#8 Interviews - Esben Friis-Jensen
Generating $4M ARR with 3 People.
I have been following Esben for a long time as my previous job is related to the same category he has been in. And back then, I admired the things they accomplished as a company.
I got a chance to meet with him in real life at SaaStock and am glad to host him on our interview series.
Updates From My Side
Passed 390 subscribers.
Planning to get paid sponsors, starting in 2-3 weeks.
Testing YouTube shorts and TikTok.
Planning to launch a growth cohort program for SaaS companies.
Can you give us some information about your background?
Prior to Userflow, I co-founded another company called Cobalt. Cobalt is a cybersecurity software as a service company that introduced pen testing as a service. Penetration testing, traditionally done by consultancies, was delivered through a modern software platform we built. I started Cobalt in 2013, about 10 years ago, with three other Danish people. Although Danish, we moved to Silicon Valley, founded the company there, raised capital, and built the company in Boston and Berlin, becoming a remote-first company. It was an exciting journey. When I left in late 2020, it was a Series B company with 200 people.
Why did you leave the company at that time?
I left because it had grown to 200 people. As a founder, I find it more rewarding to be in the early stages where I can stay close to the product, be involved in all decisions, and move quickly. I believe that SaaS companies often grow too big and complex, losing the speed and strong connection to customers necessary to deliver a great product. So, it was a personal choice to pursue something new.
And then you started to focus on Userflow, right?
Yes. In Cobalt, we were a sales-led business but had started transitioning to a more product-led approach. I'm passionate about the product-led movement. When my friend Sebastian, who founded Userflow, told me about his company and asked if I wanted to join, it was an easy decision. Userflow helps companies become more product-led, and it's a product-led company itself. Sebastian founded it a year prior, and I joined him to lead the go-to-market efforts.
As far as I see from the videos, three of you guys are doing great things regarding the MRR part.
Yes, we are a very special company. We're fully bootstrapped and decided not to hire unless necessary. So far, we're only three people: the two founders and one designer. Sebastian codes and builds the product, I handle go-to-market, and then we have our designer Jonas. We're doing very well, with over 4 million dollars in ARR, making it a fun and unique journey compared to most companies.
So Esben, as you're responsible for sales, marketing, and growth in your company, how did you start to get your first customers? It's a new product, and I'm curious about what you did in your early days.
Sebastian did most of the early work. Userflow originated when he was working on another company called Studio One, a platform for repeatable video recordings. He built a product tour for it himself, which gathered more interest than the product itself. This led him to pivot towards Userflow. The first customers came from his network from the original product. Then he launched a Product Hunt campaign for additional traction.
So first was the closed network, then a Product Hunt campaign, and third?
The third was Google Ads. He started with SEM early on. Many are afraid to use SEM due to costs, but it's effective, especially in competitive spaces. People search for your type of product or competitors, and you can run ads for those keywords. These were the three main ways we gained traction. In Cobalt's early days, we also started with our network and then expanded to broader marketing campaigns. Starting with your closest network is a common strategy.
Regarding customer acquisition, how did your network from Cobalt contribute to Userflow?
Not really, as they're very different markets. Cobalt was more for chief security officers, while Userflow serves product managers and customer success professionals, so there wasn't a significant overlap in those two markets.
You mentioned that you've remained a small team of three over three years without hiring full-time staff. How did you handle various operational aspects? Did you outsource or work with contractors?
No, we don't use contractors. Our approach is product-led growth, focusing on having a great product. A great UX, ease of use, and minimal bugs are crucial. Sebastian is an exceptional engineer who builds almost everything, supported by Jonas' design work. We use the product to attract customers and automate processes for sign-ups and tracking. We solve recurring support issues by fixing them in the product, reducing future support queries. Our philosophy is always to think product-first in everything we do.
You've been sharing revenue and feature updates publicly. What are the benefits of building in public, and why do you choose this approach?
