Bootstrapping to Inflection: Dan Stewart, CEO of Happy Grasshopper (Part 7)

Sramana Mitra: What was the inflection point? I remember there was a channel-based inflection point that you were able to hit upon as well, right?

Dan Stewart: It was the introduction of the custom-writing services that caused the spike in our revenues. Instead of providing a single message that they can send once per month, by providing this custom content, we became attractive to a much broader audience.

Sramana Mitra: When was that?

Dan Stewart: That was 2013. >>>

Bootstrapping Using Services: James Kane, CEO of RWS (Part 6)

Sramana Mitra: In 2011, you had scaled significantly. Where are the revenues at this point?

James Kane: I want to say they’re right around $4.5 million or so. My recollection gets a little bit fuzzy there.

Sramana Mitra: What are the next strategic moves? What was the thinking behind those moves?

James Kane: We entered a period of time where growth slowed. We attributed it to the charging of the setup fees. In 2011 and 2012, we suffered a little bit in terms of growth. We didn’t lose ground. We just weren’t growing as explosively as we wanted to. Then in early 2013, we changed our model to one where we didn’t charge large upfront setup fees. That wound up reigniting sales growth again. >>>

Bootstrapping to Inflection: Dan Stewart, CEO of Happy Grasshopper (Part 6)

Sramana Mitra: Talk a bit about the ramp in customers. What was the first year and how did it grow from there?

Dan Stewart: In the first year, we ended up with tens of clients from the real estate coach who was talking about our service. Somehow, a very prominent real estate agent up in Washington named Ben Kinney heard about us, and he subscribed to our service. I had no knowledge about him but he enjoyed the result of our service. One day on a webinar, he mentioned that he really liked us and he told his audience that they should take a look at us. We thought we were being hacked because our web traffic just spiked. It was completely unexpected.

From that, we ended up with hundreds of clients. We got to know Ben. He is one of the most successful real estate agents in the world. He has multiple millions >>>

Bootstrapping Using Services: James Kane, CEO of RWS (Part 5)

Sramana Mitra: How did revenue ramp during this two-year period?

James Kane: We went from about $500,000 to a little under $3 million.

Sramana Mitra: That brings us to what? 2008?

James Kane: Yes, roughly speaking – about when the housing crash started.

Sramana Mitra: How did that impact your business? >>>

Bootstrapping to Inflection: Dan Stewart, CEO of Happy Grasshopper (Part 5)

Sramana Mitra: When you and I started working together and we were looking for the positioning, that was very much our conclusion. It’s okay to cater to people who are coming as inbound leads and are a fit for the technology and product. But from an outbound marketing point of view, you have to pick a vertical and you have to remain focused and committed to get the full leverage of the methodology of getting a laser-sharp positioning in place. Talk about pricing. My recollection is that there were some discussions and debates around freemium and free trial on that front as well. Talk to us about what those decision points were.

Dan Stewart: We were, and remain, willing to experiment with pricing and with trials. On our very first site, there was nothing free. There was no trial. It was $19 a month. As we started to get a little bit of traction in the real estate space, we thought, “Wouldn’t it be smart to increase this?” We created an account that was 50 contacts free forever.

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Bootstrapping Using Services: James Kane, CEO of RWS (Part 4)

Sramana Mitra: As you identified that opportunity, what then did you do to execute on it? What changed?

James Kane: We identified that the opportunity was significantly large here. We then reimagined the company to pursue a much larger opportunity. We moved the business from a small, sleepy college town in New York to Phoenix, Arizona. We had a lackadaisical team. We started the process of building a proper team to pursue the larger opportunity. It all started with the idea that there’s a larger opportunity out there. The first step was the realization that major changes would be needed to realize the opportunity. I wound up bringing on my sister who’s our Chief Operating Officer. Together, we reimagined the business from scratch. >>>

Bootstrapping to Inflection: Dan Stewart, CEO of Happy Grasshopper (Part 4)

Sramana Mitra: How many years was the CRM company?

Dan Stewart: Three years.

Sramana Mitra: How much did you sell it for and to whom?

Dan Stewart: That’s all really confidential. It wasn’t a sexy exit. Our largest customer did not want us to sell to their competitors. They basically bought a license of the code and then we shut down the company. >>>

Bootstrapping Using Services: James Kane, CEO of RWS (Part 3)

Sramana Mitra: What was specifically the customer acquisition strategy? Were you calling these people? Were you visiting these people? Was it direct? Was it channel? How did you sell?

James Kane: The primary customer acquisition strategy was in-person sales at trade shows. The appliance retailing industry is cyclical. They have two buying seasons – in the late summer and in the very early spring. Appliance retailers have big buy fairs where they come together at those two times to buy new merchandise for their store and also to evaluate new business services. Almost all of our initial sales were through those kinds of trade events.

Sramana Mitra: How did the business ramp given that strategy? >>>