Hey James! Hahah too nerdy, these are great!
Differentiation: YES. At the beginning I would stay up all night fearing a competitor would figure out this major gap that was hiding in plain sight. Then my biggest fear happened and Squarespace released email marketing. I thought that was the end for us, since they already had a large customer base, and their brand was very well known. Ask me what actually happened? Nothing. To date, we haven’t had a single member leaving us for SQSP and a good part of our members use them for websites. What I realized was that the market is big enough for a lot of different solutions since there are also a lot of different needs. You’re familiar with this since you’re also in the marketing automation space (love that), just Mailchimp has 14M+ users. How many tiny startups could become unicorns with just a tiny portion of that marketshare? And then we have Gen Z, with over 50% of their generation already jumping into entrepreneurship. I’d say our primary moat is the education built into the software. Members don’t have to struggle by starting anything from scratch, so they’re more successful, which means they share their success more often and churn less. Think about the buying journey today, it’s no longer about speaking to a sales rep, you post in your forum looking for a recommendation, then get your community to share what worked for them. It’s more important than ever to focus on making the user successful since the rest of the cycle stems from there, at least for us.
Pricing: we played with so many scenarios, and this was the most sustainable one. If you think about it, we’re not priced that low, you could get the equivalent service at other providers for free. Not having a free plan is what afforded us this bolder pricing. Backend costs are very predictable now, so the reason email marketing platforms charge in tiers is because they can. This is less tied to their growing costs and more to optimizing the max revenue per user based on their needs. It’s very smart, but for us lowering the anxiety of paying more the more you’re successful was a bigger priority. And yes, we’ve had large customers offering to pay a lot to use Flodesk, but it’s never been a debate since we’ve always been clear on this. We know our market, and taking on high value customers would be a distraction roadmap and support wise.
$10M ARR: regarding growth without a sales team, I shared a bit about our target market’s buying journey in my last reply, but it really comes down to this. Our main goal is to make our members successful. We have a viral loop embedded in the product, it’s the hotmail model. When a new member successfully sends their first email, their audience sees the result of using Flodesk, then at the bottom of the email, they see an invitation to try it out. Same thing happens with word of mouth referrals, you’ll only get them if your users are successful in using your product. For us, it was clear from the beginning that we wouldn’t have a sales team. Our monthly subscription is $38/mo, so there’s no way we’d be able to make the math work unless it was product led growth fueled by customer behavior.
How to decide to focus and avoid distractions? It depends on what you call a distraction. I often tell Rebecca, my cofounder, to get up and go on a walk because she spends so much time on her screen. I’d rather her be doing her best work than staying focused all day long and burn out. The most important part for me here is alignment. All hands, offsites, team meetings, 1:1s, these are so easy to skip early on but they turn out to be the most important for alignment, and if everyone’s on the same page on all the things we say no to (for example with frameworks like the KANO model in reply 1), it’s easy to avoid distractions.