eWebinar Cofounder and CEO, Melissa Kwan, has spent twelve years in startups and built three successful companies without venture capital backing. Her previous startup, a real estate tech company, was acquired in 2019. As a revenue-driven founder specializing in B2B sales and business development, she has learned how to build companies with very few resources — by automating what she could, outsourcing wherever possible, and inspiring talented people to join her team with shared focus and enthusiasm.
Over the last decade, Melissa has come to believe that happiness should be the foundation of one’s career, not the other way around, and that the way to achieve this is by intentionally designing one’s life.
This belief was born in part from the soul-crushing experience Melissa endured giving the same webinar over and over again while onboarding and training customers for her previous SaaS company. She wanted to free others from the same trap by giving them a way to automate their repetitive webinars, so they could get their time back and spend it doing something else they value more instead of being tied to Zoom all the time.
How do you create a viable business by scratching your own itch? Can you really build a tech business as a nontechnical founder? And in a world made noisy with “disruptive unicorns” how do you buck the trend and manage your business for profitability and longevity rather than explosive short-term growth?
In this episode, repeat founder and tech entrepreneur Melissa Kwan talks about how she capitalized on her long-standing frustration to start e-webinar, how she orchestrated its development with smart resourcing and an eye on revenue and cash flow from day one, and how she used her authentic definition of success to shape every aspect of her business.
Links and Resources
eWebinar: The automated webinar platform that Melissa founded
ProfitLed: Melissa Kwan’s podcast showcasing growth strategies for entrepreneurs
Melissa Kwan: Thanks for having me.
Melissa Kwan: I became an entrepreneur for real, like quit my job and focused on it for real, about 12 years ago. The last job that I left was at SAP. That was the biggest company I’ve ever worked for. Previous to that I worked for smaller companies here and there, but always in sales and business development positions.
I think I was always entrepreneurial, but I was never an entrepreneur. I’m not from a family of founders or business owners. My mom didn’t have a job. My dad worked in the same company for 40 years.
I was always envious of my friends who had entrepreneurial parents and they would do things with them, whether we were in high school or university, but I never got the chance to do that.
So, I was always curious about what that meant, and I always wanted to try things on that side, but I was never fully dedicated to it.
I think I was just too young and so when I quit SAP, I think I was 27 or 28, I decided that was the time to try something on my own and that was my first foray into my first company and now I’m onto my third.
Melissa Kwan: I just really hated working for someone else. I think I hated it more at SAP because it was such a big company, and I didn’t realize what it meant to be in a big company.
I think there’s something to be said when people say like, “You can’t hire people who have only worked in corporate and a start-up, and vice versa” because the things that you value are just so different.
What I didn’t realize while working for small or medium sized companies was that I was still allowed to be my own person. I was still able to be creative and have different roles within my own role.
I didn’t realize that that was something that I liked until I went into SAP. In a company like that you have very distinct responsibilities, and you can’t do anything outside of that and I didn’t love that environment and I quit within the year, and I just realized that I really did not want to work for someone else.
I remember emailing my parents on Hotmail, that was how long it was, and asking them for their blessing.To my surprise, because they always just wanted me to have a job like that, they shockingly gave me the blessing because I think they didn’t know what that meant.
I think they were like, “Oh, she just wants to play around for a little bit and then she’ll come back to a job.” But it was with that, that I felt comfortable to quit my job and that was when I decided to go ahead.
Melissa Kwan: eWebinar saves people from doing the same webinar over and over again. The thing is, people love webinars, but they’re just not scalable. That’s the biggest problem, right? Someone has to actually be there to run them live.
So, whether it is your sales demos, your sales pitches, your onboarding, your training, or after somebody buys your product, you have to make sure that they stick around, and webinars are the best way to deliver that content.
But most companies can’t do them around the clock enough to actually serve all the new customers coming in. So, what we do is that we automate that process with a video.
We turn any video into a recurring webinar that you can set on a schedule that just happens 24/7. People can join right now, tomorrow, or next week and they get the exact same experience. So, we help companies scale all of that content.
Melissa Kwan: I think the best way to validate a market is to see that something already exists out there. I don’t believe in being first mover. I think when you want to do something that doesn’t exist, that is a huge red flag.
When I was living with this problem, this particular problem that we are solving, I lived with in my previous start-up for five years. I was the person that was delivering all these webinars. That’s how I know this problem intimately.
I tried a lot of things that are out there. Everything that I tried was missing so many things that would actually make this process easy but most importantly, those solutions were just not good enough and I wanted to solve this problem by building the “Apple” of webinar automation.
I don’t want to have something that just “kind of” works. I think the world where we can put a product out there that just barely works is over. If you just think about me and you as consumers, we demand so many things now.
So, it was just years of trying things that were out there but were just subpar. That I think was the biggest validation. There are products out there and you know you can do better, but they still have a business.
I remember looking up these businesses and seeing where their employees were on LinkedIn and how big their team was and most of these companies don’t even have teams. They probably outsourced their whole team, like what we are doing now.
