Kyle Racki is the founder and CEO of Proposify, a software-as-a-service company currently doing seven figures in annual recurring revenue. Proposify allows companies to make better proposals faster to win more business. When Kyle launched Proposify in 2013, he and his co-founders almost gave up in their first year but despite enormous challenges, they now have 2,500 paying customers. He dedicates most of his time to product design, management and customer support, and doing his best to make Proposify all that it can be.
He has been an entrepreneur for over 10 years and has lived with hustle, tenacity and resilience. He shares what he has learnt and what he continues to learn every day because he wants to help other entrepreneurs succeed. He does that through his blogs, videos, speaking and his upcoming book on building a SaaS business.
Period in full-time business
At age 24, he became a freelancer and a while later started a small web design agency with a guy he had met in the agency world. They ran the business for 5 years before starting Proposify which has been in operations for the last 3 years. They sold the agency in 2014 and also raised a seed round of funding for Proposify.
He never thought he would be an entrepreneur and was in fact terrified of it.
Core revenue streams
Proposify is a software-as-a-service business. People sign up for a free trial of their proposal software and later they can opt for different pricing plans based on how many proposals one writes. Each pricing plan also has a range of features. So far they have 5,000 paid accounts and retention is very good.
Starting out in business
Kyle says everything he has done so far in business was not planned. He was freelancing in 2008, doing web design and development, but he got lonely and decided to get a business partner. Together they started their agency.
Getting the first set of clients for the agency
His business partner already had a few clients but they struggled a lot in trying to get clients. They did well in the first year, maintained low overheads and they got several good projects. They also struggled with their growth after the first year because they couldn’t effectively manage the volatility of the business.
Core agency products
Kyle says that social media and digital marketing were there but very new. They used to do a lot of web design, UX work and online marketing. One of the problems they noted with the agency is that they didn’t have a speciality. They never focused on a niche so they were stuck competing with local companies for smaller contracts.
Tip: When starting a service business especially a creative one, you need to specialise in one thing.
When he was employed and freelancing, he used to write proposals and as he was freelancing he came up with the idea for a SaaS product for proposal management. He didn’t have any coding skills but created its wireframe and shelved it for several years.
In the process of running their agency, they started getting tired of chasing clients for payments among other issues. They really desired to transition into a SaaS business and tried out different SaaS products which didn’t work. That’s when they started discussing the proposal SaaS idea and they decided to go into it.
Developing a SaaS product
Kyle was not skilled in building a SaaS product but he knew how to create the interface. As they were developing different SaaS products, they built a team of developers internally. They got a grant to hire a developer who worked on the Proposify idea for one year. The developer is now the CTO.
They got the grant from the Atlantic Canada Opportunities Agency (ACOA) after they pitched their early stage prototype at an event. They also got an investment from another government-related organization which put in $250,000.
Tip: To get funding, go to start-up events where they let you pitch or demo your idea. It’s better than looking up investors in a directory and trying to contact them
Bringing back the Proposify idea
Kyle and his partner had tried out many ideas to see what would stick. They tried a do-it-yourself website builder like Wix or Square Space, they had a few customers but it didn’t work very well. They also tried a social media analysis tool that they put out, got a few customers, but it too didn’t work.
Proposify was one of the ideas they decided to try out. The reason they stuck with it was because when they did the demo of the early stage mock up, they got very good feedback from potential customers. Kyle discovered that proposals were a big pain point for so many people.
Tip: If you are trying to find out if your business idea is viable, focus on the pain
Time allocated to each idea
It was an easy choice for them to let go of the projects they tried out because each of them would fizzle out after being launched. When they got Proposify out as an MVP (Minimal Viable Product), they didn’t hit the product market fit (when people actually start to really love it and pay for it) for about 17 months. It was 17 months of putting out new releases, listening to people saying how they use it, fixing it, and building new features.
Tip 1: Until you get a product into somebody’s hands, you haven’t began. Until you get somebody using it, you haven’t started
Tip 2: Get the product out in as little time as possible so you can begin to learn and build on it gradually
When Kyle presented the demo of Proposify, it was just an initial go of the product, and it was very early stage. He says the first product was ugly but it was just their first kick at the idea. Because they hadn’t launched it when he presented it, they had time to add critical features that met users’ needs.
Proposify core features
Kyle says their value proposition has been well refined and they know their audience. A lot of the customers they get are people who are searching on Google for web design proposal templates, and other templates. Once people sign up on Proposify, they are immediately launched into the product to start editing the proposal templates.
