What's up everybody? This is Courtland from IndieHackers.com where I talk to the founders of profitable internet businesses and I try to get a sense of how they got to where they are today, so the rest of us can learn from their example. In this episode I'll be talking to Gareth and Jonathan Bull, the co-founders of an email marketing company called EmailOctopus. Welcome to the show guys, it's really great to have you. Why don't you introduce yourselves and let us know who's voice belongs to who?
Sure! So I'm Jonathan, this is my voice, and I'm co-founder and director of EmailOctopus
I'm Gareth, Gareth Bull. Co-founder of EmailOctopus as well. I'm twenty-five years old and we're both from London.
I understand the two of you guys are brothers, which is pretty cool because I run Indie Hackers with my brother Channing, and Indie Hackers is owned by Stripe, which is run by two brothers, Patrick and John, and now I've got two brothers on my podcast running a business together.
Hopefully it's a winning formula for all our sakes!
Haha, did you guys know from a young age that you wanted to work together on a business?
I don't think we did, I think we both took quite separate paths into business, and we both just ended up converging around three or four years ago.
For me, I always used to watch Jonathan program and do stuff online even before the internet was really big. I was sort of inspired by that to do stuff online. Yeah, I sort of went my separate ways and started to do my own business things and Jonathan was purely programming, then I think we started to have this need for a product and it went from there.
So I gotta ask, what's the hardest part about working with your brother? I'd love to hear both of your opinions on this.
Well the hardest part I guess of working with my brother came probably two or three years into EmailOctopus when we started to get big, and it was making good money, and it started to mean something, at which point we realized we'd never really discussed equity or how we'd split our workloads...
That's an interesting time to start talking about that.
Yeah, in hindsight we probably should have done that in the very beginning. We had quite a few awkward conversations about that. I remember putting it off for quite a while and Gareth, you just kept saying we need to talk about this, we need to talk about this, and finally we managed to get over that hurdle didn't we.
What about you Gareth?
That was pretty much the hardest thing, and it still is. It's always a challenge, I think any co-founders, regardless, even if you're brothers I think it makes it even harder because I know that he's always going to be my brother and we're not going to ever fall out, so it already makes it even more awkward, like you just don't want to have that discussion. It's such a cool and fun project and we're so in it all the time, unfortunately that business side to it never really kicked in until we started to make decent money, then we had that conversation, but I think that's the main challenge any partners have is communication, and I think that's what we've learned. Moving forward it's just about communicating with the co-founders together.
The fact that you know that you're still brothers at the end of the day, and that no matter what gets said or what happens, you'll probably still have a working relationship afterwards is so interesting and it's really an advantage I think because it means you can have these contentious blow up fights, and not have to worry about the other person just giving up and quitting. In fact you probably have years of experience of arguing with each other and knowing how to resolve things.
Almost twenty years of that!
Patrick from Stripe says the same thing about him and his brother John actually. I have to ask you guys, why email marketing? It's not a particulary sexy space to get into, it's difficult technically, and I'm sure you blamed for all sorts of technical issues that aren't your fault. People's emails going to Gmail's promotions tab, ect, and worst of all it's extremely crowded. You've got a ton of companies in this space and you're pretty much going head to head with companies like MailChimp, so of all the things in the world that you could choose to do why start an email marketing company?
Haha, I don't know about Gareth but had I have known how difficult it would be five years in, I probably never would have started. I thought email was a lot easier than this, but yeah, absolutely, deliverability, the infrastructure is very difficult to get right and above all it's an extremely crowded space. A lot of people ask why did you enter the space of email marketing, but I kind of see it as the fact there's such a massive market, there's room for us. There's room for plenty of competitors and we're not necessarily out to dominate it, all we want to do is make a sizable dent.
I run a digital agency and I deal with different kinds of businesses that are leveraging email marketing every day, and I kept seeing the problems they were having and also the price they were spending on their email marketing when their list started to get really big, so for me I knew how big email marketing was and how many businesses started to move around from MailChimp, to AWeber, to whoever, so we felt like if we could just get an angle in there people would make the effort to move their list across to someone a little bit cheaper, and now because we leverage Amazon SES and their product of how they deliver emails, the deliverability can't really be beaten like Netflix and Uber are all sending emails via Amazon, so we let people do that via our platform.
You guys mentioned earlier that you guys both came into business from very different angles, you had different paths to get to where you are now. I'm curious what the story is behind how you guys ended up deciding to work on this together?
My story probably starts quite a while ago when I was a young teenager and I remember at the time I was really interested in two things: internet and practical jokes. I ended up creating a website which let people send SMS and email from anyone they want, which at the time I thought was absolutely hilarious. Then when I was seventeen or so I monetized it and I was making a bit of money a week, I think I was making $50 or so a week, and I just got hooked on it. It ended up getting neglected when I went to uni, I had a lot more fun things to do, but it slowly built in the background until I ended up closing it just because I wasn't really happy with the kind of messages that were going through the service and we got banned from PayPal a few times, it was a problematic service to run as you can imagine. I guess that's how I got the itch for business and the itch for having a side project that made money, it was based in email so I guess that's quite a natural segway into EmailOctopus.
