Interview with Outseta Co-Founder Geoff Roberts: Building SaaS companies the contrarian way

In this episode of The Bootstrapped SaaS Operator, Geoff Roberts joins us with the inspiring story of Outseta.

Topics

• How to stay determined even without any feasible results?
• An interesting way to build an incredible team.
• How to go against what is trending?

Video

Transcript

Nikolas
Hey folks, with us today, Geoff, co-founder of Outseta. Geoff, super happy to have you.

Geoff Roberts
Super happy to be here. Thanks so much for having me

Nikolas
Awesome. Let’s dive right in. So what problem does Outseta actually solve?

Geoff Roberts
Yeah, it’s interesting. Outseta does not solve a single minute problem as they tell you to solve with most startups. It’s kind of a bigger platform type solution. But the way that I would think about it is, if you talk to any founder of a SaaS company, they are all doing the same thing when it comes to the technology that their businesses rely on. They’re integrating. authentication tools, with billing tools, with CRM tools, with help desk tools, with reporting tools. And what that means is at the end of the day, they’re spending an awful lot of time and particularly an awful lot of a technical person’s time. Building the actual systems that support their business as opposed to building their actual SaaS product. And there’s a real opportunity cost there. So what Outseta is, is an all in one platform. that kind of gives you all the table stakes features that you need to launch a SaaS business. The value prop really being speed to market and giving founders back time to spend on product development rather than building all these systems that the business relies on. So a parallel that a lot of people have liked to understand what we’re building is we’re building for SaaS, what Shopify built for e-commerce, essentially a way to accelerate speed to market and sort of give you all the table stakes. features that you need out of the box.

Nikolas
That’s quite a contrarian way of building a SaaS. Because in the end, like the typical startup story is like, take like the smallest niche possible, the smallest scope possible and go for it. So what made you actually go after this particular problem, all those sets of problems?

Geoff Roberts
Yeah, I’d say two things. The first is our, my co-founder and I, one of my co-founders and I worked together previously at another large platform based SaaS company in a different vertical, but we sort of saw the benefits of targeting a very specific niche and giving them sort of all the software tools they need in a single platform. So we had experience doing that already. We had built something of similar size and scale at that business. But then in the context of building that business, we were faced with the technology decisions that all SaaS companies have to make. And we went through a similar journey. As the company scaled, I was sort of the business user, and my co-founder, his name is Dimitri, was the CTO of that company. And I was kind of pulling on his shirt saying, we need to get a better billing system. We need… HubSpot for marketing automation. We need Zendesk for support. We need a reporting tool like ChartMogul or ProfitWell. And at one point he kind of looked at me and threw his hands up and was like, I’m supposed to be building our software product, not integrating all these different tools. And being an engineer and frankly, a little bit of a stubborn guy, he ended up building what became an early version of Outseta. It was a very simple billing system, a very simple CRM, a very simple. support ticketing tool. And we ended up using that sort of home, very simple homegrown tech stack until the company was at about $7 million a year in revenue. And at that point, you know, we had grown big enough. We did go out and sort of assemble the perfect tech stack and integrated all the types of tools that I mentioned. But when we were finished with that business and looking for something new to work on, we said, you know what, this is a problem. Every single early stage SaaS founder has. Every single founder is doing something that’s really inefficient at the early stages of building a business. Let’s productize that tech stack that we built for our own use. And that’s how Outseta of Was Born.

Nikolas
Interesting. Let’s stick to those like super early days. In another interview, you mentioned that it actually took you four years to get to your first 100 users and you have three co like you plus two co-founders. So how did you actually self fund or manage to get to this one? Those like basically to get four years in because that’s no easy fee to, to staying alive for four years as a startup.

Geoff Roberts
Yep. Yeah.

