Quarterly update: Crossing the $1m per quarter line, 25 employees, $10m in historic sales

April 5, 2017September 8, 2017 Per Fragemann Quarterly Update

I’m very proud to announce that our first quarter 2017 has been amazing! Our Q1 revenues jumped to $1.2m (24% better than last year), and just in time for our 6th company birthday we crossed the $10m mark for historic sales.

It has been quite the ride since our first $3600 USD check back in April 2011!

Numbers in more detail

As you can see on our two default financial slides, our company revenues are quite seasonal, but the overall trend of payments received per quarter is going up.

What’s not going up is the total number of paying customers. We’ve enacted minimum pricing that’s keeping many of the smaller potential customers out, while existing smaller customers are churning. Small Improvements is a great solution, and it can work fine for companies of just 15 or 20 people (like us!), but for most companies the threshold for successful deployment (and team members to back it up) is beyond 50.

This means we’ll hopefully see new growth over time, but right now we’re going through a bit of a valley there.

As always the MRR chart has the far stabler line:

And our trend towards serving larger clients over time is quite visible on the Revenue per Unit (Customer) chart too. In early 2014 our average customer earned us $300 USD per month, while today we’re approaching $425 per customer.

Team growth

Numbers aside, we keep on rocking on the team level too. We had 4 new starters in Q1: Jeremy and Kelly in Marketing, Olga in HR, Paulo in Design. At the same time, we said goodbye to Stephan who obtained a work visa for Canada, and to Alison who set out on a sabbatical. You’re both being missed dearly!

Slightly outside Q1, Sharmeen started in Development on April 1st, on April 15th we’ll get serious about product management with Jenny taking over a lot of work from me. In June Adrienne will join us as a second PM.

All combined, we’re now at 25 confirmed staff by June, and we’re also interviewing and in negotiations with quite a few more people. Our Mission 28 will hopefully be complete by the end of the Q2!

In more detail, and slides

From a product perspective, I couldn’t be happier either. We spent the first half of Q1 doing a lot of spring cleaning. Behind the scenes, several major features and overhauls went from alpha to beta, and those will launch in early Q2. I don’t want to spoil the surprise, but we’re also adding a fifth module soon, and revamping one of the existing modules entirely.

We’ve been ramping up our marketing efforts as well. We’ve gotten a lot more structured and successful on inside sales and customer success, and our support team keeps working perfectly despite its lead being on paterntity leave.

You’ll see a lot more detail about how we work on the following slides. We’ve moved to a weekly all-hands meeting without slides, and once every 6 weeks or so we go the extra mile and create slides as well. The following are not focused on this particular quarterly update, but they do give a good overview of what we’ve been up to the past 6-8 weeks.

Presentation Slides

Mission 28 (we’re hiring)

November 17, 2016September 8, 2017 Per Fragemann Uncategorized

We didn’t hire enough new team members in 2016: We brought on board 4 new people, but 4 people left us, so in total we’re still hovering at 20. True, even with 20 dedicated people one can have a blast, but there’s so much more we want to accomplish.

Luckily, when I checked our numbers 2 months ago (during our lowest season), it became clear that we can easily grow to 30 people out of our cashflow and without touching our bank buffer. We have so much work to do, recruiting is now one of my two major objectives in Q4 and Q1.

Why 28?

So why Mision 28 then, why not Mission 30? The problem with round numbers is that they sound like “give or take”. But I want everyone to understand that we definitely want to get to 28 quickly. We may keep hiring and maybe we end up with 32 people, but that’s just so longterm. Right now, 28 is the number, and it’s not give-or take, it’s the one single goal.

How to get there?

Even getting to 28 without sacrificing our high bar will be tough. Everyone’s hiring like crazy in Berlin, so what makes us confident that we can crack this nut?

To be honest, we’re not sure. But we’re doing everything now. We’ve increased our referral bonus to 5k€ internally, we’ve overhauled our careers site , we’re tech-blogging like crazy (even made it to the Hackernews frontpage), we’re cold-contacting people on LinkedIn, our Twitter job ads even target New York now, we’ll be overhauling the main website not just for customers but also for recruiting reasons, and of course we advertise heavily. We’ll even go as far as considering working with “virtual recruiter” platforms that charge up to 15% of a placement’s annual salary. Initial impressions were underwhelming, but yes we’re that desperate. 🙂

But we’ll not lower our bar, which requires applicants to send really strong applications to begin with, survive our screening call, convince us at an in-depth 2h interview, followed by 1-2 days of on-site paid trial work.

So, fingers crossed that our new efforts will get us there. Here’s the list of open positions by the way, and our external referral bonus is now 3000€!

Company update November 2016

November 17, 2016September 8, 2017 Per Fragemann Quarterly Update

It’s been too long!

