SFN195: How to bootstrap a company and dominate an industry for nearly two decades
How do you bootstrap a company for 18 years without taking on any partners or investments?
Get ready to find out.
Tom Kulzer founded AWeber Communications, Inc. in 1998. He is still CEO and still owns 100% of the company.
It’s an incredibly unique story that will teach you how to bootstrap a self-sufficient software company – and avoid the mistakes that Tom made along the way.
In This Interview I Ask:
- 4:00 - What are Tom’s views on equity and raising money?
- 9:35 - How did AWeber start and where did it come from?
- 15:35 - It’s interesting to think back to ‘98. It’s cool to be an entrepreneur today, but it I imagine it was a whole different set of challenges way back then.
- 17:15 - What makes Tom qualified to run a business?
- 18:00 - What was the first big milestone for Tom?
- 23:00 - One topic that keeps coming up is the idea of product vs. marketing. Does Tom find himself falling on one side or the other?
- 24:25 - When did AWeber start getting traction?
- 28:35 - AWeber has been the dominant player in the space for as long as I can remember. Has it been that way since the early 2000s? How do you continue to stay on top of the game with it?
- 37:50 - When you see people getting started in software businesses, what are the common mistakes you see people making?
- 41:10 - How does Tom run the company right now?
- 42:35 - What does the future of email marketing look like?
Tom On Equity & Raising Money
“Raising money can teach an organization bad habits. It teaches you to spend money you don’t necessarily have.”
Businesses have to be self-sufficient.
Investment can help get a business off the ground, but bootstrapping can teach you the discipline and skills necessary to be self-sufficient in the long run.
Raising funds can give you access to capital, purchasing power and talent, but you also become accountable to whomever you raise funds from. That extra accountability can be good, but it can also negatively influence your company’s growth strategy.
As a founder, Tom is only accountable to his customers.
A Brief History of Automated Email Marketing
“I defined it as lazy. Other people might define it as smart.”
In 1998, email marketing was a fairly new concept. Tom was in college and working as an independent distributor selling wireless modems. The sales process was entirely manual.
He wrote a Perl script that sent a series of seven emails out over the course of a couple weeks. It basically worked. He was receiving a lot more orders and spending a lot less time selling.
Someone wanted to buy the automated system, but it didn’t exist as a reusable platform. There was only one similar product at the time, which only sent one auto response and one follow up email.
Tom spent a summer building the Automated Web Assistant platform, which was later changed and shortened to AWeber.
Overcoming Limiting Beliefs
“Over the years, I myself have been the biggest bottlenecks in many of our biggest leaps forward. I just couldn’t get out of my own headspace.”
Over the past 18 years, one of Tom’s biggest challenges has been his own mindset.
He had difficulty committing to office space, every time he needed to expand, and he even had difficulty with his first hire.
Tom’s only experience with interviewing and hiring was being interviewed by restaurant managers for part-time jobs, so making his first hire was a big challenge and a big milestone.
He built up the process in his head, but it was actually pretty easy overall. Initially, he was bottlenecking the scaling process because he had difficulty getting over the fact that the next step for a business often involves doing things differently.
Product Vs. Marketing
“At the end of the day, what we’re here for is value creation for our small business customers. What we do for them is very directly correlated to their bottom lines.”
Tom drives business growth by
- creating the best product in the automated email space
- handling support well and
- letting his customers talk about their success
If AWeber is not creating 10x or 100x the value of every dollar a customer spends, then they need to figure out how to make their product more valuable.
AWeber gained traction in the marketplace because the network of customers had success and then told their peer groups about how email marketing, tracking, segmentation and funnels helped their business.
Each time a customer has a positive experience with the product, AWeber’s network grows.
How to Avoid Common Mistakes in Bootstrapping Software Startups
Tom shares tips to avoid common mistakes that Founders make in new software businesses:
- “I think a lot of people fail to flourish because they fail to launch.” People spend too much time creating a minimally viable product. It doesn’t need to be nearly as perfect as you think it needs to be. Get something out there, even if you have to give it away for free for a little while, in a beta test.
- Don’t give your product away forever. You should be making money because your customers should see value in what it is that you’re doing. “If your customers aren’t willing to pay for what it is that you’re doing for them, then you probably want to think of something different to do.”
- Don’t be afraid to fail. The faster you fail, the faster you can find something that works.
Tom shares a couple tips based on his own mistakes, as well:
- Hire more team members quickly
- Hire people with experience growing the type of business you want to build
- “I wouldn’t say that I’ve overmanaged or undermanaged. I’d say there are times I’ve done both.”