Building a Top-Rated SaaS Product Your Customers Will Love with Matt Barnett, Founder and Papa Bear of Bonjoro

Matthew Barnett: Any of your listeners who are over the age of 40, the most successful founders in the world are between 40 and 55 by a long way because you know what it is you're doing.
Voiceover: Welcome to SaaS Origin Stories. Tune in to hear authentic conversations with founders as they share stories from the earlier days of their SaaS startups. We'll cover painful challenges, early wins, and actionable takeaways. You'll hear firsthand the dos and don'ts of building and growing a SaaS, as well as inspirational stories to fuel you on your own SaaS journey. Here's your host, Phil Alves.
Phil Alves: Welcome, everybody. Today I have Matthew Barnett from Bonjoro on the show. Welcome to the show, Matthew.
Matthew: Phil, thanks for having me along.
Phil: Matthew, could you please tell us a little bit about your company and what problem do you guys solve?
Matthew: I run a company called Bonjoro. We started off as a video messaging platform. Essentially, we give you a way to send one-to-one video messages to leads, clients, as they come into your funnel, to better connect with customers in an online world that has started to lose that human connection in onboarding and welcoming new users.
Phil: That's awesome. I want to dive deeper on the product's story and what it does, but before that, I was looking on your LinkedIn and stuff and I saw that everyone called your papa bear. What is that about? [chuckles]
Matthew: If you look at Bonjoro, you'll notice our logo's a bear and we're a massive fan of brand. I think brand is probably one area I'll talk about later that I think a lot of startups don't invest enough in. We have a lot of fun, we run a business because it makes us laugh, not just because we like growing a business, and so, the bear thing has kind of got out of control, [chuckles] I think.
Everyone who joins the company gets a bear suit. We send bear suits to customers when they hit some milestones. Most people have titles referencing a bear, we sponsor a few bears and I think in Ukraine and in Australia. Anything bear-related, we are up for it.
Phil: That's awesome. You guys kind of own the bear in the market space. Talking about a bear is like talking about you guys. [chuckles]
Matthew: I think MailChimp, they have the monkey. We took the bear.
[chuckling]
Phil: That's awesome. I even saw your team members taking pictures wearing bear suits and stuff.
Matthew: Everyone that joins the company gets to design their own bear suit. Most people love it. It's pretty hot. In Australia, wearing a bear suit in Australia, it's probably not the best choice of attire, I'll be honest, especially when it hits 110 degrees Fahrenheit. It's killer. We should have chosen something else, but anyway, here we are.
Phil: That's awesome. Let's definitely dive deeper later on the show about culture and brand. I think that it's pretty cool what you guys are doing there. Tell me a little bit about the story behind Bonjoro. How everything got started.
Matthew: A little bit different to a lot of startups. We actually launched Bonjoro out of another company that we had, where we had a small agency and that agency dealt with large enterprise clients and large FMCG clients, very much a sales lead process. Now, we were actually based in Australia, but all of our clients were US, UK, and France because that's where those industries were. We never really met clients face to face as a first interaction. We had leads coming in, but we were trying to convert them on email when so much of how we sold was us and our enthusiasm, and our creativity.
We experimented with different ways to contact people and we started recording videos for every single lead that we had that would come in. I used to take a boat to work. I would do them on a ferry going past the Opera House in Sydney, which is quite iconic, and I would just get on the video and say, "Hey, James, I saw you sign up for Heineken. We've worked with Budweiser, we've worked with Coors. This is what we've done. I'm not based in the States, but I'll be over there in six weeks' time, but let us come in and talk to you."
The first coms they would ever get would be this video and we would record these on a phone, download them, upload them to a server, put them into an email. It's very manual, but that's supposed to be the first coms they ever got and we tripled our conversion rates overnight because everyone would get this video and then would go, "This is awesome. I'm glad that you took the time. Absolutely come in and see us." Then we'd go in and you walk in and everyone's like, "You're the guy on the boat, on the video." All I did was just basically start that conversation which led us to be able to sell better.
A long story short, a few of those clients asked us at the end of meetings, "What's that video email thing you did? Can we use it?" We spent a weekend with a few beers and pizza, putting a MVP together, a minimum viable product. We put this clients on, they started using it. Their customers who they sent it to also started signing up. We put a paywall down, we got some money, and the rest is history.
Phil: That's awesome. It came from like a solution that you guys-- We had a problem here, our agents being far from your customers and you were just solving your own problem. From there, other people liked what you were doing and it developed to be a product. Do you still have the agents or you're doing the product full-time right now? How does it work or things?
