How Flodesk Reached $27M ARR and 80,000 Paying Customers with Zero Outside Funding (Interview with Chief Brand Officer Rebecca Shostak)

Intro and Revenue Snapshot

Nathan Latka

00:00Flodesk makes email marketing easy as pie. From 2011 to 2014, she was selling Mailchimp templates doing $405,100,000 dollars per year. Ultimately, Canva and other tools came in, and so templates 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

00:23HoneyBook and eventually launching the three cofounders put in $90,000 total back on launch date before they launched their first paid plan at $19 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 27,000,000, up from 20,000,000 just a year ago, and their $10,000,000 a year was back in 2021, which they hit just it's crazy.

00:50Eighteen, nineteen 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 Latkov. 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

01:16book, I launched this show and one went on to create founderpath.com. I raised a large fund to do non dilutive deals with b to b software founders. So far, we've invested in over 400 software founders totaling a $150,000,000. Here in 2024, we're doing three to four new deals per week. So if you're looking for capital and don't wanna give up equity, go sign up at founderpath.com for free to get your offer. Alright. Let's jump into the

Guest Introduction: Rebecca Shostak

Nathan Latka

01:44interview. Hey, folks. My guest today is Rebecca Shostak. She is the chief brand officer and founder at Flodesk, 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 gonna learn her full story today. Rebecca, are you ready to take us to the top?

Current ARR and Growth Rate

Rebecca Shostak

02:00>> I'm so ready. Let's do it.

Nathan Latka

02:02I am stoked you're here. I met you via Greg Head at SaaS Doc a week ago, and, you know, I rarely get surprised, but he goes, you've gotta meet the Rebecca. I'm like, well, why do have to meet her? And he goes, well, she's bootstrapped, and she's doing a crap ton of revenue. So I don't wanna bury the lead. What are you at today in terms of revenue?

Rebecca Shostak

02:18>> We are hovering right around 27,000,000 ARR.

Nathan Latka

02:22This is incredible. Okay. And and just so people get a growth rate, before we dive into your product, your background, design, templates, etcetera, where were you exactly one year ago?

Rebecca Shostak

02:32>> I oh my goodness. I feel like I'm being put on the spot. I believe we were at around we're hovering around 20.

Nathan Latka

02:41Okay. 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 the space six and a half years ago?

Rebecca's Background in Design and Templates

Rebecca Shostak

02:56>> Oh my goodness. Well, I mean, we can go way back. So I think my first job out of college, actually, it goes back to that. I was hired at this company to be the designer for the merchandise for a lot of top brands. So I was designing for Lincoln Park and Rihanna and Sheryl Crow. And this was my first job out of college. So that was pretty cool. And I I would I was living in LA

03:17>> and I would go to Hot Topic and I would see my designs all over the t shirts behind the clerks. I'd be like, oh, I I wanna buy a few of those. And they're like, well, why do you wanna buy those? Like, those are a lot really different bands. And was like, oh, I designed them. And they were like, we don't believe you. Like, not really.

Nathan Latka

03:32I did.

Rebecca Shostak

03:33>> And from from there, I I had fell in love with being able to design for a lot of different brands and especially marketing design and brand design and doing, like, a lot of different styles that would excite different people in different verticals. And from there, I sort of I fell in love with 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

03:58>> was just a little shop that I had online where I was selling templates for professional photographers. And I would get all the

Nathan Latka

04:06Photoshop templates.

Rebecca Shostak

04:07>> Photos Photoshop templates. That's right. Yeah. And I would create a lot of different types of templates, pricing and branding for these professional 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 that you had to export, and then you had

04:30>> the copy, like, the 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 caps, 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,

Identifying the Email Marketing Gap

Rebecca Shostak

04:54>> 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. Surely, there's going to be a Squarespace of emails.

Nathan Latka

05:07So was twenty ten to 20 you said twenty ten to 2017?

Rebecca Shostak

05:11>> '14.

Nathan Latka

05:12'14. '14. When was what was your best year revenue wise selling those templates? Are we talking, like, $50 a year or, like, $500 a year or more maybe?

Rebecca Shostak

05:20>> It was was between 4 to $500 a year.

Nathan Latka

05:23Okay. So this wasn't like a small business. I mean, this was plenty for you to live on, have a great life.

Rebecca Shostak

05:28>> 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 SaaS players coming into the space, the demand for these one off Photoshop templates had decreased. So it wasn't super sustainable, but it was something that that created a really nice little lifestyle business.

Nathan Latka

05:45Mhmm. Mhmm. Okay. So what happened in 2014? Canva'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?

Rebecca Shostak

05:55>> So between about so we the the idea of Flodesk, I would say, was conceived in 2017. So I had this template shop, and then I also started to pitch template shops to other influencers. So I was just just making a lot of creative output and templates for a lot of different brands in different spaces and to different audiences. But in 2017, that's when I met my co founder Martha. And we got together and she was working

Meeting Co-Founder Martha and the Flodesk Idea

Rebecca Shostak

06:22>> in a company, a CRM called HoneyBook, which is CRM for small businesses. So she had a lot of overlap with her, 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.

06:48>> And so she saw it from her side and she saw that the 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 gotta do something about this.

