These Founders Failed Twice And Burned $10,000 to Take Their Talent Marketplace to $250,000 in Revenue
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Originally Posted On: https://bootstrappers.com/these-founders-failed-twice-and-burned-10000-to-take-their-talent-marketplace-to-250000-in-revenue/
Say you just received venture capital to take your startup to the next level and you’re looking for the best coders you could possibly find. Experts to help your business achieve the explosive growth your investors expect. Money is no object, only time.
Acting fast, you find a website that promises to match businesses like yours with great coders in a matter of days. They give you a list of hundreds of coders rated on a five-point scale, but the best one is only 4.3 stars. Maybe those few bad ratings bringing down their ratings are flukes, but how can you convince your team this coder is “the best” with only a 4.3-star rating?
Karthik Sridharan guessed that for many companies looking for top-tier freelance developers in a hurry, simple talent marketplaces covering all skill levels wouldn’t cut it. He nearly went broke testing that hypothesis but has a lot to show for it now.
After two failed tries that burned over $10,000 of his own money, he and his friends successfully created Flexiple, a premium network connecting freelance pro-grade developers and designers to startups. They now connect clients and developers from all over the world to generate $250,000 revenue as of August 2021.
Here’s how this former investment banking analyst out of India made a plan to escape the rat race and executed it successfully.
Escaping the Rat Race
Karthik Sridharan is calm and matter-of-fact with a dry, deadpan sense of humor. It’s easy to think you’re speaking with someone much older because he knows so much about his field and speaks confidently about what works and what doesn’t. Here’s how his story goes:
In 2015, Karthik was studying for his MBA at the prestigious Indian Institute of Management, Ahmedabad. He had just left a position as an analyst at JP Morgan he’d held for the past three years in London. He didn’t intend to go back.
“I was miserable,” Karthik says. “I didn’t like investment banking so I went to get an MBA for a change. But when I got in it was still all about job placements. I decided right then that I did not want to get back to the rat race again.”
Resolute on his new path, he started researching ideas for businesses he could start alongside his studies, putting them into his special “idea book”. He’d invite his friends over to critique his ideas. During that first year, he slowly developed a couple of core concepts for his future business.
“I liked the B2B space because companies will pay if you give them the value,” Karthik says. “You need fundraising for B2C because customers usually need to see a fleshed-out product first and often quite a few discount promotions if they’re going to buy. I also wanted to make a sophisticated product that was poised for scale.”
Eventually, he settled on an industry that he and his friends knew a bit about already. One that was quickly becoming an issue for startups: developer hiring.
Third Time’s the Charm
Through his connections in India, Karthik was well aware of hiring difficulties in the local tech startup scene.
“It’s usually tough to find devs with the particular skill set you’re looking for, and typical hiring times are four to six months with all of the vetting they require,” says Karthik. “When startups want to scale fast, they don’t want to wait that long.”
To begin, Karthik first reached out to a classmate who worked at Amazon and Adobe named Hrishikesh Pardeshi who joined at the end of 2015. Confident that this idea was a money maker and wanting to spend more time on it, Karthik then decided to kill two birds with one stone. He requested that his professors let him structure his MBA projects around the new company and his MBA program administrator agreed.
Karthik’s second co-founder was another “batchmate” of his named Suvansh Bansal who joined one year later at the start of 2017. After working with the team for a short time, he came on as a founder and the first official launch of Flexiple happened later that year. Karthik feels his business would have been nowhere near as successful without his co-founders.
“This is not very fancy, but the biggest contributing factor to how successful we have been are my two amazing cofounders,” says Karthik. “They showed me you don’t need to have the same skill set to run a business well. In fact, it is better if you don’t.”
But things were not easy at first. As first-time entrepreneurs, Karthik claims they made a couple of major mistakes when creating their service. Mistakes that cost $5,000 apiece and resulted in two projects being completely scrapped. Both in the same year.
“We were trying to build a very sophisticated product because we were focused on pricing and scale,” says Karthik wryly. “Because, you know, it was very obvious to us that we were going to make millions of dollars. But the problem was people simply didn’t use it.”
Karthik believes they failed the first two times because they tried to make the product complex before they knew the weak points in their business.
“We first thought talent matching alone was the issue so we tackled that in what seemed the obvious way. We gathered requirements from companies and then screened a list of freelancers against those,” he says. “We wanted screening freelancers to be as automated as possible so we’d try to run an algorithm for everything, but it turned out that wasn’t our biggest bottleneck. When our contractors didn’t know the brands they would be working with by name, they wanted to interact directly with the people in charge, not an algorithm.”
Because people didn’t want to use the platform, adoption was sparse and Flexiple couldn’t offer the service they wanted.
“We just simply didn’t have enough people on both sides to match,” says Karthik. “Once the scale reached a higher level then talent matching became important, but we realized we needed new tactics to reach that scale.”
So in mid-2017, the team ditched the tech and started running their business completely off cold outreach and Google Sheets. Quickly, they started seeing growth.
“Build a Solution That Solves a Problem First, Then Scale”
“In my opinion, there are two main types of tech startups,” says Karthik. “‘Tech-enabled’ where your tech enables you to scale (that’s Uber, Airbnb, etcetera) and ‘core-tech’ where technology is part of your core offering. These are businesses like Dropbox or Postman. Many startups are the former but confuse themselves with the latter.”
Karthik believes this confusion is the root of many technology startups’ failures as well as his own.
“When this confusion happens, businesses invest way too much time building tech to solve future scaling challenges when they should be focusing on building their business,” he says. “Businesses should only add technology into the process when manual efforts have become a bottleneck. Otherwise, you are trying to predict the bottlenecks, which hardly ever works.”
