Our SaaS Start-up’s Equity Allocation, Expenses, and Growth After Eight Years

As has now become an annual tradition, today is exactly 8 years since we publicly launched Outseta. Here's our annual recap on our 8th year of bootstrapping our SaaS start-up.

Equity allocation

We continue to operate Outseta using our "choose your own adventure" compensation model.

• Every member of our team is paid based on a pay rate of $210,000 per year
• Everyone can elect to work anywhere from 1 to 5 days per week
• Everyone can also elect to work some percentage of their time to earn equity in the business—on the same terms as our founders

The equity everyone on our team holds is a direct reflection of the total amount of time that they've elected to work for equity in Outseta, relative to all other employees. Here's how ownership shakes out at the end of 2024.

• Dave Wong (30.72%)
• Dimitris Georgakopoulos (25.44%)
• Geoff Roberts (21.13%)
• Bernard Chen (16.21%)
• James Lavine (4.54%)
• Benedicte Raae (1.95%)

Our objective is to build a team where everyone acts like owners because they are owners in a material way. Typical VP-level equity grants in tech companies are often in the range of .5% after a 4-year vesting period.

Expenses

With our standardized (and relatively high) salary, almost all of our expenses at Outseta are related to payroll.

All things considered, I continue to love this model and I think it's served us really well. It was a huge strategic advantage in our early years and it continues to provide a clear path that helps everyone understand how their compensation will grow over time.

However, Outseta is a relatively low cost product—that means it takes a lot of new customers to afford each incremental hire. When I talk to other founders about our challenges, I routinely hear "You could make four $50,000/year hires instead of one at $210,000/year."

They're certainly not wrong, and we've had plenty of conversations about whether this model continues to serve us best.

Through all of those conversations we keep coming back to our existing model. As we hear more about "AI Agents" and the ability to build big companies with very small teams, I see that as playing right into our hands. We're going to continue to keep our core team as small and talented as we can while encouraging everyone to think creatively about how we can scale our business.

Payroll aside, here's what the rest of our expenses looked like in year eight.

Every year when I look at this, I generally have the same reaction—people related costs aside, it's astounding how little it costs to run a software company. While we've been particularly financially disciplined with non-payroll related expenses, this certainly reflects our overarching strategy. We've chosen to invest in people, and expect those people to deliver work that in turn grows our business. We're not spending money renting attention from social media sites, paid newsletters, or really on any type of advertising.

A few notes on what's included in each of the major line items above:

• Business Software—Sendgrid, Flatfile, Figma, Zapier, Slack, Google, and Cloudflare are the larger software related expenses.
• Business Services—These costs are mostly related to accounting and tax prep.
• Web Hosting—Amazon Web Services and Webflow.
• Marketing—Affiliate commissions, costs associated with WebflowConf and MicroConf (conferences), and software like Wistia (video hosting) and Descript (podcast recording) that are marketing related software expenses.

Product Updates

Our product strategy remains largely unchanged—we believe we've identified the "right" feature set that represents the core tools needed to build a SaaS or membership businesses. Our work continues to focus in two areas:

• Improving each of Outseta's core feature sets (payments, auth, CRM, email, help desk)
• Deepening integrations with the complimentary tools Outseta is most often used alongside

Deeper integrations with Webflow and Framer

Webflow and Framer are the two website builders that Outseta is most commonly integrated with—this year we made significant investments to integrate with both in greater depth.

• Outseta's Webflow App
• Outseta's Framer Plugin

Outseta's Webflow App and Framer Plugin bring payments, authentication, protected content, CRM, email, and help desk tools directly into Webflow and Framer product experiences. Our app and plugin represent two of the more robust products available in these ecosystems, saving builders from needing to integrate a handful of disparate tools.

Better support for Xano and Supabase as low-code databases

While most of our SaaS customers integrate Outseta with more traditional backend databases (Postgres, MySQL, etc), our no-code and low-code customers are increasingly building more complex sites and web apps that require a backend database. It's pretty clear that Xano and Supabase are the preferred "low-code" database tools, so we invested in making Outseta more compatible with both tools.

• Supabase and Outseta Auth with Row Level Security
• Integrate Outseta and Xano

Added support for all major payment methods

We added support for a slew of new payment methods, allowing our customers to collect payments with:

• Google Pay
• Apple Pay
• Bank transfers
• iDeal
• SEPA
• Many more!

