Bootstrapping Cold Email Studio to $240k ARR in 200 days. Insights for other bootstrappers.

We’re 7 months into building our productized service, Cold Email Studio, which is a service that builds and manages B2B outbound sales campaigns mainly for YC and other venture backed startups.

We’ve just passed $100k in revenue, we’re tracking around $20k MRR and our gross profit margins are around 55%.

Cold Email Studio exists because B2B founders and sales teams shouldn’t focus their time on building lead lists and sending outbound campaigns. They should just focus on closing deals.

So we put outbound sales on autopilot, for a price that’s lower than a junior BDR.

Today I want to share some of the insights from building Cold Email Studio that could help other bootstrappers, especially ones who are juggling kids like me 🥴.

I hope there is something useful here. If anyone has any questions, just reach out!

The beginning.

When my co-founder Andrew asked if we could partner to build Cold Email Studio in late 2020, I didn’t really hesitate, even though I should have.

I’ve got three kids, a mortgage to pay and a bank balance to show for it. I’m in a different place to when I started my first business over a decade ago and I’m wiser today about what’s required to get something off the ground.

But, I was itching to start something new and I backed my experience to bootstrap us to a point where we could pay ourselves before the sh*t hit the fan.

We’re not quite there. The fan is spinning and the sh*t is flying, but no direct hits yet.

When you’ve got kids, bootstrapping is particularly hard. In addition to sleepless nights, every spare moment is taken up with endless diaper changes and cleaning.

So I knew I wouldn’t be able to do this business on the side, I’d need to jump in 100%.

We earned our first $500 in Nov 2020 and I jumped in full-time in Jan 2021.

We aren’t your typical candidates to build a business like this. Andrew and I mainly have experience building technology businesses. Andrew is a software engineer, I’m more of an operator/product person. However, I did spend a couple years running a dev shop, so the agency model isn’t foreign to me.

Still, it wasn’t immediately obvious that we should be building essentially a non-tech, productized service business focused on outbound sales.

So why Cold Email As A Service?

Here are some reasons why building Cold Email Studio makes perfect sense:

1. Building a service business gets you to cash fast so you can pay salaries and hire people who are frankly better at delivering the service (Julia🙏).
2. Offering a service that can be ‘productized’, gives you something closer to a recurring SaaS revenue model that’s easier to scale than traditional agency work.
3. We knew that along the way there would be SaaS products we’d want to build (or buy) that are in the ‘lead generation’ space and working on this business would give us clear visibility as to where the opportunities truly were.
4. Given we’ve mainly got backgrounds building software, we felt we had an advantage over other service businesses who would have to pay to build technology and sacrifice margins.
5. By running a b2b outreach service, we’d have a built in mechanism for growing the business and any other projects that we’d want to start.

My approach to building Cold Email Studio

I knew from day 1 that I didn’t want to be the one delivering on our service. This wasn’t going to be one of those ‘founder wearing many hats’ scenarios where I was doing a bad job of lots of different kinds of work.

I’ve learned too many times over the years that as soon as you step into the weeds, it’s very hard to get out again. I prefer to hire fast, hire well and support a team to do great work.

But, in the beginning we had no cash to hire full time people. So we took on an intern to help with execution and leveraged freelance copywriters and lead researchers from platforms like fiverr and upwork to help with building outbound campaigns.

But, I knew very early on that this setup couldn’t last long.

None of us were experts in cold outreach at this point and I knew we’d encounter customers who knew more about what we were doing than we did.

I quickly had to figure out how we could have a team who were experts in lead generation and B2B sales, when we only had small early revenues to play with.

Figuring out what team we needed (and could afford).

In January 2021 I set out to understand what team I needed to provide a better service that was scaleable and where I wasn’t getting pulled into the delivery side of our service.

I started deconstructing the work of a typical SDR/BDR into discrete functions and started figuring out how I could build a team of fractional hires, who were all experts in each part of the process.

Our irresistible offer to customers would be for them to have access to a team of B2B outreach experts, at a fraction of the cost of a junior BDR.

Cheaper, better and faster vs an in-house team.

I broke down the key sales functions as:

Campaign Management — managing the campaign strategy, managing the different team functions and working directly with the client.

Market Research— working out how and where to find prospects as well as gauging the total addressable market for each persona.

Lead Research— responsible for building lists of super relevant prospects based on the personas and market research.

