Editors note: we recently took time out of Lasse's busy schedule to sit down with him and learn about how Mouseflow came to be. Questions are italicized and bolded.
Please share your name, background, a little bit about your business, and if you have any investors?
Lasse: My name is Lasse Schou. I have a background in Computer Science, started coding at the age of 9, and started my first business at the age of 21. I founded Mouseflow out of Copenhagen, Denmark back in 2009 and have grown the company (and our team) ever since. We're lucky enough to be 100% bootstrapped and profitable, serving over 115,000 clients.
Today, we have a healthy mix of small and medium businesses, as well as large enterprise clients in almost every sector. We love the position we're in: selling to small and medium businesses while also selling the product to enterprise clients (at much larger scale and with added features) is a win-win!
Why did you start the company, how did you come up with the idea?
Lasse: I was already an entrepreneur for 7 years, creating tons of websites for clients. Google Analytics was well known at the time, but there weren’t really any tools that could show how visitors actually use websites. It was a black box. I discussed visualizing mouse movements with a colleague and came up with the idea of aggregating click and movement data into heatmaps. So, the idea started because I really needed a tool like it for myself.
Was the business funded or bootstrapped in the beginning? What about to date?
Lasse: It was bootstrapped and still is to this day. Looking back, this strategy is really what enabled us to focus on profit from day one. We started with very few clients and, over the course of the first few years, quickly grew at 60 - 70% each year.
This, helped us scale our platform and build a great reputation for our product. Today, we have the attention of enterprise clients around the world: Microsoft, NBC, Philips, Costco, Regus, and Office Depot, to name a few.
How were your first few years in business, what were some of the hurdles that you had to get through?
Lasse: The first few years brought valuable lessons. It was fun building the company and the product from scratch, but it was also difficult not being able to bounce ideas off colleagues or partners. I had close friends offer advice and input like “why aren’t you doing this?” and “that’s never going to work!”.
In the end, I chose to listen to our customers (and follow their requests) to shape our product as it exists today. That was an excellent decision, because I ended up using our own product to understand how customers interact with the tool -- what works and what doesn't. Today, we get constant feedback that our product and interface are far better than anything else on the market. And, that's great to hear!
What’s the biggest risk you’ve taken for the company, and did it pay off?
Lasse: The biggest risk we took was completely rewriting our codebase and overhauling our user interface back in Fall 2015. We use our product ourselves and our customers are professionals in analytics, marketing, and user experience, so we also get great feedback.
At one point, it was clear our user interface couldn’t keep up with all the features we wanted to add. I distinctly remember planning our custom variables feature (which allows users to associate their own internal data with sessions in our system) - no matter how much I tried, it just didn’t seem to fit. However, we knew the feature had tons of potential and serious client interest.
I made the decision that the sensible option was not to monkey-patch our current architecture to make a feature fit where it shouldn’t, but to instead redesign it from the ground up. This turned out to be the right decision and we’ve added several features since then which wouldn’t have been possible otherwise. Shortly after launching The New Mouseflow, we had an influx of new users sign up which further cemented the decision to invest in our product.
What strategies/tactics have you implemented to acquire customers? How have these worked out for you?
Lasse: It might come as a surprise, but most of our business is through word of mouth. Do we run ad campaigns, maintain a social media presence, and conduct outreach campaigns? Sure. But, the bulk of our clients are referred from other happy clients. Even users who try our product for as little as a few days tend to tell someone else about it. There is a bit of “cool factor” that comes with session replay and heatmapping — we’ve definitely benefitted from that.
How do you ensure the constant flow of new customers, and that there will be a demand for your products/services?
Lasse: The most important thing we do is to constantly improve our product. We’re always asking our customers for feedback and inviting them to try new features to help shape the product. Our offices are very focused around development which means we can take new ideas from paper to prototype extremely fast and this helps customers answer questions where, previously, they were had nowhere to go.
The Internet is home to over 4 billion websites and, at 115,000 websites, Mouseflow is just scratching the surface. We have a lot of work to do, but making sure our company stays nimble enough to adapt our features/functionality, marketing, and product-to-market fit when needed is both a challenge and a necessity.
Can you share with us your business model?
