Chris Savage, welcome to the Indie Hackers podcast.
Thank you for having me.
Excited to be here.
You are the founder of Wistia, where you create software and guides that help other businesses
create and host their own professional videos, and use their videos to convert more customers.
And you've been working on the business since 2006, it's been quite a roller coaster ride
since then.
There are times where you had investors, there came a point in time where you bought out
all of your investors.
You've been growing at times, you've been stagnant at times, you've been wildly profitable.
You've also been $17 million in debt, you've really been all over the place.
How would you say things are going with Wistia today?
Things are great, better than ever.
We've made a lot of mistakes over the years, and fortunately, some of our instincts were
turned into convictions with those same mistakes, and so we're in a good place.
But yeah, we've had our ups and downs like everybody, and learned the hard way that how
your company is set up really matters, who you're working with really matters, expectations
you set for yourself, and your team, and your investors really, really matters.
Getting that right makes a big difference, I think, in terms of how successful you can
be, and also how fulfilling the work can be.
How do you measure how successful you are?
If you're trying to paint a picture for a hypothetical podcast audience that might be
listening in, how would you describe Wistia's success to them?
When we started, we honestly thought we were going to sell the business six months after
starting, and I thought that's what success looked like, was making money.
Six months after starting, we were nowhere close to selling, but we were enjoying what
we were doing, and we continued to enjoy what we were doing.
Somewhere along the way, success became hiring amazing people, it became figuring out how
to get customers, it became solving hard problems.
It's morphed, I think, what you need in your career, what you're looking for, and how that
maps to your company and where it is, is really important.
If that matches right, then for me today, it's like, I love my work, I love what we're
doing, I love the creative risks we get to take, I love the products we're working on,
I love the content we're making, I love how the company is set up, and we're also doing
really well, but doing really well enables all those other things.
I think it's just trying to figure out what it is you actually are looking for, because
when we started and thinking we were going to sell, we had that opportunity at one point,
for example, and realized that for us, actually selling was going to feel like failure, and
so it's what you want changes.
One of my favorite parts of all the things that you've gone through is the part where
you bought out your investors.
What does it feel like to go from having to answer to investors and make them happy, to
suddenly being in full control of your own company?
It's funny, I would say we've been on a roller coaster there, because when we first raised
money, it felt like we had to answer to our investors.
That was stressful but cool, because we were telling them about...
We had other people to tell about the business and what was happening, and so we had other
people giving us advice, and that was exciting and really awesome, and then the company hit
this period where we didn't really have enough traction, and so we went into a deep dark
hole and just did things by ourselves.
We didn't really talk to the investors for a few years, and that was really scary at
first and then really awesome.
We built up a lot of confidence, and then as the company started doing really well,
the investors came back, and they're like, whoa, your business is doing really well.
What are we going to do with this thing?
Are we going to sell it?
Are we going to IPO?
What's happening?
There was a different kind of pressure that was put on us, and it was that round of pressure
to find an exit that made us realize that we didn't want to sell when we had the opportunity
to because we didn't feel like the work, when we were just trying to optimize only for revenue
growth and speed of revenue growth, it felt like the work was no longer satisfying and
actually we weren't even growing as fast as we wanted to.
Once we realized we wanted to go back to this moment of being profitable where we could
take bigger risks, we went and bought out our investors, which was scary and also incredibly
free.
Once we realized what we wanted to do, there hasn't been a day that I've questioned it,
and instead we put ourselves in a position of, instead of running on a loss, we became
really profitable.
Instead of growing with old tactics, we took crazier long-term bigger risks, and all of
those things started to work, and so it felt very freeing.
Are you open at all with any numbers around how much revenue you generate or how profitable
you are or how big your company is today?
We're open with some of it.
We disclosed last summer, so summer of 2018, that we were close to a $30 million run rate,
and our profit, but we're beyond that now by quite a bit, and our profit margin is close
to 20%.
That's got to feel so good as somebody who's in complete control of your company.
If you have investors, those are probably pretty good numbers, but it depends on how
much you've raised, what kind of return they're looking for, but on your own, it's completely
different.
Yeah, it's a different feeling, and yeah, it feels amazing.
When we raise the debt, it was a scary moment because you have no debt, now you have $17.3
million of debt.
It makes its way into your bank account, and you look at it, that one day it's in your bank
account, and you're like, wow, it's a lot of money, and the next day it's gone because
you bought back all these shares from your investors and employees.
But it also was calming for us to do that because for Brendan and I, my co-founder and
I, we felt like we had at least taken care of the people who had taken care of us.
We got everyone to return, and so if things soured after raising debt, it would be on
us, but at least the business was big enough that we thought would be fine.
And yeah, it's felt really amazing to get the company profitable, and really just because
of the type of work we get to do.
Now we are able to take bigger risks, bigger creative risks, things are less short-term,
and it's all counterintuitive.
Most of the time when I tell people we're running profitably, they're like, oh, so you
must be super concerned with cost, and you must really be trying to eke out your margin.
And it's actually been the opposite, which is now that we've gotten there, it frees us
up to do things which we believe in, but we won't be able to track for a long time.
And a lot of the things that you got to do, especially in the early days, you just got
to believe in them.
And it turns out when you're bigger, you got to believe in them too.
And for us setting ourselves up to be profitable has made it easy to make those decisions.
So let's go back in time and talk about how all of this started.
Let's try to get into the head of Chris Savage circa 2005, 2006.
Why did you decide to start a company instead of going a more normal route and getting a
job?
So we just started, we decided to start because we saw the landscape of online video was starting
to change.
I went to school and did a lot of film and video.
My real my resume was on a DVD.
And so if I want to get more work, I was like, I should probably put this online, I should
put my films I've worked on and the videos I've worked on, I should put them online.
At the time was actually hard to do and there weren't a lot of filmmaking communities in
2005.
YouTube came along and I saw that and realized, wow, one of the things that's so interesting
about this is it's not the filmmakers, the people with all the content that are using
it.
It was truly user generated.
And it was people who had no, you know, film and video experience whatsoever were able
to get videos online, have them play.
And what we realized was happening is that there was open source tools that could do
the encoding of the video.
And the what clicked for us is that this is going to open up a top, this is going to open
up online video for real, like for the first time, anyone will be able to upload it, you
will not be able to need to be technical.
