In episode 595, Rob Walling catches up with Brian and Scottie Elliott, the husband and wife co-founders of Gather, an interior design project management SaaS. This husband and wife duo shared their victories, challenges, and failures, including a cash crunch, moving upmarket, and managing to double revenue over their nine episodes of TinySeed Tales Season 2.
It’s been over a year since they were last on the podcast and wanted to see how the company is doing. It turns out Gather is on track to 10x their MRR.
In this episode, we reflect on what they learned in the last year, how their thought process has evolved around deploying capital to grow the business, and what they are most excited about in 2022.
Topics we cover:
[3:33] How Gather is on track to 10x MRR
[4:26] Shifting from solo designers and small design firms to catering to large firms
[5:51] Moving upmarket
[8:28] Why they shut down Gather consulting services
[10:38] How they knew when they had product-market fit
[12:57] How they bounced back after their developer accidentally crashed their entire app
[20:11] Their thought process for deploying capital to grow the business
[23:02] What they are most excited about in 2022
Links from the Show:
Thanks for listening to another episode of TinySeed Tales. If you haven’t already, be sure to check out all of Season 2 of TinySeed Tales with Brian and Scottie and Season 1 of TinySeed Tales, where we follow the SaaS journey with Craig Hewitt of Castos.
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you.
If you haven’t heard TinySeed Tales, it’s a podcast that I host. We do heavy production value on it where I have voiceovers, background music, and we cover the struggles, victories, and failures of SaaS founders. I do between 8 and 12 interviews over the course of a year. It’s about every month or two with the founder or founders who are going through TinySeed.
Season one ran through 2019 and it was Craig Hewitt, founder of Castos, who many of you have heard on this pod. Season two followed Brian and Scottie, who are a married couple who run Gather at gatherit.co. It is a SaaS for interior designers. That season aired in September and October, a little bit of November of 2020. Those interviews, I believe, ended around the summer of 2020, and then we aired them a month or two later.
It’s been about 18–20 months since I’ve spoken with them. During that season, they had struggled as the world entered COVID. They were not growing as quickly as they wanted. They were going upmarket. That was a big part of trying to raise their price and change who they were focused on. I believe when they first started season two episode one, they were around $4000 of MRR. It may have been $4500. When we ended the season, they were just getting over a cash crunch. They were looking ahead to, I believe, double their MRR in the subsequent year.
Today, in the conversation, we talked about how they’ve made it upmarket, how they’re looking to double their MRR again this year, and how their growth has accelerated since they found product-market fit. Of course, you’ll also hear my new segment: How did you know when you had product-market fit? With that, let’s dive in to my conversation with Brian and Scottie, the founders of Gather.
Brian and Scottie of Gather, welcome back to Startups for the Rest of Us.
Brian: Thanks, Rob. It’s good to be back.
Rob: It is so nice to have you. Folks who listened to TinySeed Tales season two will remember your trials and tribulations throughout that year of TinySeed. You were in batch one back in 2019. You graduated and became alums. Really, your business has gone up into the right since then.
We were talking before we hit record. You were making good progress during the year, but really something kicked in. I was caught like a bootstrapper hockey stick where it’s not the Facebook, Google hockey sticks that they talk about in Silicon Valley, but noticeable upturn going from you’d grow 500 MRR in a month. You’d grow a thousand and a thousand was a decent month. Then suddenly, it was 2000, 2500, 2000, 3000.
It was a really noticeable thing that happened in, really, I guess it was mid-2021. This was eight or nine months ago. When you started with TinySeed in the first year, you were doing just over $4000 a month, so under $50,000 a year. You’re on track now to 10x that number by the end of this year. My first question is, how does that feel to think about we’re about to 10x our business? Does that feel real?
Brian: I think it feels real. I think that the thing that startles me sometimes is thinking back to how slow things went in the first five years of Gather and how that compounding growth starts kicking in. When you’re living just in the moment and you’re trying to set goals, for us, it’s doubling this year. You think, oh, well, we can double this year because we’ve more than doubled last year and then we doubled the year before. But where it really starts to get interesting and exciting is just seeing the compound trajectory go steeper and steeper.