Nathan Latka

07:01So What what was her role at HoneyBook?

Rebecca Shostak

07:05>> I believe she was working in business development.

Nathan Latka

07:08Okay. Yeah. Because, I mean, that was I'm just going back in our we can do this live when we have 3,300 episodes. We had Oz Alon on 05/04/2021 on the show, one of the HoneyBook founders. And the

Rebecca Shostak

07:17>> the data Oh, yeah.

Nathan Latka

07:18Yeah. The data he shared, I mean, they were this wasn't just a small company. I mean, they broke seven they broke $10,000,000 of revenue in 2021, now over $30,000,000 of revenue. But it sounds like she was onto something even back then because in 2017 when you met, they'd already I mean, they'd raised a bunch of money. So she certainly understood what it was like to for a VC backed company. How did that influence how you guys

07:37split equity on day one as cofounders and how you thought about funding your first million of revenue?

Rebecca Shostak

07:42>> Yeah. Well, we actually have a third cofounder too, Trong, who is in Vietnam, and he's our technical cofounder. And so, we we split up the the equity 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, we also had some set aside for employees, but we we always knew that we wanted to remain undiluted and keep as much

08:11>> of our shares as possible and also make sure that anybody that we brought on offered equity to would feel like really bought into the company. And so that was a big part of not taking on VC.

Bootstrapping: $90K Investment and Early Customer Interviews

Nathan Latka

08:22Now, Rebecca, did you guys have the tough conversations early on about are we all equal? Are we not? Do we just do 30% each then 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?

Rebecca Shostak

08:41>> 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, 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.

Nathan Latka

09:02Yep. 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 Flodesk hit some traction?

Rebecca Shostak

09:10>> So Martha and I were completely full in, at the beginning and obviously, she was working full time at HoneyBook and we were very diligent about making sure that, that there was no overlap in that time there. So that she was basically moonlighting at the desk and pulling it eight hour day in the evenings, after work. So she and I were definitely, like, full time a 100% from the beginning. And then our technical co founder, had his

09:37>> other company going at the same time and went full time, within a about a year and a half of the company launching.

Nathan Latka

09:44Okay. That's great. 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 it know, we're talking like 50 k or, like, 500 k or millions. Can you share that?

Rebecca Shostak

09:56>> $90,000.

Nathan Latka

09:57Oh, great. Okay. So you guys put in $90. And then what? Tell me how you get the MVP launched and when you close your first customer.

Pre-Launch: Envision Mockups and First Paying Members

Rebecca Shostak

10:04>> Oh my goodness. So, I love telling this 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 a 100 to 200 people from

10:29>> 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 they were my customers and people that she had relationships with through HoneyBook. So she and I were

Nathan Latka

10:40But what are what are those people? People you sold Mailchimp templates to two years prior? What were those people? What were their job titles?

Rebecca Shostak

10:46>> 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, people at salons, spa services, masseuses, creative services, graphic design services. So it's like this sort of whole economy that was overlooked by traditional Silicon Valley of people who have small businesses. And I think it's not super attractive to a lot of SaaS companies because they wanna go after the big

11:16>> whales of of getting these, large enterprise customers.

Nathan Latka

11:19Churn too much. I don't wanna sell something to them. They're not gonna keep it.

Rebecca Shostak

11:22>> Yeah. 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, then we will then we'll really been onto something. So we immersed ourselves in this customer segment. And I just remember it was pre Figma, so I had my Envision mock ups. And

11:47>> I would go in and be tweaking it, and we would be go walking them through flows and having them go through sort of like a fake builder experience. And at the end asking, would you be willing to pay for this? And they were whipping out their credit cards saying, when can I buy this? So we had a really clear idea of our vision and what this Wait.

Nathan Latka

12:07Did you close it? Did you if if if okay. Let's say I was one of those

Rebecca Shostak

12:10>> We actually did. We

Nathan Latka

12:12We did. What landing page let's say let's you say 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, mister hair salon guy, are you willing to pay $30 a month or whatever to pay? And I say, yes. Do you do you to make sure they're not bullshitting you and tell you what you wanna hear, do you say, okay. Here's

12:28the link. Go swipe your card now, or what did you do?

Rebecca Shostak

12:32>> 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. 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 positioning. And at that point, they said

12:54>> $19 a month. That was what we landed on. I think we were anchoring on something around there, like, $38 a month, because that's actually our full price cost, but we offer 50% off your first year. And our special beta deal that, 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. And so we we offered the 50% off deal, and

13:20>> 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, 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

13:46>> plugging it into something that could be sent. So it was almost like a design service. And then the the platform development and the self serve onboarding experience came downstream from that.

Nathan Latka

13:58Okay. So how many $19 per month plans did you sell before you said, Tron, hurry up. We gotta launch a freaking website that actually works.

Rebecca Shostak

14:06>> Well, we he was he was there helping us and me also managing the engineers to help us build it. But we I think by the time Trong went completely full time, we were in the several thousand range of subscribers of of paying members.

Nathan Latka

14:22Wow. Okay. Okay. Got it. So, I mean, a thousand paying $19, and you're making $20 a month before you have a working website. That was all from Vision flows, basically. And you're doing custom work on the backside?

