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How do you achieve both success and longevity in SaaS?
In episode 766, Rob chats with Steli Efti about growing Close.com to over $40 million in ARR. Steli shares insights into the importance of maintaining strong co-founder relationships over 12 years, navigating crises, and the importance of emotional resilience in entrepreneurship. They also dive into Close’s recent pricing shift to introduce a lower entry-level plan.
Topics we cover:
- (2:08) – Reflecting on 12 years of SaaS at Close
- (3:50) – Strong co-founder relationships
- (11:24) – Longevity and consistently showing up
- (20:23) – Surviving moments of crisis
- (29:27) – Launching a more affordable pricing tier
- (34:40) – Getting back into the content game
Links from the Show:
- Exit Strategy by Sherry Walling, PhD & Rob Walling
- Close
- Close Sales Guides
- Episode 498 | Selling During a Pandemic with Steli Efti
- The 0 to $30 Million Blueprint
- Steli Efti (@Steli) | X
- Steli Efti | LinkedIn
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
Subscribe & Review: iTunes | Spotify
Rob Walling:
It’s startups. For the Rest Of Us, I’m Rob Walling. Today I’m joined by four time guest, Stelli fd co-founder of close.com. We have what I consider to be an amazing conversation about their pretty amazing growth being a mostly bootstrapped company to $40 million in a RR. I love talking with Sally because he is so thoughtful, but also very passionate and he and I have known each other for more than 10 years. And so there’s just this kind of common frame of reference and this understanding of each other’s history that allows us to go pretty deep, pretty quick on topics that I think matter to entrepreneurs. It’s a great conversation and I hope you enjoy it. Before we dive into that exit strategy, my new book is available on Amazon and Audible. You can of course go to exit strategy book.com to get the links or go to Amazon or Audible and search for exit strategy by Rob and Sherry Walling. And with that, let’s dive into my conversation with Stelli Stelli fd, welcome back to Startups For the Rest Of Us.
Steli Efti:
So good to be back.
Rob Walling:
It’s your fourth appearance. Your last appearance was May of 2020.
Steli Efti:
Wow.
Rob Walling:
May of 2020. If that day, the rings a bell with it. And it was something about how to sell during a pandemic and you were doing a lot of tugging about it. I don’t think fondly of those days. Pandemic days. I believe you’re a four time MicroConf speaker. I was trying to recall. It’s always hard to remember.
Steli Efti:
I think so.
Rob Walling:
And you’re the founder of close.com, your H one is stop using slow cluttered CRMs. You guys have been in business for, what is it like 13 years? Am I remembering correctly?
Steli Efti:
Yeah, I think the product has been launched in January, 2013. So 12 years.
Rob Walling:
And I tend to refer to you as mostly bootstrapped, meaning you raised a little bit of funding early on and then never raised again. Is that still accurate?
Steli Efti:
Yeah, that’s correct.
Rob Walling:
Cool. And do you want to give folks an idea of where the business stands today in terms of if you’re willing to share a RR and employee headcount?
Steli Efti:
Yeah, so we are at 110 people fully remote and over 40 million in revenue. Good
Rob Walling:
For you, man. Hell of a business. So when people hear this, there’s a good chunk of this audience who will know you. They will know you from this podcast, they’ll know you from MicroConf, and then there’s a chunk who don’t yet. And when I hear someone saying they built a SaaS company over 12 years, I mean it’s kind of SaaS og, right? SaaS was a thing, but I mean that’s a long time. And to also build a business of that magnitude without a bunch of funding, just a high level looking back, has the journey felt, as long as that sounds as 12 years of working on the same project or has it kind of flown by may not be the right word, but have you just day-to-day you execute and suddenly you’re here.
Steli Efti:
It’s both. This sort of life is a paradox in many ways, and it feels both much longer and much shorter depending on the mood the day. But
Sometimes I feel so young and then I feel so old and the time spent between those two sensations does no, this have to be that long. So similarly with running a company like this, sometimes things are just flowing and you reflect back and you go, holy shit, this has been a hell of a journey. And it’s been pretty smooth. And then there are moments where there’s trouble and you’re like, how much longer am I going to be doing this? This is too difficult. So it’s like depending on the mood and the day, but it’s definitely been a very gratifying journey for sure. A really amazing journey
Rob Walling:
I can imagine. Yeah. And do you have one co-founder?
Steli Efti:
Two, we have three co-founders
Rob Walling:
And they all, is everyone still working or has
Steli Efti:
Anything done? Okay, that is probably one of our biggest accomplishments and that probably trickled into a lot of the other things that made close special is that the three of us have been working as co-founders. We did a couple of other things before we ended up pivoting to close. So we’ve been working together as co-founders for 14 years. And I would say that our relationship today is closer than ever before and we are such different people. 14 years, there’s a lot of life that happens. So a lot of moments of crisis where everything pushes you to show up at your worst or to expect the worst or to be a little bit more selfish than you ought to be or see somebody else slack off or be selfish and all these potential for conflicts. And usually these things are the things that sort of break co-founders apart, just like any other very intense relationship. And we’ve been able to work really hard on the relationship and navigate these tricky waters and all three still work at the company and still work very intensely together.
Rob Walling:
It’s really impressive on a couple fronts. Number one, it’s very unusual to have co-founders who are able to stay together that long, but it’s also really interesting that all three of you have still felt so engaged with the business because usually what happens, even if you have two, and especially with three, at some 0.1 of them is like, well, I have a life change. I have a wife and kids and I want to just move on. Or I have an idea and I’m bored with it. Whatever. There’s reasons we all move on from stuff. And with three people there’s a lot more variable. So it’s really striking that not only are the three of you still as you sit very close, I mean you’re probably really good friends I’d imagine working together that long, but that all three of you still feel like the business is invigorating to you and the best use of your time is really impressive.
Steli Efti:
I think in reality, just like anything else that you really invest long-term in and any other relationship that goes on for a very long time, you’re going to have ups and downs. It’s not like all ups, no matter how great the end result is or how great the current status of affairs is. There have been times where some of us were less engaged in others. There have been many times that one of us or even all of the three of us were like, what are we even doing with our lives? Is this really what we want to be doing for the rest of our life? We’ve had all kinds of crisis of meaning and all kinds of other things. I think what has kept us together has been a combination of being very honest with each other and trusting that you can be honest and that you can be frustrated or can tell people how you really feel.
And you don’t have to hide, don’t have to pretend you’re not going to be judged if you say, I’m really stressed out or I am burned out, I’m not feeling that inspired. I don’t know if AKI want to do this. You don’t have to worry that your other two co-founders are not going to conspire with a board to push you out and get your equity or some other thing, right? There’s a tremendous amount of trust. To be honest, I think we were all three quite wise in many times, recognizing that this is an emotional state that I’m in or a face and maybe this is the truth and I should act on it, but I can’t act on it right now. It’s too hot. I need to let it cool down and simmer down. I need to look at it from a number of perspectives and then I can make a good decision, but I shouldn’t just knee jerk act because it’s been a tough couple of weeks or something.
And I think that more often than not, after we’ve had sort of times of crisis, it went and there was something exciting on the horizon or something engaging on the horizon. And then the other thing is I think that the three of us have built so much of a commitment to each other as well, that also sort of over the years we’ve showed up so much for each other that there’s a sort of a bond that’s very strong and a recognition that yes, maybe there’s a shiny cool co-founder over there that’s flirting with you at a bar about a new AI startup and everything’s going to be simpler and more fun. But usually that’s bullshit. And usually all problems that I have here I’ll take with me in other situations. So why not fix the problem here with people I really trust and really respect instead of just hopping to the next most exciting thing to run away from my problem. So this company’s problems, I think that all three of us have have that which people don’t usually always bring to the table that sort of perspective or little bit of wisdom. And that has saved us, I think, from making decisions that ultimately, I don’t believe that at any point, anything that we thought about of doing that would’ve been more fun or more exciting would’ve been as fulfilling and successful as what we’re currently doing.
