How Missive Bootstrapped to $1M ARR with Just 4 People and Said No to a $30M Acquisition Offer Paid in Equity (Interview with Philippe Lehoux)

Introduction and Background

Nathan Latka

00:00Hello, everyone. My guest today is Phil Lehoux. He's building a great tool called missiveapp.com. It's a shared inbox and chat SaaS tool. Are you ready to take us to the top? Sorry? Are you ready to take us to the top? Yes. Of course. Very good. Well, hey, welcome to the show. Tell us a little bit. So missiveapp playing in a competitive space, shared inbox and team chat, when did you launch the business?

From Internal Tool in 2014 to Paid Launch in 2016

Philippe Lehoux

00:22>> We actually start working on the project in 2014, but it was mostly like a tool for itself, building another previous startup we had started.

00:34>> And we launched it in 2015 as a free product mostly just to test the ground. And then a year later in 2016,

Nathan Latka

00:44we launched a first paid paid paid version. And so how did you you know, the the starting years for any founder paying yourself is difficult. So what did you do between 2015, the first line of code or 2014 and the paid launch in 2016? How did you pay yourself?

How Philippe Funded the Early Years

Philippe Lehoux

00:57>> Well, I think that's the interesting part of our own story is that I met my co-founders at the co-working space that I created in Quebec City in 2012. And so my cofounder were the absolutely best, like, developer I knew at the time, designer at the time, and I knew I wanted to work with them. Right?

01:22>> And

01:24>> at the co working space, I was actually making money from, like, a really from a a game portal I created when I was a teen, a French game portal I I created when I was a teen. And, you know, just like random money, random profitable money, like, a few k's a year, just being able to pay the apartment and the food. And I lived basically with that much money for for ten years, like, really, student salary.

01:51>> And really start to work on many different projects. And the first one I created was a game jam festival. So I wanted to be a a game developer at that time. K. So I decided to create, like, a game jam. So the

Nathan Latka

02:05idea was to try and move your mic so that it's not rubbing against your shirt. We're getting audio feedback. Sorry. Yeah.

Philippe Lehoux

02:10>> You wanna start it over? No. You're good. Keep going. No. Keep going. Okay. That's fine.

Nathan Latka

02:14No problem against the game developer.

Philippe Lehoux

02:16>> Yeah. Game developers. I I create a game game festival, actually. Okay. So the idea was, like, I wanted to meet meet other game developers. And so went to the mayor, told him about the idea, thought it was a great idea, decided to fund the project. So we we made that great festival for five years. Okay? And making no money whatsoever, but just having fun. My initial the initial reason I created that festival was just to meet

02:43>> developers, but at the end of the day, it was mostly just organizing the the the festival and never really meeting anyone. And, but the one thing that that festival

02:54>> teach me is like, not the one thing that the festival teach me, but hey, sorry, I just wanna start over. It's really do you mind like No, no, no.

Nathan Latka

03:04Listen, it's a conversation, man. You don't need to be nervous. We don't need to start over. So you have a game festival. The game festival revenue is basically enabled you and your co founder to have a little cash runway to build missiveapp those first couple of years.

Philippe Lehoux

03:17>> Is that right? It's more complex than that. I'll put pretty simply. So when I was a teen, I created a game portal. So just with ads, I was able to kind of pay myself, like student salary for many years. I did my university study and business management. Being able to pay myself, I was not a programmer whatsoever. It's just like technology. Right? So I had that game portal. And after university, I I started I was like,

03:50>> I I wanna be a game developer, actually. So I start kind of learning to code myself, still being able to pay myself, to live basically from the the the the game portal I created, a French game portal. Understood. And so I started that festival to meet other like mind developers. Right? Because I wasn't, like, in any community whatsoever. So I created that festival and it really worked. Right? It became like a music festival. It was a

04:13>> hell of a side, like many thousand visitors, like music. And so the idea was like people had forty eight hours to create a game. And there were like prizes and it was really successful. But at the end of the day, met no one because I was just organizing the thing. But I still learned to code and had different projects on the side. And after that project, said, well, I'm not really into game actually. I think I

04:42>> just want to go back to create a web business. So at that point, I thought,

04:50>> what problem did I face while organizing that game festival? One of them was like

04:58>> printing the name badges before the event. So like when people arrive at the event, you just want to end like the name badge so people know like, you from a game company or are you a press VIP or a participant or whatnot. And so it just sucked like the day before to just go on Excel, do a mail merge and print those badges. So was like, oh, just gonna create a web tool

05:23>> so Organizer can actually import an Excel spreadsheet and then we just print the badges for them and ship them. So that was basically the idea. That's where in my co working space that I started by the side,

05:40>> I actually met my co founder and decided to work on that idea with them.