Rebecca Shostak

14:34>> Yes. Yes. That's right.

Nathan Latka

14:36Incredible. Okay. Okay. Okay. Okay. So when did you when did you email all the list and say, okay. It's live. Go to flowdesk.com, log in, and create your first thing. We've pre uploaded the designs we already did for you. So you see them in your dashboard. Click the thing, start sending. Like, when was that moment?

Rebecca Shostak

14:52>> Wait. I'm so sorry. I just realized. So we didn't have the paying we didn't have that many paying customers without a website and a platform. So we had maybe fifty fifty 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

15:15>> website up and people were signing up, but the software had a lot of, like, high touch interaction from Martha and me to actually give people any kind of viable experience.

Nathan Latka

15:25Yep. Yep. Yep. Yep. No. That makes a ton of sense. And that would when so when did you say that would have been? Was that in 2018, 2019 when the website was fully fully working?

Prelaunch Viral Moment with Natalie Franke

Rebecca Shostak

15:35>> Yeah. I would say it was so we we had our planned launch in 08/12/2019. And then a month before that, we had our explosives, sort of prelaunch 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 twenty nineteen, we actually had a website.

Nathan Latka

15:56Yes. So I have it pulled up. 08/16/2018. It says, Flodesk. It's not fancy. It's just black in the upper left with a period. There's some weird sort of oval shapes background. It says beta access coming soon. And it says

Rebecca Shostak

16:07>> Oh, man.

Nathan Latka

16:08It 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 prelaunch launch.

Rebecca Shostak

16:18>> Oh my goodness. So, yeah, I thank you for speaking me back on the trip to memory Lane. There's been so many iterations of the website. I completely forgot about that, but I love it. And we did have people coming through that that form at that point.

16:32>> So we were planning a big launch for August 12. Then we had planned, a co marketing campaign with a community called Rising Tide Society, which, 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 80,000 people. So that was sort of our big marketing campaign. But leading up to that, a month before, a good friend of

16:58>> ours who was an influencer was beta testing the software, and she was like, you guys, this is absolutely incredible. I just love Flodesk. And she asked if she could send out a newsletter using Flodesk and move over from ConvertKit. So we were like, yeah. We don't know exactly what's gonna happen, and, hopefully, you know, the software will work and everything will

Nathan Latka

17:17Who was it? Was it, like, Marie Forleo or Amy Porterfield or one of these types?

Rebecca Shostak

17:21>> One of those types. So it's actually Natalie Frank who's Yeah. Who's now our head of marketing. But, she's also a very good friend of 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 Flodesk at the bottom with more than just our little viral footer that says made with love in Flodesk.

17:44>> She actually put, a footer at the bottom that said, if you're loving the design of this email, check out this new service by my friend's Flodesk. And during that time, we had that website up and we were getting maybe two to three people trickling in a day just who heard about us organically or through the grapevine. We we went through Y Combinator startup school and, like, the word was just starting to get out a tiny bit

18:08>> 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. We had a channel that was telling us how many trials are coming through. As soon as she sends the email, within thirty minutes, we're getting 50 trials or more an hour. Within twenty four hours, we were tutorials were popping up all over YouTube. Within forty eight hours, it was all over

18:29>> 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 mean, a very high touch point with, 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

18:54>> plan, a lot of people were already using us. It was it was just one of the most incredible moments of my life.

Nathan Latka

18:59That's Natalie's background, going off our LinkedIn cofounder Rising Tide Society in June 2015, then recruited in October to HoneyBook as head of community. Right? Because she has such a great community. Right? And then she effectively used that Rising Tide Society, then promote Flodesk, which is where 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 a community. I mean, it's

19:19such a moat. You can play queen maker is what we'll call it. You can play queen maker any software you want. Right?

Rebecca Shostak

19:25>> I think so. And I I think that's, like, a big secret to it as well. I think we had founder market fit, which is something that not a lot of people talk about. But we had product market fit before we touched line of code, we had founder market fit, like, literally from day one since we we signed the the incorporation papers. It was like we we not only understood our audience, but we actually were one of

19:48>> them. Like, I I I felt the pain as a small business owner with my template shop of not having an amazing design forward, super user friendly email tool to promote, my template offering. So I think understanding not just understanding, but beating one of our customers was a huge advantage.

Nathan Latka

20:06And 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 gonna be a survey tool or an email tool. Was it always gonna be email?

Rebecca Shostak

20:14>> It was always email. Just completely clear, beautiful, simple email marketing. It's been our thing since day one.

Nathan Latka

20:21So 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 up for beta, actually try it. So people would get in and start going. I wanna touch on a couple of things here. The first is a lot of people have problems trying to engineer what is called the viral coefficient. Right? You explained it already. It's the powered by sort of thing. Right?

20:42This 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 freemium powered by product?

