How We Grew Our Time Tracking App To 10,000 Paying Customers

$490,000
revenue/mo
2
Founders
54
Employees
product
Hubstaff
from Indianapolis, IN
started August 2013
$490,000
revenue/mo
2
Founders
54
Employees
17.7K
alexa rank
9.44K
followers
574
subs

Hello! Who are you and what business did you start?

Hi, my name is Jared Brown and I am a co-founder of Hubstaff. We started the company eight years ago to build a time tracking tool that included “proof of work”. The initial goal was to solve the issue of non-developer owners and managers not knowing how long development tasks should take and feeling helpless when they suspected the freelancers they hired were billing them for more hours than they were actually working.

At the time there were very few software tools that could provide proof that the freelancer was working. The “proof of work” usually takes the form of screenshots or other forms of activity tracking via a desktop app. We have settings that let you turn any aspect of the monitoring on or off. A lot of customers nowadays are coming to us because we’re one of the most robust general time tracking solutions on the market and they don’t even use the monitoring features.

We were fortunate in that there was a strong need for this product from the very beginning and that there was a lot of search volume that was ready to be captured by someone. The pain point is so great for our customers that they’re literally waking up in the morning after a restless night’s sleep and searching for a tool that can take screenshots. It made me realize how valuable it is to build a product that customers are actively searching out.

It’s a great tool if you run a remote team or hire freelancers. These are two trends that have seen incredible growth over the past several years and we’ve been able to ride those waves. Our typical customer is an agency or freelancer that is working on a PC doing marketing or development. But we are aggressively expanding into other industries, including construction.

The needs that we’re solving have grown beyond just proof of work and now include automating or streamlining many of the back-office tasks that pull you away from running your business (approving timesheets, running payroll, ensuring field service technicians are at their job sites, managing time-off requests, and much more).

We started charging for our product in August of 2013 and we were recently named one of the fastest-growing privately held companies in the U.S. for the second year in a row. We are about to hit 10,000 paying customers and $6,000,000 in annual recurring revenue.

how-we-grew-our-time-tracking-app-to-10-000-paying-customers

What's your backstory and how did you come up with the idea?

Hubstaff is my first product company. But building a software business was a long-term goal for me that started in high school. I would read a lot of books about the early success stories in the tech business, such as Apple and Oracle.

Since I was young and couldn’t raise money or pay for a developer out of pocket I taught myself how to code. Coding was a great skill to learn because it taught me how to think clearly through a problem and develop a solution.

Since I was young and couldn’t raise money or pay for a developer out of pocket I taught myself how to code. Coding was a great skill to learn because it taught me how to think clearly through a problem and develop a solution. It also forced me to think through the product psychology of what I was building. I built a lot of software in high school, but none of it got any traction.

When I graduated from high school I attended Purdue University where I earned a degree in computer science. Fast forward to 2012 and I had a successful consulting business. That’s when Dave, my co-founder contacted me. He had found me through LinkedIn because he had an idea for a software product and was looking for someone who could be a founding CTO.

Around this time I would get a lot of emails and LinkedIn messages from people who had an idea and just needed a developer to start the company with. I would usually schedule a call with them and listen to what they had to say. But in the end, I’d refer them to a friend. What impressed me with Dave was that he had already proven the concept. He worked out a deal with one of the screenshot monitoring tools that were available at that time to sell him a white-labeled version. He had a marketing site and was selling the product. So he had proven that he could get customers for it. Even better he had run Google Ads and had CTR and cost per click data on those showing that they had ROI. The problem was that the software he had white-labeled was buggy and he realized he wouldn’t be in control of its roadmap.

We talked about what type of software we’d want to build and the approach we wanted to have for about three months. In May of 2012, we started writing code. I actually kept my day job for several years while we bootstrapped the company, which meant working nights and weekends on it. Dave and I each put in about $26,000 to fund the company in those early days. For an entrepreneur, I’m really quite risk-averse. Consulting paid well, but as client projects ended I wouldn’t replace them. So eventually I got to zero clients.

how-we-grew-our-time-tracking-app-to-10-000-paying-customers

Take us through the process of designing, prototyping, and manufacturing your first product.