I used to be pretty good at diligently posting our financial updates every quarter. But ever since we’ve moved to a monthly all-hands meeting cadence, I’ve really struggled to keep my posts coming. The new format is typically more focused and timely (which is why we moved to monthly) but meetings were often a bit too narrow to be share-worthy.

Until now. We’re reorganised internally, and put some more effort on reporting again, so here’s finally a nice new update that doesn’t require me to do a lot of editing.

Main revenue numbers

General company internals aside, the most beloved charts are these two.

About these bar charts: It’s important to understand that Q2 and Q3 are typically our weakest quarters. Just because our Q1 was awesome doesn’t mean our numbers are now going down 🙂

Also, one of our goals is to have fewer tiny customers. Based on experience, we just see too much churn in companies of 10-30 people because there is simply not a dedicated HR person to manage SI. So we’ve enacted minimum pricing a year ago, and subsequently we lose existing small clients due to churn, but don’t backfill them. Hence the stagnation in customers, while the MRR goes up:

But yes, our growth could definitely be better. We’re currently looking at a 20% annual growth for 2016, and that number is too low. We’re still wildly profitable and we’ll again be donating 2% of our annual revenues to good causes. No worries on that end. And since we don’t have investors, we’re not getting slammed for “too bad growth” and we’re certainly not doing anything silly just to get the numbers up.

But still, stuff needs to happen – and we’re at it. We have recently reorganised our “unified sales, customer success, marketing and support” team into three independent units: CS is now a real team, so is marketing, and we’ve grown the combined Sales & Support team so that there’s far more capacity for following up on leads. The teams are still tiny, and we especially want to hire 2 people into marketing asap.

Beyond that, several very interesting product improvements are in the pipeline, and the website is in for a major overhaul. So overall, despite the so-so numbers the outlook is very positive.

The slides

And here’s the link to our all-hands presentation slides.

The slides are lightly edited, we removed customer names and we dropped two features that we’re working on. Other than that, it’s exactly as presented on Monday this week, giving you a fairly good overview of how we’re working internally.

Enjoy!

Distributed work is hard. Company retreats to the rescue!

November 1, 2016September 8, 2017 Per Fragemann How we work

Working with distributed teams is hard. A key ingredient to helping teams gel is the good old company trip. Here’s how we do it. TLDR: Meaningful work plus some fun – not the other way around.

It’s been another crazy week in San Francisco!

One dear SI tradition is to send the entire company to the US once a year. Our Berlin and San Francisco staff get to collaborate, and we can meet customers in person and brainstorm features. Additionally it’s a great time to slot in team activities such as sailing the San Francisco Golden Gate:

While last year’s trip focused more on longer term strategy, this year was mainly tactical, and it was a huge success! It’s not exactly cheap to fly the entire team across the world, but it’s an experience I’d definitely recommend to other startups – even early stage startups.

How and what?

Monday kicked off with a Beth Steinberg workshop, giving teams a chance to pick a seasoned HR practitioner’s brain. We’ve not been able to hire dedicated product managers yet, but we have assembled a team of highly product-focused developers, so for them to soak up Beth’s learnings was a perfect way to start the week.

Our R&D department consists of 3 empowered subteams that work independently on major features. Between Tuesday and Friday each team went to visit 4 customers, presenting their current work, soliciting feedback, and discussing next steps, while also sharing the overall product roadmap. Customers were carefully selected to align with the team’s respective features. Each dev team was joined by one Customer facing person, helping the departments gel.

In parallel, I went to meet a few partners, competitors and ex colleagues to pick their brains on topics such as product growth and marketing.

Key learnings

Get everyone together in the same house – no matter what!

We managed to secure a large AirBnB house in the Mission. It had it’s quirks and certainly looks better than it sleeps — broken airbeds, rooms without windows, no locks on bathroom doors, you name it. But having everyone in one spot was really crucial, and once we had gotten accustomed (and rented a new airbed from an outdoor supplier), the benefits of a single house really made a difference: a huge living room and three balconies/courtyards for work, great eateries nearby, and of course Bart access. No hotel plus rented workspace could have created the same sense of team spirit.

One customer meeting a day is sufficient

Although 4 meetings in four days doesn’t sound all that much, proper preparation and debriefing did consume a lot of effort, and in a way each debriefing turned into productive feature-discussions quickly. Teams could be heard debating client feature suggestions late on the balcony late at night, and I feel this level of intensity could only happen because teams were not overwhelmed by meetings but had “only” one per day.

