Early 2011. We are 12 months into bootstrapped development of Brand24: a SaaS application providing instant access to online mentions about any company. A year with no income. It’s getting hard. A mortgage. We are used to our previous, well-paid jobs. Loans from our parents. My first daughter on the way. You get the picture.
So we decide to find an investor.
We reach out to 9 backers (VCs, business angels). We offer 30% of Brand24 for $25,000. Out of the 9 potential investors, we get feedback from 4. After a bunch of emails and a few meetings, we get a final answer from just one:
„We analysed your project and came to a conclusion it doesn’t fit our investment policy.”
Despite our multiple attempts at contact, we get no other feedback. We get desperate enough to offer our whole company for free with a single condition to hire us (so we can finally pay the bills) to some of the potential investors. Again, no interest.
The hardest months in my life. In all of our lives. You start to wonder: is this a bad idea? Bad execution? Maybe this whole Internet business is not for me after all. The people rejecting our project are smart. I get their point of view. We are not the first, not even the 10th social listening tool in Poland. Not to mention our global position. It’s easy to imagine our company getting little or no traction after the release.
Still, we keep going.
Not because we believe in ourselves. Not because we know that market conditions are perfect for introducing a new social listening tool. We keep going ’cause we have no alternatives.
A few weeks later, things are finally starting to look up.
We get very positive feedback from top online marketing influencers in the region. They really like our product. So do potential customers trying out our private beta. I’m sending hundreds of personal beta invites every day. The most unscalable customer acquisition strategy ever, yet a very effective one in our early days. Soon after we hit 1,000 highly engaged beta users, we incorporate the company (with the help from our partners/co-founders who we recruited from our first beta users).
We launch Brand24 in October 2011. We sign 40 new customers in the first month. We hit 100 paying subscribers before the end of 2011. Needless to say, what’s going on in our houses at that time (we couldn’t afford offices yet) looks just like the re-entry scene from the Apollo 13 movie.
We’ve been growing ever since.
We currently track 40,000 brands and products for over a 1,000 paying subscribers from 39 countries. We sign 120 new customers every month, with little outside funding. Since late 2011, our company is profitable and we grow organically, reinvesting money we get from customers. With every dollar spent on customer acquisition we are getting 4 dollars in return (CAC=25% * CLV).
A few months after launching the global version of Brand24, we’ve developed a formula for scalable and profitable growth. This is why last December, we raised a seed round from Inovo.vc. $350,000 for 5%. This time all the VCs contacted replied.
This time, we actually had a lot of alternatives.
Once we raised money, we expanded our marketing efforts and now we’re growing faster than ever. The number of new international customers acquired every month doubled. Meanwhile, the founders of LiveChat, a public company valued at $249M providing a live chat and help desk software tool for e-commerce sales and support, joined the shareholders of Brand24. With over 13,000 active subscribers and 70% profit margins, they are a benchmark for most of SaaS companies out there.
Obviously, it is not like we are on top of the world with Brand24 right now. Lots of online businesses grow faster, generate more ARR, have better ARPU. This is not a “from zero to hero” kind of story. Not yet, anyway. We obviously have a long way to go on our journey to $100M in ARR. To become any kind of benchmark for other online businesses out there.
Anyway, I’m moving away from my point here.
You probably already get the point of our modest story. We were willing to sell 30% of Brand24 for $25K — a roughly 100 times lesser valuation than the one from our December seed round. I know we are all bombarded by stories of overnight-success type of businesses. We all want to experience hyper-growth and become billionaires overnight. In most (if not all) cases, however, it takes years to turn things around. Years of 18-hour work days, sometimes spending more time with your laptop than your kid. Years of hustling. Keep it in mind.
Whenever it’s hard, just remember: it is supposed to be. Write your own story and prove disbelievers wrong.