Sales — managing inboxes, converting responses into meetings and reporting on campaign performance.

Copywriting — responsible for building campaign sequences bespoke to each company, persona, industry etc.

With this team, we could build targeted lead lists, setup campaigns, send them, manage responses and book meetings at scale.

Honestly, it’s a lot of work that no founder or sales team should be doing themselves. That’s where the value is.

Matching the team requirements with the business model.

Once I had a decent idea of how our team needed to be structured, I had to understand what price we could charge and what we’d need to pay each fractional hire for us to still make a margin. This process took some time to work out.

Essentially I was reaching out to freelancers with relevant experience and seeing if they’d be up for working with us based on what we could afford to pay. My requirements were very clear and specific, so it was easy for them to say yes or no, based on them having done the work before.

Below is the first draft I ever did of our model so I could work out exactly what the costs were to deliver our service. I focused on the setup costs to build an outreach campaign and then the monthly ongoing management of the campaign. These numbers have changed along the way, but hopefully it gives you an idea of the process.

The key thing I’ve always had in my mind from the beginning is our gross profit margin. Most people think SaaS is the ultimate repeatable, high margin business model. It is, but it takes time to scale revenues to a point where you can pay yourself a salary. The right productized service with a subscription model can still have decent margins. The gold standard is probably 65%-70%, which is actually comparable to some SaaS businesses.

Hiring the core team.

I ran two processes in parallel to build out the team. Honestly I didn’t know which one would work best because I’d never hired a fractional team before.

Process 1) Run hiring campaigns to find the fractional hires. I focused mainly on copywriters and lead researchers to begin with.

Process 2) Networking with founders who are experts in the lead generation space and getting referrals of decent hires.

For Process 1, I built automated linkedin campaigns to reach out to ‘lead researchers’… this returned hundreds of potential hires.

I posted job ads for copywriters on various job boards as well as on freelance platforms, and reached out to people individually on linkedin. For those that applied I ran copywriting challenges to filter out serious candidates and see who could actually do the work.

In the end, I spent a lot of time interviewing people and analysing work samples.

Honestly, it was a struggle.

But, Process 2 started to yield more interesting and more qualified opportunities.

I spoke to a bunch of founders who were also running productized services to understand how they were operating their businesses. It turned out that my plan for our team was correct, I just hadn’t landed on the right hires yet.

Making a keystone hire.

In February 2021 I spoke to Mark Colgan of Speak on Podcasts. He has a decade of experience in B2B Sales and immediately said: “you should speak to Julia”.

Julia is a B2B Sales Campaign Strategist with years of experience working at big lead generation companies. Immediately I could tell that she knew more about the nuances of B2B lead generation than I did.

She had run hundreds of sales campaigns for many different kinds of businesses and understood the team required to deliver the service.

As luck would have it, she had been consulting independently doing outbound campaigns for B2B businesses and was up for joining a team again. Within days she had come on board and took over running our campaigns.

Big win for us 🥳

As far as I was concerned, as long as we were bringing in enough money to pay Julia’s salary, our plan was going to work.

Scaling the team.

With our Campaign Strategist role filled, this is where things started to get really interesting.

• Julia knew how to run good outbound campaigns.
• She understood the team that she needed around her.
• And she had a network of people she could bring into the business.

So gradually we started to pull in the fractional hires that we needed. This was a combination of people that Julia knew and also people who had responded to my outreach campaigns.

• February 2021 we hired Julia our Campaign Strategist. 🤩
• March 2021 we hired 2 x SDRs, 3 x Lead Researchers and a Market Researcher 🤩🤩🤩🤩🤩🤩
• July 2021 we have a total of 12 people, full and part-time. We’re now layering full-time management hires into in key areas of the business. 🤩🤩🤩🤩🤩🤩🤩🤩🤩🤩🤩🤩

Increasing prices.

As we began to fill all of the roles in our team, our costs naturally increased, as did my confidence in the service, so we began to push up prices.

• November 2020– prices were $500 per month (manual invoicing)
• December 2020 — 👆 increased prices to $1000 (manual invoicing)
• January 2021 — 👆 increased prices to $1500 (manual invoicing)
• March 2021 — introduced quarterly prices and sold first 3 month package
• April 2021 —👆 increased prices to $2000 per month and we introduced monthly and quarterly subscriptions

Our prices should be higher than they are today, but we’re still cementing some of our processes and hiring a couple more positions.

