Hitting Reset on MeetEdgar with Laura Roeder

0:00let's lay the sand it's March 1st 2021 this year and at 5 PM I have the worst call scheduled of my life the absolute most gut-wrenching terrible thing I've ever had to do is gonna happen at 5 pm and I have to wait for it all day so I'm pacing around my house pacing around my garden all day just waiting for 5 P.M to come because 5 p.m is when we had the weekly Team all hands for my company meet Edgar at five because I live in the UK it's us team so the weekly All Hands happens at 5 pm and I haven't been on the call for a

0:59really long time because at this point I'd been out of the day-to-day in the business for a few years so I knew that as soon as my face showed up on that Zoom screen the team was going to know that it was some big news and probably think it was some bad news but they probably had no idea how bad that news was going to be because on that call I told an entire team of people that they were all being let go that every single full-time employee at the entire company was being let go uh that sucked and what was interesting was the anticipation was so much worse

1:50than doing it was really bad but the anticipation was worse and I had been thinking about how it was probably what the business needed for years before I got up the nerve to do it so I'm going to tell you the details of the story but before I do that I just want you to take a moment to think about what this thing is for your business what this big or small but maybe big thing is that you know you need to do but you've been scared to do it in my case it seemed crazy to burn down a team like this because even though I let go of the whole team

2:34the business wasn't failing uh the business was and is a few million an annual revenue good churn numbers the business was doing well but I made this decision because I knew this is what the business needed to make it stronger so before we go into the details that decision let's back up and talk about how I got to that point of that all hands team meeting where I had to tell everyone that they were all losing their jobs I launched meet Edgar in 2014 bootstrapped self-funded business and we had full-time employees much earlier than a lot of bootstrapped businesses I had a training business that Edgar kind

3:29of grew out of I already had maybe two or three full-time American W-2 employees in that business so they moved over to Edgar and then we added at the time I really loved the idea of working with people who were totally devoted to one business instead of having you know Freelancers where I was just going to be one of their clients also saw a kind of script out there that said if you want to have a serious respectable startup you need a team um and it's a little bit gauche to ask someone how much money they make but you can ask them how big their team is you

4:12know it's this little shortcut that we have for how how serious how impressive is your is your business you know what size is your team and as you are growing a team each person needs to add more Revenue than they're paid right that's the only way that the math works out if each person on your team is paid more than the revenue that they contribute to then your team will not be then your company will not be profitable now that's very logical and it's true but it's really really hard to figure out for any role besides a sales role you know like this is all easy and well

4:58and good if you're like okay this sales person gets paid 200k and they bring in 800k Easy uh where it's really hard to do is for engineers right the bulk of the team of a software company I don't know about you but I've always found it really impossible to attribute Revenue to an engineer and if you try to do it it gets you say okay well maybe if we you know add new features like that'll attract more customers but often it doesn't you don't actually know you know which features are making people stay and it doesn't really matter who built what percentage of what feature right it just

5:37gets really weird if you try to sort of Force an engineering team into that box so it's really hard to do with Engineers uh it's also hard to do with the rest of the team for a self-serve model which is what we are a meat Edgar you know we don't have that sales team the way that people hear of us is usually word of mouth right so we absolutely crush it for search results for the term meet Edgar right and that's how most of our customers come in they've obviously heard of mead Grove somewhere they Google us they buy so how do you attribute that Revenue to someone on the team obviously

6:20everyone's doing stuff that all contribute to it but it's really hard to pinpoint that to any individual person another element of the story of growing our team is that we had really fast growth especially for a bootstrapped company so we hit a million in ARR 11 months after launch and we more than doubled the next year really fast growth in the first two years but that growth that growth rate did not continue but we hired as a high Growth Company nothing crazy huge you know by funded startup standards I think the largest our team ever was at one time was maybe 25 people but when I look back we would bring in