So with this philosophy in mind, the founders stripped all the technology away and started a cold outreach campaign to freelance developers on LinkedIn. Instead of matching them on client requirements they instead asked what skills the freelancers had and listed them all out on a Google Sheet. Then they ran the sheet against client requirements.
“That was pretty much our first $100,000,” says Karthik. “We made it look good, but it was full of bandaids. Once we got through the first $100,000 we knew that we wanted to build that product. The good part of that was now we could see new bottlenecks that would keep us from reaching one million dollars.”
After a successful first year of nothing but cold outreach, the Flexiple team realized the product wouldn’t scale much more if they remained within India. That’s when they got serious about their marketing.
“We set up a lot of inbound pipelines, put heaps of money into SEO, and became active on relevant communities online until we hit 200,000 hits on our website monthly,” says Karthik.
Karthik thinks that time spent on SEO and social media was crucial to getting the industry chattering about Flexiple. He’s particularly proud of how he went about it and thinks it’s a model more bootstrapped startups should pay attention to.
“All bootstrapped founders need to be their own media companies,” he says. “We cannot rely on major outlets to take care of these things. I created my social media completely to boost branding for my company. Plus, I got a lot of feedback on what people like and what people don’t like about my products.”
Flexiple also got very creative about their inbound marketing, creating free tools helpful to the startup community. One of the tools that did particularly well was called Scale. It lets founders access hundreds of free, modifiable illustrations so they can save money on graphic design.
For the next few years, the business grew steadily, though it had more than a few close calls.
“Multiple times in the first couple of years I thought the business might fail,” says Karthik. “The downside for a small, bootstrapped startup is if even one customer leaves you in the early stages it leaves a real dent. It took a while to get out of the survival stage and we were only thriving in the last year and a half.”
When Karthik says “thriving” he’s being modest. After three years of steady marketing, Flexiple hit $700,000 in revenue. Then, in a matter of months, ARR hit $1 million. Things started growing at light speed from there. Flexiple went from $90,000 per month in January of 2021 to double that at the end of May. In August of 2021 Karthik claims to have tripled it with the aforementioned $250,000 in one month.
After nearly five years of constant work, the Flexiple co-founders today boast a remote team of 22 people, the majority of whom have never met due to the pandemic. They employ developers in more than 30 countries and service mostly American and Indian companies along with a sizable number from Europe and Australia.
“How We Select the Top 1%”
This section’s title is prominently displayed on the Flexiple website today. The platform’s key selling point is its ability to connect founders with top-tier coders in as little as a week. And they’ve only gotten better at it.
“Finding the right person in the quickest time possible is huge for startups today,” says Karthik. “Usually timelines are pretty steep, especially if you have funding. The impetus is on the hiring team and the market has become very competitive. We’ve created a system that enables startups to focus on what they want to do without worrying about the quality of their developers.”
To assure that stamp of quality again and again the team has developed an increasingly in-depth vetting process for their developers.
“Our first step is our curated recommendations database,” says Karthik. “We get freelancers to fill out a detailed form regarding their experience and based on the form we reject the first round. Next, we have an introductory call to make sure what they said in the first round is true and they are good communicators. Next is a more technical interview. We have our new developers call into a network of our current devs we’ve hired to help grill them on specifics of their field. Finally, they need to get a reference from a past client. They do all that and we have a successful background verification.”
With a viable product increasing exponentially in size by the day, Karthik is preparing Flexiple for the next leap.
“Our focus now is to reach $15 million ARR. To get there, we want to start by building a stronger senior team,” he says. “We think everything else is going well. All of our clients are fully inbound with no paid marketing. Our major growth has been through our current clients referring others. That is the evidence we are doing good work.”
Why Karthik Is Happy He Lost That First $10,000
Had he not been worried about running out of money after his first two attempts at a product, Karthik strongly believes Flexiple, as it is today, wouldn’t have happened.
“Throwing money at problems does not solve them,” he says. “I think bootstrapping forces you to not make multiple stupid decisions. It keeps you in check. What often happens to VC-backed startups is that people talk about them before they even achieve anything so they can’t always see what’s going wrong until it’s too late.”
Lessons For Other Founders in the Space
Karthik believes he has stumbled across a formula for scalable businesses that industry experts already know and new founders ignore at their peril.
“My biggest advice to other founders is to build a solution that solves a problem first and then use tech to scale it.”
“My biggest advice to other founders is to build a solution that solves a problem first and then use tech to scale it. Never build features for the heck of it,” he says. “The way we did it was by making all solutions manual for a month, then we’d prioritize it and implement an automated solution. VC-backed startups can go the other way but bootstrapped ones cannot.”
He also emphasizes the importance of marketing as a way to expose roadblocks in growth
“If your marketing does well, then the product deficiencies will be obvious and get solved quickly,” he says. “Without a consistently growing business, you simply will never be able to see the things preventing you from becoming a larger one.”
Regarding monetization, Karthik encourages startup founders to be ruthless about generating value for their businesses or else risk losing their validity.
“I suggest people always do things that make them money,” he says. “Us founders find it tough to ask for money for things we’ve built, but we need to figure out our value. Keep doubling your price until people are really unhappy. Until people actually pay you you haven’t validated your idea.”
Finally, he recommends founders keep their vision small and grow it with their product.
“People talk about 10 and 20-year visions, but it always starts with one week, then one month, and then six months,” he says.
As boutique talent marketplaces are beginning to proliferate in the tech industry, there are many different perspectives on what works and doesn’t work for scalable growth. Karthik’s story shows how big picture thinking at the early stages of growth can result in huge success down the line despite major setbacks. It’s also a great allegory for life. Facing small daily challenges is how one eventually faces enormous challenges and succeeds.