Affiliate Program Structure and Scale

Rebecca Shostak

21:01>> Well, 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 interlinked because our 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, we had, a give 50% off to your audience. So the coupon code would be distributed through the people

21:27>> that used in Love Float as through our affiliates, 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 it's a super simple messaging. Give 19. Get 19. And then, the viral footer isn't just taking people to sign up for Flodesk. It's taking people to sign up for Flodesk for the affiliate page of the person who sent the email. So

21:53>> that it provides a strong incentive for people to keep that footer turned on, 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 wanna tap into and leverage people that do. And you can do that by offering them a lot of incentives. And I

22:17>> mean, everybody wants to make money. Right? Like, I think that's that's the case. And so by offering really strong affiliate incentives, you can tap into other people's audiences as long as they love your product. I think the first thing, though, is making sure you build something that people are even excited to talk about.

Nathan Latka

22:32Yeah. Look. This is interesting because I just interviewed the CEO of SEMrush, Eugene, and he said one the big mistakes they made early on is SEMrush'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 winner for everybody, but it

22:53doesn't impact your margins. Right? Give your audience 50% off Flodesk. Right? And then and then the affiliate is paid $19 just every time someone signs up from their recommendation, just one time $19?

Rebecca Shostak

23:06>> Correct. Correct.

Nathan Latka

23:07That's awesome. So so how much do you know this off your head? How much how much do you pay how much did you pay out to affiliates in 2023 last year?

Rebecca Shostak

23:15>> 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, so so much of our traffic comes in through word-of-mouth.

Nathan Latka

23:26Yeah.

Rebecca Shostak

23:27>> That's It's a 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 Flodesk 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 and us. And so we wanna reinvest in them as well. And I think

23:50>> it's really important to to do that. Like, it's like our one of our biggest sources of of traffic.

Nathan Latka

23:56Well, and these things are by rosanna.co.uk. The ultimate guide to Flodesk. Meet the email marketing platform I'm obsessed with. And then it's the full link, and then right there, smack dab, and then I'll get 50% off Flodesk. Right? There it is. Boom. Goodness. 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 thirty days? And a range

Rebecca Shostak

24:16>> is fine. I I wish I am.

24:18>> I have thousands.

Nathan Latka

24:19Or is it, like, tens?

Rebecca Shostak

24:21>> It's thousands.

Nathan Latka

24:22And do you see power laws? You know, do your top 30 affiliates generate 80% of your affiliate revenue?

Rebecca Shostak

24:28>> Yeah. It looks like a lot of the standard, graphs that you see where it starts out with a few that are at the very top and then goes down. But, 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

24:55>> in from a few big players and almost nothing from everyone else. And for us, the distribution has a much longer tail.

Nathan Latka

25:01Your long tail is more substantial than the average. Correct. Really interesting. Okay. $27,000,000 of AR today. How many paying customers does that make?

Pricing Philosophy and Flat-Rate Model

Rebecca Shostak

25:11>> We have over 80,000.

Nathan Latka

25:13That's wild. Okay. So 80,000 paying customers. And besides the affiliate traffic and the powered by, what's your second most powerful growth channel? You grew from 20,000,000 last year to 27,000,000 today.

Rebecca Shostak

25:27>> I believe that it is organic search.

Nathan Latka

25:32Interesting. What keyword do you know you've just dominated? It drives you a lot of your traffic.

Rebecca Shostak

25:38>> I

25:40>> I think it's again, it's like a long tail. Like, I think it's a lot of little things. Like, we have we we just have so many affiliates generating content. And I I guess that goes back to the affiliate channel though. And we also have a pretty strong paid arm as well. But I think that I believe that's I'm not sure about the numbers, but it's not generating, anything like our affiliate.

Nathan Latka

26:04Yep. Yep. Okay. So 80,000 paying customers at 19, 19 a month is, what is that? Think that's, like, 1,500,000 per month times twelve months is 18,000,000. So you have some people paying more than $19 per month. What what do you upsell? How and how do you upsell?

Rebecca Shostak

26:19>> Yeah. Absolutely. So two ways. So, actually, the $19 a month, it we had a cutoff in 2021 of our out of beta campaign, 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, 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.

26:43>> So we have a lot of full price customers now. So that, 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, a sales funnel up with, like, a beautiful designs and it is seamlessly integrates with our email product. And so that is an upsell as well.

Nathan Latka

27:05You just see, like, these loud men in this space selling. You say, I wanna beat Nathan Barry ConvertKit. And now I see Russell Brunson at ClickFunnels. I'm a take it to him too. Is that what happens here?

Rebecca Shostak

27:15>> With the going against King of our Kit

Nathan Latka

27:18or going up against King

Rebecca Shostak

27:19>> of Kit?

Nathan Latka

27:20No. 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?

Rebecca Shostak

27:31>> 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 upvote 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 they're experiencing and what they're asking for. So we

27:54>> 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.

Nathan Latka

28:09Oh my gosh. Rebecca, your pricing page on this is so funny. It says I'm like, I'm gonna catch her on something. I'm gonna find how she upsells. And it says, stop getting penalized for growing your list. And it has one of those draggers. Those of you listening in your car, it has one of those draggers. Right? Like, how many subscribers do you have? And I'm expecting, like, the Flodesk price to go up as I, like, drag

28:26the number of subscribers up to a 100,000. The left side says, Flodesk email marketing, $35 a month. The right side said is everybody else. Since I drag the dragger from five k on my list up to a 100,000, everybody else goes up to $700 per month. Rebecca and Flo does stay at $35 per month. This is like this is like goes against all conventional wisdom about driving net dollar retention and all this kind of stuff.