We knew early on what the initial feature set for the MVP (minimum viable product) was going to be. We had the advantage of already proving it with the white label solution. We had decided on a basic time tracking desktop widget that you would access from the Mac menu bar or Windows system tray. Therefore we didn’t even need to design any window UIs for it. It would take screenshots and record your keyboard and mouse movements. All of that would be uploaded to our servers where owners and managers could view the data. We would break up a person’s workday into ten-minute chunks of time. You could see a screenshot thumbnail and a progress bar for their activity. This was really the one feature we had, but it proved to be a killer feature.

We spent all of our time building out this initial product from May to Oct of 2012. By mid-October, we started to have something that others could use. The website had a sign-up form where you could create an account, set up your organization, and invite team members. I built a lot of it. We also built an installer for the desktop app.

We had two developers working for us, since May. They are brothers and both worked part-time, just like us. So we were really building all of this at night after our we got home from our day jobs. We’d often times have called at 9 or 10 at night.

At this point, everything looked really rough. The website was using the standard Bootstrap styles that were so common at the time. So it looked like the result of a weekend project. It wasn’t anything fancy. The desktop app also looked terrible and suffered from crashes. But we didn’t let that stop us from launching the product. It had been about eight months since Dave contacted me and we began talking about Hubstaff, so it was time to launch. We definitely prescribe to the doctrine that if you’re not embarrassed when you launch you waited too long.

how-we-grew-our-time-tracking-app-to-10-000-paying-customers

Describe the process of launching the business.

We built our initial marketing site on Unbounce, so it’s not even something that we coded ourselves. This was mostly done so that Dave, who is a non-technical co-founder could implement it without requiring any development because we were all heads down on building the product.

Block out distractions. Your time is your most valuable resource and it only becomes more scarce as your company becomes more successful. It may seem polite to respond to every VC that emails you or potential partner, but you need to use the delete key on most of the emails coming into your inbox.

It proved to be a great decision because Unbounce had already implemented all of the SEO best practices at the time directly into their platform. So the pages had a good chance of ranking highly for their long-tail keywords. Dave was able to use their WYSIWYG editor to change aspects of the site and could even run some multivariate and split tests easily. It gave him the chance to play around with the layout and marketing message in real-time. Another key advantage to using Unbounce is that we didn’t have to hire a designer or front-end developer to implement the marketing site.

Considering that we were bootstrapping the whole endeavor, that was really important. We needed to get this product built and launched with our team of four. So Dave had to wear a lot of hats back then.

We started seeing sign-ups come in from day one when we launched. This was mostly due to the fact that the domain had already existed from the white label solution that Dave had running on it before. He had already done some SEO work to build backlinks to the site. We also turned the Google Ads that he had created during that prototype phase back on. Our ad budget was meager. I think we were spending maybe $20 a day at that point. Ads honestly didn’t move the needle for us back then and they still don’t. Our number one channel has always been SEO.

We were getting about a dozen or so company owners coming to the site each day and signing up. They would create their organization in Hubstaff and play around with the software. An important aspect of the software, that we both really liked when we were discussing the product concept, was that it could be viral. That’s because every owner only gets value from the tool if they invite team members in, the freelancers they hire. So every owner who signs up invites a handful of users.

Another key to our virality was that we built Hubstaff to be multi-organization from the beginning. This means that you can belong to multiple organizations under one login account. We figured that some of the freelancers who were invited would, in turn, create their own organization and invite their clients into those. A small percentage of those clients would then create an organization and pull in some of their other team members. It would spread naturally this way. This pattern of virality proved to be true and continues today within the product.

When we launched the product we didn’t charge for it. The product was completely free. We did this for two reasons. First, we didn’t want to create any barriers to entry for users. We wanted to get some momentum going initially. Second, it was one less thing to build early on. Not having to build a billing system let us focus on the core MVP features instead.