Matthew: We do the product full-time. We ran the agency for a while, but then we decided to focus down on Bonjoro. I think after 18 months, we shifted the team full-time to Bonjoro, and then we ran the agency for a couple of years. Interestingly, if you look at MailChimp, who's in the email space, and if you look at another company called Campaign Monitor, who's also in the email space, and I'm sure many others, I think ConvertKit too, all these companies started off from agencies who were solving a problem.
There used to be a weird thing that in the communication space, often those products come out of companies trying to solve their own communications. It seems to be a bit of a thing, and then, generally, the agencies-- For us, Bonjoro became so much bigger that it made sense to focus all that energy there.
Phil: I think of Basecamp too. They were agents and then become the product that it is today. Do you think they made funding easy? Because coming from an agency, you didn't need to go and raise money. I don't know if you raised money later. How did that help with funding?
Matthew: We raised money later. Obviously, because we had revenue of our own. We were able to get Bonjoro to a size where fundraising made sense. Initially, when we first had it, we're friends with a few VCs, investors. We showed them what we do, we're doing and they're like, "This is interesting." We're like, "Cool, we'll come back in six months." Then we came back in six months we're like, "Here's the numbers now," but obviously, we had engineers. We had some IT team members that we could use to fund that and build it through and we could also take our time a little bit.
I'll be honest, we didn't really expect it to kind of go where it went. We didn't approach it from a funding-first mindset. It gave us more time. It also meant that we were just really focused on trying to solve the problem. I think we weren't trying to impress external sources. We weren't chasing bad metrics. We solved the problem and then we're like, "We like money. Let's make some extra money." We thought it would be beer money and it ended up being a lot more than that.
Phil: [chuckles] For sure. I can see how not having investors early on helped you focus on your product, but I am in the same shoes. I have an agency that is a little bit big, over 100 people, and I'm building a product, but one thing that's a challenge is getting their resources because there's always real client work, and then you're moving the resource to work on your product. How did you deal with that problem so you're not always taking the resources out of the product that you were building?
Matthew: The original version I built with my CTO, just two of us. One engineer and I'm a product guy and I did the design work. He built it, and then while he was building it, I went out and started to sell it and have conversations. It took with the two of us out and I have a COO as well who was able to run the other business. We had someone in the team who was able to oversee-- To be fair, he was overseeing a lot of that anyway. The two of us stepped out. The product work was at a stage where we knew what we were doing for the next six months.
We knew the work we were going through. Nothing in that was I think needed me to step into my CTO specifically. We had a bit of time again. We were ahead on our product timeline. We have this time and we said maybe conversely too, I think how you think about it, we would put the best people onto a new problem, to do that, two best people, put them on because we know we get done a lot faster that way and we know that we find out within six months if it was a good thing or not.
Phil: Because you have systems who else build systems for agents that didn't need to go so much there and you went out and with the best people you had to build the product, which was yourself and your CTO?
Matthew: Exactly. We just took two of us. That's not a massive risk, and you know what? If it doesn't work out, we could drop and flip back anytime. I think founders, you're totally good at contact-switching. Again, if we're needed, it's not a problem, but we just locked ourselves in a room for a few months. It is hard. The team will question it so you need to be open with the team about why you're doing it. Lucky for us, it proved that correct. We're like, "See? We told you."
[chuckling]
Matthew: [unintelligible 00:09:50].
Phil: That's awesome. Let's talk a bit about founder. Like you say, as a founder, we can change contacts quickly. Why do you think you were the right founder for this product?
Matthew: I think this is a coms platform. It's all about taking time with customers and investing in customers. I love humans. I'm a product person so I love products. I love building products. Obviously, software makes a lot of sense there, but then I love people. I love [unintelligible 00:10:20] customers. I love [unintelligible 00:10:20] people. I was doing it and living and breathing it every day in the agency anyway. I think because it's that it was our problem, and not just mine, it was the team's problem.
I think you've lived and feel the problem close to heart. When you get a solution, you understand, really, what it is you're solving. It's really nice to be able to do that and you'll see, I think a lot of the most successful startups you see come from people who have a problem in a specific industry, and a lot of good startups are actually older founders who are industry experts and they're five to seven times more likely to succeed because they know exactly what it is they're solving versus saying, "Here's a hypothetical issue," or, "Here's a problem that I didn't necessarily have that course."
The main reason we were the ones that do it is because we were living with that problem every day and we were actually pretty good at getting around it. This has made it even better. Then part of it was timing as well.
Phil: I totally agree. I think the keyword word here is industry expert. You are the industry expert, you understand the problem well, you live the problem. I agree, most very successful companies have the sauce. It's not all the time, but if you look at successful companies, it's a lot different than what we think. It's not like the young person that just tought about a problem, it's someone that actually knows the problem, was in the problem. It's an industry expert that a lot more likely to be successful, but that's not what we hear in the media at the time.
