Hey everybody, welcome to the first episode of The Early Stage Founder Show, the podcast for B2B SaaS founders looking to accelerate their growth. I’m your host, Andy Baldacci, and every Tuesday I’ll bring you a brand new interview with startup founders, venture capitalist, consultants, anybody who has been there before and can provide actionable lessons to help your startup get to the next level.
Today, I’m really excited to be talking with Josh Pigford of Baremetrics which provides zero-setup subscription analytics and insights for Braintree, Stripe, and Recurly. Josh launched Baremetrics in 2013 and hit $5k MRR within the first five months completely bootstrapped, doing everything himself. Since then, Baremetrics has raised $800,000, built a team of 7, and grown to $55k MRR.
In this interview, Josh talks about what it’s like to get off to such a fast start, the decision to raise money, their plans for growth in the future, but above all else he talks about his decision to embrace transparency and how he is able to drive forward in the face of all the armchair quarterbacks it brought out.
So without further adieu, here’s Josh!
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Transcript:
Andy Baldacci: [00:01] Josh, thanks for joining me today.
Joshua Pigford: [00:01] Thanks for having me, Andy.
Andy: [00:04] In my mind, as someone who's been to MicroConf a couple of times, someone who's always read Rob Walling's work, you're almost like one of those Internet celebrity people, but I know not everyone has heard of you. For those unfortunate people who don't quite know who Josh Pigford is and what he's done, can you give a little back story to you and launching Baremetrics and all of that?
Joshua: [00:32] I would consider myself a lifelong entrepreneur. As a kid, I was selling junk and cutting lawns. Not just like somebody would ask me to cut their lawn, but I was actually trying to go get lawns to cut.
Andy: [00:50] You were hustling.
Joshua: [00:52] Yeah. That's always been in my blood. I was a kid who grew up on the early days of the Internet, making websites on GeoCities and Tripod and all the stuff. I was always making things as well. In high school I was making websites for people.
[01:19] In college I was still making websites for people, also I started picking up actual programming, building these random sites. Some of the gems were reallyfunarcade.com and reallydumbstuff.com. These sites. I put stuff on there, then I put ads on them. Back in the early 2000s you could make a nice pile of cash off ad revenue for a relatively small site. I was doing a mix of that kind of stuff.
Andy: [01:57] Was that full time?
Joshua: [01:58] In college we're talking like my freshman year of college I started building this kind of stuff I'm going to school. I was big into music. I was in bands. I was designing websites for other bands. I was doing what would be considered client work plus making sites and things like that.
[02:18] In reality I was making pretty decent money for a college kid. I was bringing in $2,000 or $3,000 a month off of these random sites and stuff.
Andy: [02:29] Right. Most people are scrounging around for enough money for pizza.
Joshua: [02:33] Right. Right. I finished college. I graduated college with a graphic design degree. Then shortly thereafter I…time out here. I graduated college in summer 2005. Then I got married that same summer. Then my wife and I moved…I grew up in Mississippi, went to college in Mississippi.
[03:02] Then we got married and a week later moved out to Denver, Colorado, just for kicks. Didn't have jobs or anything. We were fresh out of college. I still had all these random sites and they were getting more substantial, making $3,000 to $5,000 a month at this point. There was still this stereotypical like, "We’ve got to get a job."
[03:26] I've been through it for years. I don't know what I was thinking, but I went and got a job at an interactive design firm. I lasted seven weeks and I quit. That was my extent of my employment anywhere. I looked back. It's like, "I could make so much more money just doing freelance design and then building my own stuff."
[03:50] For the next few years I was mixing my time with client work, doing a lot of design and development work. My wife and I had a collectable, it's called Urban Vinyl Toys. They're basically collectible art toys. We had a toy store. I did the eCommerce thing, but at the same time also I'm building software, too, online.
