What's up, everybody? This is Cortland from ndhackers.com, where I talk to the founders
of profitable internet businesses, and I try to get a sense of how they got to where they
are today, so that the rest of us can learn from their example. In this episode, I'll
be talking to Gareth and Jonathan Bull, the co-founders of an email marketing company
called Email Octopus. Welcome to the show, guys. It's really great to have you. Why
don't you introduce yourselves and let us know whose voice belongs to who?
Sure. So I'm Jonathan. This is my voice, and I'm co-founder and director of Email Octopus.
I'm Gareth Bull, co-founder of Email Octopus as well. I'm 25 years old, and we're both
from London as well.
I understand the two of you guys are brothers, which is pretty cool because I run ndhackers
with my brother Channing. And ndhackers is owned by Stripe, which is run by two brothers,
Patrick and John. And now I've got two brothers on my podcast running a business together.
Yeah, hopefully, it's a winning formula for all of us.
So how did you... Did you guys know from a young age that you wanted to work together
on a business?
I don't think we did. I think we both took quite separate paths into business, and we
both just ended up converging around three or four years ago.
For me, I always used to watch Jonathan. It was weird. I used to watch Jonathan's program
and do stuff online even before, you know, any software. The internet was really big,
and I was sort of inspired by that to do stuff online. And then, yeah, I sort of went my
separate ways and started to do my own business things. And then Jonathan was just purely
programming. And then I think we just sort of started to have this need for a product.
And then, yeah, it sort of went from there.
So I got to ask, what's the hardest part about working with your brother? I'd love to hear
both of your opinions on this.
Well, the hardest part, I guess, of working with my brother came... It was probably about
two or three years into email octopus, actually, when we started to get big, and it was making
good money, and it started to mean something. At which point, we realized we'd never really
discuss equity or, you know, how we split our workloads.
Yeah, that's an interesting time to start talking about that.
Yeah, in hindsight, probably should have done that at the very beginning. And yeah, we had
quite a few awkward conversations about that. I remember putting it off for quite a while
and Gareth, you just kept saying we need to talk about this, we need to talk about this.
And finally, finally, we managed to get over the hurdle, didn't we?
What about you, Gareth?
Yeah, I think that was pretty much the hardest thing. And it still is, you know, it's always
a challenge. I think any co-founders, regardless of... I think even if your brother's actually
makes it even harder, because, you know, I know that he's always going to be my brother
and we're always... We're not going to ever fall out. So it already makes it even more
awkward, like you just don't want to have that discussion. And because it's such a cool
project. Yeah, it's such a cool and fun project. And we're so in it all the time. Like, it...
Unfortunately, that business side to it never really kicked in until we started to make,
you know, decent money. And then, you know, we had that conversation. But I think that's
the main challenge any partners have is communication. And I think that's what we've learned. And
we'll, you know, moving forward, it's just about communicating with the co-founders together.
The fact that you know that you're still brothers at the end of the day, and then no matter
what gets said or what happens, you'll probably still have a working relationship afterwards.
It's so interesting. And it's really an advantage, I think, because it means you can have these
contentious blow up fights, and not have to worry about the other person just giving up
and quitting. And in fact, you probably have years of experience of arguing with each other
knowing how to resolve things. Yeah, almost 20 years of that. Patrick from Stripe says
the same thing about him and his brother, John, actually. So I have to ask you guys,
why email marketing? It's not a particularly sexy space to get into. It's difficult, technically,
and I'm sure you get blamed for all sorts of technical issues that aren't your fault.
People's emails going to Gmail's promotions tab, etc. And worst of all, it's extremely
crowded. I mean, you've got a ton of companies in this space, and you're pretty much going
head to head with companies like Mailchimp. So of all the things in the world that you
could choose to do, why start an email marketing company?
It's a very good question. And I don't know about Gareth, but had I have known how difficult
it would be five years in, I probably never would have started it. I thought email was
a lot easier than this. But yeah, absolutely. Deliverability, the infrastructure is very
difficult to get by, and above all, it is an extremely crowded space. And we hear that
a lot. A lot of people say, why did you enter the space of email marketing? But I kind of
see it as the fact that it's such a massive market. There is room for us. There's room
for plenty of competitors, and we're not necessarily out to dominate it. All we want to do is just
make a sizable dent.
I run a digital agency, and I deal with different kind of businesses that are leveraging email
marketing every day. And I kept seeing the problems they were having and also the price
they were spending on email marketing when their list started to get really big. So for
me, I knew how big email marketing was and how many businesses sort of started to move
around from MailChimp to Aweather to whoever. So we felt like if we could just get an angle
in there, people would make the effort to move their list across to someone a little
bit cheaper. And now because we leverage Amazon SES and their product of how they deliver
emails, the deliverability can't really be beaten like Netflix and Uber are all sending
emails via Amazon. So we let people do that via our platform.
And you guys mentioned earlier that you guys both came into business from very different
angles, you had different paths to get to where you are now. I'm curious what the story
is behind how you guys ended up deciding to work on this together.
Sure. So my story probably starts quite a while ago when I was a young teenager. And
I remember at the time I was sort of really interested in two things, internet and practical
jokes. And I ended up creating a website which that people send SMS and email from anyone
they want, which at the time I thought was absolutely hilarious. And then when I was
17 or so, I monetized it and I was making a bit of money a week. I think I was making
about $50 or so a week and I just got hooked on it. And it ended up getting neglected when
I went to uni, I had a lot more fun things to do. But it slowly built and built in the
background until I ended up closing it just because I wasn't really happy with the kind
of messages that were going through the service. And we got banned by PayPal a few times. It
was a problematic service to run, as you can imagine.
So I guess that's how I got the itch, the itch for business and the itch for having
a side project that made money. It was based in email. So I guess that's quite a natural
segue into email octopus.
