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What’s it take for a bootstrapped SaaS to beat a competitor with $10M in venture funding?
In this episode, Rob Walling talks with Laura Roeder, founder of Paperbell, about how her lean, fully-bootstrapped team outlasted and outperformed a VC-funded rival. They discuss what the venture-backed company got wrong, how Paperbell focused on the right customers, and why efficiency still beats funding.
Topics we cover:
- (3:52) – Competing against a $10M-funded startup
- (8:45) – Why “self-serve SaaS on hard mode” was worth it
- (14:36) – How over-investing in engineering killed their competitor
- (19:04) – The real problem with under-investing in marketing
- (21:19) – Why some SaaS markets can’t scale upmarket
- (24:13) – Why some markets are perfect for bootstrappers
- (28:42) – How big funding rounds create false signals
- (30:24) – The behind-the-scenes of a potential acquisition deal
- (33:26) – How Paperbell became the market leader
Links from the Show:
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!
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Rob Walling :
It’s another episode of Startups for the Rest of Us. I am your host, Rob Walling, and in this episode I am joined by fan favorite Laura Roeder, who has made several appearances on this very show. And in this episode, we talk about how she and her small but mighty bootstrap team beat a venture backed competitor. And I believe if I recall, it’s in the episode, but I think they raised $10 million. It’s a significant amount of money. And while Laura talks a lot about why the venture-backed competitor failed in a way that almost makes it sound like they beat themselves, I would encourage you to listen to this episode and listen to what the funded competitor did wrong, but also what Laura has done right. And what Laura has done right is a lot of marketing, a lot of focusing on building the right things for their customers, not building too much, not having a large bloated org chart, hiring a lot of engineers.
She’s been very focused on what her customers need and then very focused on how to find more of those customers. It’s always an inspiring story to hear a founder who’s bootstrapping against a funded competitor and that bootstrapper wins. And sometimes it happens this way and other times it doesn’t. There is no, “Oh, funded companies always implode or funded companies will always win.” There’s none of that. It’s always nuanced. It depends a lot on the situation. It depends a lot on the founders. That’s something else I want to call out here is if Laura Roeder had $10 million in funding, she still would have won. Or at least that’s the position I would take given everything we talk about in this episode. But before we dive in, I want to let you know that MicroConf Mastermind matching is open. One of the most valuable things you can do as a founder is surround yourself with people who get it.
And that’s exactly what this program is designed to do. A recent member had this to say, quote, “Our fear is all the same. It’s that our product’s going to flop, that it’s not going to take off.” We openly talk about it and I’m like, “Oh, this is so normal.” And so then it makes it feel a little more fixable, relatable, and approachable, and we can all have ideas for how to just get past this. To date, we facilitated well over a thousand mastermind matches, bringing together founders from more than 50 countries and over 20 time zones based on things like ARR, team size, experience level, geography, and when they’re able to meet. Applications close on January 16th. For all the details and to apply today, head to microConf.com/masterminds. And with that, let’s dive into my conversation. Laura Roder, welcome back to Startups for the Rest of Us.
Laura Roeder:
Hello. I am happy to be back on one of my favorite podcasts.
Rob Walling :
Oh, you are too kind. I think this got to be your, what, your fourth, fifth appearance?
Laura Roeder:
Something like that. Yeah. It’s a long running show. I’m a long running entrepreneur, so I go together.
Rob Walling :
Indeed. You’ve told the story. Well, you come on and answer the listener questions a few years back. You told the story of Edgar of exiting that, I believe. I know we talked about the whole story there, but you are a storied entrepreneur. You’ve had consulting, you’ve had info products, and most recently for the past 10 years at least, you’ve had two SaaS companies, right? You had Meet Edgar and now Paper Bell.
Laura Roeder:
Yes. And another one that we shut down shortly after it started. So technically-
Rob Walling :
It had Hog in the name.
Laura Roeder:
It had
Rob Walling :
Pig.
Laura Roeder:
Pig. Pig. What was it called? It was called Ropig. The mascot was like a robot. Robot Pig. Robot Pig.
Rob Walling :
Oh, I love it. It’s so memorable because I remembered Hog. I
Laura Roeder:
Remember Hog. I don’t know.
Rob Walling :
Yeah. Maybe not. All right. So we want to talk about Paper Bell today. And the reason I wanted you to come back on the show is I saw you tweeted out that one of your venture backed competitors went out of business. I’ll use the word imploded, but I don’t know if that’s accurate. They went under. And Paper Bell, for the record, is fully bootstrapped and you and your husband are co-founders, right? He’s the developer and you are everything else, marketing and sales and all that.
Laura Roeder:
Correct.
Rob Walling :
And it’s a common story because I remember growing drip, seeing venture back competitors come and just hit the market and spend a bunch of money and implode. And I never really talked much about that, but there was always some really interesting nuggets in that. And so you were mentioning, “Hey, I might write a blog post.” And I was like, “Just come on, let’s talk about it. ” And if you do wind up publishing a post, we’ll obviously link to it in the show notes. But can you set the stage for people? What is Paperbell? What’s the space it’s in? When did you launch? Where does a business stand today? Just give us the ground level view.
Laura Roeder:
Yeah. So Paperbell launched in 2020. So five years ago at the time of this recording, we’re fully bootstrapped. We’re now in the low millions ARR.
Rob Walling :
Awesome. And how big is the team?
Laura Roeder:
It’s hard to answer because we have one full-time person, everyone’s freelance. So as small as possible, basically as how big’s the team.
Rob Walling :
Yeah. You run really lean businesses for folks who don’t know. And it’s a lot of async, right? There’s like almost no meetings.
Laura Roeder:
There’s literally no meetings.
Rob Walling :
Yeah. And so you take that tact and it’s for your lifestyle, right? It’s like you don’t want to be in meetings. That’s the purpose. The business serves your lifestyle’s true bootstrap business.
Laura Roeder:
Yes. I did the meetings in the last business. I got sick of the meetings. I’m like, let’s do no meetings. See how that goes so far. It’s going great.
Rob Walling :
Paperbell.com. If folks want to check it out and your H1 is $47 million paid to coaches like you. Wait, you pay coaches? Paperbell is the simplest way to sell coaching online. Aha. It’s a SaaS. Get your own gorgeous social friendly website with scheduling payments, messaging and more built right in. The proof is in the profits. Coaches like you have earned, collectively earned over $47 million using Paperbell. $47 million, that’s a lot of money actually, because coaches, I know it’s a dicey … I guess I view it maybe as there’s a lot of prosumers and hobbyists doing coaching. You think that’s accurate?
Laura Roeder:
That is accurate. A lot of people do it because it’s something you can sort of just do for a few hours on the side. So yeah, a lot of people do it on the side. As you can guess, our best customer is someone who does it full-time as their career. So there’s plenty of those out there. But yeah, it’s a very prosumery type of business. I liked hearing that headline reflected back and I was like, okay, I think that actually does sum it up pretty well. And yeah, just to clarify in the 47 million, that’s not our revenue. People connect their Stripe account and their PayPal account and then do their payments through Paperbell. So that’s just flowing through us. We don’t take any kind of cut on that, which is a benefit to our customers. So yeah, we’re just a true self-serve SaaS business, $57 a month.
Rob Walling :
And when you entered the space, I have to imagine there were already coach … Can I call this space the category like, is it coach practice management or just coaching SaaS?
Laura Roeder:
Coaching software.
Rob Walling :
Coaching software. There had to have been other coaching software that existed.
Laura Roeder:
Yeah. Yeah. The easiest way to think of it is just kind of an industry vertical tool for coaches to do their contracts, their payments, their scheduling. And when I say coaches, I mean life coaches, executive coaches, business coaches, that’s kind of most of our market. It’s not fitness coaches. That’s kind of a different category where they’re often wanting apps with their own workouts and meal plans. We don’t do that. Yeah. So that’s the market.