But that tells me that this is a business I am passionate about. This is a business that other people are building off of and make a good living off of. It also tells me that I can run this with a very small team, which is important because we are bootstrapped.
Melissa Kwan: I think both. Before eWebinar, I was in start-ups for 10 years and what I know is that I love making sales and creating products and freedom.
What I absolutely hate is managing people, hiring, firing, and recruiting. I hate all that stuff. So, coming into this business, I wanted no full-time employees. Everybody is a contractor.
Being able to hire anybody anywhere in the world is what makes our company possible because we are able to do it on a fraction of what it would cost in the US, Canada, or anywhere in Europe.
So, I think it is a bit of both, but I think I always wanted to work through other people because then they can do the hiring and firing and I want to just put that on them while I focus on what I love to do the most, which is building the business and creating revenue.
Melissa Kwan: Wow, that’s a huge question. I think the biggest step is to figure out that this is the idea you are going to jump in for. Every founder or every entrepreneurial person would come up with an idea and buy a domain, right? That’s why people probably have a hundred domains that they never actually end up using, right?
It is almost like you are not really a founder unless you have more than 20 domains. But the thing is, once you start digging into an idea, you start realizing, “Oh, I can’t do this” or “Someone else is doing it better than me and they have the expertise, and I don’t.”
I think the biggest leap is to convince yourself that this is what you are going to spend the next five years on. “This is not something I’m going to do because it makes financial sense or because I think there is a big market out there. I don’t have a background in it, or I don’t have a network in it and that just makes it really hard.”
So, coming to terms with committing yourself for the next five years, assuming you are not going to get paid, or if you are, you are going to get paid last and very little, that’s the hardest jump.
But then once you do that, then you start to put the pieces in place. “What am I going to name this thing? How is it going to be branded? What is it going to look like? What other company do I want to emulate? Who is going to be my designer? Who is going to build it?
Am I going to have a co-founder? Am I going to do this on my own? If I want a co-founder then who is going to be my co-founder, and how do I do this? What kind of market research am I going to do to make sure that I’m on the right track? Are there any blind spots that I haven’t seen? Who can I talk to that can tell me things I don’t know about this idea?”
I think there are a lot of people that are like, “Oh, I have to keep my idea secret because it is so special. I have to make it stealth.” That’s the worst idea ever because you are one person.
If you talk to five other people, maybe that person knows someone else who has tried this before and it didn’t work, and maybe you are not going to do it because it didn’t work for that person, or you realize, “Oh, actually that person did something that I would do differently.”
So, market research is also to figure out, “Are there any blind spots that I haven’t seen?” So, further validating that and once you’ve done that, this is obviously a tech product and that’s what I can speak to, but then you have to spec out what is your first set of features.
What your Version One is – the version that people are going to pay for the moment they see it. That is becoming bigger and bigger because consumer expectations are at an all-time high. So, once you come up with all those features, then you have got to start building a team.
Then you have got to start thinking about how to pay that team. If you are not the person that is coding it and assuming that you have taken care of that, then you have got to think about how you can get to market.
You have to ask yourself, “Who are my first 10 customers?” Don’t worry about 50 or a hundred or a thousand but first ask, “Who are my first 10 customers who are going to give me their credit card who are unrelated to me?
It cannot be my mom, my uncle, my aunt, my friends. It has to be someone that is unrelated to me that sees value in this product, and they are going to use it in their life or their business.” How are you going to get there?
Then as the team is building and creating, you as the non-technical founder or CEO will have to come up with all that stuff – building a website and writing all the pages.
If you are not a great content writer, who’s going to write it? What are the first few articles that you are going to launch with on your blog, so you don’t look like a brand-new company? Then writing all the help articles right before the product comes so that you don’t look like a brand-new company.
It sounds big because it is a big task but once you start doing it, it is just like a puzzle. It becomes very obvious and there are lots of resources and communities that can give that guidance nowadays.
Melissa Kwan: I want to say that it took about five years because I honestly lived with this problem, and it was so painful. In my previous start-up, I was everything except for code.
So, selling to customers, onboarding, making sure they stay feature releases, all of those I did myself and sometimes I would do seven or eight of these training-onboarding webinars that were exactly the same back-to-back.
I would go and find solutions to solve that. I would tell friends that they need to build something like this so they could solve it for me and also other people because this is a big problem.
But over the years, nobody came up with something better. Periodically I would look up “Webinar automation” – or “Evergreen webinar” and see what would come up that was new.
It just blew my mind that when I started this company in 2019, I started it two months after I sold my previous company, I just couldn’t believe that billions of dollars were being poured into live broadcast – like Zoom, Instagram Live, Facebook Live, or Restream.
You name it and they are out there. This was before 2020, right? It just blew my mind that no one is solving the scaling problem of the live broadcast.
If you are doing a webinar or some meeting or that works, that helps a customer stay, or helps a customer understand you, and it generates revenue then why do it once a month? Wouldn’t you want to do it 10 times a day? I didn’t understand that.