Yeah, for me, as I said, I always saw Jonathan programming and I thought how clever Jonathan
was and it was frustrating for me to see how, what products he could build and what difference
he could make. He didn't necessarily understand how to market it and find people to use it.
And it's just a different brain. So I started sort of, I just started my digital agency,
you know, to find businesses and help them drive traffic. And I sort of started to get
into affiliate marketing and then, yeah, my agency sort of grew from there and I started
to understand, you know, different kinds of marketing, email, SEO, PPC, etc. And then,
you know, I tried to use MailChimp or whatever and the price was getting really high for
my clients. So we just thought, I said to Jonathan, is there a better way of doing this?
You know, it's got so costly at the higher tier when you've got a big list. And that
was frustrating for me to see. And I said to Jonathan and we both sort of came at the
same point and said, let's try it. And then the story sort of starts from there really.
So did you guys have a grand strategy early on? Because I know a lot of companies will
start and think, all right, here's our five year business plan. We're gonna write down
everything about why this company is gonna work, why this idea can succeed, how big it's
gonna get when we're gonna hire. Are you guys sort of like, let's take a few steps and then
see what happens?
Yeah, I think that one is I see that time and time again. And even back then, even if
I started a business today, you know, you can plan as much as possible. But you just
don't see things along the road that you can't plan for, especially when you're building
software like, I mean, Jonathan's been coding this along with a couple of developers for
years now. And it's like, you just can't plan things. But yeah, I think we would have planned
a lot better, definitely. In hindsight, it's a wonderful thing. But I don't know what Jonathan
thinks as well.
Yeah, the first time we actually sat down and drew up a business plan was summer this
year, which was about three years in. It always it always just, it never really felt necessary
and full credit to our CEO for prompting us to do that. But up until then, we'd seen a
nice amount of growth month on month. And we felt like we were doing all right, just
winging it. I guess the question is, could we have done better, not winging it and having
a plan? And the answer is probably yes.
I think that's always true for every company for sure. Let's talk about the early days.
What were the first steps you guys took to getting email octopus up the ground once you
agreed that it was something you want to work on?
So I guess the very first step was coming up with a name, which took far too long. It's
always the hardest part, right?
Yeah, I spent a few days coming up with a name for Indie Hackers, so I know what it
feels like.
I wish we'd have spent a few days. I think it took us about a month, maybe two months
to come up with a name.
Oh, wow.
We had some really bad names.
Do you remember how many names you considered?
Probably about 10 or so names made the cut. It was that horrible thing where you come
up with the perfect name and then you type it into Namecheap or whatever you used to
buy domains and you find out that it's taken and then you think, do I go with the IO or
do I go with get email octopus? But we never really wanted to do that.
At one point, it was going to be called mass SES with about four S's. I'm so glad we didn't
go with that. And eventually, email octopus came to us. And I remember I was adamant about
not even starting coding until we had that name. I think that's probably quite a classic
trait amongst programmers.
Well, yeah, because you put the name everywhere in your code and you're like, I don't want
to have to go back and change this, change the name of my repository, change all my variable
names. You really don't want to have to do that.
Exactly. Yeah. But yeah, I had Gareth in my other ear telling me just to start coding.
So a month goes by, you guys come up with a name, email octopus. How much time passes
between starting and finding your first real paying customer or your first user?
So we then had about six months of me coding email octopus in what was my favorite programming
language at the time. Then I decided I didn't want to use that anymore. So I did another
six months of programming in a completely different language. And finally, I think it
was about a year later we launched, we came out of a private beta around end of 2014.
And Gareth, what were you doing this entire time when Jonathan is writing and then rewriting
this app?
This is something that, you know, I think in hindsight, I would have done exactly the
same again, which is weird because even looking back, I would have done exactly the same tactic.
Back then, we were going through Mailchimp's followers and I was looking at sort of the
people that could be slightly influencer based or that could be using us in the future. So
I started to follow them and tweet them and mentioned that we've got a product coming
soon and the way that we pitched it was email octopus for a fraction of the price of Mailchimp.
And it was straight away they got a follow from us. We had the branding there, we had
the landing page, we got their email. And then when Jonathan had finished the beta version,
the first version on that day, I remember looking at Google Analytics and seeing like
two, three hundred people on the site. And we had about two thousand, I think we had
two thousand pre-signups ready to launch on that day. And I think that's the massive
lesson we, you know, learn. And I see that quite a lot in startups. They write code for
months and months and then launch and then have an amazing launch and then think where
on where users gone or where are they, which is quite funny.
The trough of sorrow. I mean, it happens. It's happened every single thing that I've
worked on where that launch boost, you know, of traffic just is impossible to sustain for
the next few months. And it's pretty depressing. I really want to dive into this whole idea
of building an audience before you launch, because I think it's something that you rightly
point out a lot of people don't do a great job of. And that it sounds like you guys really
killed it. How did you get hundreds of people onto your site the first day that you launched
and how did you get two thousand people on your mailing list?
Well, it was the pre-launch. It was getting people excited. I think people do get excited
when you have a different angle in the market and you've compared, like we compared ourselves
to MailChimp. We said we were a fraction of the price of MailChimp. We were leveraging
their brand to try and push ours. And I think it was the only way to get any sort of attention
quickly. And then we had that list ready to launch on launch day, which really helped
us.
How many places were you going to find people who were interested in a MailChimp competitor
for a fraction of the cost?
So we did a bit of Google AdWords, which was really helpful. We were just looking at keywords
that people were typing in, MailChimp alternative, Amazon SES providers, and then also looking
through their Twitter. I actually I remember looking at people that are disgruntled with
MailChimp and getting frustrated. And I said, why not try email Octopus? We've just launched.