And basically, it's going to be opportunity for people who are naive to jump into this.
And so Brendan and I saw that we started riffing on ideas of businesses that would exist if
online video was really easy.
We had all these different ideas we and we wanted to start a company because we wanted
to be in control.
We didn't want bosses.
We wanted to just trust ourselves.
And that was enough to convince us to start.
And you know, we had a wild first idea that was a filmmaking competition website with
it a couple months of starting where we thought it was a bad idea, but we had started and
we told everyone we had started so we felt like we couldn't go back.
And we just kind of, you know, burned the boats.
And so we just kept going and kept searching.
And it took us about a year to find our way to the kernel of what was today.
How do you go from having an idea that's a bad one to pivoting on to a good idea?
Because a lot of people are working on bad ideas, arguably, most people are working on
ideas that aren't really tenable.
So you know, the way that we did it back then was we were just constantly commiserating
with other startups.
So we were going to meetups all the time and telling them, you know, telling people about
our product and trying to demo it and other people were trying to demo their products.
And you know, we weren't getting any traction with our first stuff, really.
But we met a lot of folks and we started to hear a lot of the problems that people have.
And we became a little bit known in our hyper local community as video people.
And so what started to happen is after like six or eight months of that, someone would
come up to us at a meetup and be like, Hey, I'm thinking about using video on my website.
Can you help me with XYZ?
Or you know, our first paying customer was somebody who wanted to privately share videos
around the world.
And that was really hard to do back then.
There's no easy interface for it.
And so they came up to us and you know, we started talking through with them about what
we how we could help.
And we kind of accidentally interviewed a ton of folks who could be our target customer.
And we were honest with ourselves that our other projects weren't working.
And I think it was just that combination.
And it's still true.
Like, you know, we still try to talk to customers all the time and learn from them and understand
the problems they're dealing with and how we can help and we try to be honest with ourselves
about the things that we're trying that are working and the things that aren't working.
You say you're kind of known as the video guys around the startup crew hung around.
It's so valuable to be the best at something in your community.
Because then you like the rewards sort of stack up.
If you're the best, like you probably get like 80% of the requests 80% of people come
to you for help.
Second best is like something significantly smaller, everybody else, no one really comes
to them for video help.
And so you're going to get all the ideas, etc.
I think it's, it's crazy helpful if you're a founder to be the best at something specific,
and make sure everybody knows it.
So that way you sort of get these inbound ideas coming to you these inbound requests.
That's exactly right.
And I think one of the hardest things about growing a startup is sometimes you don't even
know what you're the best at.
You know, I feel like we've had this experience.
I've talked to a lot of other folks that have had this experience where they actually do
find traction.
And they're like, why did we get, why did we find traction?
You know, because maybe you did 20 different things, you know, campaigns and features and
you went to different events, you give these talks and, you know, you paid an influence
or whatever, just like the litany of different things.
It's sometimes really actually hard to know what is connecting with people.
And yet you have to, you have to be in tune with that.
Because as you get to those moments of your business where you need to take a big risk,
and you need to bet on the future, you know, where people are going to go, you got to lean
into the stuff that you believe that you're the best at, and or that you're ideally the
best in the world at.
And that's yeah, it's funny, because it's I think it happens in the beginning, and then
it keeps happening.
And it's this constant search, like, what are we actually the best at now?
And how does that help us figure out what we can do best next?
I want to talk about how you were confident enough to actually start a business because
probably most people listening in are not reached that point yet.
They're not even, you know, getting started.
A lot of the founders that I talked to, they feel comfortable starting a company because
they have a fallback plan.
For example, they might be a software engineer.
And so they know at least they're still a lucrative career waiting for them if their
business doesn't work out.
But I've also talked to people who are just so confident that their business would be
a huge success.
They didn't worry at all about having a fallback plan.
Where would you say you fell on that spectrum?
I was pretty sure we'd have a fallback.
My co founder is an engineer, was working as a software company, building software.
I was working in film and video and I was actively getting jobs.
And so it didn't seem that scary that we would have to go back if we needed to.
But we also felt this, we felt this opportunity existed.
And actually one of the most important things for us was we were 22 and 23 when we started.
And so our lifestyle was still very much college, a college lifestyle.
And we're living very, very cheaply.
And we thought to ourselves, if we start something now, we will actually be able, we don't have
to change our lifestyle.
We can continue to live very cheaply.
And that will let us do this for much longer.
That'll give us more runway to try.
And our fear was if we waited too long, then we'd get real careers, we'd make real money.
And then we'd be in trouble because it'd be so hard to give that up.
And so it was the very beginning of our careers when we took the risk.
And yes, we had some fallback, but more we were worried that if we waited till we were
in trouble, it would just be a bigger decision, not that you can't start a company with 30.
Of course you can.
I know tons of great founders doing that all the time.
It just can feel like a bigger decision to do that.
Yeah, that's exactly how I was reasoning about it.
I was also in my early 20s when I first started getting into the tech business world.
I'm 32 now.
But I was like, yeah, at some point if I take a job at Google, I'm going to be really addicted
to that salary.
And it's going to feel really good.
And you always want your life to be increasing.
It's really hard to take a step back and say, oh, you know what, I'm going to get rid of
my salary and just go back to the wild west and see what happens.
So I think that's a really huge advantage you can have as a young founder.
But then again, probably most of the people that I interview on the show, I started their
companies in their 30s.
And so some people just somehow get over that hurdle.
Totally.
And I think you start to see opportunities that you didn't act on and what happened.
And you realize you could execute on those things.
You learn a lot of those things that if we're going back and doing Wistia again, I think
we could do parts of it much faster from what we know now.
And I'm sure anyone who is especially if you're working in the same industry that you want
to jump into, as you get more experience, there's a lot of stuff that you will be able
to shortcut.
You'll know the people to hire.
There's all these things you can do more quickly actually, as you're in your 30s or 40s or
50s.
And I think that for me, it was just that lifestyle at that moment I had trouble imagining.
You know, I imagined having a family in my future.
I imagined all those things far off.
And I was like, well, if I have that, it's going to feel scarier to do.
And that was helpful for us.
Like, it let us be really patient because while Wistia has been successful, I'm super
thankful for that.
