546: In Retrospect - Building BigCommerce: Mitch Harper’s Guide to Scaling a SaaS Empire

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0:39Just head to omnisend.com forward slash founder without the E to get started. All right, now let's jump back into the show. Hey, founder fam, today we're jumping back into the archive to bring you an all-time favorite episode with one of my old mentors Mitch Harper who's the co-founder of a massive company called BigCommerce. Now Mitch is a longtime mentor to me and coach and the driving force behind Founders Success and the things that I learned from him were so invaluable and this interview is just a small fraction of just how incredible this guy is. So I want to share this with you guys again.

1:21We've got so many incredible interview. Sometimes it's hard to find and sift through all the noise. So let's jump in. Welcome Mitch Harper. Hear the stories, learn the proven methods and accelerate your growth and future through entrepreneurship. Welcome to the Founder Podcast with Nathan Chan.

1:43The first question I ask everyone that comes on is how did you get your job? my job my job as an entrepreneur or my first real employee job yeah i guess that how do you find yourself doing the work you're doing today oh wow that goes back so i started building software when i was 12 12 12 it was a pretty pretty loose definition of software so i was using you're probably way too young to know what i'm even talking about but i was on q basic on an old XT computer back in the day, probably around 1994. I was 12, yep. And I was building games. So ASCII-based, text-based kind of games back in the DOS days before Windows.

2:26And I would print out the source code to other games, and I would just type that into QBasic. So there might be 300 or 400 pages of code, and that's how I learned programming essentially in QBasic. And then I had a few jobs, built a few early businesses around teaching coding. So one of my first businesses was a website called devarticles.com, kind of like SitePoint. I sold that when I was about 21. And that really taught me programming, software, design. I did a few courses in classrooms and online and everything like that. And realized that number one, I love to take an idea from my head and bring it into reality.

3:07and number two the easiest way to do that is not to for example build units or houses it's to do with software and do with code on the computer so self-taught software engineer designer product manager marketer just by reading books and asking smart people and yet turned that into uh what we have about eight companies now since 2001 when i got started so really it's been the last 17 or so years implementing what I was teaching myself from when I started when I was 12 which is software engineering design and then I've done all the other stuff like hiring and raising capital and all that kind of stuff so yeah just just a passion that I had when I was younger I don't know why I liked coding and building software maybe because of the maths maybe because of the creativity but that's kind of how I got my start.

4:03And I had a lot of jobs. So I started at Burger King or what we call Hungry Jacks here in Australia, worked in food shops, worked in kind of computer hardware repair companies, but then got to the point where I was out of school and I just wanted to do my own thing and wanted to be my own boss and do what Bill Gates and Steve Jobs back then, they were my kind of mentors and idols, do what they were doing at the time with Microsoft and Apple, which has We built a big, important technology company that could transform the world and democratize or take something that was only available to larger companies and give it to smaller businesses because I love helping small businesses.

4:41Yeah, wow. That's crazy, man. So did you go to uni or anything? Because you've been an entrepreneur, you said, or founder for 17 years. No, I didn't go to university. So I did a few private college courses back in the day to learn different programming languages, like ASP and.NET. I mean, this was 15 years ago or something like that. And I kind of didn't like the classroom environment. I like to teach myself. I like to find people who are the best in the world of what they do and get them to mentor me. So I just, I didn't find the dynamic of sitting in a classroom, listening to someone from an academic background, try and teach me practical skills in software engineering and design.

5:25So that was the main reason I never went to uni. And by the time I was ready to go to uni, so that would have been around 90, the year 2000. So I finished high school in 99. So around 99 or 2000. I mean, I had my first company up and running by then, which was DevArticles. I'd started another online e-commerce site that was generating$500 ,000 a month in revenue. And so by that time, the opportunity cost of going to university didn't make sense to me. So I kind of said, why would I spend four years sitting in a classroom learning how to build software when I already know how to do it, how I can keep learning on the job and make a lot of money, help a lot of people at the same time?

6:05So that's kind of how I weighed it up and decided not to go to university. I think when you're into software, when you're into entrepreneurship, when you're into computer science and those kinds of things, my personal opinion is that it's better to learn by doing than by sitting in a classroom and learning from someone with an academic background that doesn't have the practical skills that you need to either be an employee in a tech company or to run one as an entrepreneur. So I decided not to go to university. Yeah, I see. And were your parents very supportive of that? Like, did you have like a family or did you know anyone that was an entrepreneur?

