As we announced in mid-November; after six years of bootstrapping our way to sustainable, profitable revenue growth, we decided that it was time to accept outside investment to fuel the next phase of our development. We are excited to be working with leading venture investors TenOneTen Ventures and Freestyle. Over the past few years we have learned a few lessons that I thought would be useful to others who are starting out on their entrepreneurial journey or otherwise working to scale a SaaS business without outside capital.
1. Use Disruption as a Catalyst
We were originally focused on the emerging market for bluetooth beacons and micro-location. Coming into vogue around 2014, beacons promised to notify smartphone users about information or offers tied to locations in their immediate proximity, a kind of primitive augmented reality marker without the visual flair. However, businesses and consumers mostly shrugged at the functionality, which led investors to do the same in terms of attracting funding.
But sports teams had been experimenting with beacons as the technology provided a way to engage fans at their venues. Supporting that functionality raised our awareness of clients’ needs to facilitate sponsorship and contextual in-venue content in apps.
2. Find a Pivot Champion
As our initial funding discussions floundered, we were watching every dime as we found the cheapest route we could into Texas for a make-or-break meeting with our biggest client. Things were looking pretty bleak when the meeting concluded and we hadn’t thought the pitch had gone well; we had discussed the beacon functionality and dynamic content insertion, the two pillars of our platform. However, the client called us to let us know that, while they valued the ability to flexibly build, deploy and optimize native app experiences that Judo delivered, we should kill the beacon functionality.
3. Focus on Product over Services
We heard the message and understood that we had to shift our priorities to meet and service our customers’ needs. Investing in long-term client relationships yielded low churn; this became critical to preserving financial health when we had limited sales resources. However, while there was often a temptation to do whatever it took to meet client requests, we stayed focused on building a product and avoided becoming a consultancy. We also resisted pushes to become an adtech vendor at a time when the idea of native advertising had some currency. Keeping a disciplined focus on product is critical to building something of strategic value, something that has a chance to achieve scale.
4. Find Low-Cost Centers to Build
Of course, another key way to control costs when bootstrapping is to base (or move) your business to a geography that offers lower costs for space and talent than the Bay Area or New York City, particularly if the government offers subsidies to entrepreneurs. Toronto has proven a great home for us. We’ve leveraged government incentives as well as dipped into the great engineering talent from local universities. When Covid forced so many businesses to turn to allow employees to work from home we committed to being fully remote. We put in place platforms to support remote collaboration and many of our team jumped at the chance to acquire more comfortable homes outside of the city. As we seek to scale our engineering and go to market orgs we are recruiting globally and now have staff in Poland, the UK, and the US.
5. Penetrate a Vertical
Our early success among sports teams had a secondary benefit, the buzzy nature of management and IT pros who converse off the field as the players compete on it. After making our pivot, word spread among personal connections around the leagues that our solution delivered its promised functionality. Word-of-mouth advertising allowed us to acquire customers cost-effectively and helped us fend off many competitors, some long-gone, that spent big on marketing and sales.
6. Be Confident in Your Value
It is always tempting to compete on price and terms to get deals with entities that are much larger and obviously have substantial negotiating power. However, this is a slippery slope, particularly in an industry where buyers exchange notes on vendors and move around. We negotiated deals confident in the fact that we were top of our buyers’ consideration set and had a clearly differentiated technology that could command a premium. Many of our deals are multi-year as clients have confidence in our ability to continue to fulfill given our disciplined approach to sales and pricing. Don’t underestimate your negotiating power!
Practices such as focusing on product, listening to our customers has allowed Judo to grow into a strong, profitable business with a low cost of customer acquisition and low churn. However, as we find new customers in verticals such as financial services, we require more investment to realize the potential of these large new verticals. Entering a mode of rapid spending that typically follows an investment round represents a bit of a culture shift from the financial conservatism bootstrapping requires. That said, while we will put our investors’ funds to work, our experience will help us do so in a way that’s focused on generating cash, not flash.