Matthew: Any of your listeners who are over the age of 40, the most successful founders in the world are between 40 and 55 by a long way because you know what it is you're doing. You might not be a previous fan. You might be someone in the industry. This is obviously across all businesses. It's not 20-year-olds.
Phil: I tried to start coming in when I was 20. It didn't work.
[laughter]
Phil: Every time, me an industry expert. They don't have to be a founder before, but they know the industry very well and then they tell me, "I want to be the SaaS project for this industry because I have been doing this for 15 years and I really understand the problem." I'm like, "You're going to be successful. I'm sure you're going to be successful. Your likelihood of success just really increase." You build the product. Now, how did you get your first few customers? Your first 10 customers, your first 100 customers, how did you go about that?
Matthew: Actually, in person pretty much. This is pre-COVID, the world was open. We were going to events, I was going to events, I was seeing clients, and I was asking everyone if they'd use this. We hit up every industry. Again, I think the best way to start is you know that you had the problem, you know that others like you had the problem. The question is where else where the problem exists? With us, we went to charities, we went to enterprises, we went to agencies, we went to SMBs, we went to educators, and e-commerce, which was a small industry at the time.
We actually went out and tried everyone, tried a sample set. We probably spoke to 50 people. Of those, we probably got half on board. That's how we started and seeded it, those initial customers. I think from that point on, we're quite lucky in that we have a product that has a viral coefficient built in. People are sending video messages. When their customers receive those, they go and look how it's done, and they often come in into our funnel, south of Bonjoro. The reality is once we'd seeded, the product starts to grow a life of its own in those early days.
I think a lot of our early customers just started to filter in through this year. We had a couple of influential early customers who we met in person, who happened to be micro-influencers in their space. We had loads of mortgage brokers come in because we had loads of mortgage brokers' space. Loads of people are in the education space. Those early days and this is part of luck as well, I think we happened to get some good customers early. It was done through hard work, but some of those were really, really good for us and really accelerates our early growth, but again, we could have picked 50 other customers, maybe that wouldn't have happened.
Phil: Makes sense. You met those people in person at events. Basically, you're like, "There's an event for this industry. I'm going to go to the event and I'm going to show up and I'm going to show my product," or how did it go?
Matthew: Honestly, the most random thing, because we were building this for six months so we put a fair of time over those six months. Anything. We had VC events, went to staff events, other random things. All of it was stuff that we were going to anyway. We'd also get agencies and ask them about it. We'd ask if any of their clients wanted it so we have meetings too.
We generally did all this in Australia because the product team was on the ground in Australia versus all my clients overseas, but if I did a trip to London, I'd be asking every agency at the end, "Oh, by the way, we have this new product." Across, the agency wouldn't use it but they'd go, "I have a friend who would love this, give me the website."
You literally get this one by one by one over six months and then you just start to seed it back. This is about, again, if you have a product-led growth company, you just have to seed it well.
The seeding is everything, versus continuing selling off that. In person, it's great because you get feedback. You show people the products and they go, "This is good, this isn't good," and you go, "Cool, we'll go and change that."
Phil: You have a product that's worked very well for a product-led growth like you say, because people start using and then they're seeing how this was done, "Oh, this video is made by Bonjoro," and then they go and find your tool like MailChimp, Calendly, all those tools have a product lab built in. Did you start to leverage that as you started growing or you kept the sales lab for a little bit?
Matthew: We did that over time. I don't think we realized what we had. Again, like a lot of this is in hindsight. You went back and you go, "That's how it worked." At the time we were just like, "Oh, this has been--" Because again, it was always a side project that potentially have legs. We still did sales led for quite a while because I think trying to understand really where that problem was, we need to talk to customers. We used to talk to people to understand really the greater problem and what we're solving.
I don't think you could do that if just built in a shut room. We trying to understand that. A lot of our early conversations were about building the product too. We combine them both together. When that finally started to take off and when it was clear that product-led growth was a key part of what we did, then we doubled down and started to really look at that over time, but for a long time, every opportunity we'll be out there. I don't think we do it so much anymore. I mean we do but not so much in person. This is also, COVID and the world-changing has been part of that. Again, once again, the agency, all of our customer base is not in Australia. We're dictated a bit by that as well.
Phil: I like what you said about it's great to be getting the feedback and it's hard to get the feedback when you're in the room. Would you go as far as saying that maybe people become product-led too early when they should be still talking to customers or not?
Matthew: A lot of companies aren't product led because they don't have a mechanism for it. I think if you have a company that can have that mechanism, again, in hindsight now, I think it's actually extremely important if you have a mechanism that could do that. I actually do think you should leverage it early on. I still think you should go and talk to customers. To be fair, I think a lot of stuff I actually did this.
