Fireside chat with Bridget Harris and Alex Theuma - How to take care of business: 5 lessons in bootstrapping to $5m ARR

there's no fire no chairs no chairs no no far side chat a great intro we're gonna have to do it Alex just standing up standing Fireside it's gonna be a stand-up Far Side sit-down chat how's everybody thanks everybody for Friday afternoon sticking with us here um excited to be on stage with Bridget Harris yeah fastest no today uh we've got to give Bridget a round of applause here uh she made it to the number 30 in the e2e

uh female 100 fastest growing uh I guess in the UK so well done too well done it's giving her a bit of credibility due credibility uh as to the the subjects here Five Lessons in bootstrapping to five million ARS do we have many bootstrappers here I think there's a lot of bootstrappers at this conference I'm gonna say probably about a third of you to wear two bootstrappers so we can talk about that uh I'm at five million but

not in ARR in dollars you're a five million era dollars or pounds uh dollars but like we're kind of heading towards the pounds depending on the dollar Sterling parity you know it kind of changes but yeah and I'll be running SAS stock which uh helps SAS companies get to 10 million in Revenue throughout conferences uh on memberships and media uh Bridget running an actual SAS company so I think more uh Pearls of Wisdom coming from Bridget uh uh today in the

next 20 minutes then uh than myself but uh let's talk about it Five Lessons we've got 17 minutes uh plus we want to take some questions uh as well so first lesson uh is around timing so like who who what uh when to to buy your product right well yeah the question about timing is intrinsically connected to whether you raise money because if you're going to go for a kind of product that requires a lot of upfront investment to do with

compliance or maybe it's it's got some Hardware Association you've got into manufacturing or you need to do a huge amount of customer research in order to get the right thing then your timing is going to be really affected by your choice to bootstraps you see thank you how effective bootstrappers are at getting what we want so we can we could do any stage but we can also eventually things that you need arrive we can do what we want because we own the company exactly um so this is what I would say and my

experience of bootstrapping and I want to hear what you think about your timing for for because you were much more in the you need upfront Capital so I want to know how you did it um it just so happens that with our products we were doing online scheduling it's a drip drip it's a self-service it's a freemium so because of that and also we started about 15 years ago the timing for us to be able to stretch that out over a long time when you're really earning very little now for context to get that 5 million we have over 20 000 customers so we have a lot of small people Small Engines small amounts of

money powering what we're doing so um it takes a long time to build that up um so if you haven't got the time to do it then that's really helping you define whether you can bootstrap or not but what about you Alex yeah I think for me I mean SAS stock was a side hustle obviously before it was a a revenue generating business I spent 12 months building an audience inadvertently maybe maybe a bit more sort of credit uh uh

around that but um 12 months doing that I think six months of those 12 months I was working full time somewhere else working from home so I had the time to work on the side project and after 12 months of not being Revenue generating I had an audience that I could then sell tickets and sponsorship into so we were then customer funded after the next 12 months yeah I mean it your Runway to get up to speed where you're hiring people you're paying

yourself and you're feeling good about it then that's the point to take on a financial partner who's going to give you some of that upfront cash um but right now you know the the first the first product that myself and Keith actually launched my co-founder and CTO was literally in 2003 and it was a survey building tool it's called tickboxer.com that we sold the domain since then um it was exactly like Survey Monkey but we just realized in order to get people to use our survey building tool we

needed a lot of upfront Capital to invest in the marketing and the awareness and the brand we couldn't do it because we didn't want to take on money and it's as simple as that so we we dumped the product so as soon as we got you can book me where we could see that natural viral growth rate essentially and we had the patience and timing to do it second lessons around skills what skills that you have as the co-founders versus what do you need to pay for and bring it to the business so again it's the same

sort of thing versus upfront funding if you have the money you can buy all the skills fantastic if you haven't got the money you then got to look at your internally what skills have you got and my view is that you've got three core things that you need inside a product a SAS product like ours you need engineering CTO somebody who's actually going to code you need operations and finance somebody's basically going to deliver the business strategy and then