Geoff Roberts
Yeah, we had a tough run to be honest with you. So just with the size and scale of the product, it’s really more like four or five software products than one because it is billing and CRM and help desk and all these different components. So I’d say a few things. One was just belief in what we were building. We had sort of seen… the opposite path and we knew that this was a better solution. It was just going to take us time to get there and build it. So it took about two years to even build the MVP to be frank. I would say in our third year, we sort of struggled. The product just wasn’t really good enough to be competitive with the other tools that we competed against. And then in year four is when we really started to grow in earnest. But in order to make that all feasible, a couple of things of note, The first one would be everybody on our team sort of has different financial situations. So for some of us, it was easier than others. Frankly, I’m the younger, poorer one. So for me, it was probably the most difficult. But what it meant practically was we all started out working on Outseta in a part-time capacity. For me, that was two days a week focused on Outseta and three days a week I spent consulting. I was able to make enough money consulting three days a week to sort of stay financially afloat. And then as our revenue scaled up, I gradually increased my time on Outseta to working on it to the point where I was working on it full-time, but it did take a long time. It certainly was stressful. You know, and we, like everybody else, were sort of faced with a tough decision of when do you jump into working on this thing full-time? When do you have the financial ability to do so? And it really took four years until I was able to focus on Outseta full-time and have my salary paid by our revenue.

Nikolas
Was there any point at which you or another teammate really like considering considered giving up because I can imagine if for a lot of people they would be three years in still not full time that would basically just break them in the way that they would just would just lose the patience to go after it?

Geoff Roberts
Totally. I think in many ways, the decision to keep going was crazy. Just being frank, if you look at it objectively, there was a point three years in where we’d been working on this for three years. We had very little to show for it, frankly. And I think it was a combination of a few things that kept us going. One, just to be frank, and this is probably not a good… reason was sort of like this idea of a sunk cost. We felt like we’d already put three years into this thing. It was showing some signs of life, but it was kind of like, are we going to scrap three years of work and walk away? And you hear all the time that the thing that kills startups is founders that either burn out or give up. And I think I would have had a hard time sleeping at night knowing that we had put three years into it and then just walked away when we did think we were. getting closer and closer and closer to where we needed to be. So, certainly that I would say a bit of stubbornness, sort of the same thing, but just stubbornness and believing we could do it if we stuck with it. And third, I would say just getting our founding team right. We have very complimentary skills. There’s three founders, so we sort of needed each other. And on top of having complimentary skills, I think we were really, really philosophically aligned in terms of what we wanted to get out of the business, how we wanted to operate the business. And we were all sort of working towards this future and this way of running a company that resonated with us deeply, and we didn’t want to give up on that. So I think some combination of those things helped us keep going. And luckily in year four, as I said, we really started to grow at that point. And as you start to see customers and revenue come in, it becomes easier and easier to believe.

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Nikolas
I would love to double click on the way of operating that you mentioned, because I found a quote on your website that for me resonated really deeply, which is, we operate as if this is the last business we will ever build. We think it will be. And that’s a strategic advantage that’s very tough to compete against. What made you come?

Geoff Roberts
share.

Nikolas
to this conclusion and being like so such a strongly held belief that you even put it on your website for potential hires, partners and customers to see.

Geoff Roberts
Yeah, I think a lot of it comes back to the previous company that we worked at. It was called Buildium, by the way, it’s the word build and then IUM.com. So that company was very successful. It had a huge exit of $580 million sale to a publicly traded company. Uh, but it took 15 years for that to happen. And there was actually a fairly similar trajectory in that business in the sense that it took building them, I think, four or five years to get 200, 300 customers. And then things really started to compound and the company grew like crazy and had this big outcome. So I think it was sort of ingrained in us that, you know, SaaS is something that typically occurs slowly. There’s always… you know, outliers that are companies that grow very, very fast, very, very quickly, but particularly when you’re building a big platform solution by Outseta, it’s just going to take a long time to build that product. It does compound. And, um, you know, there’s a lot of people that talk about a long-term mindset, uh, and sort of pay at lip service. And there’s no way for me to prove that, that we’re not doing the same thing. Um, other than, you know, we’ve done this for 15 years before and I think that mindset ultimately is what’s led to our success. That’s why we haven’t given up. That’s why we’re still working on Outseta today. And I really do think it is our biggest competitive advantage. If you’re one of our customers, we intend to work on this at least for another 10 years and just make the product a little bit better every single day. And if we do that, I’m pretty sure we’re gonna end up in a good place. I don’t know exactly what that looks like. But it would almost be hard not to, is my opinion.

