Growing My "Lifestyle" Business to $130,000/mo in Revenue

Tell us about yourself and what you're working on.

Hello, I'm Dave Nevogt, and Jared Brown and I are the cofounders of Hubstaff time tracking. I've been running online businesses now for a long time, and this is my first true software business. The past two have been in e-commerce and services.

Hubstaff is a time tracking platform for remote teams that provides proof of work. We help our clients manage employees across multiple time zones and set priorities in terms of who is working on what.

How'd you get started with Hubstaff?

I needed a solution, but nothing existed at the time. I started looking for something like Hubstaff back in 2008 with very little results. There were some that I tried, but nothing really worked well. There also wasn't any software built for remote teams when we started developing the ideas, which is what made it seem like a good opportunity.

Hubstaff has been built with my specific needs in mind, and as we've grown and gotten more customers, we've let them drive the product direction. We build most of our features based on what our clients request.

How'd you find the time and funding to build your business?

Hubstaff is a bootstrapped business, so the funding came from our personal savings. Both cofounders had previous businesses that we were able to pull from and fund the business. The initial investment was $26k each, so $52k total.

Regarding time, we built this on the side as we were running other businesses. As Hubstaff has grown in size, we've been able spend more and more time on the business. It's been a gradual process. It took about 7-8 months to get something to the point where we were able to launch it and start charging clients.

How have you attracted users and grown Hubstaff?

Most of our growth has come via word of mouth from existing users, as well as through distributing frequent and quality content. Initially we did some advertising back in 2013-2014, and that was able to get us free users, but once we converted to a paid model it wasn't very profitable, so today we don't do much traditional paid advertising.

We started with a product that was free until it was good enough to charge for it, and we launched in August of 2013. We wrote a lot about our very early days in marketing in our blog post about acquiring early adopters.

Conversion rates were very good in the beginning, and still are good. (About 6% of home page visitors sign up for a free trial.) Having the product as a free option worked great and produced a higher conversion to free trial, but then didn't work out so well in moving from free accounts to paid. We wrote about that experience in our blog post about SaaS pricing and free plans.

What's the story behind your revenue?

We are a transparent company, so you can see all of our growth metrics on Baremetrics:

When we launched we had approximately 2,000 free members using the software, and we released with a 40% for life offer to those people. We closed about 275 of them into paying accounts, which was not that great. Many of the things we learned are referenced in the "free plan mistake" blog post referenced above:

We had great expectations for our free plan and the users who signed up for it, but those expectations were never realized. Our free plan ended up losing us money and stunting our growth! Here are just a few of the things we learned:

• Paid products carry more value
• Free users bring more free users
• Free users eat up support
• People take advantage of free accounts

For us, revenue growth has been a very slow and steady climb. Time has been our biggest asset to get where we are currently. What we've learned selling to small business SaaS clients is that it's mostly about the product and features. Even our marketing page test has reflected this in the sales copy we write — the winning tests usually have to do with features over benefits.

We've constantly been releasing new features throughout the four years we've been in operation. Part of that is just to keep up with the industry in general, and part of it is to increase conversions both to the free trial and then to paid clients.

What are your goals for the future?

We always want to maintain this as a lifestyle business. We're big believers in remote work, and we do not want to have 300 employees/contractors in the future. We'd much rather stick to a team size similar to what a company like Basecamp has. We do not want to take on funding and get a big office, and we'd rather maintain full control over how we grow the business and serve our clients.

We also want to spend time growing our new offerings similar to what we've done for Hubstaff. We have a new directory for freelancers and agencies called Hubstaff Talent. It's completely free to post a job or to find and contact contractors to work for your company. We are doing this as an effort to help our current clients solve their number one issue, which is finding great people to help move their businesses forward.

If you had to start over, what would you do differently?

There's not a lot that I would do differently with Hubstaff. I suppose I'd try to learn who my real customers were and how we were attracting them a little sooner than I did. This would have given us some important insights, so we could have adjusted some strategies earlier.

I also wish we would have chosen a business that didn't require the desktop software. This is wishful thinking because in our business it's just a requirement, but it adds a ton of overhead because we have been forced to create products for Windows, Mac, Linux, iOS, and Android. It's kind of like supporting 5-6 products instead of having to support only one (web only). This diverts our resources and makes hiring harder.

One more thing about the business in general is that we need to support 6-7 users per one paying account, because the contractors and employers all need to work together in our platform. This creates onboarding and support complexity, but this is much of the reason why the software has done well, so I fully realize that aspect of it.

Overall Hubstaff has exceeded our expectations and has very performed well.

What have been your biggest advantages?

Ironically, the best advantages we have are exactly what the hard aspects are from above. Since we have all the desktop and mobile versions built now, it opens us up to the users that require well made time tracking for specific devices. It also increases the barriers to entry.

The fact that we have employers and contractors working together in our platform has led to a lot of word of mouth growth. A client hires a freelancer and naturally that introduces them to our platform, then that freelancer can spread the word about Hubstaff to their other clients.

So, I guess the moral of the story is that sometimes it pays to tackle the hard problems.

What advice would you share with aspiring indie hackers?

I'd recommend reading The 80/20 Principle by Richard Koch. I'd also advise that entrepreneurs think about the best/worst case scenarios when making decisions in terms of risk/reward. An example would be when dealing with a customer that may have a $15 plan and is upset. The risk of them spreading a bad story online would be much worse than dropping your ego and giving them a free account for 6 months. When you look at the best/worst case scenarios it helps you see things much more clearly and make an informed decision.

If you are starting a software company I'd definitely advise that you choose something that requires web-only. You'll be able to focus much better and hire more easily.

Where can we learn more?

My Twitter handle is @dnevogt, you can also follow @Hubstaff and find us on Facebook. I write blog posts similar to this interview at The Hubstaff Blog which is a growth timeline on how we've managed to grow our business and exactly what we've done over the years.

You can also leave a comment below, and I'll try to get back to you!