SaaS Interviews with CEOs, Startups, Founders
How Bootstrapped YouCanBookMe Hit $5m using team profit sharing as internal motivation
19 Sep 2022
Chapter 1: What strategies helped YouCanBookMe achieve $5 million ARR?
The easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Please help me welcome Bridget Harris with You Can Book Me to the stage. Bridget.
So my name is Bridget Harris. I run a company called You Can Book Me. And as he said, I'm here to talk about with my fellow Bootstrap founders how we have grown to around $5 million ARR using profit sharing and open salaries to motivate the team. So you can book with your online scheduling tool. We've got over just a million accounts. Where am I looking here? There we go, a million accounts.
We've got about 22,000 customers. And to date, over the last 10 years, we've got 82 million bookings. We do around a million, a million and a half bookings a month.
Chapter 2: How does profit sharing motivate the team at YouCanBookMe?
So that's, we're busy. These are the kind of customers we have. They use our tool for team scheduling, the kind of customer success, onboarding, sales, that kind of thing. I'm sure you're familiar with it. And that first five years is the lonely years of growing our long, you know, have you ever heard of Gail Goodman's long, slow ramp of sass, death? That's where we were.
We didn't have people like Nathan and others to talk to us about raising money. But we got to about the one million pound mark and we made our first 105,000 pounds, 791 pounds in profit. And like Nathan said, especially if you're bootstrapped, you need to get money from somewhere. VCs aren't giving it to you, so you need to make it yourself. And we've been very, very profit motivated ever since.
So over the next 20 minutes, I am here to talk to you about, first of all, the profit stack. So I've put this together especially for this conference. So this won't be the last you hear of it because I wanted to start to think about strategically how we have done that because profit doesn't just come from selling a Ā£5 product for Ā£10.
It actually comes from a much more strategic idea about how you build your company.
Chapter 3: What metrics indicate profitability for a bootstrapped company?
Metrics that matter, Nathan mentioned a few of them. The kind of things that will tell you and indicate whether your company is profitable and then how we share that profit. So let's just talk a little bit about profit, because as he said, VCs don't talk about profit very much. It's only if you're really motivated to make it, you really understand what it is.
Because the news is for founders, business profit is not how investors intend to get a return on their investment.
um i don't want to overthink this but hands up if you agree the founder business plan is basically invent something make money you know i mean that really that's basically what we're trying to do that's our you know our end goal vc business plan it sounds it feels like it's the same but it's not invest in stock and trade make money
So, yeah, sure, we're all aligned to the same goal, but it's very, very different to be investing in shares, basically the value of shares going up versus making profit off a product that you can sell to customers. And this has been our mantra as founders for the last 10, 15 years. So I'm sure you all know this guy, Jason. He talks about it.
Everybody recognises this whole kind of SaaS subscription economics, which is you absolutely hammer your sales and marketing. You grow like, you know, as fast as you possibly can.
kind of numbers nathan was just talking about and then you basically ipo you exit you bet you do what you want to do to get to get it up well and that is what they have done this is the this is uh some some data that i found which shows that a lot of uh public so they've ipo they've done their big exit they're still not making any profit they're still trading in the value of the shares of their company they're not making business profit it's the value of their shares where they make money
And the problem is, is that for a lot of people, that is not good enough. Because that VC model is, if you're being a little bit mean about it, you'd call it a Ponzi scheme.
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Chapter 4: How does YouCanBookMe define and measure profit?
Because people have to lose. And recently, in the last couple of years, those people who are losing are losing big. So over 168,000 people have lost their jobs in the last couple of years from this spread bet. And that's because those guys didn't realise that they were working for a bet rather than a business plan. So, good news. We're all here. Nathan's here.
The whole team is understanding to align against something slightly different. Even the VCs have woken up to the fact that they have to reinvent some really slightly crazy mathematics, which is adding together your profit margin with your growth rate. And if you come up with more than 40%, then they'll still give you some kind of valuation. So, okay, fine, we'll accept that.
But I have a different way of thinking about it, which is jam tomorrow, jam yesterday, but never jam today. And that's essentially the VC message to people like Alice in Wonderland, which is why can't we have jam today? What is this whole thing about the delayed gratification, the IPO tomorrow, the exit tomorrow, the share options tomorrow?
Wait, everybody burn themselves out today for something that's going to happen tomorrow.
Chapter 5: What are the challenges of VC funding for bootstrapped companies?
Well, at You Can Book Me, we don't believe in jam tomorrow. We believe in jam today, or as we put it, profit today. This is like a really weird face, but that is what we're in. That's the story we're in. So we broke even in 2016. We've not looked back. Basically, this was the moment. This was a fantastic moment.
And in a year later, as we had always promised our team, we paid out $75,000, it was about Ā£50,000, to the five eligible team members who'd been working with us for all that period of time. In fact, we hired a lot of them in September 2015. We told them we were going to do it and we did it. So I hope you will allow some of this as well into your companies.
