Sramana Mitra: Kevin was also doing YCombinator?
Ryan Chan: I was part of the YCombinator class of winter ’17.
Sramana Mitra: But you didn’t hire him through YCombinator. You hired him and brought him into your YCombinator membership.
Ryan Chan: Right. We went through YCombinator. It was an amazing experience. I got introduced to this world of technology, venture capital, growth, and startups.
After we went through YCombinator, it was now the two of us. We decided to raise some money because that’s kind of the thing that people did after YCombinator. It’s very interesting because this is coming from me. Yes, I went to Berkeley. But I was never in the tech scene. I was never in the startup scene.
I was always in the engineering scene. I was always in the chemical engineering group. Now going through this YCombinator, we went through the motions of raising capital.
There’s another funny story here too. My wife and I were living with my mom in her garage in Los Angeles. When I got into YCombinator, I said, “I’m going to move up to the Bay Area for four months.” Shelly was still in school, so she continued living with my mom in Los Angeles. Shelly and her family is up in the Bay Area. So I lived with her family for four months. So it’s kind of like child swap.
So after we went through YC, we raised some money. Then I came back to Los Angeles and started hiring a small group of folks. In the very early days, I didn’t want to hire a sales team. So this was kind of coming full circle to that repeatable sales cycle. I said, “I don’t want to hire a sales team. Our product sells itself.”
For a very long time up until our Series A, I was very focused on just building the best product for our customers. We didn’t have anyone in sales. We had Kevin who is basically doing everything and anything from customer support, to marketing, to maybe sales.
We had tons of free customers or free users sign up for our free platform. During our Series A process, we raised $10 million. Our Series A investors said, “I know that you love your product and that the product sells itself because it does today. I don’t disbelieve you. But just see what happens when you hire one or two salespeople.”
I kind of reluctantly said, “Okay, let me do that. I don’t fully believe you, but I’ll try it out.” So we hired two sales folks. Then we started seeing our revenue increase. I was so entrenched in this idea that I hate when a salesperson calls me. I’d want to sign up for a free trial myself and buy the product that I like. I wouldn’t want to talk to anyone.
I was so entrenched in my own idea of how I purchase software that I got confused about how the rest of the world purchases software, especially in a blue-collar workforce environment. So we brought in these two sales folks and our revenue started increasing.
We were letting so much opportunity just slip through the cracks because no one was there to pick up the phone and call someone back when they asked about a support-related question or when they asked if they could get a demo. In my eyes, I was always like, “You don’t need to talk to the salesperson. Just sign up for the free product.”
So that was the beginning of our sales process with hiring a few folks for just answering questions from our customers. So we had come out of YC and there’s literally just two people. I had always operated in this bootstrapped mindset where I wanted to be fully self-reliant.
When we started taking money, I was all about this growth game. For me, I didn’t have that mindset of being in Silicon Valley. So this idea of hiring a very expensive sales team was just very different to me. I was very focused on our product – just building and getting a product-market fit. When I think back, that was the right decision. But I was probably a little bit late on hiring sales.
Sramana Mitra: It’s not so much hiring that I’m thinking about. I’m thinking about the process. You can do all these things. Our community is full of bootstrapped startups. That’s what we do constantly – to help people through their bootstrapping phase.
We’ve seen tremendous success in applying process in going from 1 to 5, 5 to 50, 50 to 500 customers. That process, if you do it well, is immensely effective. It doesn’t deter from bootstrapping at all.
Ryan Chan: Right. So I think I was late on the building process. But what I was doing during that time is focusing a lot on product-market fit. So we got to a point where we had a tremendous product-market fit. We could say that because of how many people were coming into the top of the funnel every single month. People were converting without talking to a sales person.
Emergence had a lot of confidence that if we hired sales people or if we hired and built out the sales process, we could increase our conversion rate and every part of our funnel.