[MUSIC] On the marketing side, it was very specific to if we spend so much on paper click advertising or on newsletter advertising or on different types of advertising, different types of marketing efforts, will we see the return. And even at the hiring people in our marketing department, it first started with hiring a college intern to work a couple hours a week, that I'd say, you need to be able to pay for yourself, so these projects that I'm handing to you we need to know that they are actually bring in more customers. And that led to okay, I'm going to hire my first person to manage SCO and PaperClick and I said to him, here's the level we're at. You've got to be able to pay for yourself within six months by showing that you can double where we're at which would effectively would pay for your salary. And so as we made each hire samething. One more thing on support, although it's a little bit different in that we would hire support and then know that if we couldn't get back to customers within a day we would need to hire another support person. Sales people, again really looking at the metrics of how much revenue they're bringing in. Versus how much they're being paid. And we are able, the sales team started growing more on a commission basis because we didn't want to pay a lot for a base salary. But once we saw the model were they're really just was only inbound leads, no outbound on sales as leads were coming in, or people who wanted to use the service. They'd sign them up. And what we ended up doing was actually shifted away from the commission model at one point because we realized that we really wanted people who were more empathic and able to provide good information, not being pushy sales people. because we got a lot of feedback from competitors in the industry had commissioned salespeople that their salespeople were being too pushy. So we went to the opposite way. And that saved us a lot of money because we didn't have to pay out anything in commissions or overpay salespeople in commissions. And so that also enabled the company to become more profitable and what we heard from customers is they ended up going with us because the salespeople from our competitors were being too pushy because they are highly commissioned. By the time we sold the company we were 70 employees and our marketing team I think was maybe ten people. But each new hire onto that marketing team was a similar conversation. You gotta figure out how your position, your role, produces ROI, otherwise we're not going to, it won't be about you, it'll be about this position whether we're going to keep this position or not whether it produces ROI for the company. With companies that I've seen that have been heavily funded up front, there isn't that equation usually, put into place because they hire and they have all the money that they can hire with, and there isn't that economic ROI equation for each particular employee or person. So by the time we got to ten million in revenue, we were doing about $4 or $4.5 million in profit which is net bottom line profit. >> Pretty nice profit margins? >> 40% profit margins where our competitors who were some of them were much bigger than us, weren't doing any. They're still losing money, still raising money, so we had a great stability to what we could do. It also enabled us to be more, I don't know the words generous or have more fun, provide more benefits to our employees because we're so profitable. We would do things like company trips to Mexico with everyone and we decided to make it easier for everyone to get in in the morning. So we had a chef come in to cook breakfast for everyone in the morning, so it made their mornings easier. But with that kind of cash flow and only two owners and no outside ownership we could do things that were really helpful to the employees. And they also had a much more stable environment. We didn't have this up and down, where we raised a bunch of money, hired a bunch of people, we were running out of money, so we had to let go a bunch of people. I've been involved in those companies where I've seen the employee base go up and down, up and down. It's very. >> Very hard on the culture. >> It's very hard on the people. And so most of our employee, the common theme with our employees was that they work there for a while they say, this is the best place I've work. And some of our team members were in their 50s and they work a lot at different places but that was the common theme. And that also, that carried over into how happy they were at work was how happy they were when they were helping customers. >> [LAUGH]. >> And customers would say this that you guys are great. You seem like a really happy company. I love working with you guys. Whereas we've had plenty of customers come from competitor saying, yeah. It was really hard dealing with the company, it's a constant turn over employees. And they felt like, it felt like they are working with their family. Business which it did feel like a family in the company. >> So you've proven that SaaS business can be built this way. And you've proven that multiple times. So question for you then, why then do so many of today's inspiring entrepreneurs who want to build a SaaS business think the first thing they have to do is go get some capital? >> That's a good question. You should ask them. [LAUGH] >> I know, I know. But are they mesmerized by the lure of VCs? What is it? >> I have the conversation all the time as a mentor at Techstars. I give a talk about customer funded businesses. And I talk to Many people say, hey you've already got paying customers rather than going out and raise money, go out and get more paying customers. And there's a combination of things that I see or hear from them. One is there's sort of this excitement level that they can be validated by people who invest in a lot of different companies like theirs and so there's this validation of getting a big check from folks like that. That's one two, there's really a legitimate fear that if I take a wrong turn, I'm going to run out of money and not have a chance to really make this thing work. And so money in the bank enables them to relax a little bit into not being as fearful about, am I going to be able to connect the dots. It is a harder hurdle up front to create a customer business, no question about it. >> Mm-hm. >> The benefits on the tail end I'd say, far away. The burden of that hurdle. But when you're at that hurdle of, I don't know if I'm going to be able to get enough customers and having the fear of that. And thinking about quitting your day job to do it, it makes it a lot easier it’s easy as human would like to take the easier route, sometimes meet her low seems like too much to people I think lot of times. >> Sometimes, I see my students come to me and say, well here's the business I want to build. And I'm trying to raise money and I'm having a hard time doing it. And I ask them about their team. And I ask them what they're going to do. And they say well, I'm going to manage this. And another guy's going to manage that. But I don't hear anybody who's actually going to do this stuff. And I think they need to raise money to find people who are going to do the doing. >> That's right, and I. >> Do you see that? >> Yeah, I do and I think in the tech business, all my SaaS companies, I have partners who built the original code. So I'd say my first recommendation is, yes find someone that you think has that you could be business partners that can build a code if you're not one of the people building the code. If you're one of the people building the code, then find a partner that can really run the sales and marketing, and the other side of things. (MUSIC)