How do you crank out profitable web apps when you have no funding and are working with a virtual team? That’s what Chris Nagele did, so I invited him to teach how he did it.
Chris is the founder of Wildbit, a web software firm focused on building complex web applications that are easy to use. Wildbit has launched Beanstalk, a code collaboration, management, and deployment system, Newsberry, an email marketing system, and Postmark, an email delivery service for web apps. Each one of those apps is profitable, and as you’ll hear in the interview, Beanstalk generates over $1 mil in annual revenue.
Before we get started, Mixergy is sponsored by Grasshopper. It’s the virtual phone system that entrepreneurs love because they’ll give you a toll-free number, unlimited extensions, call forwarding, voicemail via email, and so much more. Go to Grasshopper.com.It’s also sponsored by Scott Edward Walker of Walker Corporate Law. If you’re an entrepreneur in the tech space, you probably have already heard of him. If you’re not, if you’re new in the space, check out Walker Corporate Law, and you’ll understand why so many tech startups and so many advanced tech companies use Walker Corporate Law.
All right. Here’s the program.
Andrew Warner: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. How do you crank out profitable web apps when you have no funding and are working with a virtual team? Joining me is Chris Nagele. He is the founder of Wildbit, a web software firm focused on building complex web applications that are easy to use and understand. Wildbit has launched Newsberry, an email marketing system, Postmark, an email delivery service for web apps, and Beanstalk, a code collaboration, management, and deployment system. Chris, welcome to Mixergy.
Chris Nagele: Thanks a lot. I’m excited to be on.
Andrew: I’m looking over your shoulder as we’re doing this interview, and I see people walking behind you but you’re all virtual. So where are you today? Are those people working for Wildbit?
Chris: No. Since we’re a virtual company, I’ve had the freedom, my wife and I, to roam around. We do work out of our house. We also have a small office in Philadelphia. Right now, I’m actually at my brother’s company office in Philadelphia, which actually I’m part owner in as well.
Andrew: OK. The people walking behind you are working for your brother’s company and not yours.
Andrew: Where in the country or where in the world are your people?
Chris: Let’s see. I always have to think about this. There are nine of us total. We have people in Ukraine, Germany, Serbia, Bulgaria, and Russia. Actually, Russia, I try to say Siberia because they’re actually all the way out in Siberia and that’s like a completely different place.
Andrew: Wow. This is your company and you own it 100%, or are some of them co-owners too?
Chris: Yeah, I own it 100%.
Andrew: Wow. I want to find out how you found those people. I want to find out how you guys work so well together. Why don’t we start off with just an understanding of the products. How many of them are profitable of the ones that I mentioned earlier?
Chris: Newsberry, Beanstalk, Postmark, they’re all profitable all in their own way. Beanstalk I would consider our flagship product. Newsberry was our first product. It’s grown slower than our other products, but either way it’s profitable and doing well for us. Postmark’s brand new, at least in my eyes. We launched paid accounts in April of this year. Since we launched, it’s been really kicking ass. It’s great.
Andrew: Profitable already and it’s just a few months old. Let’s go back and find out how you started this. How old were you when you launched the business?
Chris: I was working on some projects. I was doing PHP development and building brochure websites. I was 19 years old and just trying to pick up some money and do some work. We were working on one big project. I actually finished the project. And at that point, I said, “What am I going to do now? Am I going to find a new customer or contract for somebody?” I decided to go out on my own and start a company and see if it worked. At first, I did a lot of the stuff on my own. I do a little bit of design. I do a little bit of PHP. I do the business development side. You know how it is starting a company, you do everything. Little by little, we were doing brochure sites, and from there we started getting into applications. Along the way though, I realized that I’m actually an awful programmer. So I started looking around for help.
Andrew: Actually, let’s slow it down. I want to make sure to understand everything. You’ve heard my interviews before you told me. What do you think of the work that I do here at Mixergy? While you say that, I’m going to raise my mic because it’s picking up a little too much noise down here. You heard my interviews. What do you think of them?
Chris: I think I told you before we were talking, I’m not the type of person who’s on Twitter all day. I don’t read blogs all the time. I do every once in a while. I have a small list of RSS feeds. I listen to two podcasts and that’s it. Mixergy is one and there’s another one I was telling you about called WebPulp.tv, just because I’m really into the server side of things. I love it. It’s great. Nowhere else can you get a perspective of what these small startups are doing to build a company. I don’t have another outlet to really see how I’m stacking up to other people and also just get ideas.
Andrew: Thanks. I didn’t mean to push you for a compliment in the middle of the interview. I didn’t realize that it would take me so little time to fix my mic issue. You know my work, you know I like to dig in really deeply. I don’t want to move too fast through the story. You were starting out at 19. How did you get customers back then?
Chris: Any way I could.
Andrew: Can you tell me about one of the customers that you got just to give me a sense of how you were building your business?