Then companies started to have automation features. Zoom has an on-demand feature, but it’s literally a gated landing page with your replay on it. That’s just a video on a landing page and they call it a webinar because it’s like a recording.
So, I remember one night I was just staying up googling different solutions. I was so convinced that someone has solved this problem elegantly and I just couldn’t find anything and then I asked myself, “How would I feel if someone else did this before me given how much I’ve thought about this and how much research I’ve done, how would that make me feel?”
And that was when I decided to do this. That was when I decided I was the person to do this.
Sometimes it just doesn’t, and you’re like, “Why?” Maybe you’re meant to be right. But even then, I don’t think it matters that someone else is doing it. Like how many CRMs are out there? How many HubSpot replacements are out there? How many kinds of ketchups and mustards are on the shelf?
As long as you know how to find your target audience and as long as you know how to differentiate and sell your value, the more the merrier? In fact, competition allows you to differentiate. Having competition helps you educate the market.
I would say our biggest obstacle right now is we don’t have that much competition. I want more automated webinar software to come out because then there would be 10 other people that would tell other people that they should automate their webinars and not do it live and being one of the first people to actually educate people is actually super hard because people are like, “Well if it is good, then why isn’t everyone doing it?”
I don’t know why. They’re slow.
Melissa Kwan: Yes, our minimum set of features are not very minimum to start with, and nobody’s will be, right? As you do market research and you sign up for other people’s software, or you look at what other people are offering, you are going to be like, “Oh yeah, I need this.”
But building stuff takes a long time. It is also really expensive and a lot of times you don’t really know what to build and why it’s built that way unless a customer interacts with it.
Like you can copy a Facebook, absolutely, but if you don’t know why something is there, then your experience is going to be off. You can copy all the menus and the headers and the footers, but you don’t really know why things interact with each other.
So, we came up with a set of features that was probably 50% too large, and we basically just got together as a team probably once every two weeks in the beginning and maybe once a week closer to launch and we just started cutting stuff.
We were asking, “Do we really need this at launch? Who are we targeting? Who are the first people we are targeting? Will they even use this? Do we really need that many interactions, like polls and questions and resources? Or should we just start with five or four?”
We just kept cutting it and in fact we set a launch date because we just didn’t want to keep spinning the wheel forever. It is lovely to build something because when you never launch, you can’t fail.
Founders get into that, “Oh, I’m still building”, or “I’m getting caught in administration so I can’t launch it.”
So, we set a date and we were like, “This is the day we are going to put it out there and this is the day we are telling everyone that we are putting it out there.”
And the thing that we gave up was Stripe. It was like subscriptions. We launched without an ability to charge people because we didn’t need that from day one.
What we needed was the ability to take credit cards. So, we had a sign-up form with Stripe integrated, but we didn’t have any of our plans actually built in because we gave all of our first customers a 60-day trial.
So, we had 60 days from the day we launched to figure out building the subscriptions, because if we had done that then it would’ve taken two or three more weeks just to figure it out.
So that was how we worked backwards, “Okay, do people actually need it?” And sometimes the thing that you cut may seem really critical, but it is not time sensitive, and you are still buying time to do that later on.
Melissa Kwan: Yes, luckily I was in start-ups for 10 years before that and had other jobs. It was actually a super simple and tedious process.
I basically started a Google sheet, and I just went through my phone and my old emails and all that stuff, and I wrote down every single person and company that I knew that could use this in their business.
I used to do a lot of real estate conferences for my tech company, so all of the other real estate software companies, like my vendor buddies, and then every single real estate company because I knew they could use this. Anyone that is using webinars to train or sell can use us.
So, I just made a list. I don’t think that list was very long. I think it might have been about 150 or so names on it. It would have their name, company, email, and phone number if I could text them and I just went down the list and I just told them, “Hey, this is what I’m doing next. Does it sound interesting? If yes, let’s get on a call.”
I would push them using screenshots and I would say, “Hey, we’re launching on this date. Would you like to give it a try? We are going to give you 60-day free trial, but we’re going to charge you if you want to keep this. It is not a beta, it is not an alpha, it is a product.”
So, everybody went in knowing that that they were going to be paying for this. But I went in already knowing they had this problem because I had experienced this, and I was the person providing training for their agents.
So, that was how we got our first batch of customers. and I probably personally onboarded the first 70 customers before I automated the whole process because what you don’t realize is that you are building in a silo.
You’ve come up with this stuff all on your own, in your head, no one’s actually seen it, and you make a lot of assumptions about where things should be.
The menu, the button color – are they going to see this? Yes, of course it is super obvious, but you are looking at this for the last year and a half, someone with fresh eyes, who knows nothing about the software and what it does is going to see it for the first time.
So, what was really helpful was when they said, “Yes, I want to sign-up.” I booked an onboarding call with them. They knew we were a new company. We weren’t hiding that, and I was going to get on a Zoom call with them. They were going to share their screen and I was going to watch them sign-up, go through the entire process and create their first webinar.