For me, I always saw Jonathan programming and I thought how clever Jonathan was and it was frustrating for me to see what products he could build and what difference he could make, but he didn't necessarily understand how to market it and find people to use it, it's just a different brain, so I started my digital agency to find businesses and help them drive traffic, and I sort of started to get into affiliate marketing. My agency grew from there and I started to understand different kinds of marketing: email, SEO, PPC, ect. I tried to use MailChimp or whatever and the price was getting really high for my clients so I said to Jonathan, is there a better way of doing this? It got so costly at the higher tier when you've got a big list, and that was frustrating for me to see, and we both sort of came at the same point and said, let's try it. The story sort of starts from there really.
Did you guys have a grand strategy early on? Because I know a lot of companies will start and think, "Here's our five year business plan, we're going to write down everything about why this company's going to work, why this idea can succeed, how big it's going to get, when we're going to hire." or were you guys sort of like, let's take a few steps and see what happens?
I see that time and time again, even if I started business today you can plan as much as possible but you just don't see things along the road that you can't plan for. Especially when you're building software, I mean Jonathan's been coding this, along with a couple of developers, for years now, you just can't plan things, but yeah I think we would have planned it a lot better definitely, hindsight's a wonderful thing.
The first time we actually sat down and drew up a business plan was summer this year, which is about three years in. It never really felt necessary, full credit to our COO for prompting us to do that, but up until then we'd seen a nice amount of growth month on month, and we felt like we were doing alright just winging it. I guess the question is, could we have done better not winging it and having a plan? The answer is probably yes.
Haha, I think that's always true for every company. Let's talk about the early days, what were the first steps you guys took to getting EmailOctopus off the ground once we agreed that it was something you wanted to work on?
So I guess the very first step was coming up with a name, which took far too long. It's always the hardest part right?
Yeah, haha, I spent a few days coming up with the name for Indie Hackers, so I know what it feels like.
I wish we'd have spent a few days, I think it took us about a month, maybe two months to come up with the name. We had some really bad names.
Do you remembered how many names you considered?
Probably about ten or so names made the cut. It was that horrible thing where you come up with the perfect name, then you type it into Namecheap or whatever you use to buys domains, and you find out that it's taken, then you think, do I go with the .io or do I go with gets, get EmailOctopus, but we never really wanted to do that. At one point it was going to be called Massss SES with about four S's, so glad we didn't go with that. Eventually EmailOctopus came to us and I remember I was adamant about not even starting coding until we had that name. I think that's probably quite a classic trait amongst programmers.
Well yeah, because you put the name everywhere in your code and you're like, I don't want to have to go back and change this, change the name of my repository, change all my variable names, you really don't want to have to do that.
Exactly, but I had Gareth in my other ear telling me just to start coding.
Haha, so a month goes by you guys come up with the name EmailOctopus, how much time passes between starting and finding your first real paying customer, or your first user?
So we then had about six months of me coding EmailOctopus in what was my faux programming language at the time. Then I decided I didn't want to use that anymore so I did another six months of programming in a completely different language, and finally I think it was about a year later we came out of private beta around the end of 2014.
And Gareth what were you doing this entire time when Jonathan is writing and rewriting this app?
This is something that I think in hindsight I would have done exactly the same again which is weird because even looking back I would have done exactly the same tactic. Back then we were going through MailChimp's followers and I was looking at the sort of people that could be slightly influencer based or that could be using us in the future, so I started to follow them, and tweet them, and mention that we've got a product coming soon, the way that we pitched it was EmailOctopus for a fraction of the price of MailChimp, and it was straight away that they got a follow from us. We had the branding there, we had the landing page, we got their email, then when Jonathan had finished the beta version, on that day I remember looking at Google Analytics and seeing two, three hundred people on the site, and we had about two thousand pre-signups ready to launch on that day, and I think that's the massive lesson we learned. I see that quite a lot in startups, they write code for months and months then launch, then have an amazing launch, then think where have my users gone, where are they? Which is quite funny.
Haha, the trough of sorrow, it's happened to every single thing that I've worked on, where that launch boost of traffic is impossible to sustain for the next few months and it's pretty depressing. I really want to dive into this whole idea of building an audience before you launch, because I think it's something, that you rightly point out, a lot of people don't do a great job of, and it sounds like you guys really killed it. How did you get hundreds of people onto your site the first day that you launched, and how did you get two thousand people on your mailing list?
It was the pre-launch, it was getting people excited. I think people do get excited when you have a different angle in the market, like we compared ourselves to MailChimp, we said, we're a fraction of the price of MailChimp. We were leveraging their brand to try to push ours and I think it was the only get any sort of attention quickly, then we had that list ready to launch on launch day which really helped us.
What kind of places were you going to find people who were interested in a MailChimp competitor for a fraction of the cost?
So we did a bit of Google AdWords which was really helpful. We were looking at keywords that people were typing in, MailChimp alternative, Amazon SES providers, then also looking through their Twitter. Actually I remember looking at people that were disgruntled with their MailChimp and getting frustrated, and I said why not try EmailOctopus? We've just launched. It's a little like, people call it growth hacks, but it's just pretty simple marketing that worked really well back then. I think Twitter now is quite overloaded with a lot of stuff and it's quite hard to get people's attention now, but Google AdWords really helped us back then, and Twitter.