Chris: That’s a tough one. The company I’m in today was actually started around the same time that Wildbit was. My brother and I started it together. It’s basically an event nightlife website. We started it in Philadelphia. People come to the website to figure out what’s going on in the city. I was talking about before I finished the big project, this was actually the project I was working on.
Andrew: I see. This was called Philly2night.com.
Chris: Right. Back then it was called something like Mineo.com [SP] and we rebranded it over the years. At first I actually got some customers who were nightclubs and needed websites. Restaurants, bars, nightclubs. That was a great way to start because we already had the relationships. Back then no one knew how to start a website and do anything. We went from there.
Andrew: This is kind of a tangent but I’ve got to ask you. Why is it that restaurants all have Flash-based websites that are tough to navigate? Why do you think? Were you one of the people who were building Flash-based sites for them?
Chris: We used to but we would try so hard not to. They would really make us do it, but we didn’t want to because we knew it was such a bad experience. Especially nightclubs, I think they just feel like when people come to their website, they want them to feel like they’re in the nightclub. It’s such a bad idea because you just want the address or want to figure out what time they’re open. You don’t want to go to a nightclub on the website. But that’s the way some people think.
Andrew: You also don’t want the music to start playing so everyone in the office knows you’re looking at a nightclub website. You’ve got nightclubs and restaurants as customers. How did you move up to web apps?
Chris: I think it had a lot to do with our experience. As we were getting into just doing brochure sites, then you needed content management. Then people started asking for things like newsletters or customizing the content or the page. As we built experience, I think people just started seeing our sites and what we could do. A lot of the stuff that I did back then was word of mouth in the same way that we build our products now. We don’t have sales teams or anything. I think I followed that trend over the years. I never really did any cold calling. I’ve never been much of the aggressive salesperson. I’m more of a behind-the-scenes guy.
Andrew: You were starting to tell me about how you hired people to help you out. Who was the first person you hired?
Chris: It was myself here, and we were hosting with a company called Pair Networks. They had a really cool user group where people would discuss PHP and different technical things. I was always on there just learning. At a certain point, I needed some PHP help that was way beyond my skills. I just put out a feeler for anybody willing to help me. A bunch of people replied. One guy who replied, his response was great. Everything he did in his work looked excellent. I said, “Yeah, let’s work together.” He said, “Oh, by the way, I’m in Romania.” Right now, that doesn’t seem like a crazy thing. But if you think back to ’99, not many people were doing that. I had nothing to lose. I said, “Let’s give it a try and see how it works.” We gave it a shot. It worked well. Obviously back then, trying to grow a company, the price was fantastic. We just started building projects. I would do the HTML and the design, and he would do all the complicated backend programming. We just started picking up clients from there and moving on.
Andrew: How’d you pick up clients at that point once you had him? Were you starting to build a reputation online and people started to find you, or was it still word of mouth?
Chris: Actually, most of my reputation was built locally in the Philadelphia market. People would just talk to each other. In the beginning, like I said, it was restaurants and bars and nightclubs. Really, we just picked up clients wherever we could. I can’t say there was a particular strategy or anything. It was more just getting out there, talking to people, having people talk about the things that we built.
Andrew: When you say getting out there and talking to people, were you going to local chambers of commerce? Were you going to meetings? Were you doing anything like that? How were you doing it?
Chris: I did some of the chamber of commerce stuff until I realized it’s just a bunch of salespeople talking to salespeople. I got the hell out of there. Again, that’s just not my personality. I will definitely go to user groups for search engine optimization or HTML or programming and things like that and talk to people and partner with people.
Andrew: Okay. What was the first product that you built for yourself?
Chris: I guess this was about six years ago. Coming back to nightclubs, we actually had a nightclub in Philadelphia who wanted to send weekly emails to their customers. Actually it might have even been more than six years ago. We built our own custom system to help them import subscribers and send out a really basic text newsletter. Then all of a sudden a couple of other people started asking for it. We said, “Hey, maybe there’s a product here.” Slowly, over time, it was more of a side project. We didn’t have a lot of resources to put into it. We started to build out a product. That’s where Newsberry was created from.
Andrew: I was going to ask you why didn’t you use Constant Contact or one of the off-the-shelf solutions for your clients?
Chris: I think Constant Contact and some others have been out there for a long time. Back then, it was actually pretty hard to find any of them. I didn’t even know they existed. Now there are so many of them. The marketplace is really saturated. Back then there weren’t many, so we just decided to do it on our own.
Andrew: What were the challenges in the beginning? I remember sending out email back then was tough because you’d get into spam boxes, you’d get blocked by ISPs. AOL notoriously was tough to deal with. What are some of the issues that you found in building your own email marketing system?
Chris: I think the ISP blocks, that’s always a challenge. It was a challenge years ago, it’s a challenge now. It’s something you have to be on top of.
Andrew: That’s why a company needs someone like Postmark, your other business, right?
Andrew: You help them get deliverability.
Chris: We have the infrastructure so you don’t have to worry about it.
