Dave Nevogt, Co-Founder of Hubstaff, joined Maren Kate on the podcast to discuss transparency, growth and revenue tactics, talent acquisition, and insights into building a successful business that provides value to its customers, all with a fully bootstrapped and distributed team.
Hubstaff is a workforce management software suite that offers proof of work, time-tracking software, and payroll management, along with a remote talent finder and project management software. Dave Nevogt found a way to solve the big problem of time tracking and reporting (both for other companies as well as his own) by making time tracking and reporting better and more transparent for distributed teams. He set out to create something that would give daily value to its users, and Hubstaff’s history of growth and revenue shows that it does exactly that.
Hubstaff began as a bootstrapped company by a handful of trusted individuals, plus a Co-Founder sourced on LinkedIn. It has grown slowly and steadily and now does over 6M ARR with a team spread all over the globe, across 11 timezones. Hubstaff has believed in transparency from the very beginning and found it important to have numbers to show,. A story, of sorts, to point to and refer to in real-time, to whoever needs/wants to see it. So much so, that their revenue and growth numbers are available for all to see, hosted on baremetrics.com.
Maren and Dave discussed the challenges that companies face when recruiting for a distributed team: geographic location, access to top talent, cost and savings, and of course communication and processes.
Dave talked with Maren about the intricacies of how Hubstaff cultivates company culture for their distributed team, and best practices for companies looking to improve their own: company retreats, communication channels and topics, and finding a common interest. He says “it’s really a matter of empowering your people.”
Dave finishes the conversation with his opinion on Hubstaff’s most successful growth hack as well as some detailed and invaluable advice on building a company/product and where to spend your time and energy first.
If you like this podcast and want to hear more transparent companies share their stories, check out our conversation with Sid Sijbrandij: **Gitlab’s Journey to IPO–lessons on radical transparency, growth, and remote-first culture.
Be sure to check out Dave’s go-to book: The 80/20 Principle.
Co-founder of Hubstaff.com – driven by changing the way remote teams work and communicate.
Resources & Referenced Links
Contact Dave Nevogt at firstname.lastname@example.org
Welcome to 5 to 50, the podcast dedicated to helping startups and founders survive and thrive through the early stages. I'm your host, Maren Kate. And we're here with Dave Novogt. Did I say that right, Dave? Awesome from Hubstaff. Welcome to the show. Dave. Thanks so much. Awesome. So just to get started, when did you found Hubstaff?
We started working on it back around like 2012, late.
Late 2012. And just 90 Seconds or less tell our audience the founding story or the why behind Hubstaff?
Yeah, I've been running remote companies kind of my whole life. Well, not my whole life, I guess, since college, my working life. And so that goes back about 2003 timeframe. And it's just always something I struggled with, understanding what people were doing, setting priorities the right way. Getting feedback from them in an effective manner. You know, something that wouldn't be intrusive, also getting data to myself, that I needed without getting so stressed out and stuff. So, anyway, I knew that kind of software is where I wanted to be. I was in e-commerce, I did my first software startup 2009 timeframe. And I just, I felt like, you know, I'd been looking for a product like this, found my co founder, and just kind of went for it. At that point in time, I felt like Hubstaff or something that could provide a lot of value to people. So I could sell it for an inexpensive amount. And people would use it all day long. So that's why we might value versus like, lots of companies they have to log in once or twice a month and they charge say $200 a month and that this work is kind of the opposite.
Okay. And how did you find your co founder?
Really? Did you just cold outbound?
Yeah, cold call. I mean, he is from Indianapolis. So that's where I live. So we had something in common, but yeah, other than that.
How many people had you reached out to before you found him?
Oh, I don't know. I think he was really my first attempt, I think.
Founder love at first site.That's amazing. Okay, and you guys started working on it. And then are you bootstrapped, self funded? Or did you take on investors?
Bootstrapped, we put about 20, we're pretty transparent, we put about $25,000 into it to start it off. And that that's it.
Okay. And from there just growing off its own profit. What's the current size? I read somewhere? 30 people? Is that right? Has that changed?
Yeah, we have more like 45 now.
Okay. Wow. So just take me through the first few years? What did it look like the first year, the second year, in terms of team size? And then was there a point where you just kind of had a bunch of growth?