Proposify has templates of all the different proposals that people write and that is the hook that gets people on board. Overtime, people save time writing proposals because they can put their content in a content library. That is one way Proposify is offering great value to its users.
Evolving away to other target clients
Kyle says that they will always have a lot of customers from the web design/marketing agency space because that is the space that they know and so, the content they write is naturally agency-oriented. Their desire is to keep their core customer base of agencies, but they also want to expand their proposal templates into other industries.
Getting the first clients
Kyle can’t exactly recall their first client but he remembers a moment when they were surprised to see that a free user upgraded to a paying account without even being sold on the idea by the Proposify team. After a month or so, the client left, but it was exciting for Kyle and his team to get that first paying client. Before the product was launched, they built a landing page with a sign up form, started doing guest blogs, started writing a blog about proposals and pitching/how to win proposals, and much more. They also did a lot of marketing.
Tip 1: Doing a lot of marketing before launching a product is super important
Tip 2: It’s going to be a long haul in terms of getting regular traffic to the site. At the beginning you can put a landing page; send a little Adwords or Facebook traffic to it; and start doing a little bit of guest blogging or being a guest on podcasts. Start by getting traffic to the site and once you have people signing up to the product and using it, it’s just a matter of how great the product and on-boarding is; and can you actually convince someone to take out their credit card and upgrade to a paid account
Core growth strategy after launch
Kyle says he has been a big believer in inbound marketing and content marketing. He thinks it’s a good long term strategy and good for both traffic and brand building.
Tip 1: If a customer finds your blog and signs up to get new posts every week, you start to build an audience and relationship with that person. The customer begins to be loyal to your product because they feel an attachment to your company.
Tip 2: As you get bigger and start to scale, you need to start looking into paid acquisition and build a sales team.
Tip 3: In the first years, you can build a great business without spending a cent on sales people or ads, and just work at being great at producing content, networking and getting your content on other people’s networks
He says at the beginning it was blogging including guest posts. He also did some trolling to get people who were looking for proposal software and he got some of them by checking out a competitor’s site for client reviews and then dropping comments on each of those clients’ sites with the link to Proposify included in there. That got a handful of people clicking the link and finding out about Proposify.
The biggest reason for launching the podcast was because he knew their core audience was agency owners. It had been a year since he had run an agency and he was starting to run out of ideas. He felt like his experience as an agency owner was limited and so to create good content on the agency business, he needed to get that knowledge and wisdom from well experienced agency owners. That was the motivation behind starting the podcast
He says the podcast has been good in bringing in organic leads. 90% of Proposify customers come through organic channels through the podcast, blog, referrals and direct traffic. Paid leads make up a very small percentage of their customers. All that is because they kept investing a lot in content from their earlier days. They get 6,000 new trials every month.
Tip: In every content marketing activity, you have to go all in and you have to treat it like it’s a company/product in itself. It has an audience, it has a target customer, you acquire customers by getting them to subscribe, and you retain customers by having them not unsubscribe from you. You have to deliver a product that meets their needs.
The funnel set up
Kyle says that getting the 6,000 new trials every month is a result of having a marketing site that effectively communicates the value proposition of their product and having a blog that produces good articles that are keyword targeted for good searches. For example, one of their most highly trafficked blog posts is the one called “How to write an executive summary”. Search is a big part of their inbound strategy.
Tip: There are a lot of great resources out there to find how to optimize for search. A lot of it comes down to content and that you are creating content that people want and are searching for
Proposify now has a 23 member team which includes the 2 founders. It consists of developers, sales people, marketers and customer support. In the next year, he projects that number growing especially in the sales team. In early 2017, they passed $3 Million in annual recurring revenue and they are trying to grow that to $5 Million by the end of 2017.
Comparison: Proposify Vs. The Agency
Kyle says that in the agency business they never achieved $1 Million in revenue, they had gone as far as $800,000 and the growth projections in the new business are more solid.
Biggest breakthrough moment with Proposify
“There are a lot of little moments that all add up to a big thing but the most notable milestone was hitting product market fit because we had been trying for a very long time to hit the product market fit”
They don’t have a free plan on Proposify, they only have a free trial but they had experimented with a freemium plan (free forever plan) but it didn’t work out so well. They had 14 day free trials for a long time then they switched them to 30 day trials, but after a year, their data showed that their conversion rate was double with 14 day free trials so they went back to 14 day free trials.
Tip: Never stop testing and never stop experimenting
Book recommendation for entrepreneurs:
Tools of Titans: The Tactics, Routines, and Habits of Billionaire, Icons, and World-Class Performers – Timothy Ferriss