Andrew: Back then how did you deal with it?
Chris: Back then it was all the same kind of process. You were asking what was one of the challenges. I think one of the biggest challenges of building an email marketing system is really trying to figure out what features. Feature requests for email marketing can be a very, very simple system that just sends out emails or it could be extremely complex, merging different databases and everything. The deliverability stuff is always tough, but I think that was one of the hardest, deciding what to put our resources into knowing that we had limited resources.
Andrew: What was the first version, before you started adding all these, the first version that anyone can go use? What did that look like?
Chris: Really basic. One account had a single list. You basically build your newsletter, you send it out. Some simple statistics. I don’t even know if it had click tracking or anything. People at that point were just happy that the email would go out and people would read it. It was just really basic. Not much there.
Andrew: Are you playing with the cap of your drink, by the way?
Andrew: Oh, okay. I’m hearing some sound come in, and I can’t figure out where it’s coming from. I thought maybe you were playing with the edge of the cap of the drink, which is what I do when I hold one of those drinks. What features were people asking for that you had to add and which ones did you have to say no to?
Chris: The hardest ones were the database integration. With APIs now, it’s a lot easier. Back then, it was more how do I take my mail order system and integrate it with Newsberry? I want to send to everybody in certain ZIP codes. All of that stuff is pretty basic and easy now, but back then it was a challenge. A lot of times we just said, “Until we have enough people who want it, we’re just not going to do it.” There were some cases where we’d have people who wanted a feature, it was one customer and maybe they were paying a little more than everybody else, and we would implement it, spend all this time on it, but at the end of the day, a subscriber-based service, each customer is only spending so much. You have to pick and choose what’s worth it for the entire audience.
Andrew: Was there one feature that you added that was just a big waste of time and effort and nobody ended up wanting it?
Chris: Oh, man. That’s a hard one. Off the top of my head I can’t think of anything. I’m sure there are plenty actually, but it’s hard to think of.
Andrew: What about prices? How did you decide what to charge?
Chris: Newsberry went along as a product we’re giving to our clients. It wasn’t out there for anybody to sign up and just start using it. I think by the time we decided to put it out there, I think Constant Contact might have already been out there. We basically just did the usual thing of looking at their prices and trying to be a little competitive based on what they were offering, and looking at any other competition. We didn’t have any specific formulas back then on how we did the pricing. I can’t say that we do now either.
Andrew: How did you go beyond your customer base to bring new people into the system?
Chris: Into Newsberry?
Andrew: Into Newsberry, yeah.
Chris: There are probably a lot of ways. If I look back, and this applies to all of our products, integration is really key. We integrated with 37signals’ Highrise service early on. We got tons of customers from that because I think we were the first email marketing system to integrate with them. People have all these contacts in their database with Highrise. They didn’t have a way of getting them into an email system easily. We created this really simple method of, in Newsberry, just clicking a button, importing all the contacts, and it worked out really well. I’m not trying to get too far ahead with Beanstalk. That’s been a huge success for us as well. We did it early on.
Andrew: The first time that you did it at Newsberry, were you doing it with 37signals’ permission and cooperation, or did you just do it?
Chris: We basically just did it. They had an API. We came up with the idea, we did it, and then we talked to them. They’re really good about promoting the products that integrate with them. The promotion as well really helped out.
Andrew: Who else did you partner up with or work with?
Chris: That’s one of the main services that we integrated with. We haven’t done much integration beyond that with Newsberry. I think, to be completely honest, Newsberry’s been the hardest product to grow. I think partly because it was a side project at first. So it was something that never got all of our attention. It was our first product, so a lot of our learning mistakes and trial and error went into that. Also, over time, the industry’s now is so saturated. There are so many out there from very small to enterprise solutions.
Andrew: You said that you made a lot of mistakes. What are some of those mistakes?
Chris: I think some of the things are just trying to figure out who your audience is. When it comes to email marketing, you have people who want sales campaigns, some people who want to just send out a basic newsletter. In Newsberry, we never did something like seeing who actually clicked or opened an email. We fought with that for a long time because we said, “If you’re sending an email to 5,000 people, looking at every single person who actually clicks and opens that email isn’t really important.” But people really wanted it. We pushed back for a long time saying, “We’re not going to do it.” Now we have it, because I think in retrospect, it was probably a good idea to listen to our customers and do it.
Andrew: I wonder how people are using that. I have that too for my mailing list. I have thousands of people on the list. I can figure out which specific user opened my email and which one didn’t. I don’t know what I would do with those emails individually. I can say in the aggregate my next email should go just to the people who didn’t open and maybe offer something a little bit bigger or more valuable. Is that what they were doing?
Chris: I was going to ask you have you ever looked at an individual and said, “Did this person open the email?” That’s why we fought against it. When we came out with the feature, we still didn’t do it the way most people did it. We didn’t come out with a feature where you can view everybody who opened an email. We came up with a way that you could say, “Create a sublist based on all these people who clicked on it.” Now I can send them a follow-up campaign. You can view that list, but that wasn’t the main purpose.
