393: Circle: Scaling a Community Platform from Seed to $19M ARR

Omar Khan

Welcome to another episode of the SaaS podcast. I'm your host, Omar Khan, and this is the show where I interview proven founders and industry experts who share their stories, strategies and insights to help you build, launch, and grow your SaaS business. In this episode, I took to Andrew Gattomsen, the co founder and chief revenue officer at Circle, a platform for creators to build communities and memberships. Andrew and his co founders spent five years as early employees at Teachable, where they saw firsthand how creators often struggled to build engaged communities. So after Teachable's acquisition, they saw an opportunity to build a community first solution that was tailored to the needs of content creators.

The plan was to grow slowly, maybe even bootstrapping the business. But when the pandemic hit in 2020, demand for online community tools exploded. The founders raised a small seed round and worked tirelessly to spread the word, engaging with potential customers on social media and building a waitlist for early adopters. Andrew personally did over 1500 demos in the first 18 months, and their efforts paid off as Circle skyrocketed to the first million in ARR in just four months after launch. But the journey wasn't without challenges.

The founders faced a major blow when an influential customer publicly shared his negative experience with Circle and why he moved to a different platform. For Andrew, it felt like a punch in the gut. He and his team had to swallow their pride, confront their shortcomings head on, and work overtime to fix them. Also, as they started bringing on enterprise customers, they struggled to adapt their approach to customer success and support. Despite those challenges, the founders kept listening to their customers and quickly improving the product.

Fast forward to today, Circle has over 10,000 customers, generates $19 million in ARR with a team of about 150 people, and has raised $30 million in funding. In this episode, you'll learn how to the founders built early traction by doing things that don't scale, like jumping into Twitter threads and doing one on one onboarding calls while landing a few key anchor customers can create a halo effect for your brand and product. We talk about how Circle aligned its pricing and packaging to grow with customers and maximize lifetime value. What Andrew learned about building a sales team and Gotomarket engine with no prior sales experience, and how a product led approach with a viral loop baked in propelled circle to $19 million in ARR. So I hope you enjoy it.

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Andy, welcome to the show. Thanks Omer. Been looking forward to this. It's been a while. We were just talking earlier before we started recording and I was like, I don't know why I haven't done this sooner.

You and I have known each other since probably the very early days when you guys were starting circle. So it's been great to see that journey and finally get you on the show. But first I have to always ask, do you, do you have a favorite quote, something that inspires or motivates you that you can share with us? There are two that come to mind. So one of them is a friend of mine, Brendan Burchard.

Andrew Guttormsen

He has this quote, which is who? Like, you gotta figure out who's the person, who's the person that really needs you to be at your best today, which I think is always a good one. Whenever I'm having a day or there's a challenge or whatever it is, I think about that. By the way, the other one, Scott Belsky, shared this. But whenever you need to make some hard decisions, I don't know if you can read that DYFJ, do your f ing job.

That also, that also is a helpful one posted up there. Love it. Awesome so for people who aren't familiar, tell us about circle. What does the product do, who's it for, and what's the main problem you're helping to solve? So circle is really, like, the easiest way to create a home for your community, your people.

So you can do your live streams there. You can do your, like, real time chats. You can bring people together. You can host courses, have, like, member directory, private messaging, you know, drop into, like, a. Like, a video call room.

But people that, you know, tend to use circle and are creating membership experiences and, you know, might be somebody who's got a small backyard gardening community, brings 100 people together up to. It could be a company like Adobe or it could be Oprah or somebody really big and everything in between, about 10,000 customers, and it spans all sorts of different types of communities. Is Oprah using Circle? She's about to be, yeah, she just. She just became a customer.

Not, Oprah's not the one signing the contracts. It's her team. Yeah. Wow. Give us a sense of the size of the business.

Omar Khan

Where are you in terms of revenue, customers? Size of team? Yeah. So we're about 150 people today. We are about $19 million in ARR right now.

Andrew Guttormsen

And so we're growing quickly. Last year, we grew from about 8 million to 16 million. So we a little bit more than doubled. And, yeah, things are good. We're about four years into it at this point.

So it really was about March 2020 when we started working on the product. And then from there, we launched after being in a six month waitlist, kind of like private beta period to the public in that summer. And you guys have raised about 30 million to date. And in terms of customers, you think you might actually hit a big milestone today. Right.

You know, it's 04:00 p.m. New York time right now. I think by midnight tonight, we will officially bring on our 10,000th customer today. 10,000 paying customer. Yes.

Omar Khan

That's amazing. That was awesome. Great. So let's talk about how this all started.

Early 2020 is really when you guys kind of got the show on the road. What were you doing before that, and where did the idea come from? It's funny. Really technically started circle in March of 2020, right when the pandemic was happening and all that. But before that, my co founder, Sid and I, we spent, and I have another co founder, Rudy, as well.

Andrew Guttormsen

But Sid and I, we were at a company called Teachable for almost five years. Right. And Teachable is a course platform. And so, you know, we were there. Sid was the third employee.

I was the 7th employee. He was the ultimately, like, the vp of product there. I was the vp of growth marketing. And so we, the whole time, I think we just really respected each other. We had very complimentary skill sets.

Sid eventually left teachable about a year before I did, and I was still there. And then ultimately, teachable was sold. So teachable was acquired by a company called Hotmart. Really good outcome for teachable and really great people at teachable is one of the best times in my career. I learned so much there.

But then after teachable was sold, there was this. I was trying to figure out what's going to happen next from here. And so at the time, it's like you start to become really close to the markets that you serve. So I really understood course creators and just creators in general, and how they thought what they needed. One of the things that I saw at the time, and Sid, I know, saw as well, but it was also, frankly, I think, kind of obvious is a lot of the best course creators.

They were having these, like, slack groups or, you know, they were earning a lot of money. Well, why were they earning a lot of money? Well, they had these, like, premium offerings because they had these Facebook groups alongside them. And so, like, there was a lot of the best creators using these community experiences, and there was no product to actually do it in this holistic way. And so we thought, you know, what if we.

What if we start a business here? And so I had just left teachable, and Sid had been, you know, doing his own kind of thing, exploring for, like, a year, just building products and stuff like that. He was actually at Gumroad for a bit, and then we're just like, let's start a business around it. Let's build the product. And did you guys, at what point did you raise money, and did you kind of bootstrap initially?

Omar Khan

Like, what was the process you went through to kind of get started? Five years in at teachable, we were really tired, and actually, we had no interest in raising money. Like, we were. We were ready to. We were so excited.

Andrew Guttormsen

We're like, we're gonna do slow growth. We're just gonna maybe bootstrap this thing. It'll be me, Sid, and Rudy. We'll have a little three person company. We'll go really slow.

Then COVID happened, and all of a sudden, there's also just pull in the market from people wanting that type of product. So we were starting to kind of get pulled into the market. Actually, my close friend from teachable who was the CEO and founder of Teachable on core Nagpol. Him and I sat down, we're getting lunch, and I remember walking him through, hey, I'm going to leave Teachable. We're thinking about starting this business and all of that.

And so he's the one who kind of said, well, first of all, I'll invest, right? I'd love to invest. Have you guys thought about investing? And we didn't really want to, but then he was like, I can line up the investors. And so we did raise a small round.

Relatively speaking, it was about $700,000. Right? And then from there, we decided to raise another round a few months later because things are really taking off. Remember, we went from zero to about a million in arriving four months. And so there was a lot of investor interest.

It was also pretty frothy time in the market when, you know, we're talking 2020. Our product was a community product. And because of the. I think, like, the small reputation we had just from the success at Teachable, it was easier to have those conversations, and there was interest there. And so we did end up raising a $4 million seed round, kind of like a big seed round.

And then eventually, we did raise. Two years later, we raised a $25 million ramp. Let's talk about those early days. So you guys decide you want to build this new company. Initially, you're thinking about slow growth.

Omar Khan

How long did it take to build that first version of the product? And, like, you'd seen the opportunity, but what did you do to validate this idea? Did you do the lean startup thing and start trying to interview customers? Did you put up a landing page? What were you doing to kind of help you be confident that you were going in the right direction, building the right thing?

Andrew Guttormsen

It was pretty organic early on because at the time, we'd worked with tens of thousands, like, literally tens of thousands. Of course, we knew course creation, that space so well. We knew how, what the folks needed. But, uh, yeah, we just had friends in the space. And so we're like, look, here's what we're thinking.

A lot of people say that when you create a new product, it needs to be, like, ten times better than whatever the existing product was. In our experience, it was not that we knew actually, like, if we could just make that thing, like, 10% better and that thing 10% better, like, that would be a huge win for our folks. And so we wanted to kind of de risk things. And what we did is we said to certain customers, like, look, you're already using a Facebook group and a slack group, you're already creating courses. What if you just had it as a little bit of a better experience or more holistic?

