How Flodesk went from 0 to $25M in ARR just five years

Good morning! This is The Zero to One. Think of us like today’s deep dive, Flodesk. But instead of helping you craft killer emails - we help you craft killer growth ideas!

Here’s what’s in store for you today:

• Deep dive of Flodesk, bootstrapping to $25M ARR.

Flodesk: Five years bootstrapping to $25M

Email marketing is hard. It’s even harder for small business owners who don't have an army of marketers to design, write, and craft killer emails.

And the tools at the time didn’t cater for the increase in innovative entrepreneurs and solopreneurs. They were often complicated to use and difficult to get started with.

So Martha Bitar, Rebecca Shostak, and Trong Dong set out to change that. They wanted to build an email marketing tool that makes it ridiculously easy to design emails people love to get.

And Flodesk was born.

5 years after launch and Flodesk has bootstrapped its way to $25M in ARR.

But this isn’t about where they are today. It’s about how they got here.

This is the story of how Flodesk went from Zero to One. 🚀

Business model: How Flodesk makes money

Flodesk’s business model is beautifully simple.

They have three plans:

• Link in bio: Free

• Flodesk Email: $35/m annually (or $38/m monthly)

• Everything (Flodesk Email + Flodesk Checkout): $59/m annually (or $64/m monthly)

Unlike other email service providers or e-commerce platforms - each of their tiers is only the one monthly fee. No incremental cost per subscribers or additional transaction costs.

Additionally, every user gets a 30-day free trial On their Everything Plan.

Even more awesome, their pricing of their email solution has only increased once in the company’s history - when they launched publicly.

They also never run any sales - but every single one of their users has a referral link that will give you 50% off your first year (and give them some money).

Flodesk’s Growth

Flodesk launched in August 2019. After a few months of testing with ~30 users.

The plan was to bootstrap the business - so no investor money. They were going to fund this thing.

To do this, the idea was for Rebecca and Trong to work on Flodesk full time and Martha to continue in her job for a few months. They set December 2019 as the date to decide if they should go all-in, with the goal of having 500 paying customers.

When December came they had 5,000.

Safe to say they met their goal.

So Martha left her job at HoneyBook, and the two of them went all-in on Flodesk.

What’s crazy about this, is that if you do some quick math. You’ll see that they were doing ~$190k/m within five months of launching (5,000 x $38) - now it was probably a bit less considering referral codes and annual plans. But it was still substantial.

Before they even closed in on the one-year mark, Flodesk was doing $5M ARR. Which is super impressive! Even reaching profitability along the way in March 2020.

By July 2023, Flodesk was doing $20M in ARR. And had achieved a YoY growth of 391%. This is just insane.

As of today, Flodesk is doing over $25M in ARR. Profitable and bootstrapped. An awesome combo. Keeping a large chunk of equity and having cash flow.

Key Success Factors (KSFs)

There have been plenty of reasons for Flodesks quick rise to success. They have managed to fill a huge need for an underserved audience. And because of this have created a customer base of true fans.

Here are three drivers of Flodesk’s journey that particularly stood out to me:

🗻 1. Go above and beyond for their customers: Flodesk has built a culture of serving their customers above all else. Always overdelivering on value. This is shown in all areas of their business, from their affordable pricing, to their customer support and everything in between.

🥅 2. Aligned their goals with customers’ goals: Flodesk have done an awesome job in aligning their goals with their customers’ goals. Meaning when their customers win, so do Flodesk. This has been the driving force behind Flodesk’s biggest growth channel, customer-led growth.

📚 3. Picked a customer they understood: Flodesk were extremely intentional about their customer. Choosing small business owners as their ideal customer profile (ICP) early on. They did this because they understood small business owners from their past experiences and because of this could effectively communicate with them and solve their pain points intuitively.

🗻 1. Go above and beyond for their customers

Flodesk is a truly customer-first business. Building a culture of service from day one.

Even going back to their MVP, this belief of over-delivering value to their customers was clear. They wanted more than anything for their customers to succeed.

When they released their MVP, it was really barebones.

It was a system to send out emails. That was it.

There were no editable design templates or suggested email sequences.

It was simply a system that allowed you to send out emails.

So to still provide additional value to their first 30 beta testers on the MVP. Rebecca herself created custom emails for all 30 of them. Just think about that, she would individually design emails for every customer in photoshop and then walk them through how to send it through their MVP. This must’ve taken up so much time - but yet she did it for her customers to succeed.

Another example of them making sure their customers were successful happened right at the start of the pandemic.

They noticed that the usage of their platform was down for a few days.

So they immediately reached out to customers to see what exactly was wrong and how they could help. They didn’t wait weeks or months, just a few days and they were speaking directly with their customers.