Andrew: Yeah. That’s all I need. I just need a quick sublist. People were asking to email individual users or to find out the names of individual users who did and did not open their mailings?
Chris: Yeah. I think in email marketing, a lot of times there are so many features that people, when they’re looking at different solutions, just do a feature comparison. Does it have this? Does it have that? A lot of times that doesn’t matter.
Andrew: I see. What other mistakes?
Chris: It’s hard to say. I think part of it is just maturity of the company like I said. Newsberry is actually doing Dot Net development. Postmark’s a blend of Dot Net and Ruby on Rails. Beanstalk is all Ruby on Rails. Newsberry was our first product. The way we built it, there are some technical ways that we could have done it better. We’ve improved over the years definitely, but I think early on, it was our first product, and it was, at least in my view, not up to standards at that point when we first built it. When all these email marketing companies were starting to blow up and get bigger, we didn’t have the ability to launch features as fast or really focus on certain items as much as we wanted to.
Andrew: What point did you launch your second product? How far along with Newsberry were you?
Chris: I guess Beanstalk was about three years later after Newsberry. Beanstalk just celebrated its third year this month. It just came out of a need of our own. Beanstalk we were managing our own subversion repositories in-house. When a new person would come into the team or need to access our code to work with us, I would have to go into config files and the server and do all this stuff. It was just a big pain and I didn’t want to do it. I said, “There has to be a better way, some easy way to save, click, add user, manage your repository.” But there wasn’t. I went to the team and I said, “What do you think about this idea?” At that point, we had no expectations. We decided to work on something small and it worked out really well.
Andrew: Was there a failed product before that? Was there another product that you guys tried to get started that didn’t go anywhere?
Chris: No. Newsberry, we did consulting, and then basically the whole time we’re taking consulting revenue and putting it into Newsberry and then putting it into Beanstalk to grow Beanstalk.
Andrew: I’ve talked to a lot of entrepreneurs who did that. Many of them said that it was just too hard to do. For some reason, every time they’d go to build their own product, they’d get distracted by client work and have to get pulled back in. I guess I understand because there’s money and urgency in client work, and there isn’t immediate money and there’s definitely no urgency in creating a product. How did you overcome that problem?
Chris: I think early on, one important thing was having dedicated people for it. When you start the product . . . actually, if I compare Newsberry and Beanstalk, this is one thing we did different. When we started Beanstalk, we said, “We’re going to hire this person. This person’s on the team.” They were only going to work on Beanstalk from now on. This way, when a consulting or client project came up, it wasn’t like, “Oh, we can just take Ilya and put him on a client project.” By having that constraint, I didn’t allow us to move or shift things around too much. There are probably some other ways. I really just think it comes down to . . . hold on one second.
Andrew: Screensaver came on?
Chris: Yeah. Sorry about that. It really comes down to just trying to manage priorities properly. I think really you just have to be very strict about refusing certain client money that might come in so you have time for it. If you believe in your product enough, you’re willing to do that. With Beanstalk and Newsberry and Postmark, when we launched Postmark, we didn’t have any client work anymore. With Beanstalk and Newsberry, we really believed in the product, so we put the time into it.
Andrew: I can see how having a separate person work on a product, one who’s not going to also work on client work, would ensure that the new product gets the time and attention that it needs. But what about the experience from the rest of the team? One of the reasons that development shops like yours would create products is they say, “We’ve built all these great products for other people. We’ve learned so much by working for other people. Let’s take some of these learnings and apply them towards our own product like we’re our own customers.” How do you get that knowledge to go to the new product and that experience to benefit the new product that’s now yours?
Chris: It was never a clear that, “We’re a consulting company and now we want to be a product company.” It was more like, “Now we have some products and they’re starting to work. Let’s think about becoming a product company.” I think if you try to force it, you don’t really know where to put your priorities. We put priorities into Beanstalk and Newsberry as the products grew. Over time, it was like 10% products, 90% consulting. Then over time, it was 20/80 and 30/70. As the products grew, we shifted.
Andrew: The advantage you had at the time over me building a web app is you were in the business, you knew the space, you’d failed and you had succeeded and you learned. How do you take all that knowledge and pass it on to the new people? Was it just you, Chris, being the guy who’s got a leg in each business and you can pass the information back and forth?
Chris: Yeah. For us it was mainly using the product. Are you talking about experience in what to build for the product or the experience in . . .
Andrew: In how to build it. You said, for example, that you learned a lot at Newsberry that you then applied to Beanstalk. If you’re hiring a separate new person to work on Beanstalk and saying, “You’re our guy. We’re not going to distract you by having you work on client work,” how do you pass the knowledge of the successes and failures and missed opportunities at Newsberry to the guy who’s working at Beanstalk? How do you pass the knowledge that you’ve learned by building bad or okay websites for clients because that’s what they asked for and saying, “No, we could have done it so much better”? How do you pass that on to Beanstalk? Was there a way, or were you just thinking, “No, we’re building this almost like a separate business”?