So little like people call it growth facts, but it's just pretty simple marketing that
worked really well back then. I think Twitter now is quite overloaded with a lot of stuff
and it's quite hard to get people's attention now. But Google AdWords really helped us back
then. And Twitter.
Yeah, more than a few of the guests that I've had on in the past have talked about this
phenomenon of distribution channels sort of reaching the saturation point where they're
no longer as profitable as they used to be. And how it's better off if you can find these
nascent distribution channels before they really take off and get on there when ads
are super cheap or when it's really easy to reach your audience.
So if we're talking about AdWords, David Hauser of Grasshopper is a good example. He was,
I think, buying ads on Google in the early 2000s when it cost him pennies to access to
get in front of thousands of users. So I kind of wonder what you guys would do today if
you had to reinvent yourself. Is there any new channel that's like kind of in its early
stages that you would target to get the word out about email Octopus?
Yeah, it's a lot harder when our price point is quite low. You know, when you're providing
a low product and software, and when you're in email marketing, people have to move their
whole list across to you. It's not a quick transaction. You're not buying something
a one off. It's quite a long time for people to convert. So today, we still do paid Google
ads. We do a lot more branding stuff now. So talking about our story just like this
and, you know, blogging around our story and our startup and how we're helping other businesses,
I think that's really helped us. And I think Jonathan's enjoyed doing help in that side
of the marketing as well, not necessarily just pushing ads to people and stuff like
that. I don't know, Jonathan's thoughts. And that would be interesting.
Yeah, my my favorite sort of marketing at the moment is side project marketing. So actually
giving people something, for example, in November last year, we got to the front page of products
hunt with quite a simple email template pack, which ended up being downloaded, I think by
about 2000 people, one of them was was Uber. And that's just consistently given us about
10 leads a day now.
So when you say email template pack, you mean like HTML code for actually sending an email
like the styling and what it looks like? And Uber is using this?
Exactly. Yeah. We haven't actually seen them using it. But we know they downloaded it.
That's crazy. I think this whole idea of side project marketing is super interesting. And
I want to get into it. But I think it comes a little bit later in your story. So let's
let's table it for a second. And Jonathan, I want to ask you about like these early months
of development, because I know a lot of companies die before they ever launch. And a lot of
them die for reasons that you seem to have, like, I guess ignored, because it takes them
too long to get their first product out. And they lose motivation. How did you push through
this year long development process without getting discouraged?
Yeah, I actually came really close to give it up. It was it was Gareth who sort of motivated
me saying, you know, we just saying all right things, we need to get this out, we need to
try it, don't give up until we've at least got this in front of people. But it was it
was a real slog. And I was doing it alongside quite a demand in full time job. So it's taken
up my evenings of weekends. And yeah, it was tough. I'm lucky I'm lucky that I enjoy programming
and that would probably be my hobby, even even if I didn't have sort of financial motivations
behind it.
Yeah, I think that's like the best hack is to actually love what you're doing, at least
to some small degree, otherwise, it's going to be painful the whole way. And then having
a co founder for sure is helpful, because you're not just giving up on yourself, you'd be giving
up on this other person who you agree to work with. And it's much, it's a much harder thing
for people to do, I think, exactly. And in time, like you say, time and time again, people
give up before they even get it out there. And that's perhaps because they're perfectionists,
which I certainly am. And Gareth wouldn't mind me saying that he's less so and he was
like, let's just get it out there. And it probably wasn't even good enough to be called
an MVP at the time, it didn't really do anything.
So what what did it do launch day? You know, what what can I use email octopus for?
You couldn't even import your subscriber list. So you had to add every subscriber manually
for starters, which was a bit of a barrier to entry. So after they've gone through that
process, which probably took them about 10 hours, they'd finally be able to send them
a large email blast. And that was that was pretty much it. The people were using it,
surprisingly.
Yeah, it was frustrating. But I'm, I'm very optimistic. And I always think there's something
in something. And I was, you know, there's so much so many people out there that using
awful products. And I thought, if people are using our product that people can't even import
subscribers into, then we must be on to a winner. I think straight away, people mentioned
about the simplicity of it. And, you know, we definitely mentioned pricing on, you know,
when the people were trying in beta. And so it was just people, people using it for free
for for quite a long time, weren't they, Jonathan, I think?
Yeah, how long was that? Perhaps almost a year, I think we were completely free.
Wow, that's nuts. Yeah.
That's crazy. So I guess I mean, that's like, am I correct in assuming that being free was
an integral part of your strategy? Because it might have been hard to compete otherwise
as like a brand new entrant in this crowded market.
Yeah, and it worked really well. It's so easy to sell, sell perhaps the wrong word in this
instance, but get people using a product that is free, that is free. And so one of our largest
sources of acquisition was a Reddit post, you know, I've made this as a side project.
It's completely free. Send, send all your emails, no cost whatsoever. Check us out.
And that was huge. That blew up for us.
There's no way that was your long term plan, though, because how do you how do you guys
make money with a free product? I'm sure you're, at this point, just hemorrhaging money. How
did you guys decide that, you know, launching with free was a good way to go? And what was
your plan for how you would eventually start charging?
Well, I guess it goes back to us not really having a plan. In terms of losing money, it
was very, it was very hard to quantify because it was my personal time. And when it's your
personal time, you don't really think of it as as an hourly rate, what I certainly didn't.
I guess, in the back of our minds, we just thought that we'd be able to switch on the
paid plans and people would love us so much that they're just instantly switch over. But
that didn't really go to plan either.
Yeah, I think that's pretty much he's nailed pretty much everything there. I think, yeah,
when we did launch the paid plans, I think Jonathan's got the exact timeline, but it
was, yeah, we launched the paid plans. And I think 99% of all our users disappeared.