Very happy as well to talk a bit more about how we did it. So the profit stack. This is it.
Chapter 6: How does YouCanBookMe implement an open salary structure?
Absolutely classic. You know, we talk about tech stacks, sales and marketing stacks, all the rest of it. Same principle. You get your degrees of foundational capacity at the bottom and then you build up. So in terms of the, you can book me P&L, this is roughly what it is.
Gross margins, now I know in America you have, you include lots more costs into your gross margins, but in the UK we are only required to report on direct costs like AWS and stuff. So for us, we run a sort of a 95% gross profit margin. But then on top of that, you've got your core management.
On that, you've got your R&D, your engineering team, your product team, and then your communications support and research. And on top of that, if you're a SaaS bootstrapped company around our sort of size, you should be expecting to make 25%, 30% profit, which sounds like a lot. But as I said, nobody's giving this money to you, so you need to make it yourself. You decide on your cost.
You decide what you want to spend on. It's not exactly a tap that you switch on and off, but you decide when you want to spend it. Recently, we've just decided to double size of the company.
Chapter 7: What is the impact of hiring high-performing problem solvers?
But what we're doing is we're investing, we're eating into our profit margin. We're not trying to spend money that we didn't have. So we make it out of our monthly ARR, if you like.
Business stack, same sort of thing that you'll recognise, cost of acquisition for customers, how much you're going to spend on the product itself to retain and give them a good experience, their lifetime value, whether you can expand them and then essentially how much money you can make off the top of what they give you.
Now, the name of the game here is I'm not talking about sales and marketing. What I'm talking about is product-led growth, because that is what's going to lead you to profitability.
And if you listen to Nathan, a couple of years ago, he did an absolutely fantastic 20-minute talk on how you should be expanding your customers, how you should be making more money from people giving you more, rather than trying to expand through growth, through sales and marketing. And that is the best economics you can put into your company. And then the final one is people, HR.
So what I talk about is high performing problem solvers, which sounds completely obvious. Obviously you want to get high performing problem solvers, but what it doesn't say is what you don't want to hire is low performing problem creators, because they're going to be very expensive inside your company. So how do you do that?
Well, you invest in your recruitment, you invest in your turnover and culture, and you look at what the experience is like for somebody working for your company. You want to incentivize somebody working for your company for as long as possible. You therefore have to work out how you're going to give them some career paths and promote them and so on and so forth.
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Chapter 8: How does YouCanBookMe share profits with its employees?
And at the end of the day, you've got a profit margin there, which what I would call is essentially their ability to impact your growth. So who you hire will have a direct impact on that. So here it is, the profit stack of your classic P&L or income statement, what you're doing in terms of people and team, and then how you're actually going to build a product together to make some money.
So in terms of metrics, people metrics, this is Eithne and Kelly, two of the high-performing problem solvers that worked for us in Lisbon earlier this year. What we're trying to do is to maximise the opportunity for high performers to hit their stride.
That is where you're going to get true value out of anybody who works for you, is to get them to work for you for at least two, if not three years, and to hit their stride over that time. So you have to have a view about what their best work is going to look like.
And so for the metrics that matter, you need to understand what is your average tenure, what is your turnover, and what is your, as Nathan would say, your ARR per employee. And you will be able to scale profitability in your company if you do it. Now, metric, tenure. SaaS benchmarks. Now this all comes from SaaS Capital.
So I am going to come with a slight contradiction of what Nathan said, but you can certainly, all of these sources, I hope that they're going to be shared in the documentation that you got. So SaaS Capital will do metrics about bootstrap companies, VC funded companies for different sizes. So I've taken them for a company you can book me size.
benchmark is two years you can book me 3.3 years and it's only 3.3 because we've just doubled the size of the company recently normally it was about four years four and a half years people say for you can book me for a long time which means that we get a lot of value out of what they do for us turnover this is the voluntary last 12 months of turnover at 9.2 percent how many people are just deciding to resign and move on instead of you know other negative more negative things and you can put me at 3.6 percent and then this is what nathan was saying they are arr per employee so the benchmark
is actually $125,000, depending on what size of company. So it can be 250. It just depends. You have to look for your own equivalent. And You Can Book Me is 200,000. So you can just see with that. You can see why You Can Book Me is profitable. Salary metrics. So everybody loves talking about salaries.
Nobody likes talking about salaries, but I do an awful lot of work on salaries inside You Can Book Me. And that's because a labour market works the same as any other market at supply and demand. So you have to basically pick your price point and pick how you're going to pitch your salary rates to other people. I was talking about this with Rory this morning over breakfast.
It is really hard to get it right. You have to do a lot of work on it. It's not some of those things where you can just basically pluck a number. out of thin air. So one of the things that we do is we have an open, transparent salary scheme inside You Can Book Me and have done for a long time.
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