Rebecca Shostak

28:50>> Yeah. I mean, you would think, but then I also think that there's the Netflix model, right, which we were sort of inspired by, which is something where it's like, it brings so much value and especially, like, at the $9 a month back when Netflix had a little bit of a different model. But we are like, we wanna make the price so unbeatable and so enticing and have, like, the most accessible possible model ever that people can't

29:14>> say no to Flodesk. It's like, if it's super simple to use, it's more beautiful than the other solutions out there, and the pricing can't be beat, like, how could we lose? So that was sort of the bet we made. And I think it was very resonant for these small business owners too who are struggling. Right? Like, you think about someone who has, like, a small bakery in San Francisco, and they're waking up at 04:00 in the

29:33>> morning to make croissants. And they don't wanna have to worry about their email. They wanna be able to make money and send a communication to their customer when it matters without a lot of friction. And on top of that, we don't want them stressing about all of the stuff that it takes to build a small business and then thinking, well, if I'm successful and I get more subscribers, then I'm going to have to get charged more

29:55>> as well by my e email subscription service. Like, that's just Yep. It it makes logical sense.

Nathan Latka

30:00Yeah. Rebecca, I just realized I totally lost track of time. I'm, like, so into this. Do you have a couple more minute when's your hard stop? How much time do we have?

Rebecca Shostak

30:07>> Yeah. Absolutely. Let's keep going.

Nathan Latka

30:08Okay. You who designed your I'm just I just onboarded because I was curious what your onboarding flow looks like. Most onboarding tools, there's 9,000,000 buttons to check. You can only really do one thing to your onboarding. I click checkout. I click sign up. It says welcome to the Temple Library. Checkout is selected on the left, and then the first thing it says, sell a digital product with a big pink design. I scroll down and it says,

30:25open a registration for an event or sell a course. Like, you've clearly sort of intentionally restricted what the options are on the onboarding flow because you know your audience so well. How important is that for your activation rates?

Rebecca Shostak

30:37>> Oh my goodness. I think it's critical. Right? Because, I mean, we we talk about onboarding a lot. And my take on it is why would you put anything between your user and the moment? And we know that the moment for our customers is when they see a template that resonates with their brand and speaks to the use case that they're trying to solve for. So why would we put anything in between that moment where they sign

31:01>> up and the experience of realizing that this is a tool that understands that?

Team Size, Paid Ads, and Agency Strategy

Nathan Latka

31:07This is so cool. Let's talk a little bit more about people and scale. So you mentioned you some paid spend. How much do you spend per month on paid about? Do you know?

Rebecca Shostak

31:15>> Oh, I think we spend around 700 k a quarter.

Nathan Latka

31:19Okay. 700 k a quarter. And do you do this in house, or is there an agency that you really trust that handles most of this for you?

Rebecca Shostak

31:25>> We're working with an agency. Well, we we have a or we we have a growth team, but we also work with an agency that I can't say.

Nathan Latka

31:32How many how many agencies did you go through before you got to the one that you're on today? And what question would you recommend someone listening if they're gonna spend $20 a month on ads? How should they quickly get to the right agency for them? What questions should they ask?

Rebecca Shostak

31:45>> Oh, I think that it's really important to have an agency that we went through several. And I think but it's it wasn't because they weren't good or it was just that we needed different things at different stages. And so I think when you're a larger company, you're gonna look for an agency that is able to bring you a lot of data, have, like, strong account managers that are, they're able to set up a lot of systems

32:13>> for you and work cross functionally with your team and also be able to understand your markets and almost and and go broad, but then fine tune. Because a lot of times as you get to a more mature stage with your ads, you have a lot of creative that you've tested already. And then, and then you want an agency

32:35>> that can help you to fine tune, what that creative looks like and go after the target audience. But in the early stages, I think it's really important to find an agency that's just gonna get you off the ground with testing and throwing a lot of tomatoes on the wall and seeing what sticks and not worrying about optimization. Because at the very beginning, you just wanna know if you have a viable product, who your audience is, who

32:58>> it's gonna speak to. And if you have an agency that's, like, really large and super detail oriented and able to go in and refine, the the the way the audiences are built out and the creative, then that's probably too heavy handed for for a company just getting off the ground. But I do recommend working with an agency if you're gonna spend that kind of money because otherwise, it's very

Nathan Latka

33:20well Are placed. You recommend people can go to to find an agency? Like, did you use Fiverr and hire eight agencies and give them a test and see who worked and then hire the one that worked well? Or how did you what was your process?

Rebecca Shostak

33:31>> I think that we went with recommendations and that to my recommendation to the audience as well, to go with the recommendations that that that people are and especially in your space to, like, try to find an agency that specializes in the audience that you know is your target market. So for us, it's really important to have an agency that understands the small business customer and segment because they behave so differently from larger companies. They also behave

Profitability, Cash Cushion, and No M&A

Rebecca Shostak

33:56>> very differently from from consumers.

Nathan Latka

33:59Yep. Talk to me real quick on team. How many folks are full time today?

Rebecca Shostak

34:03>> Right around 50.

