Reinventing E-CommerceThe BigCommerce Story (So Far)www.bigcommerce.com

Presented by Mitchell Harper, co-founder, BigCommerce

A Bit About Me

● 29 years old, born in Sydney

● Co-founder of BigCommerce

● Technical background but now I focus on running the business and strategy

● Always entrepreneurial - sold my first company at 21

The Early Days2003 to 2008

It All Started Here...

No Wait, It All Started Here...

With 2 Entrepreneurs Who Learned to Code

Me (Mitch)

Eddie

Initial Idea (2003)

● First browser-based website editor (WebEdit)

● Point-and-click editing of static web pages

● Built over a 3-4 month period

● We both wrote code for 18 hours a day

This Was WebEdit!

Initial Business Model

● Perpetually licensed (i.e. one-time payment)

● $197 USD per license, all done online

● Email support only with regular updates

Initial Results

● About $1M in sales in the first 12 months

● Bootstrapped from $10,000 on credit cards

● Almost 90% profit! (free rent, low costs)

● Worked 10am-4pm then went to the beach

We'd Built A Great Lifestyle Business!

More Ideas...

● "We like building stuff, so let's release more products that will help our customers!"

● Email marketing software

● Knowledge management software

● Shopping cart software

More Revenue...

From 2003 to 2008 We:

● Grew from 0 to 10,000 customers

● Grew from $0 to $6.5M revenue

● Grew from 4 employees to 15

● Opened a small office in the U.S.

● Great, but the market was changing...

Lesson

● You either need time or money to build a startup - this is your leverage

● Hard work and a willingness to learn and change can make up for mistakes

● Watch your cash at bank andalways have at least 3 monthsof operating cash at hand

Saas2008 Onwards

A New Opportunity

● Customers loved our suite of software

● But you needed to be "techy" to install and maintain it, which was a pain

● Around 2008 Saas was gaining huge momentum: Google Apps, Constant Contact, WebEx, Salesforce, etc

● They were all easy and ran "in the cloud"

Installed Software Is Hard For Customers!

Perpetually Licensed To Saas

● Over 2 years we transitioned our business model from perpetually licensed (one-time payment upfront) to Saas (paid every month)

● This changed everything

● Our focus went from building more apps to building a single killer Saas application

Initial Saas Strategy

● Turn two of our perpetually licensed products into Saas versions:○ Email marketing○ Shopping cart

● See how they go over a few months

● If they work, go hard - if not, keep doing what we were doing

Our A/B Approach To Testing

● Launched our email marketing software as BigResponse (Saas)

● Launched our shopping cart software as BigCommerce (Saas)

● Set out to see how they would do over a 6 month period

Well Hello, BigCommerce...

● BigResponse gained about 700 customers in 6 months - not bad

● BigCommerce gained about 5,000 in the same time period - great!

● Clearly, there was a need for Saas e-commerce software for SMBs

Lesson

● Be data driven - if you can test something quickly and cheaply, do it

● Don't rely on your gut for decisions that are easy to test

● Understand Saas metrics (LTV,CAC, conversion rate, churn, etc)

Lesson

● Don't be tied to a single business model

● If what you're doing isn't working, change it

● Fail early and fast but keep costs low

● It's OK to have multiple irons inthe fire and to test different ideas

"Will This Work?"

● Now we wanted to prove the concept at scale - "can we grow this thing to over 10,000 customers in the next six months?"

● If we can, we know we're on to something

● If we can't, we'll try something else until we get to the outcome we want (big growth)

10,000 Customers In A Year

● We grew BigCommerce to 10,000 customers in about a year, completely bootstrapped

● We were (and are) growing faster than all competitors in the space

● We kept our focus on building an amazing product that SMBs liked to use every day

Lesson

● As a startup, your biggest differentiator is not your marketing - it's your product

● If you can solve a big problem for your customers they will keep coming back

● Build a product, not a feature thatyou've mistaken for a product

Understand What Customers Want

● All of our competitors focus on providing a better shopping cart - we think this is wrong

● We focus on driving traffic to our customer's BigCommerce stores and automatically driving repeat sales

● Our customers don't want a shopping cart - they want more customers and sales!