Rob Walling :
And was it competitive when you entered it? Were there a lot of alternatives and why entered this particular space? You have a lot of options to what you’re going to
Laura Roeder:
Do. Yeah. So when we launched, there were competitors that existed. There were no venture backed competitors and it was very, very fragmented. The competitors that existed seemed to be more hobby business type of things. I think what often happened was like someone who was a professional coach would sort of see the need for this. They would kind of try to build it, but they weren’t really like software people necessarily, which maybe that should have … You can view that either way. One, there was competition, but it’s like, well, if there’s not a one really successful competitor, maybe that’s a red flag. I don’t know. But what I liked about the space was one, like I love self serve, even though it’s absolutely SaaS on hard mode and you should go up market and it makes it a lot easier and it makes you ensure all the things that Rob says are true.
But I like a challenge. I like doing self-serve. I just love that market of helping the individual coaches, creators. It’s just really fun for me. And I thought that coaching would be a hugely growing market, which has … That hypothesis has definitely turned out to be correct. Coaching is weird. You can’t actually get any numbers on it because anyone can call themselves a coach. It’s not something where you have to be certified. So there’s no official association and they say, we have this many members. So no one really knows how many coaches there are, but I think anyone could tell you anecdotally that they have come across more and more life coaches over the years and it has become more and more popular.
Rob Walling :
Yeah, that makes sense. A little bit to the bane of coaches like my wife, Dr. Sherry Wallinging, who has a psychology degree and is like, she’s like, “I don’t want to call myself a coach because it puts me in a bucket of a lot of people who are just calling themselves a thing.” So she often uses consultant, but that doesn’t mean that it’s not a viable market and doesn’t provide value to a lot of people. And so in this episode, I want to focus on this venture backed competitor and is it practice. Practice.do. And they set the stage there. So you launched in 2020. When did they launch and were they funded by the time you heard about them and how much did they raise?
Laura Roeder:
So they also launched in 2020 and their founder is actually someone that I did know from years ago when he was more in the course space also, but we hadn’t spoken in like 10 plus years. We both apparently just had the same idea at the same time. I don’t think that’s a huge surprise because like I said, it was a growing market and there wasn’t someone who had really, completely addressed it really well. So Practice launched the same year as us 2020 and they announced that they had raised 10 million when they launched, I think they might have called it a seed round. So the founder in his previous business had raised like a hundred million. So he’s someone who’s used to those larger numbers. So this is my assumption. I would assume that he thought he would go on to raise more, which they did not end up doing.
Rob Walling :
10 million is a load of money for those watching at home. I will often say, “Oh, mostly bootstrap TinySeed, you raise 150 grand or whatever, 200 grand.” It’s like, that’s not as much money as it sounds like if you bootstrap. You burn through that pretty quick. It’s a salary or two.
Laura Roeder:
10
Rob Walling :
Million bucks, that’s a lot of money and that means your goalposts are very, very high because if you raise that 10 million in 2020, was it a hundred million dollar valuation maybe or maybe 50 million, right? So yeah, 50 million if they bought 20%, which may be more accurate. So now if you sell for a quarter of a billion dollars, you give a 5X return to your VCs, which they don’t want a 5X return.
Laura Roeder:
Well, and they raised from Andrews and Horovitz. So they’re not expecting small returns over there.
Rob Walling :
Yeah. They want decacorns. They want billion or 10 billion. We want to roll up the whole coaching industry, which I’m still thinking it just doesn’t seem like it’s that big. There must have been some vision that they painted that is not just serving coaches for $57 a month.
Laura Roeder:
Well, coaching is kind of a weird industry. So there are a few VC backed companies in the coaching industry. And what those companies do is they kind of have like a tech enabled service coaching as an enterprise perk, kind of like better help for therapy. There’s a few companies out there because all large corporations do have lots of coaching actually, both provided in- house or they’ll contract a firm to do their leadership coaching, stuff like that. So there is like a coaching enterprise market, but that’s not what Paperbell does. That’s not what practice does. And it’s kind of a weird one where they have completely different needs because we’re basically enabling individual coaches to sell their services. Obviously if you’re coaching in- house at Coca-Cola, you’re not selling a service, you’re just providing a service in house. So it’s not the type of thing where you’re selling more of the same to upmarket.
And it’s also not … If you look at that upmarket space, they don’t need a ton of software or like custom software necessarily.
Rob Walling :
Got it. So yeah, it is an interesting fragmented market, but kind of sounds like there’s a dichotomy there with enterprise and the self-serve is like different.
Laura Roeder:
Yeah.
Rob Walling :
It’s called coaching, but it’s not really the same. It’s very different ICP.
Laura Roeder:
Right. Especially as far as the business model works. So yeah, I was not in their pitch meetings, but I would think part of it could just be like coaching, coaching, because it’s true, like there’s a lot of coaching going on. There’s some money going into coaching. We’re going to capture that in some way. And so maybe that was their pitch or maybe they planned … I always assumed that they planned to start in coaching and then kind of expand to a larger freelancer. There’s a lot of tools out there just for general freelancers to kind of manage their business, take payments, stuff like that. I thought they would go in that direction, which before the call I sent you some, we looked sort of through their website over the years. They sort of did try to go there for a while, but never fully went there.
Rob Walling :
And so for folks wondering what we’re going to cover, I want to talk a little bit about what you feel like they did wrong. The things, because you’re still alive doing millions a year in ARR and they’re now under, out of business, even though they had such a headstart with 10 million in the bank. So I’d love to hear, we’re going to dig into the things that you did differently as well as even like to jump to the spoiler, you had a conversation with the founder of Practice, I guess as they were kind of knowing that they were struggling about potentially acquiring the business, which I think is a fascinating part to this story. So you outlined a handful of things that they did differently and that you feel like … I mean, some of these, as I read them, I’m like, oh yeah, these are classic engineering mistakes, classic like technical founder mistakes.
And the first one is you said that they over invested in engineering too early that they launched an Android and iOS mobile apps either immediately or very early on. And yeah, any mobile apps plus web apps, it’s like, you burned through 10 million pretty quick doing that kind of stuff. So just talk us through that, that whole point.
Laura Roeder:
Yeah. And I mean, this was pre AI. It’s a lot easier now to create apps and maybe languages you’re not as familiar with, although obviously still a ton of work. And our market does not demand a mobile app. It’s a nice to have … People sometimes ask us for it, but if I’ve never had anyone cancel saying it’s because we don’t have a mobile app. But it makes sense if you think from their perspective, it’s like when you’re raising money from these huge VC firms, it’s like you’re not supposed to sort of gradually feel things out, right? You’re supposed to go, honestly, spend as much as possible, as soon as possible to try to dominate the market. So I can understand why they’re like, ” We’re going to do web, we’re going to do all the mobile. “But what it meant was they had a large engineering team right from the beginning.
We had one person engineering team for the first three years of the business, and our one person was able to build extremely similar to what their entire team built. The big thing, we didn’t have the mobile apps, that was the big difference. But as far as the functionality of the software, it was extremely, extremely similar.
Rob Walling :
This is where I talk about founders having a gut feel and a product sense, which is I’m sure that, and you just said, you have received through Paper Bell requests for a mobile app and obviously practiced it as well. And they said,” Oh, customers ask for it. We need to build it. “And you said,” Customers ask for it. I’m not building it unless I start losing a book, right? And this is this bootstrapper mindset of what is the minimum that I can build to get this business off the ground or to half a million or a million or wherever you’re going. And while bootstrapping … Look, I may get hate mail for this. Bootstrapping is doing it on hard mode. Now that I have raised funding with TinySeed and I see companies that raise a few million, we have a bunch of TinySeed companies that have done this.