Chris: It’s more like the first priority is just making a great product. To make a great product, I really think you have to use it yourself. At Newsberry, we used ourselves, and we still use ourselves, but it’s like once a month, once every couple months, that we send out a newsletter. Beanstalk, we’re in every day, multiple times a day. Building a product that you actually use, I think, is incredibly important especially early on when it’s a beta. We were using it for our own stuff. We had our own repositories in there. When bugs would come up, when new ideas would come up, even when people would ask for feature requests, we would know what we want for ourselves, and we would have some ability to say, “That doesn’t make sense,” or, “Yeah, that makes a lot of sense.” Using the product yourself, I think, is really key.
Andrew: I asked Jason of 37signals the same question I’m about to ask you. I’m curious about this. When you’re building a product for yourself, how do you keep it from being more than just an answer to your unique problems and make it something that anyone can use? How do you identify the problems that are uniquely yours and that you shouldn’t address and separate them from those where the problems you’re experiencing are representative of what everyone else who’s using the program would experience?
Chris: I think the focus shifts a little bit. In the beginning, it’s all about how you use it, because in the beginning, it’s just you using it or maybe a few hundred people. When you have tens of thousands of people using it, you start thinking much more broadly and try to say, “What do our customers in general want?” I think it’s a gradual shift to just listening to the customer base as a whole and understanding what they need. As we need stuff ourselves, we’ll actually deny ourselves of features because our customers may not want that. I think it would be equally as foolish to put features into it because just you want it but maybe your customers don’t.
Andrew: What did you deny yourself in the early days of Beanstalk?
Chris: It’s probably too long ago to think of something. I guess a more recent one I can give you is deployment. We have these very simple but effective deployment tools that are actually able to take your website files and deploy them to a server automatically or just by a simple click. It’s really easy and simple. People love it. We use it for some of our sites, but since we have more complex applications, we don’t use it as much. That’s a strict choice where we decided not to do it for ourselves. If we try to do it for ourselves, we make it so complex. We’re getting away from the goal of the product, making it easy for people to develop software.
Andrew: I see. How did you get customers for Beanstalk?
Chris: Beanstalk’s growth was never something like we launched it and all of a sudden had thousands of customers and we’re all jumping up and down. It was always a gradual growth cycle. Every month we would just see more and more people in the product. It would just grow naturally.
In the beginning, like I said, integrations were huge. We integrated with Lighthouse, which is a great test management system. We integrated with Basecamp and Campfire. We did a little Twitter integration where when you do a commit, it will show up on Twitter for if anybody’s interested. The great thing about that is people already use these services. Integrate was something people already used.
In most cases, the people who run those services are more than happy to promote you as well. It’s definitely a mutual benefit. That little bit of promotion as you do enough integration tools really helps. I think I just saw something, FreshBooks just celebrated maybe their 50th integration or something like that. They integrate with 50 applications. I think that’s fantastic. For us, in the beginning, that was a relatively inexpensive but effective way to grow the product.
Andrew: I see. Marketing through integration. Every time FreshBooks integrates with someone else’s software, that software’s website will say, “We now work with FreshBooks,” and give their people the option of sending out invoices and the same thing’s happened with you.
Chris: Right. Not only that, but it’s about a holistic experience. You’re already using all these apps, so you want all the apps to work together. If they do, it makes your life a lot easier.
Andrew: Did you try anything else like AdWords or buying, what are those ads that Gruber has on his website? I forget. Did you try any kind of advertising?
Chris: Yeah. We’ve done AdWords. Personally I can’t stand it. I don’t have the time to monitor everything and learn what really needs to be done in AdWords. Overall, I just haven’t seen the results that we wanted from it. We don’t do a lot of advertising for our products. Actually, I think a couple months after we launched Beanstalk, we did two big campaigns. One was on The Deck, which is the network with 37signals and Coudal and stuff like that. That drove really great consistent traffic over time, over the month that we sponsored it. It’s also fairly expensive, but it was worth it because we just launched our product and we wanted to get the word out.
The other thing we did was the Daring Fireball. I think we sponsored his RSS feed. It’s amazing. I’ll send you a screenshot of it, but if you look at our traffic during that month, it was a like a little bit of traffic from The Deck and I think we did a newsletter or something and then it was like this huge spike from Daring Fireball. I haven’t seen traffic like that ever since we did it.
Andrew: I’d love to see that. John Gruber, on Daring Fireball, does he run you just once to his RSS people, or does he do it consistently in his feed? I go to his website, but I don’t subscribe to his feed so I don’t know.
Chris: When we did it, there were mainly two bumps in traffic. One is when, I’m trying to remember, I think he mentions it or he puts it into his feed, and then there’s another where he thanks his sponsors. When he thanks a sponsor, that’s where everybody gets it and reads it.