Nikolas
makes total sense. I would love to like stay on the company building side of things because the way you build your team is super interesting to me. Could you like for the audience a bit on just your thinking on hiring and growing a team and also what kind of offer you make to employees who join?

Geoff Roberts
Yeah. Yeah, this is in my opinion, this is the most interesting aspect of our business. And frankly, this is what gets me most fired up. Um, I am the only person on our team that is really not a technologist myself. I’m a marketer and relatively non-technical. Um, so a lot of them are like fired up by the, by the tech piece, um, more so than I am, uh, but this is the part that really excites me. So coming out of that, that previous company experience as well, um, we sort what we wanted in our next startup journey. And one of the things we kept coming back to was we had a lot more fun as a company of 20 people than as a company of 200 people. And in the previous business, we did bootstrap for a long time, but we ended up raising VC money. We had investors, they were great investors. There was a good outcome for everybody. It’s not like there was any sort of negative experience, but we said, if we do this again, we wanna keep the team small and we… want to be independent by design. And we’re willing to even extend our timeframes longer and make sacrifices for longer periods of time to maintain those aspects of the business. So I don’t want to say that we’re going to sort of artificially cap how many people we hired outside of, but that was the first bit we started with. And the idea was we want to be a team of 20 or smaller. And that’s something that we think about today. We’re still a small team today. We’re about six people. But we sort of have that constraint in the back of our minds. And we try to hire very, very slowly and look at the business through the lens of if we’ve got a problem, we need to solve this by some means other than just throwing bodies at the problem. I think particularly in the context of a VC backed company, uh, it becomes very easy to just look at people or money as the solution to everything. Um, and we’re sort of forcing ourselves to be creative in how we build the business. by not having access to capital and not wanting to grow headcount. Beyond that, we sort of said, okay, in the context of a small team, how are we going to compete with companies that have four, five, six times as many employees? And one of the answers we came up to that question, essentially, is we need to hire senior people that are sort of A players. We need to get the best talent on this team that we possibly can. So there’s a couple things that we’ve done that are really unique to our business and our way of operating to do that The first is we’ve adopted an organizational structure called self-management This has been sort of popularized by the shoe company the e-commerce company Zappos They used a similar model at least but the basic idea is it’s a flat company. There’s there’s no hierarchy There’s no boss. We don’t have a CEO we try to hire the best people that we can, bring them onto the team and let them sort of contribute wherever they’re best able to. So I’m the marketer on the team at the moment. I do most of the marketing work. I’m not writing code because that’s not my skillset. This is certainly easier in the context of a smaller team than a larger team, but I think it’s really attractive to people that we sort of give every hire all of the information about our business. There’s 100% transparency for everyone that works here. We say, you’re a super talented person. We brought you onto the team because you have skills X, Y, and Z. Go figure out how you can contribute to Outseta and push us towards our goals essentially. So it’s not about being a flat organization or not having bosses. It’s really about giving people autonomy to help the business where they’re best able and where they’re best interested. On top of that, hiring people of that skill set and that level of talent. we needed to have a compelling offer to get them to join Outseta. So, uh, there’s a couple of things that we’ve done from a compensation perspective, uh, that I think are interesting and frankly have turned into probably our biggest competitive advantage as a company. And the first is we have a standardized salary. So everybody at Outseta can work anywhere from one to five days a week. And if you work five days a week, you earn a salary of $210,000 per year. So if you wanted to work one day a week, at least for cash compensation, you make $42,000 a year. If you work two days a week, you make $84,000 a year. If you work three days a week, you make $126,000 a year, all the way up to the $210,000 a year salary. And the other thought behind that was, particularly with our product, the type of people that will thrive at Outseta are going to be entrepreneurial. people themselves and we wanted to give people the ability to work on their own projects and then work on outside of part time if they want to and to the extent that they want to. So we do have people working full time. We do have people working part time, but we wanted to give people that, that flexibility is just sort of choose their own adventure, if you will. Um, and the mindset there is I’d rather have someone super talented working on outside at two days per week. than a lesser person working on outside of five days per week. If you’re really that great of a developer, designer, or a marketer, we think you can make huge contributions to our business two or three days a week, and we want to give you that opportunity. But the part that is probably most unique, even aside from the salary, is everybody on the team has significant ownership in the business and earns equity in the business on the same terms as our founders. So typically you’ll see founders or investors have sort of a… class of stock that is higher than the rest of the employees. That’s not true at outside of first of all, because we don’t have investors. Second of all, because the founders just said, the stock works the exact same way for everybody in the company. So how that works, just the basic mechanics of it, are you can choose to work however many days per week you want for cash compensation, and then however many days per week you want to work earning equity in the business. So. how we distribute equity is if all time 100 days were worked by all employees for equity in the business and you worked 10 of those days, you earn 10% of the company. So it’s sort of a completely fair playing field. It’s totally up to you how much you do or don’t want to work for equity. But the idea is we give everybody essentially the opportunity to be a co-founder and have co-founder level equity. It’s common knowledge that that’s kind of how wealth is built. And I think that’s been critically important with this whole notion of self-management, too. We’re giving people an enormous amount of freedom. We’re giving people sort of access to all of the information about our business. And we give them very little direction, to be frank. And they are incentivized to do the things that help Outsetter grow because they actually have a big ownership stake. And today the person with the smallest ownership stake on our team owns about 4% of the company and the person with the highest percent ownership is about 30%. So, uh, everybody has a big cut. I mean, I’ve worked in other SaaS businesses as a VP and, you know, you work for four years and get like a quarter or a half a percent equity. So we’re. issuing equity much, much, much more liberally than a typical business.