If you do it well, if you think about it like a bootstrapper and you approach it like Laura Roder or like a Ruben Gomez or even like a Jason Cohen, he raised a bunch of money, but he approaches things super pragmatically, that is a superpower. It’s like adding octane to a fire in a good way though, not in the bad explosive incendiary way. But when I think about folks raising a bunch of money and then not acting more capital efficient, it sounds like that was this of like, “Well, everyone’s requesting everything, we’re going to build it all. ”
Laura Roeder:
Well, I think it’s a very common VC trap because again, I have to assume that they wanted to keep raising just an assumption, but that’s kind of what you do if you call 10 million your seed round. So you get yourself in this weird trap often where it’s like you have to keep raising because that’s how the game is played. But then if you want to keep raising, you kind of have to show this evidence that you’re just going as all out as possible. It almost looks better if you’ve spent all the money. It’s like impressive if you have this huge engineering team and sometimes all these huge marketing plays, that’s another theme that they seem to have missed. They seem, maybe because they had only quote unquote 10 million, they seem to have put it all into engineering and extremely little into marketing. But if you think you’re going to keep having more and more tens of millions coming in, I can see why you would make that choice.
But yeah, it just makes you a lot more sloppy with what you’re building because you don’t have that constraint of, oh, we can only build things that will make us keep our current customers and get more of them.
Rob Walling :
Yeah. And the fundraising landscape in 2020 after … Obviously there was the big stock market crash in March or April. And then when it came back and there was all the stimulus here in the US, well around the world for that matter, it became really easy to raise money and money was cheap and that carried into 2021. And then we know there was like an asset crash after that. And 2022 and 23, it was very hard to raise money. And so I imagine they just went under in the last few months, right? This is the end of 2025. Yeah. So I imagine if they didn’t have the numbers these days, it is you do need fundamentals to raise because if they’re at 10 million, well, what’s your next round going to be? Aren’t you supposed to raise more? To raise 20 million at a whatever, a 200 or 100 million dollar valuation, like you need some really good fundamentals these days in a way that I don’t think you did in 2021.
And to circle back on something you just said is 0.2 that you had sent me is they overinvested in engineering it sounds like, and they underinvested in marketing and distribution. And the quote from your email that you sent me, “I kept waiting for them to do more marketing, but we just never really heard much about them.” The lack of visibility was noticeable. That feels like, shouldn’t their VCs or someone smart be telling them, “You guys need to market more? What happened there?”
Laura Roeder:
Yeah, again, maybe you can get their founder on, that would be fascinating and hear his side of the story. So that one always was surprising to me because that was more the worry to me because I know how much one engineer can build. There’s some benefits to only having like a one person or two person team, like especially one person, they’re able to keep the whole architecture in their head, not have any of the back and forth, not have any of the drop balls between two people, right? But marketing, I mean, like we’ve done marketing through SEO and through ads. And obviously ads is very much like if you spend more money, you get more exposure. It’s very black and white. It may not be effective, you may not be converting, but if you spend more, you can get more exposure. SEO, sort of similar, I mean, all that’s got out the window in 2025, but in 2020, it’s like you could sort of spend more on SEO, maybe get more traffic faster.
So that’s what we were doing. And I was always kind of looking around being like, “Oh God, are they just about to murder us spending tons of money on Meta ads?” Meta’s a great channel for coaches. They’re very active there and over the years they did little or no ad spend.
Rob Walling :
That’s crazy because I would think with that much money in the bank, that’s the most obvious and easiest path is to just drop money. I would think AdWords or Meta ads. Well, all right, so that’s mistake number two. And then the third thing you mentioned was a fundamentally limited upmarket path. The coaching industry is difficult because there isn’t a cleanup market path without fundamentally changing the product. And you touched on this earlier where you say the true upmarket in coaching is the corporate coaching and that’s enterprise, but basically with self-server, mostly self-serve, I guess there’s not a ton of expansion revenue is kind of what it is.
Laura Roeder:
Right. There’s a market which, looking at their website, I think they tried to serve. There are some coaching practices that have multiple coaches, maybe there’s like a leadership coaching practice and they have like 10 coaches and you hire them to do leadership coaching for your team. It’s just not a big market and it’s also not … It doesn’t really help you if you have businesses that are somewhat bigger, but they still don’t make a ton of money. So a coaching practice with 10 coaches isn’t necessarily having huge revenue or like huge willingness to spend that much more than like the solo leadership coach. So it’s something I looked into because again, you’re supposed to go at market. It’s very helpful if you do. But I just saw after being in that industry, we would get some requests over the years of like, “Oh, we have five coaches, we have 20 coaches at our practice.” And we’d be like, “Buy five Paperball accounts.
I’ll give you a discount. That’s kind of all we can do. ” But we got so few of those requests that I’m like, “This is not going to be worth our time to build functionality for this. ”
Rob Walling :
If someone’s listening to this, I don’t want it to come across like us saying, “Well, anyone who raises 10 million, it’s just so stupid and all the incentives are and you can’t build a great business doing this. ” It’s like we hear, it’s kind of fun just in general and the broader internet to talk about the companies that raise a ton of money and then go under because there’s a little bit of Shadenfroda of like, “Oh, you thought you had this great thing and you fumbled the ball with 10 million in the bank or 100 million or whatever, some of these big companies do. ” And while that is probably the most common story, because we know that for every 10 companies, VC backs, I think don’t seven of them go to zero and like two of them break even or have very little return and then one is the big returner, right?
That’s the idea is 100x or something. And that is kind of how the model works. But I have personally seen many companies, some that compete with TinySeq companies, others like a Jason Cohen or folks kind of within our orbit that do raise buckets of money. I mean, I think Close didn’t necessarily raise buckets of money, but they did go through YC. I think v.io is doing really well. We had dinner with Saba, remember a couple years ago in Croatia, you spoke at MicroConf, they raised a lot of money and I think it was Sequoia or Andreessen, I don’t remember, and I think they’re doing pretty well. So I don’t want to paint this picture because someone, if you’re so pro bootstrapping and you’re listening to this, you’re like, “Yeah, this is why you never raise money because it totally screws you and you should never…” And that’s all we’re saying.
We’re saying that it is a balance and that probably 70% of the time, if I were to throw it out, 70 or 80% of the time, it doesn’t work out. But I tell you what, 10 million bucks in the hands of the right person of you, of Ruben, Heaton Shaw, like Jason Cohen, Dharmesh, we can name a bunch of like really accomplished and capital efficient founders, you can do some damage. I mean, it doesn’t necessarily mean that the business is bad because you raised 10 million for it.
Laura Roeder:
Right. And I would add to that, I do think that there are some markets, some businesses where you don’t want to raise 10 million, and I think this is one of them. And I think this is one of the huge bootstrapper advantages that people don’t deeply understand that doesn’t get talked about enough is as a bootstrapper, I can run a business that, let’s say it maxes out at two million, let’s say it never gets higher than that, and I can take home a million dollars a year. You know what I mean? That’s obviously a great outcome for me, but that’s a zero, that’s a dud in VC world. So there are actually, I think, more SaaS opportunities than a lot of people realize because by definition, they’re too small for VC and coaching might be one of them, the way that we’ve approached it, Paperbell serving just these one person businesses, because even if Paperbell goes to 50 million, that’s still not a VC win, right?
The numbers are just so different. VC, again, depending on how much you raise, they’re often looking for businesses that are doing hundreds of millions or more in revenue. So it does also have to be a match what the business model is, who you’re serving and the amount that you’re raising.
Rob Walling :
Yeah, that’s a good point. I really like the way back machine headlines you’ve sent me for practice.du. DO? Practice.due. I’ve never- They just
Laura Roeder:
Called it practice.
Rob Walling :
Practice. Okay. For practice. I haven’t heard the due TLD before, but I remember when we were building Drip and I would look at the newer entrance into the market, a lot of them had some type of venture money or some type of funding. And I would watch their headlines change every four or five months and dramatically, and I was like, “Oh, they’re floundering. They don’t really know what they’re doing.” Or maybe they do know what they’re doing, but they’re just not finding product market fit, so they just keep changing it. And I’m not saying that necessarily about practice, but you look at their headline from 2021, the H1 launch and manager coaching business instantly. So it’s like, all right, it’s for coaches, right? In 2022, streamline your coaching business. We help coaches consolidate clunky, disjointed and annoying systems into one simple place. All right, this still checks out.