So, by watching people interact with the sign-up page, upload a video, and create their first experience, like adding a schedule, adding a poll, and publishing it, we learned things from a design perspective that we needed to change.
Some of the things were actually pretty mind blowing. People would come into the product and skip all the tabs and just hit publish because they just didn’t see it on the top and it was just a simple color flip. It was like a colored button versus a white button.
Just things like that or how we name things like we thought we named things that were pretty obvious, but to a brand-new person, it’s not and it wasn’t until that onboarding process became pretty smooth that we basically just did.
Now it is just a hands-off onboarding process.
Melissa Kwan: It helps that I’ve always been in sales, so I’m not scared of asking people for money. I’m also not scared of people telling me they don’t want to pay me. I think that’s a learned skill.
Sometimes people get hurt or they are super emotional when someone says, “I don’t want to pay you.” It is not you that they don’t want to pay, they just don’t see value in this product or maybe, your product doesn’t create the value for them yet today, which is a big problem with tech because you can only build as fast as time allows.
So, we basically just picked a price point and did some pricing research. We didn’t want to be the cheapest. We didn’t want to be the most expensive because we couldn’t do that because we were new with the intention that we were going to increase the prices later as the product grew.
So, that was just the price. There was no question about it because we were pretty cheap, like $50 a month to start and I would argue that anyone that can’t pay that is not a great customer for us because they at least have to have a business that generates revenue and have people to sell to or people to train.
Melissa Kwan: Yes, do it a lot.
Melissa Kwan: You have to – as a founder there are many parts of the business, but there are really only two parts of the business, which is product and sales.
Product is a cost, sales is revenue. Sales is an investment, and it is what keeps the company going.
I don’t believe that anyone is born a great salesperson, I don’t believe that. I think sales is a science. I think anybody can learn it and I think it’s a very simple psychology of communicating to someone in a way that they understand.
I like to say that a lot of times even in relationships with your partners or with your friends, what you are saying is not what is being heard.
That is where the discrepancy comes in and the best sales people know how to align the two. So, I already know that you need this product, you just don’t know that yet. “How do I communicate that so you can also see that too?” That is what sales is.
It’s not like, “Oh, I’m asking someone, I’m taking something from them?” You are giving them something and in return they have to give you something too, to keep the product alive and to keep your company alive.
There really is no other way but to just do a lot of it. A lot of people could start by shadowing other sales people.
There’s a book that I recommend called “The Presentation Secrets of Steve Jobs”, I’ve probably personally sold like a hundred copies of that book, but it is exactly that. It is just the art of presenting something where people understand what you are trying to say.
Melissa Kwan: That is a great question because we’re not profitable. A lot of tech companies struggle to get to profitability, mainly because it is so expensive to hire a development team.
If I had to hire a developer at $180,000 a year, I’d go under tomorrow, right? That’s why people have to raise money, especially in Western countries and the US and such.
It is a hard question because if you want to build a SaaS company, it really takes five years. We are in Year Four. Two of those years we were building and two of those years we have been live, and we are doing well, right? We started charging people from day one and they were willing to pay.
A lot of people like me in my previous company took years before we found the first $10. That is where a lot of your debt and starvation and all that stuff comes, from needing to borrow money and raise money and all that stuff.
It is really hard because it is you as CEO who gets paid last, and you have to figure out if this journey is worth it.
If I build this for five years or 10 years, what am I trying to get from it? Is all of that suffering worth my time? I would love to charge someone a thousand dollars ahead for my product, but that’s a different product. It’s a different business.
The higher you charge, the more service there is. That’s not the business that I want. That’s the business that I had. The business that I had previously was that we sold enterprise only. So, our contract value was like 10k a year to a 100k a year.
But with that came people texting me on the phone on weekends. I had to work the floors on conferences, and we had 50 different versions of the same product because everybody wanted to customize their company. It’s just a different business model and that’s not what I wanted to come in with.
So, I think less about price and profitability and more about what the big picture is of where we are trying to get to because the reason why a SaaS company can be sold for 10 times revenue, or 20 times revenue is because of this process we are talking about.
Because it is so hard. Most people die in that process because they just don’t know how to figure it out or they can’t survive long enough.
So sadly, it’s been four years and I haven’t paid myself a single dollar, but I did sell my previous company and that gave me some cushion. It wasn’t like what you read about on TechCrunch, it was definitely life changing, but it was not retirement level, which is why I had to start this one.
So, it gave me some cushion. But after four years, I’m now starting also to get antsy about not getting paid. There’s all this life stuff, right? Like inflation and traveling.
You don’t want to lower your standard of living. I have done that in my early thirties and that is a long way to say that it is just really hard, and we are now at the point in our product where we are going to start raising our price, but that took a bit of time.
It took two years, to get to a point where we feel like we are now a world class software, and we should be worth this instead of that. I don’t know what’s going to happen because that’s happening in the future.
So, we are going to actually do that tomorrow and the real test is how will people react to the new pricing we have on our site? But I just know that you can’t keep selling a product at $50 and pay a team to focus on this 24/7 and build the best thing in the world.