Rob: What do you think has been the cause of that?
Scottie: I think it’s hard to tell exactly the reason for that growth. I attribute it to us finally getting our footing with the right set of customers like the right customer. When we started TinySeed, we were catering to a smaller design firm, a solo designer. Anybody who listened to Tiny Tales would know that we started to go towards the larger teams. I think that saved us in the end, especially with COVID.
There’s some churn there during COVID. When we ended up on our exit checklist, when we asked them why they turned, we added COVID. There were a few that did say they were leaving because of COVID and they were always the smaller, the solo. I think that actually focusing on teams and building platform geared towards team communication and collaboration, especially for COVID teams looking to work remotely, it was almost like we didn’t know that was gonna happen, but it was the best thing we could have done.
When COVID happened, I think design teams were looking for a tool just like ours. I think that was really beneficial.
Rob: A big theme of your episodes of TinySeed Tales was moving upmarket. Every episode, I kept saying, you’re going upmarket, you’re moving upmarket, this is the process, and we don’t know how long it’s going to take. It seems to me it took longer than we all thought. But once that happened, it really clicked all at once because your churn plummeted at that point.
You had increased your prices three or four times, which is the definition of going upmarket. I remember you increased prices a couple of times and I’m not sure your product had caught up with it yet. I think it maybe took some development months, some cycles to get there. Do you agree or disagree with that?
Brian: Yeah, I agree. Also, it occurred to me too that when we were going through TinySeed and you were mentoring us on going upmarket, somewhere I think towards the end of 2019 we decided to shut off self-service and we went to a demo-only model. We did that for almost a year while we were trying to build the product and gear it towards the customer that we were trying to attract and work on language and positioning.
I think that that was a good decision, even though we didn’t go real fast. We were going slow that year or we were going at the same speed, but we were learning a lot more from our customers because we were talking to them, sales demos, and learning about what they needed while we worked on the product.
Sometime (I think it was) at the end of 2020, we turned the self-service back on. We had a dual model, both sales demos, and self-serve. That’s right around the time when things started to go out. I think you’re right. I think we had found the right product for the customer that we were trying to attract upmarket. We gave them more flexibility as to how they chose to sign up and come into our funnel.
Rob: Yeah, and oftentimes, growth like this comes from a lot of different factors hitting at once. It can be hard to determine exactly was one thing? Probably not. It seems like it was a combination of things. I know that it was towards the end of TinySeed Tales.
I think we recorded the end of those, let’s say, the end of 2019 maybe. No, because we were in the pandemic. It was mid-2020 that we recorded the end of those. I remember that you weren’t growing as fast as you wanted. You wanted to both see if you could retain some customers, but also try to accelerate your short-term revenue.
Scottie, you and Brian added a consulting service, in essence, to where you were going to help your customers and you were going to charge them a monthly rate. I think of it like a design pickle but for interior designers, where it’s like, pay us $800 a month or $1000 a month, then I’ll do all these things for you. Because for folks who don’t know, Scottie, you yourself used to work in the interior design space.
I don’t think we ever wrapped that up. Do you want to let folks know? Is that a roaring success? Is that still happening or did it just fizzle out?
Scottie: Sadly or however you want to look at it, it did not pan out the way we wanted it to. In hindsight, I think that’s probably a good thing. It required a lot more of my attention than I had anticipated. Literally, I almost felt like I wasn’t focusing on Gather, the product, anymore. I was just focusing on Gather services.
I was doing, actually, more of the work than I had anticipated doing myself. I, all of a sudden, found myself in a job. I didn’t really want that and I couldn’t really figure a way out of that quickly. It’s something that maybe over time I could have figured that piece out. The ROI on it just was not there.