7:08full-time in-house people for everything and I think at the time that was just sort of the script that I thought that I should follow you know I think of some of the roles we had we had a full-time marketing data analyst there was no reason for that to be a full-time job that was a project that needed to be established getting that data in but once it was we did not need someone full-time on the team but what happens is you add people for these roles and then you don't want to fire them because that sucks and they're smart people and they're contributing to the business

7:46right and so you end up what I found is you often end up without realizing it creating a lot of busy work and there was a lot of busy work that was happening in the business and it would just accrue over the years you know our customer service team would do office hours and Q a calls and educational webinars and we can never tie it to turn you know we would try to say okay or the people who are attending this stuff is it lowering their turn rate the answer was no um but it was something to do that seemed like it would add value to the

8:24business and people had time to do it so it was done so we ended up in this place where we had a kind of larger robust team but I was having a really hard time tying the people on the team to Growing the revenue of the business and here's where it really wasn't working out the revenue of the business was not growing after a certain point we reached this sort of balance stasis point where the MRI was flat where we were bringing in new Revenue every month obviously through churn we're losing Revenue every month and we weren't trying to do that we were trying to grow the business but

9:11we weren't getting those results so in 2020 we made a decision to say okay we're gonna spend we're going to reinvest more because we'd always had a healthy profit margin in the business so we said okay we're going to try something different you know we haven't been getting the growth we've been looking for we're going to try investing a lot more money into the business so after I've always taken owner pay but after my pay and everyone's paid we're going to take the profit margin down to zero for 2020. so that means we reinvested hundreds of thousands more than we had previously in 2020 we also got PPP money that year

9:52which was another few hundred thousand um we use this to put more resources on our engineering team we added a big new feature that we didn't have which was Pinterest we're a social media scheduling tool so that was a big social network that we didn't have before and then we did a lot of marketing support around that Pinterest launch at the end of 2020 our growth was still flat all of that work we've done all of those resources we'd invested had not been successful actually our MRI was like a tiny bit lower at the end of 2020 than when we started some months we'd gone up and

10:31then other months we'd gone down and it got canceled out so after a few years of having this flat growth after you know trying some new things in 2020 at the beginning of 2021 I was just ready for a really hard reset on the business I'm like something about this business is not is not making sense and I knew something I had as I referenced earlier as something I'd thought about for years was that we had this team of people and I would read business books and it would talk about you know looking at the ratio of your employee expenses versus the revenue you're bringing in and when I

11:14would try to do these ratios they just wouldn't work out for our team so I thought okay what if instead of trying to grow the business what if we looked at the business and said what sort of resources and team does it take for the business to be just flat as we have been right and like I mentioned a few million in annual revenue so not a failing business by any means but not a growing business so if we say okay we're not we're not going to struggle to grow we're just going to be okay with the state we're in what sort of team would it take to keep that stable state is the

11:55team that we have if we're going to be stable you know we can change our mind and try some other strategies in the future but for now if we're going to be stable do we have the right team is this a match right is this team the right match for the stable growth business so let's look at where the team was in uh March 2021 earlier this year so on the product team we had a product owner who's also a designer we had three full-time developers and one part-time developer one part-time QA on our customer service team we had two full-time people one person who split their time between

12:40doing customer service and QA so you get that half and a half on the marketing team we had a full-time marketing manager and then we would bring in various um writers and designers or other Freelancers that we needed for our marketing activities and then on the operations team we had a president running the company as I referenced I hadn't been running the day-to-day of the company for a while we had a kind of HR Ops kind of assistant role and then we had a full-time in-house Finance role who would do all of our bookkeeping daily reconciliation also Financial forecasting helping with taxes anything around Finance so I'm like okay if we're not trying to

13:20grow If all we're trying to do is stay stable who do we need on this team and that made me think about how value is created and software so the amazing thing about the business model of software is that what people are paying for is the software right that that's what they're paying for they're not paying for the team they're paying for access to meet Edgar and the software is delivered without a team I mean a team obviously had to build it obviously there have to be humans that Geo maintenance and Bug fixing and things like that but for you to buy and use meet Edgar it's a SAS

