Flodesk Revenue (2024)

Introduction to Rebecca Shostak's background flowes makes email marketing easy as pie from 2011 to 2014 she was selling MailChimp templates doing $ 400 500,000 per year ultimately canva and other tools came in and so templat stopped selling as well but she still had a great built-in base that said hey we'd love to build you know this inside of MailChimp and make the flows easier that prompted her to start going and interviewing folks from her audience pairing up with a team at honeybook and eventually launching the three co-founders put in $90,000 total uh back on launch date before they launch their first paid plan at 19 uh bucks per month they eventually got going and today over 30% of their inbound is powered by affiliate marketing and Word of Mouth marketing they have over 80,000 paying customers Revenue run rate today is about 27 million bucks up from 20 million just a year ago and their $10 million a year was back in 2021 which they hit just it's crazy 18 19 months after launch all here's a cherry on top with no outside funding and just 50 full-time employees for $540,000 of Revenue per employee hey folks if we haven't met yet my name is Nathan ladka I launched and sold my first software company back in 2015 and went on to write a book about it which you guys made a Wall Street Journal bestseller purchasing over 30,000 copies thank you so much for that after the book I launched this show and went went on to create founder path.com I raised a large fund to do non-dilutive deals with B2B software Founders so far we've invested in over 400 software Founders totaling $150 million here in 2024 we're doing three to four New Deals per week so if you're looking for Capital and don't want to give up Equity go sign up at founder path.com for free to get your offer all right let's jump into the interview hey folks my guest today is Rebecca shc she is the chief brand officer and founder at flowes launched the company over six years ago after being very active in sort of the graphic design template space from 2011 to 2018 we're going to learn her full story today Rebecca are you ready to take us to the top I so ready let's do it I am stoked you're here I met you via Greg head at saso a week ago and you know I rarely get surprised but he goes you've got to meet the Rebecca I'm like well why do you have to meet her and he goes well she's bootstrapped and she's doing a crap ton of Revenue so I don't want to Origin story of Flodesk and transition from selling MailChimp templates bury the lead what are you at today in terms of Revenue uh we are hovering right around 27 million AR this is incredible okay and and just so people get a growth rate before we dive into your product your background design templates Etc where were you exactly one year go um I oh my goodness I feel like I'm being put on the spot um I believe we were at around we're hovering around 20 okay so sort of 20 now up to about 26 27 yes that's great growth okay guys keep listening we'll hear how she drove that growth growth without raising VC even while her competitors raise a bunch of VC but Rebecca first how did you get into this space six and a half years ago oh my goodness well I mean we can go way back so I think I think um my first job out of college actually it it goes back to that I was hired at this company to be the designer for um the merchandise for a lot of top brands so I was designing for Lincoln Park and Rihanna and Cheryl Crow this was my first job out of college so that was pretty cool and I I would I was living in LA and I would go to Hot Topic and I would see my designs all over um the t-shirts behind the clerks I'd be like oh I I want to buy a few of those and they're like well why do you want to buy those like those are a lot really different bands and I was like oh I designed them and they were like we don't believe you it's like no really I did and uh from from there I I fell in love with being able to design for a lot of different brands and especially marketing design and uh brand design and doing like a lot of different styles um that would excite different people in different verticals and from there I sort of I fell in love with um this idea of creating for lots of different brands and I started another company that was a recurring Revenue company but it was just it was just a little um that I had online where I was selling templates for professional photographers and I would get all these phers Photoshop templates that's right yeah and I would create a lot of different types of templates like pricing and branding for these professional phot wedding photographers especially and then I started getting a lot of requests for MailChimp templates but I wasn't able to actually make a MailChimp template that wasn't really a thing it was either like you had HTML and then you had to package it with images from Photoshop you had to export and then you had the copy like the um the the written pieces of it and you would have to paste these emails together into MailChimp and I sold that as a package but every time I sold a MailChimp template the next day I'd get an all cap super angry you need to give me a refund email from the customer saying like I could not Implement these designs in MailChimp and this this happened from about 2010 to 2014 and I was like wow that is a big gap in the market of people needing really beautiful email marketing that represents their branding and it's not being served by the Legacy players but I was like that's someone else's problem Challenges in the template market and the strategic pivot surely there's going to be a squar space of email that was 2010 to 20 you said 2010 to 2017 14 14 14 when was what was your best year Revenue wise selling those templates are we talking like 50 Grand a year or like 500 Grand a year or more maybe it was it was between four to 500 Grand a year okay so this wasn't like a small business I mean this was plenty for you to live on have a great life yeah I mean it was it was it was really Nifty I would say though that with the onset of canva and a lot of SAS players coming into the space the demand