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Userflow and Esben Friis-Jensen
How a three person team was able to grow their annual recurring revenue to 7-figures in less than a year
This week I met Esben Friis-Jensen, a serial entrepreneur who joined Userflow a little over a year ago. Userflow is a product that helps teams build high quality user onboarding experiences for their products, without code. It enables a marketing lead, customer success or product manager to easily build in-app tours, checklists, or surveys without needing a developer to deploy updates.
Userflow was started by Sebastian Seilund, a friend of Esben, in late 2018. The original product was focused on helping people build video demos. Sebastian got some early traction, but quickly realized that customers were more interested in how he built the user onboarding experiences for Userflow, rather than the video demos. By 2020 Sebastian had pivoted the product to what it is today and by the end of 2020 Sebastian and Esben were talking about how they could collaborate together and how Esben’s growth and marketing skills could help accelerate growth at Userflow.
In early 2021, Esben made the switch from a cybersecurity company he had co-founded in 2013 to becoming a co-founder at Userflow. He immediately got to work overhauling the marketing channels and implementing a scalable growth engine, leveraging his experience in sales and customer success.
In our conversation, Esben talks about:
How their three person team was able to bootstrap and grow their annual recurring revenue to 7-figures
The essential components of building a scalable growth engine
How it’s critical in SaaS companies to avoid analysis paralysis and a/b testing every decision
Their most effective way of acquiring customers
How they decide which features to place in their premium tier versus their standard tier
My questions are in bold; this interview has been lightly edited for clarity.
Let’s start at the beginning. What’s the founding story of Userflow?
Esben Friis-Jensen: Userflow was founded in late 2018 by Sebastian Seilund, but as a different kind of product than it is today. It originally helped people easily build video demos of their product and then automatically update them if the product changed, such as the app colors were changed, without having to re-record the whole video.
In building that product, he made another product. It was a product tour within the product, that helped users get onboarded automatically. And many of the early customers of the original product started asking him, what tool did you use? Since he had coded it himself he realized that Customers started asking him, how did you create that? What tool did you use? He realized that maybe product tours were more helpful to customers rather than video demos.
He decided to pivot in late 2019 and started developing this other product tour and onboarding product. Sebastian is a good friend of mine and we had been chatting a lot about me joining him. I had co-founded a company called Cobalt and by late 2020 we had grown it to close to 200 people, it was successful. I had been very focused on Cobalt, but it had become a different company and I wanted to get back to my startup roots and build something new.
It was perfect timing for me to join Sebastian and help him take a great product that he had built to the next level. He's a super strong engineer and he had gotten some early customers, but with my background and experience in growth, I wanted to help grow the business to a level that it deserved.
So I officially joined Userflow about a year ago, at the beginning of 2021.
Got it. So he had released the original product in 2019 and then pivoted it by the time you joined in 2021?
EFJ: Right, he had already made the new product and gotten some users. He discovered that the market is very competitive, but many of the competitors have products that are not very easy to use. He wanted the tool to be truly “no code” so that a customer success manager or a product manager could build in-app onboarding, or product tours, or surveys without involving a developer. There were certainly no code tools that existed on the market, but they were hard to use. Sebastian wanted to build something that had a better UX and he managed to find a really good way of doing that. He was inspired by products in other verticals, especially a Kanban style board, for how to actually build the guides. This resonated with users and he got some early traction, mostly from very small startups. So the product worked and was ready to grow when I joined.
Tell me more about your experience in growth. What was your role at Cobalt?
EFJ: At Cobalt, I was the first sales person and the first customer success manager. I built out the sales function and the customer success function from 0 to 1. Over time I became more of a chief customer officer. Somebody who was very familiar with who our customers were and the full end to end customer lifecycle. So I had this experience of how you take a product from 0 to 1 from a marketing, sales and customer success perspective. That's the value that Sebastian and I talked about when I was making the decision to join Userflow.
So, about a year ago you joined Userflow, bringing all of that experience, what were the initial goals that you set?
EFJ: My focus was figuring out how we can build a scalable growth engine. There were three things. The first was how do we add more marketing channels. We already had some ads running and strong word of mouth. I was looking at, could I add additional dimensions to that? One area I looked at was, of course, can we do any outbound sales or marketing? I actually didn't have high hopes for outbound tactics, such as emails, because I've tried it in the past and I think the return on investment is starting to diminish compared to earlier times.
Instead we focused mostly on making Userflow a thought leader in the SaaS onboarding and product-led growth space. I’d seen thought leadership work well for us at Cobalt. Given my background as co-founder of Cobalt and because I had gone through a journey to transition from sales-led to product-led growth with them, I could tell that story to the world and help people see the value in product-led growth and how Userflow is an important part of a company’s product-led growth strategy.
