Author: Matt

Flashback: The 37signals homepage back in 2002.

Time: 23:14 | 05/25/2010 | Download MP3

Summary
Kiran Max Weber and Sarah Hatter, two members of 37signals support team, discuss what it’s like helping out customers, the pros and cons of email-based support, and more.

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“Profitable and proud” is a new series here at Signal vs. Noise. We’ll highlight tech companies (and others) that have $1M+ in revenues, didn’t take VC, and are profitable. First up: Campaign Monitor, a small software company in Sydney that makes elegant email marketing software for designers and their clients. Co-founder David Greiner tells us about CM’s path below.

How successful is your business? Any numbers you’re willing to share to back that up?

Success is a tricky thing to define because it means different things to different people. From a financial perspective we’ve been very successful. We’re a private company so don’t share any numbers. I can tell you we’ve managed to more than double our revenues and profits every year for the last six years. All without taking any outside investment.

While the financial success has been great, there are other aspects of the business that I would consider more of a success personally. I genuinely still love what I do. I work with interesting, funny people. My wife and I are expecting our first child soon and I can work the hours I want. For me these things are much better indicators of a successful business than anything on a spreadsheet.

You started as a small web design shop and then clients started approaching you to send email newsletters for them. How did you make the switch to selling a product? How much time did it take to build something on the side?

The idea for selling our own software really came out of frustration more than anything else. We were designing email newsletters for a lot of our clients but couldn’t find the right tool for the job. After trying everything on the market, we built a simple app that let our clients manage their own newsletters. All our clients loved it and it created a nice new revenue stream for us.

We quickly realized this was something other web designers would love too. In early 2004 we cut back our schedule a little and built Campaign Monitor on the side. The majority of our days were still spent on regular web design work, but every spare moment was spent building the first version of Campaign Monitor. It took us just over six months from having the idea to launch.

Dave (left) and co-founder Ben Richardson.

Did you ever consider taking on any investors? Why or why not?

Outside investment was never an option that interested us. I think there are a couple of reasons for this. First, we were building something for ourselves, so we already had a good idea what the problem was and how to solve it. Our background was designing and developing for the web, so we didn’t need to hire anyone. Plus, we could fund the whole process with the profits of our consulting business. We’re not talking big numbers here either. It’s amazing what a small team can achieve when you really focus for a couple of hours each day.

On top of this, the first version of Campaign Monitor was deliberately simple. We hosted it on a relatively cheap shared server with the rest of our clients. We spent next to nothing on marketing, and just relentlessly improved the product week after week.

How long did it take you to get the product to a point where it was profitable? How long until you stopped doing client work completely?

After launch we continued to spend an hour or two a day improving the product and talking to customers. By our sixth month Campaign Monitor revenues were already on par with our consulting business.

We’re quite conservative, and waited another six months before focusing on the product full-time. By this time Campaign Monitor was generating more than three times more revenue than the web design business, so we were comfortable making the transition. We didn’t want to leave our existing consulting clients in the lurch, so we created a new company to focus on Campaign Monitor and hired on a new team member to take over the web design business, which is still operating today.

Screenshot of Campaign Monitor.

More…

“Profitable and proud” is a new series here at Signal vs. Noise. We’ll highlight tech companies (and others) that have $1M+ in revenues, didn’t take VC, and are profitable. First up: Campaign Monitor, a small software company in Sydney that makes elegant email marketing software for designers and their clients. Co-founder David Greiner tells us about CM’s path below.

How successful is your business? Any numbers you’re willing to share to back that up?

Success is a tricky thing to define because it means different things to different people. From a financial perspective we’ve been very successful. We’re a private company so don’t share any numbers. I can tell you we’ve managed to more than double our revenues and profits every year for the last six years. All without taking any outside investment.

While the financial success has been great, there are other aspects of the business that I would consider more of a success personally. I genuinely still love what I do. I work with interesting, funny people. My wife and I are expecting our first child soon and I can work the hours I want. For me these things are much better indicators of a successful business than anything on a spreadsheet.

You started as a small web design shop and then clients started approaching you to send email newsletters for them. How did you make the switch to selling a product? How much time did it take to build something on the side?

The idea for selling our own software really came out of frustration more than anything else. We were designing email newsletters for a lot of our clients but couldn’t find the right tool for the job. After trying everything on the market, we built a simple app that let our clients manage their own newsletters. All our clients loved it and it created a nice new revenue stream for us.

We quickly realized this was something other web designers would love too. In early 2004 we cut back our schedule a little and built Campaign Monitor on the side. The majority of our days were still spent on regular web design work, but every spare moment was spent building the first version of Campaign Monitor. It took us just over six months from having the idea to launch.

Dave (left) and co-founder Ben Richardson.

Did you ever consider taking on any investors? Why or why not?

Outside investment was never an option that interested us. I think there are a couple of reasons for this. First, we were building something for ourselves, so we already had a good idea what the problem was and how to solve it. Our background was designing and developing for the web, so we didn’t need to hire anyone. Plus, we could fund the whole process with the profits of our consulting business. We’re not talking big numbers here either. It’s amazing what a small team can achieve when you really focus for a couple of hours each day.

On top of this, the first version of Campaign Monitor was deliberately simple. We hosted it on a relatively cheap shared server with the rest of our clients. We spent next to nothing on marketing, and just relentlessly improved the product week after week.

How long did it take you to get the product to a point where it was profitable? How long until you stopped doing client work completely?

After launch we continued to spend an hour or two a day improving the product and talking to customers. By our sixth month Campaign Monitor revenues were already on par with our consulting business.

We’re quite conservative, and waited another six months before focusing on the product full-time. By this time Campaign Monitor was generating more than three times more revenue than the web design business, so we were comfortable making the transition. We didn’t want to leave our existing consulting clients in the lurch, so we created a new company to focus on Campaign Monitor and hired on a new team member to take over the web design business, which is still operating today.

Screenshot of Campaign Monitor.

More…

Saying no the right way — taking things away from people while keeping them on your side — seems like it’s becoming an increasingly crucial skill. Came across three bits in the last few days that echoed this idea…

1) Marco says, “Making a product better often requires removing features.”

Dealing with the negative feedback is tough. Every feature removal, even if minor, is greeted with an initial barrage of emails from people whose lives I have just completely ruined by this change to my free website or my $5 iPhone application…It’s especially tough with web and iPhone apps, for which there’s no good way, or no way at all, for the offended customers to just keep using the old version.

But the result, once the fire has died down, is a much better product for the majority of customers.

If I could never remove features, I’d never add any.

2) A day after reading that, I heard Thomas Friedman discuss how the next generation of political leaders will need to focus on taking things away from voters.

We’re entering an era where being in politics is gonna be, more than anything else, about taking things away from people.

You think it’s tough removing a feature from an iPhone app? Try being a politician that takes away a group’s pet entitlement program.

3) And here’s Yvon Chouinard in the trailer for 180south:

The hardest thing in the world is to simplify your life. It’s so easy to make it complex. The solution for a lot of the world’s problems may be to turn around and take a forward step. You can’t just keep trying to make a flawed system work.

37signals Podcast transcript: “Addressing criticism of 37signals (Part 2 of 2)”

Transcript posted for latest episode (#14) which discusses criticism of REWORK.