for these one-off Photoshop templates a decrease so it wasn't super sustainable but it was something that uh that created a really nice little lifestyle business okay so what happened in 2014 canvas's coming in your templates are selling less you've identified this key need you haven't built a product for it yet what happened in 2015 so between about so we the the idea of flus I would say it was conceived in 2017 so I had this template shop and then I also started to pitch template shops to other influencers um so I was just just making a lot of creative output and templates for a lot of different brands in different uh spaces and to different audiences but in 2017 that's when I met my co-founder Martha um and we got together and she was working in a company a CRM called honeybook which is CRM for small businesses so she had a lot of overlap with her um with her Market seeing the photographers who a lot of them use honeybook and she was seeing the exact same problem where we would see these huge influencers that were making millions of dollars a year and had the most beautiful Instagram feeds the most gorgeous websites and their emails were freaking ugly like to be completely honest and so she saw from her side and she saw that the uh these amazing influencers were so Savvy with every part of their business email and they were struggling I saw it from my side and we were like somebody's got to do something about this so what was her role at honeybook um I believe she was working in business development okay yeah because I mean that was I'm just going back and our we can do this live when we have 3,300 episodes we had Oz Alan May 4th 2021 on the show one of the honey book Founders and yeah yeah the data he shared I mean they were this wasn't a small company I mean they broke seven uh they broke uh 10 million bucks of Revenue uh in 2021 now over 30 million bucks of Revenue but it sounds like she was on to something even back then because in 2017 when you met they had already I mean they raised a bunch of money so she certainly understood what it was like to work for a VC backed company how did that influence how you guys split equity on day one as co-founders and how you thought about funding your first million of Revenue yeah well we actually have a third co-founder to trong who is in Vietnam and he's our technical co-founder and so um we we split up the the equity um between the three of us going forward and then we also put aside an employee pool so from the beginning it was just the three of us and then um we also had uh some set aside for employees but we we always knew that we wanted to um remain undiluted and keep as much of our shares as possible and also make sure that anybody that we Formation of the founding team and their roles brought on and offered Equity too would feel like really bought into the company and so that was um a big part of not taking on VC now Rebecca did you guys have the tough conversations early on about are we all equal are we not do we just do 30% each didn't have a 9% ESOP pool I mean how did you you know you probably can't share specific percentages but generally speaking is everyone equal or was it clear someone was putting in cash and so they got more Equity or something like that um I can't share specifics but I think there were a lot of interesting conversations around the topic and we decided to split things up based on um how much money each founder was putting in at the time because we fully bootstrapped and it was out of our pockets and then about like at the the amount of effort that each was putting in at what stage y was everyone convinced and ready to be full-time on day one or did some people keep a side gig for a little bit until fles hit some traction uh so Martha and I were completely full in um at the beginning and obviously she was working full-time at honeybook and we were very diligent about making sure that I that there was no overlap in that time there um so that she was basically Moonlighting and desk and pulling a eight hour day in the evenings um after work so um she and I were definitely like full-time 100% from the beginning and then our technical co-founder um had his other company going at the same time and went full-time um within about a year and a half of the company launching okay that's great um I know you can't give individual numbers but can you share what you guys all in together put into the company to fund it to get it going was were talking like 50k or like 500k or Millions can you share that $90,000 oh great okay so you guys put in 90 grand and then what tell me how you get the MVP launched and when you close your first customer oh my goodness so um I love telling the story because I think a lot of people are almost confused about how we had product Market fit even from day one but the truth is that we actually had a viable product before we touched a line of code and I know that sounds nuts but when we were first starting Martha and I had crazy amounts of customer interviews like we probably spoke to 100 to 200 people from from our target audience because it was just the water we were swimming in right it was the people that we were already hanging out with and it were my customers and people that she had relationships with through honeybook so she and I were what are what are those people people you sold MailChimp templets to two years prior what were those people their job titles yeah so it's almost like the new creative economy right so a lot they call them solopreneurs but a lot of them are photographers service providers coaches Educators um people with salons Spa Services masseuses uh creative Services Graphic Design Services um so it's like this sort of whole economy that was overlooked by traditional Silicon Valley people who have small businesses and I think it's not super attractive to a lot of SAS companies because they want to go after the big whales of of getting these uh large Enterprise turn too much I don't want to sell something to them they're not going to keep things exact exactly and Martha and I were like no like this is almost a secret this is a