Nathan Latka

34:05Okay. This is great. Five zero are full time? Yes. It's just wild to me. How many freel do you how many how many contractors do you pay at least a dollar per month?

Rebecca Shostak

34:15>> I think it really depends month to month, but probably in the 5 to 10 range.

Nathan Latka

34:22That's just this is just wild to me. 27,000,000 divided by 50 is $540,000 of revenue per employee. It's insane. What are you doing with all the profits every month? Do you take it out or do you reinvest it? You just let it build up in the bank account, put it in treasuries? I mean, what do you do?

Rebecca Shostak

34:34>> We reinvest. And right now, we're we wanna make sure since we are bootstrapped that we have a strong cash cushion so that if anything were to happen, not I hope that it doesn't, but that we we create a long runway for ourselves in case Yeah. Because we just feel like we don't we don't have that, you know, like a lot of companies have a they feel like they have a cushion with the VC backing, we don't

34:55>> have that. So we wanna make sure that, if something crazy happened or something changed with the industry or we had to make a complete pivot, that we have the resources to, retain our team and make sure that we do the right thing to ensure the survival of the company.

Nathan Latka

35:10Are you have you bought any companies? Would you consider m and a inorganic growth in the future m and a?

Rebecca Shostak

35:17>> I we have not. And I think if an opportunity presented itself for us to find a company that did something very specific that we wanted to integrate into our company and the financial numbers made sense, and even more importantly, the people side of it made sense, I think we would consider it, but none of those opportunities have have arisen for us so far. Yeah.

Nathan Latka

35:40Are you comfortable sharing how profitable you are per month? Are we taking, like, 20% to the bottom line, 50%?

Rebecca Shostak

35:46>> I'm not exactly sure, but we are very profitable.

Nathan Latka

35:50Good. That's a great answer. We're so profitable. I don't even look at it every month. I just know we're printing money.

Rebecca Shostak

35:56>> We are very profitable.

Nathan Latka

35:57What's the largest acquisition offer you've turned down?

Rebecca Shostak

36:00>> Oh my goodness. We you know what? We've been very we've been very disciplined about not entertaining the offers, that have come so far just because they haven't made sense for us. Not even been we have so we've never even gotten to the point where we've had the discussions about, the in getting into the weeds of the finances because we just really believe in the mission and the vision, that we are building, and we still feel that

36:30>> we have a ton left on the table. And so an acquisition doesn't really make sense for us at this point. We wanna remain independent and keep serving our customers.

Nathan Latka

36:37Love that. Love that. You don't have quota carrying reps at this price point. Right? No AEs?

Rebecca Shostak

36:44>> What is that?

Nathan Latka

36:45Do yeah. You don't have, like, a a an account executive you hire and say, your job is to go sell 10 customers, a thousand dollar per year plans, and you get an x percent commission. Yeah.

Rebecca Shostak

36:54>> No. We don't have a sales team. It's all completely self serve.

Revenue Milestones: $1M in 2020, $10M in 2021

Nathan Latka

36:58Yeah. I love that. So how many of the 50 would you say are engineering?

Rebecca Shostak

37:02>> I believe we have a like, right around 20 engineers, give or take.

Nathan Latka

37:08Yeah. That's that's wild. I mean, this is interesting. Okay. Is there any look. I I see so much of this. Sometimes I fall in the trap of asking the same questions every founder, but when you then meet a unique founder, you forget to ask the unique thing. So, like, is there something that I haven't asked that you know has been critical to your success that you wanna touch on?

Rebecca Shostak

37:25>> Well, I think we've touched on it. But I just wanted to say, like, I think there's this sort of like the Silicon Valley founder space and the SaaS space, and there's a lot of data and numbers. But the truth is that I think success comes when you build an amazing product that people love. And the SaaS portion of it is is just sort of your monetization strategy. And it's it's like when it you know, you build

37:49>> something in a subscription model makes sense. But at the very core of what we do, we listen to the customers. We spent a massive amount of time with them. We had a vision and practically a product before we touched a line of code. And then everything came downstream from that. And you just I don't think that's a very common thing to hear in the SaaS space, but I think it's critical. That's that's, like, how you create

38:13>> something that's truly valuable to people that you wanna pay for. And no matter how you try to tweak numbers and shuffle around data, like, if you don't have that one core piece, a product that people love and that really solves a pain, then none of the other stuff matters.

Nathan Latka

38:30How much of your 80,000 paying customers do you think pay you because they love and respect your story, and they and they wanna be like you, and they wanna be in your orbit and in your community and at your events versus they just believe that, you know, your technology allows them to create a blue button with a certain border color and drag it and left align it. Like, the technology of the WYSIWYG builder that you built

38:49is better than everybody else. So community versus better tech. What's the bigger pull?