you need some kind of creative designer product owner or somebody who's going to sort of shape that product over time basically me and Keith had the had the first two so he was the engineer and I was the operations person and you see that today 10 years later in the in the company it's a very engineering and operations-led Company that's taken a while for us to move across into more product and design LED sort of set of priorities so you can get a lot of people but I don't I've never met somebody yet who's one person who's

all three or two Founders you either get three co-founders with those skills or you have to buy in now I would say actually nowadays it's probably easiest to buy in Tech ironically engineering because there's so many Fantastic agencies that do it as long as you've got a very good strong product desire you can basically hire people to do that for you um but again can you bootstrap without one of those key leading skills um how are you going to pay for that skill

um and whatever you can't pay for you're going to create debt so essentially you're going to create technical debt or customer debt or product debt or some some form of cash debt how are you going to do it so cash debt is borrowing money from a from a from an investor to um or any kind of borrowing money that's cash debt if you decide not to take cash debt because you want to be customer funded well then you're going to probably take on debt by one of the other pillars talk about

um hiring then so obviously we talk about the skills what have you got what do you need to buy for a paid to bring into the company so when you're hiring um you know I guess kind of like what stage do you know like what sort of roles and how much you're going to pay to to bring I mean amazing point and I was talking about it with Angie today so it's huge um Everybody Makes Mistakes loved what Becca was saying about hiring and how to essentially diversify and think about internationally who you can get there's

some incredible models out there now of people who've just decided to not employ anybody directly and they just go straight to the freelance market and only get Freelancers and they put a um you know Gum Road is based based on that model um and actually Angie this is really what I was trying to capture in what we were talking about earlier today the minute you start hiring and employing people you're introducing culture into your company so you have to decide what that culture is going to be and how that's going to grow um so what you pay them and how you how

much you can afford is is is absolutely embedded and baked into it so my view is pay as much as you can a sort of minimal acceptable um offer for people don't pay them the most you can as soon as you realize that they're going to offer you value and they're going to keep helping you build your company keep paying them internally to keep incentivizing and supporting the people internally who work for you um and also to stay Market relevant but you've got to do it within your

bootstrapped boundaries and don't do and I we have done this before believe that if you could just afford to pay somebody 150 000 a year and you sort of bring in some kind of six figure superstar that they will then have this transformative effect I've never experienced that I've never experienced the idea that by going out and paying you know a huge salary I'm going to get a 10x person to come in all my 10x if you like people who work for me now who are on good salaries they

all started joining the company on fairly modest rates and basically work really hard inside the company to get to that point where I realized just how powerful a team we are because because of it but you you have to do that through culture not just not just direct hiring yeah I think I mean slightly the opposite for for us I mean obviously again we're not a SAS company but you I feel like we over the years and you know we've been running for eight years um as a bootstrap business we haven't

really been able to pay like you know uh competitive you know super competitive uh sort of wages um and we probably not I wouldn't say underpaid we pay well for all the industry that we're in I'm not applying for a job by the way yeah no no no no it's okay um but yeah I think only sort of like recently you know in the eighth year are we now you know paying top dollar for you know senior leadership roles and we are seeing you know personally like a

10x difference you know in uh I guess uh these expensive uh sort of folks but is that that's a disadvantage for bootstrappers generally would you say so you absolutely and I think in some ways you just have to be kind of confident about what it is that you're offering somebody and it's not the case that every single high performing person wants exactly the same thing it's relative to all these other other things in their lives so you know you can find

people who they actively like um you know you can book me's brand if you like as a company it's pretty clear I think it'd be pretty clear to anybody who wants to come and work for us what they're going to get they're going to get a small company because we basically um you know we we have um we have kept a lot of control over the size of our company deliberately pretty much to reduce the sort of stress on us as Founders um I mean look at Becca she's running a company with 150 people and she's you

know she's dressing up as a unicorn like there's a kind of you know you have to find find your strategies through and and um I personally would find it very stressful to to run a company with a thousand people so there's that so we're small we're remote another big differentiator well not so much now but a big differentiator um is to be remote we're bootstrapped we're profitable we pay out profit share we are very transparent inside the company and we did we document all of that so we do it very deliberately so that somebody the aim is for somebody to