It’s a little different. 2023, give clients a simple way to schedule, sign, submit a form, pay, message you, get reminders, schedule. Practice has everything you need for your client-based business. So there’s no coach anymore. It’s now anyone with a client. 2024, stop tracking sessions manually. Give your team the tools that would … I don’t think of coaches as having a team in general. Give your team the tools to schedule, track sessions, manage clients in real time automatically. And then the 2025, the last homepage before they shut down, the appointment platform built for growth. I mean, that’s almost a completely different category. It is. Empower your team with the scalable tools to track, manage, and grow bottom line. Were you looking at these headlines over the years or did you just look at them retroactively?
Laura Roeder:
It was interesting looking at them retroactively for this podcast because I kind of popped in over the years, but I’m definitely someone who have some awareness of what your competitors are doing, but I’m more kind of focused on my own thing. But they were always the one I was most interested in because they launched in the same year as us and raised 10 million where none of our other competitors had. So I was certainly worried about them taking a lot of the market, but also it was also along the way this kind of parallel journey because we’d launched at the same time. So I did notice that one year in the middle when they started to go more just sort of general client business and small business, I actually thought at that point, I’m like, oh, that makes sense to me. I think they saw that this was not a big enough market for the amount they’ve raised.
I think they’re going to go broader, but then they seem to move from there to like, I think those later headlines are trying to serve, again, those like multi-coach practices is kind of my best guess. And again, this is where like VC world can be so different from bootstrapper world. Just speculating, maybe when they tried to go after that general client business, maybe they felt like, “Oh, we need to raise another 50 million to go after this really broad market.” Where I think bootstrappers think more like, “Okay, if it’s not working, if you need a pivot, let me try just running a few ads to this market. Let me try just changing the marketing and not too much with the product and let’s see if it gets traction there.” Whereas I think there’s this other kind of thinking that’s like, “Okay, if we’re going to go in this different direction, we have to invest tons of money changing everything.”
Rob Walling :
Yeah. So I want to talk about how you potentially were going to acquire the business, but before we do that, I think this maybe leans into it or leads into it. One of the points that you had sent me was that their fundraise created a false signal. And what did you mean by that?
Laura Roeder:
Just that I thought that they were going to dominate the market is what I expected by … It’s like, oh, they have this huge company behind them. And I always kind of wondered, am I missing something? Because we wouldn’t hear about them. You get people emailing you saying, “Oh, how do you compare to this company? I’m thinking of switching from this competitor. How do you compare?” And we just didn’t hear about them very much. I would also like to throw in here, I do think they had just a terrible name, and I don’t think that names matter that much at the end of the day, but this name was impossible to Google, impossible to track. It’s like you can’t see when people are talking about you on Reddit or Facebook or anything when your name is … And you can’t even put in practice coaching, but you can’t put in practice software because there’s a million other softwares within practice in the name, so we just didn’t hear about them.
So I kept thinking because they’d done this big raise and they announced that Tony Raw Cobbins was maybe even on their board or one in their investors or something. I’m just like, is there something going on that I’m missing? Have they found some sort of secret part of the market that we haven’t found that they’re serving?
Rob Walling :
Yeah, that makes sense. And so you had a conversation about potentially acquiring it. How did that come about? Did he reach out to you? I guess you kind of knew him?
Laura Roeder:
Yeah. So at one point he had sent me an email because like I said, we kind of knew each other. So he had sent me an email at one point over the years being like, “Hey, do you want to chat?” And we didn’t end up chatting, but it was friendly and fine. And then we actually heard they were closing from customers because we started getting emails saying like, “Oh, all of a sudden we need to move our coaching business somewhere. How do you guys compare to practice? Can we move over?”That kind of stuff. But there was no public info on social media, on their blog, on their website. So we actually asked one of those people who had contacted us, were like, “Can you forward us the email that you got?” Because there was nothing public. And then we were actually able to jump on that and publish a blog post about practice closing because they had told their customers, but there was no public info.
So people were searching for it, but there wasn’t a lot out there. So I then tried to reach out to their founder to find out what was happening. It took me a little while, a few layers to get to them, but I did end up speaking to them. But I think the thing about SaaS is that if you’re acquiring another business, you either have to keep that business running and keep their whole business and keep their customers or you have to tell their customers, “Hey, we’ve acquired practice. Do you want to sign up for Paperbell?” But you don’t just magically collect their money. They have to actively resign up. And it is, even if they’re similar, it’s obviously a different system.
Rob Walling :
Yeah. And you don’t have mobile apps.
Laura Roeder:
Right.
Rob Walling :
So people want that, they’re going to get … Yeah. So you have to almost guess how many … Because you don’t want to maintain two apps and keep building. You’re not going to do that. So you have to guess, I don’t know how many of their customers are going to translate over, right? And what is that worth to us?
Laura Roeder:
Exactly. So I think it’s a lot … I talked to some friends who had acquired companies to get advice from them, but if you’re not in … A lot of them … I talked to one person who had a service business and he had grown his business hugely acquiring other businesses. But if you’re an accountant, you’re just like, “We’re doing your accounting now.” And that’s kind of all it is, but it’s quite different in SaaS. So that was a big question for me. It’s like, is this really going to be worth it? Because if their business closes down, their customers are going to have to go somewhere. Aren’t we kind of going to get … We’re so similar to them, we’re going to get a lot of them anyway for free if they shut down.
Rob Walling :
Yeah. So that does make it challenging because acquiring it, like if I swooped in or just some random entrepreneur swooped in and bought it for parts, then it’s a business that I’m running and now I see there’s potential in it. But you already have one. And while it seems on the surface like, well, they’re complimentary. It’s the same ICP or very similar. It should work, but it really is a complex issue and you would have to kind of guess how many folks would move over.
Laura Roeder:
Yeah. And they had a different tech stack than us. So if we were to maintain them at all, we would have to hire engineers and like, now you’re not making money anymore.
Rob Walling :
Yeah, it’s complicated. Well, I guess, I mean, Paper Bell, are you the market leader in this space? I mean, it’s a pretty impressive business.
Laura Roeder:
Now we are. I didn’t know. I kept thinking, I think we’re the market leader, but I’m not sure. And yeah, so to close that loop, we did not end up acquiring practice and it didn’t really end up being a serious conversation and they ended up just shutting down. And I did find out that they weren’t that large, that we were definitely far ahead of them as far as revenue and customers. So yeah, we do seem to be the market leader, which is cool. And I think we are kind of seeing our growth has been accelerating for the past year. And I think we are starting to see that market leader benefit happen of like the more customers you have, the more referrals you get, the more of our competitors go out of business. We’re like the last man standing and we’re going to get more customers.
Rob Walling :
Winning by attrition.
Laura Roeder:
Yeah.
Rob Walling :
You’re just like, “Yeah, I’m still here.” Well, it’s an interesting story and I really appreciate you taking the time to come on here and share it and share it so thoughtfully, right? It’s like you had the headlines and the takeaways and all this stuff. And it’s obvious that you, it should be obvious to everyone, you’re a very experienced and talented entrepreneur and I’ve had multiple successes under your belt and I just appreciate your insights and analysis on this topic.
Laura Roeder:
Thank you. If
Rob Walling :
Folks want to keep up with you, you’re on X Twitter. Are you @LKR?
Laura Roeder:
I just got back on. I was off for like two years, but now I’m totally addicted again, LKR.
Rob Walling :
What brought you back?
Laura Roeder:
I just got bored. I tried to go to Blue Sky, but then it didn’t end up being active. And then I was just not on social media, which is great for you, but I missed all the Twitter drama.
Rob Walling :
You miss the Twitter drama. Oh boy. No, that’s great. And I wouldn’t have heard about this probably at all if you weren’t on Twitter because this is where I saw it. Yeah. @LKR, if folks want to follow up or just hang out, follow you, paperbell.com. If folks want to see the best coaching platform on the internet. Then market later. Number one, the best, best on the best. Awesome. Thanks again, Laura. Thank
Speaker 3:
You.