I know this is something that's not done because you have to build something, but I wish we'd clicked how big a funnel and how big a led piece was earlier so that we could double down on the micro improvements to make that go better in hindsight. Although the startup was great, there comes a point when we should have switched over probably a little bit earlier. It depends on your company. Some companies have to be sales led from day 1 to day 5,000. You're a sales-driven organization. Some are marketing-led, some ads-led, some are product-led. It's one growth channel. It's not necessarily the one that's going to be for you.
Phil: For sure. I think so many times we look what's working for X and you think's going to work for us, but it's each business is different. What's your biggest fear? We don't talk so much about fear as founders when you're starting this product and building this.
Matthew: The biggest fear is going to be running out of money [chukles] when you first start, because then, we did a bit of fundraising, and then you start hiring team ahead of your cash rates. You then got catch up to do. Now, obviously, you're confident in what you're doing, but there's an end date to your cash balance. You've got to get to a certain number before you hit that.
It's always the race, I think, initially around running out of money. As you grow and mature that, those fears change. I think you then stay, you have the market competition. You have macro climate changes like we've seen in the last four years. It's been a wild ride. Like COVID, Ukraine, [unintelligible 00:19:35], you see that coming into play, but in the early days, honestly, you have to meet pay for your team. [chuckles] That's the number one thing.
Phil: [laughs] I hope I can make payroll.
Matthew: You've been there. You know this.
Phil: I've been there, for sure. What was your biggest challenge to date?
Matthew: I think probably the biggest challenge-- Everything I'm saying here is in hindsight, I don't think I knew it at the time, but I think team. I think pretty much everything else comes down to team. You need to make sure that you have the right hires because they will make or break the company. I think we made some wrong hires, historically. It's interesting, you have two types of wrong hires. The ones are obviously wrong. They may be a little bit slow to lead them on. There are other hires that are not obviously wrong, where actually they are pretty good, but not great. That's hard because they're not doing badly, but they're not crushing it, which was potentially very harmful for business.
I think this is probably the big lesson I think every founder has to go through. I think if you can nail that and you get your hiring correct and right people, you need a lot less people in the company than you think, your output per person is much higher. It's not necessarily more expensive because you might have fewer more expensive people, potentially. In terms of relations, is a big part of this and then culture.
As your team starts to grow, you're more likely to make mistakes. I think in the early days it's probably easier because you're all super enthused and you start together and you have you found team. As you grow, you start to hire, and the faster you grow, there's probably more room for error, I think.
Phil: How did you fix it when you figure out that was a wrong hire? Especially if the person is doing it good but not great, how did you go about fixing that problem?
Matthew: I wish I had all the answers. I think that you have to move people on if they're not right. The other thing is, it's not necessarily always the person, sometimes it's the role. You go, "We're going to go for this channel." Let's just say you decide to have ads, and let's say you decide to hire somebody on PPC to run that. Ads don't work for you, but that person is really good, but it just turns out your business won't grow at any possible way like that, but the payout period is too long or there's too much competition. That person might let go. It's not necessarily their fault, it might be the strategy was wrong as well.
Regardless, that person, you need to actually act sooner than later and move them on. You can be transparent with them, I think, around this as well. There are always the best ways to let people go and you help them find roles to whatever you can because it's your fault, really, because you hired that person. If you've made a call to hire someone, hire it, and not necessarily you but your team under you who hire people, they hire someone, but they need to know that if that doesn't work out, it's their job also to let that person go, which makes me think, do you really want to hire this person? Because it's not a good thing to do. You've got to do right by anyone you take on board.
Anyone who hasn't done that before, [chuckles] honestly, everyone has to make this mistake. Everyone has to let someone go as they mature into [unintelligible 00:22:48] roles, not just the founding team, but your managers. It's good if this happens earlier rather than later. It's good so you don't make more expensive mistakes or it doesn't repeat itself.
Phil: For sure. It definitely abused the team maturity. I remember that happening with our manager just recently. They hired someone and then I was like, "You hired, then you have to let them go." Then they like, "You ruined my day. Can I go home early? I'm like, "Yes." The next time that they hire someone, they really thinking about, I don't ever want to have to let that person go. I think it's a growing thing that you as founder is going go through, but the more people in your team that grows and learn that, the better it's going to be for your company.
Matthew: It's hard, it's really hard.
Phil: It's very, very hard. At what point you knew you have a product that people love like people really like your product? When did you know that?
Matthew: I do remember one thing where the penny dropped where we have a large influ-- This guy called Pat Flynn, he's a big influencer in the SME space. One day we're just in the office and all these signups start coming in and all the stuff starts happening on social. [chuckles] What's happening? It was all these guys on stage talking about you as a massive event. We're like, who's this guy and what's this event? It happened again next month with someone else, and we're like, oh, this is out of our hands. We don't know what's going on. We start to see this growth coming in that you can't explain.