Yeah, team size. So team size is something we might have done a little wrong, you know, going back on it, it might have done a little differently. But you know, the way we did it was, we had a few trusted individuals that we went to, to kind of get the application built. A very, very basic and beta version, we launched it as a free product. Stayed there for about six months. Once we started to get traction, and during that time, of course, we're working on it working on it. But at that point, it was really me doing the marketing, my co founder doing some of the web development, or most of the web development, and then another developer doing the main desktop development. And then we had a QA/support person. So it was really the four of us that kind of built this thing up. And from there, we kind of hired a marketing person have a support person, another developer, and then we stayed there for quite some time. Call it another year, maybe. And then we started to kind of make revenue and have enough to actually hire more people out of that revenue.
Maren Kate 4:26
So what do you think that maybe you did wrong? What would you have done differently?
Dave Nevogt 4:30
Oh, I think that growing faster earlier on, it would have been a lot smarter. We stayed at a spot for probably two years where we were pretty basic.
You’d have had to raise money though, right?
Yeah, probably Yeah. Maybe from friends or family, that kind of thing. But, you know, we could have put in one of those things where you could have put in a little bit more and then actually gotten out a lot more speed from that but it wasn't something that was truly holding us back. We were both working on other jobs as well during this time. So it wasn't something that was really, truly holding us back. Time was also an issue for us.
Maren Kate 5:17
Got it. Okay. So you mentioned you're transparent. Are there any growth numbers you can share with the audience? Revenue users, stuff like that? Just so we can get a sense?
Dave Nevogt 5:27
Yeah, if you go to Baremetrics, actually, you can see everything. So it's, everything's in there. Real time. Yeah. So it's all real time. And you can see, churn and and I think it's the exact URL is Hubstaff Baremetrics https://baremetrics.com/blog/hubstaff-public-revenue-dashboard. And so it's B A R E metrics.com.
Why did you decide to do that?
It's something we decided to do a long time ago, and we just kind of went for it. And as something a little bit different, a little bit different story to tell. So back in the day, when, we found since then, that it hasn't probably been a huge plus for us. Probably not a huge negative either. But, you know, the theory at the time was that there's a story you tell if you have those numbers, so if I'm a pitching journalist or whatever, I've got a story to tell. I can show them some concrete measurables. And they click through that. And they think, wow, that's different. That's cool. And then you potentially get a response because of that.
Maren Kate 6:34
Yeah, I'm looking at Baremetrics right now, it says, monthly recurring revenue. 488,000. Net Revenue 510. I love it has the breakdown of today. 15 new trials. 27 new subscriptions.
Yeah. Wow. That's really awesome. So you mentioned that it, it hasn't hurt, but it hasn't done a lot.Would you make the decision again, to go on Baremetrics?
Dave Nevogt 7:02
Yeah, I think so. Yeah.
Maren Kate 7:06
Okay, cool. So you have one co founder?
Dave Nevogt 7:13
Just to set the stage. He's the technical co founder. And I'm like the operational/sales and marketing.
Maren Kate 7:21
Got it. So just looking at your numbers, you guys are doing about 6 million a year?
Nice. That's awesome. I love that transparency. Does your team like it? Do people come to you with questions?
Dave Nevogt 7:36
Yeah, no, it has not done anything to the team internally that’s been bad. They sometimes catch milestone markers faster than we do. We have team members limited to $100,000 a month and $10,000 a month. We've been using baremetrics since 2013. So really early on. So really, this podcast is built for people to start off, you can go back to 2013, when we first launched and see the progression of a very slow and steady incline. Which really, that's what it has been the whole time, now we hit stages of a little bit of growth, but it's not like a hockey stick, ours is very slow and methodical.
Maren Kate 8:31
So that's interesting. That brings me to, you say you're across 11 Time Zones and you are fully remote team. Is that correct?
Yeah, that's right.
Awesome. And what was the decision for that? Or even better, not even the decision. What do you think the pros and cons are of remote teams? Because a lot of the people in the audience the way I think about it, there are a few people that are building towards that 50 person goal. And at that five person stage, you're really making the decision – are we going to get an office? Or are we going to be partly or fully remote? So what do you think the good and the bad is?