We chose to build in public because it's an effective way to establish thought leadership and connect with the community. By sharing our journey, including our successes and ARR milestones, we inspire and educate others in the startup world.
Regarding sharing revenue details, it might seem risky, but it rarely gives competitors a significant edge. Instead, it enhances transparency and builds trust.
As outbound marketing becomes less effective, channels like social selling on LinkedIn and Twitter are crucial.
They are not just about product promotion but also about engaging with the community through shared experiences and insights which is a new way of selling, social selling.
I often discuss topics like product-led growth and the evolution of SaaS organizations, which ignite conversations and strengthen our brand. Building in public is about contributing to the entrepreneurial community, sharing knowledge, and fostering a culture of openness and collaboration. It’s a blend of marketing, community engagement, and personal passion, beneficial not only to our company but to the wider entrepreneurial ecosystem.
What are your thoughts on VC funding? Would you consider having VC funding, or would you prefer to continue as a bootstrapped company?
We're gonna continue as a bootstrap company. I don't believe, especially as a second-time founder, I don't think we need VC funding.
Unless you have some big ambitions of becoming like a unicorn company and I think those ambitions I don't have. I don't necessarily need to become a unicorn. It's okay for me to build a really strong, profitable business.
So I think too many of us and myself included with Cobalt was sold on this unicorn dream that that's the best thing in the world, to become a unicorn.
Right now, I don't think that's true.
I think for most founders, it's better to build a highly profitable business and a strong business. The thing that happens when you do this venture capital, it's either, you know, go big or go home.
So you invest a lot. You hire in many cases, too many people, because you have the money and that's the only way to deploy capital is really to hire people. So you end up with a too big organization in many cases, and I don't think that's good for the companies. On the other hand, the founders get super diluted.
So unless they show secondaries along the way, it's not necessarily very beneficial for the founders to go on the VC path. If they can build a strong bootstrap business that is potentially acquired, then it's a much better business case then, waiting for a company to go public in 15 years or something.
So if it's the money you have in mind, I think the bootstrap route is actually better if you're able to build a strong business.
Subscribe to our newsletter:
To receive weekly interviews,
To get the latest updates about SaaS Bootstrappers.
Do you have any advice for bootstrapped founders in their early stages, similar to where you are with Userflow?
Don't let them drag you into the VC bet. The thing about bootstrapped companies, especially if they're doing well, is that VCs will keep contacting them. But the reality is that the culture of a bootstrap company and that of a VC aren't really aligned.
VCs want to bring in a lot of cash, and you need to deploy that cash, typically by hiring a lot of people. In bootstrap companies, the mindset is different; it's profit-first and staying as lean as possible. Those two mindsets don't fit together in my view. You should only go the VC route if you want to change the company into a more VC-backed kind of company. While I enjoyed my journey with Cobalt, I now prefer a bootstrap journey.
My advice is to keep going and not give up. For early-stage bootstrappers, it's the same advice I'd give to any startup, venture-backed or not: focus on earning money from customers. Many forget this. If you meet an early-stage founder, they often talk about raising capital, but do they have customers?
If not, they should stop trying to raise capital and focus on getting customers who are willing to pay for their product. That's the number one priority. If you don't have a product people want to buy, why even try to raise capital?
And in terms of hiring, you also emphasize trying to be lean in most cases, right? Maybe working with contractors, some freelancers, or not hiring full-time?
Working with contractors can be beneficial. For instance, our designer Jonas was initially a contractor before we transitioned him to a full-time role. It's an effective way to test working relationships with less commitment, giving you a chance to assess their work over time.
In general, I always evaluate the necessity of each hire, prioritizing profit first. Our philosophy is to maintain a profitable business without unnecessary expansion. Our approach involves first looking for solutions within the product itself, then turning to automation, and finally considering hiring people as a last resort. Essentially, our strategy focuses on product solutions, then automation, and only then do we consider adding personnel. Hiring is indeed our third option.
Previous Issues:
Thanks again for reading the interview and don’t forget to share this issue if you want your friends to read.
Reply