Nathan Latka

05:45And Phil, did you guys decide to split the company fifty fifty early on?

Philippe Lehoux

05:53>> No. So the company was fifty fifty me, 50 them because I I had a kind of, you know, bootstrap the product. It

Nathan Latka

06:01was split fifty fifty. Yeah, Okay. Yeah, exactly. And just because again, I wanna get as much of your missive story as possible and it's a quick show, so I don't mean to cut you off, but let's jump into missive. So you start working, you pivot from this spreadsheet tool for name badges. I imagine that you've been pivoting to missive app from that. Is that right?

Pivoting from Conference Badge to Missive

Philippe Lehoux

06:20>> Yes, exactly. So Conference Badge was successful. Okay. So we launched it. Eventbrite wrote to us like they saw we were pinging their API and they said, oh, are you creating a tool to print badges? We say, Yes. And they say, Oh my God. It's one of the things that people have a lot of problem doing when they use Eventbrite for their conference. And so they featured us and it was really successful. So I applied to Y

06:43>> Combinator, Paul Graham started revenue for the first few weeks. Said, oh, come on, we want to interview you. And as you can see in the interview, we're quite bad. It didn't take us at Y Combinator, but the product keep on being successful, making more money. And as a small team, we had trouble, like, doing customer support.

Nathan Latka

07:01Didn't want Phil, what were you making? And would you remember first year revenue in 2016?

Philippe Lehoux

07:07>> So Conference Badge was a bit earlier, 2013. '20.

Nathan Latka

07:11Okay. For missive well, I want I wanna get into the missive story here as as I just wanna sort of push past the previous so where the event Okay.

First-Year Revenue and Early Customers

Philippe Lehoux

07:20>> First year, missive was like, I don't know, not a lot of money. Like, I think like 3 k for the whole year.

Nathan Latka

07:28Okay. And how did you get your first 10 customers? Do you remember?

Philippe Lehoux

07:33>> Early text. So we post like to Product Hunt and kind of cold reach, like people we admire that we thought could have a use for the product. Like the Stripe people, they'd kind of written a paper about how they collaborate around email and how they were fully transparent around their own internal communication. That was kind of one of the idea of missive is the ability to share the email easily with the people in your company. So

07:59>> we reach out to people over

08:03>> Twitter and launch on Product Hunt and those were the earlier user. Most of those earlier users were excited by the product but not really willing to pay for it because it was really early stage and we were missing a lot of the things now that our customer are willing to pay for.

Nathan Latka

08:21And fast forward to today, those are your first, you know, ten, twenty customers. How many customers are you serving today?

Philippe Lehoux

08:27>> I think we are

08:28>> around like 2,000 comp businesses using Missive. 2,000. Yeah.

Nathan Latka

08:32That's great. And help us understand how you decide to price this. Again, very competitive space. What's the average price look like?

Pricing Model and Average Customer Size

Philippe Lehoux

08:38>> So right now, so you you pay per seat. So if you're a company of 10, you're gonna pay 10 seat. And right now it's $15 per seat, US dollars for a seat and that's full featured. So you get everything in the product for $15. We kind of have one at 10, but it's way less popular. So $15 in our space is really low compared to other offering.

Nathan Latka

09:01How many seats when a company pays you, are they usually paying on average, like, for one seat or, like, a thousand seats? What's sort of the sweet spot team size?

Philippe Lehoux

09:10>> Five seats. Okay. Yeah. Five seats. So it's really SMB, like, small and medium businesses using the product.

09:16>> Yeah. So each one five times 15, each one is paying something like 75, a $100 a month, something like that.

Nathan Latka

09:21Exactly. Exactly. And can I take 75 a month times your 2,000 customers with that?

Philippe Lehoux

09:26>> Well, yeah, like a 150,000 a month, something like that?

Crossing $1M ARR

Philippe Lehoux

09:29>> It's it's a bit less. So I'd say right now so we crossed, like, the 1,000,000 ARR, like, two months ago. And yeah. That was good.

Nathan Latka

09:41Congratulations. That's exciting. Yeah. And where where were you exactly just if you cross that, you know, a month, two months ago, where were you a year ago in terms of monthly recurring revenue?

Philippe Lehoux

09:50>> Say half of that.

Nathan Latka

09:51So healthy growth, where's all this growth coming from? Is it it's still not is it still product launches or where's the growth coming from?

Growth Channels: SEO and Word-of-Mouth

Philippe Lehoux

09:59>> I mean, like, we're the anti story of of, like, startups. We never really invest our time in marketing. We're like, we just like to build a product and and, like, email with our customers. That's really not much like, the only thing we do. Like, everything, like, people say don't do, we only do. So

10:17>> the paid customer, most of them right now, I would say are either they find us through Google, alternative to well known funded product, they will find us, or it's word-of-mouth. So lot of like, realtors, are gonna use missive. So like one say to to another one, I use that product with my team, you should try it. And then so word-of-mouth is also a big factor in our growth.

