How We Started A $550K/Month Wireframing Software Company
Hello! Who are you and what business did you start?
Hi, I’m Natalie Gould the CFO at Balsamiq. First, it’s important to note I didn’t start our business. I’ve been honored to help build it with my colleagues for the last soon-to-be 10 years.
We make Balsamiq Wireframes (formerly Balsamiq Mockups), a low-fidelity wireframing tool for designing software. My long-time friend Giacomo “Peldi” Guilizzoni founded the company in 2008, and I joined the team as employee six in 2010. While Peldi initially intended Balsamiq to be a one-person business, our team has grown today to 33 people, located in two US states and four European countries, with current revenue of about $550,000 a month.
We sell our software world-wide in electronically downloaded versions, subscription-based Software as a Service (SaaS), as a standalone tool, as well as integrations with Google Drive and Atlassian’s Confluence (collaboration software) and Jira (issue or bug tracking software).
We recently wrote up our company values, and I think the best way to describe our story is by our final value: Always be Kaizening.
What's your backstory and how did you come up with the idea?
That company value starts out:
“Our team is filled with talented, skilled, and knowledgeable people, but we are also humble enough to know that there is always something more to learn - something that can be improved.”
Learning and constant improvement are important to us, but also in telling our story. There is a tendency to look at startup success as coming from a single moment’s inspired idea and perhaps from one individual genius founder. When Peldi launched Balsamiq Mockups in 2008, it may have appeared from the outside as an overnight success.
But as Peldi pointed out a couple of years later in a talk (16:09) you must “do the time” to learn and develop your skills and insights. He marked the starting point on the revenue graph growing to $2M not from the 27 months since launch, but in a certain sense, all the way back to learning to code at age 12 (1987).
I like to think that no experience is irrelevant. We are shaped by many experiences, and by the many people who cross our paths. One of Peldi’s learning experiences in that 20-year journey before launching Balsamiq, was studying abroad at UCSD in 1999.
That part of his journey is also the reason I’m at Balsamiq today. We shared an apartment forming the foundation for a long friendship which, surprising to us both, led to our now decade-long work collaboration.
He hired me knowing I knew very little about the software business world (I had worked in theatre, outdoor education, and the baking industry) but knew we had a mutual love of learning.
I think he also recognized that diversity — including people who have different perspectives and work experiences improves your end result, no matter the endeavor.
This concept is also essentially the inspiration for our product. While working at Adobe, in product meetings Peldi noticed that some voices were not being heard. The product manager had great ideas, but didn’t know the complicated tools the designers were using to be able to express them visually to the team.
He realized what was needed to arrive at the best idea was an extremely simple sketching tool that could be used by any contributor.
The first idea isn’t necessarily going to be the best idea either — it rarely is. So the tool should be something designed for very quick changes, discussion, and rapid iteration — it should be for collaborative learning, sharing, and improving on ideas. As our company value goes on to state “We see everything we do as an experiment and are ready to course-correct at any point.”
I think the story of my work collaboration and friendship with Peldi, matches up well with our tool and Balsamiq as a company: ideas take time to develop and inspiration comes from many unexpected places.
Take us through the process of designing, prototyping, and manufacturing your first product.
The idea of experimenting and collecting ideas from others was essential in how the product was developed.
Peldi actively blogged between 2007 - 2009 about what he was doing, not really for marketing purposes, but because he was honestly looking for community input and wanted to share what he was learning.
He also had developed many friendships through the investment of time working at Macromedia and Adobe — this community gave their input as he worked through ideas about the product.
Here are some of the elements that Peldi shared with me about what contributed to the first product design:
- I had built a real-time shared whiteboard before, so I knew how to write graphic design tools.
- I went through the software architecture a few times before landing on one I liked.
- I had a mastermind group of 4-5 people who gave me feedback once a month.
- I initially had both low-fidelity and high-fidelity features — I iterated and killed the high-fidelity part.
- I quickly started using the tool to wireframe new features of the tool itself — a good sign!
As a sign of how we have grown since then, the baby who used those highchairs is now 14 and that focus on the table is currently in my house and much bigger than me!
Outreach through his community and blogging had a major impact on the successful launch of Mockups. He was* transparent and open, and willing to listen to ideas,* and I think that was something that people identified with. It even got him a mention in the New York Times.
We are pretty sure it wasn’t the original website design that did it. ;)
Describe the process of launching the business.
The company was completely financed by Peldi — the business model he designed was not one that required major cash investment. He specifically chose a problem to solve that was very small, and could (initially) be done by him alone.
By saving for over a year and cashing out his 401(k), he made sure he had one year of salary in the bank. He worked building Balsamiq Mockups on nights and weekends so that it was ready to launch shortly after leaving his job at Adobe.
Electronically delivered software has very little overhead — there is no manufacturing or inventory to speak of — but still, Peldi decided to move back to Italy with his family in order to reduce his expenses.
This blog post from October 2008 captures many details about the launch and what led to Peldi starting Balsamiq.
Since launch, what has worked to attract and retain customers?
I think there are many factors, but two come to mind. The first is staying extremely focused on the problem we are trying to solve. There are areas our product could expand, features we could add, but we recognize every feature adds a level of complexity. Being everything to everyone has its downsides. Sticking to the original inspiration, we believe simplicity is key.
It isn’t that our product has remained the same for 10 years, but we have kept focused on the “zone” we want to tackle with our product.
The second thing is staying focused on the people — taking care of our team and also our community. We have never focused on how we can make more money. Instead, we try to think about how we can provide value or how we can help make our customers' work or experience be more awesome. This focus has returned with revenue — but revenue isn’t our primary motivation.
