Podcast Episode 7

Bootstrapping a SaaS company: Lessons Learned

Kosta Panagoulias is a bootstrapped serial entrepreneur with experience growing companies from scratch, all the way to successful acquisitions. One of his passions is mentoring and advising startup entrepreneurs. He enjoys sharing his insights with others to help them grow, and he loves learning and gaining knowledge from other people’s unique experiences.

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Naren: How are you doing? 

Kosta: I’m very well. 

Kosta: Thanks for having me. 

Naren: Oh, you’re very welcome. Thank you for being here, and just wanted to start by getting our audience to know you. Just tell your story. Who are you? When did you become an Entrepreneur? What made you become an Entrepreneur? Let’s start at the beginning. 

Kosta: I don’t want to start too far back. My name’s Kosta Panagoulias. The simple of who I am is I’m an Entrepreneur. I started a company called Web4Realty 12 years ago with my partner. We began it without much money or technical skills, right from my parents’ basement. Despite not being tech experts, we successfully expanded our business to include over 20 team members worldwide, and we all work from different locations. Plus, our company is making money. Last year, we got acquired in a successful acquisition. And today, I just launched my second SaaS company called jobtable.com. 

Naren: That’s amazing. That’s great. So you are like an overnight success, I guess, 12-plus years in the making. So you know a thing or two about the mistakes, the things to do, things not to do. So, let’s start by sharing with our listeners who you are and what you did.

Bootstrapping a SaaS Company: Early Years of the Business

Naren: So, just to set some context, I was doing a bit of research. So, Web4Realty is a company that’s 12-plus years old. They provide a subscription service, $30 a month, all the way to $39 to $49 a month. So it’s a volume play, right? It’s all about getting thousands of real estate professionals to use and subscribe to your service. I want to focus on the keys to success. You said it’s profitable; that’s the number one thing. A lot of people raise a lot of money and burn a lot of money eventually; they never figure out how to make it work. So maybe talk about the phases of your business, like how long it takes you to become profitable. 

Kosta: Yeah, we were profitable very early on. We literally had no money to invest in anything. So our only source of funding came from our customers. We needed revenue. We needed sales immediately. As I mentioned before, that was the only way we could get money to start the business. Through hard work and determination, we were able to succeed in a game where quantity matters. So, one by one, chip away at the user base to get to the point where eventually, hey, we’re now covering our cost.  

Naren: yeah. Approximately how many years did it take for you to get paid? I mean the number of years you bootstrapped.

Kosta: Yeah, I remember the first paycheck we cut ourselves was probably around the six-month mark. It was for $250 a month. 

Naren: So you started getting paid but not enough, of course.

Yeah. No, no, just, when I say getting paid, it’s just like something to, you know, say, hey, we’re doing something there. 

Naren: How long did it take you to get to, let’s say, 5,000 a month each? 

Kosta: Just, I don’t know; I’m not saying that I’m not the best with timelines, but probably, you know, a few years.

Sales and Marketing Strategies: 

Naren: So how did you start driving revenues because you don’t have any money to do expensive marketing or hire expensive teams because it’s all bootstrapped? You didn’t have investors. It was all you guys, you and your co-founder. 

Kosta: Yeah. So, the only option we had was to do outbound sales cold calling. I single-handedly closed the first 500 paying clients through cold calling and email marketing. Something that cost no money. It’s just a lot of time and dedication. And yeah, that’s what we did. The more you do it, the more repetitions you put in, you get better at it. I read a ton of books on sales to help me along the way, and over time, I naturally got good at it. Tweak the positioning of the messaging. Like you said, there’s so much involved in sales. I think the best salespeople are the ones who really understand human behavior and why people react or don’t react to things.

Naren: You have an amazing sales and marketing process before you. That’s why you got acquired. So, what did it look like? What does it look like now? I want to understand what amazing looks like for a SaaS company if you were to start at the top. Maybe just give us a 10,000 ft view, and then perhaps we’ll get into some of that.

Kosta: Like to me, what’s successful is being profitable, making money, of course, But more importantly than that, is being able to provide true value to people. That’s the main thing because, without that, it’s very hard.

Naren: Like, did you guys have webinars? Do you have a large email list? Did you work with partners?

Kosta: First of all, servicing real estate agents was our first internet business. We had no idea what we were doing. Luckily, we’re in a business where scraping lead information is very easy. Real estate agents provide their phone numbers and emails all over the Internet. So I would literally go on the website, get phone numbers, pick up the phone, and start calling people. I just make my own list over time. Over time, we began with basic cold calling using an Excel sheet with names and phone numbers. As we learned and gained more knowledge, we improved and streamlined the process to make it more efficient and effective. We never paid for marketing. Our marketing and sales approach was always outbound.

Naren: So it was outbound, and these people know you and trust you when they first heard from you.

Kosta: Over time, naturally, your brand starts to get more familiar, and you start getting more inbounds, more referrals, but yeah, that took a bit of a time to reach that level. 

Naren: Right. So, we all know that we all have unique selling propositions. Is that something important for a SaaS founder to be able to articulate clearly; “this is who we are, “this is what we do,” and “this is why we are the best.”