Ensure the roadmap can be reshuffled after the trip

It’s happy coincidence that most of our current features are wrapping up in the next couple of weeks. We came back with our heads spinning, there’s just so much we need to improve on, and so many client ideas that need to be worked into the roadmap. We’re now at it, debating and prioritising suggestions, and merging them with our “old” roadmap, and while we’re not done reshuffling yet, we will have a good merge available once the current feature work is wrapping up. Next time I don’t want to rely on luck though, but proactively plan ahead.

Fun activities are important, but engaging work is crucial

We’re no strangers to fun activities: This year we went sailing, explored an Escape room, and of course had some nice dinners. Last year saw a roadtrip down to Santa Cruz plus cycling over the Golden Gate bridge, and the year before that we went hiking. But as fun as it is, nothing helps a team gel better than exciting and meaningful work. For us, that’s customer visits and roadmap discussions. No amount of sailing can beat the experience of working shoulder to shoulder with your remote peers on wowing a customer.

But, the cost?

We’ve often been asked if it’s not a bit frivolous to send all developers around the world. Shouldn’t we send just the marketers and product managers? I think not. We’ve spent roughly $40k on this trip, but the benefits outweighed everything. We reduced “man in the middle” friction by having devs talk to clients, we ensured that our departments gel, and having a clear goal (“be ready to demo to client by date x”) helped prioritising our work. The preparation and debriefing offered deep insight to everyone involved. And our distributed team being able to gel is priceless.

Rather than sending fewer people and saving on costs we’ll probably be sending more people. We have already encouraged SF staff to come to Berlin for 3-4 weeks once a year, we’ll probably increase this to twice a year. And we’ll be encouraging developers to make the trip in the opposite direction as well – it worked exceedingly well in summer in a pilot visit, and more trips are to come.

I see this as an investment, not as a cost.

Fun fact

This is the second time already that our Berlin based staff decided to grab the opportunity by its neck and extend the company trip by a weeklong private road trip.

It’s totally fine (even recommended) for the US team too to extend the trip to Berlin for a private vacation in Europe by the way. But an entire dev team living on the road together for a week and not falling apart, that’s really something to be proud of!

In summary

Although it can be stressful at time, I can only recommend the annual trip to everyone who a) has a distributed team, or b) sells to clients far away, or c) both 🙂

Meet our two new subteams

September 30, 2016September 8, 2017 Per Fragemann How we work

As our company grows and evolves, so do our best practices. In this episode: Team Delineation.

Early days’ bliss

Until very recently, all our customer-facing staff were assembled in one team of 5. I loved the flexibility this gave us: The same people who introduced evaluators to the product would reach out to provide demos, offer assistance during billing and roll-out, provide day to day support, help with marketing, ultimately working to ensure all customers could succeed well beyond their initial sign up date.

While everyone had their special skills, it was crucial for all team members to be versatile – Ready to jump in and help at every stage in a customer’s journey utilizing Small Improvements. This worked perfectly in our early days.

Challenges started mounting

Yet as we grew from 100 customers to 700 in 34 countries, it became clear that we were faced with dwindling bandwidth and a need for structure. “A Jack of all trades, is a master of none” … It was time for us to grow as a team as well as organizationally, turning those special skills our customer facing team possessed into dedicated areas of focus.

In recently hiring a new customer support representative, the customer team is now 6 people strong. This was really pushing the limits of the old structure, so:

The new way

We decided to split the Customer Team into two teams: The Customer Success team of 2 which is only focusing on proactive outreach and client retention and the joint Support and Sales team of 3. While still collaborators in many ways, our goal is to target our resources having even more of an impact on the happiness and success of our clients and prospects the like.

Customer Success will be driven by two of our longest tenured staff members: Scott Faverty and James Nichols. Support and Sales will be driven by: Tore Ingersoll-Thorp, Andy Fordyce, and our new hire, Sarah Burgess. And Linda who had managed the team in addition to her Marketing duties can finally focus entirely on spreading the Small Improvements love – and we’re hiring in Marketing too!

Support and Sales?

While the combination of Sales and Support may sound unusual at first, note that our approach to sales is very different to the “normal sales” out there. We’re extremely light-weight, and go out of our way to not annoy potential clients. We’ll suggest a demo, and we’ll follow up by mail if the demo was received positively. But we’ll not pester anyone with spam or phone calls, and don’t even sell to companies whose business models we don’t agree with. Accordingly our sales process works without quotas. Thus, sales being influenced by our support channel makes an interesting and fruitful fit.

We’ve just started the process of defining and strengthening the work these two teams will champion, but we’ve already seen higher engagement from our customers! The future could hold even further refinement of structure and growth, but the focus will always be on the optimal way to deliver the best customer experience possible.

Learn more about our customer facing team on our website!

Company Update Q4 2015

February 12, 2016September 8, 2017 Per Fragemann Quarterly Update

We completed 2015 with quite the end-of-year rally! While our mid-year results looked pretty dull, Q4 really met expectations and helped us close the year with a 70% revenue increase compared to 2014.

