Episode Transcript
[00:00:00] Speaker A: Foreign.
Super excited to have you. I would love to hear kind of the story of freemius, how you got started, where you're at now, the whole rundown.
[00:00:15] Speaker B: Sure. So I started Freemius around the end of 2014. I've been doing startups for many years and I had this side gig, a little SaaS that I was know, doing on the side. Just a passion project. And after my previous company was acquired I was kind of looking what I want to do next. I looked at the data, realized there's quite a lot of users there, let's see if I can build something out of it. And I joined with another guy and it took us about a year to take that, you know, turn it from this side thing into an actual subscription SaaS business, adding all the, you know, users, payment integrations, marketing stuff, all of that and start to make money and you know, start to take salaries and all. But what was really kind of exciting or not exciting, surprising to see is that the product itself didn't change at all. And it was something that I built in two weekends of my spare time while doing, you know, gazillion other things. And I kind of realized that there is, there is something here, right, like building products, not talking about the, the AI era that you can just spin with a prompt, you know, an app. But previously you had to actually code that. But even that, it's pretty easy for developers. But if you want to turn that into a business, it's like a whole lot ordeal. It takes much more time, a lot of integrations, many times it's much more time consuming and more complex. So I kind of said, okay, there's a interesting bigger problem here. And that was kind of my eureka moment to understand I want to start freemius. I started to chat with software developers out there to kind of validate it's only me. It was years ago. I validated the problem is there. And the next step was for me to choose the specific market I want to tackle because anything is pretty big and when you start out, you want to start with something more specific. And I narrow down on the WordPress sequence system because back then it was the fastest growing, the least monetized and the least mature ecosystem from a commercial perspective. So I thought, you know, I have a lot of know how experience, background in SaaS which was more evolved and developed ecosystem from a commercial perspective.
Let's see how we can bring those practices into WordPress. And also the benefit of starting with a platform is that you can create an SDK that will Work for everyone. So literally can get to like 5 minute integration and you have all the bells and whistles. So basically the initial idea of freemius was to, you know, you get an SDK and you can take a product and put it in the market in a matter of five minutes. So this is how freemius started.
[00:03:10] Speaker A: That's really cool. And then I have a couple of questions based on that. So you mentioned that you basically started it in two weeks. I'm really curious as to your thoughts, whether you think this is still something that's doable. I think on the one hand I'm gonna be like, oh, yeah, like actually it's more possible now because I think with AI. But on the other hand, I feel like AI's kind of lowered barriers made it more challenging to actually sell stuff. So if you had started freezing today, do you still think you'd be able to like code it in two weekends and then go straight to selling?
[00:03:34] Speaker B: No. No. So freemius wasn't coded in two weekends. Okay. That project that I then monetized and was kind of the preliminary step to understand that there is a gap. It took two weekends. So working on the whole monetization and all of that, it took me, another guy, about a year. So that was kind of my understanding. Oh, this is much more complex and time consuming the actual selling rather than building the product itself.
[00:04:01] Speaker A: Okay, okay, okay. That makes total. That makes sense to me now because I was thinking like, man, this guy's like Peter Levels or something. It's like so cool. I was actually reading a Peter Levels Twitter just today and that guy just blows the mind. But one question, as far as being tied to WordPress, being in the WordPress ecosystem. So kind of some drama recently with WordPress. You mentioned a little bit kind of the benefits of being in the WordPress ecosystem. Like, you just get that as EK and then you're kind of tied in. What would you say are sort of the challenges there? And is that something that if you could go back, would you tie yourself to an ecosystem again?
[00:04:35] Speaker B: No, I think it was a smart move. We learned a lot. We developed tons of capabilities.
I would even say that selling because plugin themes, those are downloadable software, so they come with additional complexities of licensing and updates and release management. Things that usually in SaaS are not even. Not even problems. There are some challenges that coming to any ecosystem, whether it's WordPress, Shopify or any other dependency that you add into your platform because you need to play under the rules of that ecosystem. Right. So There are some, there's a community, there are dynamics. Like for example, some things that mistakes that we've done. Right. We brought SaaS practices into WordPress and there were some pushbacks in the beginning. Like for me it was data is like key when you're running SaaS. Right. You want to measure as much as possible about your users. So we're kind of pioneers bringing the con, the concept of opt in Usage tracking into WordPress products. And it was completely new back then and it required some, you know, mind shift in the beginning to accept that concept. Now everyone doing that but you know, it's been 10 years. So every ecosystem has its own challenges and benefits. But I think it played really well for us. We're like dominantly dominating the WordPress space and like in the products plugin themes. And now a year and a half ago we went through this huge rebrand and repositioning and you know, we are expanding. It was always the plan. We were not sure what would be like the next ecosystem. But you know, SaaS is exploding and the whole AI is exploding so we decided to go that route. We're also seeing a lot of new players coming to the space, which shows, you know, maturity of the market. I think also the some other players really help to kind of educate the market about what merchant of record means because we never, like, we didn't use the term for years we knew that we were a merchant of record, but no one knew what it means. Right. But today when you say that people actually understand what it means. So it feels that for us it's really good timing to step in and you know, and get ahead with all the other competitors out there.