14:06right no human there's there's nothing manual in that process which I think is how most of our businesses in this room are obviously you can do stuff where you're doing manual work for people but I think most of us have self-serve SAS businesses someone buys your software online they set it up themselves they use it themselves a human does not need to do anything unless something goes wrong right so the value that's being exchanged for the money humans support that but the bulk of it is really not happening from humans which is why SAS is such a cool business model and which is why a team can be so

14:49lean at a SAS company because it's not an agency right humans aren't delivering it they're not paying for people they're paying for software so if we're just oh yeah and so this is the before numbers of 2020. so the whole team together I added up the hours the whole team was doing 1840 hours a month in 2020 my owner pay was 10 but then our profit margin zero percent zero percent growth who don't we need just to maintain well we don't really need a person adding devoted to product because to just maintain we don't need to do really any feature development you know it's an established mature software we

15:38have all of our core functionality don't need that development team we need some sort of developer right maintenance bug fixing things like this so I think we could get away with one part-time developer probably don't need QA they can just do their own QA if we're just kind of maintaining right customer service when I looked at our ticket volume I saw that our customer service capacity was way way larger than what we needed again we're a self-serve business our pricing is 19 and 49 a month and we don't do any custom anything any custom onboarding it's easy to use people are just answering questions via email so

16:26one part-time customer service rep if we stop doing all this extra stuff that we can't attribute to lowering turn anyway if they're just answering emails definitely just need one part-time person we don't need someone to manage the marketing uh I think to keep in that static State we need to keep kind of maintaining the content marketing that we do which for us is like writing or updating blog posts sending out a newsletter kind of some you know we use meet Edgar for our own social media marketing of course and that handles that um but we'll need some kind of freelancer someone to kind of help the

17:06marketing machine stay alive and then the operations team is really interesting because the operations team their only purpose is to support all the other people if you don't have a team you don't need an operations team so this whole area gone you know you need bookkeeping but even that you know you probably do it monthly honestly you could do it quarterly you could do it yearly I mean we're a SAS business you can just look at profit while right the math is really simple for the bookkeeping so this is what I decided to do if we're just gonna stay flat we don't need this whole team a much simpler team is a

17:53much better match to serve the business and I do want to tell you because of course I'm focusing on the logistical side the business model side of this but obviously there's a huge Human Side to this as well which is why it was such a terrible thing to have to do but because I didn't wait until the ship was sinking we were able to give three months Severance to everyone we've always kept open financials with the entire team so people it was surprising but it wasn't the most shocking thing in the world because everyone knew that we weren't achieving growth like we wanted to be right people

18:40knew that things were not amazing in the business so don't get me wrong it was a terrible day it was very bad news but we were because it wasn't a disaster point in the business we were able to handle it in a way where we could be generous with people and give them plenty of severance give them plenty of time and health insurance uh to find their their next thing so here's the team that meet Edgar has today we have one freelance developer who does 20 hours a week mostly again maintenance bug fixing stuff for customer service we have a freelancer who does 10 hours a

19:20week and then we have one backup person I have another SAS now paper Bell so I have them cross-trained you know just if somebody is out they can do backup the customer service rep hands bugs directly to the developer so that's a really simple process for marketing we have a small content agency that just updates our blog posts we've written over 500 blog posts why were we writing more every single week that makes no sense we're actually getting much better results now search optimizing and updating the posts that we had already written because they're old posts which Google actually loves so now we just have a freelance agency

20:01they'd completely handle the updates all the keyword research much much lower cost for them to do all that than when we were paying just one full-time person and then I like to mess around with marketing stuff so I spend a few hours a week improving funnel stuff usually operations we have a freelance bookkeeper who does our books monthly and uh we have a freelance project manager just to kind of I don't know if anybody has any problems or little projects the other day I got a letter from the state of Wyoming saying that I owed them money so I sent that to her so she could deal with it right just