It took a hell of a long time, you know, before we really got traction and, you know, years
and years and years, I think six years into the business, we're still five people.
I did not expect that.
And if you told me that that's what was going to happen when I started, I would have thought
that's crazy.
There's no way I will continue to do it, you know, but it ended up being fun and rewarding
nevertheless.
And so we continued on and, you know, now we're over our I think we're 110 people or
so, 115 people a day, and the company's still growing quickly.
And so it's, it's funny, like, it's just figuring out what you need to help sustain you through
that those hard times, really.
I love that point you made that when you're older, you have a lot more experience, a lot
more knowledge, you're smarter, you have more connections, you're probably just going to
be a better founder.
You said that if you could go back in time, there are things you could have done to grow
Wistia more quickly.
Let's talk about this.
How did you find your first customers once you came up with your sort of good idea and
you pivoted away from your bad filmmaking competition idea?
And how might you have done things differently?
If you could go back?
Yeah, so a lot of that stuff went, it's funny, at the time, it felt excruciatingly slow.
And now looking back on it, it feels really fast.
But so we did the filming competition idea for like two months, then we tried like three
other ideas in succession, the course of another two months.
And then we settled on trying to do a portfolio website for artists, so it was a little bit
more broad, we'd have filmmakers and photographers and musicians.
And we did build that and launched that had about 500 people using that actively, but
we couldn't get it to really grow and didn't seem like very viable that we're able to make
money.
And so a part of that, though, we had is we'd solved the video hosting problem and encoding
and delivery and all of this, we were built on cloud from the beginning.
And so like, you know, our first bills were, I think our first bandwidth bill was 43 cents.
And like a year later, we're still spending like $2 a month on bandwidth.
That was allowing us to sustain in a world where like two years before, it would have
been hundreds of dollars a month for our costs to start, we couldn't ever have started.
So we're in that world, we knew we had these video this video data that was really, we
thought it was valuable, this ability to let someone upload a video and code it deliver
it, make it fast, we had a player, and we were building tools and just trying lots of
different stuff for that filmmaking community.
And so we talked to a friend who worked at a medical device company.
And they were sending DVDs around the world that had videos of surgeries they were doing.
And they were doing clinical trials in South America and in Europe, and wanted to, what
would happen is they do a, you know, a surgery, they would take the DVD, they'd ship it back
to Massachusetts, and then hopefully they would look at the video, and then they could
iterate on the device.
But the problem was shipping something overnight from Chile is like a two day prospect.
So it was a slow part of their process.
And so when we talked to them, they heard of us at the video guys, they told us about
what they're doing.
And we'd actually built something in our portfolio website, which is a way to privately share
video that was designed for people who were making videos for clients.
So we said, Oh, I think we can help you solve this problem.
They said, that sounds great.
We'll pay you to build this.
We said, don't pay us to build it.
Just pay us a monthly fee.
We made up some pricing with fake prices on it, of course, because that's how you do it.
Highest price was $400 a month.
They looked at it.
They said, we'll take that.
It's the best.
And we had like in about two weeks, we had taken that stuff we'd built and spun it off
to be its own product.
And they started using it.
And then we just started through that first year of networking.
We just started, you know, talking to people and calling people.
And you know, we talked to production companies and people were using video for training and
basically anywhere where at the time, people were sending DVDs around.
And we could do it faster, cheaper, more securely with collaboration.
And so that is really how we got our foothold.
And so within a year of getting onto Wistia, we had about 10 customers.
We had some big names.
We were raising our first angel round.
So you know, while the absolute numbers were small, it was a lot of traction.
So I think going back, that stuff went pretty quickly.
And a lot of the discovery went pretty quickly.
I would say the things that I would do differently is we really thought that we were doing everything
for the first time.
And we should, you know, from a blank slate on every problem that we would need to build
out in the business, like, you know, whether it's sales or support or marketing, whatever,
we always tried to innovate on everything.
And in hindsight, there are aspects of our business that are the same in any other company.
And had we not tried to innovate on all those things, we would have gotten way faster.
We would have hired more people who had done it before.
And I think there's a lot of things that we could have captured more opportunity that
was sitting right there just by slight differences in how we were building on our team and the
way we were solving problems.
It's tough when you get into that builder's mindset, you have customers, you're building
features or you're setting up email accounts and websites.
It's really tough to like take a pause and say, okay, what has already been done?
You know, let me read some stuff about how others are doing these things.
You have momentum in building, so why not just keep building more stuff?
Yeah.
And it's kind of the same thing.
Like, which of these things are we doing?
Do we need to be the best in the world at, you know?
And we were thinking we had to be the best in the world at absolutely everything.
And that's not actually true.
And when you feel like you have to be the best in the world at absolutely everything
that you're doing, you end up putting extra effort into some things and relearning certain
things that other people have learned, and that can be brutal.
And also, you know why you end up doing everything that you're doing.
So that part of it is great.
But yeah, I think there's some things there that if I were to go again, I would go fast,
Rob.
You know, one thing that really stands out when you're talking about this discovery process
is just how quickly you're iterating through all these different new ideas.
It wasn't just one idea over the course of a year.
It was like, it seemed like every two months, you were changing ideas, you were talking
to people.
And it's a pretty consistent pattern that I've found energy in people.
A lot of people try out a lot of really quick ideas.
And it sounds like the ultimate thing that you ended up with only took you a couple of
weeks to build once your first customer said, yeah, I'll pay for this.
How beneficial do you think it was for you to kind of have this process of continually
starting new things rather than just working on one thing and trying to make it work for
the whole year?
Yeah, I think it was quite critical that we're constantly trying new things.
And we were honest with ourselves.
We would do something and then we'd ask ourselves, if you multiply this by 100, would it still
work?
Would there be opportunity there if you multiply it by 1,000, if you multiply it by a million?
And we tried to evaluate how scalable these things were from the get-go, which also was
a very hard thing to do.
We had a potential early relationship, early customer relationship with HBO at one point.
And we got into talks with them about basically being the provider of their dailies.
And the dailies, they make a DVD every day back then, all the shoots from a show, and
then they take the DVD and they send it around to everyone who works on it, all the producers
and editors and what have you, and those are the daily footage.
And so people would look at the dailies to see how production was going.
