Ladder

Michael Taylor talks about bootstrapping and iterating on his business to find the ideal target customer and grow revenue to $150000 a month.

Tell us about yourself and what you're working on.

I'm Michael Taylor, Chief Product Officer and Co-Founder at Ladder. I build tools to help startups grow without wasting time or money. As well as offering these tools on a self-serve basis, Ladder has a full-service agency offering where we work with startups and large enterprises launching new products.

Over the past 6 years I've spent $25M on marketing and worked with over 100 startups and larger companies, so I've seen (and made) every mistake it's possible to make when it comes to scaling your marketing campaigns. Ladder is my way of helping others avoid those issues.

What's the story behind your business, Ladder?

It was August 2014 and I was in the middle of relocating from London to New York with my girlfriend (now wife — yay!). I had to quit my job at ShopStyle to make the move, so I planned to just do some freelancing till I found my feet. My boss at the time, Alex Emberey, offered to ask around his network and see if anyone needed marketing help.

Within 24 hours he came back to me with a proposal: he was going to quit his job, too, and we were going to start a marketing agency together. Even better, we were going to be incubated by a large ad agency (BBH, part of Publicis Groupe) who were going to help us with office space, incorporation, and branding, plus they already had 5 clients lined up for us.

Within the first month we had a pretty good idea of the problem we needed to solve. We were usually one of 3-6 different consultants/freelancers our clients had hired, all with different specialties, goals, opinions, and financial arrangements. Because the founding team typically had no marketing experience, they were also usually getting a bad deal: either being charged too much or buying services they didn't need at the stage they were at. We started calling bullsh*t, helping them trim the fat and be more practical, and they just started handing everything over to us piece by piece.

We were generalists rather than specialists, so we could do just enough to solve any problem they would throw at us. And that's all they really needed: not deep (expensive) specialist advice, but just someone who understands how all these different worlds worked and how it all fit together; mostly someone to stop them from doing anything stupid.

We each owned our own clients, so they were dealing with one person instead of six, which they loved as it was less distracting. Because one person worked across everything, we could take learnings from one channel and apply them immediately to another with no silos or communication overhead. Performance skyrocketed and we quickly expanded.

The expansion was too quick. We didn't end up keeping enough of our clients because our model wasn't quite right. From there we spent about a year going through several failed iterations of the business. This was a painful time as we had to let a number of people go every time we'd fail, and we were killing ourselves working 80+ hours a week just to break even. One saving grace from this period was picking up a third co-founder, Jon Brody, who had done this twice before and really helped us get a handle on things.

Eventually, just through sheer exhaustion I think, we focused on servicing one persona (seed stage startups looking to hire their 1st marketer), with one business model (retainer fee for 3 growth tests executed per week) and one USP (grow your business without the guesswork). Within a few months, we turned a 30% profit. After an initial spike in churn where we parted ways with clients who didn't fit the new model, our clients stopped leaving us and started referring us new business. I remember thinking, "So this is what product/market fit feels like."

Soon we had enough float saved up to hire our first developer (Adrian Slipko, now our CTO), and we started building our platform — a marketing planning and recommendation engine — which we launched in January 2016. We've tripled in size since then to $150k in MRR (95% is still agency revenue, but tech is growing faster) and 18 full time employees, and raised a small funding round in July 2016 to fund further expansion.

Can you share more about the tech part of your business?

The dream we're chasing is to build a fully automated marketing plan — a recommendation engine for growth. Most marketers try what worked for them in the past or what they read in a blog post; they either get lucky or fail. If we can expand the range of tactics they can choose from, and automatically prioritize those tactics based on our data on what's working for similar businesses, we'll be able to help them grow faster and more cost-effectively.

We're currently about halfway there. We have a drag-and-drop marketing planning tool with over 1,200 proven growth tactics across every marketing channel and funnel stage. Now our challenge is to scale the number of tests executed within our platform and connect to other marketing platforms in order to build a larger data set to be able to make those recommendations accurately.

We currently have 200 active users and ~$7,500 in SaaS revenue, though about 100 of those users are currently in their free trial period, and many of the rest are agency clients or staff.

Our CTO Adrian built much of the initial product himself (he's an absolute machine!) using the Meteor JS framework. The design came from our product designer Ivan, who we work with part time. Just before the fundraise we hired Maciej, our second full-stack developer who's giving Adrian a run for his money. Recently we took on a QA tester Piotr, who has been (necessarily) ruthless in catching our mistakes.

The major difficulty in growing an agency whilst also building a product is focus. Initially we just tried to automate everything we do as an agency, piece-by-piece. However, that lead us to a pretty complicated and difficult to maintain product, with a limited user base (i.e. just our agency). Now that we've raised funding, we're re-focusing — paring everything back to nail a couple of main use-cases and make it less complicated and more useful for self-serve customers.

We talk about our product as a key part of our pitch to every lead we get on our website (through the marketing efforts I described earlier). If they want to manage everything in-house, we talk about the product. If they need someone to execute for them we talk about the agency with the product as our main USP. Interestingly, because we have a product, we're getting to talk to people who would normally never work with an agency. Because we have an agency, we're able to take on enterprise deals that most product-only companies couldn't handle. We're pretty excited about where this hybrid tech + services model could take us.

How have you gotten the funding to work on Ladder?

We actually signed our first three contracts before leaving our jobs, building a website, or even creating a pitch deck. As first-time founders with limited coding ability and no connections to VCs or other investors, bootstrapping was really our only option. Though this route was pretty brutal at times, it forced us to be disciplined and operate defensibly, ultimately making us a stronger business.