You definitely have not done anything to get it. We didn't deserve that. It was again, luck worthy. You see that happening. I think at this point with the business when it starts to get out of your hands and that's really exciting, and obviously, quite scary because you're like, is this us, or is this luck, or is this tight? Suddenly you realize that this business has its own momentum and its own thing. It's no longer something that is growing solely by your sweat, blood, and tears. I think that's the point when all of us were like, oh wow, this is the thing.
Phil: That's amazing. I can just imagine you guys at the office and now these signups are coming like, who did that? It was just very organic. Did at that point, you knew the business would last or you were still didn't know yet if the business would last? [chuckles]
Matthew: You never know if it last a day, things fail. I don't think we think in terms of, will it last? I think we think in terms of, can we get to our end vision? We think we can but we also know there are a lot of other variables, like competition markets and funding to get there. Do we have or it just get there in a certain time period? I think that's how we think about it, carry it as the vision.
Can the business last as it is? Yes, potentially, but would that excite us? If the business just stayed as it was forever, it wouldn't excite us. It's got to get bigger and bigger. It's got to challenge us more and more. I think the day that we get bored is when we stopped being challenged. That, to us, is actually the driver versus whether the business will last as such. None of us are interested in running a business that makes $5 million a year, every year for life, and doesn't go anywhere else.
Phil: Basically, you don't want to plateau. You want to keep growing and keep solving problems.
Matthew: Exactly.
Phil: Share a little bit about the vision because you say I want to realize the vision. What's the vision? Could you share a little bit?
Matthew: What we're looking at really is, we think the idea of loyalty is wrong in the other space and underserved. I think when people mentioned loyalty, people always think about loyalty cards, discounts, and that kind of thing. Whereas, loyalty really is the ability to, A, increase the lifetime value of customers through non-product-like pieces, which can involve communication. It can involve award schemes, yes, but there's much more to it. Also, it obviously, generates advocacy, which in turn leads to net new customers, because the more your customers talk about you and rave about you, the more new customers they will bring in. It becomes a growth challenge.
If you nail loyalty, you increase the lifetime value of a customer so every customer spends more and stays longer, and then you increase that base of your customers as its own growth channel. They start referring other customers. Most companies don't just say, wow. I think larger customers can be more passive. If you're Delta Airlines, you have a loyalty program and people sign up because they want to save money.
If you're a little startup, no one's ever heard of you, no one's going to talk about you. You have to basically think about your active role and this involves things like, obviously, stepping in with a video and saying, "Dave, I saw you signed up. Just want to check in and see if you need any help."
That's a great starting point. The video messaging is a good point, but then what happens from the next six months of Dave's journey? What are the things you do? How else do you make his journey as engaged and as delightful as possible? How do you bring your team to the forefront to make him into a more-- How are you turning him from a passive customer into a very active and loyal customer and he goes, "I love these guys, I'm staying forever."
Once you solve that, how do you go to Dave and say, "You're a great customer, could you go and tell 100 people about us?" Dave goes, "Sure I will," but then never actually does it. How do you make Dave go and driving more customers in as there are other signs? You just launched a product which is, basically, in the video space, but it's around collecting video testimonials of customers. The idea here is now you have this messaging piece that actually allows you to make customers more loyal by taking time with them, and now you have a piece which says, "Can you give us some great video testimonials so we can use on our site to convert more traffic?"
Those are just two starting points, and then we start to build a suite of products based upon both of those hemispheres. Again, rewards, discounting is part of this, sure. That's not what loyalty is though. That's one mechanism. How do you make any company becomes like a Zappos? How do you do that?
Phil: It's pretty hard. That's the problem we're trying to solve. It's funny because I had a similar problem this week, testimonials are so important. Speaking of this customer, like this potential client and he's like, "Your customer have big fortune 500 companies like ADP and Box, but I couldn't find many videos. They made testimonials about your company. Now, I'm like, I don't know if I can trust you guys because I Google and I couldn't find enough information.
If you have all those big customers, why you don't have a lot of video testimonials on our site?" There are four videos and he just felt like wasn't enough for our size. That's a problem that's very hard to solve. How am I going to go and get those videos? How am I going to get those people to be comfortable?
Matthew: You are educated as well. When a client needs to know four is not enough, he's going to ask for more. A lot of times, the reason people don't have testimonials is because they don't ask. It's that simple. I think there's a lot of education here about how to use your customer base better. A lot of people don't do it just because I don't think they understand. It's not that hard, to be honest, but then what you do is you prompt the customer and say, "This customer has been with you this long. They spent this much money. They're highly engaged. Now's a great time to go and ask for X." He does that and it's 80% chance of success because it's timing based. You built a system that says to him, "Today, contact these two people. Tomorrow, contact these three." These little things you do every day, but you're there to remind them just to make sure it happens.
