“Should I build this idea into an app?
“Should I take this investment money, or should I bootstrap?”
“CRAP!! One of my early employees just quit. What now!?”
J.P. Werlin has been there.
As founder and CEO of PipelineDeals, he’s grown a SaaS company from nothing to a profitable business with 3,000+ users.
These days, JP serves as a mentor for many early entrepreneurs.
He was gracious enough to share some of what he’s learned with us.
If what follows feels like a lightning round of expert-level advice, it’s because that’s what it’s like to talk with him.
Full of energy and opinions, he shared story after story about his journey building PipelineDeals.
Here are our top takeaways after talking with him.
First, if you want to build a sustainable, profitable business, bedrock principles are essential.
Pipelinedeals set three core principles early on that have guided the company ever since.
True to form, every piece of advice JP offered during our interview aligned perfectly with these three ideas:
#1. Hire behind the revenue
In other words, be profitable. Don’t hire until the money is there to cover the additional payroll expense.
#2. Head down between milestones
Running a startup means there’s far too much to do. The danger is that you’ll get pulled in too many directions—and fail to make real progress anywhere.
For JP and his partners, “head down between milestones” meant they picked a milestone to work toward, then ignored everything else until they hit the target.
Only then would they reevaluate priorities.
#3. Run up the stairs
That is, do things the right way the first time.
“It might cost a little more or take a little longer,” JP said. “But not taking the easy way out means you have a better product for the future.”
When you’re running an early-stage startup, those first few customers are everything.
Forget the term “customer-centric.” Be customer-obsessed instead.
“For us, it was like, this person is paying us money. They’re one of the few people in the world doing that,” JP said. “That’s our lifeline. If you have a high probability of drowning and you’ve got your hands on a lifeline, you hold on to it tight.”
For JP, “customer-obsessed” means doing anything and everything for the people who are paying to use your product.
That’s the only way to protect your revenue, which was—for JP—the only financial protection he had in the early days.
“There was no trust fund for me,” JP said. “That revenue was how I paid the bills.”
It has become common for companies to bury their phone number three or four clicks deep on their website.
For big companies, maybe that makes sense. They get hundreds or thousands of customer service requests a day.
By driving support requests through contact forms or email (instead of on-the-phone support reps), Amazon and Google can significantly lower personnel costs.
You’re running an early-stage startup.
Put your phone number the homepage.
Doing so gives anyone who’s interested in your product access to help or information whenever they need it.
“Stop trying to be Google or Amazon,” Werlin said flatly. “People still value human connection.”
The VC driven culture has made it seem almost all software startups are infatuated with revenue, user numbers, and (especially) growth rates.
“We live in an environment where profit isn’t really valued at all,” JP told us. “That’s especially true with companies backed by angel investors.”
In JP’s opinion, it’s time to get back to the fundamentals—to building sustainable, durable, profitable businesses.
“People want to know if they have product-market-fit,” JP asked. “Well, when your product solves a problem in a way that drives revenue business, you’re getting close.”
We hear about Dropbox. And Facebook. And Google.
Tremendous success stories. Massive hockey stick growth.
Also, total anomalies.
“Hats off to those guys,” JP said. “But what happened to them isn’t the experience of 99-percent of entrepreneurs.”
A hyper-focus on success stories tends to cloud the vision of many early entrepreneurs, JP said.
This is a form of survivor bias—the tendency to focus only on the successes and to ignore the many failures that are common for entrepreneurs.
It’s pervasive in the startup space.
It’s also the cause of much heartache for many entrepreneurs who find the process much more difficult than they’d imagined.
“I think most entrepreneurs don’t really know what success as an entrepreneur means,” JP said. “They have this all or nothing mentality. They want to be Dropbox. If they’re not, they think the effort won’t be worthwhile.”
So, if you’re not trying to build a multibillion-dollar behemoth, instead of focusing only on growth, JP recommended asking:
…which takes us to…
Taking VC money might be the right choice for your business.
But it comes at a cost.
“I think taking venture capital opens up a whole world for spending a lot of money wastefully,” JP said. “I get why they do things that way, and maybe I’m wired differently, but I don’t enjoy wasting money.”
The failure rate of early stage startups is a matter of debate. But it’s at least 50%. And perhaps more like 90%.
That’s just businesses who return 1x for their investors.
Well, there’s a reason they’re called unicorns.
You have to realize: asking people to adopt a new software is a big ask.
“Asking a human being to change their behaviour is a big deal,” JP said.
Adoption of your tool, however, is the make-or-break moment for your business.
“Getting users to adopt your product is the main event,” JP said. “If you can’t get people to change their habits, you’re going to churn customers.
Adoption—then—is the key moment that determines if a product gains traction in a market.
“This is the real determiner of traction for an early-stage startup,” JP added. “Do new users convert into paying users? Or do they leave?”
How should you choose whether or not to build a product?
Choose based on the problem it solves.
“I remember when my friend said, ‘my customer list is my gold,’ and from there I knew we had to do a CRM product,” JP told us.
“We build a tool that helps businesses grow. That’s what gets me up in the morning.”
Whatever problem your product will solve, make sure it’s one that inspires you.
You’ll have to sell your product to someone. Which means you’ll need to get good at pitching.
For JP, in the early stage of PipelineDeals, he negotiated using two sales levers:
Usually, he’d discount money.
“You can give away one or the other but not both,” JP said. “I would always discount to secure long-term revenue, ensuring a bit more runway for the business.”
In the early days of PipelineDeals, there were two partners and one developer.
And then, the developer quit, taking with him almost all the institutional knowledge he had about the product.
“To be honest, I thought the business was going to die,” JP told us. “I remember thinking, ‘Well, I’ve guess I need to find something else to do.’”
For several months, PipelineDeals had no technical support staff, no way to make changes to solve customer issues, and no way to improve the product.
It was a crisis. But, one they survived.
It helped that the team had a habit of “running up the stairs.”
“You can argue about what it means to have a ‘minimum viable product,’ but is it really viable if it’s not stable?” JP asked. “For us, we had no technical debt. The app was stable and well-architected. Even when we didn’t have a developer around, it ran just fine.”
But more than anything, PipelineDeals survived by leaning into the principle that seems to define JP’s approach more than any other:
“It is an obsession for us,” JP said. “We set the support number to route to our personal phones so people could always reach us. And we just took care of them.”