Bootstrapping millions in a crowded B2B SaaS with Tom Evans, COO of EmailOctopus

We hosted Thomas Evans, Chief Operating Officer of EmailOctopus for an Ask-Me-Anything session over our slack community on 26th July.

Best excerpts from the Q&As are below:

Q: How are you looking at your unique value prop for?EmailOctopus considering the fact that the space is tough to be in. What were the top 3-5 value prop points that you choose for the tool and why specifically them?

A: So EmailOctopus started out as a side-project to a side-project initially. Born from the want to use Mailchimp but it was too expensive at the time. It was a stupidly simply product where users uploaded a list of contacts, and sent emails created in a rich text editor to that list. So our only USP for the first few years was price.

As we’ve grown we’ve chosen to focus on the USP of ‘accessibility’.

For us that covers 3 things:

• Price. We’re still around 50% the price of our competitors with an industry leading free plan.
• Simplicity. As the incumbent SaaS businesses grow they build out their feature set, which means that a lot of the original email marketing platforms are now all encompassing e-commerce and marketing behemoth which has a large learning curve for lots of people and does a lot more than what they need. We focus on email marketing, making that as simple as possible.
• Customer support. I think when starting out this is an easy differentiator for any bootstrapped business. We offer personal live chat and customer support, round the clock, to all our customers, whether free or paid. The cost of doing this is actually relatively low to the value it brings our customers.

Q. What is the main challenges in building outreach solution?

A: We’re actually not really an outreach solution, primarily we focus on permission based email marketing. That said, challenges which apply to an outreach solution, do apply to us. Our biggest challenge is balancing delivery of emails with growth of the business.

That essentially means monitoring the metrics, content and quality of our customers. It’s not easy turning a $3k per month client away from the product because their emails are damaging the reputation of the service. (reputation meaning the reputation we hold with Gmail/Yahoo/other ISPS)

Q: What about the competition? I know at least 10 good tools but still a lot of people creating more and more similar tools.

A: We’re in a space where there are around 100 competitors, I’d say. And as you say, more crop up everyday. This means the differentiator we build has to be not only our price/support/simplicity, but in order to build a moat we need to establish the brand and our positioning.

It’s why we spend hours on the little details and obsessing over the copy on the website, simplifying it and ensuring it’s ‘on brand’.

I like to think, for a smallish team we have a brand, logo and website which stands up against many of our much larger competition.

Q: Really curious about your main product development learnings that you faced while building a solution?

A: The largest product development thing I like to share, is around not always building simply what your users ask for. There needs to be a vision for your product which needs to be cohesive with your brand positioning, direction, and messaging.

It is why I steer away from public roadmaps or the possibility for users to vote on features.

It’s our job to understand their problems, but they need to be assessed and fed into our priorities balancing them against the direction we want to take the business.

Q: How important is the role of influencers in EmailOctopus growth? I remember Harry dry and Avinash Kaushik both recommending Email Octopus at one point in their respective newsletters.

A: When Harry Dry came on board it was in 2019, when we were already at $60k MRR. So the snowball was already in motion. He’s clearly had an impact but I wouldn’t say it was crucial, it’s just another marketing channel. I do love that the sponsorship of Marketing Examples only lasted 6 months but people still associate us two together though – a great investment which came about as we walked home from an Indie Hackers Meetup together one evening hear in London.

Q: What has been the most reliable channel of growth for EmailOctopus?

A: 90% of our acquisition comes through non-attributable channels. So we cannot track the main channel, but it’s likely from communities we participate in, influencers, and little shout outs at the bottom of users newsletters. I think that’s why it’s important to build a memorable brand – the little Octopus logo helps us there – and in a world where every SaaS just seems to add LY on the end of a verb our name stands out.

Q: What is the top advice you give to founders just starting their business?

A: Surround yourself with people who have done what you’re about to do. When we launched back in 2016 we shared an office with 2 bootstrapped startups who had launched around a year prior (Ticket Tailor and Payhip). I think it benefitted us both, they had renewed enthusiasm and learned new tricks from us. They pointed us in the direction of great marketing channels (at the time Quora was the one) and helped introduce accountants and navigate the world of Tax!

