had to continue to ship value to customers so it wasn't overnight you know it wasn't like everything changed but very quickly we

started to make progress we started to ship faster and we started to notice the Improvement and so just about a month ago we launched the version three beta of our product which has completely rebuilt um the front end from the ground up and IT addresses a lot of long-standing issues we've had about product stability and ease of use now I would love to say we're completely out of the woods and we're you know we're skyrocketing to 100 million we're not quite there yet um in fact the last two years you know have been 2023 we

declined a bit we've been flat this year but I am confident that we have you know I have a a bigger Vision now than I had about five years ago go um that I believe could take us to 100 million if we can execute it and I feel like we've got the right team and the Right leader to be able to do so so I know I've only got a couple minutes left I just want to share a couple takeaways um because I know my story wasn't like how we grew to 100 million in five years it was much more

of that long slog of you know building a SAS company and being sort of bootstrapped and sort of funded but really the you know one of my biggest unlocks was solving for your biggest constraint like how often do you know what really is holding you back from growth and it just feels like it's too difficult or it's too hard to fix so we tend to go to other things and we go to things that feel easier and feel productive instead of staring into the abyss directly you know and attacking the biggest problem that's that's

holding us back and if we're in SAS you know you hear people say oh product is um you know it's so easy to build product now ai can write your product it's all about sales and marketing I don't believe that for a second I believe that if you're in the SAS business you're in the product business you know you can't outm Market or out sell a week or a mediocre product especially when you're in a competitive market um where other competitors are innovating at a fast rate um and you know leaders are your

leverage right like if you're not if your department isn't functioning oftentimes we hold on to people too long or we hold on to leaders and think well maybe in another quarter they'll have figured it out and you know I've just learned this lesson I have the scars to show it time and again is that you know when it's the right leader because within 90 days something will change they will pick broken glass off the floor right you know some changes are more systemic and take longer to action but a great leader is going to make is going to do something within the

first 90 days that show you that they're the Right leader for where you're at in the business and then finally you know as we know SAS is a marathon and not a Sprint and when we look at these Founders who grew to 100 million ARR a lot of times there was five years of zero uh you know revenue or sub five million in revenue and so that's what I'm embracing now is I'm not trying to fast exit I'm not trying to get to a certain Revenue Mark and and flip the company I'm really building for the longer term and if you as the CEO aren't

the biggest cheerleader in the business if you're not the most passionate your team will feel that too and I realized that when I wasn't passionate um I was letting the whole company down and I was expecting somebody else to figure out instead of taking the range myself and I think you have to do whatever it takes to get your head back in the game like I did so I want to thank you guys I hope you got something valuable from that and love to chat with you