Rob Walling :
Thanks again to Laura for coming back on Startups for the Rest of Us. She’s always a fount of knowledge and very experienced and exceptional entrepreneur. I hope you learned a lot from this episode and thank you for listening this week and every week. This is Rob Walling signing off from episode 814.
It’s another episode of Startups for the Rest of Us. I am your host, Rob Walling, and in this episode I am joined by fan favorite Laura Roeder, who has made several appearances on this very show. And in this episode, we talk about how she and her small but mighty bootstrap team beat a venture backed competitor. And I believe if I recall, it’s in the episode, but I think they raised $10 million. It’s a significant amount of money. And while Laura talks a lot about why the venture-backed competitor failed in a way that almost makes it sound like they beat themselves, I would encourage you to listen to this episode and listen to what the funded competitor did wrong, but also what Laura has done right. And what Laura has done right is a lot of marketing, a lot of focusing on building the right things for their customers, not building too much, not having a large bloated org chart, hiring a lot of engineers.
She’s been very focused on what her customers need and then very focused on how to find more of those customers. It’s always an inspiring story to hear a founder who’s bootstrapping against a funded competitor and that bootstrapper wins. And sometimes it happens this way and other times it doesn’t. There is no, “Oh, funded companies always implode or funded companies will always win.” There’s none of that. It’s always nuanced. It depends a lot on the situation. It depends a lot on the founders. That’s something else I want to call out here is if Laura Roeder had $10 million in funding, she still would have won. Or at least that’s the position I would take given everything we talk about in this episode. But before we dive in, I want to let you know that MicroConf Mastermind matching is open. One of the most valuable things you can do as a founder is surround yourself with people who get it.
And that’s exactly what this program is designed to do. A recent member had this to say, quote, “Our fear is all the same. It’s that our product’s going to flop, that it’s not going to take off.” We openly talk about it and I’m like, “Oh, this is so normal.” And so then it makes it feel a little more fixable, relatable, and approachable, and we can all have ideas for how to just get past this. To date, we facilitated well over a thousand mastermind matches, bringing together founders from more than 50 countries and over 20 time zones based on things like ARR, team size, experience level, geography, and when they’re able to meet. Applications close on January 16th. For all the details and to apply today, head to microConf.com/masterminds. And with that, let’s dive into my conversation. Laura Roder, welcome back to Startups for the Rest of Us.
Laura Roeder:
Hello. I am happy to be back on one of my favorite podcasts.
Rob Walling :
Oh, you are too kind. I think this got to be your, what, your fourth, fifth appearance?
Laura Roeder:
Something like that. Yeah. It’s a long running show. I’m a long running entrepreneur, so I go together.
Rob Walling :
Indeed. You’ve told the story. Well, you come on and answer the listener questions a few years back. You told the story of Edgar of exiting that, I believe. I know we talked about the whole story there, but you are a storied entrepreneur. You’ve had consulting, you’ve had info products, and most recently for the past 10 years at least, you’ve had two SaaS companies, right? You had Meet Edgar and now Paper Bell.
Laura Roeder:
Yes. And another one that we shut down shortly after it started. So technically-
Rob Walling :
It had Hog in the name.
Laura Roeder:
It had
Rob Walling :
Pig.
Laura Roeder:
Pig. Pig. What was it called? It was called Ropig. The mascot was like a robot. Robot Pig. Robot Pig.
Rob Walling :
Oh, I love it. It’s so memorable because I remembered Hog. I
Laura Roeder:
Remember Hog. I don’t know.
Rob Walling :
Yeah. Maybe not. All right. So we want to talk about Paper Bell today. And the reason I wanted you to come back on the show is I saw you tweeted out that one of your venture backed competitors went out of business. I’ll use the word imploded, but I don’t know if that’s accurate. They went under. And Paper Bell, for the record, is fully bootstrapped and you and your husband are co-founders, right? He’s the developer and you are everything else, marketing and sales and all that.
Laura Roeder:
Correct.
Rob Walling :
And it’s a common story because I remember growing drip, seeing venture back competitors come and just hit the market and spend a bunch of money and implode. And I never really talked much about that, but there was always some really interesting nuggets in that. And so you were mentioning, “Hey, I might write a blog post.” And I was like, “Just come on, let’s talk about it. ” And if you do wind up publishing a post, we’ll obviously link to it in the show notes. But can you set the stage for people? What is Paperbell? What’s the space it’s in? When did you launch? Where does a business stand today? Just give us the ground level view.
Laura Roeder:
Yeah. So Paperbell launched in 2020. So five years ago at the time of this recording, we’re fully bootstrapped. We’re now in the low millions ARR.
Rob Walling :
Awesome. And how big is the team?
Laura Roeder:
It’s hard to answer because we have one full-time person, everyone’s freelance. So as small as possible, basically as how big’s the team.
Rob Walling :
Yeah. You run really lean businesses for folks who don’t know. And it’s a lot of async, right? There’s like almost no meetings.
Laura Roeder:
There’s literally no meetings.
Rob Walling :
Yeah. And so you take that tact and it’s for your lifestyle, right? It’s like you don’t want to be in meetings. That’s the purpose. The business serves your lifestyle’s true bootstrap business.
Laura Roeder:
Yes. I did the meetings in the last business. I got sick of the meetings. I’m like, let’s do no meetings. See how that goes so far. It’s going great.
Rob Walling :
Paperbell.com. If folks want to check it out and your H1 is $47 million paid to coaches like you. Wait, you pay coaches? Paperbell is the simplest way to sell coaching online. Aha. It’s a SaaS. Get your own gorgeous social friendly website with scheduling payments, messaging and more built right in. The proof is in the profits. Coaches like you have earned, collectively earned over $47 million using Paperbell. $47 million, that’s a lot of money actually, because coaches, I know it’s a dicey … I guess I view it maybe as there’s a lot of prosumers and hobbyists doing coaching. You think that’s accurate?
Laura Roeder:
That is accurate. A lot of people do it because it’s something you can sort of just do for a few hours on the side. So yeah, a lot of people do it on the side. As you can guess, our best customer is someone who does it full-time as their career. So there’s plenty of those out there. But yeah, it’s a very prosumery type of business. I liked hearing that headline reflected back and I was like, okay, I think that actually does sum it up pretty well. And yeah, just to clarify in the 47 million, that’s not our revenue. People connect their Stripe account and their PayPal account and then do their payments through Paperbell. So that’s just flowing through us. We don’t take any kind of cut on that, which is a benefit to our customers. So yeah, we’re just a true self-serve SaaS business, $57 a month.
Rob Walling :
And when you entered the space, I have to imagine there were already coach … Can I call this space the category like, is it coach practice management or just coaching SaaS?
Laura Roeder:
Coaching software.
Rob Walling :
Coaching software. There had to have been other coaching software that existed.
Laura Roeder:
Yeah. Yeah. The easiest way to think of it is just kind of an industry vertical tool for coaches to do their contracts, their payments, their scheduling. And when I say coaches, I mean life coaches, executive coaches, business coaches, that’s kind of most of our market. It’s not fitness coaches. That’s kind of a different category where they’re often wanting apps with their own workouts and meal plans. We don’t do that. Yeah. So that’s the market.
Rob Walling :
And was it competitive when you entered it? Were there a lot of alternatives and why entered this particular space? You have a lot of options to what you’re going to
Laura Roeder:
Do. Yeah. So when we launched, there were competitors that existed. There were no venture backed competitors and it was very, very fragmented. The competitors that existed seemed to be more hobby business type of things. I think what often happened was like someone who was a professional coach would sort of see the need for this. They would kind of try to build it, but they weren’t really like software people necessarily, which maybe that should have … You can view that either way. One, there was competition, but it’s like, well, if there’s not a one really successful competitor, maybe that’s a red flag. I don’t know. But what I liked about the space was one, like I love self serve, even though it’s absolutely SaaS on hard mode and you should go up market and it makes it a lot easier and it makes you ensure all the things that Rob says are true.