You can’t price according to people’s ability to pay. You have to price according to the value that you create and where you are on that spectrum, and we are the best.
So, these are the things that go on in my head when I think about price. But one day, very soon I also hope to get paid.
Melissa Kwan: I think it’s always pure profitability, honestly, because we have to, right? I do my projections because I want to get to profit and every dollar I invest in, I want to be able to put into my projections and figure out how that is going to affect my trajectory.
One of the most valuable things that somebody taught me in the past is how to do projections. I’m not a numbers person, I’m not an Excel person so it is really hard.
It takes a lot of energy for me to look at that and then figure it out. But 10 years ago, I was taught how to do this. I actually recently made a copy; I turned my projections into a template that I shared with other founders because it was just so useful.
But yeah, I do projections. I update them once a month at the end of every month, and it goes out for one to two years.
What it has is all of our revenue in the past and in the future, all of our costs as accurate as possible, of course we always refer to our accountants, and our accounting documents for the actual numbers, but it is as close as possible and when I look at that, I’m able to see if I can hire this person I want to.
If I hire this person, how much cost is that going to add? And how many more subscriptions am I going to need?
We have three different plans. I’ll be able to look at that and see what our most popular plan is and what happens if 50% of the people come in, but we raise our price by a hundred percent.
So, I think as a founder, it is really important, even if you are not a numbers person, to understand how these levers drive your business, because all that matters is that you have enough money in the bank to keep your business going.
Moreover, when you are burning $60,000-$70,000 a month, which for a start-up of our size, and with a product at our stage, is actually not a lot – If we were in the US, we would be burning three times more, but it is still a lot of money. It is more money than you can borrow from your family, and it is just for one month.
I have that in place and now that we have some revenue I work with Capchase, which is a financing company that works with SaaS companies specifically to give them non-dilutive funding.
So, if you can get to that hump of creating some meaningful revenue, there are now lots of companies like Capchase that can give you a loan based on the revenue that you bring in every day. They have some algorithm to determine that.
My co-founder and I put in some capital in the beginning, and we also have some friends and family investment from the very beginning but the main way that I manage cost and profitability is that I’m just super frugal with who we bring onto our team.
I always pay people what they think they are worth. I never negotiate. But I’m very cautious of who we hire, what they do, how much they are, where we hire them, because our product is low priced, so we can’t afford to bring on someone who takes five grand a month or 10 grand a month.
That would be like another hundred subscriptions that we don’t have today. So, I think the most effective way of managing money in your start-up is starting from not spending a lot.
Melissa Kwan: It is a big challenge since the entire world is outsourcing developers. All of these shops that we used to hire from don’t give us allocation, because now every single company is outsourcing because they realize people like to work from home or they can work from home, and it doesn’t impact their revenue.
So, when everybody that used to hire locally is outsourcing, it’s pushing the global price up by at least 25% to 50% minimum. But not only that, but all of these companies would also rather work for the midsize companies because they hire five people at once, and then they keep adding people.
Whereas someone like us can only add one person at a time if we can afford them. So, we have already had two people fire us because we were too small, and they wanted to focus on another company and that is actually a really big challenge.
So, we actually built a development team in Vietnam through Dev shop. We have worked with them for four years now, since day one and my co-founder, who is also my life partner, David, he is the CTO. He still codes and he manages that team.
Ideally, we can also hire people that are a bit more senior but we actually have not been able to do that because we are getting so close to profitability.
So, we can either hire another developer who is senior, or we can start paying me a little bit. So, what is that choice going to be?
Maybe we build a bit slower, but my own mental wellbeing needs a little bit of uplifting as well,? So, these are the decisions that we have to make, but everyone else is fairly easy.
If you are talking about our marketing team, people that write content for different purposes, whether it is blogs or long form pieces of content or designers, all that other stuff is pretty easy because we only hire contractors, so we only hire people for a specific thing and usually that person is doing that specific thing they are really good at for 10 other people.
That’s actually a better use of their time and talent and it is a better use of our time and resources because we don’t have to own this person that’s actually really good at this one thing. Then they have the freedom to work on their own time as well.
So, I would say the biggest challenge that we have is developers and I’m not too sure how to solve that. I think there are companies, like the companies that we used to pay $5,000-$7,000 a month per person.
But a senior person is now charging double. So that’s really tough. If anyone has solved that, they should contact me.
Melissa Kwan: Yes. I actually just tap my own community now that I’ve been doing start-ups for so long and it is so easy to hire people now that it is hard to find really good quality for a lot of things?
It is almost like jobs are like Tinder now. People are not committed to their jobs, I guess, as much as they used to be.
I don’t know if anyone else is feeling this, but there is this whole, quiet quitting movement. I’m like, “What is quiet quitting? Why don’t you just quit?” It is like, “Oh no, we are going to show you.”
You know what? As a business owner, that’s terrible. Why would you waste your time doing something like that?
