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David Hauser: How He Bootstrapped His Startup to $30M+ in Annual Revenue and Then Sold It

“Once a company has established a clear market need and ability to solve that need the rest is all execution.”

 

david

 

As Founder of Grasshopper (acq’d by Citrix) and Chargify, David Hauser was one of the youngest founders to lead a company to the Inc. 500 list of fastest growing U.S. companies. He took some time to provide insight into how he was able to find success as a young bootstrapper.

davidhauser.com

@dh

 


LawTrades:

You’ve started two companies that became massive – Return Path and Grasshopper. What do you think separates the best companies from the rest?

 

David Hauser:

Grasshopper and Return Path are two very different companies that took different paths. Return Path raised significant amounts of VC money while Grasshopper was totally bootstrapped and never raised any money. There are pros and cons of both approaches but either can work. What made these companies successful is a combination of great product, the right marketing for the target audience, timing and then execution. Once a company has established a clear market need and ability to solve that need the rest is all execution. At Grasshopper we had an amazing team lead by an amazing management team which made my job as founder easy.


LawTrades:

How can companies with no money start exploring paid media channels when they might have few resources compared to the competition? How did Grasshopper do it?

 

David Hauser:

When it comes to paid marketing, the capital required to test a channel is really just a function of total spend. So if you are spending zero you can test with a few hundred dollars compared with when you are spending $1m testing looks more like $100,000+. So at the start I would suggest testing with anything possible, even if only $100, this will give directional information about a channel and maybe some information about unit economics of a channel. As for competition, who cares what they are doing or how much money they have.

 


LawTrades:

After selling your company, you started a syndicate on AngelList. How can a startup rise above the noise when approaching you for an investment?

 

David Hauser:

After having made 50+ angel investments my target company has changed a lot so there are some key metrics I look for in investments in SaaS now. First, the company must have traction in the market, at least a few hundred thousand in revenue, but preferably over $1m a year. Second, the company is breakeven or profitable, so investment dollars can fuel growth and not experiments. Third, a preference or lack of need to continue to raise capital. These three factors are very different than many other investors and limits the possible companies, but those that meet these it is pretty easy to get my attention. A simple email that is clear and to the point often works.

 


LawTrades:

What would you tell a SaaS business that’s struggling to find their first 100 customers?

 

David Hauser:

Just go out and sell. The first 100 customers don’t have to be through scalable channels or even optimized. Make phone calls, send emails, test some low-cost channels, do anything it takes to get those customers and learn.

 


LawTrades:

At the early stages of operating a company, what are the common mistakes you see many founders make?

 

David Hauser:

Worrying about making processes scalable before they know if the process in question is even the right one. Raising money and the metrics around that, rather than focusing on selling and making money.

 


LawTrades:

You placed a big emphasis on health & wellness at during your career, how has that changed your business career?

 

David Hauser:

Entrepreneurs have huge amounts of stress and often there are few if any people around them to talk to about this stress. I found that eating well and exercise helped with this stress but more importantly, helped with life balance when working crazy long hours. Going to the gym or working out early in the morning, gets the day started and more productive. Get up at 5am and start your day at 6am when everyone else is starting at 9am. You are three hours ahead of others when they start their day.

 


LawTrades:

Most startups believe they have to raise money to be successful. But you didn’t and you sold your company to Citrix for a large sum of money. When should companies bootstrap and when should they raise money?

 

David Hauser:

There are so few reasons today to raise capital at the early stages, the costs of everything needed to start has come down significantly, from cloud computing and advanced APIs to payment process and professional services like legal and accounting. Also there is so much free information and education available now for every step along the journey, you can get much further with much less than ever before. I think 90%+ of companies today can bootstrap and start with nothing before even thinking about raising money. Companies, like Grasshopper, that start this way, when they see success later are much better setup for success than those that raised money.

LawTrades:

What were some daily habits you followed when growing Grasshopper to $30M+ in annual revenue?

David Hauser:

There are so many things we tried over the years but I think the thing that had the most impact, yet is so simple, was well run daily meetings. These daily standups, would last about 5 minutes and every single person was in at least one, either based on department, team or project. This got everyone aligned and focused quickly, allowed people to share where they are stuck and get help and communicate in a fast growing company.

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1 Comment

  • Amit Roopnarine
    Amazing!

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