Bootstrapping to $10 Million: Lawline CEO David Schnurman ( Part 5)

Sramana Mitra: When did you introduce the subscription revenue model?

David Schnurman: We introduced it several times, but the time that we got it right was four years ago in 2016.

Sramana Mitra: At that point, you were in that transaction revenue model? Were you still in that $5 million range?

David Schnurman: We had a subscription model, but it just didn’t automatically renew for a while. It wasn’t really a subscription model, because you have to resell them every year, but it was a one-year access.

In 2017, we started automatically renewing a typical subscription. We are trying to make it easier for our customers. Not only did we have a sales force, but we also had another sales force that would call our customers and say, “Your subscription is up. Do you want to renew?”

We asked ourselves what we were doing at this point. We were using a salesperson to call and confirm whoever wanted it. I wanted to do it in 2012, but it wasn’t easy to do it. Now, we use Stripe. In 2016, it was much easier. We had a better team, and we were more mature. That was one of the things that we did.

Another thing that we did was, we hired a business coach. Before I go there, I’ll answer the question about subscriptions. 

Sramana Mitra: Before you go to the business coach, let me just clear up the subscription-related discussion. Your customer acquisition strategy in 2017 with the subscription model was still Google AdWords and email?

David Schnurman: Email was the main one. 

Sramana Mitra: What happens to revenue?

David Schnurman: We took a year to see what’s going to happen. Our subscription is not monthly; it’s yearly. The first year, it went up 20% to 30% and then it kept continuing from there.

Sramana Mitra: At that clip, 20% to 30%?

David Schnurman: About that yes. 

Sramana Mitra: You started to talk about a business coach. What did that business coach bring to you? What was the nugget idea that you got out of that relationship? 

David Schnurman: It wasn’t a nugget or an idea; it was building a foundation for our business. One of the things that happened during this five or six-year period where we didn’t move in revenue was that I went through three different chief operating officers.

Each one left in about two years. I realized that I didn’t want to manage a business. I was always looking for someone to do that for me, so I can be on my business and not in my business. That’s what I was trying to do. It kept breaking down for whatever reason. Something was going on. I found someone through EO.

There is this book called Scaling Up by Verne Harnish. They have a coaching program where the coach implements the book. I met this coach. They help you work with your executive team. They come in monthly and help you scale your business.

I had my third COO who I knew at any moment was going to leave. The COO and my sister who is the VP Business Operations were my confidants. I was scared that when that third COO left, I was going to start all over and find another COO.

He came in and the first thing that he did was to find the right people in my company to build an executive team. He then helped start building accountability, priorities, communication rhythms, culture, and core values.

When we got through all of this and we put it out there, I realized that we hadn’t done any true planning up until that date. We didn’t do any forward-thinking except for some basic things. If we would write a plan, there would be no dates on it. Without a date, it isn’t a plan.

It was an eye-opening experience. We weren’t going to be able to keep the good people. Although it might have not been as dramatic as a subscription, it set the tone to build the right people. The executive team had four people, we’ve grown the team since then. All of them are still with me today.

It’s essentially going to business school and getting paid to do it. After five years, we started to get into the same rhythm, and now we are working with a new business coach so that we can refresh and redo it. 

Sramana Mitra: You were about $10 million at this point?

David Schnurman: Correct.

This segment is a part in the series : Bootstrapping to $10 Million