The second focus point was the operational part of the business and how we could enhance our customer conversion and retention. What I did was to automate a lot of it. We already had in-app onboarding using our own tool, but how could we have automated emails on top of that to ensure the users also got email onboarding. In the early days I focused on setting up email automation for all these touchpoints that we do as part of a free-trial, along with the post-purchase lifecycle and so on.
The third thing that I focused on was re-evaluating our pricing and packaging. When I joined we had a starter package, a pro package, and an enterprise package. But, Sebastian and I believed that there were not enough incentives for the pro package. Everyone was just buying the starter package. We reevaluated how to allocate Userflow’s current features between the tiers so that the pro package was stronger as well as what features should we build exclusively for the pro package.
In relation to pricing, we did what I think most businesses do when they start out, they price themselves too low. So we tried to increase pricing a bit and saw that it had no impact on the number of customers that signed up each month. This is advice I give to all the startups I advise. You can charge a lot more for your product than you think. Increase prices, because you can always re-evaluate if you worry that you increased it too much.
I don’t hear too many founders that I speak with tell me they use “thought leadership” as an acquisition channel, but it makes perfect sense. Reminds me of how a number of years ago Optimizely really leaned into the a/b testing and experimentation space, teaching best practices, etc, while also making sure their experimentation product was mentioned in the notes.
EFJ: It’s a good acquisition channel, but it can be a challenge. It requires grit and credibility. You can only do it if you have something to say and you have a reputation, it can be a bit harder for somebody starting out. When we started Cobalt, we were four Danish guys, we didn't know anybody, right? Even though we were saying the right things, we got no attention. So we decided to hire somebody who already had an audience, that attention, and could then start talking about Cobalt. But with Userflow, I already had that attention because I had created a successful company, so I think that helped.
It also seems like something that takes time for the audience to grow.
Real quick, on the pricing and packaging changes that you mentioned. Did you run experiments with different prices or just increase the prices and see how it does that week?
EFJ: I think a lot of it was just gut and that’s always how it is in early stage startups. I actually wish that larger companies would keep some of that after they grow. Just make a decision and go with it. You still need to think about it, the pros and cons of each model and so on. But I’m honestly not a big fan of the “test everything” model where everything has to be an a/b test. Especially in SasS B2B it’s extremely hard to get valuable data from it.
So a lot of it is just gut feeling. Try it out, see what happens, right?
Interesting, that’s actually similar to something I heard on a podcast recently. A founder who was a former Facebook product manager said that PMs coming from large companies sometimes struggle at startups because they are so accustomed to having huge amounts of data to analyze so that they can really experiment and optimize every little feature. But going to a startup you just don’t have that much data or time. It would take you too long to collect the data. You need to make decisions and move forward and he found that PMs of larger companies really struggled with that.
EFJ: And I think that you always risk analysis paralysis when you're doing too much testing. You should really just try something out and see how it goes.
Going back to the product. Over the past year it sounds like a lot of the changes you implemented were how you positioned the product, operational changes, or implementing new acquisition strategies. Did the product change much over the past year?
EFJ: Yeah, so the product-led model is our mindset. That's where everything comes back to. That was also what I thought about when I was operationalizing and automating the trial conversion and user retention. We should always think “product” first. How can we improve our onboarding in the product? How can we make the product have a better UX to solve certain use cases?
That's how we always think about scaling our product. It's really when we see a problem, a customer asks a question, we solve it in the product instead of hiring more support people. That’s how we’ve been able to scale. We are still just three people, but we’ve grown to seven figure revenue.
Do you have an example of a problem that you had to solve in the product?
EFJ: Yes, some people were finding it hard to connect steps in the flow builder. We were getting questions from people on how they connect the next step. We could have solved that by only making a written guide or video. We actually did make a video which helped, but we really wanted to solve that confusion with a user experience change. Now when you have a missing connection in the builder we highlight the issue, making it very clear with an arrow and a message, explaining what they should do.
That's just one kind of UX solution. But we've done that for many, many things. If some question is getting asked too many times, you should solve it in the product. That's our mindset.
In general, I would say 50% of our roadmap are the user experience changes that improve the product to make it easier. The other part of our focus during the last year was as mentioned how we can make the product and especially the pro package stronger. Customers had been asking us for some features, like surveys, no code event tracking, and a resource center. We added those things. The first two things we added in the pro package to make it more appealing and the resource center we decided to give to all customers.
How did you know those two features were the best next ones to add to the pro package. Was it inbound requests from customers, customer surveys or something else?
EFJ: We always keep track of what customers are asking us about. We have a score for each feature on the backlog which is based on how many customers are talking about this feature. We, of course, also do competitive analysis to understand how we compare to our competition. We can do that because we are in a very competitive market. But we are mostly listening to our customers that are asking for these things.