I had one firm that we were piloting the program with. They were really gracious and let me stumble my way through it. Then we ended up just killing it after we were done with those two projects with them.
Rob: It’s one of those bittersweet things perhaps because long-term, do I really want services in my SaaS? At this point, I’m not sure that you would want that to stick around. But I know in the near term, you were in a cash crunch for a bit and wanted to be able to pay your devs and do all that. It’s an experiment. We’re entrepreneurs. We try a lot of things. Some of them don’t work out. Many of them don’t work out and I consider this one of those.
I’m not sure if you know, but I have a new segment on Startups for the Rest of Us. It’s called, How did you know when you found product-market fit? I’m asking this of all the founders that come on the show because no matter how many times we talk about it, if you’ve never seen or achieved product-market fit, it’s still this very I-know-it-when-I-see-it type of thing. I want to get one of your perspectives on, do you remember when that happened, how did you know what that felt like, and how did you identify it?
Brian: I guess, for me, it wasn’t like a binary, black and white thing. You’re right, you know it when you see it. I definitely think we have it now and I feel confident. I just think that there are some signals that you can look out for.
For us, like I said, it wasn’t just all of a sudden, one day, we went from zero to 60. I can say it definitely turns a big signal. Our churn had been slowly dropping over time to the point where it got to be pretty predictable as to what range it would fall within and it was to the low end of the margin.
In fact, I even remember looking, we used bear metrics for our analytics. They’ll actually let you look at where you lie in the cohort that you belong to as far as your revenue is concerned. We watched ourselves go from medium to not so good into the best cohort repeatedly.
That was actually an interesting way to feel like we’ve got product-market fit and then just having customers that stick around for a long time so you can watch your lifetime value just come up, and up, and up, and up. It got to the point where our lifetime value became 10x what it was just a couple of years prior. A lot of that is because they’re not churning out and they’re happy. Those were signals that indicated to me that we truly had product-market fit and we were probably ready to start scaling more seriously.
Rob: It’s a good answer. Like I always say, it’s a continuum and it sounds like it was. It’s always a long process. It’s never like, oh, now we have it. You have it with a certain audience. You have it with a certain size. If you went after a massive hotel chain, you wouldn’t have it. You need different features and all that, but that’s a good perspective.
I want to regale you with a little story that happened in summer 2021. I’ve logged into TinySeed Slack. I don’t remember if it was advice needed or if I got a DM, but it was from Brian. Basically, our hair is on fire. Our entire app is catastrophically down.
I’m just going to come out and say it, it was the worst moment. I always asked what was the best and the worst since we last spoke. I think this was the worst moment for the two of you and Gather. Your entire infrastructure—what happened with this? First, let’s give the facts, what happened? And then I’m going to ask you the question. You tell me what it felt like in that moment because I’ve been there too.
Brian: Yeah, that was awful. I think I literally did text you in Slack and say, hey, Rob, do you know any really good DevOps guys? Which is always the lead question to something really bad that’s just happened. We run on AWS all over infrastructure, not to get too technical, but we used some automated infrastructure tools and processes.
Our developer who wasn’t really that knowledgeable of the infrastructure set up, he tore down the infrastructure, basically, just by accidentally running a script that he thought was innocuous and he brought the whole infrastructure down. Meaning, he literally tore down the entire infrastructure, like deleted all the servers, all the provisioning. That, of course, crashed the app for our users.
Due to some technical reasons, we couldn’t just press some buttons and then reload the infrastructure. It wasn’t the best time for me or Scottie, me from the technical side and Scottie from customers beaten down our door.
Rob: Yeah. And so you couldn’t just run a script and redeploy. Things are on fire. Customers are probably calling in. I don’t know if they have your number, but they’re certainly emailing in live chat. They can’t live chat because it’s down, so they’re emailing. Scottie, what was that like?
Scottie: Because I was doing support from the beginning and so many people have my personal email, my inbox was just filled to the brim. They weren’t happy. They were frustrated. I think the frustrating thing for us was that we didn’t know how long it was going to take to get it back up.