And we were talking to them about putting that all into Wistia and having these dailies
for all their shows in Wistia.
And this happened crazy early through an insane connection.
And so we met with HBO, we met with head of production, we were looking at a deal with
them that was close to a million dollars a year, like $750,000 a year.
And then we realized, Brandon and I realized at one point, if we were to do that deal,
that there would be our biggest customer and there would be no way that we could not do
the things that they asked and build the product that they wanted, which seems like a good
thing.
You'd think that seems like something that everyone getting HBO that early would be a
game changer for the business.
But our concern was if we will just end up being this another custom back-end tool for
Hollywood and we'll never break out into doing something bigger.
And so yeah, we looked at that and eventually decided not to do it and actually walked away
from the deal because we felt like there would be a bigger opportunity to help lots of small
medium-sized businesses rather than just helping the high-end back-end studios.
And that was one of those ones that was like very hard decision to make and you're not
sure if it's the right thing to do.
And looking back, it definitely was.
But yeah, we just tried to look in terms of that quick iteration.
If you multiply this by, can you multiply this by 10 or 1,000 and is this going to be
the life that we want to live and the business that we want to run or not?
Sounds like in general, you're just a very future-focused person.
You're never overwhelmed by what's going on in the here and now.
You're always thinking, five, 10 years from now, am I going to be happy with this decision
that I made?
Am I going to be able to start a company as easily in the future as I can now when I'm
a 23-year-old?
Am I going to be able to build this into a big business even though we might have HBO
as a customer?
What's this going to look like in the future?
How can other people who are listening in, who want to start a company, ask themselves
the same questions?
What should they be thinking about when they're starting a company that they really need to
get right early on so they don't end up regretting some of their earlier decisions later?
Yeah, that's a great question.
I think it's right that I have always tried to look far into the future.
And I think it's a skill like anything else, you just have to practice that.
And I think from the beginning, it's kind of when you're building a company, a lot of
the first decisions are, who are your customers going to be?
And you're searching for the right target customer that actually you can serve better
than anybody else.
And you can give them a great product and a great solution.
And the question you want to ask yourself there is, if I have relationships that mimic
this one that are 10 times more than this, or 100 times more than this, or 1,000 times
more than this, is that going to be something that we can sustain?
Is that going to be something that we want to do?
And you should actually be evaluating who your first customers are going to be through
that lens.
Or another thing that's similar is the values that you have when you have a small team in
the early days.
So if you're sacrificing on some of your own values with the people you hire, the decisions
that are being made, you have to expect that those things will multiply as the company
gets bigger.
And so it's just kind of this practice of trying to take whatever your current situation
is and imagine it being 10,000 times greater, 10,000 times more.
And if you could do that, it often makes it easier, I think, to make those decisions in
the short term that affect the long term.
10,000.
That's a big number.
It's got to be big.
It's got to be big.
Because if you have 10 customers and two of them you feel like are doing sketchy things,
but it's fine because you just need that revenue, that might seem OK.
But you're sending a signal to everyone on your team that that's acceptable and you're
self included.
And so it doesn't take much.
But if you suddenly have 100 customers and 20 of them are sketchy, 20% of your customer
base is not good.
Those things compound.
That's the crazy thing about it.
And it's actually why some of the hardest decisions you're going to make are the ones
that are...
It's actually about you slowing down aspects of your business.
So that over time, the right relationships, the right business model, the right customers
are, you know, the high density of the right things.
So let's fast forward a few years.
You guys raised the money from angel investors.
You're running this business.
It seems like you got some good traction early on, but you didn't grow as fast as you wanted
to.
I think you said five years later, you still had five people on your team, which is not
as fast as you thought you would have been able to grow.
Why was that?
What stopped you from sort of carrying on with this initial traction?
And what stopped you from being able to multiply it as fast as you thought?
So the stuff that stopped us was, you know, our market was way slower than we thought
or grew much slower than we thought it would.
It's funny, there was a moment in time when we probably had 10 competitors that had all
raised five or 10 million, like truly direct competitors to us.
And we'd raised, you know, a million.
And we were kind of like, oh my God, are we going to run out of the water?
What's going to happen?
And they all need to grow the revenue so quickly that they hired big sales teams and they had
to bring the price of their products up to support those sales teams.
And so then they couldn't find the traction.
There just literally weren't enough customers, so they all went out of business.
Basically they're in the market too early.
And so it was slower than we expected, but we were still growing at a pretty good clip.
It was just small, you know, the numbers were small.
And what eventually ended up happening is that, like, we were still growing back at
those days, like, you know, 100% year over year.
And the numbers, the absolute numbers were small, but it continued.
And so it just took longer for the market to materialize.
And as it started to materialize, we were sitting there with a product that companies
loved and with a brand that people loved.
And it was really about us changing our own mindset of, oh, wow, for us to scale this,
we need to hire more people.
We need to change our operating.
We need org structure.
We need all these other things.
We need to turn ourselves into being a real company to match the growth in the market
as opposed to, you know, kind of operating the way we're operating at the time, which
was keeping things crazy lean just to make sure that we could survive.
And so what did that look like exactly?
Was it raising more money from investors?
Was it changing your business model?
So it didn't require more money from our investors.
It required just like, it required a lot of things.
I mean, it required, you know, assessing the business model and making some changes.
It really required, you know, building an infrastructure of people to work.
And that was very different.
You know, we were used to everyone could jump into anything and help.
And now we have people who are responsible for marketing.
We have people who are responsible for sales.
We have people who are responsible for like specific parts of engineering.
And it really turned into this mode of, you know, we've been flat for a long time in our
org structure and thought that that was a great way to run a business.
And we went face to face with that and realized that it was actually quite a bad way to run
a business.
And we needed very clear structure.
We needed clear autonomy.
We needed clear direction and clear goals and all these things that I thought would
kill our creativity and ended up being the things that allowed us to continue to be creative
as we scaled.
And so it was really this moment of like, to go big on the stuff we were doing, we had
to work very, very differently.
When you add more people to get a similar result.
Let's say you're someone who's running an unstructured company, a very flat company,
and company that you haven't deliberately considered all these different things that
you can do to really formalize your processes and I don't know, sort of act like a grown
up company.
How do you make that transition effectively?