Rob Walling:
It’s a mature perspective for sure. And as you said, a lot of entrepreneurs have this, what do you call it, shiny object syndrome or a DD or grass is greeners on the other side type thing that as you said, maybe it’s, it’s an idea, maybe it’s an opportunity or maybe it’s just frustration or burnout because you do anything for 13 years, 12, 13 years, you hit points of being very unmotivated, uninterested in it. I mean, I’ve been married almost 25 years, I’ve been doing this podcast for almost 15, and I talk about same thing, right? It’s like there are ups when it’s great and there are downs when it’s like, Ooh, this is not going well at all. And I really resonate with the fact that you said, but when it’s not going well, you say, I’m not going to make a permanent solution to a temporary problem, is really what you were saying, A permanent solution is to I’m bailing, right? I’m shutting it down, I’m walking away, I’m selling my shares, or I’m just not going to work on it anymore. And that I think is something that a lot of people don’t have. It’s crazy. It’s maturity and loyalty it sounds like that the three of you have for each other. So it’s really quite striking.
Steli Efti:
I think honestly, Rob, when I think back at our success, we’ve done some great things at a time, but I think most consistently it’s not been that we’ve been so brilliant that’s gotten us to where we are. It’s been that we have consistently avoided being stupid. It’s that sort of like that Charlie Munger quote of how far you can come in life if you consistently can avoid being stupid. And that’s definitely something that looking back there are very tempting times to be stupid. There’s times where it’s almost impossible not to act stupid as a founder. And in those times, I think that we’ve had the ability to sort of disconnect how we feel and realize that that may be the truth and should be acted on, but it very likely isn’t. So what is the right action is to just hold that emotion or hold that frustration, hold that anger or fear or greed and go, in Germany they say, go pregnant with it.
Just walk with it a little bit. Just carry it for a couple of days. Talk to a number of people, marinate on it instead of instantly making a decision, especially decisions that can’t be easily reversed where you walk through a door you can’t go back from. And most people will act when they’re overwhelmed with fear, with greed, with whatever it is. That’s why I think a lot of companies don’t reach their potential because they kill themselves. They commit suicide rather than being killed by external forces because they overreact in situations where they should think it through a couple more times before they make a final decision.
Rob Walling:
I think longevity is underrated, just staying alive and sticking around both in SaaS because as we know, it’s a long slow SaaS ramp of death. And I bet if we went back and traced close your amazing $40 million company now, but after 12 months, do you remember what the revenue was? It probably wasn’t very much.
Steli Efti:
No, actually our first three years were pretty amazing. I think the first you went, oh, were they? Yeah, yeah, yeah. I think we’re not a good example there, but we came with a lot of unnatural momentum of running this elastic sales sales agency. We had a bit of a name in the market and all that. So the first three years were great, but we had years where growth stalled and we had years where, especially where it seemed that there were a couple of peers that surpassed us, or I even remember at MicroConf in Vegas, meeting a founder and giving him advice, and he was like, whatever. It was 5K an MRR after many years of hustling. And then I was already at whatever it was at the time, 9 billion, 11 million, whatever it was. And then two years later, his company surpasses mine and rocket ships. And if you’re long enough in the market, you’ll meet people that get richer quicker than you. And you’re like, huh, what are we doing wrong? What is going on here?
Rob Walling:
There’s always something, huh?
Steli Efti:
There’s always something. Oh
Rob Walling:
Man, it’s funny. So I feel the same way, right? Let’s talk about this podcast, which is one of the, aside from my marriage is probably the longest thing I’ve done in my life. I guess raising kids is the other thing. I have an 18-year-old, but a lot of this podcast is just showing up 52 weeks a year. I’ve shipped an episode every week since 2010, and some people are like, wow, startups For the Rest Of Us really popular. How can I build something like that? And I’m like, I don’t know how to do it and not do it over 15 years. But then Sam Par, who for my first million, is an unknown kid. I mean, he was very young. He was in his twenties. He sends me an email when I’m in Fresno back in, I was doing Drip, so it must’ve been 2012 or 13.
I still have the email in my Gmail account and it’s like, Hey, I’m in San Francisco. And he was very broey, but it was super fun. And he’s like, you, I’d like you to come to this meetup or something. I was like, I can’t make it. And then Sam Parr starts a podcast. How old is my first million? Three years, four years. And it’s 10 times the listenership of this. So to me, you, I’m like, oh, what happened? What have I been doing with my life? But then I think I have the success that I want. I have the success that I deserve. I have the success that I should be happy. It’s only through comparison that I have ever found myself not being happy with what I have. I have plenty of my life in terms of my family, my professional success, financial success, this podcast, the audience, whatever you look at, comparison is a thief of joy. That’s the quote. But I feel you that the 5K to surpassing you, it happens.
Steli Efti:
And there’s a part of me with those examples, these kind of Sam pars people that you mentored and then they have a more successful company than you and all that. I have both joy and pride for them. I’m happy, I want people to be successful, but being somebody that is ambitious, being somebody that poured a lot of hard work into something and is very self-critical, you do go, what the hell am I? This is proof that I suck at this. I’m not good at this. I’m not living up. There’s this idea of full potential, which for most of my life I was chasing and I was like, I just want to grow. I want to live up to my full potential. And I think I’m coming to a stage where maybe out of convenience, maybe out of wisdom, at an old age, I come to this, what is evening?
If you ask people of their full potential, we have this imaginary idea where if I did everything that I can think of myself doing, possibly, I’m like a superhuman robot. I just do all these things. And that’s not realistic. It’s easy to think of all these things and to actually live them. And when you live them, when you meet people, I’ve met a couple of people that are super successful and very, very well-known and are working harder than I’ve ever worked on to live to that sort of wake up in the morning cold plunge, this, that every minute is strict and you just fly over to this airport, do this event, fly over there, do that. And when I meet them, there’s a part of me now that just, it breaks my heart where I go, wow, they work so hard and they’re still on this treadmill and they’re not any little bit happier or more fulfilled or richer in any substantial way than they were when they were.
And so there’s a part where you have to sort of realize, well, I’m doing the best I can and let’s see what’s next. Let’s just see what’s next. But there’s also something to be said for just consistently showing up in the business world. It’s just like if you cannot die, if you can just not die while maintaining optimism, fun and curiosity, which is very difficult, people that just survive usually become more cynical and then just surviving or committing suicide. I don’t know what’s better. Maybe you should just exit. If you’re just so miserable, burned out and depressed, just keep going. Maybe it’s not the right advice. But if you can survive while staying positive, curious, and having some fun, you are going to, I mean, you’re already winning, but you are going to, the chances of you eventually breaking out of whatever plateau you are and experiencing massive success are dramatic, dramatic.
So if you can do something with longevity, if you could just show up day in doubt with a good attitude, with the curiosity and open-mindedness to learn to adjust where you’re not just doing the same thing that doesn’t work forever and pretend it’s working. If you can have that sort of balance of the two, it’s really magical superpower. And I didn’t do my podcast for as long as you, I did a ton of content for many, many years. I’ve been in this space for a long time, but now that I just started doing a bit more content, again, it’s surprising and humbling to get these emails and messages of people that are like, for 10 years I was reading all your stuff and blah, blah. Stelli did this for me with employees. This is a fun little experience that I have now that we are hiring people.