So, I think the number of jobs that are available in the gig economy has made it exponentially harder to hire someone that’s really good quality, that has integrity and is self-motivated and all the things that you want.
So, I typically just go to my own community. I was part of On Deck, which is a start-up community, a few years ago. They have a built-in Slack group that you can ask any question.
I actually have a number of role-based or industry-based Slack groups that I belong to and that I ask questions in. But since I’ve started building content and posting content on LinkedIn, I actually think that is the biggest treasure trove of talent that you can find.
Melissa Kwan: Yes, that is a really good question. No one has ever asked me that before. So, a company needs money to start, right? Whether it’s your sweat equity or just money to pay other people, anyone who has done it with zero capital, maybe because they are a coder I’m envious of them. They are my hero.
In the beginning, I put in a hundred thousand and my co-founder put in a hundred thousand as well, which I get is, a lot of money for most people but that’s just the reality.
Then I actually talked to a number of friends and having had an exit really helps. I don’t believe that success is repeatable. I don’t believe that just because you had one, you can have another one because it’s just so hard.
There are so many different elements that can influence your success. But for some reason, other people think that if you’ve had a success, that you can have another one.
So, once I started telling my friends what I was doing next, and now that I’m, getting close to 40, and a lot of my friends are older than me, they just offered to invest in my next thing.
But I actually thought about what I want my next company to be and how I want it to support the life that I want to live. I used to think, “Oh, I just want to build this thing and sell it for 10 million.” Do you know how hard that is? It is so hard that 99% of people don’t actually do it.
So, before I started eWebinar, before I even knew I wanted to start this particular idea, I just realized that I wanted a thing that could eventually pay me 20 grand a month, because that’s the number that I set myself on.
However I get there, I don’t care. I just want something that gives me that. I also wanted to build a company with friends. I liked the idea that we could have a company together and we could do company retreats where it would be on the company account, but it would be like an investor retreat and then all my friends would be there.
That is the life that I want. So, I actually structured this company such that all my friends and family investors have to be people that we are super good friends with because otherwise that retreat is going to be very weird?
So, that was a number one requirement. Then I also structured the investment so that if we pay out dividends, because it is meant to be a profitable revenue-generating – revenue-first company, if we pay out dividends then the dividends would be paid out proportionate to your investment holding, not your equity holding.
So, you can own 1%, but you could have 10% of the dividends pay out, which is a non-traditional model for sure.
But the whole idea is that you don’t get paid back until the company sells. That is crazy. What if I never sell the company?
Because I don’t want to sell the company. I want to build an ATM machine that helps fund the way that I live. I don’t want to work forever. I don’t want to pump this thing into some unicorn and then sell it. I just don’t have the ambition for that.There are so many other things that I enjoy in life that are not work related.
So, that was how it was structured. We put in some money, we got some friends and family and there was a minimum 50k buy-in and it was structured so that they could, in theory if we do well, they would get paid back their investment long before we actually sell because the idea is we would pay out dividends.
The way that I’ve structured it makes this company not venture investible. So, if I ever in the future raise venture capital, which I don’t plan to, I would have to restructure the whole thing and get everybody to sign off.
But they would actually hate that because that’s not the vision that I sold them and the vision that I sold them is exactly what I told you. Wouldn’t it be amazing if we could build this thing that just gives us passive income and we could just spend time together?
These are all people that are like in their late thirties, early forties, some in their fifties that have had some successes, but they’re not founders. They are not going to go and start something.
But as you get older, you start thinking, “How much money do I actually need to retire?” Turns out it is a lot, and it would help a little bit if you had something that gives you a little bit every month. So, that was the mentality behind that.
So, we were always revenue focused and having that structure with all my friends makes it such that I’m even more revenue focused because number one, I don’t want to let them down and number two, if I bring in any new investor, I dilute them and I don’t want to do that.
So, that is making me think extra hard about whether I really need that money or not. Do I really want that person? What would that mean to my friends and for me.
Once we got to around like 40k in MRR, that’s when I started exploring non-dilutive funding just to have a line of credit because we were running low on cash, and I wanted to see what options were out there.
The market has also been turning and it is harder to get credit and things like that, so I wanted to lock something in before it was really hard to get lines of credit.
Melissa Kwan: Yes, I just looked at three different companies. They all had different business models. So, sometimes people would give you a small line of credit, but they would have a very low interest.
Sometimes they would give you a medium line of credit and have an okay interest, higher than the bank, but at least you are getting it because the bank doesn’t even talk to you unless you are profitable and in the tens of millions and then they are tripping over themselves to have your business.
But until then they are like, “Please don’t talk to me.” Or there are companies that give you massive lines of credit, but the interest rate is like a credit card. It is about 23%.
I’m not saying that one is better than the other. But one will be better than the other for your business. If I got a massive line of credit right now and I knew exactly where to put it, that would give me more than 25% return then yeah, absolutely. I would do that. But otherwise, that is like putting 200 grand on a credit card.
Melissa Kwan: I didn’t know how hard it would be to get a self-serve SaaS product to market. I had mentioned that my previous business was an enterprise SaaS.
