I Built a Multi-Million Dollar Startup With $0 Venture Capital 📈

0:00on July 1st of 2016 I signed a contract that finalized the sale of my company an email marketing platform called drip the following day my life changed forever when the acquirer wired millions of dollars to my bank account it was more money than I had ever seen in an amount that meant I would never have to work again you probably think that all your worries go away when you sell a company for that much money but honestly the build up of years of stress damage I done to my mental health and frankly to my closest relationships made it a Bittersweet moment I also had to let go

0:32of the company that my co-founder and I had been building for the previous three and a half years and during that time drip had become a big part of my identity and on that day in July I handed the keys to someone else in this video I'm going to talk about how I built a multi-million dollar startup with no Venture Capital I'm gonna talk through my journey from being a software developer making several hundred thousand dollars a year for my own software products to building a rocket ship that changed the course of my life and culminated in a financial outcome I never would have expected and per usual

1:01if you stick around to the end I'm going to tell you the biggest regret I have around building growing and selling drip I'm Rob Walling I've started six companies five of them bootstrapped I've written four books on entrepreneurship and I've invested in more than 125 startups so we sold drip in 2016 but now I want to roll the calendar back four years earlier to 2012. I had this amazing lifestyle business called Hit tail it was a SAS application that was doing tens of thousands of dollars a month in net profit and I was the only employee so it was a pretty amazing cash flow business hiptail got a lot of

1:34traffic mostly from SEO and while it had a decent trial to paid conversion rate I wanted to capture emails on the website since I had used email marketing in every product business that I had run to date and it had always been one of the most profitable channels so I hired a contractor to help me out he was working about 20 hours a week for me and I asked him to put an email capture widget on every page of this site this is hundreds and hundreds of pages and this is before this existed as a product now there's optinmonster there's Sumo there's a bunch of options for email capture

2:05widgets they didn't exist then so the contractor I hired was actually Derek Reimer whose name you might recognize if you followed me for any amount of time he would later write every line of code for the first 15 months of drip and he became a retroactive co-founder as we started to scale the company so it took him a week to wire up what I thought was a pretty simple request he had to dig into open source JavaScript write a bunch of custom JavaScript himself style the thing post subscribers into MailChimp and I thought there has to be a better way than this and we looked and

2:35there was not so I realized that this might be a problem other entrepreneurs were having which is I have hundreds and hundreds of pages on my website I'm not going to go and drop an embedded form into each page but I want a little toaster pop-up widget maybe an exit intent we didn't offer exit intent at the time but the idea was to get something where it's like JavaScript into a footer and now I can activate it and deactivate it across any or all pages on my website didn't exist as a product when we started building drip and that was the initial idea for it so

3:04instead of going in my basement and coding for six months I went to try to validate this I emailed 17 entrepreneurs that I knew I asked if they would pay for a nice widget plus an email sequence 11 of them said yes and that was enough validation for me I decided to productize the widget and at that point I called it velvet mail and I'm glad who dodged a bullet with that one I'm glad uh it later was renamed drip before we launched but my contractor Derek agreed to work the other half of his week because remember he was working 20 hours a week on hittail this might show you

3:37that I had no idea what drip would become I was not building it to be some multi-million dollar company I literally thought it would be another nice lifestyle business I wanted it to get bigger than hit tail but I had no idea how big it could get so Derek agreed to work the other half of his week building it and we sketched out the basic functionality and he started coding all that was in there was an email capture widget you could install with one line of JavaScript then you had an email follow-up sequence once someone subscribed and that's it there were no broadcast emails I don't believe you

4:06could even be in multiple sequences at the same time or switch sequences it was it was very very simple and so while Derek built I got excited because when you're building you know all the potential that you have when you're gonna launch right it's this really exciting time and so he was writing code and I was marketing and I went out and marketed in every way I knew how I was starting to do SEO with blog posts and essays I went on every podcast that I could get on I use my social media following I ran Facebook ads this was all going to a landing page back then it

4:36was at get drip.com and the value proposition was we're going to improve your visitor to trial conversion rate using email marketing that was it I didn't go into a bunch of specifics about exactly how it would work but I was able to gather 3 400 emails for our launch list and 3 400 emails I thought was pretty good it was probably the biggest launch list I'd ever had so six months after the first line of code in the middle of 2013 we onboarded our first two or three customers we did this completely manually by hand so to speak there was no billing in place there was

5:05no way to create an account everything was manually inserted into a database just to get a couple people in these were people that I knew we instantly ran into several speed bumps too we thought we'd covered everything but of course we had not so an example of that is if someone unsubscribed from drip they would still be subscribed on your main email list because remember drip was almost like an add-on to MailChimp or aweber or your other email service provider it couldn't do all the functionality that ml Champion aweber could do it was really an add-on and so you had to use both and that instantly