Kosta: Yeah, for sure. I think messaging is so important, and I think that really helps when you understand who your customer is. And I think the more granular you can get, the more precise your communication and messaging becomes. 

Naren: Let’s kind of role-play. Let’s say I’m buying your business, and you are trying to explain to me, “this is my customer, and this is our message.” I want our listeners to understand how you define it.

Kosta: I learned this in a SaaS Expo. It was really powerful, and a lot of people can’t do this right. Just being able to explain in one sentence “who you help and how you help them.” So, for example, “We help real estate agents manage their business better.” When you say that, you can say that to anyone: to a taxi driver, someone random. 

That’s something any would respond to; “oh okay, how’d you do that?” As opposed to most people, they get too technical and say “Oh, we do this, we provide this,  we do a CRM.” etc. There, you lose people. So, you need to simplify Who you help and how you help them in one clear, concise sentence that everyone can understand. I think that’s a very powerful starting point to improve your messaging and communication on your website and when you speak to people. 

Naren: You talked about who your customer is. I’m assuming it’s not every real estate agent or every real estate firm. Were you able to get nuanced in that as well? Like in terms of who your customer is?

Kosta: When I’m cold calling people or reaching out to people, I’m able to create different micro-segments of real estate agents. If not, that’s the biggest mistake I see people make when they do outbound: they don’t get too granular enough on who they’re targeting. For instance, let’s say we’re targeting customers who are real estate agents. Many might think that’s already a specific niche, but in reality, there are numerous types of real estate agents. They can be involved in residential or commercial properties, work independently or as part of a team, do it part-time or full-time, and operate in different regions. So, what we did early on was break down this broad group into smaller, more specialized segments. In the initial stages, we’d begin by dividing our target audience into small, specific groups. One of these groups could consist of real estate agents based in Toronto (my hometown) who are affiliated with Remax, a major brokerage, and do not currently have a website. I have these three key attributes. Now, with these attributes, my messaging can sound and feel very warm. So, an example of a cold pitch is, hey Naren, this is Kosta here from Web4Realty. We’ve been helping a lot of your colleagues from Remax with their website. I noticed you don’t have one. Is there any particular reason why? So that’s a cold pitch, but it sounds pretty warm. Sounds like I picked up the phone just to call you, and I’m gonna get a response back, most likely, or engage that person.

Naren: That’s amazing. Yeah, I think it’s those nuances that you said. Just brilliant.

Hiring and Onboarding

Naren: Yeah, let’s now switch gears. We talked a lot about marketing and, you know, sales and so forth. I assume you use marketing automation; you have outbound email and inbound like you do lots of stuff. I’m sure you’re very sophisticated by now after 12 years. When did you hire your first person? And let’s talk about the people side of this. did you make mistakes? Like what were the mistakes you made? 

Kosta: Yes, I believe that hiring is a crucial topic, especially when you’re starting with limited resources, like bootstrapping. We made our first hire around the 12-month mark. Hiring is a skill that improves with experience. Our hiring process includes video introductions, multiple interviews, and exercises to ensure the right fit. Like I remember one sales role. we must have got like 1200 applicants in a few weeks. So, the first thing I do is send every applicant an email saying, hey, send me a quick two-minute video, about why you were hired, and why you applied. I do that because it just weeds out a lot of people; only people who are somewhat serious will take the time to record that video, and then you can see how they interact and how they communicate, weeding out a lot of people

Kosta: The next step would be to schedule a quick, 15-minute call with whoever passes that phase. That will also weed out people because a lot of people just won’t schedule that call. The purpose of this call is very informal, like trying to understand who the person is, like their life, where they’re from, and what their situation is. Then, I schedule a second call with people who pass that test. But this time, it’s a bit more formal, more professional, like on the technical side of things for what the role is, that further weeds out people.  And then I’d like to do another call. this time with the department manager who’s going to be working closely with that person; they usually quarterback this interview and ask their own questions. I usually just stay in the back. By that point, you’re usually down to a handful of people. So that’s the process. that’s what I do for every single hire. So, I could say my last few hires were really good, and I used this process. The worst thing you could do as a bootstrapped founder is make the wrong hire; either they are not a good fit, or you are not good for them; they leave after a few weeks, and you have to start all over again. 

Naren: I appreciate Appreciate that. That is amazing. Now, let’s talk and flip our focus from the hiring phase to what happens after the hiring. Do you find there are key pieces that are also critical in that phase to make sure the person is a success and, of course, you’re happy with the hire? 

Kosta: The next step is like onboarding. Because you, you must think, why did someone choose you? At the end of the day, as much as the applicant’s pitching you, you, as the company owner, are pitching the applicant.

 In simple terms, it’s crucial to have a well-organized onboarding process and training plan. If your onboarding is chaotic or disorganized, it can make a new hire question their decision and create red flags. So, having a structured and clear onboarding process with guidelines and training is essential. 

Naren: How do you effectively manage a remote team? Whether it’s the managers or the team members, do you rely on well-defined processes? Or do you use project management tools to assign tasks and keep things organized? Share some of your secrets, If I may.