20:38these random things that come up when you're running a business she helps with so here's the numbers and don't worry I'll give you the side-by-side comparison on the on the next slide now we run the whole business the same multi-million dollar ARR same business for 170 hours a month our profit margin is 60 and then with my like salary of 10 that takes my owner pay since I own the whole thing to 70 we still have zero percent growth so this isn't some like amazing like oh we did this and then everything turned around like we still have zero percent growth that's the same but that's how it was

21:22before right the structure just makes so much if you're gonna have zero percent growth this is the way to do it you know so this like this is the big before and after numbers so our team numbers are 90 Less hours spent on the business to achieve the exact same outcomes and now the profit margin is seven times higher huge huge huge difference and the point of this is not like the profit margin is cool but the point of this is not to say oh like look you know look how much more profitable it is the point is really just about that that match of what's right for the

22:16business right like does your business need Freelancers in this role or full-time in this role like are you excited about building strong company culture or are you not like which parts of your business really need the resources or maybe you have way too much engineering happening and it's really not needed for your business or maybe you have too much sales or too much marketing like this is just about looking at what your situation in your business is and making sure that the team and the resource spending that you have really matches up with what you truly need and it's really hard to do that after you get started because

22:58seven years in I found what I needed was to let go of the entire team and replace it with a totally different structure that's a really hard call to make because the people working at the business were excellent they were really good at what they did they were really smart people right they weren't doing a bad job we just had roles that weren't really needed for the company that we had so I want to take I left a lot of time for questions because I want to know what you want to dive into more but what I want to leave it with is just for you to again reflect on what is this

23:39thing in your business that feels really scary that feels overwhelming feels like you can't do it but you know that you need to do what is that change thank you and thanks Lara great talk a difficult decision I can imagine um I'm wondering though there's a lot of competition in your field um and by removing most of the products uh capacity within your team are you not afraid that your product will stagnate and eventually uh growth will yeah at least you'll decrease in in Revenue along the way and that you'll be squeezing out most of the business like this I think that is likely I think that that

24:32is expected I think if we continue to keep the product in the same place over time yeah it won't stay exactly flat it'll continue to inch down and so I think that's just a question of I can either be okay with that of saying okay I see it inching down there's a lot of room for it to inch or we can bring in more resources so something we've done at this point is we have a Dev agency trained up on the software honestly we thought we would need more resources than we do so we got an agency trained up and then we saw that we just don't

25:06really need them right now but we could bring in them or we could bring in other Talent if we get to a point where like okay we do want to spend more on feature development so it's just looking at it in a more flexible and of course there are downsides to that right like we have a huge code base they're not familiar with as the people in this room know you can't just snap your fingers and just like pop a new feature on but that's now a trade-off that we're willing to make hey Laura hi great talk um I'm curious like why uh so you also have another

25:36business coming up now uh and now you're making a couple of million that's like great money why not sell it I think I will I think I will yeah I mean that's that's something that I am exploring and that was something that was on the horizon I could kind of decide okay do I keep it do I sell it and I wanted to see how it felt with this new structure it's a little boring with this new structure honestly because it is so yeah boring because nothing nothing really is happening um so I I do think that's something that I'll do within the next year or so

26:15um great talk uh thank you Laura wait who's talking okay thank you here um one question I have is how could you have avoided like so like you you told us what led you to hire that many people but what you could do what could you have done differently to Berlin from day one well I'm doing it because I have another sass now and that was also a big impetus in making this decision because with paper bell uh I have gone a different route of going very freelancer heavy I mean paper ball is much it's a much smaller business we launched a year ago and the growth hasn't been you know