A lot of this is, it does take an active role. You have to actually ask people. Timing is key when to do it. Asking positive customers rather than negative customers always pays. Again, there are lots of individual tools that can solve business problems that you stitch together. There's not really a platform that solves it all, I think. The sales CRM has been done, the market CRM has been done with the loyalty piece. It's disparate, there's no one owner of that space.
Phil: That's a great vision. I'm excited to see you realize that. Tell us a little bit, it could be a little bit more of what we have been talking about. What do you think the early stages SaaS founders should start doing that most people don't do when they're starting a SaaS product?
Matthew: Again, most people don't do this, but I think, get your hands in the products, customers more and faster. This is going back really early, people were like, "He's making it perfect before I show anyone." Forget that. Just get it in the hands of people, show them and demo it. It doesn't matter if it doesn't quite work or it's not quite there. Potential customers are very good and they like being part of a process and they'll help you build a better product for the first version.
Again, at first version, we put people onto it and it looked disgusting, but it worked for them. They were like, "This is good. It works, but this is hard, guys." We're like, "Cool, we're going to fix that." Don't ever lose that. Keep doing that. It doesn't matter if you're last in [unintelligible 00:31:57]. Keep putting your hands and your betas in the hands of customers as early as possible.
Don't wait until things are perfect. If you get bigger, have a group of beta testers who are there to break everything and be like, "Guys, here's a new thing. Can you go and break it and tell us what's terrible."
Phil: That's definitely easier said than done because I have a SaaS product right now, and every time I have a new feature to go out, I'm like, "Oh, my gosh, this has to go." But I'm always afraid of doing but once you go and people are like using and they're like we love it. Just fix this and this, and just super exciting and your product keep getting better.
Matthew: Because of loyalty. Customers like to be part of that journey. By doing this, you create loyalty because that was like, "Oh, this is amazing. They're showing us even though it's not ready, but we'll help build them." It's great.
Phil: That's something that you helped create. Probably when you see your feedback apply. You're like, "That's cool. They really hear me."
Matthew: Exactly.
Phil: That builds loyalty. What do you think founders should stop doing?
Matthew: I think maybe stop, this is not a new one. I think vanity metrics. Who cares how many new customers you get or whatever else? What matters is how many active customers do you have every month. How many customers are returning, and what are they spending if your B2B platform or B2C active users? Everything else doesn't matter, really. Focus on those. Anything to make yourself look good on a pitch deck that doesn't actually help business, forget about it.
Smart investors and venture capital will see those numbers anyway. Very few numbers really matter, active usage is key, revenue ultimately is key and what it ties to. Focus on those. Everything else, don't worry about that.
Phil: I like it, I loved it. Let's touch on brand. We talk a little bit in the beginning of the podcast. What do you think people could do better about their brand and building their brand and build their company?
Matthew: I'm from a design background so I get it. I don't think a lot of founders necessarily understand brand that well. They think brand is a logo, which isn't. Brand is basically the external facing piece of your culture. Yes, obviously, there are visual elements, but it's also how you talk to customers. It's what you stand for, what your views are, what your values are, who you're going to hire, because you get who you look at and they're amazing, this person is so smart, but if they don't fit your culture, don't hire them. If they can't speak with your brand voice, don't hire them.
Culture and brand is so entwined. It's crucial, This playbook is, obviously, Zappos wrote a lot about this. If you're interested, just go read that. As an early startup if you can get your brand done well, if you can come out looking professional, you look professional, you look beautiful, you appeal to your exact audience, your internal values aligned even when there's like three of you. You're going to grow faster because people will see that and they'll connect with it better.
If you approach enterprise, and you look like you're a B2C company, you won't sell to enterprise and vice versa. If you're a consumer and you look like you're made of enterprise, you're not going to sell for them either exactly the same product, different brand. We're messaging everything, I can't stress how important this is. In the early days, we did the whole bear thing. We gave bear suits away, we distributed videos. That's who we were. You know what? We didn't appeal to enterprise.
We appealed to our user base and people talked about us because of it. I think we were a breath of fresh air within that space. You obviously have to get it right, but just consider brand. If you don't understand it well enough, go and talk to somebody. If you want to hit me up about it, I'm always in LinkedIn and happy to help. Go out of your way and pack it. It's important.
Phil: Let's dive a little bit deeper into that. I love what you say, but what are some of the tactics that you implement your company together with a strategy? How did you arrive to the bear idea? I'm going to send bear suits to people. Let's go a little bit deeper on how that was done.
