In start-up growth strategies, the journey from inception to expansion often poses challenges and involves critical decisions. For Toinon Georget, CEO of Waalaxy, the path to success has been marked by resourcefulness, strategic insight, and a relentless commitment to innovation.
Toinon's journey began with developing a prospecting service, evolving into Waalaxy over two years from its origins as a mobile application. Rooted in customer feedback and a dedication to meeting market demands, Waalaxy is an excellent example of a fully self-funded solution-driven platform tailored to the needs of its clientele.
This article draws from Toinon’s experience to give you the best tips for start-up management. Proving that bootstrapped and fast-growing aren’t incompatible, we show you how to test a product-market fit, adapt your pricing, deal with growth challenges, and manage your data properly for better results.
Bootstrap and fast growth: incompatible?
If you think bootstrapping and fast growth are incompatible due to limited resources, think again.
Usually, the most resourceful and efficient bootstrap entrepreneurs maintain lean operations. This enables rapid adaptation and scalability. A customer-centric approach fosters organic growth through strong relationships and iterative development, while strategic partnerships extend their reach without significant investment. Ultimately, bootstrap start-ups can achieve rapid growth by leveraging these strengths effectively.
One of the best examples is Waalaxy, Toinon’s start-up, rapidly gaining revenue and expanding as an entirely self-financed business. Waalaxy reached 7M€ ARR within three years by offering practical and functional solutions in response to specific needs. After four years, the company now exceeds €10M annual ARR with more than 50 employees and is now the world's leading LinkedIn automation tool with more than 150K active users.
According to Toinon, being bootstrapped was never really a choice, but the company quickly became profitable within three months and reached a million in revenue in 9 months, with only six employees. Being able to recruit when needed, they did not question the bootstrapped model.
Waalaxy’s development and what you can learn from it
Assessing market fit and product strategy
Indicators of market fit are signals such as willingness to pay and virality. Having customer feedback will give you opportunities for product iteration.
According to Toinon, to test the market for your SaaS B2B, you should identify a problem and find the best solutions. In the case of Waalaxy, the idea was “to make the LinkedIn prospecting accessible to as many people as possible”, Toinon says. They achieved a 0 to 1M growth quickly thanks to a good market fit, strong traction and word of mouth feed, and focusing on serving those new customers with the best, simple and accessible product.
Toinon uses the following framework to test the market and figure out, within two days, if an idea has market potential or not:
- First step: With LinkedIn Sales Navigator’s free trial, look for three types of profiles for potential users. Using an automated prospecting tool (e.g., Waalaxy), you can create distinct lists with one or two campaigns each to test your messages. The idea is to contact potential clients to discuss solutions you could bring to an identified problem in their sector. Rather than selling, your prospect should help you understand and interrogate their needs.
- Second step: Create a landing page and structure an impactful speech to define your value proposition, describe your product and present critical factors differentiating you from competitors.
- Third step: Beta testing. Create a LinkedIn page with “CEO” or “Growth Manager” for the product you will launch, and collect all the subscriptions to the beta. Doing so will give you a point of contact with the people interested in your product with whom you can discuss and interact.
- Fourth step: Prospecting. Try to guide the potential clients to your website to see how many convert. Out of 1000 contacted people, if you get more than 30 conversions, you know you have a market potential, and you should move forward!
Choice of revenue model
Toinon chose a subscription-based model for Waalaxy, focused on flexibility and scalability.
Over 2.5 years, the company has significantly adjusted its pricing strategy, quadrupling prices on Waalaxy, which has been a critical driver of growth. This was allowed by good product quality, a robust support system, and a strong brand reputation.
As a leader in the market, Waalaxy enjoys reduced customer sensitivity, enabling gradual price increases while expanding its customer base. The decision to prioritize subscription revenue aligns with the nature of Waalaxy's self-service product.
In this model, Toinon emphasizes the importance of efficient customer support through features like chat support. The chat support system allows for the management of multiple user inquiries simultaneously, leveraging pre-recorded responses and multimedia aids like GIFs to streamline communication and address common issues promptly. Waalaxy’s team can handle over 10x more customers than with phone support.
Overall, the subscription model coupled with responsive customer support has facilitated revenue growth and fostered deeper insights into customer needs and preferences.
Pricing strategies
In terms of pricing, Toinon advises you to follow two different strategies: as a young start-up when you just launched your company and later on in your business journey.
At the beginning of your journey, you should be doing competitive pricing (ie. aligning prices with competitors to gain market entry). To penetrate the market, you should have compelling prices to attract many customers. This will also allow you to differentiate yourself from competitors and simplify conversions and client acquisition. To determine your pricing, look up other similar products or services' pricing and test your prices: if no one is paying, you are either charging too much, or your product is not delivering enough value.
As was the case for Waalaxy, the goal is to grow your business and iterate your prices. The more famous your product gets, the easier it is to sell it at higher prices. Toinon recommends seasonal pricing adjustments to gradually augment your prices and examine their effect on your customers and business. You can increase charges for new customers or apply the price changes to new and old customers. Over time, you need to understand where the price ceiling lies and when prices are becoming too expensive for your users.