Lasse: Mouseflow is a Software-as-a-Service (SaaS) product that’s entirely self-service. A new user can go to our site (https://mouseflow.com), learn about our features/functionality, try making their own recording (new users love this: https://mouseflow.com/demo), pick a plan and then sign up directly online.
We use automation wherever possible, so users are greeted with a series of drip emails to help with installation and learning our tool. Of course, we also provide support for users that have specific or technical questions, as well. In fact, we’re often told that our customer support is one of the reason clients stay with us. It’s just nice to be able to get in touch with someone who can answer your questions. That part is hard to automate.
Our business revolves around making a product that answers mission-critical questions for companies and website owners. As long as we continue to deliver value, we’ll maintain a healthy user base of loyal customers.
What have you been able to leverage throughout this experience that you’ve used to your advantage?
Lasse: Our team is split between Europe (Denmark and Germany) and the United States, so we’re able to make distance work to our advantage. When one office is asleep, the other takes over and handles development, support, and administrative tasks. This, in effect, is a recipe for a healthy and sustainable company that, to a client, never sleeps. We like that and it helps us win business that would otherwise be impossible. Most of our competitors are stuck in one specific location and being cross-timezone nearly let us build features and sell our product twice as fast.
What sets Mouseflow apart from the competition, what makes you unique/different?
Lasse: In the beginning, our focus was on small and medium businesses. We had competitors that went a traditional “enterprise-only” route only to be burdened by high costs, long sales cycles, and poor win-rates. We knew we had to try a different strategy if we wanted to succeed.
We first built our business focusing on areas we knew well: small to medium sized businesses, agencies, and web developers. This built a solid foundation of loyal fans, customers, and industry contacts that continue to be fruitful to this day.
Once we had predictable and recurring revenue, we shifted our sales focus to target enterprise clients. Today, we have a diverse mix of clients (large and small) in almost every industry. This benefits the product because we've been able to add features that would have otherwise never existed.
What kind of expectations should customers have if they decided to use your products/services?
Lasse: The second you record someone on your website in Mouseflow, be prepared to receive jaw-dropping insights that will rattle your pre-conceived notions of analytics and user behavior. Rather than staring at numbers, Mouseflow shows you what visitors are seeing. And, as a bystander, there’s a lot to learn.
What awards has the company won, if any?
Lasse: Mouseflow received its third Gazelle Award - an honor presented to the fastest growing companies in Denmark - in 2017. A few years prior, we received mentions from Discovery Channel, 425 Business, Forbes, and Business Insider.
How many employees does the company have?
Lasse: Mouseflow currently employs around 20 people full time.
What are the company’s goals for the future? What are your personal goals for the future?
Lasse: Our main goals are user acquisition, churn reduction, and product/platform improvement. We recently hit a milestone of tracking over 115,000 sites but, of course, my eyes are on the next milepost. We also need to continue investing in our product, onboarding, and training to reduce churn.
In 2017, these items are a big part of my focus and, so far, it’s paying off. On the product/platform side, we’re investing in infrastructure improvements (we lease our own servers), caching (to make aggregate heatmaps load at lightning speed), and new intelligent ways of interpreting data with machine learning and artificial intelligence. We hear from clients who ask “how do I know what data to look at?” and we expect to have a great solution available in the coming quarters.
What advice can you share with our readers, what should they take away from your business experience?
Lasse: I think the most important goal (in any business) is to find a sustainable way to earn profit. It's too easy to get distracted by debt, pursuing a vision without knowing finding anyone to pay for it, or building a company for the wrong intrinsic reasons.
I was at SaaStr in San Francisco this year, and I heard Peter Gassner (CEO of Veeva) say that being non-profitable is like a drug that’s hard to get off. That’s exactly my own view as well. I also agree a lot with Jason Fried from Basecamp who says that profitability is a feature of their company.
What would you say is the biggest lesson or central theme of your story?
Lasse: I proved to myself that being frugal and starting a low-cost business that reaches profitability fast is a business model that’s sustainable. I strongly believe that profitability means focusing on customers, not investors.
A lot of startups (especially in the Bay Area) get this wrong. If you put sustainable profit first, success is almost a guarantee. I’d rather start a business like that instead of starting a high-risk, high burn rate company with a constant “cash runway fear”. The only drawback is that it takes more time to grow the company.
It’s all about learning how to balance these two dynamics and adjust your strategy to make the best of both worlds.