secret superpower that it's an underserved part of the economy and it's a huge growing sector of the economy the small business segment and if we can nail it um then we will then we'll really been on to something so we immersed ourselves in this customer segment and I just remember it was pref figma so I had my Envision mockups and I would go in and be tweaking it and we would be going walking them through flows and having them go through sort of like a fake Builder experience and at the end asking uh would you be willing to pay for this and they were whipping out their credit card saying when can I buy this so we had a really clear idea Initial funding strategy and launching Flodesk’s first plan of our vision and what the wait did you close it did you if if if if okay let's say I was one of those we actually did we actually did we did so what what landing page let's say let's say you give me The Envision board it feels almost real because it's an Envision it feels like a real flow and at the end you say Okay Nathan Mr hair salon guy are you willing to pay 30 bucks a month or whatever to pay and I say yes do you do you to make sure they're not bullshitting you and telling you what you want to hear do you say okay here's the link go swipe your card now or what did you do oh well so basically we had one-on-one interviews so either in person or on Zoom or I guess Google meets at that point um and we would walk them through the flow and then at the end Martha would ask them the question how much would you pay for this and we would put a few numbers of pricing in front of them because we were also trying to test out pricing and positioning and at that point they said $19 a month that was what we landed on I think we were anchoring on something around there like $38 a month um because that's actually our full price cost but we offer 50% off your first year and our special beta deal that um has long since passed was you could get 50% off for life if you sign up for our Beta And it that just it worked so well um and so we we offered the 50% off deal um and people were loving the $19 a month price point it was kind of unheard of to have unlimited subscribers and unlimited emails especially at that low price and compared to like the major players or the larger players like they they charge you so much when your list gets big so uh yeah we we had people signing up and the service that we offered because we didn't have a software was me just designing their emails in Photoshop and then plugging it into something that could be sent so it was almost like a design service um and then the the platform development and the selfs serve onboarding experience came Downstream from that okay so how many $19 per month plans did you sell before you said Tron hurry up we got to launch a freaking website that actually works well we he was uh he was there helping us and also managing the engineers to help us build it um but we I think by the time trong went completely full-time we were in the several thousand range of subscribers of me of paying members wow okay okay got it so I mean a th000 paying 19 bucks you're making 20 grand a month before you have a working website that was all on Vision flows basically and you doing custom work on the back side yes yes that's right incredible okay okay okay okay so when did you when did you email all the list and say okay it's live go to flow.com log in and create your first thing we've pre-up loaded the designs we already did for you so you see them in your dashboard click the thing start sending like when was that moment wait I'm so sorry I just realized so we didn't have the pay we didn't have that many pay customers without a website in a platform so we had maybe 50 50 people who had signed up with their card before we built like the entire self-service flow but we I think the reason why it's a little bit hard to pinpoint exactly when that moment was is because we had a lot of in between where we had a website up and people were signing up but the software had a lot of um like hum High touch interaction from Martha and Ne to actually give people any kind of viable experience yep yep yep yep no that makes a ton of sense and would when so when did you say that would have been was Early growth phase and the impact of affiliate marketing that in 2018 2019 when the website was fully fully working yeah I would say it was so we we had our plan launch in August 12th of 2019 and then a month before that we had our explosive uh sort of pre-launch launch which I can get into in a second because I think that's the most fun part of the story but I would say starting in early 2019 we actually had a website yes so I have it pulled up August 16th 2018 at says flow desk it's not fancy it's just black in the upper left with a period there's some weird sort of oval shapes in the background it says beta ax is coming soon it says oh man it says design beautiful campaigns made with love for small business owners and there's no login it just says enter your email for Early Access okay tell us about your pre-launch launch oh my goodness so yeah thank you for taking me fact on the trip to memory Lan there's been so many iterations of the website I completely forgot about that but I love it um and we did have people coming through through that that form at that point um so we were planning a big launch for August 12th and we had planned um a co-marketing campaign with a community called Rising tide society which um was actually owned by honeybook but it was a community that served the small business world and a lot of our target market were part of the rising tide Society about 880,000 people so that was sort of our big marketing campaign but leading up to that a month before a good friend of ours who is in influencer was beta testing the software and she was like you guys this is absolutely incredible I just love flowes and she asked if she could send out a newsletter using flesk and move over from convert kits so we were like yeah we don't know exactly what's GNA happen and hopefully you know the software will work and everything will who was it was it like