The challenges of expanding your company
Expanding Waalaxy posed significant challenges, notably in managing scale-mess-debt and product debt.
During the second launch, the company encountered technical debt due to the product's initial design for a limited user base, which proved inadequate when faced with 50,000 users. To rectify structural issues beyond their capacity, Toinon assembled a team to develop the current version of Waalaxy, financed by the first product's $3 million organic growth revenue.
Despite recruiting 20 people over six months, this investment barely impacted growth, illustrating strategic financial management. It is only later on that the integration of these recruits caused stagnation and a decline in growth at the $3 million mark, highlighting the challenge of restructuring that you might face as an entrepreneur.
During this phase, Waalaxy implemented changes to meet customers’ feedback demands, which in turn led to product debt: the launch of this ambitious feature set complexified usage of the product, straying from the original client base and prompting a year-long effort to simplify the product.
Moving from the startup phase to scaling involved a year of paying off debts, followed by solid growth with revenue almost doubling and $10M invested in Waalaxy. After scaling, the primary goals shifted to expanding the customer base and entering new markets. This included making the product more straightforward, reaching international audiences, and using AI to improve user experience. Overall, Toinon’s strategy focused on continuously improving, hiring and keeping talented employees to ensure growth and innovation.
How do you best manage your data?
Toinon highlights the significance of understanding your data for decision-making in your start-up and emphasizes the need for accessible, meaningful, and reliable data across all teams.
What financial metrics should you focus on during your start-up’s journey?
In Toinon's view, the most critical metric in a start-up is essentially income and income growth, whether VC-backed or bootstrapped.
When bootstrapping, you will want to maximize your margin, which is the percentage of profit you make on each sale. Profitability isn't solely about making margin; it's also about tracking how much you earn and determining your Annual Recurring Revenue (ARR).
As a VC-backed start-up, you will be looking to maximize your income growth. The investors won't be looking at profitability at the start, but they will look at your growth. In the first three months, Toinon recommends looking at growth weekly: am I doing better every week?
- You don't have a product-market fit if you're doing <3% better. You still need to try to understand who your customers are and what they want to match the product to their needs. At that point, don’t look for new users by the thousands because your conversion rates aren't reasonable. You need to focus on your customers and who you want to get closer to. Try to understand why you're not generating growth.
- Something is happening between 3-5%: you need to start iterating.
- Between 5-10%, you have a good product-market fit and weekly income growth.
- Finally, >10%, it’s exceptional, and something is happening, but be careful because everything is going to grow very, very fast.
Further, Toinon recommends paying attention to other metrics, which will help monitor and understand your business’s growth:
- Churn is the rate at which customers stop using your product or service, and it helps you understand how satisfied your users are and how well you're retaining them over time.
- Conversion rates in trial to paid are helpful in evaluating the effectiveness of your trial and understanding your ability to convert users into paying customers.
- Net Revenue Retention (NRR) calculates the revenue retained from existing customers over a specific period, accounting for expansions (upsell), contractions (downsell), or churn.
- Monthly Recurring Revenue (MRR) represents the monthly predictable revenue generated from subscription-based services. Monitoring MRR will help you understand your company's revenue stability and growth trajectory.
- Customer Happiness Rating (CHR) measures the satisfaction of your users. Monitor it to gauge customer sentiment and identify possible improvements.
- The Retention rate reflects the percentage of customers who continue to use your product or service over a specific period. This metric is crucial for evaluating customer loyalty and the effectiveness of your retention strategies.
- Customer Lifetime Value (LTV) estimates the total revenue a customer is expected to generate throughout their entire relationship with your business. LTV helps you assess the long-term value of acquiring and retaining customers.
- Customer Lifetime Value to Customer Acquisition Cost Ratio (LTV/CAC): This ratio compares a customer's lifetime value to the cost of acquiring that customer. It is valuable for understanding the return on investment from customer acquisition efforts and ensuring sustainable growth.
Using Fincome to manage your data
Fincome provides data analysis and leverages payment service history without exhausting internal resources. It will allow you and your team to focus on product-related tasks and user engagement rather than data processing.
As Toinon highlights, segmentation is essential for understanding customer behaviors and revenue metrics. Toinon recommends using Fincome to enable segmentation based on various attributes, aiding in customer targeting and product optimization.
He notably recommends Fincome for companies using Stripe payment services, particularly those with ARR between 0 and 20M €. Other features and significant benefits include financial projection and treasury management, notably during critical phases of your company's growth.
Conclusion
From choosing your income mode and testing your product-market fit to defining your pricing strategies, Toinon's experience with Waalaxy underscores the power of adaptability and customer-centricity in driving sustainable growth for a bootstrapped company.
Moreover, knowing the essential metrics you should look at during your business’s journey will help you focus on important aspects of your start-up to effectively push it towards growth and success.
As Toinon, learn how to implement innovative strategies, expand your teams, and smartly iterate your pricing to maximize your business’s potential.