Matthew: Let me start by looking at what we're doing in the company, we were looking for some interesting and quite fun. We're inspired, love MailChimp, what they've done. Basecamp has done a great job. We're always looking to build this playful B2B brand. You have to be playful but we are a B2B company. We experimented with caricature because we thought that would work well. Again, like MailChimp done monkey, we'll try out other things, play around with that.
Once we had that, the bear stuff came after, that was the obvious thing to do because we were funny and we do funny videos for customers and business should be a pleasure. You should be able to make customers laugh, that all just naturally flowed on from there and went deeper and deeper. The way we spoke to customers, the way we behave with them where we have fun, is the exact same way that we will behave internally with our team. We wouldn't hire anyone who didn't really have a sense of humor.
For us, the way we speak externally and internally doesn't change, which also makes life a lot easier for us Then we start to think about values, what it is we really care about. It is important to have those down. They will change as you grow. It's not about sitting in a room and making up values that you think matter. If the value is team for customers like you mean that, put it down, that's fine. You don't necessarily have to show up on these values.
If your value is the customer is never right, if that really works for you, then that's cool. Be honest to yourself. When you get back to your values and there's no specific number, you can have 1 or you have 10. When you have those written down, when you start to write your coms and write on your website and design that, it'll basically have to reflect those values. The way you process refunds, the way that you hire, it all comes from that.
Then refine it over time, but do it early than later. Don't wait until you're 20 people and go, oh, we'll just hire design consultancy, because if someone else does it, it ain't you doing it. As founders, you have to be the voice in the early days.
Phil: Makes sense. You think, what really made the difference is think about those values from the beginning, hiring on those values, and act upon those values?
Matthew: Yes.
Phil: We're going to act based on this. We're going to hire based on this. We're going to direct our company based on our values, and again, we learned in the Zappos book, that's such a great book. I think everyone should read that book, but it's an amazing suggestion for people and advice, live with the values. I myself, didn't understand how powerful culture is and then we get to 30 people organization, and everyone is doing something different and then I'm like, "Oh, my gosh, what's going on?"
[chuckling]
Phil: That was funny because I remember I was reading a book and then I skip the chapter on culture and another company has 30 people and has to go and work that out later on and develop those values, and you will never get to 100 people and everyone works in the same manner. If we don't implement a strong culture based on our core values, I think that's the only way you can scale, and should be based on the founders' values. You can't hire, you can't outsource that to anyone else or the company is not going to scale.
What is an advice that you heard in SaaS that you disagree with? Your like, "I wouldn't do that. I think that's not a great advice?"
Matthew: I've done this, but I think fundraising is probably one of them. I know a lot of very successful bootstrap founders now these days. The caveat being quite a few of these did start out of other companies, out of agencies, or out of personal net wealth, like sometimes. Sometimes they start side projects. They'll keep on their day jobs for a while.
It's interesting, despite the competition in the market, despite the fact that most companies are funded, in the States, they're funded massively, you don't have to fundraise to have a successful company. Probably 90% of the companies in the world are not through funding, maybe higher. Outside software, most agencies are not funded. They start with someone doing some work on side enough to get there.
Again, it is hard and it's just not to say you shouldn't fundraise, but I think you don't have to fundraise is the point I'm trying to make and look to companies. It's good companies like ConvertKit, Design Pickle, back in the day, Mailchimp, Campaign Monitor, these companies are all built without fundraising and they've done extremely well because they've had to. One thing they will do is make you raise a sharp focus on your product because if you don't make money, you can't build it. It's that simple. You can't overlook mistakes.
Now, some of these companies then raise funds at later date. I think Campaign Monitor first fundraising was $60 million. That was the first time fundraising. We obviously had a company by that and it was specifically to go and put into growth lever. I think just consider that where you start. Obviously, definitely don't rule it out, but there's more than one way to grow a company and you don't have to start on that route. You might go a bit slower. It's not always a bad thing.
Phil: I agree. That's exactly how I'm trying to build my SaaS. I'm like, "I don't need to raise fund right now because I have an agency and I can sell fund." Also, I think the definition of success changed. If I build the SaaS and that's making $10 million in revenue, I'm happy. That's success for me. If I raise money and I'm making $10 million in revenue, my investors are going to be like, "What's going on? Why this doesn't make any money?" [laughs]
Matthew: Why's not $1 billion?
[laughter]
Phil: "Why is this tiny company not making any money?" I think also that changes. When you're building a business, it's very hard to know early on how big that business is going to be. I see a lot of business even because you work a lot of funded companies, they're doing very well, but their investors are not happy because they're like, "Why are you making money? You're not supposed to be making money. You're supposed to be losing money and trying to grow, grow, grow." [chuckles]
Matthew: I understand very clearly how funds get their return. You need to understand the mechanism before you ever get on the route. Understand that if it's 10 companies in the fund, 1 or 2 of those have to make it, but they have to make it to $1 billion to get their ROI and the rest of you can fail. You have to take every leap to get to $1 billion. If that means that you might fail, that's great. Cool. If you own 100% of the company and yourself $10 million, have a party, that's a good-- For some people that's fine.
