OLark: Bootstrapping a Startup to a Profitable Multi-Million Dollar Business
Interview with Ben Congleton, CEO and Co-founder of Olark By Poornima Vijayashanker A high-school-aged Ben Congleton started an IT consulting company with a couple …
By Poornima Vijayashanker
A high-school-aged Ben Congleton started an IT consulting company with a couple friends and just $100. The next company he bootstrapped, Olark, is now a multi-million dollar business. In this interview with Ben, we’ll learn why his cofounder team decided to bootstrap instead of raising much capital, and how they got their first customers.
Olark is a live chat software service that helps businesses boost sales, resolve issues, and understand their customers.
Poornima: “Hi Ben! I’ve known you for many years now, but I don’t know how you got into programming. Let’s start there.”
Ben: “My freshman year of high school I started by just modifying scripts, and noticed that my cousin Roland was building cooler things than me. So I picked up a copy of Teach Yourself Perl in 21 days.”
Poornima: “Yeah, I think I had a copy of that too! How did that lead you into starting your first business?”
Ben: “I was tired of wasting time on the internet playing video games. So, I started an IT consulting company programming PHP and installing code on websites. Then, in 1998 I started a web hosting company called Nethernet, which eventually became Netherweb, with my cousin Roland.”
Poornima: “Since you were in high school, how did you have any money to start a business?”
Ben: “We got a $100 investment from Roland’s dad to buy nethernet.com. I learned to bootstrap early on, and by my senior year of high school we were making $170K in revenue.”
Poornima: “How did you get over customers’ perceptions when they knew you were just a kid?”
Ben: “We were just online, so no one knew who we really were.”
Poornima: “Haha. That’s awesome! So then how did you attract customers?”
Ben: “At the time, there were sites like Yelp for hosting companies. I focused on providing awesome support and got good referrals. There was also a ranking engine and we figured out how to get to the top of it by offering a low-price plan. Then we wrote a free software program that got showcased in PC Magazine.”
Poornima: “Wow, so you had some really scalable tactics. OK, so let’s switch gears. You were making $170K your senior year, so why did you decide to go to college? Why not just build the business?”
Ben: “I wanted to have a real life, and the business helped pay for college. It was a great source of passive income, and we worked on it for a few days a week.”
Poornima: “And how did your business grow when you were in college?”
Ben: “It didn’t. I hired other people to do support, and we eventually lost touch with our customers. It was slowly dying because we weren’t working and competition got crazy. There were a lot of well-funded companies, and hosting was starting to become a commodity.”
Poornima: “OK, so what did you do next?”
Ben: “I graduated with degrees in Computer Science and Business from Virginia Tech. An advisor convinced me to get a Masters in Computer Science. I started to think about going the academic route. So I applied for a PhD at the University of Michigan’s HCI [human computer interaction] program. I was still running the business on the side. Roland and Kevin, a friend of mine, were working on it full time, and it became a consulting firm. Then in 2006, when I was at University of Michigan, I went to a seminar about how the internet affords disintermediation. Businesses can talk directly to consumers through phone or email. I thought about chat, because that’s what our generation grew up with. We used AIM or ICQ.”
Poornima: “Yeah, I used AIM a lot in high school. So how did that seminar inspire you?”
Ben: “I figured there was an opportunity to provide the same functionality as peer-to-peer communication. Businesses could talk directly to customers through chat.”
Poornima: “So what happened to the consulting business?”
Ben: “I was sick of consulting, but we used it to fund product development. In 2007, Kevin and I built the first version of Olark—back then we called it Habla. It was a free product and businesses could use it to talk to customers. We integrated with existing IM clients.”
Poornima: “That is a great bootstrapping strategy, and one that I recommend too! So what was the feedback on the prototype?”
Ben: “It was really buggy, because it was a fast prototype. I was too busy adding support for AIM, ICQ, and MSN. We needed someone to lead engineering. Roland was really focused on design, and I wanted to focus on product and the business.”
Poornima: “How did you go about recruiting?”
Ben: “We went through a number of co-founders. It was really hard getting people to commit. There were like, ‘yeah, we’ll join once X happens.’ They didn’t like being remote or had other personal commitments like mortgages. Then in the fall of 2008, we applied to YC [Y Combinator].”
Poornima: “That must have been pretty exciting.”
Ben: “Yeah, but the market was pretty bad, so they deferred us for 6 months. We then applied to TechStars and found another co-founder, Matt. Matt was the perfect person; he was a really good engineer, and he went all-in very quickly.”
Poornima: “Where did you meet Matt?”
Ben: “At a PhD networking event.”
Poornima: “Did you end up going to YC or TechStars?”
Ben: “We interviewed, got into YC, and then moved the team to Mountain View.”
Poornima: “What was YC like?
Ben: “We received $25K from YC and focused on launching the paid version of the product. We were making $25 per day in 2009.”
Poornima: “YC demo days are pretty happening. What was yours like? And were you able to raise capital?”
Ben: “We were not the hottest company. It was probably WePay or MixPanel. We tried to raise, like, $400K, but it seemed like it would take a long time. So, we ended up raising $60K from friends and family.”
Poornima: “So your focus became profitability?”
Ben: “Yeah. We raised prices and doubled down our conversion funnel [getting customers to convert from free to paid].”
Poornima: “How did you do that?”
Ben: “We just focused on making it super easy to integrate Olark on your site. By the end of 2009, we became ‘Ramen profitable,’ and were making $100/day.”
Poornima: “What did you do to grow?”
Ben: “We gave it [our service] to other startups in YC, then partnered with the Small Business Web and e-commerce shopping carts like Shopify. We really just focused on making our product work, and that has led to lots of traffic.”
Poornima: “Yeah, I like how Olark has baked-in marketing. I remember that when we met back in 2010, you had a singular vision: live chat. Has that changed at all?”
Ben: “We say no to all ideas that aren’t focused on helping businesses talk to their customers.”
Poornima: “It’s great to have focus. Well, it’s been 7 years since you started—have you ever had a moment when things got too hard or you wanted to quit?”
Ben: “We’ve always been focused on building a good team internally and attracting the right customers. That has kept me engaged.”
Poornima: “That is great to hear, thank you Ben!”
Just to recap, here’s what we learned from Ben Congleton:
- You can start a business at any age. Ben began his first business while he was still in high school and had just learned how to program.
- You can bootstrap your business to profitability. While other companies from YC went on to raise significant amounts of capital, Ben and his team decided to focus on generating recurring revenue and getting to Ramen profitability.
- Finding co-founders takes a few tries. It took Ben and Roland a while to assemble the right team, but they kept at it.
- Focus on building a product that is easy to use for your customers. Ben and his team were able to go from $25/day to $100/day by making it easy to integrate Olark into websites.
