How We Built Proposify And Grew To $7M ARR
Hello! Who are you and what business did you start?
I’m Kyle Racki, CEO and co-founder of Proposify. Proposify is an online business proposal SaaS (software as a service) company that streamlines the process of creating, sending, and closing proposals, quotes, contracts, and other sales documents. We do this by making the process of creating documents faster and more efficient, and by allowing sales teams to send out beautiful, professional sales documents and get them signed.
We currently serve over 8,000 customers, have 75 employees based in Halifax, Nova Scotia, Canada, and do over $7M in annual recurring revenue (and growing).
What's your backstory and how did you come up with the idea?
After high school, I studied graphic design in college and began working in agencies when I was 19 years old. That’s when I first noticed how time-consuming writing and designing proposals was, and I thought about what a solution might look like. This was in 2005 when SaaS was still relatively new. My vision was a product that was kind of like InDesign, which designers use to create professional layouts, but with the productivity and collaboration of a tool like Basecamp. I shelved that idea for many years before making a serious attempt to build it.
When I was 24 years old I left my full-time job and went out on my own as a freelancer, and shortly thereafter invited my friend and colleague, Kevin Springer to join me and create a web design and marketing agency called Headspace. We ran the business for five years, and that first business was where I made a lot of business mistakes and learned some painful lessons.
The key lessons I learned running the agency were:
- Specialize. Be the best in the world at one thing.
- Don’t depend on local clientele.
- Cash flow is king.
- Don’t become the bottleneck in your business. Set the vision, set the direction, build the team and departments, and hold them accountable to deliver.
Eventually, we decided to focus on products, and after trying out a few ideas, we came back to my old proposal app idea, realizing that there was a lot of pain associated with proposals with virtually everybody we talked to.
In 2013 we launched a minimum viable product to market, which allowed us to begin learning from our users and iterating on the product. We decided to sell our agency, raise some seed capital and focus our efforts on Proposify, which we did in 2014. Four months later, we began to hit product-market fit as our product started resonating with our target audience at the time—digital agency owners. We went from having about 20 customers in September 2014 to nearly 200 by the end of that year and 1,600 a year later.
I wrote about my journey, which included escaping a doomsday cult, dealing with personal grief, doubts, personal loss and tragedy while trying to get Proposify off the ground, in a book this year, called Free Trials & Tribulations: How To Build A Business While Getting Punched In The Mouth.
Take us through the process of designing, prototyping, and manufacturing your first product.
I’m not a programmer, so I needed to find a skilled JavaScript developer who could build the crazy idea I had of basically rebuilding InDesign in the browser.
It turns out all these years later that creating software that allowed for that much freedom and flexibility was a double-edged sword.
You begin a business by focusing on an area of pain in a market and then talking to potential customers in that market about their pain to see if it’s something worth solving and whether they’ll pay to have it solved.
On one hand, it allows Proposify users to create beautiful documents and that allowed us to stand out from the competition who are more rigid and limiting in what you can produce.
On the other hand, it inherently makes our product more complicated to learn for basic users, while power users expect that since we’re similar to InDesign that we can do everything InDesign allows—which was never the point. Creative flexibility is one of our biggest points of differentiation as we work to make it simpler for non-technical users to design and edit their documents.
All that said, the process of creating the product is ongoing and never finished. We currently have a team of over 30 people in product, engineering, and QA who build new features and functionality in Proposify. We have sophisticated processes around sprint planning, research, testing, merging, releasing, etc.
But in the early days, it was just me and Jonathan, our CTO, working on the product. I would talk to customers, he and I would brainstorm ideas on a whiteboard, I would design the mockups, and Jonathan would code. Rinse and repeat. As we began hitting product-market fit we added a few new team members to help with coding, marketing, and customer support.
Describe the process of launching the business.
I like the Steve Jobs quote: “You’ve got to start with the customer’s needs and work backward. You can’t start with the product and try to figure out where you’re going to try to sell it. I’ve made this mistake probably more than anybody else in this room. And I’ve got the scar tissue to prove it.”
Our process was to try and build something users wanted.
You begin a business by focusing on an area of pain in a market, and then talking to potential customers in that market about their pain to see if it’s something worth solving and whether they’ll pay to have it solved. Once you validate your idea, build a rough, ugly version by any means possible. Then launch it as soon as possible.
After that, iterate as quickly as possible, and sell the shit out of what you’re building. That really is the only way to make it work. Revenue solves almost everything. If you have revenue you’re not at any investor’s mercy.
There is way too much focus on raising investment dollars, particularly among startup founders. Many inexperienced founders think that simply by having a good idea they can approach a firm and land seed capital to go out and begin. Unless you’ve walked away from a huge exit recently, that’s pretty much impossible.
Since launch, what has worked to attract and retain customers?
When we sold to tiny businesses, our primary growth channel was organic SEO to attract people looking for content or proposal templates, pushing them into a trial, then nurturing them through email and Facebook retargeting.
Your company will take off if you’re selling something people want, you work hard enough, and you over-deliver on customer service.
Since moving up-market, that approach isn’t as effective, so what’s working better is a combination of content, ads, webinars, sponsoring events, and direct sales.
Here’s how: We have three core buyer personas we sell to, so everything we do now is viewed through the lens of “is this for Marketing Micah, Team Leader Ty, or Efficiency Emily”?