Was that right, Jonathan? Yeah, that was right. That was not a nice day.
That's really terrible. Yeah. That was pretty horrific. Free users come to a product for
a very different reason than paid customers come, right. And they'll even give you different
feedback as the type of features that they want. So, you know, on one hand, it was terrible,
I'm sure to lose 99% of your customers. But on the other hand, it's probably what you
guys needed to start building the right product and targeting the right types of people who
are actually going to pay you money so you can sustain this product.
I think you're right. If we look at the positives, I guess we got a great deal of motivation
from people just using it, free or otherwise. It was a great way to sort of test our infrastructure
and just get eyeballs on the site. But ultimately, you're totally right. We weren't ever validating
the correct business model there. And we did literally just have to start that all over
again once we launched those paid plans.
Yeah. But regardless, you guys have come a long way since then and definitely a long
way since the beginning. I mean, you guys are now running a profitable bootstrapped
business. And Jonathan, you mentioned that early on, you were just working nights and
weekends, pretty much just your spare time whenever you could to get the product at the
door. Did you guys know from early on that you wanted to bootstrap this business rather
than raising money from investors? If so, how did you make that decision? And how did
that constraint affect your strategies and the way that you ran email octopus?
Well firstly, it's a lot easier, right? It's much easier to just get started with a side
project in your spare time than it is to get investment. I can't even imagine how hard
that process would be running it alongside a normal job. So personally, that never crossed
my mind.
For me, it was, I always thought of software as a service and the software businesses.
I mean, back then, there wasn't as many people just raising money with crazy ideas, which
is quite glamorous now to do. But for me, we treated it as a normal business. We started
it from the ground up. We didn't want people pecking at us. Why haven't you done this?
And having external investors is great on paper on it. And it's celebrated to raise
money. But for us, it was keep it lean. And I knew that all we needed to do was get both
of us working on it all the time. And that's what we achieved. And it went from there,
really.
I've been reading this book called The Everything Store. It's about Jeff Bezos and the founding
of Amazon and how he's grown into this ridiculously huge company that it is today. And one of
their big things as well is to be extremely frugal. Because the sort of flywheel that
Amazon operates on depends on having extremely low prices so they can get more customers
to the site, et cetera, et cetera. And it strikes me as like, obviously at a much smaller
scale, similar to what you guys are doing. You guys are trying to bring email marketing
to more people by offering much lower prices. How does that affect the way that you guys
actually run your company? Does that mean that you need to not hire people or does that
mean that there are features that you can't build?
Definitely. Every time we build a new feature, we have to think about how we're going to
offer it under our price model. There are often a hundred ways you can do something
and the quickest way is very rarely the cheapest. And I've lost count of the amount of times
we've had to rewrite something just because it's perhaps storing too much data or storing
data in an inefficient way. So that's always at the forefront of our minds.
I think when we first started to see income, we immediately hired Tom, our COO, which is
quite an odd strategy looking back in theory. But straight away, the money went back into
the company of developing. He used to work at Secret Escapes. They were huge in email
marketing and still are. And that experience came straight over to us and catapulted us
and made us take things more seriously. And it was just that nod of approval from someone
else. And yeah, that went from there really.
I was going to say, it's worth noting that I didn't actually want to hire a COO at that
point. I was very adamant on it, only ever being a side project and keeping our cash,
being a nice little bump for us at the end of the month. But Gareth knew this guy, Tom.
He knew he could be great for us. And I've been proven totally wrong on that. It's been
absolutely fantastic.
Tell me more about this difference in visions. Because I think viewing this thing as a side
project and viewing it as a business that can grow to something big is very opposite
ends of the spectrum. How did you guys resolve that?
It took a while. Yeah, I was in a very comfortable job at the time that I was enjoying. And while
my dream was always to run my own business and have my own thing going on, I never really
wanted it to be... I guess I never really wanted to manage people and run a company.
I just wanted to program, get features out, make a nice bit of money. That was my aim,
really. Gareth was very different.
Yeah, for me, I was already running a business that was employing people and I saw the massive
value of that. And I sort of made sure that I kept pounding that Jonathan's throat and
saying, you know, we need to hire Tom. We need to actually... This is a serious product
because the product needs to do as well as it should. The product deserves people to
use it. And, you know, when people were using it, they were loving it. And for it just to
be a side project. And yeah, it was frustrating to see. But I think that's why a co-founder
and a programmer and a marketer works really well. And we're both completely different,
like in every shape, way or form in business. But that's why I guess it works.
I think the difference, personally, was that I was happy with any kind of growth and we
were seeing what I considered a nice amount of growth. And you, Gareth, disagreed, right?
You wanted a lot more growth and that's been great for us.
Yeah. Jonathan, were you afraid that hiring someone to rock the boat and maybe, you know,
ruin the kind of growth that you were already seeing? Or was it more that you just didn't
want to commit as much time and effort as, you know, would be required if you wanted
to start growing the company and bringing on employees?
So my end goal was for it to be my full-time project. And I guess I thought that hiring
people makes that quite a lot riskier. As soon as you've got, you know, sort of consistent
outgoings in your business, then you always have to be making a profit, right? There's
a lot more responsibility, basically.
Yeah, there's a ton of responsibility. Totally, it can identify with the reluctance to bring
other people on and to be responsible now for, you know, in some ways, their career
and for certainly like their paycheck.
Exactly. And you have to start doing all this boring stuff like employment law and tax.
And more meetings too, because now it's not just the two of you guys as brothers who probably
speak each other's language without having to say too many words, but now you've got
another person. And so you've got to make all sorts of decisions that are, you know,
I guess there's a lot more friction when you start growing your company. Did you guys feel
like you slowed down at all or did hiring Tom speed things up?
We sped up so much. It was the best decision we ever did.