5:37became a pain point because if someone unsubscribed from your MailChimp list now are they still receiving it from drip and vice versa we started to realize that drip was severely limited in its feature set and really it probably should have been a feature of a larger email marketing platform so we started building a few features to make it into an email marketing platform or email service provider to compete with the likes of mailchimper aweber although we were a light version of that we didn't have all the functionality that was not the original vision for drip but we realized within the first five ten customers that we had to change

6:07something because there wasn't enough value for people and this is something as an entrepreneur yourself you're going to run into where you have a vision and you're so sure that it's gonna be a half a million dollar product or a 10 million dollar product and once a customer starts using it you're going to realize wow I was wrong and you have to be able to take in disparate and often confusing and contradictory feedback and make these hard decisions with incomplete information this was one decision that I made which was to turn drip into essentially an email service provider so we added broadcast emails we added some

6:38reporting took a month or two and pretty soon we were a lightweight email marketing platformer the great user interface we had about 10 customers each paying us around 50 a month then over the course of the next several months we used a phased launch which I've talked about on this channel before we launched all 3 400 people on our launch list so it was three to five hundred people every few weeks we would launch people would come in we'd get them onboarded we'd build frantically the things they needed to not cancel and then we do it all over again and so over the course of I think it was about four or five months

7:09we landed almost 200 paying customers and our Revenue was just under eight thousand dollars of mrr by the end of 2013. I was stoked eight thousand dollars at the time was enough to pay for you know mostly full-time employee I thought it was a great launch and I was ready for rocket ship status and to start adding two three four thousand dollars of mrr to drip each month but that didn't happen what actually happened is we hit a massive Plateau as Paul Graham says we hadn't built something people wanted in today's terms you might say we had little or no product Market fit I like to think we

7:41had weak product Market fit what had happened is I had the curse of the audience I had a bunch of people in my audience who wanted to support me wanted to help me out wanted to check out what I was up to but they didn't really need a new email service provider and so people would sign up and then they would leave we weren't different enough from cheaper players MailChimp and aweber were cheaper than us at low levels of subscribers so I agonized over this killed me I was pumping money into ads I was doing all this marketing and we were leaking our customers up the bottom of a

8:10leaky bucket churn was too high we did not have product Market fit so I spent the next couple months watching cancellation feedback and having a bunch of one-on-one conversations with customers a lot via email there was a lot of noise like a lot of disparate feedback you slower your prices this isn't worth 49 a month build a mobile app add a CRM and then this would be worth it right the months were very stressful and I was filled with a ton of self-doubt and it was at this time that I started really confiding in my developer Derek Reimer about the direction of the product and we started

8:40really discussing you know which way should this go and I'm gonna be honest during this time I had imposter syndrome like crazy I don't know if you've heard of that but the idea is that you think you're an imposter and that you're not actually good at something that you are good at so I had already built three successful companies before this I was supposed to be good at this I knew how to Market I knew how to code I knew how to grow software products but the nagging doubt kept creeping in that doubt of did I really just get lucky with everything before this as I was

9:08wrestling with this self-doubt over the course of several months losing sleep anxious stressed there was one piece of feedback I got from a couple people it wasn't a ton but it was three four people and it really resonated with me the feedback was build email automations turn drip into a marketing automation platform and I'm gonna be honest I didn't know what that was this was probably January or February of 2014 I had used several different email service providers MailChimp aweber campaign monitor but I had never heard of marketing Automation and I didn't know what email automations were so I buckled in and I did a bunch of research so I

9:44found out they're things like if you buy a product let's say through stripe or Shopify or PayPal that your marketing automation platform gets pinged and you tag that subscriber with a customer tag or if they click a link in an email you can receive a tag that you're interested in a particular type of content today this is table Stakes right for for any email service provider and you they wouldn't even call themselves a marketing automation provider but back then it was kind of like email marketing but with more intelligence and more sophistication and a little more automation baked in and I resisted this it sounded terrible sounded complicated

10:18it sounded boring all the marketing automation providers were these big Enterprise companies they were crappy software and I felt like I was going to be entering a space that I wouldn't enjoy and it was going to be stressful and they had all raised tens of millions if not hundreds of millions of dollars and then at one point I realized we could seriously disrupt these players people really disliked the big tools these were called entrepur Infusionsoft Marketo pardot silver pop they were overpriced so we could be cheaper and still make a ton of money our ux and user interface was far superior already and we could maintain that we used a