More than a few of the guests that I've had on in the past have talked about this phenomenon of distribution channels sort of reaching this saturation point where they're no longer as profitable as they used to be, and how it's better off if you can find these nascent distribution channels before they really take off and get on there when ads are super cheap or when it's really easy to reach your audience, so if we're talking about AdWords, David Hauser of Grasshopper is a good example, he was buying ads on Google in the early 2000's when it cost him pennies to get in front of thousands of users, so I kind of wonder what you guys would do today if you had to reinvent yourself? Is there any new channel that's kind of in it's early stages that you'd target to get the word out about EmailOctopus?
It's a lot harder when our price point is quite low. When you're providing a low product in software and when you're in email marketing people have to move their whole list across to you, it's not a quick transaction, it takes quite a long time for people to convert so today we still do paid Google Ads, we do a lot more branding stuff now, so talking about our story just like this, and blogging around our story and our startup, and how we're helping other businesses. I think that's really helped us and I think Jonathan's enjoyed helping that side of the marketing as well, not necessarily just pushing ads to people and stuff like that.
My favorite sort of marketing at the moment is side project marketing, so actually giving people something. For example in November last year we got to the front page of Product Hunt with quite a simple email template pack, which ended up being downloaded by about two thousand people. One of them was Uber and that's just consistently given us about ten leads a day now.
So when you say email template pack, you mean the HTML code for actually sending an email, like the styling and what it looks like, and Uber is using this?
Exactly! We haven't actually seen them use it yet but we know they downloaded it.
Haha, that's crazy! I think this whole idea of side project marketing is super interesting and I want to get into it, but I think it comes a little bit later in your story so let's table it for a second, and Jonathan I want to ask you about these early months of development because I know a lot of companies die before they ever launch. A lot of them die for reasons that you seem to have, I guess ignored, because it takes them too long to get their first product out and they lose motivation. How did you push through this year long development process without getting discouraged?
I actually came really close to giving up, it was Gareth who motivated me saying the right things, we need to get this out, we need to try it, don't give up until we have at least got this in front of people, but it was a real slog, and I was doing it alongside quite a demanding full time job, so it was taking up my evenings, weekends, and yeah it was tough. I'm lucky that I enjoy programming and that would probably be my hobby even if I didn't have financial motivations behind it.
Yeah I think that's like the best hack, is to actually love what you're doing, at least to some small degree, otherwise it's going to be painful the whole way. Having a co-founder for sure is helpful because you're not just giving up on yourself, you'd be giving up on this other person who you agreed to work with and it's a much harder thing for people to do I think.
Exactly, and like you say, time and time again people give up before they even get it out there. That's perhaps because they're perfectionists, which I certainly am, and Gareth wouldn't mind me saying that he's less so and he was just like, get it out there. It probably wasn't even good enough to be called an MVP at the time, it didn't really do anything.
So what did it do? Launch day, what can I use EmailOctopus for?
You couldn't even import your subscriber list, so you had to add every subscriber manually for starters, which was a bit of a barrier to entry. After we had gone through that process which probably took them about ten hours, and finally be able to send them a large email blast, and that was pretty much it, but people were using it surprisingly.
Yeah it was frustrating but I'm very optimistic and I always think there's something in something, there's so many people out there using awful products and I thought, if people are using our product that people can't even import subscribers into then we must be onto a winner. I think straight away people mentioned about the simplicity of it, we definitely mentioned pricing when people were trying it in beta, so it was just people using it for free for quite a long time.
Yeah how long was that? Perhaps almost a year I think we were completely free.
Wow, that's crazy. Am I correct in assuming that being free was an integral part in your strategy, because it might have been hard to compete otherwise as like a brand new entrant in this crowded market?
Yeah and it worked really well, it's so easy to get people using a product that is free. One of our largest sources of acquisition was a Reddit post being like, I've made this as a side project, it's completely free, send all your emails, no cost what so ever, check us out! That was huge that it blew up for us.
There's no way that was your long term plan though, because how do you guys make money with a free product? I'm sure at this point you're just hemorrhaging money. How did you guys decide that launching with free was a good way to go and what was your plan for how you'd eventually start charging?
I guess it goes back to us not really having a plan. In terms of losing money it was very hard to quantify because it was my personal time, and when it's your personal time you don't really think of it as an hourly rate, well I certainly didn't. I guess in the back of our minds we just thought that we'd be able to switch on the paid plans and people would love us so much that they'd instantly switch over, but that didn't really go to plan either.
I think he's nailed pretty much everything there, I think when we did launch the paid plans, I think Jonathan's got the exact timeline, we launched the paid plans and I think 99% of all our users disappeared, was the right Jonathan?
Yeah, that was right. That was not a nice day.
Hahaha, that's really terrible. Free users come to a product for a very different reason then paid customers come. They'll even give you different feedback for the type of features that they want, so on one hand it was terrible to lose 99% of your customers but on the other hand it was probably what you guys needed to start building the right product and targeting the right types people who are actually going to pay you money so can sustain this product.