Marie forio or Amy Porterfield or one of these types uh one of those types but it's actually Natalie Frank who's um who's now our head of marketing but uh she's also very good friend Martha and me and she had an incredible personal brand with a lot of followers so she had 15,000 people on her mailing list at that point and she shot that email out and she plugged flesk at the bottom with more than just our little viral flitter that says made with love and flesk she actually put uh a footer at the bottom that said um if you're loving the design of this email check out this new service by my friends flesk and during that time we had that website up and we were getting maybe two to three people people trickling in a day just who heard about us organically or through the great V and we we went through why combinator startup school and like the word was just starting to get out a tiny bit about us in our very close friend circles but when she started when she so it was about two to three a day in our slack Channel and we had a channel that was telling us how many trials were com through as soon as she sends the email within 30 minutes we're getting 50 trials or more an hour within 24 hours we were tutorials were popping up all over YouTube within 48 Hours it was all over Instagram and social media and it just completely exploded it like self- launched and since we have a viral Loop in the Footers of our emails and on our forms I'm a very high touch point with um with the with a lot of the emails that are going out like it it was sort of like a perpetual motion machine that just kept going and going and it exploded so by the time we had the large marketing campaign plan a lot of people were already using us it was it was just one of the most incredible moments in my life that's amaz well Natalie's background I'm going off for LinkedIn co-founder Rising tide Society in June 2015 then recruited in October to honeybook as Achieving a $27 million revenue run rate with significant customer growth head of community right because she has such a a great Community right and then she effectively used that Rising tight Society then promote flowes which is what what really sort of made you guys take off and then now obviously she's full-time but this really goes to the power of building a a community I mean it's such a moat you can play Queen maker is what we'll call it you can play Queen maker on any stof where you want right I think so and I I think that's like a big secret to it as well I think had founder market fit which is something that not a lot of people talk about um but we had product Market fit before we touched line of code and we had founder market fit like literally from day one since we we signed the uh the um incorporation papers it was like we we not only understood our audience but we actually were one of them like I I felt the pain as a small business owner with my template shop of not having an amazing design forward super userfriendly email tool to promote um my template offering so I think understanding not just understanding but being one of our customers was a huge advantage and were you always email or did you have a bit of a type form potentially play early on you weren't sure if you were going to be a survey tool or an email tool was it always going to be email it was always email just completely clear beautiful simple email marketing it's been our thing since day one so by August 2020 the headline says email marketing easy as pie and now it says put your email in and actually try it not sign for B to actually try it so people get in and start going I want to touch on a couple of things here the first is a lot of people have problems trying to um engineer what is called the viral coefficient right you explained it already it's the powered by sort of thing right this is very powerful now some people say we can't do this because we don't have a software tool that is like one to many right they don't have a Natalie right where it's one to many what would your advice be to them and can you quantify the impact of your powered by how many new trials do you get today from click-throughs on your premium powered by product well um that one we get over 30% of our total inbound traffic from the viral Loop and from Word of Mouth referrals which are sort of interlined because our VI we have a really strong affiliate program and Martha made sure that we launched with that which is we can touch on that in a second because that's a big recommendation of mine but uh we had um a give 50% off to your audience so the coupon code would be distributed through the people that used in love Flo us through our Affiliates um and you would also get $19 a month so you basically give $19 a month to your audience because the full price is$ 38 and get $19 so this is super simple messaging give 19 get 19 and then um the viral flitter isn't just taking people to sign up for flesk it's taking people to sign up for flesk for the affiliate page of the person who sent the email so that it provides a strong incentive for people to keep that footer turned on um and also an incentive to keep sharing about flota so I would say for people who don't have a huge one to many audience I think Partnerships and affiliate programs can be huge because even if you yourself haven't built a large audience you want to tap into and leverage people that do and you can do that by offering them a lot of incentives and I mean everybody wants to make money right like I think that's that's the case and so by offering um really strong affiliate incentives you can tap into other people's audiences as long as they love your product I think the first first thing though is making sure you build something that people are even excited to talk about yeah look Operating without external funding and maintaining a lean team this is interesting because I just interviewed the CEO of sem Rush Eugene and he said one of the big mistakes they made early on is sem's early affiliate program was 40% in perpetuity on monthly receivables right so or sorry monthly contracts and that that killed their margin by Nature they