Are there books you can read?
Are there the people you should talk to you?
Yeah, I think there are some books you can read and there's going to be people you need
to hire to help you, in my opinion.
But I would check out Drive by Daniel Pink.
And it's about the modern research about what actually motivates people at work, which is
mastery, autonomy, and purpose, and how you actually create that for folks.
That was something that was unbelievably helpful for us in terms of our thinking and how we
would structure goals and how we would structure the way that we work at Wistia.
And then the score takes care of itself by Bill Walsh is another really good one.
It's just a really great example of a philosophy of how to lead and how the type of environment
that you want to create so that people know that they're doing great work.
And I think you're going to want to talk to other folks.
You're going to want a lot of the best advice I've ever gotten has been from people who
are actually at the same stage as us or slightly in front of us or slightly behind.
And it's those people who have the most empathy for the challenge that you're going to be
facing because a team feels very different when it's two people, then when it's five
people, then when it's eight people, and it's 15 people, all those moments feel really big
and very different in terms of how you operate.
And I think you want to talk to the people who have just been through it or the people
who are also thinking about going through it because those are going to be the people
who have the most empathy for that type of problem.
Just like for myself, it's been a long time since I was in the early days and the early
throws starting a company and I do my best to bring myself back there if I can help.
But someone who just went through it is going to give me more empathetic and probably have
better insight than I could give.
Let's talk about the path you guys started to get to $17 million in debt where you bought
back your investors, you raised the debt round.
What's the story there?
How did you get there from the beginning?
So in 2017, we were running Wistia trying to grow revenue and doing whatever we could
to grow revenue.
And we had an interesting thing happen.
So when Wistia was about $10 million in revenue, we had a few million in profit and we were
feeling really good.
And I would talk to potential investors, there would be growth investors that would reach
out and other folks who talked to other entrepreneurs.
And the thing that everybody told me was, wow, that's so amazing, you're growing so fast
and you have so much profitability, but you know you could be growing faster if you were
not profitable, you're not investing enough in growth.
And everybody that we talked to gave us the same advice.
And at some point you hear enough of the same advice that you think that you must be wrong.
And so Brendan and I started to become convinced that we were not pushing hard enough and we
were not trying to grow the business fast enough.
And the adage like if you're not growing, you're dying.
So we were concerned that the business would die if we didn't push it hard enough.
So we started hiring much more quickly.
We went from being profitable to losing money on a monthly basis.
And when I say losing money, I mean it.
We went from losing $50,000 a month to $100,000 a month to at one point losing $330,000 in
one month.
And we were basically taking that cash we'd built up when we were profitable and putting
everything back into growth.
And at first, that felt really good because we were hiring a lot of people, headcount
was changing.
So you'd go to some event, people would say, how are things going?
We'd be like, oh, we just hired all these people, we're doing all these new projects,
there's initiatives.
Things on the outside seemed like things on the inside were going really well.
But this change started to happen in how we operated.
And we saw that when we were running at a loss, everything that we did, all the projects
we did and the initiatives that we did, invariably ended up getting evaluated based on how much
they lifted the short term numbers in the business.
And so it would work like this.
We'd have our business model, we'd have our plan for expenses and how we're hiring.
Let's say we're losing $300,000 in February.
Well, you do a bunch of stuff in February, and you're hoping it's going to increase revenue.
And if it increases revenue, then in March, your expenses are what they are, and maybe
you've hired a few more folks.
And we're planning to, instead of losing $300,000 in March, we were planning on losing $310,000.
Something like that.
Well, if the revenue stuff doesn't go up, like if the revenue doesn't go up, maybe you
end up losing $350,000 in March.
Everyone starts saying, what just happened?
Because it's a pretty big difference with how you're eating through your cash reserves.
And so all the projects that you're doing start getting evaluated in this very, very
short term basis.
And so what happened to us is all these things we had done when we were profitable, we'd
gotten into doing content marketing, taking the company down on retreats, doing wild,
big campaigns, building things in the product that we believed in that we thought would
help us that our customers hadn't asked for yet.
All these different types of things, we stopped doing them.
And it wasn't one moment, it wasn't one month, but we slowly, it became harder and harder
to do those things, and everything became around optimization.
And what my co-founder, Brett, and I did not communicate to each other is that neither
of us was having as much fun as we used to.
The optimization game was just not as exciting, it wasn't as fulfilling, we weren't creating
as much.
And so we're in this moment, we had still had cash in the bank, and we knew how quickly
we wanted things to turn around and all that.
But it was this moment that was stressful and was not that fun.
And then, out of nowhere, out of the darkness, three companies came and offered to buy Wistia.
When you're growing a tech company, there are acquisition offers.
Once they start coming, they come relatively frequently, and people want to acquire technology,
they want to acquire a team, they want to acquire customers, all these different types
of things.
And that had happened over the years.
And we had always just flat out said no, because we were enjoying what we were doing so much.
But this time, when these three offers came at the same moment, we started to actually
take it more seriously, and both Brendan and I started to admit to each other that we were
not actually having the fun that we used to have.
And so we went through that process and got some offers, and we're staring at the offers,
you know, the offers with big numbers on them.
And looking at that, realizing, again, having a conversation, you know, what would we do
if we had this money?
Like, what would we do if we sold a company?
And it was pretty clear, you know, the companies we would sell to all were run by people that
we respect and, you know, people we like, but we would probably not keep working there.
They didn't really expect us to.
And so two or three years out of the road, we'd leave, and we'd start another company.
As we started describing the type of company we'd build, we thought it would be a company
that focused on video.
We thought it'd be a company that focused on helping small business businesses, because
we really love those types of customers.
We thought it'd be a company that took a lot of creative risks.
And we eventually realized that we were describing Wistia from like two years previous.
And we're like, well, this is pretty dumb.
So we're seriously sitting here thinking after, you know, 11 years, we're going to sell this
company so that we have a chance of trying to build this company again.
What if we actually don't do that?
We just fix our problems.
And so I didn't really know about raising debt, but we realized that if we decided not
to sell, that that would instantly create misalignment with our angel investors.
We'd raise 1.4 million in angel funding, and people invest in you to get a return.
Yeah.
So we're sitting here staring at a damn good return.
And we're going to say, no, they're not going to like that.