6:43Because I find that really, really interesting because, you know, back then that wouldn't be something that would be very common and it would be shunned upon even more in society back then, right? Well, I mean, we're talking the year 2000 and I grew up in Brisbane. So I was living in Brisbane at the time. I hadn't moved to Sydney yet. and actually sorry i grew up in brisbane and i just moved to sydney in 1998 so i was fairly new in sydney and back then i mean we didn't have the atlassians the big commerces the big tech kind of success stories that we have now and so my view was always u.s centric and so i'd always look at what was happening in the u.s i mean this was the height of the dot-com bubble at the time where you know pets.com had a little bit of revenue and was valued at a billion dollars with no profit right so i was looking at the u.s and mainly to get back to your question so i was raised by a single mom my dad left when i was two very hard upbringing and so my mom always encouraged me to be able to do whatever i want she she never pushed me to go to uni she never pushed me to do well in high school if i didn't want to because i was always working on my companies for 12 hours a day when I get home from school.

7:57So yeah, I had a very supportive mom. She obviously is still supportive today. And yeah, her view was you can do whatever you want. She never pushed me to do anything or go in a particular direction. I think because she saw that my mind was creative and curious more so than academic to go down that education path. And that's really been important to me because I've never had any pressure from anyone to go down a certain path or to perform in a certain way. And I think that gave me the space that I needed growing up to, you know, choose my own adventure for lack of a better term, decide to do what I want to do on my own terms, how I want to do it and to do it at the speed that I wanted to do it.

8:40So yeah, my mom was, was amazing and still is in letting me essentially do whatever I want in terms of work and even school back in the day yeah wow that's that's a that's amazing story man like so yeah i find this really interesting because um these are some things that i've never asked you before right so that is true we've spoken a lot and we've never gone into some white background it's always been drilling yeah that's right so so like um just for for the context um of everyone listening and i've mentioned at the start of this podcast like uh i've been very privileged and lucky to have uh Mitch is like a mentor and coach and he's taught me a lot and I can credit a big part of like you know founders growth and what we're doing to and all this crazy strategies to Mitch so one thing I really want to talk to you about which I think is extremely impressive that you've done is he's eventually founded BigCommerce now I want to come to that and and because I think it's just incredible what you've built and how you started out of Sydney and you know you've built this massive massive massive startup so first of all so you're working on dev articles and you ended up selling that and so what happened next so so you you're building this website and you said you had e-commerce play doing half a movie in a month yep so that was a the e-commerce play was where I was an employee, an employee during the day.

10:10They were a hardware kind of company. I don't think they're around anymore. My job was essentially to come in and build their online presence from scratch because this was in the early 2000s. There was no big commerce at that time or no point and click type tools to set up an online store. So that's really where I kind of got my skillset around e-commerce. I built the entire online platform from scratch using, I mean, And back then it was ASP and DLLs for anyone that knows what I'm talking about. And so it was really cumbersome. It took me a long time. It took me about three months to build that.

10:43And we launched. And within six months, we were generating about$500 ,000 in revenue from that online store. So that's really how I got my domain expertise in e-commerce. And little did I know that that would come back and help massively when I decided to build big commerce, probably about five years later. So, yeah, to get back to your question, started DevArticles, sold that when I was probably about 19 or 20 or something like that for a good sum because I had two US companies and I got them into a bidding war, which was awesome. So we ended up getting double the initial offer price. And when you're that age, I mean, it's a great outcome to be able to sell a company like that considering we had no revenue.

11:25It was just an online site, very similar to SitePoint where we had, I think we did about 5 million visits in the first year. Sold that. And then I was building products that you would install on your own web server run as part of your website. So this was, again, for SaaS. Cloud was really early. Salesforce was around, but SaaS and cloud weren't common terms that everybody knew. And so I built a content management platform. I built an email marketing platform similar to MailChimp. This was 15 years ago. Built a knowledge-based solution and was selling them online. So you'd come to the different websites for the products.

12:05You would pay, I think it was about$500 one time, and then you would install those scripts on your web server and run the products. And so I was doing really well. And then I was in a chat room, a Perl chat room, Perl being like a programming language. similar to PHP. And it was an American shroom and I was asking for help. And I happened to meet a guy on there called Eddie, who was also in Sydney. And he was asking for programming help as well. And I was like, all right, what are the odds of another Aussie guy being in this American Pearl coding chat room? So we started talking and long story short, I was in, where was I at the time?