[00:07:06] Speaker A: Yeah. So speaking of competitors, I think there were some people who would view you guys as a competitor to like Shrine Paddle. I know Stripe's not a merchant record paddle. I believe it is. What's that like being compared to them having your product compared to guys like Stripe Paddle?
[00:07:21] Speaker B: I think it's great.
Simple as that. You know, we are the underdog right now. Right. They have a, like the big market share and now we are going to eat some of it. So it's good to be in that place. We know we are very confident in our product.
We just need to ensure that more people are aware of it. We are narrowed down specific on software and not. Stripe is payment gateway for pretty much anything that it's not fishy petal is they market SaaS but honestly they do any digital goods so they're kind of scattered. And also their focus on the Payments mostly. And we have narrowed down on, you know, software what we're really good at. We are engineers in our background. We know how to build great products for other software makers. And we also look on the entire experience of the customer, not just the payment side of things. So looking, you know, before the buyer starts purchasing something and until they cancel, there's a lot of marketing automation in place and conversion rate optimization. So we are trying to provide a solution that it's more comprehensive, more like a business in a box for software companies intervening in as many transactional touch points as possible. So for example, someone starts a checkout, if they bend in before even entering their email, you can set up an exit intent to. So that's something that no one will implement. It's just like an application layer what is considered for them. Someone does enter their email. We have a cart ban recovery campaign. So there is all these like small touch points through the checkout, through emails in the customer portal that help software makers to get the most out of their financial potential through all these little things. And even after the customer already canceled the subscription, we have a cancellation survey. But also like your recovery campaign, all try to incentivize to get them back. So when you go with Free Muse, you don't just get the payments. And let's say if you're a merchant of record, you know, the tax and all this technical things which are needed as well. But you can also completely focus on your product and delegate all those monetization needs to us because this is what we do. And we keep evolving and adding new emails and those like micro interactions. And the incentive is simple. We are here working together. The business model is revenue sharing. So we do want to help you win as much as possible because that's how we grow ourselves. So this is on the platform side of things.
[00:10:17] Speaker A: Yep. So I'm really curious how you guys are thinking about differentiating yourselves from say Stripe or Paddle. And I think you kind of touched on this a second ago. But when you have competitors who are super well funded, they've got massive market share when they're not feature complete, but they almost feel feature complete. Especially when you go into Stripe or whatever, you're like, whoa, I didn't even know that I wanted this. And Stripe had it. And I think that's probably even more the case with Paddle. They have quite a bit more. So how do you guys think about building in a world where the competition is sort of overwhelmingly powerful?
[00:10:50] Speaker B: I mean, I don't feel this way. Yes, there are strong competitors But I feel that our value proposition is much more compelling. I understand that we're not a solution for everyone. We're not trying to get everyone.
Every solution has its benefits. You do want to have all of the control in your hands and you are okay going, you know, taking time to implement all the APIs, all the integrations and keep maintaining and evolving and you have the team to do that. Then you know, maybe Stripe is for you. But then you need to deal with sales taxes and all those other things. We are focused on micro and small software makers. Usually those are, you know, it could be a single bootstrapper, up to a Teams of 50 usually in Asia because the cost of labor is lower, you can have bigger teams. We're focused on micro and small software companies that usually don't have in house resources to focus on the money side of things. And also they don't have the interest to focus on that.
Their main focus is their product and that's what they should do. The same way they don't go and build their own Google Analytics. They use, you know, off the shelf solution.
You better like your time. Like how would you get the most out of your time? Focus on what you are best at, which is your product and not all the surrounding things. We have developed expertise of over 10 years on, you know, all this e commerce monetization related stuff. We can simply help you drive more money and keep adding and evolving and improving and you don't need to think about this stuff anymore.
[00:12:38] Speaker A: So when you are thinking about building your product, how much of it is driven by like say if you're planning a new feature, how much of it is driven by like hey, we just know that we need this versus we've got a bunch of customers asking for this or this is a gap in the marketplace or what does that look like internally?