Dave Nevogt 9:07
I'll start with the good. The good would be that you can find people across the world that are very, very skilled, I would say, specialists, if your platform is built on whatever, C++, or Ruby on Rails, or whatever it is, wherever it's built in. You can find somebody with that skill set. That's very good at that skill set. Anywhere, you know, Romania, Estonia, India, California, Chicago, wherever, it doesn't matter. Location is not something to hold you up. We were looking for that skill set in Indianapolis, we'd have our our pick among, it might be a full time job for me to go out and try to recruit people, because they're so, not to say that Indianapolis doesn't have skills, in terms of technology skills, yes, we do. But they all have jobs, and they all have good jobs. And to try to get them away from that, to come work for a small startup, at that point in time, especially, would have been very hard. So I got talent, where I was able to find talent, more easily. The other thing is, there is a cost savings involved as well. I would say pay on average, Ruby on Rails developer, probably in the ballpark of 70 to $90,000 a year. And regardless of their physical location, in the US typically, that's going to be senior level developers. It's going to be 130 or 40, probably, maybe more. So there is some cost savings there. And for that, you've got to be willing to go into the negatives now, for that you've got to be willing to put up with different timezones. You don't get to work with somebody in an office face to face, you don't get to see the facial tones, as much you don't get to see or understand a lot of the things that you would understand about that person. They could have multiple different jobs going on that you just don't know, they could be holding their baby in their lap the whole time while they're working, right. There's so many things that can come up, where as in an office, you just don't have those same things going on. And you are more able to, hey, let's look over your shoulder to see what's going on, let's look, let's discuss this, just pick up the conversation where, it's a little harder to call somebody on Slack and get a response. They're not there.
Maren Kate 12:03
It's more results driven
Dave Nevogt 12:07
You're not on the same wavelength, when it's good for somebody else. Where I can look over the shoulder in an office and see. And it's just more of that constant communication, like what do you think about this, okay, good. Got it, move on. So there are downsides, but for us the benefits far outweigh the downsides. Because you can get by and you can still produce a really outstanding product by managing the company remote.
Maren Kate 12:37
Yeah, absolutely. So that actually takes me to another question in terms of you guys have a fully remote, very transparent business. How do you build company culture? How do you guys think about offsides? What does that look like in terms of running across? You know, 11 time zones all over the world?
Dave Nevogt 12:58
Yeah. So we do like one. One official retreat per year, we've been to Chicago, we've been to Lisbon, and I will say a lot of our team is in Europe. So we have a big presence in Europe, a presence in Asia, but not as big. But still fairly large. And then the rest are spread across the US, South America, Canada is large. So those hotspots. So typically, we go to somewhere that is in one of those time zones. So far, we've been to Chicago, we've been in Lisbon, we’re coming to Mexico next year. We have that off site retreat. Sometimes our marketing, or our development team members will get together on a smaller scale. And sometimes we fly people in to Indianapolis to spend time with us, the founders of the company. But other than that, the vast majority of the time it's just through Slack and we do things like gift exchanges, a lot of family photos, we do have different channels for all these things, we do adventure we do pets, what to read what to listen to, we have all these different channels within and then we do things like poker night and we do things like happy hour, we do things like video games we do, those kinds of things. Alot of the things that we determined that people liked, like poker for example, everyone knew how to play poker, which is odd to me, I wouldn't think that everyone across the world would know how to play. I just didn't. I wouldn’t think that. But in going to the retreat, that was one of the best things that we did as a group, just play poker and so that's something that exists online that you can do it not being in the same physical location, maybe not quite as fun or whatever, but it exists. And so we can do that. So things like that, you know, and it's just a matter of, it's really a matter of empowering your people. We have ambassadors, when people come on board, there's ambassadors that get buddied up. Yeah, somebody takes him through the whole thing, we send out T shirts, they've got to create a video of themselves, do that, send it out to the company. And so just things like that, you have to work at it, you definitely have to work.
Maren Kate 15:37
So for just switching it a little bit, I'm going back to what you said a little earlier about how you could have grown faster in the beginning, now that you're at the stage where you're doing half a million a month in recurring revenue, have you, I'm sure you've been approached, but have you considered raising capital to tender 100x that? How do you guys think about that?
Dave Nevogt 16:00
You know, it's one of those things similar to advertising, it's like, if we were guaranteed a profit from advertising, we would throw everything we had into it. But really, we haven't, we don't know that raising $100,000,000 would increase our growth rate substantially? So that's a risk that we just haven't.
Maren Kate 16:29
Okay, so it's like you don't know that a dollar turns into three over six months?
