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Startup Idea: Mix of a few products. SmartSuite coined being an Airtable, Notion and ClickUp in the blender
John Darbyshire, founder and CEO of SmartSuite coined being an Airtable, Notion and ClickUp in the blender. He invested $12.5M in personal funding into product development that when launched grew zero to a $100K monthly recurring revenue in an astonishing pace of four weeks.
Discovering customer pain: too many tools
Please introduce yourself and share how did you discover the pain, which was the foundation for SmartSuite?
My background is really in building SaaS companies. The last company that I built, Archer technologies, we sold in 2010 to EMC. And after that transaction had the chance to retire basically for a period of time and started a family foundation where we focused on women’s initiatives, youth programs and entrepreneurial programs.
And as part of that, we invested, as a family, through our family foundation, we invested in about 400 startup companies, along the way, either direct investments or through venture funds that we’d invested in. What I found a couple of years in is that I was having a lot of conversations with founders, big and small from a couple founders to maybe a couple years of development had taken place where we were spending more time talking about the systems and processes inside the organization and how they would organize things.
Then we were about the product or features that they needed to develop for their customers. And I’d always had in the back of my mind for many years that, you know I’d thought about, having a single platform to manage any process or project in organization, basically, meaning I just want to have one product.
That’s like a business operating system that I can just run my business on and interact with people and do my work. And not have think so much about, these systems and how I begin to build them out. Using one off systems and products, to cobble together to solve that problem.
So the original idea for SmartSuite and the business pain that we saw was that people are working with six or eight different products to get their jobs done. Could we maybe, bring that down to one to two, maybe to three different products that they need to use each day to do their job.
How did you qualify willingness to pay?
How were you convinced that reducing the number of systems to one platform will solve such a big pain and customers will be willing to pay for it?
I think there’s a number of pain points. One of the first pain points that people talk about is they have to integrate information between these different systems for their organization to kind of operate efficiently. So if I have a sales team that’s maybe running on SalesForce, I have a marketing team that’s maybe HubSpot and some other products.
Maybe my customer care team is using JIRA in a perfect world we’d be sharing information across all three of those platforms, right? For mid to small companies that’s a lot of money to spend on integration. In some cases, they spend more on integration than they do on actual the products that they spend.
So the idea of SmartSuite was to give you 90 to 95% of the features that you get in those three products that I just mentioned in a single platform with all the integration built in. So it just makes it super simple for anyone in an organization to build a new process. If they have access to data, that’s located in another process, they just link to, it takes about 10 seconds to say, I wanna link to that information.
Here are the fields that I need. And now all the data is in sync. So as things are updated in either place, it’s updating across the company.
Why invest 2.5 years and $12.5M for product development before launch?
Take us through the first two years, of development where you didn’t do anything or hardly anything with customers. You invested, I believe $12.5M of your own money, into funding and building the project without perhaps the immediate gratification of having customers that are, you’re iterating with, which is perhaps a little bit different than the usual Silicon valley launch. walk us through the mindset and the conviction. And how did do this process in this way.
There’s a couple ways to start a new company and, if you talk with a lot of the venture capital community, they’ll say that the best way is to work for three to six months, build an MVP product, get your first release out, work with customers, iterate as fast as you can to get the product to where the customers can really take advantage of the features, you know really use it where it’s valuable to them.
The other option, which doesn’t happen typically for new entrepreneurs. If you’re new entrepreneurs, you need to take outside capital, they have a lot of influence over that direction and that MVP. If you’re somebody like myself, that’s maybe more established later in their career, doesn’t have to worry about the funding elements that are there.
It allowed us to take our time about two years to build the core platform that we have. It took about a hundred developers, to build it. And our thought process was we didn’t want to come to market with a product that was below the other products that were in the space. We wanted to make sure that we captured all the core features that were needed to solve the problem for the customer.
