Agorapulse 2016 year in review: growing from 100k to 245k in monthly revenue (MRR) as a self funded SaaS business
A year ago, I was closing 2015 with glee. After four years of constant hustle, our company had finally reached profitability and was approaching the 100k monthly recurring revenue (MRR) mark.
This was a huge milestone for us.
At that time, I told the team: “We’ve doubled our MRR in 2015 (from 50k to 100k). Let’s be crazy and aim to double it again in 2016 (to 200k).”
Deep inside, I thought if we got to 160k I’d be happy.
We ended up crossing the 245k mark at the year’s end. That’s 145% of growth in a single year with no funding. It took us three years to grow from 0 to 50k and just two years to go from 50k to 245k. Wow.
It took us 3 years to get from 0 to 50k MRR — and just 1 year to go from 100k to 245k MRR. It’s hard to get a bootstrapped SaaS business off the ground. But when it finally takes off, the sky’s the limit.
Let me step it back a bit. Benoit Hediard and I started Agorapulse in 2011 after a gazillion pivots. I remember very clearly telling myself at the time if Agorapulse doesn’t get to 50k MRR in 1 year, cut your losses and go home.
Thank God I didn’t.
When I started Agorapulse in 2011, I was ready to shut down if after a year we didn’t reach 50k in MRR. Thank God I didn’t.
But look at how painfully slow these first three years were for us in terms of growth.
I can still feel that dark tunnel my depressed self was hustling to get out of.
Why did it take us so long to be profitable?
That’s a good question. The answer is twofold:
First, we jumped in the social media marketing space to respond to the strongest market demand at the time: “I want more Facebook fans.” (Remember: it was 2011.) The one thing everyone was raving about was Facebook contests and promotions. So we built a tool for that.
Little did we realize what a bad business model that was. Contests fill a very short-term need for businesses. As a result, we experienced a very high churn rate. By the time we realized our model would never be sustainable and had to pivot to a fully loaded social media management tool, we were already a year into it and knew it would take another year to build a minimally viable SMM tool.
Second, we faced the tool vs. platform issue. Take @buffer for example. They started with a simple tool to publish social content without the hassle of manually scheduling each piece (the now famous Buffer “content queue”). It was a very targeted tool just doing one thing great.
The value was clear, the tool was easy to build, and it was clear what the next steps should be after the minimally viable product got traction: add more social networks and more publishing options to the mix.
The tool approach Buffer took was an infinitely smarter way to start a bootstrapped business. As for us, we went straight for the platform vision: build an all-in-one platform for all social media needs — not only publishing, but also listening, managing engagement, reporting metrics, and user management. This was much harder and longer to build. Admittedly, we had a half-baked product for a loo000ong time.
Did we make the right decision to start with just Facebook contests and promotions? Probably not. Do we regret it? Hell no! It got us started and allowed us to be where we are today.
We started on the wrong foot with a bad business model. But it got us started. Our determination for success did the rest.
Did we make the right decision to initially build a comprehensive social media management platform? Probably not either. But to be honest, I’m not sure things would have been easier if we had tried to focus solely on publishing (tons of competition) or reporting (a very small market).
So it was a very difficult path to take, but now that we almost have a fully baked product (to our standards), it’s paying off.
Why didn’t we raise money?
At this point, you may think that boostraping our business was a conscious choice.
Not so. In fact, we weren’t “bootstrap or bust” until the end of 2016.
We tried to raise money several times. We received an angel round of $300k in 2009 but spent two-thirds of it on a previous pivot. We tried to raise $1M in 2012 but got $250k from a seed fund.
We tried again to raise $1M in 2014. Then again in 2015. No luck.
All we heard was that in a crowded space with no obvious competitive advantage, we’d never make it. We gave up after 10 meetings each time.
We even applied to 500 Startups in the summer of 2015 for $1M. We got rejected again. Same ol’ reasons: crowded space, no competitive advantage, blah, blah, blah.
But in early 2016, our metrics were good and our growth was steady. We thought we could really catch an enthusiastic VC (or two). So we went on the fundraising path for the fourth time in five years, this time trying to raise $2.5M.