And for the past couple of years, consistently, people would either be like, oh, I remember watching you or seeing you at MicroConf. And I thought, maybe one day I’ll work for a guy like that, and now I’m at this company or people saying, oh, when I said, when I announced on LinkedIn, I joined Close. I didn’t know about close before. I’d never heard of you before, but when I announced it, I got 15 messages on LinkedIn. Hey, say hi to Stelli. I love this content. They’re like, you’re a big deal. People know about you. And I’m like, I don’t know. I guess putting that much out there and helping that many people and showing up so much, the dividends are just even many, many years later. I can still benefit from that. My business still benefits from that. And same with you. You have such an incredible reputation.
You had such incredible impact to so many people, and it’s hard sometimes you just look at the numbers, you just look at the download numbers of the YouTube views. And I remember this, he and I had a podcast, the Startup Chat for five years. We did two episodes every week, but we had plateaued for a number of years. It was just X amount of downloads, whatever it was. And then we saw all these other people that did two founders doing a podcast about startup stuff, and some of them were millions of downloads, and there was some frustration in the room. I remember I was frustrated about it, but when I think about it, there were thousands of founders that were listening to our episodes that benefited. There are hundreds, I’ve met hundreds of people. If you put it in a room, it’d be a whole conference of people that I met just from the podcast that told me one way or another, you changed my life.
That’s a lot. And even meeting one person that tells you that is so moving, it’s like, wow, I really had an impact. I really did something good here. But when it’s thousands and thousands, tens of thousands, it’s a huge number. But we look at count on a YouTube and it’s like 8,000 views or something. You’re like, I’m a failure. I don’t matter totally, but it compounds. If you do it for a long time, I don’t want to rant too much about this. And it will benefit your business and your career in many, many ways and showing up consistently. It’s very, very hard to do emotionally, not to get discouraged, not to get distracted, but if you can, it’s an incredibly powerful unlock of impact and success, and it’s much more fulfilling than just doing some viral thing that gets a bunch of views, but nobody cares. Nobody uses anything that you told them. It doesn’t really make a difference in their lives.
Rob Walling:
Yeah, no, I fully agree. Obviously, as someone who’s been doing this for a while, the numbers, as you said, I know I have a couple of friends who’ve been doing a podcast for years and they have 2,500 downloads per episode or something, which when I say that, a lot of people think, wow, that’s obviously a failure, but how many of us have 2,500 people listening to every word we say on a show? It’s like, yeah, you can have a lot of impact. And if you have a big impact, even on a small number of people, I still think you’re moving the world, moving it forward. I want to ask you a question about if you ever with CLO had a moment probably with your co-founders where I use this expression. I think Pel said this, Peloni founder of Balsamic said this one time at a MicroConf, but he said he woke up one day and what was it?
He had deleted the credit card table or they’d been hacked or there was something that happened and he said, well, I guess it’s been a good run. I love that. I guess he literally thought the business was done, and this was years into it, and I had a few of those. I’ve had a few of those over the years. Is there any one of those moment where you guys are after the initial, the first year or whatever you’re trying to survive, but after that, did you ever think, oh man, this is going to tank us?
Steli Efti:
No, so I don’t have a good story that there were many moments of crisis, right? There were many moments where, I mean, last time we talked, it was just around the pandemic. When it just started, it did raise the question, what will this mean? Is this going to be like, will we survive this? How will we survive this? But there’ve been also many sort of just internal things that happened where we did have fraudulent attacks on a massive scale, but we were lucky to catch it early enough. And it was more of a, once the crisis was averted, it was like a, oh, if we had caught this a couple of days later, it would’ve been game over. We had some moments like that, but never a moment where I thought, this is it. This is it. We’re done. No, it is also a mentality thing, and many founders have this.
I am much better in a crisis than when things are particularly going well, actually, when things are going really, really well, it’s very hard sometimes to motivate myself or sometimes there’s a guilt, a weird guilt of, I know I’m not working as hard as this success right now. There’s all kind of weird things going on, but when things are going really well, it’s not my happiest time. I’m doing okay. I’m learning to get better at this, but it’s not my happiest time when there’s a big crisis. Not that I don’t enjoy it, I really worry. I have anxiety, I have stress, I fear, but there’s a deep rooted trust that I know I’m showing up and I’m going to weather this crisis. There’s something that just, there’s a voice in my head that says, you’re going to survive this. You’re going to find a solution to this.
I don’t know where that’s coming from, but it’s always been there. And we’ve gone through enough of these that now it’s over many. I’ve been an entrepreneur for over 20 years, over so many crisis. There’s a very deep rooted, and we had a security issue two years ago, three years ago where something happened, something was exposed. Somebody emailed us about that exposure of something, and there was, it sort of very quickly skyrocketed into almost like panic mode where a couple of engineers looked at it and they’re like, oh my God, we didn’t realize this thing. And they extrapolate it. And even one of the co-founders got sucked into this panic mode. And the problem when I started catching up on the threat as I was reading it, the problem was growing bigger and bigger and bigger. It was really like, this is a huge issue.
And the proposed sort of like, we have to email every customer right now. We have to do all these very drastic moves. And again, I thought, all right, wait a second. This is not the vibe here. It just doesn’t feel right. Let’s analyze one thing at a time. This person that emailed us, there’s all these insertions in interpretation. So who this person is and what the context is, do we really know? Let’s isolate that. Let’s research who is this person and what is that person’s intent in sending us this information? Then secondly, let’s actually how many customers were really affected by that right now nobody knows. Let’s put a team together where we research what is the security problem, how quickly can we fix it? Let’s put the most resources in just fixing it right now, and then what we communicate and to whom and who we pay money to, and the legal implications.
We’ll tackle that one team at a time, one thing, but right now we can’t tackle any of this unless we know these other factors. And then we put three or four teams on these different little projects, and a day later we came back with some information that was like, okay, everybody calm down. It’s not as bad as everybody thought. Let’s take another two days to get more answers. And by the end of the week, it was like three customers were maybe affected by probably not, and we send it to a legal team, we send it to a security company. What do we really have to do? Is this really the right evaluation? Everybody came back. Almost nothing has to happen. We fixed the issue. Almost nothing has to happen. Everybody’s protected, everything’s fine. I was like, wow. We were so close to sending an email that would’ve put thousands and thousands of all our customers in panic mode. And then once that cat is out of the back, you can’t put it back in. There’s no way to reverse that. Oops. Yeah.
Rob Walling:
By the way, remember the email we got the other day? Well, that was said in mistake. So now it’s like, we don’t know what
Steli Efti:
The fuck we’re doing. Don’t know what fuck we’re doing. Trust us, we told you you can’t trust us, but we figured out you cannot trust us about not trusting us, but you should trust us. And that was so easy. There was such a momentum towards that action. There was such a built momentum, and all it took was one cool head at that time, it was mine. At other times it had been other people’s. I remember when I mentioned to you when we first started in the very first year, we had telephony always enclosed, by the way, inbound and outbounds. You can make calls, receive calls, enc close, you can phone tree with closed everything. And in the beginning we had free trials and we gave people complete free unlimited telephony on the trial, being a bunch of noobs and a startup we’re like, oh, free. Just do as much as you want.
Rob Walling:
Listeners, don’t do that. Don’t do that. Don’t do that. Yeah. So what happened? I’m waiting for this story. This is building up for me.
Steli Efti:
So then we were lucky. We were lucky that one of my co-founders out of interest would randomly look at the call logs to just see what kind of interesting calls which countries just out of an interest. And one random weekend was, this is weird. There’s these calls and they’re very long. They’re going on for eight hours. That can’t be right. And then he started digging and figured out, well, they’re calling sort of pay per minute numbers, whatever it is. And it’s like, wait a second. That account is calling 20 of these numbers, and he’s never hanging up. And then started looking into it. And I think he discovered that we had one kind of fraud account that had generated 20, 30,000 in calling costs for us in 48 hours. And we had at that point, no fraud detection. We didn’t have the systems in place to sort of flag that.