We launched towards the end of October and by the end of December we were getting about a hundred users signing up daily. That’s when I knew we were onto something. Like I said earlier, I had built a lot of software projects before, but I could barely get a few hundred people to sign up for them over the course of months. So a hundred in one day blew my mind. If those many people were willing to give this a try given how nascent the software was, I figured the sky was the limit as we improved it. It was just a matter of time before it got big.

how-we-grew-our-time-tracking-app-to-10-000-paying-customers

Since launch, what has worked to attract and retain customers?

After launch, Dave was really focused on growth, when he wasn’t being our QA engineer or giving his opinion about product decisions. He had a marketing background and was running an SEO services company at the time. Therefore a lot of the effective tactics of the day were top of mind for him. But overall it’s not that, unlike engineering. You have a goal that you’re building towards and you need to create all of these elements to get there (web pages that are optimized to rank for certain keywords, backlinks from other blogs and sites, effective social marketing via your social channels, etc).

There was a list of all the tactics that Noah Kagan considered for Mint.com that was circulating at the time. That was a source of a lot of our thinking at the time too. It made us realize we needed to be doing lots of things every day that don’t scale well or even move the needle much for us. But in aggregate they would have an effect and start to build on each other. We’d do things like join LinkedIn and Facebook groups to promote Hubstaff in. Dave wrote a really in-depth ebook that we released for free. It was a period of intense brainstorming and throwing things against the wall. I remember a conversation once about building a network of microsites, each aimed at specific customer segments, such as chiropractors. I can’t recall now why we ever thought chiropractors would want to use our product, but it’s something we explored.

We were also starting our blog and doing ideation around what blog posts we should be writing. There were debates about whether we should focus on building readership through essays or focus on SEO with keyword laden listicles. We tried it all to see what worked. We’ve always been data-driven in our approach and don’t get too married to our ideas. I think having initial excitement for a concept is important, but the danger is letting that excitement blind you from being able to take it out back and shoot it if it’s not working.

If you’ve read the book Traction: How Any Startup Can Achieve Explosive Customer Growth then you have a good feel for our approach and all of the tactics we tried. If you haven’t read it, I’d highly recommend doing so. Some of the tactics are outdated today. But the framework discussed in it along with the general concepts is timeless.

I don’t think any of those tactics would have made a difference though if we didn’t have a differentiated product in a category without any big incumbents. Toggl and Harvest were probably the first two tools that would come to mind back then for time tracking. But neither had built out a robust platform or won the market yet. Neither of them offered any proof of work features and our bet was that they probably never would.

The UI work we were doing wasn’t going to win any awards and the product had no polish to it. What carried us to where we are today was that there was a real need for our solution, so people would seek it out. They would look past the blemishes because we were one of only a few options and none of our competitors had a markedly better or more robust product than us. All we had to do was make it easier for our target customers to find us when they inevitably searched for a solution to their problem. If there had been a well-entrenched incumbent I don’t think we would have been able to topple them.

We’ve been lucky in that we’ve never had a down month revenue-wise. Growth has certainly been slower than we would like to see. But it’s been slow and steady. We’ve come to find out that is just the nature of growing a SaaS business. Especially a bootstrapped SaaS business.

how-we-grew-our-time-tracking-app-to-10-000-paying-customers

How are you doing today and what does the future look like?

We were cash flow positive in less than a year after starting to charge for the product, which was in August of 2013.

We are actually transparent with all of our revenue numbers. You can view them publicly at baremetrics. We did this because we wanted to generate awareness for what we were doing and figured this yet another good way to get some attention, which it has been. A lot of customers and team members we’ve hired have seen how transparent we are and really bought into our mission as a result. We wouldn’t be where we are today if other SaaS companies didn’t share what has worked well for them. So sharing our numbers publicly is one of our ways of giving back. Too often people think the Cinderella stories they read about are the norm. Being able to see data on typical SaaS companies resets people’s expectations around growth rates to realistic benchmarks.

how-we-grew-our-time-tracking-app-to-10-000-paying-customers

Today we’re 54 team members strong and are focusing heavily on building out Hubstaff into a robust workforce automation platform that can serve many of the management needs of small to medium-sized companies. Our major push is on the GPS tracking side and finding ways to automate tracking of time and mileage based on location data. There’s a big need for this in the marketplace.

