In November 2018, PlanGrid, a SaaS startup in Construction, announced they were acquired by Autodesk for $875M. When reading about this kind of huge success for a startup, it’s easy to forget their humble beginnings. When I first met the PlanGrid founders in 2011, during Y-Combinator, the future was anything but certain. Here’s how they got started and made their first $1M in revenue.
Usable Product
Unsolved Problem — The founders had worked in construction and experienced firsthand the major issue with blueprint drawings: every major construction project had to be on paper. “PDF readers could handle the blueprints for something small like a house, but not a large project like a hospital”, said Ralph Gootee, PlanGrid co-founder & CTO.
Differentiated Technology — The technology to handle blueprints at the scale and level of detail required did not exist on the iPad, so Ralph and the engineering team had to build something new. Their technology provided a unique value proposition for potential customers in those early years — blueprints on your tablet — and a headstart on the impending competition.
Hustle — iPads were new and not broadly distributed in 2012. PlanGrid knew they had to supply iPads to their customers along with their software, because almost nobody on construction sites had their own. “Apple restricted iPad sales to one per person, so we’d have to visit multiple Apple stores. We’d buy an iPad, then put on a hoodie and go back in for another”, said Tracy Young, PlanGrid co-founder and CEO.
Customer Satisfaction
Beta Focus — Rather than launching publicly, PlanGrid started with a small beta of 27 users. These users came via the founders’ existing connections in the construction industry. Starting with a low number of users allowed their small team to focus on making each potential customer extremely happy. The tactic worked, as Tracy shared “We converted almost all of our beta users into our first customers. The one or two we lost, we lost on price.”
Customer Feedback — The team’s regular, daily communication with users helped direct the product roadmap and it wasn’t long before customers were expressing their reliance. The app’s rating on the Apple App Store was 4.8/5 and customers would send in quotes like: “I love this. I don’t know what I was doing before”. This kind of feedback from dozens customers, for a new product, let the team know they were on to something big.
Inherent Virality — Regular usage by happy customers made PlanGrid viral. PlanGrid customers on a construction site would show blueprints to others on their iPad using PlanGrid, people carrying huge amounts of paper would want to switch to a tablet and PlanGrid would be quickly distributed across a site.
Staying Lean
Small Team — Keeping the team small kept costs down and became a guiding principle for the company, at $1M ARR and two thousand paying customers on the platform, they had just 12 people on staff. “Being cash flow positive became our mantra. We wouldn’t hire someone unless we had the cash on hand to pay them”, said Tracy.
Operations not Sales — Rather than build out a sales team, costs were kept low by training everyone on the team to handle both demos and customer support. The operations team handled the bulk of the requests but everyone was involved and it meant customers got great support from the people who built the system.
Every Lead Called — Without a sales team or marketing budget to generate leads, every inbound lead was treated to the personal touch. Every signup got a phone call and once a customer was engaged, the team would push for a decision on purchasing. Tracy shared: “We’d call every free signup and ask: if they wanted to buy? If they had all the info they needed to make a decision? It was an efficient sales process and we were ok with a ‘no’.”
Every great company had to start somewhere and your startup journey will be no different. From the great companies that came before, we learn that staying lean while building a product in a big market, that people need and love using, are some of the key ingredients of startup success.
This post is dedicated to Antoine Hersen, PlanGrid co-founder & Chief Mad Scientist.
“Life is short. Take care of the ones you love. Don’t be afraid to try new things. Never do anything that makes you unhappy.”
Thanks to Tracy Young and Ralph Gootee for sharing their story. Thanks to Kaego Rust for their help with this article.
Sterling Road invests in pre-seed B2B startups based in the US and Canada.
Full process here: sterlingroad.com/process.
You can reach me here: ash@sterlingroad.com