[00:12:54] Speaker B: Yes. So I think that today most of our development is driven by our community based on their needs. Because we've been in the market for 10 years, the foundation is already there for many years and it's more about adding new things. We are growing with our software makers so as they grow and bigger makers joining the platform have additional needs, additional capabilities and we keep developing with them as we get into SaaS. So there are like new, let's say billing things that we want to accomplish that we didn't support because they were not needed before.
So it's mostly based on demand and we are in a very lucky position. Right. Our target audience are like founders, in the end entrepreneurs, they're product people. So they're really, really good in explaining what they need in the product. We are getting mockups, we're getting contributions, we are trying to build together as much as possible. Because when you have our community, right now we have 1700 people on our Slack and we built the last checkout iteration, we revamped checkout about a year ago. There were more than 50 people that contributed to that checkout. And our initial thinking versus the results that we got by working together with the community and identifying the patterns in the feedback just day and night. We could have never got to that without their input. You have brilliant UI UX designers like all from different backgrounds and you can just identify those patterns. And I think we're really fortunate to be in that situation that we have product people that are in our community that can contribute to the product.
[00:14:46] Speaker A: Yeah, very cool place to be. And I think kind of building off of that, I'm really curious is like your experience building community. So kind of on a strategic level, how are you guys turning customers into community or is it not just customers, potential customers or kind of what's the plan there?
[00:15:02] Speaker B: Yeah, it's something that was like intuitive from day one for me probably because I heard it from so many people. You know, focus on community, it's important.
So from day one we had Slack as a start and then we started to slowly get people in not only who've been using freemius, but also like minded software makers in the industry.
Our goal in the end is to create a platform that brings value to our target audience. They don't have to be using Freemius right now. It's smaller, close because we have grown, etc. But in the end we want to tie our brand with value to our target audience, right? So maybe they're not using us right now, maybe they will use it in their next product or maybe they will use it in three years. So we have the digital community online, but we're also organizing physical events in different countries.
So we're piggybacking on top of big events, other big events that do have a high consolidation of relevant people. And we're organizing like side event specifically like invite only, bringing the relevant people. And it's just like a, you know, a fun networking event where we help them with relationships, right? We talk with someone because I know all these people because we're inviting them, my team knows them. So we talk to you, right? And you, I don't know, you say some challenge, hey, by the way, I think you should meet this guy, right? And we're making those connections and it's like a win win for everyone. It's great for us because again like our brand is tied with value. We help them in something. So we try to establish this network that we like to call that a community of success, right? Network of people that helping each other to succeed, grow, inspire, partner with each other, it's etc. And as we grow that network, we're also attracting additional key players into that ecosystem because it's interesting for them like YouTubers, right? So YouTubers need to promote products. If we have many software makers and products on our platform, they want to be connected. So now we're bringing them to those events as well, creating those, you know, mutually beneficial opportunities. Same way with buyers. You know, people are buying SaaS, people are buying plugins, they're looking for opportunities, they know that we know many of them, so they reach out to us. So we over the years build this network of buyers and in the same way makers on our community like in the end usually micro and small software businesses, they get to the point when they exit or die, they don't go public, right? So they need that help in getting those connections when they want to exit. They also need some guidance to understand how to navigate through that process. So in addition to providing a lot of educational content, like if you go to our blog from day one, all our we don't have sales free muse, we will have that, we're working on that. But all our efforts so far in the way we have grew was through educational content marketing. Just share, you know, valuable stuff that they people can learn from, take action and get better. So this is one aspect. The second is because of that kind of mutual interest to help our makers grow, we are happy to provide proactive guidance in pricing and packaging and marketing in whatever stage you are at your business. If you're launching, you need one set of help, you're growing, you need other, right? You need to hire your first employee, first engineer, first support.
And if you're scaling, you need to grow that operation beyond that. So we are helping in those different touch points of your business life cycle. So we're looking on it as you know, this long term partnership from launch to exit.
[00:19:13] Speaker A: So on a more technical level, where are you guys putting say the buttons to join your community? Like are these in your blog posts, emails? Do people just invite others?
[00:19:22] Speaker B: It's in the dashboard. It's in the dashboard. So once you sign up you get to a page where we encourage you to join the slack community.
There is some like Filtering. In the beginning it was like invite only and then we wanted to grow that faster. So we do have that. Once you make your first sale, you get an email that encourage you to to join. And also we have that in the dashboard once you sign up because we do have also a channel that community members help each other with technical questions as well. So that's also useful and you know, helping us with some of the support load, which is great. And we decided, you know, we're going to keep it unless we'll see any issue so far. We've been running that like for years and we didn't. Sometimes there are some bad actor joins but very quickly the community just flags them and we can kick them out and all good.