And that customers didn’t think about us as, hey, they launched in six months and they’re catching up to these other guys. We wanted to know we’re either we’re there or above when we’re hoping to be above the other players that are in the space, when we launched. So it took about two and a half years of just heads down work to just build all these capabilities in. We did work with customers in regards to use cases and problems that they needed us to solve and features that they needed to solve those. But we didn’t have actual customers on the platform until, January of this year was the first time.
How are you maintaining your internal conviction throughout whole long process and all the funding, personal funding that went into that throughout such a long period of time?
Yeah, no, question that it was definitely a long period of time not to see the satisfaction of customers using your platform and providing feedback,that’s there. But we just had to do it. We just had to be heads down. I wrote the original requirements, in about six months, which is about 1200 pages of documentation that the developers used to begin to build.
And we just segmented that, in the build structure over the two and a half years of what needed to get done. So there was satisfaction in that a lot was getting accomplished and we could see it, but there wasn’t a lot of satisfaction with being able to show it off. And we also, we didn’t make any public announcements on what we were doing.
I didn’t update my LinkedIn profile. I didn’t do any social media post until the second, third week of January of this year, 2022.
How is SmartSuite different?
Given established integration oriented competitors such as Zapier and Integromat, why would you think that such an idea would be much better than what’s out there?
As we work with customers, what we find is Zapier and Make are two fantastic products. When you need to integrate between our product and another product. But some organizations from a security perspective, they don’t like working with outside products to do that integration.
They want everything inside where they can control it. So they don’t use Zapier even though it’s a great product that’s there. So our thesis was that by bringing all of that into a single platform with native integrations where everything’s inside and controllable, it actually makes things even more secure, for the organization.
Walk us through how is SmartSuite product different than established and well respected players like Monday and ClickUp or even,Notion or Airtable?
So you’ve got different layers of products that you just talked about. So you’ve got the project management tools. So where you would look at, make Asana, Wrike, Click Up, Monday, begin to fit into that realm. Then you’ve got the Notion’s and Coda’s that are a little more collaborative.
They’re more document type products that allow for some really unique collaboration activities. And so I’ll go through each of those, but on the project side, so project centric products start with a task and to them, each thing that you do has elements of a task associated with it. You’re gonna assign something to somebody.
It has a due date. It has a priority. And that when that item has been completed, so Monday, ClickUp, Asana, they’re task centric products. The architecture of those platforms are task specific. What’s different from SmartSuite is we’re more of a work management product, and work management’s kind of an overused term because some of project players are beginning to use well. But what that means to me is that we help organizations manage any process or project inside of the organisation like a sales, CRM process is very different than a task management system, right?
There’s things when you’re capturing accounts customers that don’t have anything to do with task, like I don’t need to assign anything. It’s just information I’m collecting using in a process.
So by nature, a work management system includes the capabilities to also manage projects in the same way that those project tools do.
But at a bigger level, it helps you manage, any type of process in your company. And we actually provide 200 business process templates for people to get started with across about 30 different categories processes. We’ve worked with industry experts to actually build these
templates out. So it’s not just a bunch of fields. That’s on a form that you’re looking at. If you don’t understand how to manage a particular type of process, and you’re a young company, we’re gonna show you like, this is what a best in class process looks like. And in most cases, we’ll give you a couple versions.
We give you, Hey, here’s the starter version, less complicated. Here’s the intermediate. And then here’s like the full blown process that you would see inside, of a fortune 1000, type of company.
What is an example SmartSuite product use case?
So can you walk us through maybe one or two examples of processes. You mentioned a sales process or what would it look like process like that?
Probably the process that most people are most familiar with is customer relationship management referred to as CRM, right? Where you’re managing a list of all of your, accounts or customers that you work with. You have contacts that relate to each of those. You then have, leads or opportunities that you’re tracking that may be coming through your website, that link back to a contact that links to an account. And then you have closed deals that you’ve actually won. And then,you’ve got ongoing once that happens, you have more of a customer care type role where you’re onboarding customers managing renewals those types of things. That together is a process that can range from a couple of people, to thousands of people that work inside of that process each day and that process never ends, right? That’s just the way that you do business in the organization. And that’s one of 200 processes that we help support in an organization. What’s different between that and project tool is that a project typically has a defined duration that at the end of this time or the completion of these tasks, that particular activity, that project is now done. I move to the next project. Process is ongoing. It’s the way that you run your business. So you can think of, sales, marketing, HR, or customer onboarding processes to name a few.
