Bootstrapping in a Crowded Market with Gareth and Jonathan Bull

Episode #042

There's some stiff competition in the email marketing space, but that didn't stop brothers Gareth and Jonathan Bull. Learn how they overcame some significant business and interpersonal challenges to build EmailOctopus into a profitable, bootstrapped business.

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    It's interesting how they found success at approximately the same time by engaging the opposite side of the market that ConvertKit did, and they did so without Nathan Barry's star power.

    There really are a lot of different approaches that can work.

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    My Main Takeaways:

    • Jonathan and Gareth are brothers and co-founders.

    • Decide on the equity split with your co-founder from the start! - The most awkward part of their business relationship was when they had to decide about equity when they were beginning to earn lots of money.

    • Jonathan says that if he knew how difficult working in the email marketing industry would be 5 years later when starting, he never would have started EmailOctopus

    • Gareth runs a digital agency and he works with different kinds of businesses that are leveraging email marketing. And he says he saw the problems these people were having and how much they pay for those email marketing services, and he also sees how many switch from one product to another; and all he needed was just a few of those types of businesses to switch over to his product EmailOctopus in order to be able to make a good amount of money.

    • Their product EmailOctopus is essentially a less costly (and therefore more attractive) alternative to existing solutions.

    • Jonathan had experience coding and monetizing products even before starting university. However, Jonathan wasn't good at marketing and getting customers.

    • Gareth was inspired by Jonathan's ability to code and monetize products, but he was more business minded, so started an agency and learned marketing helping other busineses with their various marketing issues (SEO, PPC, Email).

    • Jonathan was coding EmailOctopus along with a couple of other developers for a couple of years.

    • They wrote their first formal business plan 3 years later after starting (just a few months before this interview), after they were already "succesful". They say that they would have done this earlier.

    • When starting, Jonathan spent 6 months programming email octopus in what was his favourite programming language at the time. Then he decided that he didn't want to use that language anymore, so he did another 6 months of programming in a completely different language, and then they launched 1 year later, coming out of private beta.

    • While Jonathan was spending the 1 year writing and-rewriting the application, Gareth was focusing on marketing.

    • Gareth's initial marketing strategy would be to go through MailChimp's followers and tweet them about their product saying that they will be launching a product called "EmailOctopus for a fraction of the price of MailChimp". This was effective, as they'd get a follow back.

    • When they launched EmailOctopus they got about 2000 pre-signups ready for launch on that day.

    • Gareth used Google Adwords to target people looking for alternatives to MailChimp. He also used twitter to search for disgruntled MailChimp users, and would pitch EmailOctopus to them.

    • At the time of this interview, they still use paid Google Ads to grow their user base, but they no longer use their Twitter because they feel that this marketing channel is saturated.

    • Jonathan's favourite form of marketing is "Side-project marketing", which is essentially giving people something useful for the own side-projects. For example, they got to the front page of product hunt a year ago for giving people a simple email template pack. Which got downloaded by about 2,000 people, including Uber.

    • While coding, Jonathan almost gave up on the project. But Gareth motivated Jonathan to keep going.

    • Jonathan is a perfectionist, but Gareth is not. And Gareth just got Jonathan to just push the product out and test it.

    • The first version of EmailOctopus was very simple, you couldn't even import your email list. All you could do is import users one by one, and send email blasts. But despite the lack of features, people were still using it.

    • For the first year of EmailOctopus the product as free.

    • Charge early - when they finally launched the paid plans, 99% of their users dissapeared. Free users come to a product for a very different reason than paid customers do.

    • They were not validating the correct business model by giving the product away for free. So when they launched the paid plan and lost 99% of their customers, they had to validate it again as a paid product.

    • Jonathan worked nights and weekends to build EmailOctopus.

    • Get a co-founder with skills and perspectives that complement your own - Both Jonathan and Gareth had two different perspectives.
      Jonathan had a comfortable job and wanted to make a business where he didn't to hire or manage people, he just wanted to pushing out code.
      Gareth was running a business that hired people, and he saw the value in having employees.

    • When they first started to see income, they immediately hired their Chief Operating Officer. Jonathan didn't want to, because he saw EmailOctopus as purely just a side-project, but Gareth saw it as much more. Jonathan said he was proven wrong, and having the COO really grew EmailOctopus beyond a side-project.

    • There are many long-term/short-term trade-offs in every business. For example, EmailOctopus became popular on blackhat forums for spammers who would pay to use EmailOctopus to send spam emails. But eventually Jonathan, Gareth, and his COO, decided to get rid of these spammers (who were paying users) and therefore save their brand from being "the spam platform". In the short term they lost 33% of their revenue, but in the long term they protected their brand and would eventually earn that money back.

    • Double your prices - by doubling their prices, they were able to earn more money and attract a high class of user.

    • Jonathan works full time on EmailOctopus, Gareth works part time because he has his own business that he works at too.

    • Be sure to ASK your customers for feedback.

    • Work alongside other bootstrappers even if they are on other projects, this way you can learn a lot from each other.

    • Hitting big financial milestones is great, but isn't going to make you happier after a certain point.

    • It took Jonathan a year and a half after launching EmailOctopus for it to cover his living expenses.

    • As a marketer you must find a technical co-founder.

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