Nikolas
Yeah. How did you get to that? Was it more of an evolution and iteration from the get-go, from like you three co-founders to where you are today or was this really like initially by design when setting up the company? Because it’s at least it’s unique enough that I never heard of a company doing something exactly that way. So…

Geoff Roberts
Yeah. Yeah, it was very much by design from day one. I would say we had people sending us emails in private in our first year being like, it’s great that you guys are sharing all of this and it’s really interesting and whatnot, but you don’t even have a business yet. You just started, you’re getting ahead of yourselves. And that feedback is totally, totally fair and totally accurate. But I think when I said earlier, we had a huge amount of philosophical alignment as a team. Certainly, we were aligned on what we wanted to build and why we think this is a fun and interesting market and those sorts of things. But building the company in this manner was something that we all cared about a lot and we wanted to sort of prove out that this is a way of company building that could be considered. I think in general, you know, the typical model of a SaaS company, at least in Silicon Valley, where you’ve got four-year investing periods and one-year cliffs and… VPs issued a half a percent of equity and all of that. It may be the norm, but there’s so little innovation in terms of how companies are built. And we wanted to show that there was an alternative path that is attractive to a lot of people. And I think we’re proving that out today.

Nikolas
Absolutely. What gave you the confidence of or what gives you the confidence to go against the grain so often? Because if we summarize in terms of product management, you do the opposite of what people are quote unquote supposed to do. In terms of hiring, you offer equity to everyone, you offer like people discuss like a four-day work week, you basically give the option of one to five days. And then even in terms of the

Geoff Roberts
Yeah.

Nikolas
willingness to operate forever basically and in another episode I think like half a year ago with Anthony from IndieWorldWide he mentioned that Hapspot approached you for a potential acquisition and you even declined those talks. What gives you the confidence day to day to trust yourself that you’re the right path? Because I can just speak for myself, for me sure I’m younger, I’m less experienced but there’s an enormous amount of self-doubt.

Geoff Roberts
Yeah.

Nikolas
that still ingrained deeply in me. So how did you manage that?