We do construction, real estate. We have dentists, lawyers, that work with us, just across the board. So we go across about 20 different industries in about 30 different categories of processes that we can support.
What is SmartSuite number of signups, revenue and traction?
So before we go into efficient sales and marketing, and you’ve done, perhaps, record of going from zero to a $100K per month in four weeks before we get into that can you give us a sense of where the company is today from metrics perspective, from a MRR perspective?
So we’re in the middle of a fundraise, so we’re not sharing all of the details on the ARR or MRR this month. I would be happy to do that next month when we’re done, but from a customer’s perspective, right now we’re bringing on about a 125 new accounts that’s coming in that relates somewhere in the 12 to 15 new signups that are happening, each day for us. Or about 100-125 new signups per week.
And then in addition to that, we’re seeing a pretty good increase user activity per account where an account maybe started with 15 licenses and then you see them continue to grow over time.
How does the free trial model work?
what happens in our product is we follow a product led growth strategy and new customers come in through a signup. They have a free trial for 14 days no credit card required. At the end of the 14 days if they feel like they’re not in a position to make a decision we’ll extend that another 14. So basically it’s a 28 day trial that is taking place in there. And then, customers are ready to move forward, they select a plan. We have three different plan types starting at $10 per user, per month, and going up $35 per user per month. But for some organizations, if you still haven’t made a decision and your trial time has run out, we have a free forever plan. That’s available for three users, that just has limited, usage activity. So you can’t run your whole business on it, but you can still continue to run a process or two to see makes sense for you.
What’s the ballpark conversion rate between the free trials and a paid customer?
We’re in the high 40’s right now. We’re not quite at the 50, but we’re in the high 40’s.
So assuming 15 users per account, you’re bringing a ballpark of $200 ish per account?
It’s close. Yeah, so we have some that are smaller. Some that are in the hundreds, that are much larger, but that’s a good average. That’s in the middle.
Is there any indication it’s only about six or seven months of revenue and actual active customers, but is there any indication for churn or for customers leaving?
Not really. We’re not at a point that we’ve had enough churn to be able to put a number on it. There, we have a few accounts here and there that are single users. We’ve had zero churn over 10 users in an which is great news,for us. And, we sell our product both as an annual license and a monthly.
We don’t worry about the direction that you take. We give a 20% discount if you pay annually. Most of the customers have come on to-date on a monthly basis which is better for us not seeing churn because they haven’t committed to that year period.
What are SmartSuite sales and marketing distribution channels?
So tell us about sales and marketing. You launched amazingly with LinkedIn, and Product Hunt, which brought you, I believe an astonishing pace of 4 weeks growing from zero to a $100K per month. And now what’s working and what’s not working these days?
Yeah, there was a little bit of energy that was built up for the product that was coming out from people that had just heard, what was happening, really in the first few weeks of January. And we really launched in the, I think the third week of January of this year.
And we did a few things. We launched on social media. And we use sites, like Product Hunt, to get the word out quickly. Then we did some, some paid PR where we did some announcements around the world. And, we had as many as, we were having hundreds of signups a day initially that were coming in from that, pint up frustration pint up demand that was there in their frustration, maybe with not having products to solve, the problems that customers needed.
So we really started with the boom that was out of there. And we don’t do any paid marketing, this year, so nothing that we have done to date, other than one week of paid search ads in first week of January, we haven’t done anything paidsince that time. For us, that sales and marketing strategy goes into full effect for the first time next month.
We used this first, four to five months to make sure that we were taking care of all the initial customers that were coming in. We weren’t doing a lot of outbound marketing. We were basically responding to people that found us through the website, started a trial, and then we would engage with them. But not anything outbound where we’re actually going after them, directly with any type of, email campaigns, paid search, anything like that today.