look at our website and go ah those look like my people I want to go work for those people now when you when you get to that situation you then really want to be able to say what we offer is fair it might be above market rate you might also get some extra in terms of bonus and profit share it's a package and so I don't know if any of you were watching me last year in Austin hands up anybody was that was the right hi of course hi everybody um but that you know I was talking then about profit share so you end up introducing other parts of your company

that you can incentivize people to be a part of also don't underestimate the power of the offer to say you have an opportunity to really change something here you can come in here is here's here's the way we've laid it out because we've been bootstrapped we're not under any pressure to kind of deliver to an external person's criteria we can build something that we really want so one of our internal cultures and culture statements is um commitment to Excellence so that's that sometimes does mean we're going to rewrite something or we're going to drop it because it's not

good enough and you know we have we have a quality control that matters to us um we're not just move fast break things hack it move on it doesn't matter let the customer down let's go let's go let's go we don't do that um and there's some people where they know they've got an opportunity to make a real impact and that is just as important as their as their salary lesson number four with cash is King what does that mean in I guess the bootstrapping terms and your experience cash King I mean my God if there is anything

um that anything anybody that doubt after last weekend's svb meltdown um you know they won't now you've it's it's all and actually as a bootstrapper and we had money in Silicon Valley Bank I was I was indignant about the idea that my money that we had earned from customers customer money basically hard-earned customer money was in a bank account that was potentially going to be lost or taken away or gone towards some

kind of loss I was apoplectic about that um so you can't run out of money if you're a bootstrapper so we didn't raise cash but we did borrow money we borrowed we had we got Banking overdrafts and credit cards private loans we we did it um you have to watch how much money is in your bank account it doesn't really matter much how much profit you're making how much you're earning you just can't run out of the money I've never ever not made payroll for the 12 years we've been running the company and there's only one way to do that which is financial literacy so one of the early

things that I did when I realized that we were bootstrapping for real if you like people as soon as you take on people you're responsible for their Financial Security as well as your own your companies um I went on a financial literacy course I basically learned about how profit and loss Works how balance sheet Works how working capital Works um so I run my business it's a business it doesn't it's not necessarily A SAS company or anything else it's a you know you're the same I mean your your overheads must be absolutely enormous in

terms of being an event organizer so I can't imagine um you know our gross margins are very very good because they're so it's a software company so it's pretty simple to run but you've got to be you've got to be confident about what you're talking about uh one of the you mentioned actually sort of earlier uh that a book that you read whilst you're bootstrapping that's helped you was Venture deals that's right why why was that so again I would say to any founder who's thinking about being a

card maybe maybe I would just say that's fine that's completely legitimate but you've got to be educated around the table if you're going to take money from a BC and I read about 10 years ago Venture deals whatever it came out read that book because um it will tell you exactly how deals are structured what the incentive of the VC is and what business that they're in and it's a really great business um it's a legitimate business but it's not necessarily got anything to do with what you've decided to sell as a product so um you just have to educate yourself

about what venture capital and corporate finance is about and they're not your friends you know what they're doing is they're making money from your decision to go into business as an entrepreneur and make money and that's a different thing and you it might you and oh sorry my view would be you know exploit them if you need them if you need them for upfront Capital if you need them for an investment exploit them because that's what they're there for but don't think that they're doing you a favor and the only way you're going to learn that is by reading the books and that's a great book um we've got two minutes the final

lesson was around boundaries so separating your personal boundaries from your business boundaries yeah you can share a bit more around that well that again is a reflection of what happens if you're bootstrap you don't have this external pressure which is obviously a good one because if you've got you've just taken on 10 million quid from somebody they're obviously going to be hovering around making sure you're not going to spend that on Suites so you've got this accountability for your business it puts you into a different role whereas if you're bootstrapped you can say well I don't know if it's my expense card or if it's the company

expense card doesn't really matter it's my money um you can you end up falling into patterns potentially around 24 hour you know obsession with your business and I just think it's going to take you longer to bootstrap a company um so you're you're signing up for 10 15 20 years of your life if you don't put in boundaries soon enough um you know it could you'll burn out like anybody else there's nothing special about bootstrapping so my experience is I'd always bootstrapped

however whatever pennies we had whatever peanuts we had in our bank account but you can book me it was always separate financially separate to my personal expenses and that way it just gave me some mental clarity about what I was doing any questions from the audience in the time that we have left anything for Bridget to the on the right first yeah we used uh