[04:17] I start getting into SaaS and doing subscription revenue, that kind of stuff. All of these things ultimately lead to me creating Baremetrics. Baremetrics was ultimately created for two other SaaS products I had at the time called Temper and PopSurvey. They're basically for surveying software and typical SaaS products as far as subscription revenue goes.
[04:40] Built Baremetrics really as an internal tool and then decided to launch it and see what happens. That was 2013.
Andy: [04:48] Then, when you launched it, a lot happened pretty quickly, didn’t it? [laughs]
Joshua: [04:51] Yeah. I was a one man show in that thing, doing design, development, support, marketing, everything a hundred percent by myself for the first six months or so. What I found was within a few months of building Baremetrics I had already eclipsed anything that I had done as far as prior SaaS products in terms of monthly recurring revenue goes.
[05:23] I opted to not work on that stuff anymore, sold those off, and to just focus all my time on Baremetrics.
Andy: [05:30] Right, because you hit, I think, it was $5K MRR within five months of almost even starting on the product.
Joshua: [05:37] Right. I built the first version of Baremetrics, got it from basically idea to charging money within a month. That month, though, was like about seven or eight days of my actual time. The rest, I'm doing client work, and I'm still doing client work and stuff at that point.
[05:56] It was relatively little work, and that first version got me like $2,000 or $3,000 a month in recurring revenue with, basically, eight days of work. Then there's a lot that happened shortly thereafter the first two months. I ended up rebuilding the whole thing from scratch and just it kept growing after that.
Andy: [06:18] At what point did, because you, I'm guessing…I assume this went quicker. You'd sold off the sites, and you'd stopped as much client work, and you went back in, built it up a bit. At what point did…Was it right away, where you're like, "Alright, I'm on to something."
[06:33] Is that why you kind of drifted away from the other projects? Were there doubts in the beginning?
Joshua: [06:38] Sure, there were lots of doubts, especially around the long term viability of this idea. Building this Stripe tool, the thought at the time was like, "Hey, I'm going to build this thing. Then, in a year, Stripe will have it. They'll have built something," or, I don't know, maybe they would want to acquire something.
[07:03] My thoughts were not, “This is the thing I’m going to work on for a while.” [laughs] As it kept growing, it became clear there's a strong need for this. After conversations with people at Stripe, I felt a lot more confident that they're not going to come and build something that would decimate Baremetrics.
[07:31] I launched it in November 2013 and I think by February or March I was done with the other products I had. I had stopped taking on client work or anything like that. It happened pretty quick.
Andy: [07:44] At what point did you start? What you're known for now, outside of the product itself, is the transparency in how you guys do business, and the struggles and successes you've had, and just the fact that you literally opened up your metrics for Baremetrics.
[08:06] At what point did you think, "Alright, let's talk about this. Let's be open."? When did that come about in the growth process?
Joshua: [08:13] It was probably February 2014, so this was a few months after I had launched. I had rebuilt it from scratch. The first version was really sort of a primitive concept. I just built what I needed. Then, after we got more customers, it was like, "Hey, this is clear. There's a lot more needs here, and what I've built this first time around does not cover it."
[08:38] I went through the process of doing a month long rebuild, what I call version two of Baremetrics. As I'm finishing up that second version in red, it's redesigned as well, so I need to relaunch the whole marketing thing, and I really wanted a demo of the thing. It just made sense.
[09:05] Before, I'd had a demo of the first version, but it was basically just dummy data, and the scope of what Baremetrics could do was super simple. There was just a single page with numbers on it effectively. There weren't all these pages to check out, so it was really easy to just come up with dummy numbers, and throw them in there, and call it a day.
[09:27] The next version was a lot more substantial and it was going to be borderline impossible for me to just fake all this data, at lease in a reliable way that made it obvious that this could be a real business.
Andy: [09:43] It could be real, yeah.
Joshua: [09:45] My entrance to transparency was predicated by laziness. I remember I was talking with some other founder buddies, they'd be like…It was the day before, like, "Hey, what if I just made my stuff public? I'm only doing a few thousand a month. It's not a big deal. Who really cares? I don't have anything to hide. If anything…"
[10:12] Then I felt like I'm doing pretty good compared to what I've done as far as software goes in the past, so why not?"