Q: Can you share some inputs on churn for EmailOctopus? How was it during the early days? Did it ever get to the point where you considered some serious changes to the product?

A: Yeh absolutely. Churn has always been on the high-side, between 5-10%. Some of that is by virtue of the industry, we serve a lot of SMBs who are very similar to the B2C market in their behaviour. The importance with churn is of course to understand it. We do that through a survey (built in-house) which asks users why they’re leaving us.50% of our churn is from users who are “Taking a break from email marketing” That might sound like there’s nothing we can do, but there is and we are making changes to reduce this. One example is the effort we’re investing in overhauling our automation product. If we consider the reason that people are taking a break it’s often because they have 100 other priorities as a business owner and they just can’t spend the time building emails right now. If we can deliver an awesome experience which allows users to gain value from the product, without actively logging in and needing to build an email or hit send on an email, then our hypothesis is that they’ll remain with us and not cancel.

Q: Could you please share some insights about your user flow: How much does the free plan help you attract paying users? Do you have many users who sign up for the free plan and then don’t come back to the platform? If so, how do you deal with this?

A: I believe every low-touch SaaS (which ours is) needs either a free plan or a cardless free trial. That comes from previously working at companies where I needed to go through 3 levels of authorisation simply to get a business card to use. It meant I often didn’t trial products which I wanted to, and is one of the reasons why I attribute massive corporations like NPR and PWC using us. Ultimately the initial decision to try is made by an individual so let’s make it easy for that person to try us.

~95% of our paid users sign up initially to the free plan, which I suppose is no surprise. It’s a low risk way to see the product.

In terms of people signing up to the free plan and not using us. Yes, we have thousands. If I look at the last year, only 38% of our free plan users who signed up have gone on to send an email.

To improve that figure we’ve built out onboarding sequences which send different emails depending on what actions have been carried out (or not). But ultimately, because we make it so easy to sign up we’ll always have these users.

Q: What are one or two things that you would have changed along the way now that you look back on EmailOctopus' growth?

A: I would have hired someone to take support off our hands much much sooner. We waited around 3 years to do that!

It's a distraction from day to day work and while it's great to keep in contact with your customers ultimately it's an easy role to outsource and will instantly give you breathing room to think more strategically as well as take a holidays and weekends off! V easy to burn out otherwise.

Q: What is the best way to attract people and how to create something they want to receive by email?

A: I think it's really easy to do this still and I haven't seen a widespread movement away from doing so. Prior to EmailOctopus I was at a flash sales business which required your email address just to view their offers - there were over 50m people who chose to do so.

I think the key as always is to set expectations to your users of what they will receive and how often they'll receive.

Also respect unsubscribes and the inbox. If users are not engaging with your emails anymore, reduce the amount of emails you're sending them. And make it easy to opt out.

Q: Less and less I want to receive something in my email and I think a lot of people feel the same way. (or not, I don't know) How do you see this issue? Is it getting harder?

A: It may surprise you but we regularly get customers getting in contact, forwarding on messages from their subscribers, asking where their daily email was. The inbox is a place where a lot of people digest the things that matter to them. Make your emails matter to them.

Q: How do you avoid burnout esp working in a bootstrapped SaaS business?

A: The key is to understand what is causing your stress before it becomes anything bigger. We've made running the business as stress free as possible which means hiring a team to handle a lot of the day to day stuff allowing us time off and to think. But we've also never persuaded growth to the extent where we find it scary, that means staying profitable on a monthly basis. Since the early days our outgoings have never exceeded incoming.

Q: What are the future plans for Email Octopus now that you have crossed the Million dollar threshold in annual revenues?

A: This is actually what takes the time and energy atm. We could, theoretically, just stay as we are and let revenue grow. Or we could just to be aggressive and spend some of our profits. Or we could sell for a multiple of our ARR. lot of thought going into that right now.

Q: Any tips on hiring?

A: The trickiest thing you can do! We've mainly hired through recommendations. But when we have hired outsiders it's having a set out and assessed process with a piece of trial work. We've mainly hired through Work in Startups (a Uk based job board).

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