But I like a challenge. I like doing self-serve. I just love that market of helping the individual coaches, creators. It’s just really fun for me. And I thought that coaching would be a hugely growing market, which has … That hypothesis has definitely turned out to be correct. Coaching is weird. You can’t actually get any numbers on it because anyone can call themselves a coach. It’s not something where you have to be certified. So there’s no official association and they say, we have this many members. So no one really knows how many coaches there are, but I think anyone could tell you anecdotally that they have come across more and more life coaches over the years and it has become more and more popular.
Rob Walling :
Yeah, that makes sense. A little bit to the bane of coaches like my wife, Dr. Sherry Wallinging, who has a psychology degree and is like, she’s like, “I don’t want to call myself a coach because it puts me in a bucket of a lot of people who are just calling themselves a thing.” So she often uses consultant, but that doesn’t mean that it’s not a viable market and doesn’t provide value to a lot of people. And so in this episode, I want to focus on this venture backed competitor and is it practice. Practice.do. And they set the stage there. So you launched in 2020. When did they launch and were they funded by the time you heard about them and how much did they raise?
Laura Roeder:
So they also launched in 2020 and their founder is actually someone that I did know from years ago when he was more in the course space also, but we hadn’t spoken in like 10 plus years. We both apparently just had the same idea at the same time. I don’t think that’s a huge surprise because like I said, it was a growing market and there wasn’t someone who had really, completely addressed it really well. So Practice launched the same year as us 2020 and they announced that they had raised 10 million when they launched, I think they might have called it a seed round. So the founder in his previous business had raised like a hundred million. So he’s someone who’s used to those larger numbers. So this is my assumption. I would assume that he thought he would go on to raise more, which they did not end up doing.
Rob Walling :
10 million is a load of money for those watching at home. I will often say, “Oh, mostly bootstrap TinySeed, you raise 150 grand or whatever, 200 grand.” It’s like, that’s not as much money as it sounds like if you bootstrap. You burn through that pretty quick. It’s a salary or two.
Laura Roeder:
10
Rob Walling :
Million bucks, that’s a lot of money and that means your goalposts are very, very high because if you raise that 10 million in 2020, was it a hundred million dollar valuation maybe or maybe 50 million, right? So yeah, 50 million if they bought 20%, which may be more accurate. So now if you sell for a quarter of a billion dollars, you give a 5X return to your VCs, which they don’t want a 5X return.
Laura Roeder:
Well, and they raised from Andrews and Horovitz. So they’re not expecting small returns over there.
Rob Walling :
Yeah. They want decacorns. They want billion or 10 billion. We want to roll up the whole coaching industry, which I’m still thinking it just doesn’t seem like it’s that big. There must have been some vision that they painted that is not just serving coaches for $57 a month.
Laura Roeder:
Well, coaching is kind of a weird industry. So there are a few VC backed companies in the coaching industry. And what those companies do is they kind of have like a tech enabled service coaching as an enterprise perk, kind of like better help for therapy. There’s a few companies out there because all large corporations do have lots of coaching actually, both provided in- house or they’ll contract a firm to do their leadership coaching, stuff like that. So there is like a coaching enterprise market, but that’s not what Paperbell does. That’s not what practice does. And it’s kind of a weird one where they have completely different needs because we’re basically enabling individual coaches to sell their services. Obviously if you’re coaching in- house at Coca-Cola, you’re not selling a service, you’re just providing a service in house. So it’s not the type of thing where you’re selling more of the same to upmarket.
And it’s also not … If you look at that upmarket space, they don’t need a ton of software or like custom software necessarily.
Rob Walling :
Got it. So yeah, it is an interesting fragmented market, but kind of sounds like there’s a dichotomy there with enterprise and the self-serve is like different.
Laura Roeder:
Yeah.
Rob Walling :
It’s called coaching, but it’s not really the same. It’s very different ICP.
Laura Roeder:
Right. Especially as far as the business model works. So yeah, I was not in their pitch meetings, but I would think part of it could just be like coaching, coaching, because it’s true, like there’s a lot of coaching going on. There’s some money going into coaching. We’re going to capture that in some way. And so maybe that was their pitch or maybe they planned … I always assumed that they planned to start in coaching and then kind of expand to a larger freelancer. There’s a lot of tools out there just for general freelancers to kind of manage their business, take payments, stuff like that. I thought they would go in that direction, which before the call I sent you some, we looked sort of through their website over the years. They sort of did try to go there for a while, but never fully went there.
Rob Walling :
And so for folks wondering what we’re going to cover, I want to talk a little bit about what you feel like they did wrong. The things, because you’re still alive doing millions a year in ARR and they’re now under, out of business, even though they had such a headstart with 10 million in the bank. So I’d love to hear, we’re going to dig into the things that you did differently as well as even like to jump to the spoiler, you had a conversation with the founder of Practice, I guess as they were kind of knowing that they were struggling about potentially acquiring the business, which I think is a fascinating part to this story. So you outlined a handful of things that they did differently and that you feel like … I mean, some of these, as I read them, I’m like, oh yeah, these are classic engineering mistakes, classic like technical founder mistakes.
And the first one is you said that they over invested in engineering too early that they launched an Android and iOS mobile apps either immediately or very early on. And yeah, any mobile apps plus web apps, it’s like, you burned through 10 million pretty quick doing that kind of stuff. So just talk us through that, that whole point.
Laura Roeder:
Yeah. And I mean, this was pre AI. It’s a lot easier now to create apps and maybe languages you’re not as familiar with, although obviously still a ton of work. And our market does not demand a mobile app. It’s a nice to have … People sometimes ask us for it, but if I’ve never had anyone cancel saying it’s because we don’t have a mobile app. But it makes sense if you think from their perspective, it’s like when you’re raising money from these huge VC firms, it’s like you’re not supposed to sort of gradually feel things out, right? You’re supposed to go, honestly, spend as much as possible, as soon as possible to try to dominate the market. So I can understand why they’re like, ” We’re going to do web, we’re going to do all the mobile. “But what it meant was they had a large engineering team right from the beginning.
We had one person engineering team for the first three years of the business, and our one person was able to build extremely similar to what their entire team built. The big thing, we didn’t have the mobile apps, that was the big difference. But as far as the functionality of the software, it was extremely, extremely similar.
Rob Walling :
This is where I talk about founders having a gut feel and a product sense, which is I’m sure that, and you just said, you have received through Paper Bell requests for a mobile app and obviously practiced it as well. And they said,” Oh, customers ask for it. We need to build it. “And you said,” Customers ask for it. I’m not building it unless I start losing a book, right? And this is this bootstrapper mindset of what is the minimum that I can build to get this business off the ground or to half a million or a million or wherever you’re going. And while bootstrapping … Look, I may get hate mail for this. Bootstrapping is doing it on hard mode. Now that I have raised funding with TinySeed and I see companies that raise a few million, we have a bunch of TinySeed companies that have done this.
If you do it well, if you think about it like a bootstrapper and you approach it like Laura Roder or like a Ruben Gomez or even like a Jason Cohen, he raised a bunch of money, but he approaches things super pragmatically, that is a superpower. It’s like adding octane to a fire in a good way though, not in the bad explosive incendiary way. But when I think about folks raising a bunch of money and then not acting more capital efficient, it sounds like that was this of like, “Well, everyone’s requesting everything, we’re going to build it all. ”
Laura Roeder:
Well, I think it’s a very common VC trap because again, I have to assume that they wanted to keep raising just an assumption, but that’s kind of what you do if you call 10 million your seed round. So you get yourself in this weird trap often where it’s like you have to keep raising because that’s how the game is played. But then if you want to keep raising, you kind of have to show this evidence that you’re just going as all out as possible. It almost looks better if you’ve spent all the money. It’s like impressive if you have this huge engineering team and sometimes all these huge marketing plays, that’s another theme that they seem to have missed. They seem, maybe because they had only quote unquote 10 million, they seem to have put it all into engineering and extremely little into marketing. But if you think you’re going to keep having more and more tens of millions coming in, I can see why you would make that choice.