I think you're right. If we look at the positives I guess we got a great deal of motivation from people just using it, free or otherwise, it was a great way to test our infrastructure and just get eyeballs on the site, but ultimately you're totally right, we weren't ever validating the correct business model there, and we did literally just have to start that all over again once we launched those paid plans.
Yeah, but regardless you guys have come a long way since then and definitely a long way since the beginning. I mean you guys are now running a profitable, bootstrapped business, and Jonathan you mentioned that early on you were just working nights and weekends, pretty much just your spare time whenever you could to get the product out the door. Did you guys know from early on that you wanted to bootstrap this business rather than raising money from investors, if so how did you make that decision, and how did that constraint affect your strategies and the way that you ran EmailOctopus?
Well firstly it's a lot easier right? It's much easier to just get started with a side project in your spare time than it is to get investment. I can't even imagine how hard that process would be running it alongside a normal job, so personally that never crossed my mind.
For me I always thought of software as a service and the software business as... I mean back then there wasn't as many people just raising money with crazy ideas, which is quite glamorous now to do, but we treated it as a normal business. We started it from the ground up, we didn't want people pecking at us, you know, why haven't you done this, and having external investors is great on paper, and it's celebrated to raise money but for us it was keep it lean, and I knew that all we needed to do was get both of us working on all the time, and that's what we achieved, and it went from there really.
I've been reading this book called, The Everything Store, it's about Jeff Bezos and the founding of Amazon, and how he's grown into this ridiculously huge company that it is today, and one of their big things as well is to be extremely frugal, because the sort of flywheel Amazon operates on depends on having extremely low prices so they can get more customers to the site, ect, ect. It strikes me as, obviously at a much smaller scale, similar to what you guys are doing. You guys are trying to bring email marketing to more people by offering much lower prices, how does that affect the way that you guys actually run your company? Does that mean that you need to not hire people, or does that mean that there are features that you can't build?
Definitely, every time we build a new feature we have to think about how we're going to offer it under our price model. There are often a hundred ways you can do something and the quickest way is very rarely the cheapest. I've lost count of the amount of times we've had to rewrite something just because it's perhaps storing too much data or storing data in an inefficient way, so that's always at the forefront of our minds.
I think when we first started to see income we immediately hired Tom, our COO, which is quite an odd strategy looking back in theory but straight away the money went back into the company of developing... he used to work at Secret Escapes, they were huge in email marketing and still are, and that experience came straight over to us and catapulted us, and made us take things more seriously, and it was just that nod of approval from someone else, and yeah it went from there really.
I was going to say, it's worth noting that I didn't actually want to hire a COO at that point. I was very adamant on the idea of it being a side project and keeping our cash, being a nice little bump for us at the end of the month, but Gareth knew this guy Tom, he knew he could be great for us. I've been proben totally wrong on that, it's been absolutely fantastic.
Tell me more about this difference in visions, because I think viewing this thing as a side project and viewing it as a business that can grow to something big is very opposite ends of the spectrum. How did you guys resolve that?
It took a while. I was in a very comfortable job at the time I was enjoying. While my dream was always to run my own business and have my own thing going on, I never really wanted to manage people and run a company. I just wanted to program, get features out, make a nice bit of money, that was my end really. Gareth's was very different.
For me I was already running a business that was employing people and I saw the massive value of that, and I sort of made sure that I kept pounding that down Jonathan's throat in saying, we need to hire Tom, this is a serious product, because the product deserves people to use, and what people were using it, they were loving it. For it just to be a side project, yeah it was frustrating to see, but I think that's why a co-founder, and a programmer, and a marketer works really well, and we're both completely different in every shape, way, or form in business, but that's why I guess it works.
Jonathan Bull [00:26:54 I think the difference personally was that I was happy with any kind of growth, and we were seeing what I considered a nice amount of growth, and you Gareth disagreed right? You wanted a lot more growth, and that's been great for us.
Jonathan, were you afraid that hiring someone would rock the boat and maybe ruin the growth you were already seeing, or was it more that you just didn't want to commit as much time and effort as would be required if you wanted to start growing the company and bringing on employees?
So my end goal was for it to be my full time project and I guess I thought that hiring people makes that quite a lot riskier. As soon as you've got consistent outgoings in your business then you always have to be making a profit right? There's a lot more responsibility basically.
Yeah, there's a ton of responsibility. I totally can identify with the reluctance to bring other people on and to be responsible now for... in some ways their career and certainly their paycheck.
Exactly, and you have to start doing all this boring stuff like employment law, and tax, and...
Uh-huh, and more meetings too, because now it's not just the two of you guys as brothers who probably speak each other's language without having to say too many words, but now you've got another person in, so you've got to make all sorts of decisions that are... I guess there's a lot more friction when you start growing your company, did you guys feel like you slowed down at all or did hiring Tom speed things up?
We sped up so much, it was the best decision we ever made.
Nice! What are some of the things that Tom did to help you guys grow and move faster?
Well Tom, Tom came from a great marketing background so he had a really good perspective on where we should take the business, and to be honest his best achievements in the first three months were just to bring a fresh set of eyes. We were doing a lot of things quite stupidly, like we were handling email support just over email and we were missing tickets, and just these small things that you should be doing as a business when you take it more seriously, we weren't doing. Tom, and having the responsibility that I mentioned, really motivated us to do all of those things right.