could only have 60% margin because 40% was going to the affiliate you've you've structured this very nicely where it's still a great win for everybody but it doesn't impact your margins right give your audience 50% off flow desk right and then and then the affiliate is paid $19 just every time someone signs up from their recommendation just one time $19 correct correct that's awesome so so how much do you know this how much how much did you pay out how much did you pay out to Affiliates in 2023 last year oh my goodness I don't have that off the top of my head but I am pretty sure it's in the millions because uh so so much of our traffic comes in through Word of Mouth yeah it's really really major channel for us and it's something that we're really doubling down on and investing in because it's like if you search for flowes even on Google you'll see all of these blog posts and YouTube videos evangelizing us and I like we're we're really like Blown Away by the amount of love and investment we've gotten back from our community in us and so we want to reinvest in them as well I think it's really important to to do that like it's like our one of our biggest sources of of traffic well and these things are by rosan .co.uk The Ultimate Guide to flow desk meet the email marketing platform I'm obsessed with and then it's the full link and then right there smack daab and then it'll get 50% off flow desk right there it is Boom um it and yeah this is great so how many how big is the program today how many Affiliates did you pay at least a dollar to in the last 30 days and a range is fine I I wish I am I had it like thousands or is it like tens it's thousands and do you see Power laws you know do your top 30 Affiliates generate 80% of your affiliate Revenue yeah it looks like a lot of the standard um graphs that you see where it starts out with a few that are at the very top and then goes down but um we're one one thing that's sort of blowing us away and that is a little bit unusual is that we get a lot more referrals from like smaller high like more frequent smaller referrals than other companies do so most companies they have almost all of the referrals coming in from a few big players and almost nothing from everyone else and for us the distribution has a much longer tail your long tail is more substantial than the average correct really interesting okay 27 million books of AR today how many paying customers does that make we have over 880,000 that's wild okay so 880,000 paying customers and besides the affiliate traffic and the powered by what's your second most powerful growth Channel you grew from 20 million last year to 27 million today um I I believe that it is organic Search interesting what keyword do you know you've just dominated it drives you a lot of your traffic uh I I think it's again it's like a long tale like I think it's a lot of little things like we have we we just have so many Affiliates generating content um and I I I guess that goes back to the affiliate Channel though um and we also have a pretty strong paid arm as well um but I think that I believe that's I'm not sure about the numbers but it's not generating um anything like our Overview of customer acquisition strategies and key growth channels affiliate yep yep okay so 8,000 paying customers at 19th 19 a month is what is that I think that's like 1.5 million per month times 12 months is 18 million so you have some people paying more than $19 per month what do you upsell how and how do you upsell yeah absolutely so two ways so actually the $19 a month um it we had a cuto off in 2021 of our adab beta Campaign which which was wild and we had a ton of people coming in there to lock in their lifetime beta but now what we offer is 50% off for your first year um which is also a very enticing deal I mean it's still a super good deal and even so our full price is $38 a month so we have a lot of full price customers now so that um increased our arpu quite a bit and then in addition to that a year and a half ago we launched a new product called checkout which is a super simple way to get um a sales funnel up with like a beautiful designs and it seamlessly integrates with our email product and so that is an upsell as well you just see like these loud men in the space selling you say I want to beat Nathan Barry can burit and now I see Russell Brunson at clickfunnels I'm gonna take it to him too huh is that what happens here uh with the going against king verit or going up against no I'm I'm I'm only half joking I mean what how did you know that this I mean sequencing with product launches is very important you start with email how did you know that the best next thing you should focus on is sales funnels our customers are requesting it honestly like everything that we build goes back to what people request and we just released a public road map so people can up vote and downvote but we've always had a very strong arm around places where people can submit their user requests we also have a very vocal community on Facebook where we can get real time feedback from our users about the pains that their experience and what they're asking for so we never build just for the sake of building or for the sake of making extra money or trying to have an upsell we build because we are all about obsessing over what our customers want from us and then bringing as much value to them as possible oh my gosh Rebecca your pricing page on this is so funny it says I'm like I'm G to catch her on something here I'm going to find how she upsells and it says stop getting penalized for growing your list and it has one of those draggers those of you listenting in your car it has one of those draggers right like how many subscribers do you have and I'm expecting like the flow desk price to go up as I like drag the number of subscribers up to 100,000 the left side says flowes email marketing 35 bucks a month the right side said it's everybody else and I drag the dragger from 5K on my list up to 100,000 everybody else goes up to $700 per month Rebecca and fles stay at $35 per month this is like um this is like goes against all...