And if it hadn’t been for us, just generally curious, looking around once in a while, we had sort of calculated out that within a week it would’ve bankrupt us. It’s just like we didn’t have enough money. It would’ve bankrupt, and it would’ve been such a sudden death that we would’ve seen it coming. And since then, I mean, we’ve gotten really good at fraud production and we don’t allow people to just make calls. But even since then, I’ve been amazed how consistently and creatively fraudulent scammers would use some scheme to make money with texting or calling or whatever in close or use the email capabilities or any other tool that we have. I’ve been always amazed at the creativity. I’ve always been amazed at how do these people even know we exist? We’re such a small company, especially in the first couple of years, but that was an example of that. We would’ve just gotten $300,000 in calling costs from free accounts, and we didn’t have that much money on a bank account to pay. And that would’ve been it. And if it was me and just the third co-founder, the technical engineer guy, and the sales marketing guy wouldn’t have seen it needed the ops guy that looked under the hood and wandered around to catch that early enough to save the company.
Rob Walling:
So that’s getting a little lucky in that case. I talk a lot about, I’ll tell founders, Hey, to be successful, you need some combination of hard work, luck and skill. That’s what I believe, whether everyone may or may not agree with it, but I think you have to put up hard work in to do most things that are worthwhile. And I think you have to develop and build some type of skillset to do it. And then sometimes you get really lucky and you need a lot less hard work and skill than other people. But usually, usually, I don’t want to count on luck. I want repeatable things that I can do. I want to start a company with a repeatable approach. That sounds like you guys stayed alive. I know you’ve worked hard over the years. I know each of you have developed skills to be able to grow the company, and sometimes you need to get a little lucky in order to stay alive, it sounds like.
So I want to ask you about a recent pricing change that you made in January, which was last month as we’re recording this, and you mentioned offline that for years your entry level plan into close was in the 39 40 $9 range. And there were folks, there’s always folks saying, oh, I would use you. This is every SaaS ever. If you were cheaper, I would use you. Right? But you said you’ve gotten a lot of feedback over the years of, hey, if you had whatever, a 15 or $19 plan that for one seat that I would be willing to do it. And so in January you launched this plan, and I believe it’s $19 if you pay monthly and 15 if you pay annually, give or take. So I’m curious to ask a couple of questions. Why did you decide to launch that plan? I’m sure you’ve been hearing the same feedback about having a cheaper plan for 10 or 10 plus years since the day you launched, right? But why do it now and then to find out is that working for you? Do you have enough data to be like, oh, this was a good choice, or is it more cannibalizing your, I guess, your $49 plan?
Steli Efti:
Yeah, I’ll say a couple of things about that. One is that I think pricing is a much bigger deal in software than I realized for the first couple of years, especially once you get to some level of scale, pricing is really a big driver of growth. And I think that for many, many years, we were just too small up until, whatever it was, two, three years, we were just less than 50 people for most of the company’s history. We’re a very small team, and we just didn’t have people to really work on pricing in a dedicated manner to really do a lot of testing. And I think we always thought about, we were always a little scared to have compete on low prices and get more volume of customers because we’re such a small team and because our more higher ranked pricing always worked really well for the business and for the kind of customers we wanted to attract.
But there was always this, it was always bumming us out that I would get on a podcast like this one and I would talk about clothes, and then sometimes we did promos about eBooks, other things, and sometimes we told people that We’ll give you a good deal. And then they would come and sign up for clothes and they would say, Hey, I’m a micro entrepreneur. I’m trying out a couple of ideas and I really love clothes, but my ideas are not taking off yet. Or This thing I’m doing is not taking off yet. It’s going to take probably a little longer than I thought. And there’s this competitor product and it’s not as nice as close, but it does do the job and it’s three times cheaper, so I’m going to just switch over there and then once I’m really successful, I’ll come back just, and it’s just always a bummer when people would leave because of that versus the product isn’t working or it’s not working for me.
Now, you’re right, there’s always going to be people that want cheaper when it’s free, they’re going to complain that you don’t have enough features or you don’t give them enough support is going to end. But only recently have we really felt like, wow, the company’s big enough now where we can make some more investments in the growth of the business into our customer base, sort of grow earlier with them and grow with them, versus being sort of very disciplined about what kind of customer we can really serve. And when we had the internal resources to run experiment to know people can consistently work on something like pricing versus we were always afraid to touch it because we knew once we touch it and change it, nobody here will want to look into it again and have to redo the work of pricing because we’re such a small team and everybody is too much on their plate already, and it’s too early to conclusively say.
I can tell you that I think two years ago, we packaged our prices and we did a big pricing change, somebody champion at close where the prices were higher and it were packaged number of seeds, and that was a terrible decision for us. And instead of helping with retention and fixing a bunch of problems, it messed with all our metrics. And it took a long time to really admit that and a long time to reverse that. This pricing change is newer, but it’s also less sort of all compounding. It’s just an entry level plan. It doesn’t touch or change everything else that we’re doing. And the instant result is that our customer acquisition is skyrocketing in terms of just how many customers we’re converting. So with a lot more customers, those customers seem to retain a little bit better. Now, what we’re going to have to look at over the next couple of months is do they grow and upgrade and how does that affect all other numbers?
But we’re pretty excited about it so far, especially as I believe we’re going to see more entrepreneurship. More and more people will start things, try things. We’re going to see more smaller teams accomplish big things in the future. I want the earliest youngest entrepreneur in their journey to come and use clothes and use the power of clothes and not feel like, oh, that’s a solution once we’re sort of enterprise level ready. So I’m psyched about just getting more entrepreneurs and business owners and more small businesses on the platform, and it feels now that we have a scale and a size where we can make these investments, even if it takes a long time for us to pay off,
Rob Walling:
That makes a lot of sense. Pricing changes always take a long time to figure out, because there’s retention, there’s all these things. It’s not, oh, hey, I got more people or I’m making more revenue in the next 60 days. It really is kind of a long tail. So folks want to check out close, obviously close.com, and I often recommend close.com/guides, which is, I mean, gosh, an extensive collection of sales guides ranging from the ultimate sales pitch deck 12 sales pipeline templates, sales management software tools. The ultimate sales pitch guide is just a lot of eBooks. I know you originally wrote, I think most of them, but I think maybe other people on your team have contributed to those in the recent years.
Steli Efti:
Maybe the last of, I don’t know even how many there are there, but if you go back to the first 40, they’re all for me and I’m going through them now that I’m back in the content game to revisit my old videos and my old stuff, and most of them still hold up pretty well. I would have to say any advice there on how to sell as a startup, how to negotiate as a startup, how to hire salespeople as a startup, all that stuff is pretty solid. It was timeless, so I’m happy to say, so that stuff should help anyone that is doing a startup and is trying to get customers.
Rob Walling:
So that’s close.com/guides, and then you have a YouTube show or a podcast, a video podcast, I dunno how you think about it, but it’s called The zero to 30 million Blueprint.
Steli Efti:
Yeah. Last year people eventually pressured me into our corner at the company and said, you have to get back in the game. People want you, you, let’s revisit how we went from zero to 30 million in revenue, and let’s do a couple of seasons where we sort of break down the different stages. So you can go on YouTube and find the zero to 30 million blueprint, but also just go to Elli on X or Stelli FD on LinkedIn. I’m getting back into the game of publishing a lot of content that’s timely and relevant right now. And as always with people that listen to this podcast, especially, send me an email stelli@close.com if you need advice, if you want feedback. I’ve been a part of the MicroConf community for many years, as you mentioned, and really some incredible stories have come out of it and some great friendships. So I’m always happy to hear from people that listen to the podcast and want to connect or want to get feedback or help.