So we’ve been very reactive, up until this point.
I know you’ve done, a few partnerships and rev share. How did that work? And is that going to continue?
It is. So we have an affiliate program that allows people that have their own audience, whether they be, a blogger, a YouTuber, a consultant that can join our affiliate program. We pay them 50% of their first year revenue of any client that they bring.
So that client starts with 10 users and grows to 30 over the first year, they get a piece of that total pie for the first 12 months.
We turned that on briefly. We had almost a thousand affiliates that signed up, in mainly the early part of February of this year. We had so many that we didn’t promote it anymore. We wanted to make sure that we could take care of all these coming in. We hired just, two weeks ago, a VP of product enablement.
That’s gonna cater to that group of people to help them understand. Basically these are creators, that are, freelancers that are doing consulting as well as affiliates that are just sending business our way via a link that we track. And then we have a second part of our partner program, which is our solution provider program, which is meant for larger consulting organizations that have practices around products like SmartSuite, where they can bring us in their portfolio and they earn a 40% commission on the first year and 30% commission on the second year. And why that’s interesting to them is most accounts do the biggest part of their upgrades in year two.
Once they’ve validated the use of product in the first year, you’ll see a pretty good uptick. It’s super encouraging that we’ve had such a volume of people that have reached out in such a short amount of time.
So is it fair to say that the ballpark of the yearly revenue from customers, maybe putting aside the huge enterprise deals is around 5 to 10 grand per year. So you are happy to pay half of that as a customer acquisition cost, is that fair to say?
It’s close. It depends on so we have some affiliates that are sending leads our way that are really good with two or three user counts, like their audiences, mainly freelancers and just really small teams. And then we have affiliates that are more established that are bringing in the larger accounts. So we cater to both, but obviously the people that are bringing in the 20 to 50 user accounts, are doing really well, compared to the one or two. But if you’re running a blog or a website and have good traction, and you’re just looking, to add us to the other list of affiliates, maybe that you’re supporting and just have some monthly income, it’s nice to have even the three to five users, up there.
Would you be happy with the return on sales and marketing cost being 6 months or would you also be happy with it being 12 months or even 18 months?
I would be happy with 12 months for sure, yeah.
And assuming the churn remains close to zero, then you would also be happy because customers are likely to stay even beyond three or four years. And then the return is going to be on the long term.
Exactly. Yeah, we know that our churn won’t stay like it is now forever. Like it’s gotta come back to a reasonable number, but we’re super excited that we’re maintaining this after five months, the way that we have so far.
Jon Darbyshire’s mindset overcoming challenges
Walk us through some of your challenges, getting to this point, even throughout your entrepreneurial challenges. Even through your previous venture, going through where you are today. Talk to us about, what’s hard in doing this and creating a product and making income out of a product.
Yeah, I think for us personally, with SmartSuite, it was just the amount of time that it took. It was such a big idea and such a big lift to build the platform that we wanted to build. It just took a lot of time to be heads down to make that happen. And we just kept telling ourselves, just stay focused.
It will happen. But if we don’t stay focused, we’re never gonna get there. And our challenge was, it was a long haul to get through that two and a half years of just a lot of hours, a lot of thought just you’re making lots and lots of decisions every day. It’s just wearing, on your mind.
But once we launched, now in the SaaS space with the project management and process management tools, it’s a category that has quite a few players that are in that space. Our particular, item that we’re focused on is how do we differentiate ourselves from those other players in a way that small customers and large customers can understand, like if we’re competing against, Monday, ClickUp, Asana. There’s a story that we can tell to customers where they say, we’re very happy with ClickUp, Asana or Monday. Currently, but maybe we have a few things that we can’t do with those products that we’d like to be able to do. They begin to use them to maybe manage processes that they’re not really meant for. And we can say that’s where we excel and what we find and what the story that we want to tell is now that you’re managing us for those processes, you don’t have to pay any more money for all those same users.