Nice. What are some of the things that Tom did to help you guys grow and move faster?
Well, Tom, like Gareth said, Tom came from a great marketing background. So he had a
really good perspective on where we should take the business. And to be honest, his best
achievements in the first three months were just to bring a fresh set of eyes. We were
doing a lot of things quite stupidly, like we were handed in email support just over
email, then we were missing tickets. And just the small things that you should be doing
as a business, when you take it more seriously, we weren't doing. And Tom and having the responsibility
that I mentioned a bit earlier, really motivated us to do all those things right.
Gareth, did he free you up at all? Because it sounds like a lot of what Tom was doing
was potentially overlapping with some of the things that you were working on.
Yeah, he did free me up, but it was more I've known Tom for quite a while, I knew that we
both have different skill sets. And I always think two marketers can complement each other
much more than just one. And, you know, it's you sort of start to run out of ideas for
certain things, or you see things differently. And I think I looked at secret escapes and
how quickly they grow, they grew. And Tom was one of the first employees, you know,
I think, one of the first 10 or 20. And that straight away, you know, I don't know how
many they are now. But they're a very big company. And that was purely from email marketing.
And I thought if he could do that for someone else, we could give him that opportunity.
And he I think he wanted to sort of secret escapes outgrew him as well. And he wanted
a new opportunity. So it not only worked really well for us, it really worked for him. And
he wanted that excitement again. So it sort of, yeah, worked out really well.
Yeah, it sounds like the perfect situation where you actually know somebody personally
who would be the perfect fit for that role, rather than having to go out and hire a bunch
of unknown people, and have no idea how they're going to perform, and you know, potentially
deal with, you know, bringing on someone who's going to not work out.
Yeah, I mean, I've had experience of that. And a mishire can be massive. And you know,
if we miss hired first, not only would it cost us a lot of money, it would have put
Jonathan off as well. And it would have been hard for me to convince Jonathan that having
an employee was going to help us. So because Tom was so helpful for us, and we knew him
as you're right, you're right there. It was a really comfortable hire for Jonathan as
well. I think in the end, absolutely.
So I watched Tom give a talk on email octopus. And one of the cool things that he brought
up was this problem that you guys had, I think around like the middle of like 2015, or maybe
2016, of growing a lot, but also having to deal with this spam problem. Can you elaborate
a little bit on what happened?
Yeah, that was that was a frustrating summer. I didn't go out much that summer. Yeah, so
our volume, I think it quadrupled almost overnight. And we were we were always busy working on
other things. At that point, we weren't really looking at key metrics. And suddenly everything
started breaking like what's going on. And we looked in the database, and there was just
a huge amount of spam going through our platform. So it was sort of all hands on deck to try
and stop that. And by that point, I think it was about it probably took us one or two
months to notice, which is a mistake we'd never make again. And by that point, we'd
got very used to the extra amount of income that was coming in from these spammers. So
I think we ended up so I think we ended up just taking about a hit of about a third on
that revenue overnight, what we realized, which was very frustrating.
Yeah, I think again, that's Thomas, you know, if that happened to me and Jonathan, and Tom
wasn't on the project, I think me and Jonathan would have just kept trying to deal with all
these spammers. And you know, we got mentioned on black hat forums and stuff. And I kept
seeing us on there. And I was, you know, you always think good, you always think growth
is good growth. But Tom started to say that, you know, this is really not working, we need
to, as Jonathan said, you know, that summer was hard for him. And we sort of start to
get finding filters and a bit of AI to get rid of those people on our platform. And we
always saw the long term benefits of that in our mind. But in practicality terms, it's
so tempting not to get rid of users that are paying you money, especially when we had Tom
at the time as well.
Yeah, I bet. I mean, I think there's so many like, long term, short term trade offs. And
every business is life where you have to deal with situations where it's like, ah, if we
stop doing this right now, we're gonna lose money overnight. And you know, maybe theoretically
it'll be good in the long term. But what about the money right now?
Yeah, it was it was it was tough. We had a lot of discussions about that. But on the
plus side, it was it was a great test of the infrastructure.
Yeah, I guess it must have been. And I assume that the spammers liked you guys, because
you guys are just so cheap. I mean, if you're trying this in spam, you don't know how much
money you're gonna make from it, you might as well choose the cheapest possible option.
Exactly. Yeah. And to explain a bit more without getting into too much detail about how it
works, it plugs into Amazon Web Services. And we Amazon Web Services do their own amount
of verification on their clients as well. And we hope that that was enough. But it wasn't.
So now we also verify.
So I've had something similar happen with ND hackers actually back in September, I noticed
there's like a huge jump and traffic to the ND hackers forum. And I couldn't figure out
where it was coming from. So after some investigation, I realized it was all coming from Google.
And these spammers had managed to create threads on the ND hackers forum that would rank extremely
highly in Google for things like live sports streaming, etc. And they were driving more
traffic to any hackers site than I've ever been able to drive by myself, just by making
a forum post. So I was simultaneously like, disappointed when I figured out where the
traffic was coming from, but also impressed that they were such masters of clever. Yeah.
Sure. Yeah, you do have to have a certain amount of respect for these people.
So after cutting the spammers out of your guys platform, what were some of the next
steps you guys took to grow and kind of recover from that loss? Was this when you started
the side project marketing? Or did that come later on?
We've not quite gotten to that point yet. I think just after the spammers, we ended
up growing quite nicely. Just very naturally and organically, we were taking on more clients.
We were trying to focus at the upper end. So we were taking on people with bigger lists.
And at that point, we realized we'd probably taken on too many people for the infrastructure
we had. It was again creaking. So what we actually did then was we tried to slow down
the growth by putting our prices up, which was perhaps a strange move.