Rob Walling:
Amazing. Sally fte, thanks so much for joining me again,
Steli Efti:
My man. Rob, thank you. It was a pleasure.
Rob Walling:
Thanks again to Stelli FTE for joining me on the show. And thanks to you for listening this week and every week. This is Rob Walling signing off from episode 766.
It’s startups. For the Rest Of Us, I’m Rob Walling. Today I’m joined by four time guest, Stelli fd co-founder of close.com. We have what I consider to be an amazing conversation about their pretty amazing growth being a mostly bootstrapped company to $40 million in a RR. I love talking with Sally because he is so thoughtful, but also very passionate and he and I have known each other for more than 10 years. And so there’s just this kind of common frame of reference and this understanding of each other’s history that allows us to go pretty deep, pretty quick on topics that I think matter to entrepreneurs. It’s a great conversation and I hope you enjoy it. Before we dive into that exit strategy, my new book is available on Amazon and Audible. You can of course go to exit strategy book.com to get the links or go to Amazon or Audible and search for exit strategy by Rob and Sherry Walling. And with that, let’s dive into my conversation with Stelli Stelli fd, welcome back to Startups For the Rest Of Us.
Steli Efti:
So good to be back.
Rob Walling:
It’s your fourth appearance. Your last appearance was May of 2020.
Steli Efti:
Wow.
Rob Walling:
May of 2020. If that day, the rings a bell with it. And it was something about how to sell during a pandemic and you were doing a lot of tugging about it. I don’t think fondly of those days. Pandemic days. I believe you’re a four time MicroConf speaker. I was trying to recall. It’s always hard to remember.
Steli Efti:
I think so.
Rob Walling:
And you’re the founder of close.com, your H one is stop using slow cluttered CRMs. You guys have been in business for, what is it like 13 years? Am I remembering correctly?
Steli Efti:
Yeah, I think the product has been launched in January, 2013. So 12 years.
Rob Walling:
And I tend to refer to you as mostly bootstrapped, meaning you raised a little bit of funding early on and then never raised again. Is that still accurate?
Steli Efti:
Yeah, that’s correct.
Rob Walling:
Cool. And do you want to give folks an idea of where the business stands today in terms of if you’re willing to share a RR and employee headcount?
Steli Efti:
Yeah, so we are at 110 people fully remote and over 40 million in revenue. Good
Rob Walling:
For you, man. Hell of a business. So when people hear this, there’s a good chunk of this audience who will know you. They will know you from this podcast, they’ll know you from MicroConf, and then there’s a chunk who don’t yet. And when I hear someone saying they built a SaaS company over 12 years, I mean it’s kind of SaaS og, right? SaaS was a thing, but I mean that’s a long time. And to also build a business of that magnitude without a bunch of funding, just a high level looking back, has the journey felt, as long as that sounds as 12 years of working on the same project or has it kind of flown by may not be the right word, but have you just day-to-day you execute and suddenly you’re here.
Steli Efti:
It’s both. This sort of life is a paradox in many ways, and it feels both much longer and much shorter depending on the mood the day. But
Sometimes I feel so young and then I feel so old and the time spent between those two sensations does no, this have to be that long. So similarly with running a company like this, sometimes things are just flowing and you reflect back and you go, holy shit, this has been a hell of a journey. And it’s been pretty smooth. And then there are moments where there’s trouble and you’re like, how much longer am I going to be doing this? This is too difficult. So it’s like depending on the mood and the day, but it’s definitely been a very gratifying journey for sure. A really amazing journey
Rob Walling:
I can imagine. Yeah. And do you have one co-founder?
Steli Efti:
Two, we have three co-founders
Rob Walling:
And they all, is everyone still working or has
Steli Efti:
Anything done? Okay, that is probably one of our biggest accomplishments and that probably trickled into a lot of the other things that made close special is that the three of us have been working as co-founders. We did a couple of other things before we ended up pivoting to close. So we’ve been working together as co-founders for 14 years. And I would say that our relationship today is closer than ever before and we are such different people. 14 years, there’s a lot of life that happens. So a lot of moments of crisis where everything pushes you to show up at your worst or to expect the worst or to be a little bit more selfish than you ought to be or see somebody else slack off or be selfish and all these potential for conflicts. And usually these things are the things that sort of break co-founders apart, just like any other very intense relationship. And we’ve been able to work really hard on the relationship and navigate these tricky waters and all three still work at the company and still work very intensely together.
Rob Walling:
It’s really impressive on a couple fronts. Number one, it’s very unusual to have co-founders who are able to stay together that long, but it’s also really interesting that all three of you have still felt so engaged with the business because usually what happens, even if you have two, and especially with three, at some 0.1 of them is like, well, I have a life change. I have a wife and kids and I want to just move on. Or I have an idea and I’m bored with it. Whatever. There’s reasons we all move on from stuff. And with three people there’s a lot more variable. So it’s really striking that not only are the three of you still as you sit very close, I mean you’re probably really good friends I’d imagine working together that long, but that all three of you still feel like the business is invigorating to you and the best use of your time is really impressive.
Steli Efti:
I think in reality, just like anything else that you really invest long-term in and any other relationship that goes on for a very long time, you’re going to have ups and downs. It’s not like all ups, no matter how great the end result is or how great the current status of affairs is. There have been times where some of us were less engaged in others. There have been many times that one of us or even all of the three of us were like, what are we even doing with our lives? Is this really what we want to be doing for the rest of our life? We’ve had all kinds of crisis of meaning and all kinds of other things. I think what has kept us together has been a combination of being very honest with each other and trusting that you can be honest and that you can be frustrated or can tell people how you really feel.
And you don’t have to hide, don’t have to pretend you’re not going to be judged if you say, I’m really stressed out or I am burned out, I’m not feeling that inspired. I don’t know if AKI want to do this. You don’t have to worry that your other two co-founders are not going to conspire with a board to push you out and get your equity or some other thing, right? There’s a tremendous amount of trust. To be honest, I think we were all three quite wise in many times, recognizing that this is an emotional state that I’m in or a face and maybe this is the truth and I should act on it, but I can’t act on it right now. It’s too hot. I need to let it cool down and simmer down. I need to look at it from a number of perspectives and then I can make a good decision, but I shouldn’t just knee jerk act because it’s been a tough couple of weeks or something.
And I think that more often than not, after we’ve had sort of times of crisis, it went and there was something exciting on the horizon or something engaging on the horizon. And then the other thing is I think that the three of us have built so much of a commitment to each other as well, that also sort of over the years we’ve showed up so much for each other that there’s a sort of a bond that’s very strong and a recognition that yes, maybe there’s a shiny cool co-founder over there that’s flirting with you at a bar about a new AI startup and everything’s going to be simpler and more fun. But usually that’s bullshit. And usually all problems that I have here I’ll take with me in other situations. So why not fix the problem here with people I really trust and really respect instead of just hopping to the next most exciting thing to run away from my problem. So this company’s problems, I think that all three of us have have that which people don’t usually always bring to the table that sort of perspective or little bit of wisdom. And that has saved us, I think, from making decisions that ultimately, I don’t believe that at any point, anything that we thought about of doing that would’ve been more fun or more exciting would’ve been as fulfilling and successful as what we’re currently doing.