You can manage all the projects at the same time. Figuring out how to tell that story in a way that resonates with a lot of those players, is important to us.
And then just finding a way to get the word out. in general, we’re not using the traditional, page search, types of elements.
We’re a small company. We’re trying to make sure that we’re cognizant of cash. So we use social media a lot. We tell a lot of stories. I like to do podcast. Gives us the chance to just, talk about who we are and what we believe in and why we’ve built SmartSuite that’s there.
And, the biggest single, lead gen engine that we’ve had has actually come from storytelling through podcasts and through some of the storytelling and social media, for us. So we’re finding those to be great channels, initially even more so than like Product Hunt or G2, one of the product comparison sites.
Would you recommend other entrepreneurs to go and get interviewed as much as they can in other podcasts?
I think so it does a couple of things, right? It helps you begin to refine your story and do a better job of articulating the vision of your company and the problems that you solve. But it also helps personalize, maybe your story with people that are interested to not just in your product, but maybe the journey of where the product’s at today.
And maybe a little bit about the vision of where you’re headed. It helps you, have time to pull all that together. And not every potential customer wants a demo or wants to take time for you to have a Google Meet with them. But they’re happy to consume, a podcast, whether they’re on a run or a jog or working out something like that.
What are Jon Darbyshire’s books recommendations
I have a couple books that I recommend to pretty much every entrepreneur that I have the chance to work with or mentor, through the investments that we’ve made. The first one is a book by Malcolm Gladwell called Outliers. I don’t know if you’re familiar with Outliers but what Malcolm Gladwell did.
And this book maybe 10, 12 years old. He wanted to understand why certain people were successful in their particular crafts. And he didn’t look at how much money they made and you know, what they did. He was focused on what was the journey that got them to the point that helped them be successful.
And he came out with a couple of kind of key points that a lot of people talk about. One is this concept of 10,000 hours in your particular craft, before you can master that craft and become an expert. And the second is opportunity, right? And when you have those two things at the same time, it leads to some pretty extraordinary things.
So he goes through Bill Gates and Steve Jobs. He goes through the Beatles in their early days. He goes through hockey players in Canada, which is fascinating, to say in that particular story, he found that, when you’re seven years old, there’s a difference between somebody that was born in January of that year.
And somebody that was born in December almost 12 months difference in the age of that person. And what they found was that when they would have seven year old teams, the kids that were almost a year older were bigger right earlier on. And they made the all star teams, they got the better coaching and it all started with all these professional, hockey players were born within this three or four months period of time and he couldn’t figure out why.
So he traces it all the way back and tell us the whole story of how that happened, but going back when they were seven, eight years old, when it first started. So if you’re an entrepreneur, it’s just a great book to begin to think about do you have 10,000 hours? Are you an expert in your field?
Are you seeing opportunities in front of you that you can take advantage of? If you’re not, are you finding ways to create more opportunities for yourself to take advantage of the craft, that you have? And then the second book is called Hug Your Customer. by Jack Mitchell.
He sold suits in New York, out of his car to get started to IBM folks in the city and eventually built his own store called Mitchell’s and it became the highest grossing per square foot store of any retail, establishment at that time it’s based in Connecticut.
It was all about the way that he profiled customers when they came in the door. So he taught his sales team
When somebody comes in the door, I want to know who you are. I want to know your age. I’m gonna talk to you about your wife, your kids, your dog, like I’m gonna make it really personal.
What the people didn’t realize is they were running in the back between the conversations on an as 400 and they were typing in all this information. So that the next time the customer came back, they were ready. Like they looked at the profile, they pulled clothes for them. So they really changed the experience of the customer.
And he called that hug your customer. That particular journey for him was so inspiring to us in our company, Archer technologies, that we actually trained every person in our company on that book. They had to read that book. We actually would sit down with the new hires and talk through the strategy of understanding.
Actually hug your customers, take care of your customers, and that’s what will help you grow your business faster than product features.
What are SmartSuite’s opportunities?
Let’s talk about opportunities. So your fundraising, can you talk to us through the rationale of fundraising and are you looking for funds or are they fighting for you?
