Jessica Hische (StudioWorks): Bootstrapping a Small Indie SaaS Product for Creatives

26:16And you're supporting these other people to being able to use it.

26:19Jessica Hische:Is there a risk, though, that you kind of end up over servicing your customers, you're selling them an amazing, fully featured product at a really low price. And the risk of that is it means that you become unsustainable. Because obviously, you know, like, you want your product to carry on and to be in existence. You want to be able to maybe hire more staff to build more features. You want to be able to offer a better customer experience. And so you want to hire CX teams, et cetera, et cetera. Like, is there a risk that by having that kind of sort of model of trying to give everybody everything at a low, low cost, that kind of limits your ability to grow and or your ability to sort of service customers?

27:00Well, I think it really, you just have to make smart decisions about staffing and the team. Because really, the thing is, like, right now, we definitely need more customers to hit a point of sustainability. But we don't need that many more. You know, like we have something around 500 paid customers right now. But in order for all of us to have, like, tech level salaries, we need about 2000 customers, like 2000 to 2500 customers, which to me, in terms of the amount of creative people in the world is not that many people, you know, so if we had, if we had 10 ,000 customers, it would be like an absolute runaway success, you know, and there are companies like and.co, for instance, was a company that, that served creative people, they ended up getting acquired by Fiverr, and they're getting shut down this year.

27:54I think at their peak, they had something like 250 ,000 customers. And they probably did have lower price points and a freemium model and a higher thing or whatever. But still, that shows me that there's like a massive market of creative people. And as long as we're smart about the team that we build and the things that we're interested in, like, I don't think I would want our company to be ever more than like 10 to 15 people, just because I want to keep this philosophy of like us collaborating and working together and that we are just kind of this like united front. And so if we ever get to that point where we're like, oh, we need more staff, we need more of this, it'll be like a fun problem to solve.

28:34But I think that that's where your sort of stance on who you are and what you want to build can really matter the most because that's where that pivot happens, where it's like, okay, now do we stop serving these people because there's all these people over here that want us? Do we stop doing this thing that felt like it was core to what we are and what we do because we see dollar signs in our eyes? And that's, I think, where a lot of things go wrong with products. They go right for the companies, but they go wrong for the product because you end up abandoning the people that got you there in the first place.

29:10And then you end up in this like really precarious place where your users and your customers are not loyal to you. They're the loyal people have left because you don't serve them anymore. And then the only people that are there are the people that are just waiting for the better option. And so we don't want to get to that place where everyone's just kind of okay with what we're making. And they're just waiting for the better thing to happen because there will always be a better thing or another thing, people will look at a successful company and see an opportunity and try to replicate it or try and do whatever.

29:44And that's why I actually do really think that like keeping those values at the center of the company and really, really speaking to the customers and trying to make sure that their needs are at the core of all of it is actually like the best sustainability practice that we could have. Because like, I, we're little guys, you know, someone could come in and say, this sounds like, like, you know, uh, QuickBooks or FreshBooks or whatever. They could come in tomorrow and say like, Oh, it looks like design is important to people. Let's like make our product more designy or like whatever. But the thing is, there are still a huge company that's doing that, that is not loyal to their customers, you know, and people will still want to support a small indie software company.

30:26That's trying to really speak to them and get on their level. so I'm cool never being an actual competitor to the big guys I don't want that to happen what I want to do is to make a real small business that is successful that serves people and we can just

30:40Jessica Hische:keep serving them do you think that it's not possible to build a business that's of a higher scale that is good and ethical and delivers quality because I guess I can I can totally see like you know in terms of kind of like your quality of life 15 person team serving 10 ,000 people is a really really nice space and like you say you can build a company of that size that can give you and your team meaningful incomes meaningful kind of quality of life but if you're thinking about serving all these amazing creatives if you can serve 10 ,000 people what if you could serve 50 ,000 what if you could serve the 250 ,000 that you talked about this other company, but in the right way.

31:22Jessica Hische:Like, are you, is there a worry that you might artificially cap the number of people that you can deliver this amazing product to? I don't think so, because there's nothing like, it's not like I'm saying, no, don't sign up. You know, I think it's, I think what you're doing is you're making a thing for the audience that you want to make it for. And if that audience will find it and it will find itself. It's not like we're going to be building things in the product that specifically limit the amount of people that will enjoy it. It's just more like, we're not going to see all of a sudden, like, oh, if we make this like way loose, more loosey goosey, we can attract any freelancer and then any this.