And if we're saying no to this, are they seriously supposed to expect that we're going to say
yes to something else?
Probably not.
And we also were giving our employees stock options.
And that's also for if you sell a company, and if we're not going to sell, we have to
take care of that.
So we thought, how can we do this?
Because we didn't have cash reserves, we've been running at a loss.
And I talked to a founder who had actually bought back control of his business over like
six or seven years using debt, and this is a complete happenstance, and he was telling
me about it.
And the light bulb went on like, we could do the same thing.
We could get debt, which basically is like taking the cash and would make it future years,
bringing it forward to this moment.
And we could offer a buyback to our angel investors and to employees where they would
get a return that's very, very similar than if we had sold the business.
And then the debt, getting debt, we'd have to serve the debt, so we'd have to pay the
debt down, which would force us to be profitable.
And if instead of having this like metric that was trying to force us to grow revenue,
we thought if we were to force ourselves to be profitable, that that would get us back
to a place where we could take the creative risks we want to take.
And that hopefully would set us free to like enjoy the work, but also hopefully actually
build with you to be a more successful business.
And so we decided in the summer of 2017 not to sell.
We slowed down on our crazy marketing stuff we were doing, and we slowed down on hiring.
We said we're going to get the company back to being profitable.
We told the whole company what we were doing.
And then we raised debt, I think, in like late October of that year, and basically had
the company back to profitability by 2018.
And so we went from having about half a million dollars in losses in 2017 to $6 million in
profit in 2018.
Wow, what a turnaround.
That's crazy.
Those numbers are ridiculous.
How do you convince someone to give you $17 million loan when you're running a tech company
that's at that point in time was hemorrhaging money and losing cash?
Yeah, so it's funny, but like you'd think it'd be really hard.
And it is generally, but what we found is that Wistia has a lot of customers.
And so you model all this stuff out, you look at the expansion, you look at the churn, and
you look at how things are going.
And actually, it's pretty predictable when you look at the revenue.
And so when we worked with the folks who funded us, this group called Xcel KKR, they basically
dug deep into our unit economics and tried to figure out how predictable our revenue
was.
And they got comfortable that our revenue would do what we said it would do.
And we also got comfortable in that process.
And so they were really taking a bet on us as to whether or not that would come true.
And so the debt they gave us was like a higher interest rate because of that.
We were a more risky investment or more risky debt investment at that moment than a company
that had lots of evidence of profitability.
And so the cool thing about all this is because we became so profitable, we ended up being
able to refinance the debt.
And we did that at the end of last year.
And so our interest rates got way lower, we were able to pay down more of the debt.
And so now we have, of the 17.3, I think we have like about $14 million of debt today.
Another thing that's crazy is you met this founder who basically had done the perfect
thing that served as a solution for you.
What do you think you would have done in this sort of dire situation if you had never met
this founder?
It was never an option on your radar that you could use debt to dig yourself out of
this hole.
I think if we had not done, if I had not met them, what we would have done is like gotten
the company back to being profitable, and then we'd have to do a series of buybacks.
And so the thing that would have been painful about that is that if you don't get one deal
to reset everything, you would have to do many deals and many negotiations.
And it's possible, I know folks that are doing it, and it is a possible thing.
But for us, we just really were focused on how do we get through one deal to get us there.
And I actually kind of think we might have found our way to it anyway, because we were
talking to enough people running non-tech businesses who have been through this.
That's the other funny thing.
Like debt and tech seems weird and different.
But if you go to traditional industries, you've got to manufacturing, beverages, consulting,
like there's debts just used a lot more.
And the reason it's not used in software usually is because they have to underwrite against
something and it's how do you underwrite against software.
And so that's why it's like less common.
But with Excel, they underwrote against our revenue stream because we're a SaaS business.
So long and short of it, I think it would have taken many more buybacks over a longer
period of time.
And it wouldn't have given us as much leverage in the deal itself to actually get the terms
that we wanted.
You mentioned earlier that one of the tough parts of being a founder is that things happen.
And just because something's happening, and just because it's going well, it doesn't mean
that you can adequately explain it.
There are all sorts of different variables that might be playing a role that you might
not analyze correctly.
But let's try to for a second.
This day is an incredible business.
You're able to take yourself out of this hole pretty quickly.
What do you think were the biggest forces that enabled you to build this business?
I think that we figured out early that if we could create an amazing brand experience
for a customer, they would stick with us through tough times.
And we went above and beyond in the early days from a support perspective on every single
customer with insanely good support.
And what that meant is that when people ran into a problem, we'd fix it instantly.
They built almost more trust in every problem that we ran into.
And I think the first 200 customers, we had almost no one churning for years, which was
amazing.
And so we built up this really solid base and figured out early that that matters.
Over time, we figured out other ways to invest in that and to scale that.
And so one of the most pivotal moments for us was we had to make a decision, should we
focus on enterprise customers or should we focus on small and medium-sized businesses?
And we realized that small and medium-sized businesses, the person who uses the product
could also be the buyer.
And we really cared about user experience.
And we didn't think we were as good as a complicated enterprise sales, so we made the focus to
go on SMB, and that ended up being the right decision.
And then we invested really heavily and really deeply in content.
And we did that for a long time before the data told us that it was working.
We had qualitative data telling us it was working, but we didn't have quantitative data for probably
two years from when we started making wild videos, that it was worthwhile.
But we trust ourselves in it, and it really compounded it.
And it continues to be the biggest driver of the business today.
So basically three things, number one, a pretty tremendous focus on a good customer experience.
And so you reduce your churn, which is really impactful, especially for a SaaS business,
because every customer you prevent from quitting is basically like finding a new customer.
And so it's like a huge multiplier for growth, focusing on the right target customer, the
small businesses, and then investing heavily in content, even though you don't really have
the ability to know if it's going to pay back what you're investing, you just sort of trusted
that. What are some things that you tried that perhaps didn't go as well?
Some strategies you guys invested in that you ended up abandoning?
Yeah, a lot of the stuff that didn't go as well, I wouldn't say that is specifically
the tactics that was the issue, but it was often more the timing and context in the business.
So there's multiple things that we've tried where someone had in that moment when we were
trying to grow at any cost, someone would say, oh, I have this new idea for this new
type of partner program.