Nathan Latka

10:43And have you bootstrapped or raised?

Bootstrapped via Conference Badge

Philippe Lehoux

10:45>> It's bootstrapped. But the long introduction to that thing is that it's actually bootstrapped from another product that we launched earlier called Conference Badge. That we were running and that we started missive. Actually, we started building the product missive to help us with the communication in the support at Conference Badge.

Nathan Latka

11:04So is it a blessing or a curse that you didn't get into YC a couple of years ago?

Philippe Lehoux

11:09>> I don't know.

11:12>> I don't think I have you know, I I don't think I'm the person the best person to raise money. Right? So I'm definitely fine with where we are. Talk

Nathan Latka

11:20to me more about your team today. What kinds of people do you have around you?

Team Structure: Four People, One Million ARR

Philippe Lehoux

11:24>> So we're so I have two co founders. Initially, we were four co founders. One left three years ago now. So now we are two co well, three co founders plus one employee.

11:36>> So one of my co founder is a CTO. So it's gonna like manage servers and it's gonna do code review. And Etienne is front end developer slash designer. So it's gonna build like the front end, and I'm gonna do kind of all of those those things. So usually, work on new features, and Rafael is gonna take over code review, and then Nathan's gonna take over and make sure everything is fine, and then we're gonna ship things.

12:02>> So it's a great

Nathan Latka

12:03this is a great story. Four people I love small SWAT team. You only had four people when you broke a million dollar run rate. That breaks some other bootstrap stories like Lemlist who had six people when they broke a million dollar run rate. I love small teams that can go from zero to a million very quickly. So congratulations.

Philippe Lehoux

12:19>> Thanks. It's all about being small, it's about being more agile to me. We really don't lose time. And

12:28>> my wife always told me like, I would never work with a team like you because you never talk to each other. Like we actually don't, we're always like so focused. We all know what we wanna do. It's a few like text chat comments in the day, but the rest of the day is just focused on all the work, you know, it's mostly customer support and product development bugs. And that's it. The rest is just like, it's

12:52>> such a big space that even if it's just word-of-mouth and we're just a small team that it's it's really working out actually. Because with the word-of-mouth, it it sustain our growth and we're just four guys and It makes good sense.

Nathan Latka

13:05Now when people start using you, do they stick? What's your churn look like?

Churn and Customer Retention

Philippe Lehoux

13:11>> You can help me here. I don't know if we have a good one. I think it's like, if I look at Stripe because I don't know like the Stripe dashboard, it's around like, depends. If virus visits between three to four percent. Per month?

13:26>> Per Stripe dashboard. So is it per month or per year? I don't know.

Nathan Latka

13:30Okay. So you you're not sure if your churn is 3% a month or or 36% for for the year?

Philippe Lehoux

13:37>> Exactly. Like I said, we do not focus on any of those things.

Nathan Latka

13:43Only focus on customer support. Yeah. But you care the lagging indicator of great customer support and customer love is do they stick with you? So you can still focus on customers loving you and the way you measure that is an NPS score or churn. How do you measure if you're doing a good job there?

Philippe Lehoux

14:01>> We don't look at data. Actually that's the simple, strangest answer I can like honest answer. It's like we don't really look at data. It's just the feeling of our customer. And I know churn is slow. Look, when you're a company like us, the product is email. Everyone can use email. There's a lot of people trying the product. And

14:24>> some of those will churn and that's a good thing, right? Because we cannot be a solution for everyone. So if I only look at churn, it's not really the real picture because the one people I wanna serve, if those people do not churn and that's you have through conversation, right? You know, like I would say even six months ago, we'd have said like, I'm not sure I'm even product fit, right? I'm not even sure. Like, right

14:47>> now, we're starting to feel we're at that point because the conversation we have, like the the range of people that are really, really satisfied and loving it is larger. Like, I would say like a year ago, was like, I'm not sure. Like some really love us, some hate us. Right? But right now, like that range has expand. And I feel like the conversation I have is mostly like people really satisfied with it as opposed to a

15:12>> year ago. And if I just look at the data, I never really feel that I could have a real definitive answer. It's like, oh, churn rate, but I don't know. Right? Actually, I don't know.

15:22>> Yep. No. So sometimes if you're building something like you're building it, best way for you to collect data is just have your ear on the ground and be talking to customers and there's nothing wrong with that.