Geoff Roberts
Sure. Sure. I think everyone else has self doubt. I have self doubt. I don’t, you know, I can’t guarantee you that Outsata is going to be this big successful company. We’ve certainly gotten it to the size where, you know, it’s supporting me and a small team and we think we have a bright future and all of that. But I don’t know that this is going to be some, I know it’s not a runaway success already. I don’t know how successful it’s going to be and I have similar doubt every day, but I would say a couple things and the big one is, I really think that the way that you do things and the way that you inject your personality into a company and all the things that you do that are unique are actually your strategic advantages. I think everybody is obsessed with like, going on Twitter and looking at best practices and looking at the successful companies and how they were built and trying to replicate those exact same things. But the secret sauce and the stuff that really resonates with people on a deep level is when you do something different. And I think that we’ve seen that just from a recruiting perspective. I’ve never in any company had any sort of talent pipeline built up that wants to work at a company the way that we do it outside of today. So like we’ve struck a nerve. People are saying, this is unique, this is different, this is something I wanna be a part of. And I think that that’s completely because we are doing something so drastically different. So I think just leaning into your sort of uniqueness is probably the best answer to the question that I can give, but as I said, there’s still self-doubt, there’s no guarantees. The other bit that comes to mind is just, I think, the vast majority of tech companies and founders, whether they will say it directly or not, their primary objective is to make the greatest financial return possible. And you see founders like hold on to every scrap of equity and not issue equity to employees unless they absolutely have to because they wanna have the biggest piece of the pie for themselves. And there’s nothing wrong with that. But I think in the context of our founding team, That’s not the mindset of any of us. Yes, we want Outsetter to be a big financial success. I’m the first one to tell you I want Outsetter to be a big financial success. But for me, that isn’t motivation number one. It’s more having freedom with my time. It’s working for myself. It’s working with people I wanna work with. All those sorts of things are ultimately more important to me. And there’s also just a fundamental belief in order to have the equity in a business be worth something, you need to build something of value. And my mindset is we have a way higher odds of building something of value. If we have really talented people on the team, then if I was to hold on to all the equity possible, yeah, I might have a bigger, you know, a bigger piece of the pie, but is the pie going to be worth as much? Probably not is the bet that I’m placing.

Nikolas
Absolutely. Let’s switch gears a bit and go more towards like the tactical, so to say, just to frame the context for the rest of the conversation. Can you give us an overview of the current like size or scale of our outside? I think you don’t share revenue publicly, but just like a rough revenue amount or just like a number of customers, something to basically just set the context of where you are today.

Geoff Roberts
Yeah, so from a headcount perspective, you know, it’s not impressive. We’re, we’re six people, but we’re, we’re sort of swinging above our weight, which again is kind of the whole idea here in terms of customers. We have 7,000, 7,400 companies using Outsetter today. Although admittedly that’s a mix of both paid and free users. One thing we can talk about of interest is we started out with a freemium tier in our first few years. The idea was. sort of building like the most customer friendly acquisition model that we could for a bootstrap founder, which freemium obviously fits. That became a big problem for us. We sort of started bringing on freemium accounts faster than we could keep up with them in the context of a small team. So we did away with that a couple years ago and we’ve been working on converting a lot of those freemium accounts over to paid. So that is sort of a blended figure.

Nikolas
So let’s split the rest of the convo in two. Basically, first off, I would love to dig into how did you get to those first 100 customers?

Geoff Roberts
Yeah, good question. Um, so it was a combination of things. Uh, the ones that were really effective, honestly, were just kind of things that don’t scale. Um, and I think you, you see that a lot in early stage companies. Um, we, we knew going into this, that we were playing the long-term game. So we started investing in content marketing very, very early on the day we started writing code, we started writing content and that has ultimately become the engine of the business and really what’s driving our growth. But in the first couple of years, that really wasn’t it. It took almost two years for that content marketing sort of engine to really kick in and start delivering customers. The two things early on that, I guess I’ll give you three. Three things that really helped early on, cold email. It’s not sexy whatsoever. But for our market, one of the things that’s really important is we get to customers early. We want to get people basically at day zero before they’ve started adopting other technology and tools. So we looked for sites like Product Hunt or Angel’s List where people sort of announced that they’re building a product or have built a product or just forming a company. And we did cold email outreach to companies at that stage. And that was really… you know, a grind, but that’s where a lot of our early users came from. The second bit would be, uh, what I’ll call community or sort of comment marketing, um, just being in, you know, communities, uh, sites like indie hackers, for example, that are filled with sort of bootstrap founders talking about bootstrap founder things, um, just being an active participant in those types of communities got our, got our name out there. Uh, and then the third one, um, which has also since become one of the pillars of our acquisition strategy. It’s just integrations with other tools. So really, one of the primary reasons that we built Outside Out was what’s come to be known as Stripe billing didn’t exist at the time. Stripe had great APIs that you could integrate with if you were building a SaaS company. But it was pretty difficult to actually build a subscription billing engine for a SaaS business back when we started. That certainly changed, but a partnership with Stripe, where Stripe verified partner and whatnot and have a listing on their website, was one of the other things that really drove those first 100 customers.