I'm like, that sounds awesome.
Yeah, they're like, yeah, we've seen all these other companies doing it, we think it's going
to work.
Great.
How many people do you need to do it?
I need three.
Fantastic.
Here are three people.
Go hire them.
Go do it.
And then someone hires three people, and they start building on this program, and you're
really excited that this thing is going to work.
And then it doesn't work.
And it doesn't work because there was a question that wasn't asked.
And the question was, if we're doing this thing, and it's so good, what should we stop
doing so that we can start doing it?
Who are our best people that we should take and put on to that?
Because there must be something we're trying that's not working, because we're always trying
things.
And you should take your best people and put them on that new thing if you think it's the
best opportunity.
And so we were basically not breathing enough life into some of the projects we were saying
yes to, and we also didn't have a rigor of actually stopping things.
And a lot of the things that we've tried over the years were often really good ideas that
were done at the wrong time or done without enough of a budget or without enough of focus
on the long term.
And we didn't ask ourselves the question, for example, we made this website 50 Grove
at one point.
It was a video production directory.
To get into it, you had to list the budgets that you worked on with examples of the work
that you had made.
And we thought marketers will love this because they can go to it.
They can see how much it costs to make a product overview video or home page video, and then
they can connect with somebody.
That'll be great for our market.
Well we did this thing.
We built it and people were using it, but we would always have to make a decision where
to decide what to build on our products, which was like, do we spend more effort on 50 Grove
or do we spend more effort into Wistia?
Well 50 Grove doesn't make any money.
It doesn't capture any leads.
It's a good thing for the community.
We can invest some on shit to it, try to capture leads and try to make money, but that seems
too risky because Wistia is doing great.
Just put more into Wistia.
And at some point now you have a product that we've launched that's languishing because
it's been 18 months since anyone worked on it, and then it's been two and a half years
since anyone worked on it.
But there's still emails that are going out when you sign up for it, and there's still
connections being made on it.
And we should have admitted to ourselves in the first place, hey, if we're going to do
this 50 Grove thing, we got to know we're committing to like a four or five year thing
at the least, just like a startup.
And if you're going to do that, how are you going to evaluate it?
How are you going to set it up in the first place that we're getting the right data to
tell us if this thing is working or not?
How do we align expectations up front?
And almost everything we've done that has not worked well has been like misaligned expectations
or not enough of a, not an admission of what it takes to really maintain that thing.
And I think a lot of the lesson that we've relearned, you know, about like the business,
how we take our best risks, why being profitable makes us confident is just simply like it
forces focus.
It forces us to focus on the things that we think that we're the best at doing.
And having that as a constant conversation, I think is a really, really healthy thing.
And whenever we've diverted focus or did things that we weren't going to be the best in the
world doing, that's when that's what things haven't worked as well.
You know, one of the cool things about Wistia is that because you've been around so long,
you've had this longevity, you've probably been able to accumulate these lessons learned,
you've probably been able to like go back to the drawing board and like retry things
that didn't work out.
Whereas a newer business just hasn't been around long enough to do that.
Let's say I'm looking at Wistia from the outside, and they can, hey, you know, I could do this,
I want to get into this business, let me start something.
What are some things I would be missing?
What are some things that like, I might not know or understand, because I don't have the
experience that you guys have.
So yeah, I mean, there's a lot of product stuff that we've done that's like, really
simple, but it's easy to miss in Wistia, you know, the there's still people who sign up
and they use our our analytics, which gives you an engagement graph to show you how people
are watching your videos second by second, what they're skipping, what they're rewatching,
how you're losing your audience on an individual basis, how people are watching.
And this is data that we've had for a long time, and it doesn't feel like a remarkable
thing anymore.
But I still talk to people all the time who've just signed up for Wistia and they're like,
wow, this is my favorite thing in there, you know, they get really pumped and really excited
about it.
And it's, you know, there's a lot going on with you.
So it's easy to miss that, I think soapbox is something I'm super proud of, which is
our Chrome extension lets you record your webcam in your screen, simultaneously, and
then make easy transitions so that you can make something look professional.
And then there's a huge content arm of Wistia, which I've mentioned has been like, the back
bone of how we've marketed ourselves.
And we've been going bigger on the content that we've been doing the last couple of years,
which has been really fun, and also really effective.
So last year, we launched a documentary, it's a four part documentary, but it's feature
length.
So an hour and 30 minutes long, called one 10 100, where we gave sandwich video and LA
production company $111,000 and had them make three ads for us, one ad with $1,000 budget,
one ad with a $10,000 budget and one ad with $100,000 budget.
And then we documented the creative process and tried to look at the link between money
and creativity.
It's a super fun project to do.
It's done really well.
We want a webby, which is amazing for like best branded entertainment.
And right now we have another new series that's coming out actually tomorrow from when we're
doing this recording called brand wagon, where I'm interviewing folks about brand marketing
and trying to demystify it because we keep getting questions about that.
So yeah, there's just there's a lot, there's always a lot going on, which is really fun.
And I think, you know, culturally, we've been a company that just celebrates creativity
and and celebrates like being who we are, you know, we try to make our outsides match
our insides.
And so when you're watching videos, the people in the videos, the people who do the stuff,
that's actually them.
And the expert of whatever we're talking about is the person who's on camera.
And yeah, it's it's fun.
Let's talk about brand wagon for a second, most people listening to the show are trying
to start early stage businesses.
When you think about brand marketing, you kind of think of Coca Cola, you think of really
big companies.
What do you think an early stage founder needs to do in terms of brand marketing, if anything?
So yeah, that's a great question.
And it's funny, I think everybody has a brand whether or not you want to.
So if you don't want to have a brand, your brand representation will be that you don't
want to have a brand, and that you don't care about it.
And I actually think instinctually, a lot of startups and early stage companies are
good at figuring out that the experience that they create for their customers, that is beyond
their product matters.
And so what I would say is like, try to be proactive in the early stages around who you
think your target customer is, and how they feel and how you want them to feel after they
interact with you.
Is that a thing that you should start thinking about before you have traction?
Or it shouldn't be like you're sort of pivoting around, you're trying to figure out what's
worth working on.
And then after you figure that out, then you start considering, they had always slapped
like, you know, a really good customer experience on top of this, how do I now start considering
these questions of what I want my users to feel?
