Hello! What's your background, and what are you working on?
Hi! I'm Tyler, and I'm the CEO/co-founder of Less Annoying CRM (or LACRM for short). My background is in software development and product design, but since starting LACRM, I find myself doing a little bit of everything.
LACRM is a bootstrapped SaaS company based in St. Louis, Missouri. We make a simple customer relationship manager specifically for small businesses. As you may know, there are a gazillion CRM companies out there so the competition is fierce, but it's also a huge market so everyone ends up finding their own niche. In our case, two things that set us apart:
First, our design focuses on the end user of our product (sales reps, support reps, etc.) rather than managers/executives. We focus on making a product people will want to use even if it comes at the expense of automation and reporting which is what the higher-ups normally want. Generally, if a company is big enough that the person in charge of purchasing CRM software isn't going to actually use it themselves, we'll lose the sale.
Second, we invest heavily in customer support. That means customers who are older, less tech savvy, or who just don't want to figure things out for themselves prefer working with us.
My brother Bracken and I started LACRM in 2009. Our team is now 11 people (with two more starting later this year) and we're making about $120,000 in monthly recurring revenue from 12,000 paying users. (Our product costs $10/user/month, so the math is pretty easy.)
What's the story behind how you started working on Less Annoying CRM?
I ended up here almost entirely by mistake. I majored in computer science in college, and during my final year a friend from high school convinced me to join a VC-backed startup he was working at in Utah. I had absolutely zero interest in entrepreneurship, but it seemed like a promising company that was about to take off, so I took the risk and joined. About a year later, funding dried up and almost everyone at the company got laid off (it was 2008, so this was happening all over the place). I was at the very bottom of the org chart, so I was one of the few people they could afford to keep.
Over the next year, I got an insane crash course in entrepreneurship since literally everyone above me at the company had been laid off, including the CEO. Along with a couple other low-level employees who survived the layoffs, I basically got to do whatever I wanted with the company. We didn't know what to do, so we just experimented with the business model until eventually we were able to get the company to profitability. One day I realized that I was playing the role of an entrepreneur, and I loved it. I figured that I'd be better off starting my own company.
I'd worked on a bunch of side projects with my brother, Bracken, and I knew we worked well together. My brother is the most talented person I've ever known. One day, he reached out to me with an idea for making an app to let people make pretend trades on the stock market and track their performance. I didn't care about the idea, the timing, or anything else. We immediately agreed to start the company. I quit my job shortly after that.
It didn't take long to realize the stock-trading app was a bad idea. It would be really hard to monetize and might have some regulatory mess we didn't want to deal with. So then we came up with an idea for an app to automatically modernize small business websites. We decided that wasn't good either. We ended up brainstorming and cycling through a lot of different ideas before settling on one we both liked.
At my previous startup, I'd built a little internal CRM to help our resellers track the customers they were referring to us. Those resellers were mostly independent insurance agents, and when they saw the CRM I'd built, they flipped. Many of them had never heard of a CRM before and loved how much it helped them. I had experience setting up Salesforce for that startup and knew how complicated it could be. Those experiences led to an idea Bracken and I could both agree on: Less Annoying CRM.
What did it take to build and launch the initial product?
Bracken and I combined had all the skills we needed to build the product. He does DevOps and back-end development, and I do design and full-stack development.
I had a pretty good idea of what people wanted from my experience working with insurance agents at my previous company, which allowed us to cut some corners in terms of customer research. We just threw together some rough mockups and then put our heads down and coded until the MVP was done. It took about three months for us to put together a basic PHP/MySQL/jQuery web app that we thought was good enough that someone would want to pay for it. Of course we would eventually learn about all the things we got wrong, but we got enough stuff right that we were able to start selling the initial product.
Given our backgrounds, product was the easy part. The hard part was everything else. We basically had no idea how we would get customers. We didn't know what, if any, legal and accounting requirements we'd need to take care of. We didn't even know where the company would be based at first. (I ended up moving to San Francisco while Bracken was in Boston, and we just worked remotely.)
