“Profitable and proud” is a new series here at Signal vs. Noise. We’ll highlight tech companies (and others) that have $1M+ in revenues, didn’t take VC, and are profitable. First up: Campaign Monitor, a small software company in Sydney that makes elegant email marketing software for designers and their clients. Co-founder David Greiner tells us about CM’s path below.

How successful is your business? Any numbers you’re willing to share to back that up?

Success is a tricky thing to define because it means different things to different people. From a financial perspective we’ve been very successful. We’re a private company so don’t share any numbers. I can tell you we’ve managed to more than double our revenues and profits every year for the last six years. All without taking any outside investment.

While the financial success has been great, there are other aspects of the business that I would consider more of a success personally. I genuinely still love what I do. I work with interesting, funny people. My wife and I are expecting our first child soon and I can work the hours I want. For me these things are much better indicators of a successful business than anything on a spreadsheet.

You started as a small web design shop and then clients started approaching you to send email newsletters for them. How did you make the switch to selling a product? How much time did it take to build something on the side?

The idea for selling our own software really came out of frustration more than anything else. We were designing email newsletters for a lot of our clients but couldn’t find the right tool for the job. After trying everything on the market, we built a simple app that let our clients manage their own newsletters. All our clients loved it and it created a nice new revenue stream for us.

We quickly realized this was something other web designers would love too. In early 2004 we cut back our schedule a little and built Campaign Monitor on the side. The majority of our days were still spent on regular web design work, but every spare moment was spent building the first version of Campaign Monitor. It took us just over six months from having the idea to launch.

Dave (left) and co-founder Ben Richardson.

Did you ever consider taking on any investors? Why or why not?

Outside investment was never an option that interested us. I think there are a couple of reasons for this. First, we were building something for ourselves, so we already had a good idea what the problem was and how to solve it. Our background was designing and developing for the web, so we didn’t need to hire anyone. Plus, we could fund the whole process with the profits of our consulting business. We’re not talking big numbers here either. It’s amazing what a small team can achieve when you really focus for a couple of hours each day.

On top of this, the first version of Campaign Monitor was deliberately simple. We hosted it on a relatively cheap shared server with the rest of our clients. We spent next to nothing on marketing, and just relentlessly improved the product week after week.

How long did it take you to get the product to a point where it was profitable? How long until you stopped doing client work completely?

After launch we continued to spend an hour or two a day improving the product and talking to customers. By our sixth month Campaign Monitor revenues were already on par with our consulting business.

We’re quite conservative, and waited another six months before focusing on the product full-time. By this time Campaign Monitor was generating more than three times more revenue than the web design business, so we were comfortable making the transition. We didn’t want to leave our existing consulting clients in the lurch, so we created a new company to focus on Campaign Monitor and hired on a new team member to take over the web design business, which is still operating today.

Screenshot of Campaign Monitor.

What is your culture/work environment like? How many hours a week do employees typically work?

Let’s start with the work environment. Making sure Campaign Monitor is a great place to work is one the biggest areas I focus on these days. And why shouldn’t it be? It’s where we spend the majority of our waking lives away from friends and family. Right now there are 22 people that give up their days to make Campaign Monitor as good as it can be. I have a very real obligation to help make this time as enjoyable as possible.

A few weeks back we moved into a new space we’ve spent the last 6 months fitting out. Every team member has their own closed office. We provide free breakfast and catered lunches for everyone. More importantly, the entire team eats lunch together every day. We have a huge common area with a couple of table tennis tables and games consoles. We also get out of the office regularly for social outings like surfing lessons, a winery tour or a game of lawn bowls (we’re going clay shooting this afternoon).

The culture side of things is difficult to define, and is really a product of the people we’ve hired over the last six years. We’re extremely picky on this front, and have turned down countless applicants with the right skills but the wrong attitude.

Typically each team member does a 40 hour week, but we’re flexible on when those hours need to happen. Our support team have a weekend roster, but the only time anyone else works on the weekend is if we’re doing a major release or fixing a critical bug. Of course, any time spent on the weekend is taken off the following week.

The team eating lunch together.

You’re moving into a new space with closed offices for every member of your team. Why are you choosing closed offices?

Over the last six years we’ve gone from open plan, to all closed offices and then to a combination of both. I’ve paid close attention to the pros and cons of each layout, and I’m convinced that closed offices are the best layout for a software company.

The reason for this is fairly simple. It’s all about removing distractions. Jobs like software development, design and copywriting often require juggling lots of different things in your head at once. Getting to this point doesn’t happen immediately either, it might take 15 minutes to really get your head around a problem. That’s when the good stuff starts flowing and can make all the difference.

While open plan might make communication easier, it makes distractions just as easy. The trade off isn’t worth it. Closed offices let you shut your door and get focused. Unless you’re sure your question is more important than what someone is working on (it rarely is), don’t interrupt them. Come back later or better yet, send an email instead. I think in many cases closed offices make communication better. Instead of interrupting someone to ask a question, you have to write it down. That takes more effort. It forces you to edit out the crappy stuff and focus on what’s important.