32:04And then all of a sudden the product starts not speaking to our audience anymore. If you think about even just Adobe users, there's 68 million people that use Adobe products. You know, that's like a lot of creative people and not everybody is working for themselves for sure. But like, that means there's a really huge audience of people that at one point or another might work for themselves and might need to manage their business. And we definitely are here for those people. And I think that in that way, when you get to that kind of scale, like if we had 250 ,000 customers, the scaling wouldn't necessarily be on the product team side, it would be on the customer service side.

32:43It would be on the like, how do we help these people when they need help? How do we like, make sure that we connect them to the right people and help them through problems or, you know, set up a legal department to help them with legal defense stuff? Like, how do we do all the things that actually that kind of money and customer base could afford, where we could make the product richer but in ways that feel meaningful in a specific way not in like a like we're making it richer in a now we are a broad software company way you know I mean it feels it feels like you're

33:20Jessica Hische:following a model that isn't a million miles away from where sort of 37 signals and base count were many many years back I think you have slightly different like um ethics and morals and kind of culture than where they are but I think you know their their focus in terms of building software was we want to build software for people like us opinionated software we never want to be a team of more than 40 50 60 people I think don't think they ever got much beyond that even though they were making good amounts of money they never wanted to raise funding they just wanted to build the kind of company that they wanted to work at and I'm getting a very similar kind of vibe from you i'm curious because i'm assuming you're bootstrapped like yeah how has that worked has this been just out of your own pocket are you funding it yourself have you got initial like early angel investors and is there a decision where you had to decide are we going to go out and raise funding or are we going to just do it ourselves we have not raised any money so far so it's just been us chris and i in terms of actual like physical money being put into the company have probably invested, I don't know,$20 ,000 to$25 ,000 each, which is not really much.

34:30But in terms of what we as a team have invested in the company, like everyone has been working for free for like, you know, more than a year. And so we've invested a lot in that we've all basically burned through our savings accounts while not being paid by this thing. And so we can all really quantify how much we've invested by how much our accounts have shrunk. So we are sort of hitting a point where it's like, you know, we do need to start having some real momentum with signups and customers, because since we only had invoicing and payments for a while, like the message of like what we are and what we build hadn't really shifted very much.

35:11um and so it's been like for me like since i'm basically in charge of all of the marketing and chris has been running ads and we've been like kind of learning a lot about what it is to run ads and things like that um what we realized is that like we do need to be more than invoicing for one thing um and we need to sort of talk about what the product does and what we're building in really different ways because when we before we launched like the the reason why this thing exists is that we had a pre-launch signup and we got a thousand people signed up with their credit cards in hand to be paid customers on day one.

35:46And then it's just been kind of steady, you know, so we've been kind of like holding steady, but not really seeing the growth. And so now we're in this sort of like, we need to grow over the next three or four months, or we need to look into like, what does it look like to take on a little bit of money in some creative way, just to make sure that the staff can get paid just so that we can push out the products that we think are going to make like a very, very meaningful difference to potential customers. We basically are having this like three month sprint of like, all right, we've got to, we've got to add an additional 250 customers in three months.

36:19And if we don't, we got to like have a conversation about what the next step is. Um, and I was like, if we like, if we want to, I'll just put in my own money into it and you guys can get paid. Cause I really believe it. And I really believe that when we like have proposals that it's going to be well-rounded enough for most people. And so we definitely like have a million options. Like people reach out to us all the time trying to throw money at us. And we've just been trying not to do it because we want to have that control. But I know that there's a lot of creative ways to sort of like take on money without it being the VC model.

36:55So I think like the more traditional VC model is just the opposite of what we want to do just because we don't want to build a company that would be a 50x return on investment. We want to build like a small and steady, awesome small business. And I just think that in order to satisfy a more traditional VC, we would have to really shift our values and the goals of the company. So I think like angel investing and, you know, kind of small scale community investment could definitely be part of our future. But I think if we tried to go a more traditional route with fundraising, it would just, it would kind of eat us alive in terms of our actual values and what we want to build.

37:34Jessica Hische:I think what you've described as kind of the journey and the kind of company you're building is very much in opposition to what a VC wants. Just because of the way the VC model works, there's an expectation that in order to get their money back and to pay for all of the investments that don't go anywhere, you need to build a company that's doing around$100 million a year in revenue. That means you need to be a billion dollar business that is really really tough to build like very few of those sort of make it so um i think you wouldn't be in that kind of vc world but have you come across the kind of concept of seed strapping at all is that yeah yeah yeah we've had a number of people that have told us that they've had really successful like early starts by just like strapping together 50 small scale or like 30 small scale investors to just like get them through and then the return is like 2x or 3x instead of 50x, you know, and they're all like, you know, it's not a lot of money.

38:28It's just enough to sort of push you over the, over the finish line on some things that you want to build. So we're definitely open to that. Um, again, we're, we're trying to do it without it just because, you know, if you can, why not? But I just feel like we have a lot of options. And so we're just kind of trying to push through this for now. And then, you know, if we just need a little bit of extra oomph to really push over the finish line, I do think that there's a lot of options.

38:52Jessica Hische:I mean, bootstrapping, there's a real culture around bootstrapping. There's a real kind of romance around it as well. And I think that's the desire for independence, the desire for creative control. But it is also kind of challenging. You know, growth in the early stages is an S-curve. You know, it's kind of slow at the start. And then once you find product market fit and get the word out, it kind of ramps up. But that slow in the start requires you to like either not get paid for your labor or very, very quickly get enough revenue, get to your 2000 mark where you're kind of paying everyone's wages.

39:23Jessica Hische:or some of it becomes being really fortunate coming from a world of money, having kind of money in the bank and kind of paying for yourself. And that can be great for some, but it can be a little bit kind of difficult for other people to do. So I think a lot of the talk around kind of bootstrapping maybe doesn't sort of reflect the fact that how hard it is or how fortunate you have to be to be in a position where you can bootstrap. Yeah. And what I was going to say, a thing that I, because I've been here in the Bay Area for a long time now, like I've been here for 15 years. And I've just seen a lot of I have a ton of friends in tech and a lot of friends that have started startups and raised money and done lots of things.

40:05And one of the things to speak to the bootstrapping, but coming from like having the money to bootstrap, there's actually like a real danger and problem with that. What I've seen over and over again, is if you don't need something to be financially successful, it won't be financially successful. You know, so there's lots of people who basically have money to throw around and want to do a fun project or create a new company. But if they don't need that thing to be successful, then there's just no drive, you know, whereas I think that and I think that's part of the, like, it is a little bit of a romanticism of the bootstrapping model.

40:42Like if you aren't doing it from like the we have daddy warbucks like giving us money to do it or whatever but uh to me it's like that hunger actually is just so motivating where you're like what if we could do this we have to do this we need to do this you know and that can really push you to work harder and and push harder on it than if you do have just kind of like a pit of money to pull from where you might waffle around a lot more and you might not actually like feel that sort of immediacy that needs to happen around finding product market fit and getting that thing to be successful.

41:19Jessica Hische:Absolutely. Yeah, the word I was hunting for is sort of privilege. I think for some people, there's a level of privilege that comes from being allowed to kind of bootstrap. But you're also right, like I see a lot of companies that bootstrap, but they don't have the external pressure to kind of make payroll to hit their kind of targets or whatever and so i think if you do have the external pressure that could be a real sort of forcing function it is something that having investors can be as well the whole concept i was going to say of seed strapping is for a lot of businesses they don't need to raise multiple rounds of millions and millions of pounds but they might need half a million or a quarter of a million or some amount of money yeah to get them through the first year or two to find product market fit and post that people are not expecting like you say like a hundred x kind of return but they may be looking at a 5x like a classic example is something like tiny in in in the u.s where they kind of they take existing businesses and kind of say hey look we'll we'll write your single check but then we'll kind of take a little you know cut of your your dividends when you start making money and we'll expect to be paid out that way rather than a big exit so there are more creative ways i think of of funding those first couple of years but um but it sounds like it's a really sort of fascinating journey.

42:33Jessica Hische:Like, how have you found being a founder of a tech business? I mean, I know you're a founder of other things, your solo business, your shops and stores, but are there particular kind of things that surprised you about being a tech founder that you didn't realize? It's kind of like an interesting landscape in terms of promoting anything right now because the internet is so broken. And so when I first started my business, the internet was a very, very different place. And people were just so excited and hungry to put eyeballs on anything that seemed fun and cool. And now just Instagram is different.

43:10Twitter is still around, but also a very different space. And now there's threads, there's all these other things. And the kind of content that gets attention from those platforms is very different than the kind of content that most startups need to produce in order to get eyeballs on their stuff. And so the actual like promotion and getting just even traffic to the website has been a challenge and a thing that I didn't anticipate because it used to be like you posted a thing and like everybody's like, oh, cool, I'll go check that thing out. And now it's like, if you at all look like an advertisement about anything on the internet and aren't just like a fun person doing a TikTok dance, it's really difficult to get platforms to point people to you.

43:55And so that's been like a huge challenge is kind of understanding just how much of my role has to be just like figuring out marketing a business on the internet in a weird time to market businesses on the internet.

44:09Jessica Hische:I think you're absolutely right. I think had you launched this business six, seven, eight, nine years ago with your, I mean, I don't know how many like tens, maybe hundreds of thousands of followers you've had across platforms I imagine it would have been much easier to kind of bring those people in and get access and expose it but I think at the moment it's really really tough I'm seeing lots of people it's very fine their usual kind of channels not delivering interest like a lot of people are left you know Twitter like you say a lot of people are kind of going into kind of small local chat groups and and you know a little bit more private I think we've got really good at picking out and ignoring kind of content that feels promotional.

44:48Jessica Hische:And so something that would have been really easy 10 years ago is an uphill struggle. And I guess if you're not used to creating video content, if you're not used to creating kind of, you know, TikTok reels or like, you know, Instagram reels, it becomes much, much harder. On the other hand, I guess one of your benefits is you are, you know, a cheerleader, you are really well known. I imagine coming and doing things like this is always, you know, a way of getting the message out you speak at conferences and events and so I guess a big part of your role is to kind of help bang the drum and and highlight the um the challenge that people have and what your problem solves um I'm just curious like so I think you are a bit of a role model and inspiration to a lot of designers you might not feel that it might feel a bit weird but I'm sure you are if a if a designer listening to this and listen to your founder journey what advice would you give them around kind of starting their own business?

45:41Well, like a bootstrap software business is really different than should I start my own business? You know, like, I think that, like, it's difficult to tell someone to quit a crazy high paying job at a tech company, because you will literally never make that money again in your life. You know, like, I know people that are founders of, like, huge businesses that generate millions of dollars of revenue, and And their take home salary is still quite similar to what a like meta salary is for like a mid level product designer. So I think the I think most people that work at specific, very, very high paying tech jobs, like should really like look at the situation that they're in and understand that there are very few other situations that will pay them as much money, especially starting your own company, because starting your own company like, yes, there's a chance that you'll be wildly successful and be able to pay yourself like loads of money.

46:37But I mean, the real reason to start a company is not because you want to make more money than your tech job. It's because you want a really different life than your tech job allows, you know? So like anyone that actually goes off to start their own business, like the main advice that I would say is like, you want to build a business that creates the life that you want for you, like whatever that is. And that's really the goal. Like, I mean, if we zoom back to StudioWorks, like that's why we have our philosophies of where we are is that all of us just want to like work a job that we love with people that we love and make enough money to pay our families and have flexibility to like go on vacations and do things.

47:23And we're not trying to like live in a fucking castle of emeralds, you know, like we're just trying to have a nice life with our families and support other people to like have a nice life with their families. And I think that you really have to zoom out and ask yourself like what your goals are. Another thing is like, don't spend money you can't afford to lose. I think that there's a real difference between investing in a thing, you know, will pay you back on some timeline versus throwing money into the wind. So I don't feel like anything that I've ever done in my life that I've invested a lot of money in has been a mistake or that I haven't gotten some return on.

48:06You know, like I have these brick and mortar shops. They do not make money. They make a modest amount of money. But what they give to me is really hard to communicate to other people. You know, like they give me this capacity to engage with the community in a way that I couldn't before. They give me a way for people to have like a physical relationship with the things that they buy that I make. They can see where things happen. And that is really valuable to me in a way that like, like if it was just about the money, it would be a terrible idea to like start a brick and mortar retail store that has like no online presence.

48:44Really. You have to just look at overall what starting that business does for you. Sometimes it's money. Sometimes it's lifestyle. Sometimes it's just feeling an amazing sense of self. Sometimes it's community engagement, whatever it is, all of those things are ways that you are paying yourself from that business. But with Studio Works, like again, like we've all invested a lot of ourselves into it. I've invested some of my money into it, but I believe in it so much that I'm just like, I know it will be successful on some timeline. Like, you know, like I don't need something to be successful, like right away to like want to invest in it.

49:21I know that it can just pay me back over time. Um, so much so that even as we get to that point of like seed investments and stuff, I'm like, do I just cash out my fun money fund? And like, I am the seed investor. Cause I just really believe in it that much. And so I think you have to, you have to really feel that in your bones that over time, the thing that you're making will work. And then spending money on that thing just will always make sense, you know? And then if you start getting like true feedback that it's not going to work out, you have to pay attention to that and know when it kind of switches from the, like, I'm investing the thing that's not paying me back right away, but will pay me back at some point.

50:02And in some way to now I'm just throwing money into a thing that I'm not getting much out of and other people aren't getting much out of, you know, like, and that's like the hard conversation to have with yourself and to like really like do check-ins with like what am I getting out of this do I still feel like it's worth it you know and that's why a lot of small businesses do shut down not because they weren't successful but because the owners feel like they're not getting anything out of it anymore there's like a timeline for restaurants and things like that most restaurants don't last past 10 years because running a restaurant is a slog even if it's really really successful at some point the founders and owners of that thing might want a different life than that business allows.

50:43And so I think that that's always what you should think about, like when starting a business or building a business or continuing a business is, does this business support the life I want? Yeah.

50:53Jessica Hische:I mean, I think this is it. I think a lot of VCs will use the term lifestyle business and they'll often use it a little bit dismissively. But I think building a business that you can spend time with people you like and care about and want to spend time with on a product that really speaks to you emotionally, that has a mission driven thing is brilliant. And a business can be a lifestyle business and still pay you decent wages. I think there's a maybe a misinterpretation that lifestyle business also means small. Like, I do understand the VC attitude towards lifestyle businesses. The main reason, I think it all just comes down to not trusting the long term success of anything.

51:35The reason why VC exists is because it's a bunch of people placing bets on a roulette table where they know their chances of winning are very small. And so that's just, it's a belief in most of the things that get invested in are not going to be successful. Whereas I think if you're building a company and the foundational part of the company is not this like, oh, this is a risky thing. It might not be successful. So let's do all the things to like max out that thing as fast as possible. like that's an immediate sign that you don't have faith in what you're building, you know, like, so for me, the idea of like making like a lifestyle business is actually just the truest sign of having faith in the thing that you're building being successful, you know, because the VC model is built on assuming it won't be successful.

52:24And so I think that that's like the really interesting dichotomy between this like VC model and the like anti-lifestyle business thing is that I just think a lot of people don't have faith that you can actually build a successful small business because it is really hard and not everybody has the abilities and the audience and the, you know, just the product itself to make that work. And so much of VC and software that gets built is just financial speculative vaporware. That's not meant to turn into anything. And I think that it would be so deeply unfun to build a product like that, you know, like it just would be the opposite of a thing that would fill your bucket, you know, and I really need to believe that there are people in the world that want to just make products that are meant to last, that are meant to connect with people that can be built based on values and not just based on this assumption that everything will disappear in a year.

53:27So you just have to fleece everyone as fast as possible. Yeah.

53:32Jessica Hische:I mean, I spend a lot of my time trying to convince people not to take VC money because it requires a very different business and a very different mindset. And actually, you know, there are plenty of businesses that would be amazing businesses that do 5 million, you know, revenue a year, that taking VC money would kill them. And I would love to see more small businesses hang around. And I think, you know, the VC model, like you say, maybe only one in 20 businesses are success. Whereas something like sort of tiny capital on the West Coast, they're kind of expecting a one in two hit rate. And in a one in two hit rate, that means you can write smaller checks, but many, many more of them survive.

54:14Jessica Hische:And you don't need anywhere near the kind of like the multiples you're talking to. And if you are doing a, you know, a five or 10 million a year business and you know you're getting a million or two a year out of that that's for most people that's unbelievably successful and then the other thing I was going to say is I think we live in a world where it's becoming easy and easier you're absolutely right that the connecting with customers is getting harder the channels are getting harder but the ability to build you know I know I know you have a certain view on AI which I think I kind of share to some extent but I think AI tools you know you you're doing more vocoding and stuff and I think you can now build a really good product with a team of four or six people that might have originally taken a team of 10 or 20 or 30 and so there's this idea of the small silicon valley startup a startup that can have 10 people 20 people that can be doing really really meaningful business that would have taken hundreds of people before and so look i love the attitude i love the ethics i love the the vision of what you're trying to build i think a lot of designers will be really attracted to that kind of lifestyle.

55:18Jessica Hische:And so I really hope you and Chris the best. I hope you carve out this amazing business with your 10 ,000 customers and be a beacon of light for a lot of other designers. So look, thank you so much for joining me, Jessica. It's been absolutely fun having you on the show. Yeah, this has been such a good conversation. It's been so great. Thank you. Brilliant. And to everyone else who's listening, thank you for tuning into the Design VC. if you enjoyed this episode please subscribe leave a review share with people you think who might enjoy listening to Jessica's journey and anyone who cares about the intersection of design startups and venture I've been Andy Bard and I'll see you next time