It was important to us that we were solving a real problem. To me that means people will pay you enough money to profitably solve the problem for them, and are so happy with your solution that they stick around and refer other people to you. It took us a year and a half of hard work, research, and soul searching to get to that point. It's also a pretty big ego boost to be able to pull money out of thin air, using only your wits and hard work.

I don't think people talk about the psychology enough, but as an introvert, I've found that confidence I earned through bootstrapping is incredibly important to me when trying to close an important deal, make a big decision on product, or survive those "we're f*cked it's over" situations. You can tell yourself everything will be ok, even if you have to start over. Once we had something worth doubling down on, we focused really hard on hiring smart people to do parts of the job for us and we're almost at a point how where most of our time is spent working on the business, rather than in the business.

What have you done to grow Ladder?

We'd be a pretty awful marketing agency if we couldn't run our own marketing, right? ;-) At first we won deals through hand-to-hand combat; basically showing up at events and saying smart things at people and persisting until we found someone willing to pay us.

Eventually when we got the model right, we started getting referrals and doing deals with larger agency partners. BBH was great on this front. They really opened up the floodgates once we figured out the best way to work together, and most of our Fortune 500 clients continue to come through them.

As soon as we could afford it, we launched Google AdWords campaigns, which now bring us 2-3 deals at $600 per closed deal every month like clockwork. We also do a lot of cold emails (yes, they actually work!). We also had a successful launch of our playbook on Product Hunt, which drove 80 new product users, 30 agency leads and 750 newsletter subscribers.

More recently, we started blogging and developing a content strategy, which brought us 14 new leads in month one alone, and has driven over 300 leads since. Content has become our highest-priority growth channel.

January Audience
Content Drilldown

Everything is automated; our leads get a series of drip emails that qualify them and warm them up before we talk to them (we get notified in Slack when it's time to reach out). We know the value of marketing as a revenue generator, not a cost center, so we invested early and heavily. We plan to scale it as quickly as we can afford to.

How have you grown your revenue?

We've tried everything. Flat fees, performance-based contracts, hourly consulting, day long workshops, % of ad spend. A retainer relationship was really the only thing that worked for us that didn't give us bad incentives to distort our work like other agencies have to do.

On top of that, there were three core things that helped us charge more (and be worth it): process documentation (much of which you can find on our blog), expectation setting, and a focused target persona. Once you know exactly who you want to work with, and how exactly to work with them, you can set clear expectations and charge a premium.

Once you have those things nailed, everyone is happier. You make more money, your staff know how to do their jobs, the client gets exactly what they wanted, and anyone that would be a poor match gets weeded out early on, before you both waste your time and money.

If you had to start over, what would you do differently?

Back in year one, we were spending 80 hours a week trying to service clients during the day, and working on product ideas every evening and weekend. Now I look back on it, almost all of that effort was wasted. Most of those pitch decks never even saw the light of day.

If I could go back, I'd waste less time dreaming hypothetical ideas, and spend more time talking to potential customers and testing ideas in market using Facebook ads and a makeshift landing page. I know enough code to speak to a developer and not sound like an idiot, but I believe being fully fluent enough to build a prototype from scratch would have also saved us a lot of time and effort before we could afford to bring technical talent on board.

What have been your biggest advantages?

Rather than being a weakness (as most people expect), being international from day one was huge. I could throw work I hadn't finished across to Alex in London when I clocked off at midnight, and have it ready and waiting for me at 7am the next day when I woke up. And of course he could do the same for me.

Although we wasted a lot of time dreaming up product ideas that went nowhere, I think we would have wasted much more time on that had we been in the same room. When Alex was sleeping it gave me uninterrupted time to settle into the zone and tackle the really difficult problems, and I'm sure he appreciated the break when I went to sleep! It also forced us to write everything down, which helped us onboard new staff quicker when we did scale.

What are your goals for the future?

We built our product for ourselves. Unfortunately, when we released it into the wild, we found out there weren't that many people out there like us. The same unique process and principles that made us so unique and effective as an agency made our product too complicated for the average potential user. So a big focus for us is getting to a true "self-serve" version that an unsophisticated user can understand and get value from immediately.

We'll be most of the way there with our next release, which features a fully fleshed out bot onboarding system. After that, the focus will be on connecting all the other tools marketers use to our platform, to eliminate as much context-switching and manual work as possible. On the sales side we're already well on our way to crushing our 2017 goals, so it's just a case of keeping hold of the tiger's tail.

What's your advice for aspiring indie hackers?

Your business is only valuable if an idiot could run it. Work as hard as possible to automate and delegate as much as possible. You'll be surprised at how inessential you really are, and how smart your team really is when fully trusted.

The good thing about being an owner of a business is that you don't get fired if your job ceases to exist. You get to assign yourself a new, more interesting job, and your business grows in value. As soon as you start down that road, you'll see how hard it is to automate anything that isn't written down first. Once you see that and start trying, you'll realize how hard it is to write down everything you do. Then once you realize that, you'll recognize the value in focus, and cut down the scope of what you offer.

Counterintuitively, by doing less you'll notice you end up making more money and growing faster. I was told this many, many times before I felt enough pain to actually internalize it.

Where can we learn more about you?

We're really transparent with everything we learn; you'll find everything on our blog: blog.ladder.io. If you're interested in working with us, submit your email on our website and we'll get back to you: Ladder.io. Reach out to me on LinkedIn or Twitter if you have any questions, or below in the comments.

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