12:46I was in Roselle at the time, Eddie was in Marrickville at the time. And we met up and got along really well and decided to kind of merge what we were doing together. So Eddie had a WYSIWYG HTML editing component and an online website, CMS, if you like. And I had three of my products and we brought them all together. And that's how we started Interspire, which we launched in 2003. And we built that completely bootstrapped up until 2007. And we got it to about$10 million in revenue in four years. And that was not recurring revenue. We had to earn that revenue every single month. So that was$10 million a year in about 2007 from one-time payments of about$500 each for the software.

13:33Are you hesitating to take the next step in your e-commerce journey? Founder Plus has you covered. With proven frameworks tailored to your business needs for fast results, a supportive community of over 30 ,000 like-minded entrepreneurs and weekly live mentorship sessions, Founder Plus is your key to success. Try Founder Plus today for just$1 for seven days and start building your dream business with confidence. You can visit founder.com forward slash start dollar trial or click the link in the description to claim your trial. Yeah, wow. And when you said about dev articles and you said weed, did you have any partners back then or it's just you?

14:10No, it was just me and some writers that I found online, freelance type writers who wanted to contribute because they liked teaching and they were really good at it as well. So it was just me. I mean, I was running it from my bedroom at night. So I would write articles and then reach out to some advertisers. I mean, we had a little bit of revenue, but it wasn't a lot. And write the email newsletters. I had an email list of about 250 ,000 people. And it was just me. Me and a server in, I don't know where I was, somewhere in the US, just a crappy little web server that did the job and managed to hold up for 5 million visits in the first year.

14:44I see. And then you said it sounded like you were building, you built some other products that you and Eddie both combined when you started Interspire. Yeah. So this was really early on again before SaaS, before products like BigCommerce or MailChimp or HelpScout and Zendesk. And so we both, funnily enough, saw the need for tools that would help small businesses run their website, do customer service and do marketing. That's why I built a CMS for the website, an email marketing platform so they could send out newsletters and a knowledge-based tool so they could help their clients. And funnily enough, Ed had the same kind of thing in his products.

15:22And so when we merged the products, there wasn't too much of an overlap, but we ended up having five different products that we could sell essentially to the same kind of customer. So instead of just selling one product to one customer for$500, we had a shot at selling them four additional products over their lifetime. And so we could increase their lifetime That'd be from, say, a one-time payment of$500 to maybe$2 ,000 or$3 ,000 if they bought a few of our products and used them all at the same time. And so we saw the synergies there. I'd put in some of the money that I made from selling dev articles.

15:55I did go out and buy an S2000, which was the Honda S2000. I don't know if you remember those. One of the sports cars that I wanted at the time because I was 19. And when you're 19 and you sell a company, you buy a sports car. ended up crashing that into a pole almost killing myself but that's another story and so yeah I put in you know a good six-figure sum into Inspire he had some money from some freelancing and web design work he was doing he put that in and yeah we were off and running we had some cash to invest in marketing and we hired a few people and yeah built that up really well as I mentioned up until about 2007 to around$10 million a year doing$8 million in profit.

16:37Wow. That's a pretty awesome business. So why didn't you just stop there? Because in 2007, we had the idea to build a shopping cart product. Customers actually gave us the idea. So we would always do customer feedback and customer development. And not only would we ask them, hey, what do you like about our current products? It would also be, hey, what other pain points are there in your business that we could help you with? And shopping cart just kept coming up. And initially, we resisted. We were like, we've got enough products. We don't need to build any more products. I mean, by that time, I think we had seven or eight products.

17:12And I thought, do we really need like a ninth product? And I remember Eddie and I were standing out the front of our old terrace on National Street in Roselle, if anyone's in Sydney and familiar with the area, which is where we were running the company from. probably illegally we had about eight people working on the top level of the terrace but we did we did have harbour views which was awesome and i did live on the bottom level so uh it was free rent for me so and we had a gym in there and we'd have crazy parties anyway i'll save that for another time so we were standing out for the terrace i think we just had lunch and eddie basically convinced me he said dude we should build this and i was like oh all right man i'll see you in three months he said what are you talking about i said i'm gonna go dark for three months you're gonna run the company i'm just gonna sit in a corner and build this product i don't want to talk to you i don't want to do any customer service and i want to deal with anything in three months we'll have a product maybe it was six months but i think it was three months and he kind of was confused and said okay you know go and go and build it if you want i said see you soon And so three months later, I got the entire product to about 80 % completion.