Finance

We made $2.9m USD in total revenues, and we had 670 active paying customers in December. The revenues dipped in the middle of the year but picked up towards the end. Our business is really quite seasonal, and sometimes major payments skew the quarterly results as well, so that would explain it.

Our MRR keeps growing, while our customer number has stalled in December. We did increase our base price a bit earlier in the year, since we saw lots of small clients in the range <20 employees signing up and then churning. We’re seeing less new tiny signups, so we don’t think that a flattening of the customer growth rate is a big problem yet. It leads to higher per-account MRR, and that’s a good thing for now. But of course growing the customer number itself is also an important goal moving forward so we’re not taking that lightly.

But in summary it was still an awesome year, and we ended up donating $60kUSD to charities. Read more about that over here!

Product

The really good news however is that our dev team has become super-productive. As you might remember we hired five developers back in July. One did unfortunately decide to leave us, but the remaining four combined with the four who joineds us in late 2014/early 2015 are now extremely well-trained and we’re pumping out features at an astonishing pace. Our latest newsletter was impressive already : Slack, Key Results, Multipraise, Calendar integration and more. But it didn’t mention 3 major features in the pipeline that are in beta stage now and which will ship in the next few weeks already!

Our roadmap for Q1/Q2 is huge and thanks to our new throughput we’ll be sending newsletters a lot more frequently now.

Marketing & Customer success

We almost thought we’d never find anyone, but please welcome Elle, who is now joining Linda to really boost our marketing efforts! Also, our CS team grew by two people in Q3/Q4 and we’ve added much needed capabilites to deal with all our new customers!

Take a look at the (public version of the) slides from our recent all-hands meeting for even deeper insight into what SI is up to these days!

All hands February 2016 from Per Fragemann

Company Update Q2 2015: Revenue dip, great NPS results, and the road ahead

July 20, 2015September 8, 2017 Per Fragemann Quarterly Update

We held our quarterly company update on Thursday, and here’s the high level overview.

We hired 6 full-time people into the Berlin office in the past quarter, and we’re looking to hire 5 more people globally in the next couple of months. We’re growing substantially, all fueled by our own revenues. Our new office is filling quickly and that’s amazing.

Finance. On track, but..

We’re on track for our goal of $3m revenue in 2015 and our pipeline is full, but due to our seasonal business and our terrific Q1 results, there’s a quite visible dip on our revenue chart. We always see more interest in the winter months than in summer, and we made 60% more than last year’s Q2. But still, we’re a bit sad the drop was this strong:

Fortunately, our Monthly Recurring Revenue chart shows that the situation isn’t all that bad:

Our MRR growth has stalled in June, but this has happened before, so we’re not worried. July has started out really promising, we made $130k in the first two weeks already. We have outstanding invoices of $155k, which means the pipeline is full. Our goal remains to make $3m in revenue this year, and we think we can still make it.

Net promoter score

We conducted a proper Net Promoter Score session in the past couple of months. We sent close to 900 emails to our HR and Admins at all our customers, and we achieved a 32% response rate. Our total NPS score is 30, which is pretty good. However, the NPS distribution is a bit uneven. If we take the two most extreme segments, we see a score of 40 with longer term clients with over 100 employees, but -9 with clients of less than 50 employees who have been with us less than 6 months. So there’s lots of room for improvements!

Goals for Q3 and Q4

We need to improve the product faster. Our largest projects – the objectives overhaul – has been in the making for 7 months now. It’s going to be really awesome and will help us get new clients, but the project need to get wrapped up. Working on that. The new 5 developers are already shipping some features, and by the end of the year we should have significantly higher throughput of features and improvements. The main challenge is know when to stop, and to avoid gold-plating.

We need to reduce our churn. Retention of larger customers is around 92% annually, but we see 50% annual churn on customers of 30 employees and less. This is totally in line with the NPS mentioned above. We’re simply not the right tool for some of the smaller clients, and we need to get better at telling evaluators upfront if we’re not the right tool for them. We’re increasing our minimum spend to $150 per month, making it clearer that a small client shouldn’t choose us just because of our affordable pricing.

We need to get better at onboarding new clients, ensuring they are happy, that they get the most out of SI, and that we keep them on board. We’ve started a “Concierge”-experiment, calling all evaluators that seem to be a good fit, offering help and establishing a relationship early on, so they know we’re around to help in case they run into issues. The next step is to call new clients a month in into their purchase and offer help proactively. We have a few more ideas but it’s too early to tell.

Lots of work ahead, and Q3 won’t be a walk in the part. But what would life be without challenges!

Full presentation

Here are all the slides from the presentation in one piece: