ProfitWell: The World Is a Math Problem That Isn’t Solved Yet

A Van, a Podcast Studio, and a Shower

Bootstrapping and Living Under the Poverty Line

No Money, Bad Design, and Strong Competitors

Systematic Thinking To Survive in The Reddest Ocean

ProfitWell Business Model: Free Metrics + 3 Paid Products

One’s Too Many, and Four Ain’t Enough

“I’ve Got 99 Problems” or Emotional Jiu-Jitsu

From a Company Without a Marketing Team to a Media Network

Saying Churn 100,000 Times

Resources

➡ ProfitWell is a bootstrapped company in the Business Intelligence (BI) industry.

➡ Compared to other BI industry companies, ProfitWell moved away from analytical tools, offering outcome-based solutions.

➡ ProfitWell has three paid products and one free product, Free Metrics. Companies can use Free Metrics to analyze churn, segmentation, engagement, and more.

➡ Free Metrics allows ProfitWell to look into the subscription data of thousands of companies around the world. ProfitWell then packs these insights into high-value benchmark reports, claiming the status of an industry thought leader. The company uses this data to develop solutions to users’ real problems.

➡ The ProfitWell well pricing is based on outcomes. ProfitWell receives a cut from its customers’ revenue.

➡ For the first five years, ProfitWell didn’t have a marketing team.

➡ Today, ProfitWell invests 100% of its marketing resources in creating TV shows on pricing, churn, and subscription. This strategy is bringing millions to the business.

➡ ProfitWell is gradually becoming a Netflix for the subscription industry. ‍

Patrick Campbell is hitting the road for a National Tour. He will live in a campervan while touring North America and bringing people together. No, he’s not a van missionary.

Patrick Campbell is the Founder and CEO at ProfitWell, and he will travel wherever the road takes him to meet people and (most probably) discuss pricing, churn, and subscriptions.

This entire adventure is still a big secret. But you can sign up for ProfitWell to come to your city . Also, you can choose how you’d like to meet Patrick: 1:1 Coffee, Group Dinner, Meetup, or a unique adventure.

Now, I know what you’re thinking: A SaaS CEO touring North America in a van? What’s this all about?

The ProfitWell team equipped Patrick’s van with a podcast studio in the back. This means one thing: Patrick will be recording a new show for Recur Network, an in-house media brand he built as part of ProfitWell’s marketing strategy.

Oh, and in case you were wondering, Patrick has a shower in the van, so he’ll be OK.

It all started with cashing out the 401(k).

Ex-intelligence officer for the US Defense Department and ex-Google employee Patrick decided to stop work for others and start his own business.

“It means you’re unemployed, right?” His mother would ask him.

But Patrick had a vision when in 2013, he officially launched Price Intelligently. Later, Patrick would change the company names (against all recommendations) and call it ProfitWell .

For the sake of consistency, let’s refer to it as ProfitWell .

ProfitWell started as a pricing software, helping subscription businesses identify what they should charge for their products.Patrick had to cash out his 401(k) to make it happen. He had around $25,000 in savings. This money went into the company. For the first months, he would pay himself $0. And for the following years, he would make under $36,000 per year, which was below the poverty line in Boston.

As Patrick remembers, it wasn’t hard to build ProfitWell, but it took a lot of work. Also, it took strategy to survive and thrive in the Business Intelligence (BI) market. ‍

Shortly after Patrick launched ProfitWell, he started to identify a series of challenges that would stagnate the growth of his company:

In 2013, Stripe invested $500,000 in Baremetrics , a BI competitor.

In 2014, a new competitor appeared on the market. ChartMogul announced the launch of SaaS Metrics for Subscription Startups. Next year, ChartMogul closed a $600K seed round led by Point Nine Capital. Later that year, the company raised another $900K, reaching a total of $1.5M in funding .

Both companies, Baremetrics and ChartMogul, had money to grow and they were offering better products than Price Intelligently.

Being an analyst by training, Patrick refused to enter panic mode. To solve the problem and survive, he decided to apply a mental framework called:

The entire concept of the Problem > Cause > Solution framework is that you can’t solve a problem. Usually, a problem is the symptom of something that is happening. However, we can solve the actual causes that create the problem and not the problem itself. One problem can have multiple causes. You want to develop solutions that address each cause and not the problem.

Patrick had a clear problem: The distribution and the monetization of ProfitWell have become difficult due to competitive pressure and limited resources.

Having this in mind, the ProfitWell team focused on collecting and analyzing specific data to understand the problem better.

Net Promoter Score (NPS). NPS is a one-question survey to identify whether your customer would recommend your product or service to others. The NPS score is expressed as a number from -100 to 100. Patrick’s team collected the NPS score data from customers using Baremetrics, ChartMogul, and other BI solutions. They’ve discovered that the aggregated score was -15. This negative score meant that the BI companies had more detractors than promoters.

Willingness to Pay (WTP) . WTP shows how much a customer is willing to pay for a solution. After gathering and analyzing the data, Patrick’s team discovered that people aren’t willing to spend a lot on SaaS Metric products.

The findings didn’t provide clear answers, though, so the team decided to dig deeper.

To get better insights, the ProfitWell team mapped the BI space. As a result, they came up with a continuum that showcased the industry’s primary focus points.

Moreover, the team discovered that all of the energy was spent on the lower end of the continuum. The BI companies provided data and analytics tools, ignoring the insights and the outcome.

Having this continuum as a reference, the ProfitWell team analyzed the NPS score and the WTP indicators again. But this time they asked people different questions:

Would you recommend a tool that solves your pricing and churn problems?

How much would you pay for a tool that solves your pricing and churn problems?

As you can notice, they moved from questions about purely analytical tools (that show the problem) and focused on tools that will actually solve a real problem.

The results were surprising as the NPS and WTP were much higher than the previous study focused on data and analytics solutions.

Users didn’t care as much for analytics and graphs as for products that helped solve the churn and pricing problems.

Accuracy was another issue Patrick’s team detected.

The existing BI products had massive accuracy issues. That was inadmissible considering that accuracy is the number one thing that matters when dealing with people’s finances. The bigger your user is, the more they care about accuracy.

Having done this research, Patrick identified the following causes at the root of ProfitWell’s problem:

Low WTP

Massive accuracy issues

No name recognition

Not a lot of money

Product is behind

As a result, the ProfitWell team came with the following solutions:

Give away the existing product for free

Build accuracy

Commit to this strategy until it works

That’s how the Problem > Causes > Solutions diagram looked like for ProfitWell:

For the next 18 months, the ProfitWell team worked relentlessly to address the accuracy issue.

Looking at the ProfitWell solutions, we all can understand the need to build accuracy into the product and commit to the strategy.

But how can you justify giving away your main product for free? Although it may not seem obvious, this decision gives us an insight into the genius of Patrick Campbell.

Do you remember how the BI space diagram looks like? Here’s a quick reminder: ‍

As we've seen previously (the ProfitWell Continuum image), most BI products, including ProfitWell’s analytical tool, were focused on data and analytics. Yet, there was nothing to cover the insights and the outcome.

In other words, the market was overcrowded with products that would translate users’ data into legible graphics. But nothing else. People couldn’t read the data to identify actionable insights and underlying pricing, churn, and subscription issues. Also, there were no products dedicated to solving those issues.

As a result, instead of making the users pay for the analytical tool, Patrick gave it away for free. By plugging in the tool to their subscription platform (Stripe, Zuora, Braintree, etc.), users would get access to data such as churn, segmentation, engagement, and more.

On the other hand, Patrick’s team would get access to enough data to generate valuable insights and build outcome-based products.

‍ Quick Note: The Free Metrics product is still at the core of the ProfitWell business. It takes a few minutes to install it and get access to accurate data about your business.

There’s no other company in the world that has more data on subscription businesses than ProfitWell. As Patrick said in one of his interviews, “We’ve seen inside more recurring revenue companies than anyone else on the planet.”

Having access to subscription data, ProfitWell identified the core problems users have and created three paid products:

ProfitWell Retain® is a solution that automatically helps users win back their customers using the industry’s highest recovery rate.

ProfitWell Recognized is a tool for audit-proof revenue recognition bested by Big Four (Deloitte, Ernst & Young, PricewaterhouseCoopers, and Klynveld Peat Marwick Goerdeler).

Price Intelligently is proprietary pricing software for monetization.

Usually, the Free Metrics tool is the gateway through which people start using ProfitWell. They will later get insights based on the ProfitWell studies. These insights help users identify specific pricing, churn, and subscription issues. Subsequently, if they want to solve a particular issue, they can use a paid ProfitWell product.

It’s also worth noting that ProfitWell charges per performance. Once a user solves the issue and gets the money, ProfitWell receives a cut. No hidden fees or contracts.

Quick Note: The Free Metrics product aligns with Patrick’s freemium vision. According to Patrick, Freemium will be the standard in the next five to ten years, as the SaaS market becomes more and more overcrowded. But that’s a different discussion. If you want to learn more about his thoughts on Freemium, here’s a downloadable book he wrote on this topic .

Most companies start with one product, and once they hit a comfortable $ARR, they move to a second one.

ProfitWell couldn’t afford this luxury, though.

The ProfitWell Total Addressable Market (TAM) was (and still is) relatively small. As Patrick highlighted in one of his articles , “There are only 100k-150k subscription companies in the world and that number is not growing quickly.”

The ProfitWell team needed a sustainable growth strategy, aiming for a high customer lifetime value (LTV) or increasing the price points.

Evaluating their options, however, the ProfitWell team decided to create multiple products. This strategy was aligned with Patrick’s bigger vision of transforming ProfitWell into a Billion Dollar company.

As Patrick said in one of his interviews, building four products at the same time wasn’t easy, especially being a bootstrap company. But this was the only way of getting on track and aiming for the big goal.

Quick Note: ProfitWell is currently situated between a $10M-$100M ARR.

Analyzing founders is as fascinating as exploring SaaS companies. Usually, the founder’s character and temperament greatly influence the company’s public image.

The way Patrick Campbell handled one of the biggest ProfitWell’s public crises is very telling about his management style and leadership.

As Patrick recalls, it was a Monday morning after a good weekend. The day started as usual without predicting anything terrible. He woke up early, had coffee, ate breakfast, and planned the week ahead. Everything was going according to Patrick’s routine until he went to his Twitter account.

What he saw on Twitter made him experience, what he calls, the reverberation of “fuuuuuuckkkk.”

Nick Franklin, Founder and CEO at ChartMogul, posted a Tweet about an anonymous that left a two-star review on ChartMogul’s Capterra and G2Crowd while adding a five-star review on ProfitWell’s profile page.

Later that day, Josh Pigford, Founder and CEO at Baremetrics, wrote this tweet:

Quick Note: Josh Pigford sold Baremetrics in 2020.

Recalling the incident, Patrick said he had two options: going full Twitter drama mode or applying his problem > cause > solutions framework.

Luckily, he decided to go with the second option. He understood the repercussions a Twitter duel can have on the public image of ProfitWell. Plus, he wanted to maintain good relationships with his competitors and avoid damaging the perception of his users/customers.

Patrick analyzed the review which looked fake. Next, he initiated an internal investigation, running in-depth interviews with everyone, including his team, contractors, and partners.

Although the investigation didn’t help him identify what happened, he came up with several solutions. First, Patrick refrained from tweeting on the subject, except that he was investigating the issue.

Next, he contacted G2/Capterra for an audit. The review was deleted. Third, he discussed it with his team, specifying that this behavior is unacceptable. To manage the crisis, Patrick also discussed 1:1 and followed up on everyone asking about this subject.

Finally, he wrote a separate email to Nick and Josh, explaining his findings.

Knowing what happened is always challenging when more parts are involved in a crisis. Also, there are always different perspectives and thoughts.

However, it takes mental discipline to handle a situation that involves your public image well. This case reminds us that what a CEO says and does in public may affect their company’s image. ‍

And since we’re talking about the public image, it’s worth discussing ProfitWell’s marketing strategy.

During its first five years, ProfitWell didn’t have a marketing team. Marketing efforts boiled down to publishing content, such as blog articles, reports, eBooks, and more. As Patrick notes, Profitwell had a good lead flow coming from inbound.

And that’s not surprising considering the quality level of the ProfitWell content.

The pricing market was based on tribal knowledge, such as whether to place or not the highest pricing tier on the left. ProfitWell, however, had an advantageous position.

Remember the Free Metrics product?

Having access to subscription companies’ data, the ProfitWell team could develop valuable insights and create unique, data-based content. According to Patrick, the ProfitWell content would go viral* quite often.

*Viral in terms of a SaaS blog meant a few thousand of views.

However, the ProfitWell team didn’t have a full-fledged inbound strategy. They published blog posts, offered downloadable content, and worked on drip campaigns to nurture the leads entering the pipeline.

They weren’t even thinking about SEO.

Later, though, Patrick asked himself what’s the next growth step ProfitWell should take. All the previous years, the team focused on sales-driven and product-driven growth, yet not much on marketing, except the blog.

This realization came to Patrick along with a mixture of factors he was considering:

The video was becoming more and more critical.

The written content was very dense. To be a leader in your industry, you had to put A LOT of work into writing articles and eBooks.

Media companies were the best at attracting traffic and gaining an audience. As Patrick highlights in one of his interviews, media companies have 7 to 4 touches per week. In other words, a media company can expect that a person will consume up to 7 pieces of content per week. A SaaS blog has a maximum of 1.6 touches per week.

Creating written content, such as an eBook, became equally expensive as creating a video series.

That’s how Patrick came with the idea of creating Recur, a media network dedicated to the world of subscriptions.

As Patrick notes, it was a considerable risk, but today, ProfitWell invests 100% of its marketing resources into Recur .

At this moment, Recur offers several shows, such as:

Price Page Teardown. A weekly show where ProfitWell breaks down strategies and insights on how subscription companies can win with monetization.

Boxed Out. A show on what happens when you buy from DTC’s subscription brands and then try to cancel your subscription.

Protect the Hustle. A show about the people in the trenches of B2B SaaS growth.

TradeOffs. A show tailored toward product pros.

And more.

According to Patrick, creating a full-fledged in-house media studio is bringing millions to the business. The team continues to experiment with show formats and length.

The entire marketing idea revolves around creating a giant pool of people who have good experiences and interactions with the ProfitWell brand. Later, if they’re ready to buy, they’ll buy. If not, they’ll continue consuming the ProfitWell content.

According to Patrick, it’s not about pushing leads through the funnel anymore. It’s all about keeping people in the audience mode all the time.

There’s no playbook on how to build and grow a SaaS company.

The industry is overloaded with contradictory advice. So instead of listening to recommendations, it’s better to read the stories of other SaaS companies and learn from their strategies and innovative ideas.

ProfitWell is an excellent example of systematic thinking, thorough approach, resilience, and marketing innovation. From a bootstrap no-name brand, ProfitWell became one of the most data-rich companies that use insights to create highly-valuable and entertaining TV shows.

Will ProfitWell become a Billion Dollar company? Time will show, but until then, I’m leaving you with this video where Patrick says churn 100,000 times .

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