● You can enter a market with strong existing competitors if you understand your customer's real pain point and the outcome they want

● Our customers want morerevenue, not an online store -this is a crucial point tounderstand

Lesson

"Cool, It Worked!"

● After hitting 10,000 clients we decided to go hard and go for huge growth

● We grew BigCommerce revenue and headcount 300% in 2010

● We used the $7M/year revenue stream from our old products to bootstrap BigCommerce

Go Big Or Go Home

● In 2010 we decided it was the right time and economic climate to raise money

● We wanted to leapfrog competitors but to grow fast requires a lot of money and a different mindset to bootstrapping

● We also wanted to attract top talent to help run and grow the company

Lesson

● Raising money is neither good or bad - it depends on what your goals are

● It's almost impossible to be the #1 player in a vertical if you stay bootstrapped

● You need to have a huge visionand think differently if youraise venture capital

Venture Capital

● We announced that we raised a $15M series A from General Catalyst in July 2011

● We were already profitable when we raised our series A

● We wanted an operational VC not a "spreadsheet" VC

This Is Larry. He Is Awesome.

● Larry is our investor from General Catalyst and joined our board after our series A

● He has been CEO of numerous companies which he's taken public

● He's a great soundingboard and has deepSaas knowledge

Lesson

● Getting on well with your investor is more important than the money

● Choose an investor that will add value over one that will give you more money

● Your investor should've startedand sold at least one companyof their own

Why We Raised Venture Capital

● We wanted experienced advisors who had done what we were trying to do before

● We wanted to attract top talent - built an amazing 8 person exec team in 6 months

● It gives you more runway to spend for growth and helps you gain huge market share in a shorter period of time

Learning To Scale

● We spent months learning from existing successful entrepreneurs who had scaled their companies to $100M+ revenue and 300+ employees in a short time

● We were diligent in implementing systems and processes in every department so we could hire the right team and double our headcount and revenue every year

Mentors

● We reached out to everyone we knew and found mentors who we met with every week

● Together we discussed our plans and put a strategy together to help us grow from a tiny startup into a bigger company

● "You don't need to see the entire staircase, just the next step"

Our Early Mentors

Ryan AllisFounder of iContact (sold

for $169M last month)

Marc BeneioffFounder of Salesforce ($21BN market cap)

Marc Beneioff"Behind The Cloud"

Their Books Will Catapult Your Startup!

Ryan Allis"Zero To One Million"

Lesson

● Being profitable before raising money puts you in a great negotiating spot

● Talking to other entrepreneurs who have built big businesses can help you see how to get there faster

● You've got to start with a hugevision that other people buy in to

How Do You Cope During Hard Times?

● Get your mental state right - Tony Robbins has a lot of great material on this

● Know your personality type (DISC) and hire a co-founder or team who compliments you

● Use NLP (Neuro Linguistic Programming) or coaching to remove limiting beliefs from your mind and thoughts

Key Points

● Get your product right and everything else becomes a lot easier

● Focus on doing what you're good at, not improving what you're bad at and hire around you to fill your gaps

● Get a coach who will hold you accountable

Key Points

● Get good at understanding numbers - know your cash at bank, spend and metrics

● What you're building right now might not be the idea that works - and that's OK

● Have an end goal in mind - do you want to be market leader? do you want to sell for $100M? do you want to go public?

Key Points

● Before you raise money, learn about VC and how the game is played

● Choose an investor for experience over one that will just give you money

● Don't underestimate the value of your startup and give away the farm to a well known investor - learn how to negotiate well

Have Fun And Enjoy The Ride!

Thanks For Listening!

● Download This Presentation:○ http://bit.ly/techconnectmitch

● Contact Details:

○ www.facebook.com/BigCommerce○ www.twitter.com/mitchellharper○ mitch@bigcommerce.com