Closed offices doesn’t mean anti-social either. I can’t understate how valuable it is that we all eat lunch together every day and get out of the office regularly. It provides a nice balance to the closed offices, and it’s amazing how much more open and relaxing a conversation can be over a meal rather than a workstation.

private offices
The corridor outside some closed offices.

You’ve said you focus on promotion through education. What’s been some of your biggest successes in doing that?

I think one of the best ways a company can build a relationship with their customers is to help them get better at something. When we launched Campaign Monitor six years ago, HTML email design really was a dark art. While browser limitations and workarounds were well known, there was next to nothing available on HTML emails. How do you make an email look good in Lotus Notes? Why isn’t this float working in Hotmail? You had to learn everything the hard way.

Over the years we’ve put together almost 350 articles and tips to help reduce this frustration for our customers. Some of our most popular resources include our regularly updated guide to CSS support in email, our free templates that work in all the major email clients and our email gallery showcasing beautiful email design. While each of these resources help current customers, they also consistently drive new customers our way on a daily basis. There’s also a certain feel good aspect to this type of promotion that you don’t get from banner ads or SEM, which is another reason we do a lot of it.

Screenshot of Campaign Monitor.

You’ve been big advocates for improving web standards support for HTML email. Why? How has taking a stand like this helped your business?

Support for web standards in email helps everyone. It makes our customers lives much easier by taking the pain out of building a HTML email. It makes email recipient’s lives easier because the email won’t be garbled by their email client or bloated with nested tables and inline CSS. If you’re interested, you can read more in my original call for standards support from a while back.

While there has traditionally been pressure on browser developers to embrace web standards support, email clients have gone in the opposite direction. After the release of Outlook 2007, which uses Word to render HTML emails, we decided it was time to take a stand for the better of the industry. Since that time we launched the Email Standards Project and worked with the likes of Yahoo!, Apple, Google and IBM to improve standards support in their email clients. After learning that Outlook 2010 would continue using Word to render emails, we launched fixoutlook.org which was hugely successful in bringing this issue to Microsoft’s attention.

It’s hard to say how well this has helped our business. No doubt it has bought additional customers to us, but more importantly it has strengthened our relationship with existing customers. They know we’re aware of how difficult their job can be at times, and that we’re working hard to try and solve some of these problems for them. It’s also been a lot of fun and very rewarding for our team.

You’ve focused on a niche industry (web designers). Why? Why not expand to reach more customers?

It’s much easier to build a great experience when you’re not trying to please everybody. Building a product that everyone likes is hard, and often the fastest route to mediocrity.

The needs of a web designer are very different to the needs of a travel agent or a coffee shop owner. By focusing just on designers, we can rip out a ton of irrelevant features our competitors offer and focus on the compelling stuff that’s perfect for that market. Lots of businesses turn to their web designer when they want to send an email newsletter, so this niche also offers a healthy reseller market. We sell to our customers, and they on sell to their clients at a marked-up rate.

And finally, we’re web designers ourselves. Building something that solves your own problem is much easier, and more enjoyable than building for an industry you’re not familiar with.

Screenshot of Campaign Monitor.

You had a nasty security breach late last year. What happened and how did you handle it? What did you learn from that experience?

There’s a bit of a story there. We had a security breach last August by a hacker looking to use our network to deliver large amounts of spam. Some customer accounts were compromised in the process. To make matters worse, my co-founder and I were on a surf trip in a remote chain of islands off Indonesia, eight hours from land with no communication with the outside world. Eventually we passed an island with a cell tower and got a barrage of SMS messages from our team asking us to call them.

By the time we got through, they’d already made the decision to go public with the news. They emailed all of our customers explaining what had happened, and what they were doing about it. The decision to be completely open about the incident was 100% the right call, but not an easy decision to make.

Because we were completely transparent, we had amazing support from our customers. Almost all of them got behind us with a positive message of some kind. I can’t tell you how proud I was of our team for how they handled it from start to finish. To top it off, we had our biggest sales month ever the very next month, which speaks volumes for respecting your customers and always being honest.

What’s your goal with the company?

Everything we do boils down to two things. Build the best email marketing software in the world for web designers and have fun doing it.

Any other advice for someone considering starting a business?

A few things come to mind:

  • Don’t make excuses, start building something right now. Ideas are worthless unless they’re executed.
  • Never be afraid to charge for your product from day one. If nobody is prepared to pay for it, it’s probably not solving an important problem anyway.
  • Avoid additional investors if you can. There’s nothing more satisfying than being in complete control of your destiny.
  • Never lose sight of the fact that you’re starting a business to give you more freedom to do what you enjoy in life. Don’t let it consume the very thing you’re aiming to improve.

Is your business profitable and proud? We’re looking for more companies that fit the bill ($1M+ in revs, no VC, profitable) to profile. Drop us a line with the subject “Profitable and proud” and let us know why your business would be a good match.