Through this process they identified that people felt stuck on how to respond to the pandemic and how to tell their customers of their response.

So Flodesk immediately partnered with some of their customers who were already creating templates and email flows and created a COVID templates collection, which became their most used templates since launching and turned what was heading to one of their lowest usage months, to their biggest spike thus far.

Martha and Rebecca’s dedication to their customers is also seen through their constant communication with them. They consistently speak to their customers to try and improve the product, valuing customer voice over feature brainstorming.

They are also super engaged on their Facebook support group, helping answer any questions they can (if the other customers don’t beat them to it).

Even look at their pricing, Flodesk have a super simple and business friendly pricing strategy. One flat and affordable monthly fee, no matter the size of your business.

They could’ve easily gone down the route of their competitors, adjusting pricing based on subscribers and emails sent. But they didn’t.

The biggest way they have gone above and beyond for their customers though was probably through Flodesk University.

Flodesk partnered with customers who were already creating content around Flodesk to build a community and central resource to share knowledge and insights, so their customers can take their email campaigns, and ultimately businesses, to the next level.

The courses range anywhere from getting started with using Flodesk to design or even making money.

Now creating a central resource like this isn’t something unique to Flodesk.

But they used it to showcase other SMB owners’ expertise. And in typical Flodesk fashion, sent all their partners the best recording equipment (for them to keep).

Yes, Flodesk benefits from going above and beyond for their customers. But this is another thing Flodesk is great at - Aligning incentives…

🥅 2. Aligned their goals with customers’ goals

Flodesk are big believers in Customer-Leg Growth (CLG).

Meaning their customers can be the biggest accelerant to their growth. Driving awareness, conversion, adoption, and retention.

Consumers today often don’t want to talk to salespeople. They want to take the word of others online and try a product for themselves.

So Flodesk looked where these conversations were happening so they could optimize growth from them.

But how do you control conversations between two other people?

You give one of them an experience so good that they can’t help but share their experience with your product.

To do this, they aligned their goals with their ideal customers’ goals. The more successful their customers, the more successful they would be.

So Flodesk made sure they blew their customers away with easy-to-design, on-brand templates that resulted in success for their users.

Now it helped that they were an email service provider - emails are inherently personal and social.

But to make the sharing process even easier, Flodesk added a footer to say: “Made with love and Flodesk” - which ~83% of users leave on.

This means that Flodesk became incentivized to:

• Help you build your email list. Exposing them to more people.

• Create the best emails possible. Increases the chance of conversions which leads to:

• Make you money. The more money you make, the more likely you stay with Flodesk.

This creates this viral growth loop where every email you send brings more eyeballs to Flodesk, which leads to more emails being sent, which leads to more eyeballs, and it goes on and on.

But underpinning all this is customer success. So Flodesk is super incentivized for you to succeed.

This forced their whole team to be extremely dedicated to customer success.

In fact it even shaped the growth of their team, with no sales or marketing function - but rather a Customer Experience and Success team, which is a big percentage of their company.

To show the success of this strategy, over 75% of their referrals come from individuals, not influencers, meaning they have created salespeople in all their users.

📚 3. Picked a customer they understood

When coming up with the idea for Flodesk, the Founders were already super clear on who they wanted to serve - Small business owners (SMBs) and micro-entrepreneurs (often creatives).

But why this customer profile?

Well for starters, the founders believed that this customer profile was underserved - whenever they spoke to someone in this target market they would see the excitement beaming off their faces.

But also because they understood this type of customer.

In Rebecca’s past life, she was a designer for literal superstars (like Rihanna and Lincoln Park), turned small business owner - one of which was a business selling email design templates that she would create in Photoshop.

And Martha had worked at HoneyBook, where a group of her customers were SMBs who relied on email marketing, and often asked for her advice.

This allowed them to deeply and intuitively understand this type of customer. And from day one you could see how this moved the needle in their growth.

Their first landing page converted at well above industry average. Because they could answer the questions they knew their customers would have, before they had them.

They knew what to say and how to say it.

This stayed with them throughout their growth.

Beyond knowing how to communicate with their customers and capture their attention. They also knew how to find these customers and what to build for them.

Plus, Martha, Rebecca, and Trong never stopped trying to understand more about their customers - constantly remaining relatable and knowledgeable, but more on this a little below in how you can replicate Flodesk’s growth.

Actions you can take to replicate Flodesk’s success

Charge Early 💸

One of the most important things Flodesk did was to start charging their customers early on.

And not because it gave them cash flow soon. Which it also did.

But because they validated that their idea was one people were willing to pay for.

When Flodesk started they got 30 users in a free beta test. They wanted feedback more than anything else. And this was working great.

They were improving their product!

But they came across some advice that you should charge early. It’s much different convincing someone to use a free product than selling them on using a paid one.