But yeah, it just makes you a lot more sloppy with what you’re building because you don’t have that constraint of, oh, we can only build things that will make us keep our current customers and get more of them.
Rob Walling :
Yeah. And the fundraising landscape in 2020 after … Obviously there was the big stock market crash in March or April. And then when it came back and there was all the stimulus here in the US, well around the world for that matter, it became really easy to raise money and money was cheap and that carried into 2021. And then we know there was like an asset crash after that. And 2022 and 23, it was very hard to raise money. And so I imagine they just went under in the last few months, right? This is the end of 2025. Yeah. So I imagine if they didn’t have the numbers these days, it is you do need fundamentals to raise because if they’re at 10 million, well, what’s your next round going to be? Aren’t you supposed to raise more? To raise 20 million at a whatever, a 200 or 100 million dollar valuation, like you need some really good fundamentals these days in a way that I don’t think you did in 2021.
And to circle back on something you just said is 0.2 that you had sent me is they overinvested in engineering it sounds like, and they underinvested in marketing and distribution. And the quote from your email that you sent me, “I kept waiting for them to do more marketing, but we just never really heard much about them.” The lack of visibility was noticeable. That feels like, shouldn’t their VCs or someone smart be telling them, “You guys need to market more? What happened there?”
Laura Roeder:
Yeah, again, maybe you can get their founder on, that would be fascinating and hear his side of the story. So that one always was surprising to me because that was more the worry to me because I know how much one engineer can build. There’s some benefits to only having like a one person or two person team, like especially one person, they’re able to keep the whole architecture in their head, not have any of the back and forth, not have any of the drop balls between two people, right? But marketing, I mean, like we’ve done marketing through SEO and through ads. And obviously ads is very much like if you spend more money, you get more exposure. It’s very black and white. It may not be effective, you may not be converting, but if you spend more, you can get more exposure. SEO, sort of similar, I mean, all that’s got out the window in 2025, but in 2020, it’s like you could sort of spend more on SEO, maybe get more traffic faster.
So that’s what we were doing. And I was always kind of looking around being like, “Oh God, are they just about to murder us spending tons of money on Meta ads?” Meta’s a great channel for coaches. They’re very active there and over the years they did little or no ad spend.
Rob Walling :
That’s crazy because I would think with that much money in the bank, that’s the most obvious and easiest path is to just drop money. I would think AdWords or Meta ads. Well, all right, so that’s mistake number two. And then the third thing you mentioned was a fundamentally limited upmarket path. The coaching industry is difficult because there isn’t a cleanup market path without fundamentally changing the product. And you touched on this earlier where you say the true upmarket in coaching is the corporate coaching and that’s enterprise, but basically with self-server, mostly self-serve, I guess there’s not a ton of expansion revenue is kind of what it is.
Laura Roeder:
Right. There’s a market which, looking at their website, I think they tried to serve. There are some coaching practices that have multiple coaches, maybe there’s like a leadership coaching practice and they have like 10 coaches and you hire them to do leadership coaching for your team. It’s just not a big market and it’s also not … It doesn’t really help you if you have businesses that are somewhat bigger, but they still don’t make a ton of money. So a coaching practice with 10 coaches isn’t necessarily having huge revenue or like huge willingness to spend that much more than like the solo leadership coach. So it’s something I looked into because again, you’re supposed to go at market. It’s very helpful if you do. But I just saw after being in that industry, we would get some requests over the years of like, “Oh, we have five coaches, we have 20 coaches at our practice.” And we’d be like, “Buy five Paperball accounts.
I’ll give you a discount. That’s kind of all we can do. ” But we got so few of those requests that I’m like, “This is not going to be worth our time to build functionality for this. ”
Rob Walling :
If someone’s listening to this, I don’t want it to come across like us saying, “Well, anyone who raises 10 million, it’s just so stupid and all the incentives are and you can’t build a great business doing this. ” It’s like we hear, it’s kind of fun just in general and the broader internet to talk about the companies that raise a ton of money and then go under because there’s a little bit of Shadenfroda of like, “Oh, you thought you had this great thing and you fumbled the ball with 10 million in the bank or 100 million or whatever, some of these big companies do. ” And while that is probably the most common story, because we know that for every 10 companies, VC backs, I think don’t seven of them go to zero and like two of them break even or have very little return and then one is the big returner, right?
That’s the idea is 100x or something. And that is kind of how the model works. But I have personally seen many companies, some that compete with TinySeq companies, others like a Jason Cohen or folks kind of within our orbit that do raise buckets of money. I mean, I think Close didn’t necessarily raise buckets of money, but they did go through YC. I think v.io is doing really well. We had dinner with Saba, remember a couple years ago in Croatia, you spoke at MicroConf, they raised a lot of money and I think it was Sequoia or Andreessen, I don’t remember, and I think they’re doing pretty well. So I don’t want to paint this picture because someone, if you’re so pro bootstrapping and you’re listening to this, you’re like, “Yeah, this is why you never raise money because it totally screws you and you should never…” And that’s all we’re saying.
We’re saying that it is a balance and that probably 70% of the time, if I were to throw it out, 70 or 80% of the time, it doesn’t work out. But I tell you what, 10 million bucks in the hands of the right person of you, of Ruben, Heaton Shaw, like Jason Cohen, Dharmesh, we can name a bunch of like really accomplished and capital efficient founders, you can do some damage. I mean, it doesn’t necessarily mean that the business is bad because you raised 10 million for it.
Laura Roeder:
Right. And I would add to that, I do think that there are some markets, some businesses where you don’t want to raise 10 million, and I think this is one of them. And I think this is one of the huge bootstrapper advantages that people don’t deeply understand that doesn’t get talked about enough is as a bootstrapper, I can run a business that, let’s say it maxes out at two million, let’s say it never gets higher than that, and I can take home a million dollars a year. You know what I mean? That’s obviously a great outcome for me, but that’s a zero, that’s a dud in VC world. So there are actually, I think, more SaaS opportunities than a lot of people realize because by definition, they’re too small for VC and coaching might be one of them, the way that we’ve approached it, Paperbell serving just these one person businesses, because even if Paperbell goes to 50 million, that’s still not a VC win, right?
The numbers are just so different. VC, again, depending on how much you raise, they’re often looking for businesses that are doing hundreds of millions or more in revenue. So it does also have to be a match what the business model is, who you’re serving and the amount that you’re raising.
Rob Walling :
Yeah, that’s a good point. I really like the way back machine headlines you’ve sent me for practice.du. DO? Practice.due. I’ve never- They just
Laura Roeder:
Called it practice.
Rob Walling :
Practice. Okay. For practice. I haven’t heard the due TLD before, but I remember when we were building Drip and I would look at the newer entrance into the market, a lot of them had some type of venture money or some type of funding. And I would watch their headlines change every four or five months and dramatically, and I was like, “Oh, they’re floundering. They don’t really know what they’re doing.” Or maybe they do know what they’re doing, but they’re just not finding product market fit, so they just keep changing it. And I’m not saying that necessarily about practice, but you look at their headline from 2021, the H1 launch and manager coaching business instantly. So it’s like, all right, it’s for coaches, right? In 2022, streamline your coaching business. We help coaches consolidate clunky, disjointed and annoying systems into one simple place. All right, this still checks out.
It’s a little different. 2023, give clients a simple way to schedule, sign, submit a form, pay, message you, get reminders, schedule. Practice has everything you need for your client-based business. So there’s no coach anymore. It’s now anyone with a client. 2024, stop tracking sessions manually. Give your team the tools that would … I don’t think of coaches as having a team in general. Give your team the tools to schedule, track sessions, manage clients in real time automatically. And then the 2025, the last homepage before they shut down, the appointment platform built for growth. I mean, that’s almost a completely different category. It is. Empower your team with the scalable tools to track, manage, and grow bottom line. Were you looking at these headlines over the years or did you just look at them retroactively?