[00:20:17] Speaker A: Amazing. And you mentioned a lot of sort of the tasks you guys were doing as far as community building are very marketing focused. So I'm curious for your time as a founder, how much time is spent say building product or coding? So you're a developer versus marketing.
[00:20:32] Speaker B: So I don't code anymore. Okay. It is my guilty pleasure and happens once in every few months and then I regret it because I don't have the time to deal with that. We are already like good sized team. We're like 20 people. So I think like today most of my work is around product, finance, operations and recruitment, like looking for talent. Because I realized we've been stuck in this like period for several years when we were like between 8 to 12 people and I was wearing way too many hats, I'm still wearing too many hats.
And I realized that if we want to grow, and I do want to grow, I have to think about like leadership team. And I spent around three years really looking for great talent, replacing myself from leading engineering. So I found amazing two guys for VIP engineering and cto. And I'm super grateful. It took so much from my end and CMO and head of brand and head of this and head of that and we need to keep doing that. That's the way to grow. So a lot of my focus is around that. Guiding the team, directing the company strategically to the right path. Now it sounds kind of, I don't know, fancy, but it is what you do that size. Like I didn't believe I would deal with this stuff honestly.
[00:22:01] Speaker A: Yeah. Well, congratulations. Especially being in sort of the space that you are. I want to return to that really quick because I'm super curious. So I think when most people think of being in like a quote unquote build niche, like a niche that it would be occupied by stripe Or Paddle or you know, something like that. They would only think of downsides, like competitors are very strong, they could perhaps somewhat easily build my solution, et cetera. But you've already kind of talked about how that's not really an issue for you. So I would be interested to hear. Do you think there are any sort of benefits of competing with these giant companies in giant space?
[00:22:35] Speaker B: Absolutely. I think it makes it clear that there is a market opportunity. Right. So if you start with something completely new and you need to educate the market from scratch, it's a big challenge. Plus, how big is the market? It's unclear. But here we have players that it's like well established that those like billion dollar markets and we are not unlike Paddle, you know, who raised, I don't know, $300 million. Right. We're not there. We don't have those expectations to go public or, or something like that. So we are cool being big enough without getting to whatever their aspirations. And I feel that we can stay much more focused and serve our audience where we focus in a much better way. Right. Even if we move a little slower, we can deliver better product, better experience.
The smaller the team, the more cohesive the work and better support we can offer. And I'm sure you had those experiences and many others that you deal with this product that's run by a single founder and you get exceptional support.
Usually you don't get that from those big companies because it's like 10 layers of hierarchy already and it's such someone who is not attached to the vision, mission or anything. They're just an employee and they have a script and they joined after whatever years and it's like their job, they don't really care as much. Right. When you are a small team, you are mission driven hopefully. Right. This is the type of people that I'm looking for. Join Freemius. You're mission driven, you want to help.
It's like completely different level of service, experience, product. So I think the smaller you are even in this big market, you have a mega advantage in any aspect. And also, you know, if we look on those new players that are coming in, you have new technologies today so you can build much faster. So I think you know David Goliath. David has the benefit.
[00:24:57] Speaker A: Yeah, that seems to be how that played out, at least in that story. But moment, this has been really cool. So anything else that you think that I probably should ask you before we head out of here?
[00:25:08] Speaker B: I didn't think about that. Should have sent me a heads up before.
I don't know. I mean, check out our YouTube channel. We're investing tons of.
It's not an ass. I'm doing promo here.
I don't know what usually people tell you.
[00:25:28] Speaker A: Yeah, they usually say, I don't know. And then we end the interview.
That's pretty much how it goes.
[00:25:34] Speaker B: All right, let's do the same.
Let's check out our YouTube anyway.
[00:25:40] Speaker A: Yeah. And if anyone else wants to learn more about bringius, wants to learn more about you, where should they go?
[00:25:44] Speaker B: Yeah, I think the website is a great place to start. I'm very active on X, this is the way we call it today. Trying to do as much of the, you know, sharing, building in public as much as possible. Sharing my journey and the company's journey. And like I said, have a YouTube channel. We have an awesome podcast, pluginfm.com or FM, where we share actionable tips and practices based on firsthand experience. That's also a great place to check. And yeah, feel free to DM me on X or on LinkedIn. I'm everywhere, man.
[00:26:25] Speaker A: Everywhere. You're a popular guy. Well, awesome. Thanks so much for hopping on Bobo. This is super interesting for me, so appreciate your time.
[00:26:32] Speaker B: Thank you so much, Brady. It was my pleasure.