26:59we're not in a million error the growth hasn't been as fast as it was initially for meet Edgar uh but I just saw with paper bell firsthand how much we could accomplish with really targeted Freelancers you know we're also like your business very SEO heavy and content heavy so our process is we hire a freelance firm to write the keyword briefs do all of our article research higher freelance writers to get them done and it's been amazing to me how effective that is you know that we have a whole now great content SEO strategy that's really starting to work with such a lean team and so now we're ready to grow our

27:39development capacity but we're not looking to bring on someone full time yet we're looking to bring on someone freelance who wants a side gig oh by the way full stack Ruby on Rails where cool side gig while you're on your SAS um so yeah we're just approaching in a different way where it's like if we ever do full-time to really be sure that this role is going to be indispensable you know in in the future and to really avoid having full time in-house employees if if we can which is just a different experiment like I I genuinely don't think that that's what people should do I think I'm excited to

28:20try that this time so that's what I'm trying to avoid some of the mistakes I made before

28:30um this question by the way very nice talk [Music] if you were thinking about selling your company and the prospective buyer asked you why can't you grow what would be your answer to that and what sorts of things have you tried to do to grow and why do you think you can't grow I mean it's the million dollar question if I knew exactly what to do I would be doing it I know that there's space to grow in this industry because there are social media scheduling tools that are larger than we are so I know we don't have every customer that you can have um you know I mean I've started

29:11exploring the process of selling the business and it's interesting when you Excel because I think a lot of the things that you feel are huge problems in the business and they are but they're also big opportunities for the acquirer right and a choir often doesn't want a fully optimized business they want to come in um and be able to add their playbook and add their growth strategies so I don't have an amazing answer for you I mean I suspect that it's a change in uh positioning slash pricing we have no expansion Revenue we have I mean we just added a 19 plan like two years ago so you can

29:57technically move from 19 to 49 but there's no usage or users or anything like that so that's kind of an easy target we actually started building um the ability to add on more users and charge for them when we made this whole big change so we and it wasn't done so we just shot down that feature so I suspected something in there um but I don't think I'll be the one to to find out I think there and honestly that's the other thing about selling it I do think there are people out there that are going to be able to do a better job growing this business

30:33really really great talk um I'm just thinking now with the questions for the selling like it strikes me that what you did was actually um prepare the business for a pivot because it's a lot easier when you have a small team than asking a current team to do all kinds of things differently right so maybe that's an argument in in the selling process or maybe it's a way to go for you obviously you have another company that you want to focus on so maybe it's not but how what did you think about the pivot housing market for that and stuff like that yeah I mean that definitely aligns with my thinking

31:11at the time that this would be kind of a clean slate and there were different directions that I could go that I could decide yeah just to keep the business passively that I could decide to sell it that I could decide okay we need we're going to build up a team again but we're going to build it in a different way with a different mix of roles also just you know I obviously just did a bad job keeping people on priority you know when I look at the size of our engineering team versus now and getting the same results um I'm not a developer y'all love

31:44refactoring you love refactoring so much and there is so much of it happening at Edgar we have a beautiful code base with so much testing um but I think the priorities were not right and what we were spending time on because we didn't have the right balance of all the refactoring stuff combined with maybe things that would put us ahead with a competition where we didn't get that balance right so yeah I think it's it was kind of a clean slate move and it can it can go a few different ways in the future uh hey Laura thank you very much for amazing talk uh I have a question uh

32:24have you step it back because you were saying that you were growing initially very intensively uh have you considered it maybe there is was something changes that you stop it to grow or you it was just a market itself because it feels that market is quite big there are a lot of tools and they keep growing maybe something happening at this point yeah so startups for the rest of us where I did talk about some of this in more detail so there was one big event that happened which was we lost the ability on Twitter to kind of do our core functionality which is repurposing content

