How to Scale Up When You’re Stuck Between Early and Growth | Postscript, Alex Beller

00:00every time your company doubles in headcount size it breaks especially within the tech and the startup landscape we're all attracted to Big names and big dollar signs and big markets but focusing on a core product and a core user in a core use case I believe that that breeds excellence in a product the riches are in the niches and that's a difficult thing to do it requires a lot of discipline and this is a secret that I would recommend to everyone I'm Alex Beller one of the co-founders of postcript postcript is an SMS marketing platform for e-commerce businesses and the idea from the start

00:37was SMS marketing for Brands built on top of Shopify make a really easy really powerful solution that lets people retarget transact converse with their customers over text message postcript found product Market fit very early customers wanted to send text messages to their and subscribers to their Shoppers and as long as it generates clear Roi they're going to want to send more and around this time we decided to apply to Y combinator and we did that for many reasons uh we were kind of Outsiders we were based in LA in Arizona we weren't very connected to the tech

01:11scene and I went into our application after we filed it every few days and I would update it with our new Revenue number so that when they logged into our application to review it they would see on this date this was their revenue on this date the revenue was higher on this day the revenue was higher and this was like our second or third month and that was the time when our Revenue each week was was going from like $200 a month to$ 800 to 2,000 to 3,000 I believe that the reason that we got in to YC was because they saw this growth trajectory and all that growth was coming from word of

01:41mouth and it was coming from the Shopify App Store it was all inbound to us we were in the right time at the right place with the right product that generated value for our users and by the time we left YC combinator we were past a million in annual revenue approximately 6 to 7 months after we launched we've raised several rounds of funding since then then through series C we bought a company called fondue and we are now about 270 or 280 people spread out across the US you know we were talking about different startup ideas me and Adam our third partner Colin they started

02:16building what became postcript our early customers were amazing they're very funny they were small e-commerce entrepreneurs so a couple of things worked for us really well in early days we did something that in hindsight we like hadn't put much thought into but ended up being a really good idea and this is a secret that I would recommend to everyone we put a live chat widget on our website and inside the postcript application and we set it up so that whenever anyone chatted in whenever any User submitted a chat it would call all three of our cell phones NE and Adam

02:52calling it would ring us and we would immediately stop whatever we were doing and we would like to we would drop it and we would go log in Andy try to help that person we would answer their questions we would take feedback from them we would help them use the product whatever that turned out to be an incredible secret that accelerated us so much and there's a bunch of reasons why first we learned so much from these early customers I mean they were giving us feedback on holes in our product and and what we needed to build next and pricing they're giving us feedback on

03:22everything and so then we could just build exactly what they were asking for and they'd be happier but the other thing that came out of it is people were getting great amazing Hands-On support from the founders and we would be super open that we were the founders of this tiny little business and people really like that and so they started to tell their friends or other people they knew about the post trip product they started leaving us good reviews on the Shopify App Store that then had our application listing rank even higher there and so us just talking to our customers as much as

03:54possible and being super available I mean we would wake up in the middle of the night when our cell phone rang to help customers we would leave leave the ringer on and that created a lot of our ground swell that led to our early growth and so our first 100 users a lot of it came from being hyper available from being public but listening to our customers talking to them and just providing completely over-the-top support it's actually a lot of what Paul Graham talks about when he says do things that don't scale you know now posted his 18,000 customers I cannot do

04:25the chat support for all of them anymore but doing that for so long we spent months and months and months we were the only ones who did support for postcript and we did it all the time live that we learned so much the product advance so much and and we got to spread a lot of Word of Mouth came from that too so uh we launched really with an MVP that directly grew into postcript we've enhanced it and we've expanded it but we never pivoted it was SMS marketing for e-commerce on Shopify and that's still what it is today in early days of postcript we had had Brands come to us

05:01big brands that heard about us that weren't on Shopify and they wanted to give us a lot of money to send text messages right so they're an e-commerce brand that's SAR sweet spot they want to use postcript for exactly what everyone else uses it for but they had a different underlying technology they weren't on Shopify they were using a different platform I'm the revenue leader of the company that's a hard thing to say no to right that's hard to walk away from a huge prominent brand who wants to pay us a lot of money and be our friend and do a case study with us but we decided to

05:35pass on that and we said you know what we'll we'll see you later on down the road but right now we're focused on this one thing and that's a difficult thing to do it requires a lot of discipline but it would have taken us off track it would have led to distraction we would have been building in many different directions then with limited resources and it would have been a mistake because of that Focus so much of our value has been created and so yes we've considered expansion many times we've considered expanding markets we've considered expanding use cases outside of SMS but

06:05what we keep coming back to is that there remains more opportunity in this core space and no one has really solved it yet we think we're doing an excellent job but there's still so much more to BU build and so much more value to deliver to these customers we want to do that first we like to be the one that goes deeper I think there's many traps and many mistakes that all of us fall into in the early days myself and and US included but focus is one that is underrated especially within the tech and the startup landscape we're all attracted to Big names and big dollar

06:39signs and big markets but focusing on a core product and a core user in a core use case to start not forever but to start I believe that that breeds excellence in a product the riches are in the niches I I really believe and that's paid off for us where we've been so laser focused on E Commerce marketers that use Shopify and delivering them an amazing SMS experience and that's really paid off for us and I think that anyone who uses postcript or works with the postcript team experiences that craft because they can tell that there's so much expertise there what makes great

