Interview with CEO Peldi Guilizzoni about the growth of Balsamiq [Bootstrapped, profitable, and proud]

Did you ever consider taking money from investors? Why or why not?

I only considered it briefly, but not until 6 months after launching. To learn what it takes to do it all meant I had to first learn what “it all” is. I suppose I was also trying to prove to myself that I could do it. I made sure to choose an idea that was small enough for me to do alone and went with it. I was also absolutely terrified that it wouldn’t work (you know how you read that “98% of all startups fail” all the time), so I didn’t even consider asking anyone else to join me in my crazy endeavour.

In January it became apparent that I needed to hire someone to help with development while I focused on customer service. I was afraid that bringing someone on would mean another family unit would depend on my actions for income, so I considered raising some funds to get a peace of mind about making payroll, even if it meant having to answer to investors about my decisions. I wrote to Dharmesh’s Shah asking for advice, and he talked me out of it. As usual, he was right. Revenue shot up that same month and now we have enough in the bank to pay for our salaries for 5+ years. We also sell enough each month to cover payroll for another six months or so. Thanks so much Dharmesh!

When did you start to feel like Balsamiq was a success?

For a very long time the feeling was of pure incredulity: how could such a little tool make so much of a splash? We still largely feel that way… in fact I hope we never loose that feeling! We still get excited and yell “yippee!” every time our ‘virtual cash register’ goes “ca-ching!” after each a new sale. :)

Personally, I am only just starting to digest what’s been going on a bit more. In November, Balsamiq was reviewed on ReadWriteWeb, which got syndicated by The New York Times. I also got a call from Leo Laporte and Amber Macarthur for an interview on the Net@Night podcast. I remember feeling like I was the next “Joe the Plumber,” thrown in the limelight for my 15 minutes of fame. But then the attention didn’t really go away, so I guess we must be doing something right. I mean, come on, I’m getting interviewed by 37 Signals, that is just beyond ridiculous! ;)

Who are your advisers and how did you join up with them?

Ha! My advisers are the best, here’s a list with photos.

My former colleagues might not know this, but I spent many years studying their every move, trying to learn from them: I loved what they did and how they did it. When I went solo, I asked some key influencers if they’d meet me once a month over Skype to continue to share their knowledge with me. They all very graciously agreed, and I couldn’t be luckier.

Michael, Sarah and Karen are former colleagues of mine. Michael and Karen are product manager / business types, Sarah Allen is more technical and one of the people I look up to the most in life. (She is now a Ruby developer and making some waves already!) Jason is a long time friend with lots of startup experience and Rob is a good friend and a wizard of the mysterious world of marketing/advertising/branding.

I’m really looking forward to our upcoming first ever Advisors Dinner, a finger-licking crab dinner in San Francisco, and I can’t wait!

You wrote you are trying to build what DHH calls “a little italian restaurant on the web.” Why does that appeal to you more than other options?

I never really understood the concept of building a company with the goal to sell it, or why one should have an ‘exit strategy.’ I just don’t get it. If you’re doing what you love, why would you want to ‘exit’? Maybe it’s because I am Italian, but I see nothing wrong with a business staying small in the long run. As long as we do great work, are happy to do it, and make people happy with it, I see no reason to change anything.

There’s this idea that you want to get rich quick so that you can “do whatever you like” once you have the money. As Guy Kawasaki would say, that’s bull-shiitake: what’s wrong with doing what you’re passionate about from the beginning, and being able to earn a comfortable living while doing it?

You’ve been open about sharing your revenue numbers. Why? What impact has sharing this information had?

I did it mostly to gain my prospective customer’s trust. Would you buy software from a one-person company knowing that there’s a 98% chance that it won’t stay in business long enough to take your support call? Sharing my numbers was a way to assuage that fear.

What I didn’t expect was the enormous amount of attention those blog posts gathered. I may have had to do with timing: the economy is in shambles, people fear losing their jobs and thirsty for good news. I can see the appeal of a story about one guy with a laptop making a good living with his little tool. It’s the same as when we hear about all the blockbuster iPhone developers.

You say you’re “in this for the long haul.” How does that impact how you run Balsamiq?

One thing that I learned from this Balsamiq adventure is that long-term-value trumps any big launch, buzz, first-mover-advantage or any short-term marketing promotion. Our mantra is “life’s too short for bad software,” and we are committed to doing whatever we can to help people design better software and websites. It will take time, and software features are only a small part of it. But this is what we care about and love to work on every day, so why rush it?

How much do you plan out where you want to go in the future?

I’d say nine to twelve months, but I’m always ready to adjust priorities as we go. We don’t have firm deadlines; it’s one of the perks of not having investors breathing down our necks. As long as we do good work at a good pace, I’m happy. I plan on spelling out my current “grand vision” for Mockups on our site soon. It’s a 9-12 month project to complete. After that, we’ll see. We will obviously continue to collaborate with our awesome customers on where the product should go.

We have a lot of ideas for future products, and customers send us great new ones all the time, so we’re not worried about running out of things to do.

What has surprised you most about being an entrepreneur?

I continue to be amazed at how successful Balsamiq is and how fast things are going. In the revenue forecast I made before starting, I expected to have a total of 150 customers after 2 years in business…we just passed 5000 in less than 11 months.

A huge surprise was the demand for the Desktop version of Mockups, something I didn’t plan on selling at first, and now, it accounts for 77% of our revenue.

The media attention has been very surprising as well. I’m sure there are hundreds of successful micro-ISVs / Indie development shops, and small companies who have been doing this for a long time, right?

Last but not least, I am amazed at the incredible community of people that formed around the product. They cheer us on via Twitter and blogs, and help us design each new feature via GetSatisfaction. It’s really touching and quite extraordinary. We are so thankful!