Gareth, did he free you up at all? Because it sounds like a lot of what Tom was doing was potentially overlapping with some of the things that you were working on.
Yeah, he did free me up but it was more... I've known Tom for quite a while and I knew that we both have different skill sets and I always think two marketers can compliment each other much more than just one. You start to run out of ideas for certain things or you see things differently, and I looked to Secret Escapes and how quickly they grew, and Tom was one of the first employees, I think one of the first ten or twenty, and that straight away... I don't know how many there are now but they're a very big company and that was purely from email marketing, and I thought if he could do that for someone else we could give him that opportunity. I think Secret Escapes sort of outgrew him as well and he wanted a new opportunity, so it not only worked really well for us, it really worked for him and he wanted that excitement again.
Yeah, that sounds like the perfect situation where you actually know somebody personally who'd be the perfect fit for that role, rather than having to go out and hire a bunch of unknown people, and have no idea how they're going to preform, and potentially deal with bringing on someone who's going to not work out?
Yeah, I've had experience with that and a mis-hire can be massive. If we mis-hired first, not only would it have cost us a lot of money, it would have put Jonathan off as well and it would have been hard for me to convince Jonathan that having an employee was going to help us. Because Tom was so helpful for us, and we knew him, it was a really comfortable hire for Jonathan as well I think, in the end.
So I watched Tom give a talk on EmailOctopus, one of the cool things that he brought up was this problem that you guys had, I think around the middle of 2015 or maybe 2016 of growing a lot, but also having to deal with this spam problem. Can you elaborate a little bit on what happened?
Yeah, that was a frustrating summer. Our volume, I think quadrupled almost overnight, and we were always busy working on other things. At that point we weren't really looking at key metrics and suddenly everything started breaking, and we were like, what's going on? We looked in the database and it was just a huge amount of spam going through our platform, so it was all hands on deck to try to stop that and by that point, I think it was about... it probably took us one or two months to notice, which is a mistake we'd never make again. By that point we had gotten used to the extra amount of income that was coming in from these spammers, so I think we ended up just taking a hit of about third on our revenue overnight when we realized, which was very frustrating.
Yeah, I think again if that happened to me and Jonathan, and Tom wasn't on the project, I think me and Jonathan would have just kept trying to deal with all these spammers, you know, we got mentioned on Black Cat forums and stuff, and I kept seeing us on there. You always think growth is good growth, but Tom started to say this is really not working, we need to... as Jonathan said, that summer was hard for him, and we started to get finder filters and a bit of AI to get rid of those people on our platform, and we always saw the long term benefits of that in our mind but in practicality terms it's so tempting not to get rid of users that are paying you money, especially when we had Tom at the time as well.
Yeah, I bet. I think there's so many long term. short term trade offs, in every business's life where you have to deal with situations where it's like, "Ughhh, if we stop doing this right now we're going to lose money overnight, and maybe theorectically it'll be good in the long term, but argghaa what about the money right now?"
It was tough, we had a lot of discussions about that but on the plus side it was a great test of the infrastructure.
Haha, yeah I guess it must have been! I assume that the spammers liked you guys because you guys were just so cheap. I mean if you're trying to send spam, you don't know how much money you're going to make from it... you might as well choose the cheapest possible option.
Exactly, yeah, and to explain a bit more without getting into too much detail about how it works, it plugs into Amazon web services and Amazon web services do their own amount of verification on their clients as well, and we hoped that that was enough, but it wasn't, so now we also verify.
So I've had something similar happen with Indie Hackers actually. Back in September I noticed there's like a huge jump in traffic to the Indie Hackers forum and I couldn't figure out where it was coming from, so after some investigation I realized it was all coming from Google, and these spammers had managed to create threads on the Indie Hackers forum that would rank extremely highly in google for things like "live sports streaming", ect, and they were driving more traffic to the Indie Hackers site than I've ever been able to drive by myself, just by making a forum post. I was simultaneously disappointed when I figured out where the traffic was coming from but also impressed that they were such masters of...
Yeah, they're quite clever.
Sure you do have to have a certain amount of respect for these people.
Haha, so after cutting the spammers out of your guys' platform what were some of the next steps you guys took to grow and recover from that loss? Was this when you started the side project marketing or did that come later on?
We had not quite gotten to that point yet. I think just after the spammers we ended up growing quite nicely, just very naturally and organically we were taking on more clients. We were trying to focus on the upper end, so we were taking on people with bigger lists and at that point we realized we'd probably taken on too many people for the infrastructure we had, it was again creaking, so what we actually did then was we tried to slow down the growth by putting our prices up, which was perhaps a strange move.
And we actually raised our prices because at the start even when we were offering free we were attracting the spammers, and it was cheap like ridiculously cheap. We were still getting the spammers, so the best way was to increase our infrastructure. We also had a couple of external devs, and one of them now works for us full time which is cool, so just creating the infrastructure ready for the real big companies that actually really wanted to use us, so we just sort of cut the fat off in the way of increasing our prices and making sure that our infrastructure was ready to scale, so yeah, we're constantly working on that.