Rebecca Shostak

38:55>> Oh, I think it's honestly, I think it's both. I think we have a lot of female small business owner members. And so I think, our founder story resonates with them, especially the Bootstrap piece because a lot of the small businesses that use us love to see that we didn't take funding. They're not able to take funding. And so we've kind of been like, why should we take funding when our customers don't have access to the same

39:17>> thing? It's like we really relate to them. And then I do think we have an amazing product. Like, we did something that no one else figured out, which is how to make these beautiful visual emails that allow small business owners to keep in the inbox with the big name brands with resources that they don't have. Like, most you know, if you take a company like Anthropologie, they have a million dollar marketing team. And small business owners

39:41>> don't have access to resources to be able to do that. So we've been able to do that and make it really easy for them. And I think, like, that's a huge I think, that's, like, a larger and larger component of it because at the beginning, it was community led, and a lot of the people that were signing up and early members knew us or knew us through the grapevine or were friends of friends. But at this

40:01>> point, our user base is getting so large that a lot of them are sort of in the outer spheres of our community and breaking into new bubbles. So they don't even know our founder story. Sorry. Just like a lot of words.

Nathan Latka

40:12No. That's great. Do you get depressed when when a logo cancels? How many people how many logos canceled in April?

Rebecca Shostak

40:19>> A logos?

Nathan Latka

40:20Yeah. Like a customer. How many customers canceled and how do you how do you how do you manage you care deeply by community. How do you manage, like, not getting depressed every time you see a $38 per month account cancel?

Rebecca Shostak

40:29>> Oh, I just muted the Slack channel.

Nathan Latka

40:36That wasn't the answer I was expecting. Okay. So you just muted the Slack. That's hysterical.

Rebecca Shostak

40:43>> No. No. But, at this point, obviously, like, we have very low churn rates.

Nathan Latka

40:48What is it? Like, 22% a month?

Rebecca Shostak

40:49>> I knew you were gonna ask me. Yeah. Something I think it hovers around that. Yes. Okay. But, you know, at scale, obviously, when you're talking about 80 to a 100,000 people on the platform, that's not a small number per day. But I think actually, as much as, I was kind of half joking about the Slack channel, I think it takes a it takes a lot of courage to go and talk to those people and understand why

41:14>> they're churning. And so that's something that we're we built a really strong muscle around is capturing exit data, you know, when we survey them when they churn, and also having our user experience researcher go and speak to these members and do a lot of churn studies so that we really understand the reason that they're leaving and try to, address the issues that they're bringing up. Like, like, literally everything we do at the company goes back to

41:40>> listening to our customers, including the ones we leave. So I guess, the the high level is like, do I get depressed? No. Because it's just I think it's a part of the business. And I also see it as an opportunity for us to improve.

Nathan Latka

41:54And how aggressive are you on the CAC side for the paid marketing stuff? Are are you willing to spend three months of fees to acquire the customer upfront, or what do you like to optimize for there? What will make you uncomfortable in terms of payback period?

Rebecca Shostak

42:06>> I believe that we like to optimize for nine months.

Nathan Latka

42:11Okay.

Rebecca Shostak

42:12>> But I'm not totally sure because I'm not I I don't run that part of the business.

Nathan Latka

42:17Yep. Yep. Yep. Yep. Yep. But but if that was the metric, $38 a month times nine is $342 is what you'd spend to acquire that customer, and then they stick obviously longer than that because your monthly churn is only two months. So the math obviously works there. But that's obviously super exciting and all these strategies feed each other. Very cool. Let's wrap up here with the famous five. We went way over, but it's very good a

42:38great story like this. So thanks for indulging me. Actually, Rebecca, I forgot. What year did you pass a million revenue? Do you remember?

Rebecca Shostak

42:44>> Oh, twenty twenty twenty. Like, I think January, like, six months after we launched.

Nathan Latka

42:52Okay. And do you remember what you finished the year after that at? 2021?

43:00I Let's remember, like, the 10,000,000 number.

Rebecca Shostak

43:03>> I think that was in the 10 range.

Nathan Latka

43:05Went from one to one to 10 in your first eighteen months?

Rebecca Shostak

43:08>> Yes.

Nathan Latka

43:10>> Believe so.

43:10Freaking that's crazy.

Rebecca Shostak

43:11>> Bootstrap. You went wow.

Nathan Latka

43:121 to $10.01 to $10,000,000 of ARR over the first eighteen months. That's powerful. You think is that right, you think? Am I saying that right?

Rebecca Shostak

43:20>> I I think so. Or do I have a second to Yeah.

Nathan Latka

43:23Look. Look. Yeah. You have you have a dashboard. Take your time. I'll make small talk with the crew while they're, you know, parking in their garage, listening to the finale of the episode and all that jazz. But Okay. I'll summarize some stuff just because I think, guys, some unique takeaways here that you learned from Rebecca so far. I mean, the fact that she already pre sold so much of this by capturing demand through user interviews back

43:42in 2017 and 2018 is just huge advantage. Like, if you know you wanna get into software one day and you know what customer you wanna serve, you're already halfway there. Just start interviewing them, learning, capture that stuff. And then eventually, you know, if software is the way to solve their issue, you build a software product and you have you have a SaaS like Rebecca before you know it. So that's a good a good takeaway there. Rebecca,

44:01I'm also curious what what dashboard you are loading right now. Do you use any tools to measure, MRR growth?