For example, we’ll use LinkedIn ads and target the three buyers with their own unique ads that go to unique landing pages for a webinar. But they are all signing up for the same webinar, which is on how proposal software can solve their unique challenges.
We use this as a way to test and tweak messaging and positioning.
Then after the webinar, we look at the leads and figure out how many attended and then converted to a demo afterward. Or how many didn’t attend but still converted to a demo after sales reached out.
We’ve done the same thing for events. The messaging at a marketing conference for industry X recently did very well, whereas the messaging didn’t resonate at a sales conference for industry Y, so we use that to inform future calls-to-action.
In this way, the marketing and sales team are really becoming one big team that all work together to drive demand.
We also put a lot of effort into building good case studies.
Here’s an example of a case study.
Here’s a blog post we published about how to write case studies.
Being listed as a leader on G2 Crowd is very helpful because most people depend on a social proof when considering changing their existing processes and tools.
For retention, there are two keys:
- 1. Build a great product that solves your customer’s pain.
All the sales and marketing in the world doesn’t matter if customers don’t love your product.
What separates successful startups from unsuccessful ones is that the ones who make it usually are obsessive about talking to their users and measuring what gets used.
Unsuccessful companies make assumptions about what users want.
When you find a great new product you often think: “I’ve wanted this forever! I feel like they made this just for me!”
If you get that kind of feedback from new customers, you know you’ve nailed product-market fit.
For larger customers, the CS team will be directly responsible for onboarding, retaining and expanding accounts, and are one of the biggest growth levers in the company.
How are you doing today and what does the future look like?
As a startup that raised venture capital (2018), we have increased expenses ahead of revenue to fuel growth, so we aren’t currently profitable. Our growth slowed slightly in 2018 (~50% YoY) as we recalibrated to focus our product and positioning on mid-market customers who have larger sales teams. This year our growth has begun to take off again as we approach $10M in annual run rate.
We target companies that have sales teams of about 25-50 reps, an established sales process, and usually some specialized functions within, such as sales ops and enablement. To do this, we have had to build our own sales team and processes and experiment with other marketing channels, like LinkedIn and webinars, which are working well.
We invest heavily in our product to better serve the needs of our customers and be the best in class. Our team has been focusing on making editing documents smoother, building better workflow and automation into Proposify, and more tightly integrating with Salesforce—which is where our customers live.
Through starting the business, have you learned anything particularly helpful or advantageous?
When you start a business you have to be moderately good, or at least capable, at everything; Sales, marketing, finances, operations, customer service, and the product/service you sell. Your company will take off if you’re selling something people want, you work hard enough, and you over-deliver on customer service.
Aim higher than you are right now. When I started out I envisioned what I wanted but second-guessed myself, thinking it was too lofty or ambitious, and that slowed me down.
Scaling a company requires a completely different set of skills than it did to start one. You have to think of the business as a machine and build the people and processes required to improve the machine. Founders too easily become the bottleneck and don’t trust their team to function without them. You have to become a good coach for your department leaders, but let them run their teams and hold them accountable for hitting their numbers.
What platform/tools do you use for your business?
We use a TON of tools across our company. As we’ve grown we’ve moved into using more expensive, enterprise solutions, like Salesforce, Marketo, Jira, and Gainsight. We also use Intercom for customer support.
As CEO, I don’t spend a lot of time in most of these tools, but I check on the overall health of the business in ChartMogul. Outside of that, if I’m not in meetings, most of my day is spent in Slack, email, and Google docs.
Lately, some of my favorite tools our team uses are Productboard for managing customer feedback, and Chorus for listening to calls our sales and CS people have with leads and customers.
What have been the most influential books, podcasts, or other resources?
Early on when we were starting Proposify I found Lean Analytics extremely helpful in understanding what to track at the stage we were at in the business (side note: the co-author, Ben Yoskovitz later joined our board of directors).
From Impossible To Inevitableby Aaron Ross and Jason Lemkin was helpful in learning how to build a SaaS sales team. The Hard Thing About Hard Things by Ben Horowitz is helpful to come back to when I’m going through a tough time in the business. Radical Candor by Kim Scott gave our team a framework for giving and getting feedback from our employees while keeping our humanity.
Advice for other entrepreneurs who want to get started or are just starting out?
Aim higher than you are right now. When I started out I envisioned what I wanted but second-guessed myself, thinking it was too lofty or ambitious, and that slowed me down.
Get better at sales and marketing. When you’re a big company you can afford to hire specialized talent, but you’ll never get there if you can’t sell to the first customers.
Think about what kind of company you want to create and start shaping it from day one. The first group of hires will define your culture forever. Cultures rarely change once they’re established.
Become a good manager, and train your managers to be better managers. Hire talented people, then give them the tools, direction, and guidance to succeed. You’ll be amazed at how much of being a CEO is simply removing obstacles for your team.
Level up continually. Level up your health, your knowledge, your network, and your mindset. You have to level up if you want to break through the next plateau.
The best time to plant a tree was 20 years ago, the next best time is today. The longer you wait to get started, the higher the risk it will never happen.
Are you looking to hire for certain positions right now?
We’re generally always on the lookout for product or engineering talent, but there aren’t any open positions at the moment.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
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