It definitely attracted a higher class of user didn't it? When we put those prices up?
It didn't even slow down our growth, we actually ended up making more money by doubling our prices which was nice but didn't really solve the infrastructure problem, so again a lot of late nights.
That's funny because I would think based on your business model and based on the industry you guys are in, your main differentiator was price. Why do you think people kept using you, or in fact used you more once you started raising the prices?
Well I think there's still so much room. We went from being probably up to a tenth of the price of MailChimp to about a fifth of the price of MailChimp, so even though with that we were still so much cheaper than the competition. It wasn't necessarily just price that people were coming to us for, they were coming to us because we were super simple, a lot of people liked that we were a small business and we were always personally replying to emails.
Yeah, I think simplicity was key. For my clients, when they started to use it and they kept saying it's so simple, like I can just open it up, send out an email, and they weren't having complicated auto-responders, they just wanted something really light for the SME market, and they wanted something so simple and we provided that. You can plug it into AWS, Amazon services, and you can send amazing deliverable, you know, the emails are just going to deliver every time and give your email the best chance of delivering.
So at this point you've got, prices that are going up but are still extremely cheap compared to the competition. You've got more users then you really can even handle, even with Jonathan working on it... were you full time yet Jonathan or were you still part time?
It was around that time I went full time. I had to haha
What did it feel like to make that decision to quit your job? I mean even if you had to, I imagine it might have been nerve racking or was it a pretty straight forward decision for you?
It was slightly nerve racking. You probably noticed I was slightly risk averse at the time and I think I had just taken a mortgage out on my London flat property, it's not cheap here, and the timing wasn't perfect but I guess it never is, and in a way it was really nice to have to make that move rather than just continuing to put it off as I'm sure I would have done.
If you guys don't mind sharing, how much revenue were you generating around this time?
We had around two hundred users at the time and were making around $3,000/month.
Cool, so it was enough to keep the lights on and really sustain you guys.
It was enough to sustain us, it was enough to pay my mortgage as well which was the main thing for me.
Alright so at this point you're full time, you've got these developers you're paying on the side to help you out, Gareth, are you full time on EmailOctopus as well or are you still splitting your time between EmailOctopus and your other business?
Yeah, I split my time. Jonathan has spent a ridiculous amount of time on EmailOctopus and it was always his baby. I had my own business before EmailOctopus, and I really wanted Jonathan to have his own business because I thought he deserves it and if I could find a way of helping him on a day to day basis, and my team can help EmailOctopus it sort of worked really well. Yes I probably split my time 40/60, forty on EmailOctopus, sixty on Bulldog, but me learning stuff in other markets really helped EmailOcotpus moving forward. I see a lot of businesses fail, I see a lot of businesses do really well through email and through other channels that can help us, and I can see the opportunities out there because I think for the startup world it's very... people read the headlines and they see lots of different stuff about growth hacking and stuff like that, and most of that stuff has been around for quite a long time as you know. I think the startup world is quite different to the world that I deal with, UK SME's, million dollar a year sort of clients, and the startup world, they never talk about stuff like that, but yeah I think it's a good experience for both of us anyway.
Do you think the insights and the habits that you bring to your startup, coming from maybe a more grounded place where revenue obviously and always matters, has been helpful in growing EmailOctopus?
Yeah, I think in the startup world, even when you said you launched Indie Hackers you weren't sure what would get anyone in, the way that I operate I'm like, how can I automate this? How can I grow this business without me? And getting Tom in was helping that growth, while Jonathan was working on the back end infrastructure so that's sort of the way I always think really. I saw a lot of tasks that Jonathan was doing like support tickets and stuff, that he shouldn't be doing, like that should be someone else, becuase Jonathan's skill set is being a ridiculously good programmer and that's what he enjoys, so he should be doing that every day.
Jonathan, are you happier when you're programming or are you happier when you put on your founder hat and dive into these new things you're maybe less comfortable with?
I am my most happy and probably most comfortable programming, but I am really enjoying the experience of running a business. I think I've learned more in the last three or six months then I did in five years of dev jobs. If anyone was looking to take the jump I'd always highly recommend it.
Yeah it's pretty cool when you realize that you're learning faster because you've been thrown in the deep end where everything is new, and therefore everything you do requires you to learn. It's definitely a good sign, especially if you're newer, when your recent decisions look like mistakes because you've learned so much since you've made them.
Yeah and you really notice when you go through things like this, like in our cred's list we were writing down our timeline and our mistakes, and just looking back on the decisions I made seemed crazy with the knowledge I've now gained.
So what are some of these things that you guys have learned and would do completely differently now-a-days?
I think side projects were very tempting to do a lot. We've done a couple, some have worked really well, and I think it's quite easy to take our eye off the ball. We've maybe taken our eye off the ball in certain aspects but they still can work so well, but focus is super key for us. We have sort of diversified some times, and we're like no, email marketing is what we're good at. We want to deliver the best product to our customers and always remember we've got customers that are paying our wages every month and we need to look after them as much as possible, it's not all about how can we get more customers... how can we do more for our customers and how can they deliver better emails? Can we help them in other ways as well?