And we actually raised the prices because yeah, at the start, even when we're offering
free, we're attracting the spammers and then it was cheap, like ridiculously cheap. We were
still getting the spammers. So the best way was to increase our infrastructure. We also
had a couple of external devs and one of them now works for us full time, which is cool.
So just creating that infrastructure ready for the real big companies that actually really
wanted to use us. So we just sort of cut the fat off in the way of increasing our prices
and making sure that our infrastructure was ready to scale. So yeah, we're constantly
working on that.
It definitely attracted a higher class of users when we put those prices up.
And it didn't even slow down our growth. We actually ended up making more money by doubling
our prices, which was nice, but didn't really solve the infrastructure problem. So again,
a lot of late nights.
That's funny because I would think based on your business model and based on the industry
that you guys are in, your main differentiator was price. Why do you think people kept using
you in fact, maybe even use you more once you started raising the prices?
Well, I think there's still so much room. We went from being probably up to a tenth of
the price of MailChimp to about a fifth of the price of MailChimp. So even though we'd
doubled, we were still so much cheaper than the competition. And it wasn't necessarily
just price that people come into us for. They were coming to us because we were super simple
and a lot of people like that. We were a small business and we were always personally replying
to emails.
Yeah, I think simplicity is key for my clients. When they started to use it, they kept saying
it's so simple. I can just open it up, send out an email and they weren't having complicated
auto responders. They just wanted something really light for the sort of SME market and
they wanted something so simple and we provided that. And then you can plug it into, it plugs
into AWS, Amazon services and you can send amazing deliverable, you know, the emails
are just going to deliver every time and give your email the best chance of delivering.
So at this point, you've got prices that are going up, but still extremely cheap compared
to the competition. You've got more users than you really can even handle, even with
Jonathan working on it. I think, were you full-time yet, Jonathan? Or are you still
part-time?
It was around that time I went full-time. I had to.
Yeah. What did it feel like to make that decision to quit your job? I mean, even if you had
to, I imagine it might have been nerve-wracking. Or was it a pretty straightforward decision
for you?
It was slightly nerve-wracking. You probably noticed I was slightly risk-averse at the
time. And I think I'd just sort of taken a mortgage out on my London flat. Property is
not cheap here. And the time it wasn't perfect, but I guess it never is. And in a way, it
was really nice to have to make that move, rather than just continue to put it off, as
I'm sure I would have done.
If you guys don't mind sharing, how much revenue were you generating around this time?
We had around 200 users at the time and were taking about $3,000 a month.
Cool. So it was like enough to keep the lights on and really sustain you guys.
It was enough to sustain us. It was enough to pay my mortgage as well, which was the
main thing for me.
All right. So at this point, you're full-time. You've got these developers that you're paying
on the side to kind of help you out. Gareth, are you full-time on email octopus as well,
or are you still spending your time between email octopus and your other business?
Yeah, I split my time. Jonathan has spent a ridiculous amount of time on email octopus.
And it was always his baby. And I always had my own business before email octopus. And
you know, I really wanted Jonathan to have his own business because I thought he deserves
it. And if I could find a way of helping him on a day-to-day basis and my team can help
email octopus, it sort of works really well. And yeah, so I'd probably split my sign, you
know, 40, 60, 40 on email octopus, 60 on Bulldog. But me learning stuff in other markets really
helps email octopus, I think, moving forward. I see a lot of businesses fail. I see a lot
of businesses do really well through email and through other channels that can help us.
And I can see the opportunities out there because I think for the startup world, it's
very people read the headlines and they see lots of different stuff about, you know, growth
hacking and all stuff like that. And most of that stuff's been around for quite a long
time. As you know, I think the startup world is quite different to the world that I'm in.
I sort of deal with UK SMEs, a million dollar a year sort of clients and the startup world
is they don't ever talk about stuff like that. But yeah, it's a good I think it's a good
experience for both of us. Anyway, do you think the insights and the habits that you
bring to your startup coming from maybe a more grounded place where revenue obviously
and always matters has been helpful and growing email octopus? Yeah, I think I think in the
startup world, I mean, even when you said when you launched in dehackers, you were quite
you weren't really sure where to get anyone in. And in the real world, I think that the
way that I operate, I'm like, how can I automate this? How can I grow this business without
me and top getting Tom in was helping that growth whilst Jonathan was working on the
back end infrastructure. So that's all the way I always think really. And I saw a lot
of tasks that Jonathan was doing, like support tickets and stuff that he shouldn't be doing
like that should be someone else. And because Jonathan skill set is being a ridiculously
good programmer. And that's what he enjoys. So he should be doing that every day.
Jonathan, are you happier when you're programming? Are you happier when you kind of put on your
founder hat and dive into these new things that you're maybe less comfortable with?
I am I am my most happy and probably my most comfortable programming. But I'm really enjoying
the experience of running a business. I think I probably learn more sort of in the last
three or six months that I did in sort of five years of dev jobs. So if anyone was looking
to sort of take a jump, I'd always highly recommend it.
Yeah, it's pretty cool when you realize that you're learning faster, because you've been
sort of thrown in the deep end where everything is new. And therefore everything you do requires
you to learn. And it's definitely a good sign, especially if you're newer, when your recent
decisions look like mistakes, because you've learned so much since you made them.
Yeah, you really notice when you go through things like this, like in our practice, we're
writing down a timeline and you know, mistakes. And just looking back on the decisions I made
seem crazy with the knowledge I've now gained.
So what are some of these things that you guys have learned and would do completely differently
nowadays?
I think side projects were very tempting to do a lot. We've done a couple, some have worked
really well. And I think it's quite easy to take our eye off the ball with maybe took
our eye off the ball in certain aspects, but they still can work so well. But focus is
super key for us. We have sort of diversified sometimes and we're like, no, email marketing
is what we're good at. We want to deliver the best product to our customers. And always
remember that we've got customers that are paying our wages every month and we need to
look after them as much as possible. It's not all about how can we get more customers
in the top line? How can we do more for our customers and how can they deliver better
emails? Can we help them in other ways as well?