Kosta: There’s no way I’ll do like a daily stand-up, as some people do. Like to me, that’s way too much. Right now, with the Job Table, I have daily discussions with developers to drive progress on that front. As for team meetings, we currently hold them about once a month, though this frequency might change as we’re still in the early stages of getting things going. Ultimately, your approach to communication and management should align with your personal style and the dynamics of your team. Ideally, you want team members who share a similar mindset for better cohesion. So, it really comes down to your individual style, and for me, this is how I prefer to operate.

Co-founder Relationships: 

Naren: All right. So, one more thing before we wrap up here. I want to talk a little bit about co-founders. You’ve mentioned your co-founder a few times, right? So, you know, what’s it like working with your co-founder for 12 years, I guess, right? You guys have been through a lot together. What’s the secret to having a successful co-founder relationship? 

Kosta: Good question. Yeah, I think co-founders could be incredible, especially if you complement each other’s skill sets. So I, I think it’s very important to complement each other beyond that. I think it’s just important to be able to communicate with your founder, be open and transparent, and just have a very good relationship is obviously very important because, you know, a partnership, I see it as, the equivalent of like a marriage in a lot of ways, right? A lot of the same values and attributes in a marriage should also apply to a business partnership as well.

Naren: What are the essential elements for establishing a successful co-founder relationship? Can you share some valuable insights, both in terms of what to do and what to avoid, based on your years of experience in this field?

Kosta: It’s crucial to share similar ambitions and values in a co-founder relationship. Alignment of company goals and a compatible personality can make a big difference. However, the key is complete transparency and the ability to set egos aside. We’re all unique individuals, and conflicts will arise, but effective communication and a focus on the company’s success are essential.

Final Advice for Entrepreneurs

Naren: Being an entrepreneur, especially as a serial entrepreneur, is the best path for someone like you. Is there anything else you would consider doing, and if not, what is it about being an entrepreneur that you enjoy?

Kosta: What excites me the most about being an entrepreneur is having complete control over my time. It means I’m not bound by anyone else’s schedule, allowing me to spend time with my young family and have the flexibility to travel or make decisions about how I use my time. The freedom and flexibility to manage my time as I see fit is the most significant benefit of being an entrepreneur.

Naren: You’re absolutely correct. You didn’t raise any money. How do you feel about that? Do you consider it a good thing or a bad thing?

Kosta: I don’t have a strong stance against raising money or in favor of bootstrapping. Bootstrapping is just the approach I’ve always taken, even with my second company. I’ve never really explored the fundraising path or had those discussions. It’s just not the direction I’ve gone in. However, I do acknowledge that raising funds can be valuable depending on your company’s goals and needs. It ultimately depends on the specific situation.

Naren: As we wrap up, bootstrapping has its pros and cons. Can you identify specific advantages that bootstrapping has provided you? For instance, when I tried to raise money in 2008, I couldn’t secure any investors except for banks, who wanted to put a mortgage on my house. In hindsight, this might have been a blessing because it forced me to be incredibly frugal and cautious. I didn’t have extra money to throw around, so I had to be meticulous and avoid mistakes. Do you see this frugality as a positive aspect of bootstrapping?

Kosta: I completely agree with your perspective. Bootstrapping has a way of instilling a natural sense of determination when you feel like you’re up against the wall. That pressure creates a mindset where there’s no room for a Plan B. When you decide to start a business, you commit fully, and there’s no consideration of failure. It’s all about finding a way to succeed because, in essence, having a Plan B is like preparing for failure. Once that thought enters your mind, the likelihood of failure increases significantly. So, in a nutshell, bootstrapping reinforces that mindset and mentality, which I believe is crucial.

Naren: At any point, did you have mentors? I know some people argue that investors can serve as mentors and advisors, but in your situation, did you establish mentorship differently?

Kosta: To be honest, not really over the years. I’ve met a few people, including you, at an event, and we’ve stayed in touch a few times, but I haven’t had formal mentors. However, I’ve now taken on a mentoring role for other entrepreneurs through a platform called growthmentor.com. I dedicate an hour every week to help and guide other entrepreneurs and startup founders who are facing various challenges. It’s something I find fulfilling, both in giving back and learning from others.

Naren: That’s true. Most entrepreneurs are lifelong learners.

Naren: Fantastic. Well, thank you so much for sharing your insights and your journey with us today. It’s been really inspiring. And I’m sure our listeners have learned a lot.

Naren: Thank you, Kosta. It’s great to see you now helping others with your second company. This goes to show that if you dedicate enough time and perseverance to something, it becomes difficult to give up. You simply have to stay committed and, as you mentioned, not accept “no” as the final answer.

Kosta: Really nice connecting again. Thanks for having me, and yeah, we should definitely do it again.

Naren: I appreciate it.

Naren: All right, I want to take a minute to thank Kosta for this amazing podcast. We talked about Bootstrapping a SaaS company: lessons learned. So thank you for that, Kosta.

Naren: I also want to take a minute to thank our listeners. We can’t do what we do without you until we meet again with another amazing TBR episode. Your host, Naren Arulrajah.

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