Bootstrapping Using Services and Piggybacking from Australia: StoreConnect CEO Mikel Lindsaar (Part 2)

Sramana Mitra: What was reinteractive?

Mikel Lindsaar: reinteractive is a consulting business. We do software development. I really wanted to build a SaaS business, but I didn’t have the resources or the people to start it. I didn’t have any way to get funding at that point.

Sramana Mitra: What you’re describing – starting with a consulting company – is a very common way. We have a whole track in One Million by One Million that we call Bootstrapping Using Services.

Mikel Lindsaar: Totally. The danger in that is not recognizing when you need to split the SaaS business out. Services are a bit like a drug in that they’re quite easy to get, and you can get addicted to them. You’re getting $5,000 for a job that doesn’t cost you that much in labor costs. They’re short-term solutions to a problem. Unless you build up that underlying revenue and work out how you switch over, you can get caught in this loop.

Sramana Mitra: The important thing is to know when to say no. Services can drag you far outside of the core product direction that you want to take.

Mikel Lindsaar: If you get some large customers and you’re not very strict on that, you get dependent on that customer. Your product becomes their product. You have to be pretty careful around that. It’s completely doable. I’m evidence that it works. I started reinteractive by finding someone to pay me to do some development work. I got more and more jobs as I did it. I ran out of me. Then I started adding staff. It’s still running. I spend a minimum amount of time there now.

Sramana Mitra: It has remained a services business.

Mikel Lindsaar: Yes, then I split out the SaaS business.

Sramana Mitra: But you incubated the SaaS business inside of reinteractive?

Mikel Lindsaar: Corrrect.

Sramana Mitra: What was the SaaS business?

Mikel Lindsaar: I actually built five and sold three.

Sramana Mitra: Let’s go through them.

Mikel Lindsaar: The first one, which is still running, is MetaPulse. That was launched in 2010. MetaPulse is a growth management system. We went to the market and did surveys. I can highly recommend surveys as a great way to know if your product is going to work or not. We went to the market and did surveys of CEOs of more than 50 staff. We had a 97% response rate for the number one thing that was causing the problem. If you’ve ever done a survey, getting a 97% response rate on anything is ridiculous.

Sramana Mitra: What was the answer?

Mikel Lindsaar: There’s no way to effectively track and measure the production and performance of their team. It was this idea that once you get to company size, you have to practice or have flashcards to remember everyone. That’s where the organization gets too big for one person to keep in their head. Our system helps companies grow from staff all the way to thousands. It does that through statistics and organizing charts, tracking events that are happening in the organization. That was MetaPulse. That’s still running. It’s growing.

The second one I started was called StillAlive.com. It created a way of making sure that websites were online and running. We have a very unique way of doing that. Instead of just checking if the webpage is returning, it would go in and actually login as a user and do things. I built that in 2012. I sold it in 2013.

Sramana Mitra: How many customers did you have when you sold it? What kind of revenue?

Mikel Lindsaar: It wasn’t a massive exit. It was a lot of money – about a few hundred thousand dollars. We were only doing maybe a couple of thousand a month in revenue. They wanted to roll it up to a bigger group of offerings.

I actually sold two SaaS products to them at that point. One was StillAlive and the other one was StatusHub. Both of these are running, but I have nothing to do with them. StatusHub is like StatusPage.io. They just wanted to put it into a suite of applications.

My next venture was Flood.io, which does load and performance testing. It helps make sure that a site can handle an expected amount of traffic that’s coming to it. I built that with two co-founders. I was the CEO and they were doing the development. Between the three of us, we built this thing up. That was interesting because I started with one co-founder, Tim, who was doing all the development. I was doing the management, pricing, and customer acquisition.

Then we brought on a third person, Ivan, to do all the frontend. We resplit the company and made him the co-founder so everyone could grow it together and get a similar return. Adding that extra co-founder made a difference in how rapidly that company grew. We ended up selling Flood.io to Tricentis which is a big load testing company. That exit was in the millions. I didn’t have to stay on. I got a discount on my payout, but I got to leave straightaway.

This segment is part 2 in the series : Bootstrapping Using Services and Piggybacking from Australia: StoreConnect CEO Mikel Lindsaar
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