Scaling revenues.

As with any business we’ve been juggling growing the team with scaling revenues. So far we’ve used one core channel for growth and that’s been doing our own cold outreach.

We do automated sales campaigns targeting B2B SaaS companies in US and Europe. At the moment that seems to be enough for us to maintain our revenues while we continue to build out the machine.

This channel has allowed us to nearly reach $20k MRR… so close 😂

Service first, SaaS second

A key part of our strategy is to build and buy SaaS tools that are in the lead generation space.

The beauty of running a service business is you’re getting paid to get domain expertise that also highlights opportunities for building SaaS. You’re also building up a bank of potential customers for future products.

One of the first tools we’ve built is WarmIntro. It’s a tool for building personalised intro lines for outbound email campaigns. Personalised emails get better response rates, so this allows you to do that at scale.

Building out our Cold Email service has also allowed us to spin out another service focusing specifically on building lead lists. We already have a team of lead researchers and sometimes that’s all a customer needs access to. So in August 2021 we’re launching LeadWork, done for your list building.

We have a bunch of other ideas and tools that we’ll be working on. Eventually they might roll into a single platform, who knows. But for now we’ll keep solving specific problems that we know we’re experiencing.

Building (with the option) to sell.

One thing that’s given me a lot of clarity is having the mindset that everything we do and build should be done in a way that gives us the option to sell (if we wanted to).

Ultimately our operation has to be so slick and predictable that someone else could take over the business without it requiring much of their time or investment.

When you look at everything through this lense, it allows you to consider deeply the work we do and the service we deliver, and identify over time, which things make the most sense to focus on in the future.

Already this has allowed us to shift our plan towards what we know will be the most valuable version of this business, and we’re already making strides in that direction.

Practically, these are areas I’m focusing on right now:

• Our processes and SOPs are documented thoroughly (we’re using ClickUp)
• We run our operation on as few tools as possible so it would be easy for someone else to take over.
• There is clear tracking / recording of all our finances.
• We have a strong business model with decent margins, with the bulk of it being subscription revenue.
• Low churn and a decent LTV.
• An operation that doesn’t require the founders / owners for any core day to day processes, including sales.

Below is a fuller checklist of things that could help you build a better business and increase your potential valuation.

Celebrating successes and sharing challenges.

In my first business when we hit our first $1 million in revenue it felt like a moment that really passed us by. We were so focused on what needed to be done next, we didn’t stop to celebrate that amazing milestone.

Honestly, getting your first $100 is a big friggin’ milestone.

Today, we’re celebrating our first $100k in revenue. I’m happy with that. We’ve got a lot of ambition and big plans, but this milestone shows that we’ve achieved a lot for ourselves and our customers, in a relatively short space of time. 🥳

Although we’re making good progress, it’s still early days. We’re only just earning enough to pay the salaries of our team with some leftover as a buffer for down months, which inevitably will happen.

In the last 7 months we’ve focused heavily on building the machine, basically good people and good processes. Then it’s been about making sure key hires have the time and space to focus on the work they’re best at, whilst balancing the distractions that come with a growing team.

As we’ve been tweaking the machine, I’ve been constantly thinking about the quality of our service and whether we’re growing fast enough to maintain (and grow) our revenues. Minor setbacks like a customer who isn’t happy or a sale that doesn’t come through, do take their toll at this stage.

What keeps me going is the team, knowing that we are improving the business every day and that we’ve got a clear direction for what’s coming next.

Whenever I have a down day, I just spend some time thinking about our roadmap, where we’ve come from and what I know is coming soon…

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I hope this has been useful. If there are any questions or anything that you’d like to hear more about then please let me know!

Key insights

• Service revenue allows you to pay salaries early and take yourself out of delivery.
• Running a service first helps you identify opportunities to build useful SaaS tools faster.
• Making experienced hires early keeps you out of delivery so you can focus on the team and strategy.
• Great hires attract other great hires, which makes scaling the team much easier.
• Building a solid team gives you the confidence to increase your prices.
• Having a target for gross profit margin keeps your whole business in check.
• Building with a view to selling keeps your operation slick and your eye on the most valuable version of your business.
• Celebrating successes is so important. Mark every milestone, even if it’s with a simple blog post like this one 😊.

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