This is a nerve-racking process. You’re scared that you lose testers and you could be confronted with the reality that people aren’t happy enough to pay for your product.

But it’s a critical step to proving you have a cash-flowing business.

So they told their 30 beta-users that they were changing to a monthly subscription to build the business…

Not one of them wanted to stop. Everyone was up for paying.

By doing this, they had essentially proven some kind of PMF (Product-Market fit).

They had something people were willing to pay for.

This also made them realize that they were just about ready to launch out of their test and to the public - giving them the confidence they needed that they had an awesome product.

I’ve had a similar thought process with this newsletter. Although not selling anything, I’ve taken on advertisements as soon as possible - and not to make money (it’s not significant yet anyway). But to prove that this can be a viable business and people don’t stop reading when I do introduce ads or other revenue channels.

Another benefit of charging early is that paying becomes the norm.

If you are free for too long, users might never want to pay - the same for this newsletter, if I don’t advertise for two years and then suddenly I introduce brand placements, I could understand that my readers wouldn’t be too happy.

So although it might be intimidating. Charge early. It’ll help you realize if you have an idea people are willing to pay for. And if they’re not, you can figure out how to pivot sooner.  

Put customers in touch with each other 🔮

Flodesk had the awesome initiative to create a community Facebook group (very similar to Lemlist’s), Flodesk Insiders. Which now has ~18k members and is super active with around 10 posts per day.

In its own words, it’s “a space for Flodesk members to connect, share ideas and support one another in the pursuit of success.”

And this is exactly how it’s used.

Through this group, Flodesk has managed to create a supportive community around their product. One that has significantly benefited their business.

You see, Flodesk deeply understood their target customer - micropreneurs and small business owners - and they leveraged one of the most defining characteristics of these groups. That they want other small businesses and entrepreneurs to succeed.

You can see this everywhere: Twitter, Reddit, YouTube, Instagram, in-person events. Small business owners want to win together with other small business owners. There has been this culture of helping each other that is inherent within this group.

And Flodesk used this perfectly.

Creating what is practically a customer success team of their users.

Their customers ask for help and get instant replies from other Flodesk users. And this isn’t just technical product help. It’s also strategy and business advice.

This is awesome for Flodesk, because the more successful their customers’ businesses are, the more likely they are to continue using Flodesk.

This strategy has been so successful that 2.5 years after their launch, Flodesk had managed to achieve a 97% retention rate. Which is incredible! Especially if you consider that they had no upsells at the time - meaning they couldn't increase their net retention through upselling existing customers.

Flodesk has built a truly sticky product. And facilitating productive conversations between their customers has been a huge part of this.

Figure out where your audience likes to hang out.

Meet them there to facilitate and encourage them to help each other.

Not only will this reduce your churn. But potential new customers who see this supportive group will be more likely to buy your product.

Become your customer 👟

One of, if not the most critical parts to building a successful startup is deeply understanding your customer, their pain points, and their needs.

And one of the best ways to achieve this is to find Founder-Market Fit (FMF). What I mean by this is the alignment between a founder's skills, experience, expertise, and passion, and the needs and traits of the target market.

Flodesk is a great example of achieving FMF. Rebecca had experience as both a designer and a small business owner - specifically selling email templates to other small businesses. So she intuitively understood other small business owners and their pain points.

Martha had been in business development, and was responsible for a group of educators who used email marketing as their key sales channel and would constantly ask for advice on how to use it effectively - to which Martha would try and help them (or send them to Rebecca).

So by having the experience to truly understand their customers - Rebecca and Martha intuitively knew what to build, what to say in their copywriting, and how to say it. As well as where to find their ideal customers.

They had picked a customer they understood. But they didn’t stop here.

They treated understanding their customer as a muscle they could work out.

Building habits to understand them even deeper,. To name a few:

• Talking to at least one customer every day.

• Asking new customers why they joined.

• Asking every customer who left, why they left.

• Engaging in the online communities customers were in.

They used all of this to constantly refine their messaging and product development.

Translating what their customers were saying into what they actually needed to solve their pains.

There are a few ways to really become your customer.

The best way is to be your target customer - take Stan founder John Hu for example, who was a content creator who built a business helping creators make a living. This gives you the best understanding of what it truly means to be your target customer.

But by no means is it necessary, there are two other ways to become your customer:

1. Work for a startup that serves your target customer (or any sized-company, but with a startup you will have the most hands-on experience). 👩‍💻

2. Do more research, and speak to more people in your target customer group than anyone else. 👩‍🔬

By building a business where you become your own customer, you will be able to resonate and relate more with your customers - increasing retention, reducing acquisition costs, and growing profitably.

Have a great week, speak soon!

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