18:21And it had online ordering, catalog, and search, and a backend. And you could upload your products and import from CSV and all that kind of stuff, reporting analytics, insights, multiple users. And then I was burnt out. So I worked on that for three months nonstop. And at the time, I was probably doing 16-hour days. I was single. I hadn't met my wife, didn't have any kids. and so I said let's kind of hire people to to help me finish this off and so we hired a young guy called Chris and a few other people and Chris went on to we'll get to this later but Chris has gone on to be in a really lead role at BigCommerce even still today and was the catalyst for the success of Interspy Shopping Cart which is what we called it at the time and then we pulled that out of Inspire and pivoted to a SaaS model with BigCommerce so long story short we lost that in, it was probably late 2007 that I'd finished the Inspire Shopping Car product.

19:18And I mean, out the gate, it just blew up. I mean, it killed all of the other products in terms of revenue in terms of custom account. We pre-sold a quarter of a million dollars in licenses just by me blogging about it as I was building it saying, hey, I've just built this feature for a shopping car product where they're launching soon. What do you think of it? And there will be a little promo below it that said, sign up now before we launch. And I think you've got 50 % off or something like that. And we had about a thousand people do that at$250 each because we were going to launch it at$495 US when it launched, which we did.

19:52And so, yeah, we generated a huge amount of cash pre-launch. And then, I mean, when we launched, I can't remember the numbers because it was 11 years ago, but I mean, we probably did something like two or 3 million bucks in 2008 just from the shopping cart product alone. And the profit on that would have been 80%. So that's when we really thought, whoa, this is insane because our email marketing product was doing really well at the time, probably generating$5 million. And so we said, this product has the potential to outstrip growth and revenue generated from email marketers. So we decided to really focus on the shopping cart product.

20:31We discontinued all of our other products except the shopping cart and the email marketing product. and that's how we ran Inspire for another two years. So until about 2009 and then we said, all right, SaaS is here. We need to move away from this on-premise stuff to SaaS. We essentially, and cut me off if I'm rambling, we essentially said, let's launch a SaaS version of our e-commerce product and a SaaS version of our email marketer product. We'll put the same AdWords budget behind both of them and after I think it was a year, We'll look at which one has the most revenue and we're going to cancel everything else and go all in on that product.

21:10And so we were split testing our products to figure out the future of the business because we knew we wanted to be in SaaS. We knew we wanted to focus on one product. And we started to have this idea that, hey, we might be big enough to raise money from US investors in a few years. So we wanted to have a singularity of focus. And after the first 12 months, BigCommerce had 9 ,800 paying customers and big response, which is what we called our SaaS email marketing product. I think it had something like 1 ,000 customers. And so that made the decision for us. We split tested two products against each other with the same marketing spend, same support resources over a year.

21:47BigCommerce had, as I mentioned, 9 ,800 paying customers. We were aiming for 10 ,000, but we missed it. And email marketer had something like 1 ,000. So that made the decision for us, shut down all the other products, renamed the company to big commerce and from September 2009 it was on that when we said we're in SaaS we're in e-commerce we're not doing anything else and then I mean it just took off like the first year I said we did 9 ,800 customers now probably paying us$25 a month so I'm just doing some maths here so we got it to about a quarter of a million dollars in monthly recurring revenue after the first year and then at the end of the second year we had something like 25 ,000 customers so it just kept growing and growing we took our average revenue per user up from 24 dollars to hundreds of dollars and you know now the company is just huge uh we announced last year that we did 100 million dollars in annual recurring revenue and it's still growing massively so that's kind of the long-winded version of how we ended up getting to what became big comments yeah wow that's amazing and and i'd like to delve a bit deeper like um so you at first you built built like out the company in sydney right we did yeah we were in roselle in sydney we moved to alexandria we stayed in sydney yeah yeah and then why was chris the catalyst like like uh so chris and if you're listening chris i hope you're well um chris is amazing so at the time of hiring Chris, he's one of these genius guys.

23:19He was running an open source forum software called MyBB. I think it might still be around. So MyBulletin board. So if you remember 10, 15 years ago, there was forum software like VBulletin and all these kinds of tools. Those forums were cool for social media, right? They were really the precursor or the version one of social media tools like Facebook. And he built this whole product that ran amazing forums and you could customize it and whatever. And that was his side hobby because it was open source. And during the day, he was working at Target on the registers, so helping people check out and complete their orders.