[Applause] as well we're similarly sort of you know largely bootstrapped entirely with scrap SASS and sometimes the growth is slower than you would like yeah and then you see other competitors in your field are well funded and going very quickly I'm just curious if you ever feel pressure from like the calendlys of the world or whomever else um well obviously sometimes you know you get you when you're a business owner you're you never lose that kind of fear that something is always going to go

wrong and and you know you've got to take care of it at the same time you have to be philosophical like apart from anything else the perspective we were in business before calendly we've been in scheduling for a very long time and we our goals are different because we're bootstraps so I don't need to be a 200 million pound company in order for actually everybody who works for us and our customers to be super happy so you know I'm glad to see obviously Dingus and Sassy are in the room as well your money that's in our bank account that was in svb that we're protecting here

like my relationship is to you guys it isn't to anybody else if calendly comes and um or any other scheduling tool chili Piper we're here like those guys there they're absolutely fantastic you know we're all in the same business to try to serve customers and our primary relationship is with the customers who currently buyers and then our Market and growth opportunities to try to persuade others and you just have to be self-assured I think you I don't you can't go into business and be an entrepreneur and be worried that your idea is is not good enough or somebody's

gonna take take it away from you you have to basically be a bit of a you know like basically be a bit cocky just like I think we can probably do anything if we wanted to you know you just have to go in there and say yeah they're great and they've been well funded and they're doing whatever they want to do why is that why has that got anything to do with my ability to ship tomorrow and do the customer feature that somebody wants and to basically run a successful business and and have lots of money in the bank and and keep everybody happy like they don't they don't have to affect me and I think you that that's

another way of grounding um you know being sort of strong boundaries I would say that resistance to pressure from competitors is a strong boundary that doesn't mean to say you don't pay attention but you do need a boundary maybe one more yep it's a quick one um what was the name of the book that you mentioned everyone should go to the table the BC table understanding oh when two deals Redfield Venture deals I mean it just it kind of lifts the lid on it it and this

actually I had a lovely chat with a guy I don't know if he's here Jim who's Adventure he's a growth Equity guy he was he's a he's a guy you know turning up to these events specifically to try to attract companies to invest in he said listen Macy's tried to give you too much money because they're basically trying to run down the fun they're trying to write big checks if they tell you they're going to give you a million they're going to try to make you take 5 million because they're just basically you know their their objectives are different to yours he said bootstrap for longer don't take

as much money work out what you're trying to do first you know work work out how you're going to make money from customers before you take money from VCS because often in this world people announce funding Rand as if they've just made some money it's like no you haven't you've just either sold a bit of your company or your customers become your VC or you've now just you know entered into some enormous debt structure and finance structure where if if you are under pressure you might have to pay that VC back three times whatever they've given you before anybody else gets a penny and

I think you just have to be literate about that because it is it is a perfectly legitimate form of Finance obviously found a pathway here as well and all these other guys that are doing some incredible work to give I mean if I'd had honestly if I'd had found a path I'm not just saying this because it's Nathan's show but if I had to find a path 10 years ago I I was scraping around for 25 000 quid from NatWest you know like on the High Street of Bedford and they were like oh I'm not quite sure I'm like I'm growing at two thousand percent you're like but I just don't understand you're making a loss I know

but you need to give me money and it was just such a headache but I I can believe that if founder path had been around 10 years ago I had to just you know I would absolutely have floated in got a million off we go but you know but I want but I mean I'm not going to give away my company you know um to people who sort of feel like uh in the when they circle around in that first year and they and they and they give you their sort of preference shares and all the liquidation preferences and all the rest of it and you read you read up on it in Venture deals and you suddenly realize the game they're playing

good luck to them well done but don't forget it's not your business it's their business model it's not your business model so I'm actually quite Evangelical about this I realized I wasn't gonna slag them all off but like you know you know what I'm saying cool all right I think we're done let's hear it for Bridget thank you thank you Alex