07:14CEOs and great leaders is the ability to look at your resourcing look at your organization look at the all the opportunities in front of you and sequence things properly so that as much lines up as possible so there's a common framing that I hear from a lot of other late stage Founders or investors that I believe is true which is that every time your company doubles in headcount size it breaks and I've really seen that to be the case you know when it's 10 people everyone's connected to everyone and it's all automatic and then suddenly it's 25 people and you need management layers of

07:51some kind and then it's 50 and it's a completely different company and 100 and 200 they're totally different companies and they require different styles of communication and man agement and they require a lot of different things from their Founders when you advance to the growth stage the people challeng is really set in your organization becomes so much more about how you can direct the resources at your disposal instead of how can you as a Craftsman or a practitioner build product or work with customers and those are very different skill sets when I think about some of

08:23the biggest lessons or tips that I could give entrepreneurs thinking about scaling uh what comes to mind more than anything else is values when we started the business we didn't create a set of values and the reason for this was because we'd all worked in companies before that you know had values but maybe they weren't that important or you know they just they hung on the wall but no one really knew them or was connected to them and so we just thought it was Superfluous but Tim Brady who was one of our partners at y combinator when we were about to hire our first team member

08:59he said to us create a couple values it'll help you anchor the culture in something and that's what we did the three of us sat down and we banged our head against the wall and we got the Whiteboard out and we created a set of values that value set has been core to the culture that has been built a postcript for now almost 7 years the key tip that I would give people is not just to create a set of values but to make sure it has a great acronym this is actually the hack because what's more important than what the values are it's that everyone knows them like the

09:34specific things I'm sure everyone can pick inspirational good values but what's more important is just that everyone can remember them and that they uh reflect how you believe work should occur so to get specific the values at postcript the acronym for them is Fe Fe it's kind of a funny word it's f a c h it's Fearless Excellence animal customer first humility every time a new person joins postcript they go through a training with me where I walk them through all of our values what Fe stands for the story behind each one how we believe it should show up at work and then people get

10:17recognized for living these values and it comes up in their annual reviews and we have a slack Channel going where people get shouted out for living within these values and that has really helped guide our culture and keep us all together as we've grown remotely but I believe that the values that are going to be relevant to an organization are going to change over time they're not always the same I'll give you an example the e in Fe of our company's values today it stands for excellence it didn't always stand for that it used to stand for 8020 8020 meaning we wanted people

10:49to be operating from an 8020 mindset we didn't want folks to focus on Perfection we wanted to be moving really quickly we wanted to be doing whatever we could to capture as much value as we can with 20% of the effort and then move on to the next thing and that was great that helped us move quickly and that helped us inform how we built product and that helped us inform how we built process and that was an amazing early stage value I mean I would recommend it to many folks but after a while we realized we were running into issues because of it we were well past 100 people and we

11:19needed more robust processes and systems we needed our product to be sturdier and more stable right and less about just shipping everything that's new and making sure what we had was really robust as we were serving bigger and bigger customers and at that point we went in and we changed the value from 8020 which starts with an E to Excellence which also starts with an E and that way the acronym for our value stayed the same but we got to change the DNA of the company and we haven't done that many times it's probably happened three times but each time it's been

11:48really valuable and it's kind of a weird quirky little learned secret but I would really recommend other entrepreneurs as they as they're scaling think about doing something similar be comfortable going back and changing your company values sometimes it's incumbent on a Founder to reset something and to make it clear that you know I'm hearing all this feedback but actually I disagree and we're going in this direction here and values are a great way to do it about what's going on with AI today with generative Ai and when I think about what's going on uh what's been

12:20going on for a long time with predictive machine learning what I see is a future where on to many marketing goes away and where it becomes highly personalized and in the SMS space highly conversational since the beginning of the e-commerce use case marketing has been generally one way it's I'm an e-commerce marketer I am pushing out a notification to my audience to try to get them to go by that works it's fine but that's not how we actually use messaging we all text one another back and forth in conversations and at postcript we've always believed that there is an

12:58enormous opportunity for Brands to see even higher performance and for consumers to be even happier if the interactions are conversational between them first more of a push marketing Approach at postcript we've been invested in this for a while we built and launched a product called SMS sales it is the only part of our company that is in person and we have a huge office in Phoenix Arizona that is filled with e-commerce salespeople who work on behalf of our Brands to sell and drive more trans actions over the SMS channel it's kind of old school it's like if you

13:33walk into a retail store and someone helps you shop or buy or answers your questions it's like that for e-commerce and we've been doing this for several years and we built up an enormous amount of expertise in it and many of our largest customers many huge brands are using it to drive more sales and to keep their customers happy and we are so excited at the opportunity of bringing that to further scale with new advancements in Ai and the data sets that we've been building and the conversational training that we've been doing over the last several years uh we

14:03believe puts us in a unique position to capitalize on that Trend Ai and predictive machine learning together are not only going to unlock the personalization I was just talking about but they're also going to allow for a much more conversational marketing experience that phrase conversational Commerce has been like floating in The Ether forever and no one's really done it and I believe now it's actually going to happen