[10:18] The day before I started second guessing I said, "Men, this feels a little wrong, like still I thought my numbers out there, but you can see also my churn and like all the stuff that just spills a little…"
Andy: [10:31] You're vulnerable.
Joshua: [10:32] Very vulnerable, right. I second guessed myself a little bit, but then the next day…and I had a couple of people who were like, "I think it's a good idea, like the competition can see it, and then like they know how good you're doing and they can copy things." Fair point, but then I was just like, "Pap! I did the demo. And so like…
[10:51] [laughter]
Joshua: [10:51] I just pulled the switch there we go there are my numbers.
Andy: [10:55] There it goes.
Joshua: [10:56] Demo.baremetrics.com that's where that ended up and where it still exists today, and so that was my interest. Now, I would love to say that at the time it was purely altruistic like I just really wanted to help other businesses' that was part of it, but it really was laziness to begin with and it has moved now into…
[11:19] We have the engineering capacity to generate a bunch of feasible numbers, but they're not real numbers I think we could do that, but the payoff from being able to talk to other businesses.
[11:30] And say, “Hey, here’s our stuff, here’s the real deal, this is actually how at least our startup is going.” It’s easy to get caught up in the buzz of the crunch, and products, and work [inaudible] or is it just feel like you get the skewed view of like there's a lot of buzz around startups that they must be doing awesome and the fact is that they're not.
[11:54] So being able to say like, "Hey, here's where we are and here's like what's in all." That's being really positive thing for us.
Andy: [12:05] Yeah, and because you're saying it's like it sort of was birthed out of a little bit of laziness, you might say, but it's turning to almost really part of your identity as a company.
[12:16] Like in one of your recent Medium posts, you said that their metrics exist to help businesses and operates in a way that reduces hype and sets realistic expectations and that's a win for everyone, and that's kind of in your ethos now, that transparency.
[12:33] One thing I'm really curious about is that because I've had those same thoughts as you, where it's like when you open up it’s easier to share when you're winning, when you're killing it, when you want a pat on the back, but like you were saying, the MRR, the growth was great, but there was some churn, there were some other things that were easier just to talk about.
[12:55] And so along the way, has it been ever hard to face some of the things where you’re struggling when you're so public?
Joshua: [13:04] Sure. There may be people are like, maybe they try out their metrics and then they see our public numbers and they're like they can make people second guess the stability of our business, or it just opens up…like it's when you post anything on the Internet, it's like it's somehow instigates everyone in their mind permission to criticize it.
[13:31] We certainly get some of that. People talking about, thinking we're not doing that good or like, "Oh my, that trends really high, or…" There's a lot of different ways that you could critic it and look into deeper things than they really are, but at the end they're like not positive has been far away to sort of negatives.
Andy: [13:57] Right and it’s the same thing as like anyone watching sports it’s the “Armchair Quarterback” is that when someone’s once going to put things on display you’re going on a commentary, but I know one thing you did touch on in the Medium post is that what really kind of not to say [inaudible] what's done with it is that at a certain point you weren't where you guys thought you'd be at this point, because you grew super fast and you're still growing and that's the thing.
[14:24] If you look at your road, it's not slow by any traditional metrics, but when it's not quite where you want to be how like…I don't even know how to rephrase I guess as a question, but how has it been kind of like dealing with that I guess?
Joshua: [14:39] Any founder, entrepreneur is really by necessity an optimist and a lot of times like two of thoughts, and I think that's because you have to be to create something out of nothing.
[15:01] To say like, “I’ve got this idea that I feel it could be something, but I have to make it out like…I have to [inaudible] out of this thing and out of dirt, and spit, and grass into something that other people would want to pay for." In reality this doesn't make any sense. There is no logical reason any of that stuff should work.