Dave Nevogt 16:34
Yeah, based on raising capital. And we don't know, at this point, money is not our limiter. Like money is not the main thing. The limiter is just the market size, and being able to sell and convert new customers into paid customers and being able to attract those customers effectively. So if we could attract more customers, or potential customers, and we had so much demand, but we've been pretty stagnant on the attraction side for the past, say year, two years.
Maren Kate 17:16
What is your competitive landscape look like? Who are you competing within this? Do you think it's because other companies are taking market share? Or, people aren't aware that this is a solution?
Dave Nevogt 17:27
I think part of it is that people aren't aware that it is a solution. Or maybe the solutions exists but that the markets not fully developed yet. As part of it. But I think also, just in general, time tracking, we're already I would say, one of the top, I don't know, top 10 Time Trackers in the world, which is great. And we're already there, but we're at $5 million, or $6 million a year, that's pretty small. It's like project management software is much bigger, right. There's some markets that are just a lot bigger than then what we do.
Maren Kate 18:19
Okay, so I guess my last question on that, and the kind of 5 to 50 side of it is, what has been the most successful growth hack that you've ever tried for Hubstaff?
Dave Nevogt 18:29
Most successful growth hack? That's a good one. I don't know. I don't have a great answer for that. Things have been so steady. I'll say this, the main thing is that letting people try the product for free has been the main thing. I guess that seems so obvious. But the thing is, we just have learned people just don't want to talk to us. People don't want to talk to a salesperson. We sell a small businesses, the founders are very busy, and they're running around, they're the type of individuals that have got a lot going on, and they don't know how to solve it all. So our job is to solve it and the software to do that. So letting them come in and try the software and in making that process as easy as possible, I guess would be the main thing because people don't want to talk to us. They don't want us. They don't wanna be sold to setting the meetings. They don't want set meetings, that kind of thing.
Maren Kate 19:35
Okay, cool. Okay, final three questions. So what is your favorite book or podcast from the last year? And this could be professional, it could be just for for kicks. What really stood out to you if anything?
Dave Nevogt 19:49
Yeah, so the book it's not it's not a new book, but it's called The 80/20 Principle. And I just am a big believer in that.
Maren Kate 20:04
Oh, yeah. 80/20 principle. It's Richard Koch, right?
Dave Nevogt 20:08
Yep, that's right. Oh, yeah. That's kind of an eye opener. Yeah, that's kind of my favorite principle in general. So, yeah, that would be my answer there.
Maren Kate 20:21
Okay, what about, what is a business tool that you couldn't live without? And you already mentioned Slack. And a lot of people say Slack, but what what would be second up to Slack, especially in running your remote team?
Dave Nevogt 20:32
So remote team, you know, it's 100% project management software. So we have our own internally, it's called upset tasks. But any project management tool is the main thing documentation, documentation, communication, communication, Publicly communicating and documenting stuff, skipping email, that's number one, blueprint tasks, that allows you to do all that stuff.
Maren Kate 21:02
Yeah, processes. I agree. Okay, so then for the founders who are listening, who are somewhere between that 5 to 50 person stage, what's the best piece of advice you've either received or got? That you could you would share with them.
Dave Nevogt 21:18
So what I would say is, just don't get, it's a very difficult balance, but I just see a lot of smart people basically invest a lot of time and effort and energy for years of their of their time into an idea that is just a little bit off base. So the main thing for us is, I would make sure that you had a good way to find your users and potential users, before investing a ton of resources into product, then I would make sure that you talked to them and understood their pain points, and had them use the software before you start building because it's really easy to have the vision in your head, but customers have got to have it in theirs.
Maren Kate 22:14
That's so true. I actually find myself constantly having to pull back from that exact thing where I can just like be in product mode, and then not actually go out there and be like, how are we acquiring users? So that's a great piece of advice. Awesome, Dave, I really appreciate this. How can people reach you? How can they find Hubstaff?
Dave Nevogt 22:33
Yeah, just hubstaff.com is the domain. I'd love to have you guys by start trial or or use a product. We have a free plan, or dave@hubstaff is my email address. And that's really the best way to do it. I've got a great growth story on our blog. So a lot of good blog posts about this kind of stuff.
Maren Kate 22:59
Yeah, and I'll link to that in the show notes, too. I saw a great article. I just read a great article you wrote on content writing and how you can kind of outsource part of that, which I totally agree with. Awesome, Dave, thank you so much. hubstaff.com And yeah, awesome. Have a good one.