Rob Walling:
It’s a mature perspective for sure. And as you said, a lot of entrepreneurs have this, what do you call it, shiny object syndrome or a DD or grass is greeners on the other side type thing that as you said, maybe it’s, it’s an idea, maybe it’s an opportunity or maybe it’s just frustration or burnout because you do anything for 13 years, 12, 13 years, you hit points of being very unmotivated, uninterested in it. I mean, I’ve been married almost 25 years, I’ve been doing this podcast for almost 15, and I talk about same thing, right? It’s like there are ups when it’s great and there are downs when it’s like, Ooh, this is not going well at all. And I really resonate with the fact that you said, but when it’s not going well, you say, I’m not going to make a permanent solution to a temporary problem, is really what you were saying, A permanent solution is to I’m bailing, right? I’m shutting it down, I’m walking away, I’m selling my shares, or I’m just not going to work on it anymore. And that I think is something that a lot of people don’t have. It’s crazy. It’s maturity and loyalty it sounds like that the three of you have for each other. So it’s really quite striking.
Steli Efti:
I think honestly, Rob, when I think back at our success, we’ve done some great things at a time, but I think most consistently it’s not been that we’ve been so brilliant that’s gotten us to where we are. It’s been that we have consistently avoided being stupid. It’s that sort of like that Charlie Munger quote of how far you can come in life if you consistently can avoid being stupid. And that’s definitely something that looking back there are very tempting times to be stupid. There’s times where it’s almost impossible not to act stupid as a founder. And in those times, I think that we’ve had the ability to sort of disconnect how we feel and realize that that may be the truth and should be acted on, but it very likely isn’t. So what is the right action is to just hold that emotion or hold that frustration, hold that anger or fear or greed and go, in Germany they say, go pregnant with it.
Just walk with it a little bit. Just carry it for a couple of days. Talk to a number of people, marinate on it instead of instantly making a decision, especially decisions that can’t be easily reversed where you walk through a door you can’t go back from. And most people will act when they’re overwhelmed with fear, with greed, with whatever it is. That’s why I think a lot of companies don’t reach their potential because they kill themselves. They commit suicide rather than being killed by external forces because they overreact in situations where they should think it through a couple more times before they make a final decision.
Rob Walling:
I think longevity is underrated, just staying alive and sticking around both in SaaS because as we know, it’s a long slow SaaS ramp of death. And I bet if we went back and traced close your amazing $40 million company now, but after 12 months, do you remember what the revenue was? It probably wasn’t very much.
Steli Efti:
No, actually our first three years were pretty amazing. I think the first you went, oh, were they? Yeah, yeah, yeah. I think we’re not a good example there, but we came with a lot of unnatural momentum of running this elastic sales sales agency. We had a bit of a name in the market and all that. So the first three years were great, but we had years where growth stalled and we had years where, especially where it seemed that there were a couple of peers that surpassed us, or I even remember at MicroConf in Vegas, meeting a founder and giving him advice, and he was like, whatever. It was 5K an MRR after many years of hustling. And then I was already at whatever it was at the time, 9 billion, 11 million, whatever it was. And then two years later, his company surpasses mine and rocket ships. And if you’re long enough in the market, you’ll meet people that get richer quicker than you. And you’re like, huh, what are we doing wrong? What is going on here?
Rob Walling:
There’s always something, huh?
Steli Efti:
There’s always something. Oh
Rob Walling:
Man, it’s funny. So I feel the same way, right? Let’s talk about this podcast, which is one of the, aside from my marriage is probably the longest thing I’ve done in my life. I guess raising kids is the other thing. I have an 18-year-old, but a lot of this podcast is just showing up 52 weeks a year. I’ve shipped an episode every week since 2010, and some people are like, wow, startups For the Rest Of Us really popular. How can I build something like that? And I’m like, I don’t know how to do it and not do it over 15 years. But then Sam Par, who for my first million, is an unknown kid. I mean, he was very young. He was in his twenties. He sends me an email when I’m in Fresno back in, I was doing Drip, so it must’ve been 2012 or 13.
I still have the email in my Gmail account and it’s like, Hey, I’m in San Francisco. And he was very broey, but it was super fun. And he’s like, you, I’d like you to come to this meetup or something. I was like, I can’t make it. And then Sam Parr starts a podcast. How old is my first million? Three years, four years. And it’s 10 times the listenership of this. So to me, you, I’m like, oh, what happened? What have I been doing with my life? But then I think I have the success that I want. I have the success that I deserve. I have the success that I should be happy. It’s only through comparison that I have ever found myself not being happy with what I have. I have plenty of my life in terms of my family, my professional success, financial success, this podcast, the audience, whatever you look at, comparison is a thief of joy. That’s the quote. But I feel you that the 5K to surpassing you, it happens.
Steli Efti:
And there’s a part of me with those examples, these kind of Sam pars people that you mentored and then they have a more successful company than you and all that. I have both joy and pride for them. I’m happy, I want people to be successful, but being somebody that is ambitious, being somebody that poured a lot of hard work into something and is very self-critical, you do go, what the hell am I? This is proof that I suck at this. I’m not good at this. I’m not living up. There’s this idea of full potential, which for most of my life I was chasing and I was like, I just want to grow. I want to live up to my full potential. And I think I’m coming to a stage where maybe out of convenience, maybe out of wisdom, at an old age, I come to this, what is evening?
If you ask people of their full potential, we have this imaginary idea where if I did everything that I can think of myself doing, possibly, I’m like a superhuman robot. I just do all these things. And that’s not realistic. It’s easy to think of all these things and to actually live them. And when you live them, when you meet people, I’ve met a couple of people that are super successful and very, very well-known and are working harder than I’ve ever worked on to live to that sort of wake up in the morning cold plunge, this, that every minute is strict and you just fly over to this airport, do this event, fly over there, do that. And when I meet them, there’s a part of me now that just, it breaks my heart where I go, wow, they work so hard and they’re still on this treadmill and they’re not any little bit happier or more fulfilled or richer in any substantial way than they were when they were.
And so there’s a part where you have to sort of realize, well, I’m doing the best I can and let’s see what’s next. Let’s just see what’s next. But there’s also something to be said for just consistently showing up in the business world. It’s just like if you cannot die, if you can just not die while maintaining optimism, fun and curiosity, which is very difficult, people that just survive usually become more cynical and then just surviving or committing suicide. I don’t know what’s better. Maybe you should just exit. If you’re just so miserable, burned out and depressed, just keep going. Maybe it’s not the right advice. But if you can survive while staying positive, curious, and having some fun, you are going to, I mean, you’re already winning, but you are going to, the chances of you eventually breaking out of whatever plateau you are and experiencing massive success are dramatic, dramatic.
So if you can do something with longevity, if you could just show up day in doubt with a good attitude, with the curiosity and open-mindedness to learn to adjust where you’re not just doing the same thing that doesn’t work forever and pretend it’s working. If you can have that sort of balance of the two, it’s really magical superpower. And I didn’t do my podcast for as long as you, I did a ton of content for many, many years. I’ve been in this space for a long time, but now that I just started doing a bit more content, again, it’s surprising and humbling to get these emails and messages of people that are like, for 10 years I was reading all your stuff and blah, blah. Stelli did this for me with employees. This is a fun little experience that I have now that we are hiring people.
And for the past couple of years, consistently, people would either be like, oh, I remember watching you or seeing you at MicroConf. And I thought, maybe one day I’ll work for a guy like that, and now I’m at this company or people saying, oh, when I said, when I announced on LinkedIn, I joined Close. I didn’t know about close before. I’d never heard of you before, but when I announced it, I got 15 messages on LinkedIn. Hey, say hi to Stelli. I love this content. They’re like, you’re a big deal. People know about you. And I’m like, I don’t know. I guess putting that much out there and helping that many people and showing up so much, the dividends are just even many, many years later. I can still benefit from that. My business still benefits from that. And same with you. You have such an incredible reputation.