Laura Roeder:
It was interesting looking at them retroactively for this podcast because I kind of popped in over the years, but I’m definitely someone who have some awareness of what your competitors are doing, but I’m more kind of focused on my own thing. But they were always the one I was most interested in because they launched in the same year as us and raised 10 million where none of our other competitors had. So I was certainly worried about them taking a lot of the market, but also it was also along the way this kind of parallel journey because we’d launched at the same time. So I did notice that one year in the middle when they started to go more just sort of general client business and small business, I actually thought at that point, I’m like, oh, that makes sense to me. I think they saw that this was not a big enough market for the amount they’ve raised.
I think they’re going to go broader, but then they seem to move from there to like, I think those later headlines are trying to serve, again, those like multi-coach practices is kind of my best guess. And again, this is where like VC world can be so different from bootstrapper world. Just speculating, maybe when they tried to go after that general client business, maybe they felt like, “Oh, we need to raise another 50 million to go after this really broad market.” Where I think bootstrappers think more like, “Okay, if it’s not working, if you need a pivot, let me try just running a few ads to this market. Let me try just changing the marketing and not too much with the product and let’s see if it gets traction there.” Whereas I think there’s this other kind of thinking that’s like, “Okay, if we’re going to go in this different direction, we have to invest tons of money changing everything.”
Rob Walling :
Yeah. So I want to talk about how you potentially were going to acquire the business, but before we do that, I think this maybe leans into it or leads into it. One of the points that you had sent me was that their fundraise created a false signal. And what did you mean by that?
Laura Roeder:
Just that I thought that they were going to dominate the market is what I expected by … It’s like, oh, they have this huge company behind them. And I always kind of wondered, am I missing something? Because we wouldn’t hear about them. You get people emailing you saying, “Oh, how do you compare to this company? I’m thinking of switching from this competitor. How do you compare?” And we just didn’t hear about them very much. I would also like to throw in here, I do think they had just a terrible name, and I don’t think that names matter that much at the end of the day, but this name was impossible to Google, impossible to track. It’s like you can’t see when people are talking about you on Reddit or Facebook or anything when your name is … And you can’t even put in practice coaching, but you can’t put in practice software because there’s a million other softwares within practice in the name, so we just didn’t hear about them.
So I kept thinking because they’d done this big raise and they announced that Tony Raw Cobbins was maybe even on their board or one in their investors or something. I’m just like, is there something going on that I’m missing? Have they found some sort of secret part of the market that we haven’t found that they’re serving?
Rob Walling :
Yeah, that makes sense. And so you had a conversation about potentially acquiring it. How did that come about? Did he reach out to you? I guess you kind of knew him?
Laura Roeder:
Yeah. So at one point he had sent me an email because like I said, we kind of knew each other. So he had sent me an email at one point over the years being like, “Hey, do you want to chat?” And we didn’t end up chatting, but it was friendly and fine. And then we actually heard they were closing from customers because we started getting emails saying like, “Oh, all of a sudden we need to move our coaching business somewhere. How do you guys compare to practice? Can we move over?”That kind of stuff. But there was no public info on social media, on their blog, on their website. So we actually asked one of those people who had contacted us, were like, “Can you forward us the email that you got?” Because there was nothing public. And then we were actually able to jump on that and publish a blog post about practice closing because they had told their customers, but there was no public info.
So people were searching for it, but there wasn’t a lot out there. So I then tried to reach out to their founder to find out what was happening. It took me a little while, a few layers to get to them, but I did end up speaking to them. But I think the thing about SaaS is that if you’re acquiring another business, you either have to keep that business running and keep their whole business and keep their customers or you have to tell their customers, “Hey, we’ve acquired practice. Do you want to sign up for Paperbell?” But you don’t just magically collect their money. They have to actively resign up. And it is, even if they’re similar, it’s obviously a different system.
Rob Walling :
Yeah. And you don’t have mobile apps.
Laura Roeder:
Right.
Rob Walling :
So people want that, they’re going to get … Yeah. So you have to almost guess how many … Because you don’t want to maintain two apps and keep building. You’re not going to do that. So you have to guess, I don’t know how many of their customers are going to translate over, right? And what is that worth to us?
Laura Roeder:
Exactly. So I think it’s a lot … I talked to some friends who had acquired companies to get advice from them, but if you’re not in … A lot of them … I talked to one person who had a service business and he had grown his business hugely acquiring other businesses. But if you’re an accountant, you’re just like, “We’re doing your accounting now.” And that’s kind of all it is, but it’s quite different in SaaS. So that was a big question for me. It’s like, is this really going to be worth it? Because if their business closes down, their customers are going to have to go somewhere. Aren’t we kind of going to get … We’re so similar to them, we’re going to get a lot of them anyway for free if they shut down.
Rob Walling :
Yeah. So that does make it challenging because acquiring it, like if I swooped in or just some random entrepreneur swooped in and bought it for parts, then it’s a business that I’m running and now I see there’s potential in it. But you already have one. And while it seems on the surface like, well, they’re complimentary. It’s the same ICP or very similar. It should work, but it really is a complex issue and you would have to kind of guess how many folks would move over.
Laura Roeder:
Yeah. And they had a different tech stack than us. So if we were to maintain them at all, we would have to hire engineers and like, now you’re not making money anymore.
Rob Walling :
Yeah, it’s complicated. Well, I guess, I mean, Paper Bell, are you the market leader in this space? I mean, it’s a pretty impressive business.
Laura Roeder:
Now we are. I didn’t know. I kept thinking, I think we’re the market leader, but I’m not sure. And yeah, so to close that loop, we did not end up acquiring practice and it didn’t really end up being a serious conversation and they ended up just shutting down. And I did find out that they weren’t that large, that we were definitely far ahead of them as far as revenue and customers. So yeah, we do seem to be the market leader, which is cool. And I think we are kind of seeing our growth has been accelerating for the past year. And I think we are starting to see that market leader benefit happen of like the more customers you have, the more referrals you get, the more of our competitors go out of business. We’re like the last man standing and we’re going to get more customers.
Rob Walling :
Winning by attrition.
Laura Roeder:
Yeah.
Rob Walling :
You’re just like, “Yeah, I’m still here.” Well, it’s an interesting story and I really appreciate you taking the time to come on here and share it and share it so thoughtfully, right? It’s like you had the headlines and the takeaways and all this stuff. And it’s obvious that you, it should be obvious to everyone, you’re a very experienced and talented entrepreneur and I’ve had multiple successes under your belt and I just appreciate your insights and analysis on this topic.
Laura Roeder:
Thank you. If
Rob Walling :
Folks want to keep up with you, you’re on X Twitter. Are you @LKR?
Laura Roeder:
I just got back on. I was off for like two years, but now I’m totally addicted again, LKR.
Rob Walling :
What brought you back?
Laura Roeder:
I just got bored. I tried to go to Blue Sky, but then it didn’t end up being active. And then I was just not on social media, which is great for you, but I missed all the Twitter drama.
Rob Walling :
You miss the Twitter drama. Oh boy. No, that’s great. And I wouldn’t have heard about this probably at all if you weren’t on Twitter because this is where I saw it. Yeah. @LKR, if folks want to follow up or just hang out, follow you, paperbell.com. If folks want to see the best coaching platform on the internet. Then market later. Number one, the best, best on the best. Awesome. Thanks again, Laura. Thank
Speaker 3:
You.
Rob Walling :
Thanks again to Laura for coming back on Startups for the Rest of Us. She’s always a fount of knowledge and very experienced and exceptional entrepreneur. I hope you learned a lot from this episode and thank you for listening this week and every week. This is Rob Walling signing off from episode 814.
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