10:52self-service model with an optional demo they required a whole sales process we moved faster we didn't have their funding or their brand recognition but I felt like our advantages as a Nimble startup could when and out against these massive incumbents many of whom as I said had raised tens or hundreds of millions of dollars and in fact that's how it played out we obviously didn't topple these big incumbents but we carved out an incredibly profitable Niche and from that point until we built a multi-million dollar SAS company was less than two years it was a pretty incredible journey so rolling back to that moment where I just decided we have

11:27to take this risk I talked to Derek I said I think we need to dive into marketing Automation and over the next seven months we built and launched one automation at a time we put them into production and with each automation launched our trial to paid conversion went up and our shirt went down every metric of the business changed for the better I remember looking in our custom dashboard that had all our SAS metrics and pointing to the graphs and saying to Derek that's it that's what product Market fit looks like all the numbers just switched from being a flatlined business to something that started growing by two or three thousand dollars

12:02in mrr that month and every month there after and I want to be clear it wasn't just product it wasn't just adding features I was marketing like crazy I hired a head of marketing and we were running Facebook and YouTube ads I appeared on every podcast that would have me sound familiar hammering out articles for SEO we built and co-promoted dozens of Integrations which brought us a lot of new customers it was pedal to the metal on both product and the marketing fronts and pretty soon our growth accelerated it wasn't just two or three thousand dollars a month of mrr by the time we hit 40 or 50 000 a month we

12:32were growing at 5K a month and then later on we were growing at ten thousand dollars of mrr every month and I'll be honest it was hard work and it was stressful and I thought about the business day and night we expanded the team we eventually had 10 people on the team completely bootstrapped and we were actually Venture beats number one choice for marketing automation providers for smbs and we made their top 12 list of marketing automation providers out of hundreds of competitors and the other nine ahead of us had all raised Millions if not Deca millions in funding I hadn't built drip to sell it but we started

13:03getting a lot of inbound interest both of venture capitalists who wanted to invest but also people who wanted to acquire drip and as it was growing I became stressed that I had literally millions upon millions of dollars in net worth stuck in this one software product and by that time I had sold all my other products companies whatever you want to call them so I was all in on drip and it made me nervous over the course of about 18 months we had five or six pretty serious conversations about selling drip and the acquisition that wound up going through took 13 months from the first email that I received from clay Collins

13:35in June of 2015. during that time we negotiated and walked away many times it was the most stressful Year of My Life by far we were growing the company not knowing if we were going to keep it or sell it and all the while negotiating like crazy for the best deal it took a toll on me mentally which impacted how I related to my friends and family and I really had no space for anyone else but kind of my own agonizing thoughts and that's one thing that I never want to do again when the deal closed in July of 2016 I called a friend of mine and I

14:05told him I'd sold the company and I just cried I cried on the phone and it wasn't sadness and it wasn't happiness it was too many emotions to contain and honestly it took me months maybe even more than a year to decompress and to get back to a normal sense of self and sense of life after the drip sale closed I worked on drip for another 18 months after that and when Derek and I left in 2018 I took six months off as he started working on his next startup I played my guitar I hung out with my family and I read a lot of books it was one of the

14:37most peaceful times in my life and I celebrated the journey you know a building and selling drip but one thing that never returned it has never returned since that moment in 2016 is the self-doubt and the Imposter syndrome that I felt in the early days of trip my building and selling grip I had proven to myself permanently at least until now seven years later that I could do it and I could do it again and that confidence is carried on as I've grown my company's microconf and Tiny Seed in the stair step method drip was my step four business the stair step method only has three steps but I'd already had a

15:12profitable Standalone SAS with hit tail but drip was that next level the 10x business it was a 10x larger 10x more competitive and 10x harder and in all honesty I've never regretted the decisions I made while running drip nor the decision to sell it but I do have one regret that I'm going to tell you about in a minute before I do that I want to let you know about my new book it contains everything that I learned building and growing drip and everything before and since as I've invested in 125 companies you can see the cool cover here to my right and I have a preview

15:42copy here of the hardcover I'm running a Kickstarter in April and I'd love it but if you would check it out and back it you can go to sasplaybook.com to find out more about this book that can help you do what I did build an incredible company without Venture Capital as we wrap I want to tell you about my biggest regret and it's that I didn't do a better job of managing my emotional and my mental health I was a wreck for months maybe more maybe more than a year I was sometimes stressed I was sometimes depressed and it really took a toll on my relationships as I said above if I

16:12could change one thing about my experience I would have spent more time exercising I would have spent more time sleeping I would have spent much more effort and resources staying sane so that I could live a happy life while building and exiting such an incredible company I hope you enjoyed this video if you did please like And subscribe in next week's video I'm going to cover two new AI tools you've probably never heard of [Music]