I think that's an interesting point because even if your goal is growth, often the best way to do that is to focus on retention and engagement. Getting your existing customers and users to keep coming back and keep paying you, and it's pretty easy to understand why because if you imagine pouring water into a leaky bucket the water level is not going to grow very fast, if at all. At the same time, retention is one of the most often neglected metrics, especially for new founders to pay attention to. I've been guilty of neglecting it even while running Indie Hackers. Has retaining your customers and getting them coming back been a challenge with growing EmailOcotpus, if so, what kinds of things have you guys done to work on that?
It's definitely something we are working on at the moment, it's so easy isn't it to forget your customers who have been with you for two years because the noisiest ones are always the newest. Recently we've been trying to do case studies, reach out to these customers, find out how they're using EmailOctopus, and seeing what we can learn from them. In some cases it's too late but hopefully going forward we can an established process in place where we start that conversation as soon as we can.
Yeah I would definitely say don't be afraid to reach out to your customers, it's amazing what feedback you get from them. We've had people email us essays of feedback, just from us asking. If we didn't ask they never would have sent us that. We've learned that over the last three or four months more than ever I think.
So another cool thing about doing startups, besides learning from your own experiences, a lot of other people have written books, they've written blog posts and guides about how they've grown their own startups, obviously it's easier to read what they've done and learn from their mistakes then to go through your own miserable path of experiences, and having to re-derive everything that they've already learned. Are there any books or role models that you guys followed in building EmailOctopus and learning how to run your business?
I've read quite a few of these books that have been recommended and they've never really worked so well for me. I think that most valuable thing I found is just working alongside other bootstrappers, so very early on in the EmailOcotpus journey I rented an office with two other guys who also were running their own side projects. The amount that I learned from that was so invaluable, every single problem I was hitting they'd already encountered and it was so nice to have that instant dialogue with someone. For me there's nothing better than having a face to face mentor.
So were you going home after work to this... well not going home, but going to this office that you rented and working there after work or was this after you had gone full time?
So it was a small period where I sort of transitioned where I was part time on one job and part time on EmailOctopus so every hour I could I was trying to get in a space. I was going to all the meet ups with these guys because at the time I didn't feel there was much out there for us, every article I was reading was about investment and VC's, and I never really read much about the little guy who wanted to turn his side project into a full time job and it was really inspirational to meet some other people who were actually doing that, and succeeding!
What about you Gareth, do you have any role models, or any people that you've learned from, or resources that are particularly helpful?
Well obviously Indie Hackers! I actually saw a tweet today, I think someone tweeted you, they said it's nice to see not the main stream entrepreneurs on Indie Hackers, like it is a different angle so I really do like that, I like to read Indie Hackers. In general I've read a couple of good books, Breeding Gazelles is a good book, it sort of talks about what it takes to get to half million dollars is completely different to what it takes to get from half a million dollars to a million dollars, so I think I've sort of pushed that into the business in saying that we need to do stuff differently all the time. What worked during the early days, we did the Twitter growth hack marketing tactic, and that wouldn't work today, and it's easy to get caught up in trying those old tactics, it's just not going to work so I think just constantly evolving your marketing and your product is crucial. We do keep an eye on the market but we don't get obsessed by our competitors, we don't really follow tons of entrepreneurs because there's only so much learning you can do right?
I wonder, did you guys decide to start things like side project marketing because the things you were doing in the past had stopped working and you wanted an extra boost?
Yeah, I think they are and Tom brought those ideas to the table really. I don't think me and Jonathan even thought about them, that's right Jonathan?
Yeah it is right and I was sort of hearing both sides, I was hearing Gareth who has come from an SEO, adspend background, and Tom he comes from more perhaps growth hacker background, and I very much favored the side projects, not saying they necessarily worked better than the ads but I really liked the fact that we were sort of giving something back, we were providing something for people to click and check out our site.
I also think if you're a programmer, like if your strength and you actual interest lie with building useful tools, especially small simple tools you can easily get out the door, then doing something like side project marketing where you're actually building tools is going to be a lot more enjoyable as well. Which means you'll probably be more effective at it because you're going to be enthusiastic about what you're working on.
Exactly, it's a lot more fun knowing that someone's using your templates, then having click the link on an ad.
Yeah side project marketing feels like something that was invented by programmers who don't want to do "real marketing", they're like oh here's how you can build features and get more people in the door, but it works remarkably well in many cases. So you guys are bootstrapped, you're profitable now, but what are your long term goals? I mean you're definitely trying to grow the company and build revenue but to what end, where do you see yourselves five or ten years from now if things go according to plan?
So I guess our main goal is revenue, we only actually decided these goals a few months ago, but our main one is to reach a million dollars annual revenue by the end of next year. We charge in dollars though so who knows what Brexit's going to do that aim.
Yeah, I think revenue's great and that's one of our targets. Another target for us is getting into the habit of spending money, which is really easy not to do, especially as a startup, and being bootstrapped to this point we've got overheads now, we've got an office, we've got developers, so now we've put enough spend aside to just say we're going to spend it on marketing, any products we want to launch like side projects, yeah so just putting money aside for us over the next year is going to be really important and putting all that back into the business.