23:56And so we saw this young guy and said, oh, my God, this guy is amazing. He's built this open source forum product, but he's never had a job in a software tech company. We're going to take a chance on him. And so he came in and was essentially my right-hand man, and helped me finish building out the product. Eventually, he was the lead developer on it and everything like that. He just took off. The world's nicest guy still is. We worked together for such a long time, and he was really the catalyst because he was just an amazing programmer. I've always said and thought that I'm an entrepreneur. I knew enough back in the day to build software, but my coding was rubbish basically.

24:38I knew enough to build stuff and get it to work, But to scale a company, I mean, the guys that we ended up hiring rewrote most of my code after the first two years. And there was always a joke that if something didn't work in the product, they'd look in the comments and there's Mitch's code. So I said that I knew enough to be dangerous, but I was not on any of the guys' levels that we brought in to run engineering and to build the product, especially Chris. I mean, yeah, he was the first glimpse that Eddie and I had of, wow, like Sydney has really good engineers. They're just not at big companies because we didn't have big SaaS tech type companies here at the time.

25:18Atlassian was maybe five or six years into their journey. They were built on Java back in the day. I believe they were on premise as well instead of SaaS. There was no big commerce. There was no anything. We really had to hunt for these guys who were almost like diamonds in the rough. They needed a bit of polish. They never had any work in a commercial environment. But man, they were programming geniuses. And we managed to find a few of them in the first few years. And then I built the engineering team. And a lot of those guys have gone on not only to do well at BigCommerce, but they're running engineering at other big SaaS companies here and in the US as well because of that experience that they got helping Eddie and I build Interspire and BigCommerce and seeing what it's like to scale a technology company up from hundreds of users to tens of thousands or hundreds of thousands and billions of hits on all of the e-commerce stores, for example, that big commerce pounds.

26:17So yeah, he was really the catalyst that made us say, man, we can find good talent and technology and software and entrepreneurship in general is all about finding good talent. I think we can build this into something big. And that's when the light bulb kind of went off for us. And as I mentioned, we went all in on big commerce and I had singularity of focus from 2009 until when I left the company in 2015 or whenever it was in 2016. Yeah, wow. And along the way, you guys raise a ton of money as well. Why did you decide to do that if the product was doing really well already? Yeah, so BigCommerce has raised a quarter of a billion dollars so far.

27:00They just raised, and when I say base because I'm no longer active at the company. It's still my baby, but I speak about it as a third person. They just raised another$80 million. I think it was$80 million, 65 from Goldman Sachs just a few weeks ago that was announced. I think the thing is when you see an opportunity to build a billion-dollar business, which is what our goal was for BigCommerce back at the time, there's a few different ways you can look at it. Keep in mind at the time, we were both single, had no girlfriends, had no wives, had no kids, right? So when you see a billion dollar opportunity in a market, that window is only open for a certain amount of time because if you've seen that opportunity, you better bet that others have seen it.

27:43At the time, Shopify had been around for four years, I think it was. Magento launched a week after we launched BigCommerce, right? WooCommerce was probably coming out as well. I mean, the space is very saturated now. And what you tend to find is if you don't take action within a certain window. So within kind of one or two years after we figured this out, then that window goes away because someone else will take that action. Someone else will go and raise money from investors saying they want to build the world's best e-commerce platform. And there's room in the market for three or four companies that want to do that, that say they're going to be big and democratize e-commerce and build a billion dollar business.

28:20But once investors have made those bets and they see that other investors have made bets in competing companies, there's two things that happen. Number one, they'll either look at the landscape and say, well, this company's already raised a bunch, this one and this one has as well. You guys are a bit late. Well, number two, the thesis of the investors will change. No one today, for example, in 2018 is going to go out and fund a SaaS e-commerce platform startup because the markets move past that. Today, it's AI, machine learning, wearables, IoT. Those are the theses that investors have. And investors research a thesis around an area or a particular type of product.

29:02And they say, all right, for this year, my theses, I think that's a plural of thesis, are X, Y, and Z. And so if you're late to the game, their thesis has moved on from e-commerce, for example, to marketing automation or to IoT or to something else. And so they're the two things that I was really conscious of at the time. And that's kind of how we looked at it. Could we build a business that would give investors a 10x return? And I didn't know any of this until I read a book called Mastering the VC Game. That really taught me everything in the early days about raising capital and how to speak the lingo of investors.