Going back to customer acquisition. What have you found to be the most effective way at acquiring customers? Has it been ads, the thought leadership work, or something else?
EFJ: Ads have been successful. But due to us being in a competitive market we've had to increase the ads budget over time. But since we are 100% bootstrapped we need to find the right balance when it comes to ads. A traditional VC backed company might push all of their money into ads. But we’ve found that there is a right balance. You reach a certain point where the return on investment is not worth it. So we’ve stopped at a certain budget because we could see the returns diminishing after it was reached.
Do you mean like a max cost-per-click that you are willing to pay?
EFJ: Yeah, exactly. We tried in one month to increase the budget a lot, but then it didn't really have enough of an impact. What’s had a bigger impact is fine tuning who we are serving the ads to. That helped a lot more because before that we were maybe getting some customers who ended up churning really fast because they were not our ideal customer profile.
So ads are still a really good source for us. But yes, the thought leadership has been big and word of mouth. We really organized our word of mouth by being better at being on review sites like G2.
Let's jump to that quickfire round of questions. What are you most proud of from the past year?
EFJ: I think it's that we grew Userflow by more than 5x over the past year. That was pretty good.
What's been the most challenging part of the past year?
EFJ: I think it was the decision to leave my old company behind. You know, it's my baby. I still have a lot of hopes and ambitions for Cobalt, but they can manage it on their own. That was a big decision for me.
I’m sure that was a big decision. You mentioned earlier that you were excited to get back to working with a small team. Was there anything else that helped push you to make the switch?
EFJ: Yeah, I was so excited about the Userflow product. As I said, we had gone through that product-led transition journey at Cobalt and so that helped me be excited about this whole new movement where things are becoming more product-led.
What book do you recommend the most and why?
EFJ: I have to recommend Product-Led Growth by Wes Bush. He's been a huge inspiration for a lot of companies and I hope he can inspire more companies. I highly recommend it if you are at a Saas company, you’ll get a lot of inspiration for how you can approach a product-led mindset in your business.
Is there any particular insight or tidbit that really resonated with you or was it just top to bottom great?
EFJ: I think the whole product-led growth approach we took. A lot of this wasn't rocket science or new to me. But it just resonated so well with what I had always thought about how companies should do business. In this new era where end customers have the power you need to give them a model that fits with that. We're moving past sales-led companies. Customers expect to do things self service and they want products with a great UX.
Now that you've been with Userflow for a little over a year, what do you know now that you’d wish you’d known a year ago?
EFJ: I’d always thought you had to raise money to grow a company. But it’s been a real eye opener for me to see that we could bootstrap a company to seven figure revenue with only three people. We’ve been able to grow organically from a lot of inbounds and I think I underestimated the power of that a year ago.
I've also underestimated the power of certain features. There’s been many times where I think a feature will be good, but maybe not great. Then all of a sudden the feature is loved by tons of customers.
An example of this is the resource center widget that we built. It’s a little widget that people can add to the onboarding experience that connects to their chat provider and existing knowledge base. Before we built it, there were just a few customers asking for something like it. We thought, okay we should probably add it for these customers. We launched it slowly and then suddenly everybody was reaching out to us telling us how amazing the feature was. It creates a stickiness for their customer which is very beneficial to their business.
We had to decide actually if that feature should be in the pro package, but as we heard from more and more customers who enjoyed using it we decided that no, this is a core feature of the product so everyone should have access to it.
I’ve learned a lot on how to think about which features go in which pricing level. I've seen lots of articles on usage based pricing and so on. I still think there's room for charging for premium features, but I think you should be careful not charging for features that are really a core product feature. Your premium features should be more like the superpower features.
Interesting. So when you're evaluating whether to put a feature into the premium package, if it’s a feature that 90% of your customers are going to use, you decide to put that into the basic package instead?
So you’ve started two companies. What’s your advice to someone that is considering starting a SaaS company in 2022?
EFJ: First of all, have a product first mindset. If you are in an established market it’s important to be able to show that your product is very powerful.
The other advice is that you don't have to get caught up in the whole VC game. I think that's something that a lot of startups could learn from is that they get caught up in raising money and the success of the startup is how much money they’ve raised. But it really isn't right. The success of a startup is creating value for your customers and creating something that over time can become a profitable business. Raising money is just fuel. So that engine shouldn't be the success criteria in itself. I think that some startups tend to lose focus and only think about raising money. I have nothing against the VC model, but if you are going to go that route then make sure you always keep the customers in mind and that your end goal should be to build a profitable business.
That’s great advice. Thanks for taking the time to speak with me today.
EFJ: You’re welcome. Pleasure meeting you.