Andrew: That’s the part that I read. Then it shows up on the website too. Wow. That was the most effective advertising that you did?
Chris: I would say it brought the most traffic. Back then, we didn’t track all the conversions that came through. We do now. In terms of sheer numbers that definitely brought the most.
Andrew: Was that for Beanstalk or Postmark?
Andrew: Beanstalk code collaboration, management, and deployment, right?
Andrew: OK. What about affiliate programs? Do you run any of those to market it?
Chris: No. I’ve always been curious about it, but I’ve never really wanted to invest the time to actually build an affiliate system. So we’ve just decided against it. The way I look at it a lot of times is if people like your product, they’re going to talk about it. I just don’t feel right. It’s almost like you’re bribing people to talk about your product. I’d rather build an amazing product and just have people talk about it. Building an affiliate system is complex. I know there are probably some tools out there now where it will make it a little easier.
This isn’t really an affiliate but early on when we had subversion . . . Beanstalk is the server side of subversion, but to interact with it you need a client. Our goal is always to make subversion or version control extremely easy for designers or copywriters or anybody who wants to use it. The missing part of the puzzle there was the client side. Before, people would have to open up command line and learn all these commands.
Around the time when we were launching Beanstalk, there was a product called Versions which is basically a subversion client for Mac. We did a partnership with them where they would promote us right in the product when you actually open it up on your computer. We would promote them as well when you sign up and you want to connect to Beanstalk. We’re still in a partnership with them three years later. It’s been great because it takes both pieces and makes a really nice workflow simple and easy.
Andrew: I think there are going to be people in my audience who are going to think you should create an affiliate program. It’s not bribing, it’s a way of doing business. I’m curious to see what the feedback is. I’m also curious, if you guys are going to give him feedback, I’m curious about the suggestions, not just the corrections or differing opinions. I want to know the suggestions. If he’s saying the issue is that it would take too much time, what do you think would save him time? What else do I want to find out about here?
Let’s move on to Postmark. What was the original idea behind Postmark, the newest product?
Chris: It’s been an idea we’ve had for much longer than when we started building it. Again, I think, reaching out to your listeners, I think one of the problems that people have trying to build a software company, the ideas are limitless. There are so many ideas that come across every day just talking to people. The hard part is really deciding which ones to work on and when.
Postmark is an idea I’ve had for years, but the timing just wasn’t right. It’s better to do it if the timing is right than try to do it early on when you’re not ready for it, because it’s just not going to be the product you want it to be. We send a lot of email at Beanstalk, because every time somebody commits code, it also sends an email notification to people on your team. Even though we had this great email infrastructure for Newsberry, we didn’t have a way to track how many emails we’re sending, if they’re getting to the inbox, how many emails are bouncing, are we getting spam complaints. It just made sense. There should be some sort of service where somebody who’s building a web application can deliver email without any hassle and without having to understand all the complexities of managing an email server. We just started working on it. We started working on it, I guess it was August of 2009. We launched it beta in January, and we let it go for about four months. Then in April we launched with paid accounts.
Andrew: What do you mean by “we let it go for a few months”?
Chris: We basically invited some people to fix bugs. We had it running in Beanstalk and production which was enough of a use case for us, but we wanted enough people using it where we got feedback and improved it before we started asking people to pay for it.
Andrew: I see. How’d you get customers there? That’s not a business where you can sit back and hope customers are going to find you, right?
Chris: That’s the other great thing. Postmark has done extremely well so far. If you look at Beanstalk, Beanstalk is focused on software developers and designers. So is Postmark. We have this great, large audience of Beanstalk customers that are probably also interested in Postmark. We didn’t do anything like blast out an email to all of our Beanstalk customers saying, “Postmark’s here.” You can gradually cross things over. In our newsletter, in the bottom, we might say, “Check out our new product, Postmark.”
Andrew: Why wouldn’t you send out an email? You’re in the email marketing business. Newsberry enables email marketing. Why not do a blast out . . . I hate the word blast. Why not do a mail out to the Beanstalk customers and say, “Hey, we just launched Postmark. If you’re building a web app using Beanstalk, you probably know that you can count on us. We’ve got a new system that’s going to help you get your email delivered from a company that you can already count on. If you had any trouble with us in the past, you know how big an issue it is. Contact us. We’ll sign you up. We’ll even give you a discount because we’ve known you for so long”?
Chris: Even though we have Newsberry, we’re very selective when we send emails. Even with Beanstalk, we don’t send a monthly email. We only send emails when we have some new features or information to share. Sending an email to all of our Beanstalk customers about another product, they’re interested in Beanstalk, not Postmark. I can’t make assumptions that they want to hear about Postmark. But I can mention that they might like it in a Beanstalk newsletter. It’s more about being polite. You can get aggressive. You can be conservative. I think we’re more on the conservative side.