These payment methods are enabled from within Stripe and are offered in addition to credit card processing.

Redesigned transactional emails, notifications, and knowledge base

We released completely redesigned transactional email templates, notifications, and knowledge base tools. These updates were primarily focused on delivering more modern designs for these components to make our customers look good.

The image above has quickly become everybody's favorite notification; and you can see the new knowledge base design in action by checking out our own help center: Outseta's knowledge base.

Other quality-of-life improvements

We also released a slew of other quality-of-life improvements—a few comments on some of them are found below.

• Content protection updates in real-time—If a customer buys a product, their content protection related to that product updates in real-time now so the product is accessible immediately without requiring a subsequent login.
• Improved UX for support tickets—It's visually easier to differentiate between "Notes" and "Replies" now.
• Search and export invoices—You can now search and export invoices more easily.
• Edit plan expiration dates—Change the expiration date on any customer's subscription directly from their CRM record.
• Reorder CRM properties—You can specify the order that you want your CRM properties to display in.
• End trial, start paid subscription immediately—Have customers eager to pay before their trial ends? No problemo.
• Skip setup fees on plan changes—Elect to waive setup fees when your existing customers change plans.
• Subscribe to an email list at sign up—Allow new users to opt into an email list when they first sign up for a membership.

Backend updates

There was also a constant stream of backend work throughout 2024 that will go unnoticed by most customers. This was generally focused on allowing us to build software faster and more reliably. We wrote a detailed post this Spring on moving our database to MySQL 8.0, as well as other updates we made to backend processes. All of this stuff is focused on making Outseta as stable, secure, and snappy as possible—particularly as our customer base grows and we increasingly serve customers with larger volumes of data.

Growth Updates

When I wrote this same update last year I ended with something I hadn't done before in the prior 7 years—I predicted that 2024 would be Outseta's breakout year from a growth perspective.

It wasn't. 

We grew revenue by 29% over the last year—not bad for an 8 year old business, but I would have liked to see our growth rate be closer to 40%. There's no specific magic to that number, but if we keep stacking 40% growth rate years we'll end up in a really good place with a growth rate that's very healthy for a business that provides critical infrastructure to our customers.

Ultimately, there were a few factors that held us back in 2024.

• We didn't invest enough time in marketing
• We didn't raise prices for existing customers
• Churn

Not spending enough time on marketing is the obvious culprit. Outseta is a very product focused company—we're a team of 4 engineers, 1 designer, and 1 marketer (me). My time is divided across product management, support, operations, and marketing—and marketing is too often what falls by the wayside when we get busy. That's been a major topic of conversation this year.

We had loosely planned on increasing prices for our existing customers in 2024 but didn't end up doing so. In our 8 years of existence, we've still never raised prices on our existing customers—we've always honored their initial pricing.

Finally, we continue to see relatively high churn rates on our entry level plan as a result of selling to start-ups. Our churn is overwhelmingly related to companies shutting down, but it still represents a headwind that we have to account for in the growth of the business.

These factors collectively resulted in a Q2 and Q3 where our growth rate was relatively slow. However, I'm happy to report that we saw a substantial and sustainable increase in our growth rate towards the end of the year.

While it's admittedly a very meaningless metric, we just had our 10,000th business sign up for Outseta. It's pretty cool to think that so many businesses have been exposed to our product now.

There were three factors that really accelerated our growth rate in Q4.

Redesigned website

Prior to WebflowConf in October James and I absolutely attacked a website redesign after having essentially the same version of Outseta's website for close to three years. We launched a new site after 2-3 weeks of really intensive effort, and the response to the new site has been fantastic.

Rumor has it James now has a neon sign that says "decidedly modern without being particularly trendy or fussy" hanging in his living room.

In all seriousness, he deserves all the praise for the new site.

Pricing change for new customers

In October we did raise the price of Outseta's entry level plan modestly, from $39/mo to $47/mo if you pay monthly. We also increased the percentage discount that we offer on annual plans to 25%.

Both changes were made with the same end goal in mind—finding more committed customers.

