David Pohlmann, is the CEO of BillBee, a German-owned firm that develops and sells cloud-based software to help small and medium-sized eCommerce businesses handle their orders, inventory, and processes more efficiently. It integrates with a wide variety of channels, including online marketplaces, retail stores, payment processors, shipping companies, and fulfillment houses, allowing all staff members to handle evesrything from document creation and payment reconciliation to label printing and customer correspondence.
A CEO’s Journey
Billbee was founded as a GmbH (Gesellschaft mit beschränkter Haftung or company with limited liability) in January 2015 by John Krause, Chief Tech Evangelist of Billbee. Initially, it existed as a side hustle. The first lines of code date back in 2009 when it used to be a community-driven tool below the radar with no economic interest. David met John in late 2015, almost a year after he has incorporated the company. David started as a freelancer working for Billbee in January 2016 because he saw a huge potential in the company that’s absolutely underrated in terms of brand, popularity, pricing, and revenue. After quitting his corporate well-paid job in October 2016, he became the company’s first official employee.
Growing the Startup
While John works the tech and product guy, David focused on growth and revenue as head of business development. Even after his appointment as CEO, his daily tasks haven't changed a lot. Initially, Billbee had a conservative growth, enough to pay themselves a salary. In 2017, they hired two more members and grew to six people in 2018. Although they didn't have a clear vision on being a multi-billion-dollar startup getting acquired for a million amount, they somehow felt they might turn into something bigger, from being a small business and side hustle.
Growing a team from 20 to 40 employees was so fast that he didn't even notice. At the end of 2020, they were just 20 and now they have doubled a little more than a year. It was even more extraordinary to go from eight or ten people to 20 because he has to define teams, structures, and processes and not everyone is live-hacking the code on the production system.
David said he really enjoys the bootstrapped life. In 2016, Billbee received 20 percent grant from the local government which covers their salaries. This was some little help, but there;s no equity involved and they are trying hard to defend against investors and potential VCs (venture capitalists).
When approached by VCs, David said they are not actively raising money and also not passively raising money. But sometimes, if they find some of them interesting, they see what others could offer in terms of knowledge and experience.
While David doesn’t hate or find it negative to be a VC-backed company, there are few cases where it's actually necessary and it makes more sense. He added that Billbee is just in a lucky position, not needing it at the moment. They could use any of those money to get to some kind of hyper growth, but they are happy with how it is now with the growth rate, profitability, and happy employees—things that matters in the end.
David and his team offers Billbee to micro and small businesses. They have over 15,000 active customers, most consisting between zero to ten employees.
Billbee had 450,000 MRR (monthly recurring revenue), so it's five to six million ARR (annual recurring revenue) roundabout and majority of it, 90 to 95 percent is pure SaaS software revenue. They also generated a small amount from commissions from third party providers.
Since 2016, Billbee has always grown 100 percent until 2019 when growth was 60 percent year over year. In early 2020, Covid came in and brought fear to the company, not knowing how this would impact the business. But since it’s based in e-commerce, it turned out that that pandemic became a blessing in disguise and an accelerator for them, growing more than 100 year-over-year. Billbee crossed one million revenue in 2019, two million in 2020, and 4.5 or almost 5 million in 2021.
One of the one of the biggest decisions David and his team had was to be proud of the product and to know the value of the product. While most companies start with a pricing way below what it's actually worth, they had a big price increase last year and almost doubled the pricing for all existing customers. This resulted to revenue uplift of 80 to 90 percent.
He also added that while starting low is fine, startups should be brave and be encouraged enough to increase prices even on your existing customers if they have a good product. He also echoed the words of Patrick Campbell from Profitwell, who stressed that one should never ever do any grandfathering on old pricings and this is what they did since then which turned out good for Billbee.
David attributed the company’s consistent growth rate in the last two years. Billbee is also more of a conservative company when it comes to planning and targeting. Even if there's no Covid or price increase in the coming years, they are growing conservatively, calling it “happy growth”—growing profitably with happy employees and happy customers, instead of doing everything to grow as fast as they can. This is also one of the reasons David thinks Billbee might not be a good fit for any VC.
Developing the Work Culture
David finds it funny for people to think that the 30-hour work week is the big thing but in terms of culture, processes, difficulties, and challenges it brought to a company, getting from an offline or on-site company to 100 remote was much bigger change than cutting hours by 25. Billbee didn’t start as a 100 percent remote company. He and John lived 80 to 90 kilometers away from each other and the startup was growing on these two locations. When they grew to 10 employees, they split the team to the two offices, roundabout, at the end of 2019. Before the end of 2019, they hired remote employees so even before Covid came in, they recognized that this would lead to some kind of two-class employees—employees in the office who talk to each other every day, and those remotely working.
They felt sticking to this hybrid approach would be a problem, but then Covid came in and everyone was sent to home office. This somehow solved the problem of having two-class employees. Later on, they decided to become a full-swing remote company. At the same time, they felt the pressure to attract people, as a company that doesn’t get a lot of media attention due to its bootstrapped nature. They believed the only thing the only way to do it is become an awesome employer but “What makes an awesome employer?”
They came up with the idea of cutting the full-time work week hours. While Germany and UK have 40-hour workweek, they took inspiration from Microsoft in Japan that introduced the four-day work week. They combined the 30-hour workweek with a 100 percent remote work because they don’t need the unproductive things like watercolor talks, having coffee together, driving to work, driving back home, etc. Aside from more flexible working hours, they also have this rule of no meetings after 2 p.m.
After setting a trial period to work as a 100 percent remote team, with 30-hour work week, after just a couple of months, they felt it was working and productivity is at least the same with higher employee happiness, higher motivation, fluctuation is lower, and onboarding is faster and easier because they don’t have to hire that fast no one left the company. In October 20, they decided to stick to it, change contracts, and cancel all offices.
One of the greatest lessons David has learned is to be brave. They tried to have radical decisions in the past such as cancelling one key feature of Billbee which was heavy in development and support but low in revenue, and increasing the pricing. He thinks it's always good to be brave because only big things, big decisions, big impact, lead you to big changes.
Best Advice for Startups
David reiterated Patrick Campbell’s advice of avoiding grandfathering. It's very practical and very operational it's an easy one. Another one is to focus. In the past they started setting goals for themselves, for the teams, and for the team members, but they found out it's hard to follow if one does not focus and has too many things in parallel to work on. Now they try to really be as simple as possible, pursue less goals and objectives, and focus on a few things instead of working on too many good stuff.
This article is a summary of the SaaStock podcast with David Pohlman. See the full Podcast on Youtube below.