You had such incredible impact to so many people, and it’s hard sometimes you just look at the numbers, you just look at the download numbers of the YouTube views. And I remember this, he and I had a podcast, the Startup Chat for five years. We did two episodes every week, but we had plateaued for a number of years. It was just X amount of downloads, whatever it was. And then we saw all these other people that did two founders doing a podcast about startup stuff, and some of them were millions of downloads, and there was some frustration in the room. I remember I was frustrated about it, but when I think about it, there were thousands of founders that were listening to our episodes that benefited. There are hundreds, I’ve met hundreds of people. If you put it in a room, it’d be a whole conference of people that I met just from the podcast that told me one way or another, you changed my life.
That’s a lot. And even meeting one person that tells you that is so moving, it’s like, wow, I really had an impact. I really did something good here. But when it’s thousands and thousands, tens of thousands, it’s a huge number. But we look at count on a YouTube and it’s like 8,000 views or something. You’re like, I’m a failure. I don’t matter totally, but it compounds. If you do it for a long time, I don’t want to rant too much about this. And it will benefit your business and your career in many, many ways and showing up consistently. It’s very, very hard to do emotionally, not to get discouraged, not to get distracted, but if you can, it’s an incredibly powerful unlock of impact and success, and it’s much more fulfilling than just doing some viral thing that gets a bunch of views, but nobody cares. Nobody uses anything that you told them. It doesn’t really make a difference in their lives.
Rob Walling:
Yeah, no, I fully agree. Obviously, as someone who’s been doing this for a while, the numbers, as you said, I know I have a couple of friends who’ve been doing a podcast for years and they have 2,500 downloads per episode or something, which when I say that, a lot of people think, wow, that’s obviously a failure, but how many of us have 2,500 people listening to every word we say on a show? It’s like, yeah, you can have a lot of impact. And if you have a big impact, even on a small number of people, I still think you’re moving the world, moving it forward. I want to ask you a question about if you ever with CLO had a moment probably with your co-founders where I use this expression. I think Pel said this, Peloni founder of Balsamic said this one time at a MicroConf, but he said he woke up one day and what was it?
He had deleted the credit card table or they’d been hacked or there was something that happened and he said, well, I guess it’s been a good run. I love that. I guess he literally thought the business was done, and this was years into it, and I had a few of those. I’ve had a few of those over the years. Is there any one of those moment where you guys are after the initial, the first year or whatever you’re trying to survive, but after that, did you ever think, oh man, this is going to tank us?
Steli Efti:
No, so I don’t have a good story that there were many moments of crisis, right? There were many moments where, I mean, last time we talked, it was just around the pandemic. When it just started, it did raise the question, what will this mean? Is this going to be like, will we survive this? How will we survive this? But there’ve been also many sort of just internal things that happened where we did have fraudulent attacks on a massive scale, but we were lucky to catch it early enough. And it was more of a, once the crisis was averted, it was like a, oh, if we had caught this a couple of days later, it would’ve been game over. We had some moments like that, but never a moment where I thought, this is it. This is it. We’re done. No, it is also a mentality thing, and many founders have this.
I am much better in a crisis than when things are particularly going well, actually, when things are going really, really well, it’s very hard sometimes to motivate myself or sometimes there’s a guilt, a weird guilt of, I know I’m not working as hard as this success right now. There’s all kind of weird things going on, but when things are going really well, it’s not my happiest time. I’m doing okay. I’m learning to get better at this, but it’s not my happiest time when there’s a big crisis. Not that I don’t enjoy it, I really worry. I have anxiety, I have stress, I fear, but there’s a deep rooted trust that I know I’m showing up and I’m going to weather this crisis. There’s something that just, there’s a voice in my head that says, you’re going to survive this. You’re going to find a solution to this.
I don’t know where that’s coming from, but it’s always been there. And we’ve gone through enough of these that now it’s over many. I’ve been an entrepreneur for over 20 years, over so many crisis. There’s a very deep rooted, and we had a security issue two years ago, three years ago where something happened, something was exposed. Somebody emailed us about that exposure of something, and there was, it sort of very quickly skyrocketed into almost like panic mode where a couple of engineers looked at it and they’re like, oh my God, we didn’t realize this thing. And they extrapolate it. And even one of the co-founders got sucked into this panic mode. And the problem when I started catching up on the threat as I was reading it, the problem was growing bigger and bigger and bigger. It was really like, this is a huge issue.
And the proposed sort of like, we have to email every customer right now. We have to do all these very drastic moves. And again, I thought, all right, wait a second. This is not the vibe here. It just doesn’t feel right. Let’s analyze one thing at a time. This person that emailed us, there’s all these insertions in interpretation. So who this person is and what the context is, do we really know? Let’s isolate that. Let’s research who is this person and what is that person’s intent in sending us this information? Then secondly, let’s actually how many customers were really affected by that right now nobody knows. Let’s put a team together where we research what is the security problem, how quickly can we fix it? Let’s put the most resources in just fixing it right now, and then what we communicate and to whom and who we pay money to, and the legal implications.
We’ll tackle that one team at a time, one thing, but right now we can’t tackle any of this unless we know these other factors. And then we put three or four teams on these different little projects, and a day later we came back with some information that was like, okay, everybody calm down. It’s not as bad as everybody thought. Let’s take another two days to get more answers. And by the end of the week, it was like three customers were maybe affected by probably not, and we send it to a legal team, we send it to a security company. What do we really have to do? Is this really the right evaluation? Everybody came back. Almost nothing has to happen. We fixed the issue. Almost nothing has to happen. Everybody’s protected, everything’s fine. I was like, wow. We were so close to sending an email that would’ve put thousands and thousands of all our customers in panic mode. And then once that cat is out of the back, you can’t put it back in. There’s no way to reverse that. Oops. Yeah.
Rob Walling:
By the way, remember the email we got the other day? Well, that was said in mistake. So now it’s like, we don’t know what
Steli Efti:
The fuck we’re doing. Don’t know what fuck we’re doing. Trust us, we told you you can’t trust us, but we figured out you cannot trust us about not trusting us, but you should trust us. And that was so easy. There was such a momentum towards that action. There was such a built momentum, and all it took was one cool head at that time, it was mine. At other times it had been other people’s. I remember when I mentioned to you when we first started in the very first year, we had telephony always enclosed, by the way, inbound and outbounds. You can make calls, receive calls, enc close, you can phone tree with closed everything. And in the beginning we had free trials and we gave people complete free unlimited telephony on the trial, being a bunch of noobs and a startup we’re like, oh, free. Just do as much as you want.
Rob Walling:
Listeners, don’t do that. Don’t do that. Don’t do that. Yeah. So what happened? I’m waiting for this story. This is building up for me.
Steli Efti:
So then we were lucky. We were lucky that one of my co-founders out of interest would randomly look at the call logs to just see what kind of interesting calls which countries just out of an interest. And one random weekend was, this is weird. There’s these calls and they’re very long. They’re going on for eight hours. That can’t be right. And then he started digging and figured out, well, they’re calling sort of pay per minute numbers, whatever it is. And it’s like, wait a second. That account is calling 20 of these numbers, and he’s never hanging up. And then started looking into it. And I think he discovered that we had one kind of fraud account that had generated 20, 30,000 in calling costs for us in 48 hours. And we had at that point, no fraud detection. We didn’t have the systems in place to sort of flag that.