Nikolas
Got it. And then what took you from the 100 to the, yeah, basically like seven and a half thousand, was it mainly the the content engine that just started spinning or what what brought you to current day?

Geoff Roberts
Yeah, the two, I guess there’s three things, but the, in, in order that they sort of kicked in, I would say the content marketing started to kick in. And what’s interesting about our content marketing approach in short, is we really don’t write any content for the sake of SEO. So it’s not that our content is just ranking well and then driving us relevant traffic. It’s that I’ve really written about my experience as a founder building out SETA. And that doesn’t work in most markets. People don’t necessarily care about your sort of entrepreneurial journey, but in our market, because we do sell to other founders, that content was really interesting to other founders. So our content marketing is pretty much just me writing about my entrepreneurial experience and that actually brings us customers, which is really fun and something that I enjoy. The second bit would be further leaning into technology partners. So The ethos of Outseta in short is we sort of give you all these table stakes tools that you need and we allow you to deliver your SaaS product, your content, whatever it is that you’re offering, however you want. So you can use any development framework to build your SaaS product. We also have customers building membership sites where they’re sort of monetizing content rather than a software product. And we looked for sort of fast growing technologies that we could turn into a business. So an example and the most significant example of that is Webflow. Webflow is a website builder that’s kind of taken off like a rocket. Webflow didn’t have subscription billing or authentication or the types of tools that we provide built into their product. So a lot of people have integrated Webflow without SETA to monetize membership websites and whatnot. So Stripe, Webflow, a community platform called Circle. tools like Discord, tools like Notion can all be integrated without setup and we can sort of ride on their coattails by turning these content delivery platforms or Development frameworks into subscription businesses essentially. So that was the other big one and then since then the third has been our affiliate or referral program. So part of the challenge of operating the business the way that we do is You know, we have a small team, we sell to a market where frankly, there’s high churn because it’s startups and we have price sensitive buyers. These are all like not attractive aspects of the type of business that we’re building. So we need to make some sacrifices in order to make this business viable. And two of those have been, we don’t have a support team. Everybody at Outsider does support and we don’t have the sales team. Um, we basically don’t. sort of do sales whatsoever. We rely on people to refer business to us. So really just spinning up a affiliate program and getting people excited about Outseta and creating content about Outseta that they publish online has been really the third driver of customers for us.

Nikolas
And do you think those three will continue to scale or are you testing or playing around experimenting with possibly like spinning up a fourth growth engine?

Geoff Roberts
Right now, I mean, we’re always certainly looking at every marketing channel that we have. I think there’s tons of room for us to continue to scale those channels. I’m not like out looking for a new channel to make a big bet on at this point in time. I’d say we can squeeze more out of affiliates, we can squeeze more out of content. And I’m always looking for sort of new emerging technologies that outset it would be very complimentary to. One that is sort of timely right now is I talked about web flow and sort of their importance in our growth There’s another website builder that’s particularly popular in Europe called framer. That’s really come on strong as of late They are very much what we saw in web flow a few years ago. They’re this Amazing product for building a website a lot of people want to integrate authentication and payments with framer websites They don’t have that tool set themselves. So We’re working on an integration with Framer at this point.

Nikolas
So you as a marketer would agree with Corey Haines who used to be the CMO at Bear Metrics that basically the thing most people get wrong about marketing channels is that they forget to double down on what works. Would you agree with that?

Geoff Roberts
100%. Yes, 100%.

Nikolas
Got it. Awesome. Then I loved all the insights and want to thank you a ton for being so open and transparent.

Geoff Roberts
Yeah, thanks so much for having me. This was fun.