We work on this in many ways, particularly through trying to offer great customer support and giving back to our community. A recent focus has been dedicating resources to educational initiatives about wireframing and User Experience.
How are you doing today and what does the future look like?
We have been re-writing the codebase over the last number of years. This major redesign could have been done faster, but we chose to grow slowly. We don’t want to push for growth in a way that overextends us financially or compromises our values.
With the pace we selected, we projected a temporary decline in revenue. Even if it was expected, it probably felt a little uncomfortable for some of our team to see.
However, we have been financially conservative from day one, and have never taken on debt or funding. We saved a healthy rainy-day fund (currently $3.8M in cash assets) in the early years and were able to remain profitable even as revenue decreased in 2017 and 2018. These choices made it possible to be relaxed and keep to our values of maintaining a sustainable pace.
As expected, after we began releasing newer versions of our product line in late 2018, we saw the revenue growth return in 2019.
Some things that help our financial stability are diversity in product types: we have single-purchase software and subscription-based options (which tend to be smaller in growth month-over-month, but are more consistent in nature). We also keep diversity in our customer base: we have revenue from many, many individual users paying only $5 or $12 a month, and some that are enterprise-level which may be many $1,000's of dollars per transaction.
It’s nice to see the surprise of a huge revenue month due to a few enterprise-level sales, but the slow and steady development of a wide-customer base in our smaller purchases gives us stability and dependability in our finances.
Through starting the business, have you learned anything particularly helpful or advantageous?
“The more adaptable our people are, the more adaptable our company will be, and the easier it will be to help people rid the world of bad software.”
My 10 years here have been filled with constant learning. I have a whole new vocabulary of financial terms such as fringe benefits and tax nexus. I’ve learned about international employment, privacy, and taxation laws. I’ve learned to identify and improve my project management and communication skills.
In addition, I and everyone in our company have made many mistakes — of all sizes. Some financially costly, and some that temporarily hurt relationships on our team.
To come back to that value, the biggest lesson I think that combines all these things is to just keep learning.
“We try to see change as an opportunity for growth. We want to encourage folks to be brave to try new things. We know this means things won't be perfect, and we try to approach these imperfections with patience and a readiness to forgive.”
When you realize you don’t know something you should, or maybe that you have gotten off track, or made an error, don’t react in fear. Take it as an opportunity. Google the topic. Ask for advice. We’re all figuring out this running-a-business thing.
What platform/tools do you use for your business?
From a communication and project management perspective, like a lot of companies with distributed teams, we rely on tools like Google Suite, Zoom, Confluence, Dropbox, and Slack.
Financial tools include Stripe (credit card processing and subscription management) and QuickBooks Online.
Customer support is done with the assistance of HelpScout (support tickets), Grasshopper (phone support) and Discourse (community forum).
Some tools for software development and operations include Amazon Web Services, Github, and Pivotal Tracker.
What have been the most influential books, podcasts, or other resources?
For our company, influential books are:
- Different: Escaping the Competitive Herd, Youngme Moon
- Growing a Business, Paul Hawken
- Badass: Making Users Awesome, Kathy Sierra,
- Drive: the Surprising Truth About What Motivates Us, Daniel H. Pink,
- How to Win Friends and Influence People, Dale Carnegie
For me personally, I listen to NPR’s Marketplace and All Things Considered daily. While not specifically focused on our business, the wide variety of topics covered in the programs help keep me informed on things that may affect or influence our business and that helps inspire me with new ways of doing things — all while I cook dinner or take care of some chores.
Our team also uses Know Your Team. I find the educational resources and articles shared by the service, including the associated leadership forum The Watercooler, to be very helpful and a good way to continue learning and thinking about how our team can build a better company.
Advice for other entrepreneurs who want to get started or are just starting out?
Have a business model. We don’t feel bad charging for our software. We think we make a good product and add value — it is ok to ask money for that. In the long term asking people to pay is in their best interest: our customers (their data) are never our product. Being an independent business with money in the bank means we’ll be here to support our customers and our team.
Resist what seems like “free” money. You may get offers from venture capitalists or have people suggest you get funding to grow faster. Think about it long and hard. You may need it, but you might not, or you might not need all of it.
You don’t need to be flashy or trendy. Businesses can be built slowly and steadily. Sometimes boring and normal are good choices.
Remember the people behind your business: your team and your community. Make choices with those humans in mind.
It’s ok to say no. We value our customer service, but that doesn’t mean we say yes to every request. Saying no (in a nice way!) to one or more customers can be the right thing to do for all your customers. It’s important to consider the long-term impact of your choices on your team and your business.
People are messy. Don’t assume a new software tool or buying a ping pong table will fix communication problems on your team. Recognize that your personal life, emotions, and personality, and those of your team, are going to be a sort of chaos monkey bringing unexpected things to your business. Instead of trying to make those things go away, learn about them. (As someone who has a tendency to cry, this is especially near to my heart; I’m grateful for my colleagues who don’t discredit my opinion, just because a few tears escape from time to time).
Keep your promises to your customers and your employees. It is usually better to underpromise and overdeliver. If you overshot the mark, admit when you are wrong. It may seem scary to do, but we have found our community respects us even more for it.
Think about your values. I don’t mean just company values, but your personal ones too. The stresses and frustrations of running a business may make it tempting to compromise your values., Being clear about what you value most, will help you steer the course in difficult times.
Are you looking to hire for certain positions right now?
We don’t have any positions open right now and hire pretty infrequently. But we have information on our website about what it is like to work at Balsamiq and a general application even when there are no job openings.
We are fully remote, but we tend to hire in the US States or countries where we already have a presence (currently that is Illinois and California, and Italy, Germany, and France). The majority of development work happens in Europe.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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