Rebecca Shostak

44:06>> Yeah. We use Recurly. Okay. But it I'm it's asking to enter a lot of we actually hope you have. I I actually wish my VP of product were here because, Lehman, she's absolutely brilliant, and she's the data geek around here. We have a lot of different tools to measure, but the one that we started with at the very beginning was Recurly. And they are, a payment processor for SaaS companies. And I really enjoy the analytics because

44:36>> they make it easy to look up metrics while you're on a podcast. So

Nathan Latka

44:43That's awesome. Well, it's nice. Mean, you you have competitors in the space that publish a lot of their stuff privately. So it's kinda I mean, publicly. So it's kinda cool. I imagine yours are all private, and you can sort of go, hey. We're actually beating them. Even though the world doesn't know about it, we're beating them.

Rebecca Shostak

44:57>> Yeah. And, I mean, I think we Martha and I have been on a lot of podcasts in the last few years, so everything is sort of out in public if you trace back our steps. But Yep. Pinpointing okay. This is a little bit mobile, not optimized.

Nathan Latka

45:11She's zooming. She's zooming.

Rebecca Shostak

45:15>> Yeah. Years. Alright. Past 18.

45:21>> So looking at it,

45:26>> it looks like let's see. We hit yeah. One so

45:36>> 1,000,000 MRR would be 12,000,000 ARR. Uh-huh. And we hit that right around, 2021.

Nathan Latka

45:44Yeah. That's it. That's it. Wow. And 2020 was, you finished, at 83,000 of MRR. Right? Or right around there? A million run rate.

Rebecca Shostak

45:54>> In 2020, we had an amazing 2020. We had a lift from the pandemic. It was a really difficult year, but in terms of our growth,

46:06>> I'm not sure.

Nathan Latka

46:08No. That's this is so great. No. It's great. Look. It's you get the idea. A lot of growth here. No outside capital. It's really impressive. So, Rebecca, thanks for taking time. Let's wrap up here with the famous five. Number one, your favorite business book?

Famous Five and Closing

Rebecca Shostak

46:19>> Oh.

46:22>> I have so many.

46:26>> Actually, I'll name one that I recently read. It's called Surrounded by Idiots, and I really enjoy it because it teaches you, different communication styles and how to work within an organization, which is a skill that I've been working on a lot myself.

Nathan Latka

46:39Number two, is there a CEO you're following or studying?

Rebecca Shostak

46:43>> I've always been obsessed with Steve Jobs. I think he's absolutely brilliant. Like, I read the book, and I'm always looking up more anecdotes and quotes and videos about him. You know that he's passed away, but I just think his philosophies on design tech the intersection of design and technology is wildly inspiring in any era.

Nathan Latka

46:59Besides Recurly, what is one of your favorite online tools that maybe you pay a lot of money for in inside of a Flodesk?

Rebecca Shostak

47:06>> Oh, I love Figma. I mean, I think we live in it. As a designer, it makes collaboration so easy, and it's sort of, like, it's so ubiquitous to our process. I don't even notice that we use it. It's wild. It's just always there.

Nathan Latka

47:19It's wild how many you can build flows on that thing that it looks like a real product. You can give demos. It looks like a real thing, and no one knows. There's engineering in there yet. It's amazing.

Rebecca Shostak

47:27>> It's incredible. Anyone who's starting a company in this day and age has no idea how hard it was even eight years ago to get your ideas out into the world and test them.

Nathan Latka

47:36Yep. There's no reason you can't presell today when you've got tools like Figma. We'll put it that way.

Rebecca Shostak

47:41>> Yeah.

Nathan Latka

47:42Alright. How many hours of sleep number four, many hours of sleep do you get every night?

Rebecca Shostak

47:45>> I make sure to get at least eight.

Nathan Latka

47:47That's great. And situation, married single kiddos, are you comfortable sharing?

Rebecca Shostak

47:52>> Yeah. I'm married. No kids yet, but hopefully, eventually.

Nathan Latka

47:58Hopefully, one day. That'll be good. And, Rebecca, are you comfortable sharing how old you are?

Rebecca Shostak

48:02>> Yes. I turn 39 next week.

Nathan Latka

48:05Let's go. Happy early birthday. Last last question. Something you wish you knew when we back when you were 20 years old.

Rebecca Shostak

48:14>> Oh, that's a good one.

48:21>> There's so many.

48:23>> I think getting into tech sooner, actually. I know that sounds a little bit crazy, but, I've always been, on computers. But just having the courage, I think, to jump into the tech space and start a tech company sooner would have been like, if I could older me went back to 20 year old me and said that, I think I would, I would have appreciated that advice.

Nathan Latka

48:44Guys, there I have it from Rebecca. Flodesk makes email marketing easy as pie. From 2011 to 2014, she was selling Mailchimp templates doing $405,100,000 dollars per year. Ultimately, Canva and other tools came in and so templates 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 Mail chimp and make the flows easier. That prompted her to start going and interviewing folks from

49:07her audience, pairing up with a team at HoneyBook, and eventually launching the three cofounders put in $90,000 total back on launch date before they launched their first paid plan at $19 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 27,000,000, up from 20,000,000 just a year ago, and their $10,000,000 a year was back

49:33in 2021, which they hit just it's crazy. Eighteen, nineteen 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. Check it out. Flodesk.com. Rebecca, thank you for taking us to the top.

Rebecca Shostak

49:50>> Thank you.