[15:25] You have to be this over the optimistic person to think like, "Yeah, of course, this is going to work," like, "Of course, this is a great idea," because if you don't then you'll just quit, you'll stop. That's the difference between I think founders, and entrepreneurs, and then like the regular average Joe.
[15:40] Not like the regular average Joes is in any way like inferior or anything, but when it comes to creating something out of nothing, the difference is you have to be over the optimistic almost to the point where you're not even realistic, because being realistic means that you see what seems the logical end result which is failure and if you rush on to that then you just won't do it.
[16:04] What happens is the next one the one that comes with the transparency out of things is you launch this thing, you launched in public, and I've been optimistic about our growth, of course, it's going to be great. Then it's not great, it's not always as great as I thought it would be.
[16:21] Then when you get some criticism about performance and how the business isn't doing then like it stings a little then it looks like, "Yeah, you're right, and I was wrong on my outlook of where the business would be." That's a bummer when you don't hit your goals and you're not where you thought you would be six months, a year ago.
Andy: [16:44] I also feel like that could be a benefit in a way because at the same time that's feedback that most people shy away from, like if I'm working on my copy writing, like one of the last…I hate other people reading it, because I don't want them to say it sucks, and that's what I need to get better at it.
[17:07] I feel like this is almost a way to force yourself to have some kind of uncomfortable situations like that where you can't really shy away from things any more.
Joshua: [17:17] To some extent the danger is getting criticism from people who don't know the big picture. So you can look at our churn and make assumptions and certainly make some suggestions, which is great, but like me as the CEO, knowing our road map and where we're heading, I have context that the public doesn't have, because I'm transparent with numbers, but I'm not transparent with every single little bit of the business.
[17:49] There are those things that I know and the things that we have planned that we haven't shared with anybody, so it's like I know the bigger picture and so the feedback while great lacks context.
Andy: [17:59] That's true.
Joshua: [18:00] It's the arm chair quarterback thing. You don't know the context of why that quarterback made a decision in the game itself. It's easy to make observations when you have hindsight, but in that moment when a decision was made, it's harder to know why other people make those decisions.
[18:23] That's the downside of the transparency, is that we're transparent, but the transparency a lot of times lacks context.
Andy: [18:31] No. We've covered the downsides. The upsides are it made it more real for so many other people to see your journey, and see the fast growth. To see what it can be like. To see realistic numbers, and to have something than judging us. Also in your blog, in the podcast, you share the success, but you also share what didn't work.
[18:54] The transparency, kind of embracing it has built you guys a larger audience, and has helped a lot of other founders. It seems like at this point, it's clearly been a win. Would you say so?
Joshua: [19:05] Oh sure. I wouldn't change it. I don't know that I would do anything different. It's certainly we've gotten a lot more views on the company than we otherwise would have.
Andy: [19:23] Along with that though, also when literally your metrics are public, you're going to get interest from investors, and that happened pretty quickly for you guys, didn't it?
Joshua: [19:32] Yeah. In summer, 2014, so I guess two years ago…we've always had a relationship with Stripe from the start really. We talked pretty regularly, especially early on, and so they approached us in summer 2014 about doing…I think they called it some kind of like Stripe fund. I can't remember what they called it exactly.
[20:05] Slack does something like this too, and then Salesforce does something where basically, they'd try to help promote people building stuff on their platform, and they had not setup this thing before.
[20:16] They set it for Baremetrics initially to say, "Hey, we support you building stuff on our platform," and ideally encourages other developers to build stuff on their platform too. The start of that was they, through general catalyst, put in $500,000 initially.
[20:37] That was the first foray into the investment side of stuff. I had not planned on taking on any investment at all. I just wasn't interested, but the terms of it were really good, and I figured I'd give it a try.
Andy: [20:52] Was it more than in terms…? I'm guessing it was also because of the close relationship with Stripe. If it was another VC had come with similar terms, would you have been as open to it, or was there more to it than that?