Our engineer would say an hour, two hours, three hours. That turned into 14 hours, 16 hours. Basically, I finally stopped giving them a timeframe. I just would say, I’m very sorry, we’re working on it, we’re doing our best.
I did actually pick up the phone and call some important accounts that I wanted to reassure that this wasn’t a data issue. Their data was safe, the site was just not accessible. It was damage control for sure.
The thing that I realized once my blood pressure had dropped, I calmed down, reevaluated the situation, and maybe took a couple of days, but our customers were so surprisingly forgiving. I think, in a way, it made them realize how valuable Gather was for them because they couldn’t access it all day.
They were like, oh, my gosh, what would I do if I couldn’t use Gather ever again? In a way, it was awful, but it was also encouraging to see how valuable we were for them. I think it made them realize that as well. That was interesting.
Rob: That’s pretty cool that you didn’t lose any customers. It shows the level of trust that you’ve built with them, that they figured, hey, this is a one-time thing. And although we’re mad and frustrated, we’re not going to bail.
The other interesting thing I found is there is a product-market fit survey that Sean Ellis developed. One of the questions is, how disappointed would you be if you could no longer use the product name? That’s another way of how you knew you had product-market fit. That is pretty cool.
Brian, you and I messaged and I said, hey, there’s a few people in TinySeed or whatever that could help out. But you mentioned specifically that some TinySed folks were super helpful in correcting this.
Brian: Yeah, it was amazing because when you’re in a situation like that and you’re like, who do I know or who can I reach out to? Had I not had such a great TinySeed batch to reach out to and then, of course, yourself to reach out to it would have been terrifying.
I just jumped on Slack because, obviously, TinySeed has a really great Slack community and just put out the bat signal. Several people actually came and swooped in to help. Shout out to Andy Hawkes. He was amazing.
Rob: Yeah, let’s give him a plug, loadster.app. He was in batch one as well. I actually love his h1. Your site has a breaking point. Let’s find it before your users do. It’s load testing your web app. He’s really good at all the DevOps stuff and I know that he worked with you for several hours just to help because it’s a relationship. You’re part of the same community.
Brian: Yeah, it was amazing. He literally dropped everything he was doing to help us out and helped to get the site back online and point us in the right direction. Just having those relationships are just so critical. I can’t imagine going through the world without the network that we’ve built with TinySeed.
It was amazing, and obviously, you helped out. We wound up finding some really awesome DevOps guys. They got things back up and running overtime. It took months, honestly, to really get things to the point where they were stable.
We’re still working on things that aren’t directly related to that whole incident, but that made us realize how much technical debt and infrastructure debt we had gotten ourselves in over five years. We have almost climbed out of that, which is a great feeling.
Rob: Yeah, it’s that hidden cost of technical debt that you don’t see until it comes and bites you like that. The outage, how long did it wind up being?
Brian: It was like a little roller coaster where there’s one big dip and then there’s a bunch of little twisty turns. The first one, I think, Scottie is probably about right, it was 20-ish hours, probably.
Brian: Yeah, awful. After that, we’d go down for an hour here, a couple of hours there for probably a week or two. Then in the back end, we’re just scrambling to make stuff work. There were points where the site wasn’t totally down, but key features were not working. That continued, I’d say, for two or three weeks at least.
Rob: That’s a bummer, but you’re pretty much wrapped with that and dug yourself out of that technical debt.
Brian: Yeah, it’s a bummer because you want to work on features and stuff but you realize, once you get to any level of scale—and we’re not super big or anything, but we’re big enough that we can’t mess around with core performance, infrastructure, and reliability—it’s just too important. You do what you have to do, you pay the debt off, and hopefully, you move on.
Rob: I actually talked with Brian last week. He was asking me questions about you having this growth so now you have more money. Oftentimes, it’s hard to decide where to spend that. What’s been your process? If you grow $2500 in a month, you’d grow $10,000 over the course of a few months. Suddenly, that’s recurring revenue because it’s SaaS and it’s the cheat code of business.