Probably the biggest thing we had to figure out was money. At my previous startup I saw the dark side of Venture Capital, so I knew that bootstrapping was the only option, but we still had to pay the bills. This meant that Bracken and I each worked other jobs on side so that we could pay our own living expenses plus the minimal costs of running LACRM. This continued for about 3.5 years before we could support ourselves with revenue from LACRM. He was a full-time PhD student for the first couple of years, and then joined a biotech startup in Boston. I was lucky enough to get a gig from my last company consulting/contracting for ~20 hours per week, and I also started a food blog with my mom on the side to supplement my income while we waited for LACRM to take off.
I'm not going to lie, working other jobs while trying to start LACRM was tough. I just wanted to put every ounce of energy I had into LACRM, but I couldn't afford to. This meant the initial launch and the first few years of the business were slower than they could have been. But in my opinion, the tradeoff was well worth it.
What strategies have you used to find customers for Less Annoying CRM?
There's a lot to cover here. I should probably start by saying that we didn't have a "launch" per se for Less Annoying CRM. There was no blog post or Hacker News submission. We didn't have a list of people who wanted to be emailed. I don't even think I posted about it on my personal social networking profiles.
Throughout the entire history of the company, we've never had a single individual thing that resulted in a meaningful surge of new customers all at once. (And we've been at the top of HN a couple of times, it just didn't actually do anything for us.) It's been an incredibly slow boil for the past seven-and-a-half years, and I expect that to continue indefinitely.
When we started, we didn't have any kind of real marketing strategy, but we figured we could get some eyeballs on the site with Adwords. We realized that we were still learning and that the ROI would probably be terrible, but we didn't have any better ideas. And even though we were right about the ROI, we actually were able to afford a small trickle of visitors who eventually turned into paying subscribers. We were at 6 paying users after 6 months, 47 after a year, and 200 after a year and a half. We suck at marketing, so this was a really slow process, but eventually we built up enough momentum that it seemed like this business might actually work out.
This is what slow but steady growth looks like.
There are two key things I learned in this process that no one wants to hear:
First, customer acquisition channels come and go. Adwords was our only source of traffic for a while, but it just got more and more expensive until we had to stop using it entirely. Around that time, the Chrome Web Store picked up. That was awesome because we got a ton of leads and they were 100% free, but Google neglected that project and it eventually became irrelevant. This is an emotional rollercoaster if you're not ready for it.
Now I realize that it's important to have multiple different channels running in parallel, and you always need to be looking for the next thing because your current channels won't work forever. We currently get customers from our blog, our email newsletter, listing ourselves in app directories, using lead generation companies (not spam-type stuff, more like matchmakers between us and interested buyers) and many other things. I sleep better at night knowing that we aren't relying on any single channel.
Second, nothing scales. Like, nothing. The dream is to find some marketing channel where you can buy a user at some acceptable amount. (For us, that's $100-$150 per paying user we get.) Then you have a machine where you can just pour money in the top, wait a few months, and even more money comes out of the bottom. The problem is that with every single channel I've ever tried, even if it works at low volume, the ROI gets worse and worse as you try to ramp it up. It's yet another reason to have multiple channels running in parallel rather than one monolith.
But forget everything I said above. By far the most important factors in our growth are low churn and high word-of-mouth. I really don't know how to market and no one should take marketing advice from me, but once we get a customer, we've had great success in keeping them and getting them to tell their friends. Almost all of our growth is organic. There are downsides to this: it takes a long time, there's no way to step on the gas, etc. But it's way less fragile and more sustainable than any marketing channel I've ever tried.
When we started, we thought the key to making customers happy was building a great product. That's obviously true to an extent, but every other software company is trying to do that too. But there's something that very few other software companies are doing that is even more impactful than having a great product: customer service.
We discovered this completely by mistake, but the benefit we've received by offering fast phone and email support for free is immeasurable. I'd even go so far as to say that the most important thing I do right now as CEO to help grow the business is recruit the best support people possible. The rest takes care of itself.
What's the story behind your business model and revenue?
This section is going to be really disappointing, because there's just nothing clever or interesting going on with our business model. We charge $10 per user per month. We have literally never charged anything other than that to anyone. Some customers choose to pre-pay, but it still comes out to the same price in the end.
How'd we land on $10? It just seemed like a nice round number, and we thought it would be enough for us to be profitable.
