088 – Pipe Drive: Started with a simple idea with zero customers – now over 60,000 customers, $30m invested and 300 employees (w Timo Rein)

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Timo Rein is the Co-Founder and CEO of Pipe Drive which is a simplified sales management tool that is helping over 60,000 sales teams around the world to get more organised, more focused and helping them sell more. You have probably already heard about Pipe Drive because they have done an amazing job marketing their service, this is a great episode with Timo, I thoroughly enjoyed it and I know we will receive great feedback on this one!

Timo is based in Estonia with his wife and kids, born in the Soviet Union, studied psychology in university, he lived in the US for four years and is now back home living and running his business from north eastern Europe in the wonderful Estonia.

He co-founded Pipe Drive 7 years ago with 4 other founders, prior to that was a partner is a sales training business for 10 years, so Timo is a seasoned entrepreneur with 17 years in the game of running his own business.

Show notes and links at: https://www.businessgenerals.co/timor

Revenue streams

Pipe Drive is a SaaS (software as a service) business, that generates a monthly and annual subscription from customers who are from all corners of the world. They have doubles their revenue each year for the last 5-6 years, so Timo describes as a high growth yet high investment SaaS business. They have invested about $30m into the business which includes successful strong capital raisings.

Dilution of your ownership v Investors

In Timo’s mind their business is run by a team of professionals right across their leadership and executive level, including the investors who he feels are well invested to give the founders every necessary introduction and connection in the market place as well challenge the leadership and ask more of them so as to get the best that the company can deliver.

The big idea and the story of how pipe drive started

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• The big idea with Timo’s first co-founder, who also had a sales background like Timo
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• Coming up with the specification document of the product
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• Looking for developers who would build the code
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• Meeting up with 3 other start up founders who had coding back ground
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The tipping point for Timo

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• He was running his sales business and going well
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• An old friend quizzed Timo about his consultancy role at the time and in Timo’s mind this made his wake up to his dream of being a doer, a builder and this sent him back to his drawing board so he went back to looking at building a business.
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Building Pipe Drive

With the new 3 co-founders the idea was ready to be dusted off and given another chance.

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• Timo and his first co-founder described the whole software idea again to the new team.
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• A brand new specification document was created and it was much better than their original spec, as it was much more visual with screen shots and clear work flows.
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• The original founders had the idea, they knew how to market and scale a business while the 3 new founders brought in the engineering experience and proven experience in coding a product that can be scaled, so together they created a strong foundation on which to build the business from.
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• For a period of 3 months the team would get together on weekend retreats at a local farm house, from Friday nights and code through out the weekend and would only head back to their homes on Sundays. Three of the co-founders had day jobs during the week so this project was only worked on during the weekends at this time. The other two founders plus one other engineer (who would later become a founding employee) worked full time on the project during this 3 month period.
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• Although away from family, this helped the team focus well on the project and also helped them build a strong team dynamic and start to understand each other better.
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• After a few months a beta version was finalised and ready for prime time, Timo was not fully comfortable with doing a beta (test) launch as the product was not fully ready, but his co-founders were quite bullish about wanting to start getting customer feedback so he went along.
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• In hindsight Timo says if they hadn’t done their beta launch when they did it would have been a mistake.
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The beta launch

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• They targeted about 500 previous contacts that they had worked with previously in sales and sales management.
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• The goal was to get the tool into the hands of these teams, have them test it, break it and give feed back so that the team could fix it and iron out all the bugs – this beta testing took about half a year before the team the first market version was ready to launch
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Market launch and getting the first few customers

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• It was launched with a 30 day trial followed by a paid plan.
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• Out of the 500 beta users, about 30 had good use of the product during the beta trial stage enough to have 10 of these immediately convert to paid customers when the market version launched.
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• For Timo, he had a back of the napkin calculation that said if they can scale up to 500 customers who had a monthly recurring subscription then the business would be real and sustainable in his own estimations
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• For about 4-5 months from launch the business grew at about 10-15 new customers each month, but it was quite linear and the growth target of 500 customers seemed very far away.
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• Before running out of steam, patience and funding due to the shear pace or lack thereof – the founders started asking how they could accelerate their growth and how they could fund their business better.
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Enter…incubators

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• The idea of joining an incubator program became their next logical step on their journey to growth, the US model was most appealing as it had both good programs to help grow the founders, get the start up off the ground as well as strong investor networks and opportunities.
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• They spent 5-6 months applying to different incubator programs in the US while documenting their successes and failures on their company blog which also helped in traffic and conversions.
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• After 6 months an incubator in San Francisco (Angel Pad) accepted them Pipe Drive team into its program.
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• This program brough some initial funding for the business and at this point Timo and his fellow founders were hopeful that this would be a real turning point for the business
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What can we change this week to help our potential customers find us better?

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• Website optimisation
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• Content creation
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• Considering crazy ideas like doing collaborations with other companies. So they did a deal with App Sumo and heavily discounted their subscription in order to make some noise in the market through App Sumo. This added 220 new customers in bulk, and this was a good jump for the business.
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• With consistent weekly effort, the team finally got to their goal of 500 subscribers which was a great milestone.
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Pipe Drive’s reach after 7 years in business

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• They serve small businesses with teams of 4-5.
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• Customer reach is over 60,000.
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• With the lowest monthly subscription at $15/month, the maths adds up to over $10 million in annual revenue, a great achievement for an idea that started so simply with limited time and resources.
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Other topics we discussed during the podcast

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• Inspirational books as an entrepreneur:
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• Common Denominator of Success – Albert Gray
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• Extreme Ownership: How U.S. Navy SEALs Lead and Win by Jocko Willink
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• Crucial Conversations – Tools for Talking When Stakes Are High, by Kerry Patterson
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• Team at pipe drive has over 300 team members which is a great team
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• Best way to connect with Timo – get onto Pipe Drive and use the messenger option and also on LinkedIn
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• Pipe Drive pricing – check out pipedrive.com
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Legacy

“To give people confidence that there is a way to get to great results which are almost guaranteed” – Timo