Previous to that, my first two companies I sold to enterprise. Previous to that, I was working for SAP. Previous to that, I was working for other companies, and selling to other businesses.
So, my background is enterprise sales, corporate sales, 101 sales, complex sales cycles, and big-ticket items. I have never sold a product that is fully self-serve.
You come to the website, you put in your credit card, you start a trial, you maybe stay, maybe you don’t. Sometimes you cancel, sometimes you upgrade, sometimes you downgrade. We all know that mail-chimp model.
It turns out that when you want a hands-off business where nobody texts you on the weekend and evenings and you want that dream life, it is 10 times harder to get off the ground because it is no longer you picking up the phone and saying, “Hey, do you want to buy this from me?”
It is, “How do you attract that person?” Because for 50 bucks, I’m not going to pick up the phone. I did that for my first hundred customers, but it is not sustainable, nor is it motivating, nor can I hire someone else to do it. It just doesn’t make sense. Nobody wants to get on the phone with me for that price.
So, for the first time, I’m realizing why SAS companies get the multiples they do. For the first time, I had to come to terms with the fact that I actually didn’t know what I was doing.
I came to this business thinking, “Well, I already did two, so of course I’m just going to do this one. I’m going to put the product out there. It’s going to be awesome, and people are going to sign up.”
It turns out they don’t do that. So, it was really disappointing and then I had to just come to terms with, “Okay, well if the way I’ve been trained to sell doesn’t work for this particular business model, then how do people buy?” And I’ve had to actually just a year into the company, rethink my entire strategy.
I’m starting from zero again and learning the new form of sales, which is marketing and community building and content and audience building. The future of sales I firmly believe is community-driven through social validation.
I don’t want you telling me I need to buy this. In fact, it turns out that that lowers a buyer’s chance of buying if you reach out to them. So, it is now having a negative effect and not even a neutral effect.
People want to discover it on their own. They want to read about it in communities on blogs.
Even if you wrote that blog. This is the thing that blows my mind, when we are recommending ourselves on our own blog, people feel better about that than if I tell them, “You should do this.”
It is like buying a TV. You probably type in your chat group like, “Hey, who has bought a TV before? Where should I go? How much did you pay?”
It is the same thing. It is the same process, but it is happening in software more so than ever before. So, that is the absolute hardest lesson and obstacle that I’m still overcoming. I haven’t fully solved it, but I guess that’s also what keeps it interesting.
Melissa Kwan: That person is always me. I know it sounds very egotistical, but I work really hard. I don’t work a lot. My co-founder would not agree with that.
I don’t think I work a lot because I think I can work a lot more, but I work really hard and a lot of people try to tell me that, “You shouldn’t work so much. You should chill. You should take your weekends.” Which I do, I take them very seriously. But I still do something every day.
People are always trying to tell you to do less and chill out a little bit more. But you know what? They don’t pay my bills. Even my co-founder, he doesn’t look at the bank account, he doesn’t know the login. He doesn’t know how much money is in there.
So, I’m always the one that is thinking, “Okay, what is the next thing? What is the next creative thing that I can do that can get me the highest return?”
I don’t believe that people need to work more. Just because you work more doesn’t mean you’re more productive. It doesn’t mean that you will be more successful.
I think we need to work less, but what we do need to do is work more creatively so that we can get more back for our efforts. I’m the one that is constantly pushing myself to do that because I do like my weekends.
Melissa Kwan: I think that means, for example, like being trained in one-on-one sales for over a decade you get that instant gratification of getting someone on a phone and they’re like, “Yeah, I’m going to try this.”
Then they sign up and you are like, “Oh, yay.” That is one person that may or may not continue with their subscription. But when I did 10 of those calls, or when I sent out 200 emails a day, I felt productive. But it was a one-shot thing, it wasn’t scalable, and I had to do a lot of that to see any sort of return.
So, I had to take a step back and be like, “Okay, I don’t know how to communicate one-to-many right now, but how do I start doing that?” The first thing that I did was I took a course by Justin Welsh. He’s a solopreneur. He is just like an insane person. I love that guy.
He is so structured and easy to understand. Going from 101 sales related stuff that made me feel good about myself at the end of the day but also bad because I wasn’t getting the return and switching to learning how to write content and feeling like I wasn’t making progress because all that gratification is delayed.
Creating an audience, writing content, understanding how to write content, all that gratification is delayed. So that’s an example of what I had to do.
Then at some point I was like, “Okay, I was just like an addict?” I was like, “Okay, I’ll just do 50% of cold outreach and then 50% of my time I’ll do this other thing.” Then one day I’m like, “Okay, this is absolutely stupid. I don’t think this cold outreach is actually working, at least for the product that I’m selling. I am prohibiting myself to do any more of that because it is just a waste of my time to fully creating content.
So, all I do right now is create content. All I do is get on podcasts and you realize once you get into this wheel, it kind of feeds itself.
