It’s one thing to achieve some short-term success with a new software product. It’s entirely another to thrive in the rough and tumble subscription economy for years on end.
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Colin Hewitt, the founder and CEO of the fantastic cash flow forecasting tool Float, has been riding the waves of the recurring revenue market since 2009. Colin and I had a wide-ranging chat at the SaaStock conference in Dublin, covering everything from founding to funding at his Scotland-based company.
Getting Float Off the Ground
In 2009, Colin had a problem. He was seeing some success with his digital agency, but still struggling to make ends meet.
Trying to get a better handle on his finances, Colin put together a basic spending model in a spreadsheet. Visualizing the impact of small spending changes made a huge impact - for the first time, Colin could see a clear path to financial stability.
Yet, it wasn’t until he ran the same analysis on his business that realized the power of real time cash forecasting. After outgrowing his spreadsheet and trying a series of unwieldy alternatives on the market, Colin saw his opportunity. Float was born as a side project a few months later.
It remained that way until Colin got a taste of the startup world, first at Seedcamp and then at a program at MIT. Boston, he says, changed his life. After the MIT program, Colin sold his agency and started working on Float full time.
From his time as an early player in the subscription software game to now, he’s been preaching the value of cash forecasting to everyone who will listen.
Going with the (Cash) Flow
At Float, Colin made it his mission to make business finances accessible. He started by designing a beautiful product, replacing the dense spreadsheets in other apps with simple line charts.
He tried to make it easy for the non-finance folks among us to see the impact of various business scenarios. What happens if our clients pay us late this month? What if we ramp up our marketing spend? What if someone goes wild on the corporate card?
In each of those scenarios, Colin realized, having your cash flow at your fingertips was incredibly helpful. Other businesses (including us at ProfitWell) can attest to that – and Colin has racked up thousands of customers as a result.
As Colin has been adding functionality to Float, he’s also been optimizing its pricing strategy.
Staying in the Black
As Colin tells it, getting the pricing right for Float hasn’t always been easy.
Early on, he discovered that many of his customers were anchored by the low prices of other products in the accounting ecosystem. With full-service accounting tools like QuickBooks and Xero charging $50 a month, it can be difficult to imagine charging more for an add-on.
Luckily, his customers have seen the value in his product and he’s been able to gradually increase his prices. Those price increases, combined with some changes to his pricing page (defaulting to annual-billing, reordering his plans, etc.) have generated a lot of growth.
Colin says that pricing can be a delicate balancing act between keeping your product accessible to smaller customers while maintaining a clear upsell path for larger customers. He decided against going freemium in favor of focusing on the market willing to pay – a decision that has proved out his business model and funded his growth to this point.
Colin’s a big believer in continual price optimization, so he’s not completely satisfied with his pricing yet. He’s got his eye on the revenue sharing model used by payment providers like Stripe, but is still searching for the key to unlocking more revenue from his larger customers.
As you can see in the interview, he and I could go back and forth about pricing for hours. But, pricing is far from the only thing on Colin’s mind. Float is now a team of 14, which has given Colin a set of new responsibilities to navigate as the leader of a rapidly growing company.
Aligning Values with Growth
In my chat with Kyle Porter of SalesLoft, we talked extensively about defining a set of core company values and instilling them with your team. Colin is deep in that process at Float today.
He’s already identified a few of the Float values – humility and a growth mindset – and is putting them to paper. He’s involving his employees in the process as well, inviting them to define the future of the company. Yet, Colin remains laser focused on two goals: remaining true to the company’s core mission and making a profit while doing it.
His success with the latter is an especially sweet part of the Float success story, which has been bootstrapped from day one. That decision to rely on a “personal runway” has forced Colin and his team to hone in on the core Float value proposition and deliver a great experience to customers. It’s also given him the freedom to pursue a sustainable growth strategy and run the business his way.
He put it best: “We didn’t go into business to work for a VC.”
Bringing It All Home
It’s been a long journey for Colin from that first spreadsheet.
He and his team have taken Float from a side project to a leader in cash flow forecasting that’s serving thousands of customers.
Along the way, he’s learned a tremendous amount about what it takes to succeed in the subscription economy. From solving a real problem for your customers to optimizing pricing to being intentional about your growth, Colin has been making all the right decisions. His team and his customers have been better off for it.
If you want to check out more stories like this, check out our first SaaStock interview with Kyle Porter (Co-Founder and CEO of SalesLoft) and look out for our Peter Coppinger (Co-Founder and CEO at Teamwork.com) on the ProfitWell blog later this week.
These interviews are the beginning of something new at ProfitWell: an effort to tell the stories that matter from within the subscription economy. If that sounds like something you're into, click here to get exclusive early access to the shows we’re going to roll out in 2018.