Profitability and Monthly Expenses

Nathan Latka

15:32Talk to me about look, most SaaS companies are not profitable. They're spending way too much on CAC, they're losing money. Are you guys profitable?

Philippe Lehoux

15:40>> Yeah.

15:41>> So we don't spend money on ads. We only spend money on servers and like tools to help us manage.

Nathan Latka

15:49What would you say your total expenses every month are?

Philippe Lehoux

15:55>> Let's say without salary, like without this our own salary. Do all in, do all

Nathan Latka

15:59in, including what you pay yourself.

Philippe Lehoux

16:05>> I don't know. Well, break it down because salary, let's say everything else except salary, I would say like 20 k's mostly servers. Yep.

16:18>> Factor in our salary, like, Quebec based Canadian, like, normal wage for a coder or a programmer.

Nathan Latka

16:26So what what are you guys what? $30,000 to $40,000 bucks in headcount expenses per month?

Philippe Lehoux

16:33>> Less than that. Less than that.

Nathan Latka

16:35So as a founder, I think this is an important question about sort of capital. Each month if your all in costs are something like, I'm making this up, 40 or $50,000, 20 k of server plus your headcount, and you're doing 90,000 top line. That means you have like 40,000 of new cash hitting the bank every month. How do you decide what to do with that?

Philippe Lehoux

16:51>> Do you pay out dividends to your team?

Nathan Latka

16:53Do you reinvest in the product? What do you do?

Philippe Lehoux

16:55>> Yeah. Well, that's a good question. So at first, that thing I'd grow, so it's not a question we had. Right now, like with the numbers we have, it started to be crazy to leave the money in the bank. Right? So well, first we decided to start paying ourselves, you know, a more competitive wage. And we're starting to think about how to reinvest that and more growth. But right now it's really pretty much just sitting in the

17:21>> bank.

Acquisition Offers Turned Down

Nathan Latka

17:22Yeah. What would you value the business at today? If someone came to and said, Phil, I buy the whole business for $10,000,000. Do you sell?

Philippe Lehoux

17:30>> No,

17:32>> because we were

17:35>> approached three times and by big, let's say unicorns and more. And so the three time was mostly for acqui-hire because I think what we built with a team of four, even if we're like, now we had some really good milestone in revenue, but like two, three years ago, it was still really impressive, Just the fact that the product was completed and full featured version on on all platforms. So we were approached just to get acquired and

18:06>> we all always said no's

Nathan Latka

18:07and the offer was What the largest offer that you turned down?

Philippe Lehoux

18:11>> It was equity. An equity, I don't know if it means much, but it was 30 millions in in in valuation from that business. You had to believe that the equity Exactly. And I and I had to move into San Francisco.

Nathan Latka

18:27Had people If you got an offer of $10,000,000, all cash upfront, do you sell?

Philippe Lehoux

18:35>> I don't think so.

Famous Five Rapid Fire

Nathan Latka

18:36Interesting. Very good. Okay. On that note, let's wrap up with the famous five. Number one, favorite book?

Philippe Lehoux

18:43>> Rework.

Nathan Latka

18:44Number two, is is there a CEO you're following or studying?

Philippe Lehoux

18:49>> I'd say geez geez and freak for the last three days.

Nathan Latka

18:53Number three, what's your favorite online tool for building missive? There

Philippe Lehoux

19:02>> are so many, but I'd say Stripe.

Nathan Latka

19:04Okay. And how many hours of sleep do get every night?

Philippe Lehoux

19:06>> Sorry?

Nathan Latka

19:07How many hours of sleep do you get?

Philippe Lehoux

19:09>> Between eight to ten.

Nathan Latka

19:10Okay. That's great. And situation, married, single, kids?

Philippe Lehoux

19:13>> I have four kids married.

Nathan Latka

19:15Wow. Okay. Four kids. And how old are you?

Philippe Lehoux

19:18>> 37.

19:19>> 37. Last question, Phil.

Nathan Latka

19:21What do you wish you knew when you were 20?

Philippe Lehoux

19:25>> Take my time.

Nathan Latka

19:27Guys, there you have it. Launched back in 2014 as a pivot out of a conference business into sort of a spreadsheet tool for name badges. Eventually, launched missiveapp. A tool that enables you to collaborate with your team. It's a team inbox and chat tool that allows you to really understand what's happening in your email inbox. They've bootstrapped their way to over a million dollar run rate with just four people, turned down $30,000,000 acquisition offers. We're rooting

19:48for you. Phil, thanks for taking us to the top.

Philippe Lehoux

19:51>> Thanks. Bye. Cheers.

Nathan Latka

19:54One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it. And the buyers try and make a deal live. It is fun to watch every Thursday, 1PM

20:18central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at two p. M. Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button, and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition,

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