Now people are seeing you, in various different places. So, it has been an interesting journey because it is new, and I didn’t think I needed to do anything new coming to this business.
Melissa Kwan: The biggest mistake that I made was I started this company thinking I didn’t need a CTO, I thought I didn’t need a co-founder.
I started my two previous businesses with the same co-founder. He was an amazing engineer. He was like my best friend, but he wasn’t a great CTO, and he wasn’t a great co-founder. That was where a lot of the friction was.
So, I came into this company thinking I’m just going to do the business side and I’m going to hire a dev shop to do the product side and they can build stuff and I can go sell stuff.
Turns out it is not that easy. Having a tech company without a CTO and a co-founder is like having a restaurant with no chef. But I realized that one year in, and I had already spent around $300,000 on outsourcing all this stuff with a product that couldn’t get out to market.
David, I had mentioned, who is also my life partner and an investor in the company, started criticizing everything one day. Before he joined me as a co-founder, he was a fractional CTO for other start-ups.
Then I was like, “Well, why don’t you go fix it? I don’t know what to do”, and so he started to go in, and fix stuff. Then the product started working and I’m like, “I’ve been with you for five years and I didn’t know that you could code this. Why am I paying this other company? Why don’t I just pay you? Or why don’t we work on an arrangement, and you can be my CTO?”
So, I wish that I had started this company from day one with a CTO, specifically with David as my CTO. Turns out your co-founder is next to you this whole time.
Another mistake that I made was that the dev shop that I hired belonged to a friend and our friendship is there, but it is not the same. It is not something that I can change but I’ve had now another two or three more times, because I don’t learn, of hiring friends that were not great for the role and not ending the relationship as early as I should.
So those are the two big things. Don’t hire your friends if they are not right for the role and start with a co-founder that might be beside you.
Melissa Kwan: Yeah, that’s a really great question. Two things have happened in the past.
So, because I chose this group of investors so carefully, like they’re my people, right? I know them and these are people that I can have really honest conversations with. These are people that want to see me succeed because they’ve seen how hard I’ve had to work for my previous company.
It wasn’t easy. What I’m doing right now is fairly easy. What I was doing before, I was years in hundreds of thousands of dollars in debt. I had one meal a day. I would go to start-up events for food.
My parents didn’t talk to me for two years. That was super extreme. So, I have friends that are investors from those days and they’re like, “I’m definitely putting money into this person.”
But two things happened. I did have an investor where we had another deal on the side, unrelated to eWebinar, and that one didn’t work out, in a way where I just didn’t want any business relationship with him and it was fairly easy for me to go to him and just say, “You know what? I no longer want you in my life and I need you to do me a favor and sell back your equity for the same price that you put in.”
And yes, it was disappointing, but he did it without question because he also knows how crappy it is to have someone in your cap table that you just don’t want there.
Your investor is not just your investor. Your investor is a shareholder that has to sign every major document. It doesn’t matter if they have 0.5% or 1% or 10%, they have to sign your document, including when you sell.
So, you better be super careful with who is on your cap table because you have to convince them, and they can make your life super hard.
Even if you had a drag along clause, you can’t just be like, “Oh yeah, we’re going to sell this company.” You have to take them to court, right?
Depending on what country you are in, and you have to have a judge say that “Yes, this is a fair deal. You can exercise this drag along.” So, it is not so easy. So that was one incident.
The second incident was actually with my previous co-founder who was one of the first investors in this company. But our relationship over time has changed and everyone that is involved in my company now is someone I have an active friendship with.
Sometimes someone’s time in your life is just over and it’s the end of an era, and it felt like that. It actually took me two years before having that conversation with him, only a few months ago.
It took me like a lot of courage because he didn’t do anything bad. It was just that it didn’t feel right for someone who wasn’t contributing and for someone who isn’t in my life to have a piece of something that I work so hard for every day.
That’s what I told him, and he understood, especially because he was my co-founder in the past. He wanted me to have a good time and he just sold it back to me.
Melissa Kwan: It is exactly that, right? It is, “Figure out what being successful means for you” because we are so polluted by other people’s idea of what success is.
We read things in the media on our apps and tech crunch, we talk to our friends, or we hear from a community who has raised some money and hired this person, and they have a hundred-person team and close a key customer and then you feel like, ‘I need to do that to be recognized and to be successful. Right? I want to be in the club.”
I don’t think enough founders stop to ask themselves, “What is it that you’re doing this? What is enough? What makes you happy? Is that a number or is that a lifestyle?”
I’ve come to realize while thinking that when I lived in New York, I thought I needed that unicorn exit and now I realize, I actually don’t have what it takes to drive a company there because I don’t even want it.
It took a long time for me to have the courage to understand that my idea of success does not need to be validated by anyone else for me to be successful.
I can be successful in my own right. But you have to take a moment and ask yourself how you define that and what you think is enough for you, and then work towards that and not someone else’s idea of who you should be because in the end, it doesn’t matter.
Melissa Kwan: Thanks so much for having me!
Melissa Kwan: Thank you!