I think that's an interesting point because even if your goal is growth, often the best
way to do that is to focus on retention and engagement, getting your existing customers
and users to keep coming back and keep paying you. And it's pretty easy to understand why
because if you imagine pouring water into a leaky bucket, the water level is not going
to grow very fast, if at all. At the same time, retention is one of the most off neglected
metrics, especially for new founders to pay attention to, but I've been guilty of neglecting
it even while running indie hackers. Has retaining your customers and getting them coming back
been a challenge with growing email octopus? And if so, what kinds of things have you guys
done to work on that?
It's definitely something we are working on at the moment. It's so easy, isn't it, to
forget your customers who have been with you for two years because the noisiest ones are
always the newest. And recently we've been trying to do case studies, reach out to these
customers, find out actually how they use an email octopus and seeing what we can learn
from them. And in some cases it's too late, but hopefully going forward we can put an
established process in place where we sort of start that conversation as soon as we can.
Yeah, I would definitely say don't be afraid to reach out to your customers. It's amazing
what feedback you get from them. We've had people email us essays of feedback just from
us asking. And if we didn't ask, they never would have sent us that. And I think we've
learned that over the last three or four months more than ever, I think.
So another cool thing about I think doing startups is besides just learning from your
own experiences, a lot of other people have written books. They've written blog posts
and guides about how they've grown their own startups. And obviously it's easier to read
what they've done and learn from their mistakes than to go through your own sort of miserable
path of experiences and having to re-derive everything that they've already learned. Are
there any books or any role models that you guys follow in building email octopus and
learning how to run your business?
I've read quite a few of these books that have been recommended and they've never really
worked so well for me. I think the most valuable thing I've found is just working alongside
other bootstrappers. So very early on in the email octopus journey, I rented an office
with two other guys who also were running their own side projects. And the amount I
learned from that was so invaluable. Every single problem I was hitting, they'd already
encountered and it was so nice to just have that instant dialogue with someone. So yeah,
for me there's nothing better than having sort of a face-to-face mentor.
So were you going home after work to this, well not going home, but going to this office
you rented and working there after work or was this after you had gone full-time?
So there was a small period where I sort of transitioned where I was part-time on one
job part-time on email octopus. So every hour I could I was trying to get in this space.
I was going to all the meet-ups with these guys because at the time I didn't feel there
was much out there for us. Every article I was reading was about investment and VCs and
I never really read much about the little guy who wanted to send his side project into
a full-time job and it was really inspirational to meet some other people who were actually
doing that and succeeding.
What about you Gareth? Do you have any role models or any people that you learned from
or resources that are particularly helpful?
Yeah, sure. Well obviously indie hackers. I actually, yeah, I think I actually saw a
tweet today, I think someone tweeted you, they said it's nice to see not the mainstream
entrepreneurs on indie hackers. It is a different angle so I really do like that. I do like
to read in the hackers. In general I've read a couple of good books, no problem.
Breeding Gazelles is a good book. It sort of talks about, just to give you a very quick
overview, it talks about what it takes to get to half a million dollars. It's completely
different to what it takes to get from half a million dollars to a million dollars. So
I think I've sort of pushed that into the business and saying that we need to do stuff
differently all the time. What worked, during the early days we did the Twitter growth hack
or marketing tactic and that wouldn't work today and it's easy to get caught up in trying
those old tactics and it's just not going to work. So I think just constantly evolving
your marketing and your product is crucial but we don't, we do keep an eye on the market
but we don't get obsessed by our competitors and we don't really follow tons of entrepreneurs
because there's only so much learning you can do, right?
I wonder, did you guys decide to start things like side project marketing because the things
you were doing in the past had kind of stopped working and you wanted an extra boost?
Yeah, I think they are and Tom brought those ideas to the table really. It wasn't, I don't
think me and Jonathan even thought about them really. It wasn't, I think that's right Jonathan.
Yeah, it is right and I was sort of hearing both sides. I was hearing Gareth who's come
from an SEO and ad spend background and Tom who comes from perhaps more growth hacker
background and I very much favored the side projects and not saying that they necessarily
work better than the ads but I really like the fact that we were sort of giving something
back. We were providing something for people to click and check out our site.
Yeah, I also think if you're a programmer, like if your strength and your actual interest
lie with building useful tools, especially small sample tools that you can easily get
out the door and doing something like side project marketing where you're actually building
tools is going to be a lot more enjoyable as well which means you'll probably be more
effective at it because you're going to be enthusiastic about what you're working on.
Exactly, it's a lot more fun knowing that someone's using your templates than having
clicked a link on an ad.
Yeah, side project marketing feels like something that was invented by programmers who don't
want to do quote unquote real marketing. They're like, oh, here's how you can build features
and get more people in the door but it works remarkably well in many cases.
So you guys are bootstrapped, you're profitable now but what are your long-term goals? I mean,
you're definitely trying to grow the company and build revenue but to what end? What do
you see yourselves five or 10 years from now if things go according to plan?
So I guess our main goal is revenue. We only, like I've hinted to before, we only actually
decided these goals a few months ago. Our main one is to reach a million dollars annual
revenue by the end of next year. We charge you dollars though so who knows what Brexit
is going to do to that aim.
So we want to get, I think revenue is great and that's one of our targets. Another target
for us is getting into the habit of spending money which is really easy not to do, especially
as a startup and being bootstrapped to this point. We've got overheads now, we've got
an office, we've got developers. So now we've put enough spend aside to just say we're going
to spend it on marketing, any products we want to launch, like side projects. Yeah,
so just putting money aside for us over the next year is going to be really important
in putting that all back into the business.