That's a great question.
I mean, it's tied into who your customer is, right?
So if you're the customer of your product is a consumer, well, consumers make brand
decisions all the time.
That's how it works.
Like they make decisions based on things that entertain them.
And they make decisions based on things that save them time sometimes.
And they make decisions on things that make them feel cool.
And so your brand better be somewhere in there helping them be more entertained or feel cool
or do better in their career or something, you've got to be helping them feel something.
And that's different than if your target customer is someone who works in an enterprise.
Like, yes, of course, they're a human being, and they probably want to feel cool and be
entertained.
And there's a huge opportunity there.
But also, they they usually just need to be more successful at their job, like they want
the next promotion, they want the next opportunity.
And so you have to help them be a hero at work.
And the question is, like, how does your brand how does your brand deliver on that?
And it's gonna be some combination of just you know, if it's a consumer product, it's
basically the product of the packaging.
But if it's an enterprise product, it is the product and it's, you know, customer success
and service and support and, you know, a million other things.
And so I do actually think we should be thinking about from the first place is like, who is
your target customer?
How can you help them?
And then from there, you can start to figure out what do you want the experience to be?
And what do you want the values of that to be?
And how can you stand out in the world that you're operating in?
And when you're thinking about those things, you're thinking about brand decisions, whether
or not you know it.
And I like in a startup, they're not going to use the word brand that much.
And that's okay.
But it is often, you know, for many companies, it's one of the things that helps them take
off that they eventually later have to realize, wow, that is why that is why people are choosing
me.
I love the way you put it, especially when you're describing sort of building a business
that targets other businesses as your customers, where you're really trying to make people
feel like they're heroes at work.
It reminds me of a talk given by Kathy Sierra, where she talked about creating the minimum
badass user or making your users feel awesome.
I highly recommend that to anybody listening in, but like, that is really what you are
going for.
And if you can do that, then you've really won.
Totally.
Yeah, her talk on that, I think was a business of software first.
But yeah, that's an amazing talk.
And totally worth watching.
I think it's one of those things that unfortunately, is, you know, one of the reasons why startups
is hard is people will make a product that is like a product that is an amazing product
for them, but it doesn't actually make sense for any particular target customer.
And it doesn't change for someone's life.
And it's really getting in that mind from it that helps you, I think, not only build
better experiences, but build better products.
Yeah, that's the limit of solving your own problem.
At some point, you have to think about other people's problems and their own national
states.
You said earlier, when you're talking about the acquisition that you were sort of pondering
whether or not to accept or the multiple acquisitions, that the way that you thought
about it was that you sort of looked into the future, you did your trademark thing,
and you pictured how you would feel not just after the acquisition with, you know, the
new money and the new job.
But like, after that, how do you think about the future now?
And what do you want to be with Wistia?
And what do you want to be personally in another five or 10 years?
Yeah, I mean, that's a great question is something I think about all the time.
So first of all, I have I have two kids now.
One that is almost four and one that's one and a half.
And I think about like what I want my life to be when they are older and know what's
going on.
And like that I want to be present and assuming that I'm working, which is my plan, I want
them to see that you can be really fulfilled at work.
And I want to be proud of the products that we're making and the impact they're making
in the world.
And I want them to see that like that like they're it that is possible, like I want them
to shoot big and see that that is possible.
And so that is like very motivating for me.
I think, you know, I got this amazing advice a few years ago from Ben Chestnut, the co-founder
and CEO of Mailchimp.
And I was talking to him about my schedule.
And I was like, Hey, man, like my schedule is crazy.
And I'm trying to figure out how to fix it.
You know, I've got all these meetings, I've got so much stuff going on and making all
this content, blah, blah, blah, like, how should I do this?
And he was like, basically, how can I be more productive? How are you productive?
And he looked at me and he went, you don't have a productivity problem.
You have a people problem.
And I sat there and thought about that was like, I do not understand what you're saying.
And he's like, you don't have the people who can own enough.
Like you need people who can own a lot more.
You need people who can take things way farther than you.
You need people who are really good at business.
Like you need people who are so good that they give you time.
And you can use that time to think and you can use the time to do other things.
But it's not actually about productivity packs.
It's about having the right people.
And it's funny how one conversation can change how you think.
But we had that conversation and I started realizing, wow, like, I have some of the right
people, but I have some of the wrong people or the right people in the wrong roles.
And we started moving things around.
And so when I think about like how Wistio runs five years from now, it was like more
great people who are running more of the company and it's allowing me and it's allowing my
co-founder Brendan to think even longer term in the future.
So it makes it easier for us to make the decisions in the short term that ladder up to the long
term.
And then for Wistio, like more closer into strategy, what does it look like?
We've been going really big on content, which has been really fun and we've been learning
a lot and we've been going deeper on the things that you can do with video.
So I think you can expect from us to be seeing, we're going to see Wistio solving more video
problems, broader video problems, broader marketing problems, and really going deeper
with content.
And I think that's the stuff that lends itself well to how we work.
Cool.
Well, I love your content, looking forward to seeing more of it.
Chris, thank you so much for coming on the show and having a great conversation with
me.
We've got one more question before I let you get out of here.
People listening in, early stage founders, what do you think they should know as they
get started on their journey to build a business?
I think they should prepare for success from the beginning.
So look at what you're trying to do and ask yourself the question, if this really works,
is this something I want to work on for a long time?
If this really works, are these people that I want to work with?
If this really works, is this kind of return the thing that seems like it's worthy of my
time?
Are these customers the types of customers that I want to spend my time with?
And I think if you can do that, it can make it easier to make a lot of those decisions
that you will face in the early days where there isn't a clear way to go.
But at least if you can come to terms with what you want and instinctually what feels
good to you, then you're going to have fewer regrets.
Prepare for success from the very beginning so you have fewer regrets in the long run.
Thanks Chris.
Can you tell us where you can go to find out more about Wistia and what you're up to?
Yeah.
So you can find out more about wistia at wistia.com.
Brandwagon is there.
Soapbox is there.
110100 is all there.
I'm on Twitter at seasavage.
And I also write, not as often as I like, but I write on my blog, which is savagethoughts.com.
All right.
Thanks Chris.
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