Joshua: [21:05] Yeah. That was the icing on the cake with the Stripe part. The terms were it's $500,000 at a $10 million evaluation which via a safe. That means that ultimately…as of today, there's no investor that has any actual percentage of our company, and I don't have to pay that money back per se. It's not like a convertible note, or…
[21:32] The terms and evaluations were really good. That sort of translates to basically five percent of the company, and I personally couldn't really care less about equity. I just don't care. I probably should care a little bit more, but in reality 5 percent, or 10 percent, it's irrelevant.
[21:56] A lot of times, people who've never taken on any kind of investment, but like talk about it talk about, "Oh, the investors are controlling your company," and like, "You're giving up control." Like no. No. That's not how it works.
[22:13] If you give up 50 percent of your company, or 75 percent of your company, or 90 percent of your company which happens, well then, you've lost some control. There's a board of directors for Baremetrics past me.
[22:25] There's nobody who's forcing their opinions on me. The investors give really great feedback on things, and have a lot of insight. Our investors have been entrepreneurs themselves. It's certainly been a net positive as far the investor, the humans behind investment go, but there is baggage that comes along with investment though.
Andy: [22:48] You touched on a good point, because there's something that seems like people have very polar views on where the traditional startups on like Y Combinator, or on Hacker News. The ones that are raising huge amounts of money with just tons of customers, low revenue, this and that. Then they'll see the VC route as the only way to build a big business.
[23:11] Whereas in the bootstrap world, they almost see like that’s the only way to raise money, is to have this big board, to give up 80 percent of your company, to have someone breathing down your neck, to [inaudible] where that doesn't have to be the case.
Joshua: [23:28] Exactly. I mean, everybody likes to think in black and white, and reality is the world's grey. When people talk about the bootstrap thing versus VC thing, a lot of times, it's people on both sides who have not had any experience with the other side.
[23:48] It's like first time entrepreneurs who do the VC route haven't known what it means to bootstrap something, and don't know what that takes to do that. They think that it's impossible to build a company that way.
[24:01] Whereas the bootstrapped people have never raised any kind of money. They don't know what that actually means, or what the terms of that stuff are, and how that affects your company. They just assume that they're giving up everything, and that you're just working for the investor at that point. That's not true either.
[24:18] I've done both, and I think there's pros and cons and for the most part, if you haven't had experience with both, then you probably should keep your mouth shut. You don't have any experience to comment on.
Andy: [24:31] It's another arm chair quarterback situation.
Joshua: [24:32] It is. It's exactly what it is. It's important to understand that maybe things are not as cut and dry as you think they are. No.
[24:43] That's a great kind of just piece of wisdom for anything, but especially in business. Especially where there can be so much hype around things on either side, as in almost sort of a little bit of people can just have almost borderline religious views on how deeply…
Joshua: [25:00] Sure.
Andy: [25:01] on some of these kind of pass of building a business, but at the end of the day, it's building a business. There's multiple ways to do it, and it's open to it, and don't feel you need to have an opinion if you don't quite know the other side.
Joshua: [25:15] A lot of times, it's the arm chair quarterback thing where it's easy to be like, "Man, I wouldn't make that decision," but it's like, "Will you make the best decision you can with the stuff that you've got available to you?"
Andy: [25:32] Exactly.
Joshua: [25:33] Sure. In hindsight, maybe that was a bad idea, but at the time, I didn't know any better. Especially for me, I learn from doing things, and I learn from screwing things up. That's the fastest way for me to learn. It's just like, "I don't know this is a good idea, or not, but let me just throw it…"
[25:51] The whole public dashboard thing. There were plenty of reasons why that was a really bad idea logically, but it's like, "Well, let's try it and see what happens. Worst case, I have to turn it off."
Andy: [26:02] You're not going to die.
Joshua: [26:04] Right. "Let's just give it a try and see what happens." To me, that's so much like business. It's just throwing something at the wall, and seeing if it sticks.
Andy: [26:13] Instead of just talking about what's on the wall.