What if EmailOctopus was making like some incredibly high number, like $10 million/year and you guys are beyond the level of financial success you even thought possible when you first started, what would you do?
It would be very different certainly. What would we do? I've always got the mentality, like Gareth, that we shouldn't hold our money and we should reinvest it back into the business or that's certainly the mentality I've had for the last year or so. Truly I don't really know what we'd even begin to spend that money on. It's crazy and it's a whole different ball game.
Yeah I think if we were like tripling revenue every month I think we'd really start to approach people from other companies, or we'd try and get some real people in, I don't know, maybe launch a US office and try to find some talent over there, maybe do something completely different to really scale the company, you know build a really great team, sort of like the Intercom sort of route maybe, something really big, but we're not shooting for the stars at the minute, we're just being very patient with building the product and also the revenue. We're not in the game of taking ridiculously high risks, also when you're tripling revenue at that pace it's easy to make some massive mistakes. We don't want to put the business in jeopardy basically.
I think both of your answers are revealing because you would take the money and reinvest it into EmailOctopus, which means that EmailOctopus is kind of your top priority, growing this particular business is what you really want to do. Whereas I think a lot of other people might take that money, invest in a completely different business, or a passion project, or they might say screw that, $10 million/year I'm going to live on a beach somewhere, I'm done running this thing.
It's very tempting and I think in my head I always had this figure of reaching $100,000 ARR and when we hit that sometime last year, it didn't seem like that much at all and I think we sort of 10x'd it and we'll probably end up 10x-ing it again. It's quite fun, I don't think any of us want to give it up quite yet.
Yeah I think it's easy to say the grass is always greener and you always think, oh when I hit this milestone we're going to be miraculously happier. Even if our revenue was doubled now, I don't think it would make any difference to our day to day lives. We'd probably have more problems because we'd have more users, more staff, more overhead, so in fact we want to make sure we're growing at a pace where we are comfortable with the set up, because I've seen a lot of entrepreneurs, their business gets too big for them and they wish it was back to where it was at a certain point or they were happier with six figures a year sort of thing, so we don't really want to get to that point, but you know, we'll see.
So I usually end by asking guests to share some advice that they have with somebody who's maybe a little bit newer to business, some tips for how they can build something successful, but since I've got both of you on why don't I ask you Jonathan to give some advice to somebody who's in your shoes, a programmer with a full time job who's interested in side projects but isn't quite sure how to get started, and Gareth, also, what would be your advice for someone who doesn't come from a technical background but wants to start a tech business?
I'd say to anyone with a side project that's doing just okay and is perhaps thinking about going full time on it to just set yourself a goal and when it's going to happen, and stick to it. My goal with EmailOctopus was always that it would be making enough money to cover my basic living expenses and that I'd actually be able to eat, and I think it took us about a year and a half to get to that point. I also think that was okay, I don't think you have to go all in to begin with, in fact, if I had done so and taken a massive financial hit I probably would have just given up and not actually validated the idea. It's okay to take it slow but don't be afraid to commit and if it doesn't work out at least you'll have some great stories.
So from a marketers point of view I've seen it before where marketers launch a software as a service business and I just don't think it's possible without a co-founder. I've seen plenty of friends use external developers, they don't understand the code they're writing. They don't even know if they're building something of value or if it's actually going to be good, so I think a lot of people go to market, try and find a developer, they think it's going to be... that's their route for them as a marketer, but I think every marketer should find a co-founder that's on a similar level with them. The mistakes we made were not laying out our specific roles, which I'd advise anyone to do in any partnership because having a co-founder is one of the hardest things you can do, because there's so much friction, but as brothers it's sort of made a different vibe but you're still going to have that friction so I would definitely find a co-founder and also I would make sure you verify the product. Even if you're a programmer or a marketer, just make sure, MVP is a classic thing in the startup world, but in my mind it's a classic business thing. Are people using it, and is it making money, and how is it going to be profitable? The great thing with software is it's very tempting to get into it because it's recurring revenue and that's been massively helpful for us. Without recurring revenue we wouldn't be here today and a lot of businesses wouldn't.
Listen thank you guys so much for coming on the podcast, it was great to have you and it's really cool to have multiple guests, especially two brothers so I can hear about how you guys interact with each other and compare it to my own situation. Can you tell listeners where they can go to find out more about EmailOctopus and about what the two of you guys are up to personally?
Sure! Head to EmailOctopus.com if you want to check out our email marketing. We also have a template pack available, still for free at Templates.EmailOctopus.com and my personal life, to be honest, is still mainly full of programming, but next year I'm hoping to mix it up a bit and go remote, and move to Canada, that's the plan.
I do a lot of tweeting and I'm trying to get involved in the startup world, and also different worlds around marketing, so if you do want to find me I'm on Twitter @ItsGarethBull , I do a little bit of YouTube stuff. Nothing promotional or selling, it's just a bit more about my story and people might find it interesting, but yeah definitely check out our blog, EmailOcotpus blog. We do share some cool case studies on there. Sign up, we're not going to send you crap, it's all of value, no sale.
Alright, well thank you so much guys!
Thanks Courtland it's been a pleasure.
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