Andrew: Okay. You and I got introduced through Noah Kagan. He is an insane marketer. He’s so good. He makes everyone love him for marketing. Have you talked to him about this? Does he say, “Chris, what are you doing? I could get this doubled in size overnight if you just let me do something here”?
Chris: We’re definitely talking about Postmark. We’re going to see if we can do a bundle or some sort of campaign with him. It’s moving along, but we haven’t figured anything out yet.
Andrew: What do you mean? What’s to figure out? We’re talking about, let’s give him a plug since he introduced us, AppSumo. Since we’re talking about his system, what’s the issue with AppSumo?
Chris: He’s doing the bundles but he’s also done some stuff for KISSmetrics where they did a promotion through Twitter where they gave away a lifetime free thing with KISSmetrics that did well. He’s a great guy and has a lot of great ideas. It’s just finding the right one for the right services.
Andrew: I see. You’re trying to figure out if you should be in the bundle or should you be a thank you for anyone who tweets you out.
Andrew: Got you. How about marketing through blogs and through interviews like this? I did some research on you before I came here. I saw you wrote blog posts for, who do I have here, Think Vitamin. You were interviewed by some geek website, people write articles about you. Is that part of the marketing plan?
Chris: It’s never been part of a marketing plan. I met Ryan Carson and some people from Think Vitamin when I was at FOWA, and we decided to do an article on version control. I kind of forgot about that. Early on with Beanstalk, that was one of the things that drove a ton of traffic as well. How can you educate somebody through an article but also mention how they can do it with your service? It’s fantastic. It also builds experience in just writing in general, which I think is very important. That’s helped along the way. We still get traffic from that article and it’s years old.
Andrew: I’ve got a note here to say why did he write that long piece on Think Vitamin? I actually included seven zeroes in my own notes just to remind myself. That’s a lot of work. I don’t know if we’re talking about the same blog post, because I don’t remember what the topic was. It was really long. You had screenshots. You had depth. Do you remember how long it took you to write something like that?
Chris: Probably a few hours. Again, for a few hours of work, it wasn’t too much work. It’s brought continual traffic over the years to Beanstalk. It’s definitely worth it. There goes my screensaver again. I’m sorry.
Andrew: No problem. Are you on a Mac or PC?
Chris: Mac. Actually, you want to give me one sec?
Andrew: Yeah, take your time. You have to answer some email or maybe Facebook some friends? When you come back, I’ll ask the big question, the one that gets me a lot of hate mail and a lot of support.
Chris: All right. I’m good. I turned it off.
Andrew: All right. We don’t have that much time, you didn’t even need to. Here it is. What kind of revenues are you guys doing?
Chris: We’re a private company. We don’t really share our specific revenue numbers. I think one thing that’s important is to give an idea. When we first created Beanstalk, I had no idea what it was going to do, whether it would actually turn us into a product company or not. Three years later, it supports our entire company. It’s great. One of the goals I set for myself, I said, “Beanstalk, at least to me, isn’t really going to prove itself until it makes over a million of revenue per year.” Within the last year, we hit that goal, which is fantastic for me. Like I said, it was a personal goal. I’m extremely excited about it. It’s amazing. Subscriber services, if you do it right, they just continue to grow month by month. You just continue to put your love into it. It’s not something, at least for us, where it spikes up and comes down. It’s just that gradual, continual growth.
Andrew: It’s not seasonal when you have subscribers.
Andrew: That’s just for Beanstalk? That’s not for the whole business?
Chris: Yeah, that’s Beanstalk alone.
Andrew: Get out. Wow. How old is Beanstalk?
Chris: Three years.
Andrew: Three years old. Congratulations.
Andrew: Wow. I didn’t realize that.
Chris: Newsberry, like I said, was our first product. It still does well. It’s profitable. It doesn’t grow as fast as Beanstalk or Postmark, but it does well for us. To give you an idea of Postmark, I can’t really share our revenue numbers of Postmark specifically, but to me it’s pretty cool watching the difference in growth between Beanstalk and Postmark because we already have this audience and reputation. We launched Postmark, and in the first month we made $6,000. It’s not huge money but when you have a subscriber-based service and it’s based on a lot of people paying a little bit of money, that was just amazing to me.
Andrew: Wow. All right. I asked, at the beginning of this interview, how can you do all this with an outsourced team? You named the cities or the countries in the world where these guys are. How do you collaborate? How do you make sure that you’re all working together well?
Chris: Actually, you mentioned Think Vitamin. I wrote an article on Think Vitamin as well about building and managing virtual teams.
Andrew: I read that.
Chris: It goes through every detail I’ve learned over the years. The short of it is collaboration’s important, what kind of tools you use whether you use Basecamp or test management systems or whatever. The most important thing is finding people who are self-motivated. When you hire somebody, you really have to make sure they’re the type of people that can do things on their own. Do they maintain a blog? Do they contribute to open source? Have they been doing freelancing for a long time, or are you taking them from a full-time position at a company and trying to make them do virtual work? In reality, any of it can work. But if you want to minimize the trial and error, it’s better to find somebody who really has that passion.