Joshua: [26:16] Yes. To me, that's the danger of super tangent here, but like people going to school thinking they have to have a business degree to do a business. In reality, the people that are teaching those classes, a lot of times have never started a business, or it's been 30 years since they've done anything with business.
[26:37] The best way to learn as far as entrepreneurship goes, it's to just do it. To just try and see what happens.
Andy: [26:46] No, and I couldn't agree more because it's like I think you can be more prepared than others. Going in clueless is not going to help anybody, but at the same time, reading the 12th book on the subject really isn't going to help you.
[27:02] It's just delaying the learning, and that's getting their self out there. Getting yourself actually doing something. Getting feedback is the best way to go forward in my opinion. To kind of go with that, and to start wrapping things up a little bit, you talked a bit about having the context for your plans for the future.
[27:17] I have just a couple of questions about that. We don't need to pry too much. I'm curious, most companies, they don't raise a single round of VC money. I know you've mentioned a blog that you're hoping to be profitable within the next year.
Joshua: [27:33] Yeah.
Andy: [27:34] Do you see there being another fundraising event coming up at some point?
Joshua: [27:39] No. We ultimately raised $800,000 total. Raised a little bit more in the last year, but at this point, I don't have any immediate…Profitability is the game. Not to have to raise another round to sustain running at a loss. That's the main goal.
Andy: [28:01] Then even at a high level, we don't need you to open up your entire playbook here, but what do you see is the future for Baremetrics? Where do you see the growth for you guys?
Joshua: [28:10] For us, it comes to how can we equip more businesses? We started off on Stripe, and very specific segment of Stripe, so subscription company which is not the majority of people on Stripe. A couple of weeks ago, we expanded to Braintree, and Recurly, and we'll expand to a few other payment processors here in the next couple of months.
[28:32] Our long term goal here, the big picture goal is how do we make business insights accessible to as many businesses as possible? That won't necessarily just mean subscription businesses. There's a lot of different aspects to that, but our bigger mission is to make actionable business insights accessible to really every business that we can.
Andy: [28:59] Do you have anything that you're able to at least tease a little bit that's coming up in the next general maybe year or so? If not, that's OK.
Joshua: [29:10] The main is there's a lot of different ways that we'll make…Right now, you have to use Recurly, you have to use Braintree, or you have to use Stripe. Then you also have to use…There are subscription components. There's still these very specific qualifiers to be able to use Baremetrics right now.
[29:28] Within the next few months really, those qualifiers will go away. For the next 6 to 12 months, will still just be subscription businesses, but in the near future, literally any business that has subscription revenue will be able to use Baremetrics.
Andy: [29:48] Interesting. The last couple of things is where do you think you spend too much time in your business today?
Joshua: [29:57] Probably content stuff. I produce really all of our significant pieces of content, and all that trickles down into other types of content that other people in our team handle, but I spend way too much time generating that content.
Andy: [30:17] If you're spending less time on content, where you do think the highest leverage point if you just spend your time would be?
Joshua: [30:21] I'm like a product person at my core. I enjoy building products, and making the product itself better, and letting the product drive things, and spending a lot of time talking to customers. I love talking to other businesses, and our customers in general, and just learning what their needs are, and figuring out how that can trickle into the product itself to make it more useful to people.
Andy: [30:49] That's one of the most valuable things that any founder can be doing is talking to other business, talking to the customers. Josh, you gave us a ton of stuff today. Before we leave, I want to ask if you want to hear more about you, more of your story, more of Baremetrics' story, where's the best place for them to follow you guys?
Joshua: [31:07] You can follow me on Twitter @Shpigford, that's S H P I G F O R D. The Baremetrics blog, baremetrics.com/blog, you can sign up for the newsletter there. We send out emails for all the new content. That's where a lot of things end up coming out from.
Andy: [31:26] Awesome. Thanks so very much for that, Josh. I appreciate it.
Joshua: [31:29] Thanks for having me, Andy.