This is where almost every SaaS thought leader will tell me I'm an idiot. I always read "just charge more" as the default advice from pretty much everyone who's ever made a dollar on the internet. I dunno, that just doesn't really motivate me.
Thinking about money and profitability and your business model is super important if you aren't profitable. But as soon as your business becomes profitable, then you have the freedom to decide for yourself what you care about. If "maximizing shareholder value" is your idea of an inspiring mission, then go for it. But that's not something I care much about. I know we could make more money if we raised prices, had extra tiers, took credit card info up front, required annual contracts, etc., but I'm making plenty of money right now, so I just don't see any reason to stress out trying to solve those problems that don't interest me.
To me, this is one of the biggest benefits of bootstrapping. There's nothing stopping bootstrappers from trying to make as much money as possible, but they also have the freedom to optimize for other goals instead. The second you raise money from investors, you really don't have a choice.
Ok, I'll get off my soapbox now and end with a couple of random tidbits about the revenue side of the business:
- We didn't have a working billing system until a few months after we got our first real users. We just made up reasons to extend their free trials (like, "thanks for finding that bug, here's two free months") until we had time to finish the billing system.
- We use Stripe for our billing. I really love them, although I personally am of the opinion that it's best not to outsource recurring revenue logic. We handle all the logic, emails, etc. in our code and Stripe is just a dumb API for charging their card when we tell them to.
- Because we're bootstrapped and don't have any plans on exiting, giving out equity to employees would be an empty gesture. Instead, we came up with a unique profit sharing plan that pretty closely mimics the behavior and incentives of equity.
What are your goals for the future, and how do you plan to accomplish them?
Short term, our goals are mostly focused on building out the team, and increasing our product development capabilities. The company has gotten too big for Bracken and I to be the primary coders now. We're learning how to hire and develop technical talent, so we can hopefully polish up our product and put out some key features our users have been waiting on: a new calendar, vastly improved custom fields, a better mobile experience, etc. In the last 1.5 years we've gone from two developers to four (with another starting this summer) and switched to a new React-based front-end framework, so I think we're in a great position to really ramp up product development.
Longer term, it's harder to say. There's definitely a chance that we'll just keep growing gradually (or even plateau or start shrinking) and just kind of keep doing what we've been doing. But I'm hoping that we can go after some grander ambitions.
This is probably a bit of a pipe dream because if I've learned anything over the last 7.5 years, it's that nothing is ever easy, and magic bullets don't exist. But I'm not letting that stop me from dreaming big. The real vision for the company is to eventually put out a suite of different products that can handle virtually all of the technological needs for small businesses. We have tons of product ideas (including mockups, marketing ideas, etc.) but we don't yet have the resources to really swing for the fences.
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What are the biggest challenges you've faced and obstacles you've overcome? If you had to start over, what would you do differently?
I've made so many mistakes over the years, but one nice thing about slow, steady growth is that I've normally been able to identify and correct my mistakes before they became huge issues. There have been multiple times where I made a major decision (completely re-writing the code base in a new language I'd never used before, pivoting the product, etc.) and started down that path, only to realize my mistake a month later and roll it back. If we were growing at unicorn startup speeds, we would have been in too deep before realizing the mistake, and we probably would have failed by now.
Having said that, there was one challenge we faced that I didn't handle well and I'd love to be able to do over. When we started, my brother and I weren't really thinking about hiring people, getting an office, or doing any other "real company" things. We just wanted to make a great product that our customers loved. When it became obvious that we were on to something and that we'd need to start building a team and acting like a real company, the transition was really hard.
The Less Annoying CRM team.
The approach that I took was to try to hire really talented people to own major parts of the business, and just assume that they'd be able to do better than I ever could. I actually successfully recruited a few great people who were clearly better than me and smarter than me (at least within their areas of expertise) and I just kind of thought I could stop worrying about what they were now overseeing. We had great leaders for the tech stuff, marketing, sales, and customer service. My job would just be to coordinate all of them. Simple, right?