And if it hadn’t been for us, just generally curious, looking around once in a while, we had sort of calculated out that within a week it would’ve bankrupt us. It’s just like we didn’t have enough money. It would’ve bankrupt, and it would’ve been such a sudden death that we would’ve seen it coming. And since then, I mean, we’ve gotten really good at fraud production and we don’t allow people to just make calls. But even since then, I’ve been amazed how consistently and creatively fraudulent scammers would use some scheme to make money with texting or calling or whatever in close or use the email capabilities or any other tool that we have. I’ve been always amazed at the creativity. I’ve always been amazed at how do these people even know we exist? We’re such a small company, especially in the first couple of years, but that was an example of that. We would’ve just gotten $300,000 in calling costs from free accounts, and we didn’t have that much money on a bank account to pay. And that would’ve been it. And if it was me and just the third co-founder, the technical engineer guy, and the sales marketing guy wouldn’t have seen it needed the ops guy that looked under the hood and wandered around to catch that early enough to save the company.
Rob Walling:
So that’s getting a little lucky in that case. I talk a lot about, I’ll tell founders, Hey, to be successful, you need some combination of hard work, luck and skill. That’s what I believe, whether everyone may or may not agree with it, but I think you have to put up hard work in to do most things that are worthwhile. And I think you have to develop and build some type of skillset to do it. And then sometimes you get really lucky and you need a lot less hard work and skill than other people. But usually, usually, I don’t want to count on luck. I want repeatable things that I can do. I want to start a company with a repeatable approach. That sounds like you guys stayed alive. I know you’ve worked hard over the years. I know each of you have developed skills to be able to grow the company, and sometimes you need to get a little lucky in order to stay alive, it sounds like.
So I want to ask you about a recent pricing change that you made in January, which was last month as we’re recording this, and you mentioned offline that for years your entry level plan into close was in the 39 40 $9 range. And there were folks, there’s always folks saying, oh, I would use you. This is every SaaS ever. If you were cheaper, I would use you. Right? But you said you’ve gotten a lot of feedback over the years of, hey, if you had whatever, a 15 or $19 plan that for one seat that I would be willing to do it. And so in January you launched this plan, and I believe it’s $19 if you pay monthly and 15 if you pay annually, give or take. So I’m curious to ask a couple of questions. Why did you decide to launch that plan? I’m sure you’ve been hearing the same feedback about having a cheaper plan for 10 or 10 plus years since the day you launched, right? But why do it now and then to find out is that working for you? Do you have enough data to be like, oh, this was a good choice, or is it more cannibalizing your, I guess, your $49 plan?
Steli Efti:
Yeah, I’ll say a couple of things about that. One is that I think pricing is a much bigger deal in software than I realized for the first couple of years, especially once you get to some level of scale, pricing is really a big driver of growth. And I think that for many, many years, we were just too small up until, whatever it was, two, three years, we were just less than 50 people for most of the company’s history. We’re a very small team, and we just didn’t have people to really work on pricing in a dedicated manner to really do a lot of testing. And I think we always thought about, we were always a little scared to have compete on low prices and get more volume of customers because we’re such a small team and because our more higher ranked pricing always worked really well for the business and for the kind of customers we wanted to attract.
But there was always this, it was always bumming us out that I would get on a podcast like this one and I would talk about clothes, and then sometimes we did promos about eBooks, other things, and sometimes we told people that We’ll give you a good deal. And then they would come and sign up for clothes and they would say, Hey, I’m a micro entrepreneur. I’m trying out a couple of ideas and I really love clothes, but my ideas are not taking off yet. Or This thing I’m doing is not taking off yet. It’s going to take probably a little longer than I thought. And there’s this competitor product and it’s not as nice as close, but it does do the job and it’s three times cheaper, so I’m going to just switch over there and then once I’m really successful, I’ll come back just, and it’s just always a bummer when people would leave because of that versus the product isn’t working or it’s not working for me.
Now, you’re right, there’s always going to be people that want cheaper when it’s free, they’re going to complain that you don’t have enough features or you don’t give them enough support is going to end. But only recently have we really felt like, wow, the company’s big enough now where we can make some more investments in the growth of the business into our customer base, sort of grow earlier with them and grow with them, versus being sort of very disciplined about what kind of customer we can really serve. And when we had the internal resources to run experiment to know people can consistently work on something like pricing versus we were always afraid to touch it because we knew once we touch it and change it, nobody here will want to look into it again and have to redo the work of pricing because we’re such a small team and everybody is too much on their plate already, and it’s too early to conclusively say.
I can tell you that I think two years ago, we packaged our prices and we did a big pricing change, somebody champion at close where the prices were higher and it were packaged number of seeds, and that was a terrible decision for us. And instead of helping with retention and fixing a bunch of problems, it messed with all our metrics. And it took a long time to really admit that and a long time to reverse that. This pricing change is newer, but it’s also less sort of all compounding. It’s just an entry level plan. It doesn’t touch or change everything else that we’re doing. And the instant result is that our customer acquisition is skyrocketing in terms of just how many customers we’re converting. So with a lot more customers, those customers seem to retain a little bit better. Now, what we’re going to have to look at over the next couple of months is do they grow and upgrade and how does that affect all other numbers?
But we’re pretty excited about it so far, especially as I believe we’re going to see more entrepreneurship. More and more people will start things, try things. We’re going to see more smaller teams accomplish big things in the future. I want the earliest youngest entrepreneur in their journey to come and use clothes and use the power of clothes and not feel like, oh, that’s a solution once we’re sort of enterprise level ready. So I’m psyched about just getting more entrepreneurs and business owners and more small businesses on the platform, and it feels now that we have a scale and a size where we can make these investments, even if it takes a long time for us to pay off,
Rob Walling:
That makes a lot of sense. Pricing changes always take a long time to figure out, because there’s retention, there’s all these things. It’s not, oh, hey, I got more people or I’m making more revenue in the next 60 days. It really is kind of a long tail. So folks want to check out close, obviously close.com, and I often recommend close.com/guides, which is, I mean, gosh, an extensive collection of sales guides ranging from the ultimate sales pitch deck 12 sales pipeline templates, sales management software tools. The ultimate sales pitch guide is just a lot of eBooks. I know you originally wrote, I think most of them, but I think maybe other people on your team have contributed to those in the recent years.
Steli Efti:
Maybe the last of, I don’t know even how many there are there, but if you go back to the first 40, they’re all for me and I’m going through them now that I’m back in the content game to revisit my old videos and my old stuff, and most of them still hold up pretty well. I would have to say any advice there on how to sell as a startup, how to negotiate as a startup, how to hire salespeople as a startup, all that stuff is pretty solid. It was timeless, so I’m happy to say, so that stuff should help anyone that is doing a startup and is trying to get customers.
Rob Walling:
So that’s close.com/guides, and then you have a YouTube show or a podcast, a video podcast, I dunno how you think about it, but it’s called The zero to 30 million Blueprint.
Steli Efti:
Yeah. Last year people eventually pressured me into our corner at the company and said, you have to get back in the game. People want you, you, let’s revisit how we went from zero to 30 million in revenue, and let’s do a couple of seasons where we sort of break down the different stages. So you can go on YouTube and find the zero to 30 million blueprint, but also just go to Elli on X or Stelli FD on LinkedIn. I’m getting back into the game of publishing a lot of content that’s timely and relevant right now. And as always with people that listen to this podcast, especially, send me an email stelli@close.com if you need advice, if you want feedback. I’ve been a part of the MicroConf community for many years, as you mentioned, and really some incredible stories have come out of it and some great friendships. So I’m always happy to hear from people that listen to the podcast and want to connect or want to get feedback or help.
Rob Walling:
Amazing. Sally fte, thanks so much for joining me again,
Steli Efti:
My man. Rob, thank you. It was a pleasure.
Rob Walling:
Thanks again to Stelli FTE for joining me on the show. And thanks to you for listening this week and every week. This is Rob Walling signing off from episode 766.
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