33:02Twitter band uh sending the same content out repeatedly and that was like that was the beginning of the bad times like we lost a big chunk of mrr at that time and we just like never got our mojo back um also when we launched we were super unique and we were the only ones with the ability to do what we did with the workflow and since we launched their more copycat tools came out which happens so I think also that is why we didn't after time I have such a fast growth rate because at first for the first two years if you wanted to be able to repurpose your content on social

33:41media we were the only game in town and now and now we're not so yeah I think it was internal mistakes that we made and also external factors that made things a little harder hi Laura thanks it was a great talk um you obviously had a lot of learnings from me Edgar and whether that was your first startup or not in terms of when you then started paper bill you had a new vision for how you wanted to build the business did you find it hard to stick to that or did you find yourself slipping into Old Habits because the last time you built a business you did

34:11it very differently yeah that's an interesting question um I did I didn't find it hard because I do have a lot of the same habits because there were a lot of things that we did right with Edgar right like I said it's kind of weird because I'm I'm up here talking about something that's hard and something that's a bad time but I the business is still you know I definitely still consider it a success overall so with paper bell uh you know I referenced SEO and content marketing we're using that same Playbook to build paper bell that we used to build meet Edgar and that's kind of my side the business

34:50marketing side so I'm doing a lot of the same habits and the same activities but really the team stuff is what looks really different and it's not hard for me because I miss it because it was so long since I wrote a marketing copy for Edgar you know I had other people doing that but I love doing that so it's actually been really fun for paper bell you know I built a whole website myself I wrote all the copy on it I'm I'm still at that place where it's really fun to be able to do all that execution work maybe in a year or two I'll I'll get

35:24bored of it and I'll have more people doing it uh but yeah it's it's largely the same kind of Playbook and how we are building the product and the marketing uh but with a different team structure it's uh Laura for being uh so candid with your your tough decision that you had to make um I had a question regarding like were you involved in setting the road map and the product vision and you know how did you get to the point where you're just like I'm willing to throw this all away and like none of this is going to work I'm gonna downsize the team well I don't know if anyone else does

36:04this we would throw out our roadmap all the time I don't like I don't know if we're the only one like our road map was just get crazy and then we'd be like we can't handle it like we're throwing away the whole thing so I think that part maybe didn't seem that that weird um and of course there are always things to build and always things to improve but we we do feel like okay the core functionality is is there you know there there aren't like huge things that are super missing from the product I mean in my opinion maybe someone else would feel would feel differently

36:39um so yeah you know I would be I would be sort of involved with the product Vision but honestly it's not a huge strong point for me my side is definitely more marketing and audience building and stuff like that so not having control over that and throwing it out was not super sad for me thanks for the talk um in the beginning you said you had the feeling that as a proper startup as a real startup you had to have lots of people to present yourself did you also have an office that people go to an office okay just yeah we were always remote yeah okay we were remote

37:23but we were all in the US and we would work at the Center so a kind of synchronous remote thanks for the talk um how did the team handle the news and was there any hard discussions after the initial announcement and how did that went for you um it went surprisingly well and I don't want to sound blase because of course it was easier for me than it was for the other side um we had actually built our retention for the team was amazing because we had built a really great place to work we had really great work-life balance we paid well people had great benefits so I

38:09actually heard from more than one person that they were kind of wanting to quit but they were not wanting to be disruptive to the team or they didn't want to lose some of that culture that we had so there there were at least a handful of people that this was immediately kind of a I've sort of secretly been hoping for this because also like being in a startup that's trying to grow and is failing sucks you know it's it's not fun when you're like we're gonna put all this time and money in 2020 and all these things that didn't work it's it sucks it's hard you know so

38:43honestly there was only one person who did have an extremely negative reaction and have a really hard time with it um but besides that like I said the anticipation was actually much much worse than the conversations um and you know I was able to see the jobs that people went on to next and some people the company you know like on our customer service team had never worked in the startup world before and then they got to go on after us to some of the really like top well-respected companies which they were really excited about so that was that was really cool to see all right thank you Laura thank you

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