Anyone who's done this before is probably shaking their head right now. I was incredibly naive and unprepared. And since this decision involved hiring people, it wasn't as simple as "rolling it back". For two years we tried to make it work. During that time, the company experienced major successes on the customer service side, but tech and customer acquisition struggled. Things just weren't working. Whatever mojo we had before this transition had been completely lost. Eventually, two of the four leaders we hired left the company which was hard to handle, but definitely for the best. I learned a ton from that experience and put together the following list of rules for growing going forward:
- Smart people in a room together don't automatically produce results. As the CEO, I need to lead and enable them, no matter how capable they are.
- Culture and mission matter. It doesn't matter how talented an employee is if they're trying to accomplish things that are antithetical to the mission of the company.
- No one should be siloed. Particularly at a small company, everyone needs to know what everyone else is working on. Collaboration is key.
- Build off what we have. Whether it be marketing, customer service, or product, all improvement should be iterative. Trying to start some projects from scratch killed our momentum.
- Grooming entry-level employees is preferable when possible. This might not be the best advice for every company, but we've found that getting an entry-level hire to fit into the current system and improve it is much easier than getting an experienced person to do that (they're more likely to want to start from scratch so they can do things their way).
- Focus on what matters. Don't start a project unless we can commit the resources to see it through. If we aren't willing to commit those resources, kill the project, because it clearly isn't important.
I can't emphasize enough how important this learning experience was for me personally. As hard as it was, I previously didn't have any discipline or plan when it came to growing the team. Since learning the above lessons, things have been great and I feel really confident in our plan.
What were your biggest advantages? Was anything particularly helpful?
I think that pretty much any advantage any business has can be characterized as something that the business can do that competitors can't or don't want to do. So whenever I think about how to compete with others, I start by trying to figure out what no one else is willing to do.
In the case of LACRM, I think our biggest advantage is the fact that we're willing to be patient. We don't have any investors breathing down our necks, we're not pushing for an exit, we aren't working so hard that we're on pace to burn out, and we're not looking for an early retirement. As long as I keep enjoying this journey as much as I have so far, I'm perfectly happy with the idea of doing this until I'm old (I'm 31 now). Despite there being dozens (or maybe hundreds) of CRM companies out there, virtually none of them are willing to be more patient than us. They're all sprinting, and we're running a marathon.
Why is this an advantage? It means that we can charge a bit less than maybe we should. It means we can offer better customer service even though it hurts our margins. It means that we can focus on word-of-mouth as our primary growth channel even though it's incredibly slow (but in the long run, it's much more resiliant). It kind of sucks seeing other startups leapfrogging us, but we're building a really strong foundation of happy customers that I think will be an amazing competitive advantage in the future.
But that's pretty general. There are definitely more specific things that have really worked out for us:
- As I mentioned earlier, we stumbled upon the realization that having great customer service is a huge advantage. We win so many sales just because we're willing to pick up the phone.
- Investing heavily in hiring has been great. Even at 11 people, we're already big enough that I by myself can't have much of an impact as an individual contributor, so making sure we hire awesome people is the most high-impact thing I can do.
- Staying focused on really small businesses. VC-backed CRM companies always start out competing for us with the same customers, but inevitably it comes time for them to start scaling faster and that's really hard in this space. Those companies all go enterprise, and they leave the little clients to us.
- Leaving San Francisco and moving to St. Louis. If you're raising money, the Bay Area is great. If you're bootstrapping, pretty much any city in the world is better. I think St. Louis is particularly ideal for bootstrapped startups (get in touch with me if you're interested in learning more about that).
What's your advice for indie hackers who are just starting out?
Figure out what you want out of this, and use that lens anytime you take advice from anyone (including me). The vast majority of startup advice is written by and for people who might not share your goals (like VCs for example), so it might be irrelevant, or even harmful for you.
Don't confuse fame with success. There are a lot of people in the startup scene who are well known but haven't ever really done anything. If you follow their lead, you may end up the same way. Unless your customers are programmers, getting a post on Hacker News won't matter. Being known by everyone at your local startup networking events won't matter. Winning a bunch of startup competitions won't matter. The way I see it, only two audiences matter: your customers and (if you have them) your employees. If you spend time trying to impress anyone other than those two groups, you're wasting time.
Develop the ability to quickly decide what matters and what doesn't. Whatever other skills you have will be multiplied by being able to apply them to the right things.