Phil: For sure. Then, also, you wouldn't be forced to run your company to the wow because you have employees, you have people that want to do a layoff. It depends on your personality, if you are the out in personality, I think raising money makes a lot of sense, but if you want to make sure things are a little bit more stable and you don't have to make harsh calls. Again, I think there's a place to raise money. There's a place to not raise money, but the advice that you're giving here is like, "You don't have to always raise money. Look at what you're trying to do."
Matthew: Consider all the options. Look at other people. Look at people who have done both way. There are other mechanisms to great business. There are many models. Look at all the models. There's more than one option.
Phil: Let's say you could go back in time, Matthew, and meet yourself from 2017, and you have about one minute to give yourself an advice. What would you do? You have a minute in 2017 with yourself, [chuckles] what you tell yourself at the time.
Matthew: One minute. Probably put off fundraising longer. Don't hire this guy, but hire these three and go faster. I think we didn't realize what-- We sat on what we had probably 12 months. I think we should just like again, but on day 1 we should have just gone, gone, gone hard. I think we probably wasted a year there with it. That's because we had two companies. The issue there is that your focus is diverted. I'm not sure if I believe myself. That's the problem here. I tell myself and I'm like, "What do you know, old man? I'm going to do it my way."
Phil: [laughs] I think if I could myself in one minute a little bit longer.
Matthew: I'm emotional.
Phil: That's funny because I always have the scenario and then my wife says the same thing. "If you go back and tell yourself from five years ago, yourself from five years ago wouldn't listen to yourself." I'm like, "No, what do you know? I'm in charge."
Matthew: Exactly. Yes.
Phil: What book do you recommend for SaaS founders? What is one book that you read that you think made a big difference on how you run your business and what you are today?
Matthew: I'll start like the one that I've re-read recently, given the fact we talked about culture so much. Go and read Netflix: No Rules Rules. It's written by Reed Hastings and an HR consultant. They talk about the culture of Netflix. It's super interesting. Super interesting. How they've gone through that high-end process and how they build their team and build things like talent density, really, really interesting. It's not applicable when you're three people. It is applicable as you get bigger. Read it, it's awesome. It will change your views on culture and the importance of it.
Phil: I remember reading that book, and then she says, "The team that took you from maybe $10 million to $50 million might not be the team that's going to take you to $50 million to $100 million and you have to make peace with that. You have to make peace that the team that got you from A to B is not going to get you to the next step. Maybe they love the culture, like scrappy culture startup and now you're in a different people and it's just so hard because you really, going back to loyalty, you being loyal to those people." That's such an amazing book. I love that book too. Maybe I should read it again.
Matthew: Read every year [chuckles] as you grow.
Phil: [laughs] I think I read the book twice, and the first time I read, I was like, "I don't agree with like 80% of what she's saying." Then I read it again and I'm like, "Oh, yes, she was right. [laughs] This and this and this because it's hard truths that she's telling in that book.
Matthew: 100%.
Phil: What are you excited about and [unintelligible 00:47:08] in these days, the business in your personal life too?
Matthew: I think, as I say, look, the business, we go beyond the first product, so we launch the second product, which is really like our stamp into loyalty space. I'm excited and I'm also nervous. I think it's a big goal to go for. It's a different business that we'll end up with. You've got five years to do it. It's like you get to a stage, you take a rest, then you have to really go again. This is massive for us, but that's what excites me.
Personally, it's a case of how do you balance that with children. Right now I'm in the UK, I have family here, I'm based in Australia. We're looking at how do you spend a bit more time here? How do we live a life between two countries a little bit better? Also exciting and our customers are all around the world. A lot of frenzy with that. Someone said something to me recently, which is another founder who runs a much bigger company. He believes in always taking things one year at a time.
I think it's actually really good advice. I think you can plan well for the next 12 months. I think almost like, stop there because as we've learned, as I'm sure you've learned, [chuckles] every plan we do in January, will get us next January and we're like, "That work for six months." Then we went to this completely different. I think this idea of living and planning ahead a year at a time is actually pretty wonderful, and beyond that, just be honest with yourself, there are a lot of assumptions there. Potentially, because of that, you make better decisions in the here and now.
Phil: Exactly, in 12 months you are a different person and you are ready to plan again in the next 12 months.
Matthew: Exactly.
Phil: That's great advice. Congrats on your SaaS on your other product. Thank you very much for being in the show today. I think this was great to learn more about how everything started and where things are going. Thank you, Matthew.
Matthew: No problem, Phil. Thanks for having me.
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