It’s a little, both. I personally had set a goal that my wife and I would put in about $15M to build the core of the product and the platform. We wanted to make sure that we were launched and had customers coming in.
So as we did go and look to raise, venture funds that we could show somewhat of a track record and projects, what the future might look like, for the company. So we’re in what we’re calling an early series A, so we’re right at the, pre-revenue, we’re not really in the growth yet.
But why are you calling it pre revenue?
We’re not in that $10M to $15M range of revenue. After four months that you would see for a larger traditional series A.
But you are beyond the one million ARR run rate, right?
We are for sure. Yeah but we’re not at the high end, is what I’m trying to say.
So we’re that early series, we have really good numbers on the low churn rate that we talked about, the customer acquisition numbers are tracking up and then we can see the users per account are continuing to grow in existing account. So those are three areas that we’ve really, begin to focus on.
So what we’re looking for, a couple of partners, to come in this fund, a lead and maybe a secondary, that have expertise in product led growth and SaaS that can not just provide money, but can help us actually think about how to grow and scale the business
over time. So obviously we’re talk, all the big guys you would consider are in there, but there’s also a number of smaller guys that have great experience that, we’re in discussions with right now.
What’s the ballpark of round size that you’re looking at?
In the ten million range.
You were looking to sell around 25% of the company, ish?
No, a lot lower than that.
Are you looking for leads, acquisitions? What else are you looking for that you wish would come faster to your table?
Yeah, I think, we’re always interested in leads. And so if anybody has opportunities to provide us with leads, we would point you directly to our affiliate program and say, we’ll pay 50% of the deal value coming in. And we’re trying to make it super easy for people to say, Hey, that’s a great opportunity for everybody involved.
And then we’re interested to have some, one off discussions, if that, particular, commission structure doesn’t work for you, we’re open to those discussions. But anything that helps bring us leads and just gets the word out. Our product is available in 15 languages, so we’re not just a US focused company.
So we’re as interested or more interested in, outside of the US as we are on just more the English speaking US, folks. And then,we’re interested in consulting partners. We call ’em creators. So we’re interested in people that want to provide services back to our customers
know our product, get certified in it really a career out of, your own book of business, that you have.
We want to our VP of product enablement that just came on board, that his sole job is to work with companies, to help them understand how to be more
efficient, how to build their business and how to have SmartSuite is either the core platform or one of a core off the shelf products that they specialize in.
What about technology partners or acquisitions? Are you planning to open kind of a marketplace or API or partner program anything like that?
We do, yeah. So we have a technology partner program, that’s in place to date. You’re gonna see an announcement here in about six weeks. More formally on the marketplace that we have. We have partners that are using our platform to build and configure what we call solutions, which are really processes that they can, offer in the marketplace back to anyone.
And they can choose to offer those for free, or they can put a price tag on those. So maybe they say, this particular process is $30,000 and it comes with this type of services to implement it. And the SmartSuite platform is what we use, to manage all of this that’s there. We’re also interested in discussions, on the acquisition side on technologies that, enable our platform to be a little broader.There are products like Stacker and Posey that allow you to build custom, like client portals and things on top of products, like SmartSuite. We’re interested in some of those younger companies that may be in a position where they would think about an acquisition with a company like SmartSuite and then we’re also interested in partnerships where those types of organizations just want to use us to consume our data, to actually help build those client portals. And that’s of the biggest requests we have from customers today is the ability not just to use SmartSuite to manage the work of their team, but to have all of their customers have a way to come into the product and with maybe a streamlined version of the product and feature set to look and see what work is being done for them. And we do support that currently, but we don’t support that with custom websites.
SmartSuite summary in a nutshell
John Darbyshire founder and CEO of SmartSuite business operating system, bringing everything in one integrated place from tasks to manage a process with over 200 business process templates, beyond $1M ARR about to raise ten million series A round. John, thanks for telling your product income making story!
I appreciate it. It was a pleasure. Thank you very much.