I think people who work for virtual companies are almost like entrepreneurs themselves. That’s like what most of our team is like. They’re all very passionate about the products we make. They all contribute to the ideas. I don’t lead the team and tell them exactly what to do. They come up with the ideas. We all discuss them. I might come up with ideas and ask them for advice. It’s all about finding the people who are like that. It’s the personality. When it comes to tools, there are a lot of tools. One thing that’s worked out really well for us . . . two of our guys are in Siberia. That’s a 12-hour time difference from us. The important thing is every day we have a meeting. It’s at 10 a.m. Eastern time. We all meet for a little bit and just talk about what we’re doing. It’s close to a scrum, if you’re familiar with it.
Andrew: Not very well.
Chris: It’s like agile development scrum. At 10 a.m. we just talk about what we’re doing. It gets everybody in the company in a campfire chat just to talk about . . . we might goof off and talk about funny stuff or we might talk about products and what we’re working on.
Andrew: Every day, 10 a.m. about an hour before we did this, no, not an hour before we did this interview. It would have been much earlier than that. This morning at 10, you guys had a campfire conversation online where you were all talking.
Chris: Yep. That’s the only really mandatory schedule we have. Other than that, in reality, you can work whenever you want. That keeps everybody on the same page every day.
Andrew: What about this though? If you’re hiring people who are all entrepreneurial, what’s to keep them from starting side businesses that get them distracted from your work or from working, I don’t know, for other people who are like you without telling you that they’re working for them and maybe being a little more productive for you but not as productive as they could be because they’re distracted by that side work? How do you prevent that?
Chris: There’s no secret. I think it’s just keeping people motivated and making sure they love their job and love what they do. Money’s a part of that, but letting them do what they want. A lot of times, our designers will come up with a design that’s not what I would do or not what I want. But giving them flexibility and freedom to do the stuff they want is really important. It’s all about just managing people and letting them do their thing. I wish I had like a “Here’s what you do and here’s not.”
Andrew: Why not bring people into an office in Philadelphia, the way your brother has an office, have them all work together, build up that camaraderie, make sure you’re all keeping an eye on each other and helping each other out? Why do it this way with a virtual team?
Chris: At first, when I started the company, it just started out that way. Over the years, I’ve built up so many relationships in all these countries where when we look to hire somebody else, we go through recommendations. It’s like, “Do you guys know a Rails developer who is looking for work?” We go through direct references through the people who are working for us first. It’s gone from there.
I think we’re actually planning on maybe bringing one or two people here if they’re interested to work in an office in Philadelphia, getting a work visa or something like that. Either way, if you have a virtual team, it’s extremely important to get together every once in a while. We’ve done this for a while. We try to do it once a year. Now with so much going on, we’ll probably do it twice a year. We do a retreat every year. Basically we get the whole team together. We get a big villa somewhere. It’s probably more extravagant than it has to be, but we don’t get to see each other a lot so we really invest in it.
Andrew: Where have you been?
Chris: We’ve been to Cyprus, Greece, Turkey. Actually one year, we went to Bulgaria to a little ski town. That was pretty cool. We just get a big villa. We all stay in the villa. It’s part about strategy and talking about the business, but it’s more about just hanging out, eating, drinking, traveling around together.
Andrew: Wives and girlfriends, boyfriends and husbands come out too?
Chris: It’s just the team. The first year we did it, wives and girlfriends came. It was just too much going on. So we decided not to. We may do it in the future. For now, the last few have just been the team.
Andrew: All right. Finally, if somebody’s listening to this, they get inspired by your story, I hope they do, and they want to go do something, where should we direct them? What bit of advice do you have for somebody who has all this energy at the end of listening to you for about an hour and says, “I want to do something like that”? What could they do next?
Chris: My friend Alex Hillman who runs a co-working place here . . . are you allowed to curse on this show?
Andrew: I’m sorry? Oh, yeah, go for it. At this point, if they’ve stuck with us, we got them.
Chris: He has a shirt that says, “Just fucking do it.” I think that’s the best mentality ever. Some people are trying to do a side project when they’re actually at a full-time job. Some people decide to quit their job to do it full time and really work on the product. I don’t care how you do it, just do it. If you’re really passionate about something, it doesn’t matter. That’s really what it is. People are looking for the secret formula, but it’s not really there. You’re passionate about something, you believe it’s right, and you just do it.
Andrew: All right. What a great place to leave it. Tell you what guys. If you heard this interview and you want more information, you want to check out what Chris has been working on or see all the websites that we’ve been talking about, go to Wildbit.com. Check that out. Chris, that links to everything we talked about — Newsberry, Postmark, Beanstalk, etc., right?
Andrew: All right. Cool. Thank you for doing the interview. It’s great to meet you.
Chris: Yeah. This was awesome. Thanks a lot.
Andrew: Cool. Thank you all for watching. Bye.
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