We're intentionally out to serve the lower end of the market and start-ups specifically—that will never change. But put directly, this increase was designed to some extent to "scare off" less serious projects. Our team commits significant time to each new customer—and we're asking for a small amount of that commitment to go both ways.

While having really accessible pricing will always be important to us, if your pricing gets too accessible the hard truth is you attract a lot of tire-kicking customers. Those customers tend to require just as much if not more support—it's just really tough to build a scaleable business with too many tire-kickers in the mix.

This change ultimately went very smoothly and increased the quality of our sign-ups as expected.

Onboarding

In tandem with our website redesign and pricing updates, we launched an entirely new in-app onboarding experience.

This came after encouraging 12 new customers to record videos of themselves going through onboarding with Outseta. This was an insanely valuable exercise that I can't recommend enough to other SaaS founders.

It was ultimately a combination of our new website, pricing, and the updated onboarding experience that really kickstarted our next stage of growth.

Is Outseta for me?

For the previous 7 years, we had a page on our website called "Sales Pitch." The idea behind this page was simple—we aren't going to chase you around from a sales perspective. If you wanted to be sold, we had a dedicated place where you could go to hear our pitch.

While I loved the directness of the "Sales Pitch" page it had started to feel kind of stale—and frankly, "Sales Pitch" just has some negative connotations to it.

With that in mind, we launched an "Is Outseta for me?" page this year—a page in the same spirit. The goal of this page was to answer in the most direct and plain language possible questions like:

• What is Outseta?
• Who uses Outseta?
• What do people build with Outseta?
• What are the benefits of using Outseta?
• What are signs that Outseta might be the right fit for me?
• What are signs that Outseta might NOT be the right fit for me?
• What technologies are a great fit for Outseta?
• Where can I lean more?

This page was a hit since the moment we launched it—it's routinely cited by customers as something that influenced their buying decision and is currently the fourth most visited page on our website.

Life Profits Podcast

2024 saw our first foray into the world of podcasting. I started the Life Profits podcast with Adii Pienaar, which focuses on telling the stories of entrepreneurs who are using their businesses to power interesting and enriched lives outside of the office. The main objective of the podcast is to share examples of people that are building great businesses and lives concurrently—without having to sacrifice one for the other.

This podcast is something of a personal interest project. I continue to believe life is more important than business and I want to encourage more founders to use entrepreneurship as a vehicle to do all the things that they want in life without flushing precious years down the drain. Hard work is required to build anything worthwhile, but you don't need to buy the hustle culture narrative that too many founders have been sold.

The podcast is definitely not something that I can point to as contributing to our growth in any direct way, but I view it much more so as an investment in our brand.

Webflow recommends Outseta for user accounts and memberships

The year ended with some pretty huge news—Webflow decided to sunset their own user accounts and membership features. Not only that, but they recommended Outseta to their customers who need these features. While this is a recent development (December) and didn't impact 2024's growth in a major way, it's a huge opportunity for us as a business and is contributing to our accelerated growth heading into 2025.

Here's a small blurb from Webflow's announcement:

If you go back just a couple of years, Webflow was actively developing their own membership features that directly competed with our own—which definitely gave us pause for thought. While Webflow was important to our growth, there was a real risk to our business as Webflow's membership features became competitive with our own. We deliberately set out to diversify the technologies that Outseta integrates well with as a protective measure.

Knowing that this is no longer the case is of course welcome news—the Webflow team has been extremely supportive of us and we could not be more appreciative of the opportunity to serve their customers. We're hellbent on offering the best set of membership tools for anyone building on Webflow.

Wins

As far as other wins for the year go, the thing that immediately comes to mind is just the quality of the projects and companies being launched with Outseta. Put directly, all of the right people seem to be adopting the product. Beyond that, the variety of the projects and use cases Outseta is being used for continues to be mind-boggling. Here's a sampling of newer customers to give you a sense of that range.

Within the design community...

• Rob Hope's Show Them course really set a new standard for creator courses when it launched, showing what's possible when you ditch cookie-cutter learning management systems and build something more custom instead. It's built on Webflow, Outseta, and Marcel Fahle's Bold Video.
• Tommy Geoco's UX Decisions course is another killer example of a course business—it's on build on Framer and Outseta.
• Dennis and Ilja from Osmo are building a platform that has a lot of designers pretty hyped already.