We met with 35 VCs in Paris, got two letters of intent, and picked one. They audited us and a week before closing, we mutually agreed that this was not a good idea and parted ways.
This time, it was a willing choice: we didn’t want to raise money — nor did we need it (at this stage). It also felt like a bad use of our equity.
My co-founder Benoit Hediard wrote a great post about that story:
Nowadays, self-funded startups are still outnumbered by glamorous VC-backed startups. But over the past few years, a…medium.com
What did I learn from that chaotic journey? And what you can you learn from it?
- Build a business where you don’t need (big) external funding to get to initial traction.
- VCs don’t care about you unless you can convince them that you’ll be BIG. Aiming for a GOOD business is not enough for them.
- Most businesses will never get BIG as say, Uber or Slack, but a few lucky ones will be GOOD (above $10M ARR). Yet $10M ARR is not big enough for most VCs.
- If you’re profitable and don’t have a very clear idea of what you’re going to do with that money, don’t raise money. Money is expensive (in terms of equity), so be sure it will help accelerate, most often in paid marketing or sales. We have no sales people (we’re fully self serve) and haven’t figured out paid marketing yet. It is too early for us.
How did we grow the team in 2016?
We started late 2011 with 6 people all based in Paris, France.
We’re now 27 spread over 7 countries (and 3 continents). The team grew pretty slowly in the early years (2012, 2013, 1014) as we were not profitable and had to live with a pretty limited cash flow (see the graph above…).
At the end of 2015, we were 11. A whopping 5 new hires in 3 years.
In 2016 alone, we hired 15 people. And we’ve hired 3 more in the first 45 days of 2017.
Between 2012 and 2015, we hired just 5 people. In 2016, we hired 15.
This growth feels incredible and challenging at the same time. We have more resources and can accomplish more than ever before. But we also have to change a lot of habits — especially when it comes to management and team communication. That will probably a topic for another blog post!
We’re also a “semi-remote” company and that adds to the challenge.
Why did we choose to work as a “semi remote” team?
That is another great question! I’ve read a TON of content on the topic.
My experience to this day is that the semi remote organization offers the advantages of the remote one (more flexibility, hiring talent where they are, expanding languages and time zone coverage without the cost of opening offices) as well as the advantages of the on-site one (easier communication for key functions, mainly product end engineering, and creating a core company culture that can then be spread outside).
I wrote a full blog post on the reason behind that choice. It’s worth reading if you have questions on this topic:
We’ve built Agorapulse as a “semi-remote” team. We have an office in Paris (9 people) and in Buenos Aires (3 people)…medium.com
I also wrote a blog post about all the tools we use as a “semi remote” team. Lots of useful ideas there:
My co-founder (Benoit Hediard) and I started Agorapulse five years ago. From day one, we knew that we wanted to create…medium.com
What’s next for us in 2017?
Are we going to double our MRR again and get to $500K? That’s our big goal. It’s hairy as adding $250k of MRR is not the same story as adding $150k, but we feel it’s doable.
And more importantly, it’s not just wishful thinking. We have a plan that we’re working diligently on to make this happen.
So … what is this plan?
To start, we’re launching a new version of our software. Among all the things that have impacted our growth thus far, improving the product has been our number one lever for growth.
With an existing funnel of roughly 5,000 free trials every month, a 4% conversion to paid subscriptions and a net MRR churn rate of 4%, just getting from 4% to 6% conversion and reducing net MRR churn from 4 to 2.5% will take us to $500k like a walk in the park!
But we also have plans to increase the top of our funnel. To help with that we’re working on several different projects:
- A new blog called the “Social Media Lab”, more on that soon :-)
- Much more paid marketing experiments to finally figure this out.
- A new ambassador program.
- Decent lead gen / lead nurturing efforts (yes, we’ve not even done that before!).
- Fine tuning our inside sales efforts.
- More “enterprise” features in our platform to attract larger customers. We started on that path in 2016 an increased our ASP by more than 60% already
I can’t wait to write the 2018 version of that post. Stay tuned :-)
What was your journey in 2016? Let me know!