What do you do with that? Because I know that you don’t want to put that in the bank. You don’t want to take it out and spend it on lavish vacations. You want to grow your company. That’s why you’ve been building it for this long. What’s been your thought process behind how do we deploy this newfound capital?
Brian: Scottie can attest to this. I probably spent an unhealthy amount of time on runway spreadsheets and try to analyze all the avenues, I guess. I think what we came to is, we’re really going to focus primarily on brand building, long-term play stuff, primarily really high quality content, and probably share that through the community. I think that’s probably where we’ll spend a lot of our money and energy.
We’ve also had some decent success, I think, with advertising. We’ll be doing more of that. It’s cool to see as revenue goes up and after you get to the point where all of your base expenses are met, then you can start to think about things like advertising and content being a percentage of MRR, percentage of growth, and then watching how that works.
I’d say it’s still in the early days of us figuring out exactly what works. I don’t know if Scottie feels the same way, but I’m comfortable with the next two years building a brand rather than always jumping from how do we make enough revenue this month to stay alive. We’re a little bit beyond that where we can sit back and go like, what kind of company do we want to build over the next three to five years? That’s a better feeling for me.
Rob: I was going to say I have this kind of three-step mental model of, in the early days, we’re building a product and it’s writing code, it’s trying to get people to use, it’s trying to get a few paying users, and then the next step. It’s usually between, let’s say, $10,000 and $20,000 MRR. It’s like you’re building a business.
Gather became a business under my definition around that time as well. Then the step after that is when you’re building a company. That’s where you have a lot of choice. You start hiring, maybe you hire your first manager. It’s just a different phase. I think you are solidly in that.
Now we’re building a business. Businesses have repeatable processes. They have repeatable marketing approaches. They usually have more predictable growth. I feel like you’re now squarely in that.
With that in mind, Scottie, what are you most excited about? In true TinySeed Tales, end of episode fashion, what are you most excited about over the next 6–12 months?
Scottie: Exactly what Brian’s talking about, it’s just building our brand. I’m leading the charge on the content side since it’s my industry. Like you said, when you’re first starting out, you’re so heads down and just trying to build the product, sell it, get users, and make sure you have product-market fit.
For me, I was deep into customer success and customer support. I’ve wiggled my way out of this actually being the front person on the support side, which really freed me to focus more on what I’m more excited about, which is building relationships and building community with industry partners within the industry. I’m excited to focus on that this year now that I’m freed up to do that more. I’m looking forward to that.
Rob: It’s a luxury when you’re not scrapping for survival, to be able to work on the business, instead of in it. You fire yourself from the jobs that you don’t want to do in the business.
Scottie: That’s been really nice.
Rob: How about you, Brian?
Brian: I think Scottie said it perfectly. I would say, for me, because I’m more focused on the product side, building our product team, getting to the point where we can actually add a lot of value on the product side, and continue to choose what direction we want to go with as far as our customers or potential customers are concerned.
I’m really excited to take on the product side again, build more features because I think there’s a ton of opportunity. There’s more opportunity than we realize in our marketplace and even in our product category that we haven’t even tapped into. I think there are several different directions that we can go. I think it’s exciting to go after a direction, see where that takes us, and maybe even enter into new markets down the line.
Rob: I was going to ask what’s next for Gather itself, but I think you answered that question right there. Thanks again so much for joining me for this, Where Are They Now episode of TinySeed Tales. If folks want to keep up with what you’re working on, gatherit.co.
Brian: That’s the one.
Rob: Thanks for joining me, you two.
Brian: Thanks, Rob.
Scottie: Thank you.
Rob: Thanks to Brian and Scottie for coming back on the mic with me. I hope you enjoyed that lookback episode. Thanks for joining me every week. It’s great to have you. I’ll be back in your ears again next Tuesday morning.