We’ve also been building what our vision of a simple, but effective, project management tool is. It incorporates our management philosophies and processes in a simple Kanban-style tool. That is Hubstaff Tasks and it integrates seamlessly with Hubstaff. It’s kind of like Trello on steroids. Those are the two areas were most focused on today. Our end goal is to build out a suite of tools under the Hubstaff brand.

Through starting the business, have you learned anything particularly helpful or advantageous?

My number one piece of advice here is to block out distractions. Your time is your most valuable resource and it only becomes more scarce as your company becomes more successful. It may seem polite to respond to every VC that emails you or potential partner, but you need to use the delete key on most of the emails coming into your inbox.

Don’t get married to an idea. You don’t have to place all of your chips on one number in the beginning. Instead, brainstorm a few ideas. Then test them using MVPs or even pre-MVP prototypes.

Minimize unnecessary meetings, turn off notifications from Slack channels, and only check your email a few times per day. You need to spend your time charting the strategy of the company, hiring, training, and working on implementing tactics. Those are the activities that have the highest chance of moving your business forward.

Most of the lessons I learned were particular to our business and the path we’ve taken. So I can’t say there are lots of golden rules I can share. You just need to be able to stay open-minded and look at the data, then adjust quickly.

Luck, timing, and a lot of hard work are what it takes to be successful.

What platform/tools do you use for your business?

We use a lot of the typical platforms to run our business.

  1. Stripe - Billing
  2. Drip - Communications
  3. Segment- Analytics
  4. Intercom - Support
  5. LogEntries - Logs
  6. Heroku - Servers
  7. Amazon Web Services - Storage & servers
  8. Google Analytics - Analytics
  9. Woopra - Analytics
  10. Facebook - Ads
  11. Redis Labs - Servers
  12. Airbrake - Logs
  13. Google AdWords - Ads
  14. Twilio - Communications
  15. Mandrill - Communications
  16. MailChimp - Communications
  17. AccountDock - Billing
  18. Referral SaaSquatch - Referrals
  19. Promoter - Analytics
  20. Hubspot - Sales
  21. New Relic - Logs
  22. Visual Website Optimizer - Analytics
  23. LeadPages - Web page hosting
  24. GetAmbassador - Affiliates
  25. Instrumental - Analytics
  26. Chartbeat - Analytics

What have been the most influential books, podcasts, or other resources?

Mixergy and other podcasts like it were a huge source of inspiration early on.

So was the Lean Startup Movement and MicroConf. It made me realize that those people weren’t any different from me and that I could do this. There wasn’t any magic that they discovered that gave them the powers to build the companies they started.

Once I realized that then reading blog posts about marketing tactics really helped me develop a marketing mentality. Once you know a few dozen common marketing tactics you can combine concepts from one tactic with those from another to create hundreds.

I honestly think blog posts, which are really essays on specific topics to be more valuable in many cases than digging into a book. Plus you can find the time here and there to read a blog post. Finding the time to read a book is really difficult.

Advice for other entrepreneurs who want to get started or are just starting out?

Don’t get married to an idea. You don’t have to place all of your chips on one number in the beginning. Instead, brainstorm a few ideas. Then test them using MVPs or even pre-MVP prototypes.

Use a white labeled solution, or build out an Excel spreadsheet and “program” macros as an early version of your concept, or just fall back on simple web forms and manually do everything behind the scenes for your initial users.

The goal is to make your ideas fight to be the winning horse that you’re going to back, instead of the other way around. This is the single biggest mistake that I see brand new entrepreneurs make.

Are you looking to hire for certain positions right now?

We’re always hiring. You can read more about our culture and open positions at hubstaff.

Where can we go to learn more?

If you have any questions or comments, drop a comment below!

-  
Jared Brown,   Founder of Hubstaff

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