What if email Octopus was making like, I don't know, some incredibly high number, like 10
million dollars a year and you guys are beyond the level of financial success that you even
thought possible when you first started. What would you do?
It would be very different, certainly. What would we do? I've always got the mentality
that we, like after we shouldn't hold our money and we should reinvest it back into
the business. Well, that's certainly the mentality I've had for the last year or so. Truly, I
don't really know what we'd even begin to spend that money on. It's crazy and it's
a whole different ballgame.
Yeah, I think if the revenue was, if we were like tripling revenue every month, I think
we'd start to really start to get poached people from other companies or we'd try and
get some real people in. I don't know, maybe launch a US office and try and find some talent
over there, maybe do something completely different to really scale the company, build
a really great team, sort of like the intercom sort of route, maybe something really big.
But when we're not shooting for the stars at the minute, we're just being very patient
with building the product and also the revenue. We're not in the game of taking ridiculously
high risks because also when you're tripling revenue at that pace, it's easy to make some
massive mistakes. We don't want to put the business in jeopardy basically.
I think both of your answers are revealing because you would take the money and reinvest
it into email octopus, which means that email octopus is kind of your top priority. Growing
this particular business is what you really want to do. Whereas I think a lot of other
people might take that money and invest in a completely different business or a passion
project. Or they might say, screw that, $10 million a year, I'm going to live on a beach
somewhere, I'm done running this thing.
It's very tempting. I think in my head, I always had this figure of reaching $100,000
ARR. And when we hit that sometime, I think last year, it didn't seem like that much at
all. And I think we still have 10X it. And we'll probably end up 10Xing it again. Because
it's great fun. I don't think any of us want to give it up quite yet.
Yeah, I think it's easy to say the grass is always greener. And you always think, oh,
when I hit this milestone, we're going to be miraculously happier. It doesn't really,
even if our revenue was double now, I don't think it would make any difference to our
day to day lives. We probably have more problems because we'd have more users, more staff,
more overhead. So in fact, like, we just want to make sure that we're growing at a pace
where we are comfortable with the setup. Because I've seen a lot of entrepreneurs, their business
gets too big for them. And they wish it was back to where it was at a certain point, or
they were happier, six figures a year sort of thing. So we don't really want to get to
that point. But we'll see, I don't know.
So I usually end by asking guests to share some advice that they have with somebody who's
maybe a little bit newer to business, some tips for how they can, you know, build something
successful. But since I've got both of you on, why don't I ask you, Jonathan, to give
some advice to somebody who's in your shoes, a programmer with a full time job who's interested
in side projects, but isn't quite sure how to get started. And Gareth, also, what would
be your advice for someone who doesn't come from a technical background, but wants to
start a tech business?
I'd say to anyone with a side project that's doing just okay, and it's perhaps thinking
about going full time on it to just set yourself a goal and when it's going to happen and stick
to it. My goal with email Octopus was always that it would be making enough money to cover
my basic living expenses and that I'd actually be able to eat. And I think it took us about
a year and a half to get to that point. And I also think that was okay, I really don't
think you have to go all in to begin with. And in fact, if I'd have done so and taken
a massive financial hit, I probably would have just given up and not actually validated
the idea. So yeah, it's okay, take it slow, but don't be afraid to commit. And if it doesn't
work out, at least you'll have some great stories.
So from a marketers point of view, I've seen it before when marketers launch a software
as a service business, and I just don't think it's possible without co founder, I've seen
plenty of friends, you know, use external developers, they don't understand the code
they're writing, they don't even know if they're building something good, that something of
value or if it's actually going to be good. So I think a lot of people go, they just go
to market, try and find a developer, they think it's going to be that's their route
for them as a marketer. But I think every every marketer should find a co founder that's
on a similar level with them. Make sure I think the mistakes we made were not laying
out as specific roles, which I'd advise anyone to do in any partnership, because having a
co founder is one of the hardest things you can do because there's so much friction, but
as brothers, it's sort of made a different, a different vibe, but it's still you're still
going to have that friction. So I would definitely find a co founder. And also I would make sure
you verify the product, even if you're a programmer or marketer, just make sure I mean, MVP is
a classic thing in the startup world. But in my mind, it's a classic business thing,
you know, are people using it? And is it making money? And how is it going to be profitable?
And recurring revenue, the great thing with software, it's very tempting to get into it
because it's recurring revenue. And that's been massively helpful for us. You know, without
recurring revenue, we wouldn't be here today. And a lot of businesses wouldn't listen, thank
you guys so much for coming on the podcast. It was great to have you. And it's really
cool always to have multiple guests, especially two brothers so I can hear about how you guys
interact with each other and compare it to my own situation. Can you tell listeners where
they can go to find out more about email octopus and about what the two of you guys are up
to personally? Sure. So head to email octopus.com. If you want to check out our email marketing,
we also have a template pack available still for free templates.email octopus.com. And
my personal life, to be honest, is still mainly for the programming. But next year, I'm hoping
to mix up with it and go remote and move to Canada. That's the plan. So for me, you know,
I do a lot of tweeting and trying to get involved in the startup world and also different worlds
around marketing. So if you do want to find me on Twitter, it's Gareth Paul. I do a little
bit YouTube stuff. Nothing promotional or selling. It's just a bit more about my story
and you know, people might find it interesting. But yeah, definitely check out our blog, email
octopus blog. We do share some cool case studies on there. Sign up. We're not going to send
you crap. It's all of value. No sale. Alright, well, thank you so much, guys. Awesome. Cheers.
Excellent. Thanks, Kirtland. It's been a pleasure. See ya. If you enjoyed listening to this conversation
and you want a really easy way to support the podcast, why don't you head over to iTunes
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