Within the SaaS world, we've seen a slew of new AI-focused start-ups launch on Outseta as you might expect. Start-up accelerator Tinyseed (who I greatly admire) is also a new customer—they are cooking up something new built on Outseta as we speak.

We also continue to see growth in the number of clubs and associations using Outseta. These run the gamut from professional associations like the Association for Electronic Music to small local choirs.

There are countless examples that I've forgotten here, but with our own audience being pretty design and SaaS oriented I figured these ones are at least relevant to many of you.

Challenges

The primary challenges in our business remain largely unchanged.

Support volume

Customer support remains the biggest challenge in our business. Between offering a "big" product, integrating with many different technologies, and serving both technical and non-technical customers I think that Outseta will always be something of a high support volume product. Our support also tends to be particularly technical and nuanced—it's not an area we can easily outsource. Our entire team continues to do support and for better or worse support has become a hallmark of our brand.

As we continued to wrestle with support this year, I think we came to two important conclusions. First, we need to continue to look for ways to make providing support more scaleable. We made greater investments in our knowledge base and onboarding processes as examples, but we're continuing to look for ways to better scale support without sacrificing customer satisfaction.

Second, I think we realized more than ever how much high quality support from a human is a differentiator.

My belief is stronger than ever that technology is not going to be the differentiator for most businesses going forward—customer service is. And while I think tools like AI have a role in customer service, I see them fast becoming the common denominator in lousy customer experiences.

The recipe of "make the product better" and "offer great customer service" is generally undefeated if you think long term. We plan to continue to embrace both.

Lack of time spent on marketing

With a small team that's designed to punch above its weight class, everybody at Outseta plays multiple roles and has competing priorities. The hard truth is we've continued to prioritize the product and providing great support to our customers—marketing has continued to be the area that falls by the wayside.

We know that we're under-invested here and need to find ways to gain efficiency in other areas of the business so we can spend more time focused on growth.

So, how do you really feel?

As I was preparing to write this post I asked the social media folk what they wanted to know about Outseta's journey so far. A number of people chimed in with similar sentiments to the one below—in many cases asking something closer to "OK, but how do you really feel?" It's a fair question and one I think too many founders avoid (at least publicly), so I wanted to end with something in this direction.

Earlier this year, Craig Hewitt the Founder of Castos asked me maybe the best question I've ever been asked on a podcast.

"Is Outseta an A+ start-up opportunity? And if not, why are you still working on it?"

It's a fascinating question and both Craig and I ultimately agreed that neither of our start-ups are A+ business opportunities, yet we still have very valid reasons to continue working on them. And that sentiment is very much at the heart of my answer to "How do you really feel?"

First and foremost, I feel immensely grateful. While Outseta is not a slam-dunk overnight success that we're scaling to the moon, we've made so much progress in the past few years.

I'm working on Outseta full-time, the business has proven to be sustainable, and it's given me an incredible amount of freedom in my personal life—that's always been my primary measure of success. It's not lost on me that Outseta is already more successful than most of the more well known indie products out there.

On the other hand, I'd be lying if I said I didn't also feel some degree of frustration. We've worked really hard for a very long time—with an extremely talented team—and the hard truth is we haven't really reaped the rewards of our efforts yet. We've made steady progress and have built ourselves a nice little business, but I'm eager to see our team's efforts rewarded in a bigger way. I have a strong sense that we've done "everything that you're supposed to do" from an execution standpoint, but I've certainly seen success come more easily in other businesses.

We're not pushing a boulder uphill anymore, but the boulder isn't rolling downhill yet either.

This comes down to we picked a tough market to serve, with lots of competition, and the manner in which we choose to operate acts as a significant constraint on the business too. We're addressing these factors as best we can, but the hard truth is our problems remain tough problems to solve.

I remain massively motivated to see that the team that's worked so hard on this product one day reaps the rewards for their work.

I very much enjoy the work of building Outseta and I came to the conclusion long ago that I simply wasn't going to stop—we're going to win by relentlessly improving the product and outlasting everybody. But I definitely look at the business with mixture of both gratitude and frustration—as I know so many founders do.

If I one day find myself on easy street, may posts like this one be a reminder of what went into getting there.

Thank you everybody for your continued support!