And we got rid of some of the pain points that come with having a separate community experience that's different from your course. We didn't say, like, we're going to go out and invent some brand new concept. And so that really helped. And so we went to these customers who we understood we had relationships with, went to like, five of them, ten of them, and we just kind of showed them some designs. And then to Sid and Rudy's credit, because I'm not the technical person on the team, like, they were building the actual product.

They would have that conversation the next day. They would go and they would build that in and they send that person an email and be like, hey, what do you think? Was this what you were talking about? And that feedback loop was really important. Love it.

Omar Khan

Now, just one clarification. When you said, like, bringing it all together for these course creators in the early days, you didn't set out to build circle as a platform for your online courses. Right. This was primarily a community platform that was integrating with other products in a more seamless way. So, you know, people could use, still use teachable along with circle, as opposed to you taking Ankara's money and all these other people and then building a competitor to teachable.

Right. That's, that's. Yeah, so we, we really didn't. We were pretty tired of the core space, so we didn't want to go back. We didn't want to be building courses and doing all of that.

Andrew Guttormsen

We wanted to create what would be more similar. And we did create what would be more similar to essentially like a white label Facebook group or a little bit more of a slack experience that you could, though, take and add into any course, platform or website. So we would just kind of create the community experience. By the way, that's for the first few time years of circle. Up until about maybe almost two years ago, maybe less than that, we didn't have a course feature.

Right. So it was just a community piece. Okay, so I don't want to skip over what you said a little earlier, that you went from zero to the first million in ARR in four months. A lot of people listening to this will be thinking, crap. I can't get to zero to first ten customers in four months and these guys hit a million.

Omar Khan

So walk us through how that happened. And more importantly, what were you doing before the full month started to hit the ground running once you had the product out there. So I think that's the key that you just had, which is, what were you doing before that? I want to paint a really clear picture here and clarify. So we went from zero to a million in the four months when we launched publicly so that anybody could come and become a customer of circle.

Andrew Guttormsen

But before that, we built up a ton of demands. We had a ton of pent up demand from, like, the six months before that. And so very tactically, here's what we did, which I think worked really well. So we created a very simple landing page, and what we didn't want to do was just let anybody come and sign up because we were taking a ton of feedback from people, you know, every single customer that came through that was using the product, I literally reviewed every single email, and if, you know, it was a big name, I would reach out to them, get in touch with them. But regardless, you had to come, you had to enter your email, you had to answer a couple questions.

Then once you did that, and we would say, circle is x number of dollars. Do you still want to get access to circle? And then they would fill it out. It would come literally directly to my email inbox. I would then look up, who is this person?

Do they seem like a legit customer who would actually get value from the product that we're building? Then I would send them an email within minutes, and I would actually type it out. I didn't copy and paste. I literally type it out every single time. Personalized email.

And then I would say, hey, I saw that you're able to, first of all, interested in circle, interested in the product, able to pay. If you're open to it, I'd love to show you the product because this was just a demo, kind of like a waitlist. And so then they would reply, and again, I'd say it's dollar 39 a month, which not very much money, obviously, but do you want a demo? Then we'd hop on a call. I'd give them a demo, I'd show them the product, and at the end of the call, I'd say, if this seems like something that you want, I would be happy to set up your account for you.

Here's a link to go pay. And that would be it. And I would just do, like, ten of those calls a day. And so the question then becomes like, well, how are we getting that much demand? How are we getting that many people to come through?

And what we did there was, well, first of all, just gotta be realistic here. Like, there's huge tailwinds in terms of, like, the market, COVID was happening. People were moving online. Community was big already. The creator space, big market.

But what we did, though, was that we really tried to be in the conversation. So we would go and we would talk with like five or ten kind of anchor customers, right? So we would use our connections that we had be somebody more influential who we knew would be like the perfect customer. It could be like a Pat Flynn from smart passive income. Eventually it was Brendan Burchard from growth day in those early days and three time New York time bestselling author.

It was a lot of people who we knew if they used us, all of their customers would get exposed to circle. All of their customers could be potential customers of circle. And so then there'd be like, Twitter conversation. What community platform are you using? We'd go in there and our whole team would reply to every single thread.

Five of us would be in there, and we would just do that all day long. And it would drive real traffic to our homepage in word of mouth. Wait, so what were you replying to on Twitter? So there'd be like a thread, it would be, somebody would say, hey, what community platform are you using? And there'd be sometimes 50 people in there with discord Facebook groups.

And you would go in and say, circle, by the way. And we'd tag like, we have ten customers. We would tag, like, two of them that we knew would say really nice things about us today and happen to be active on Twitter. And then they would do that. Then people would come and they'd see that, and then they would check out our waitlist page.

They fill out the little form. All we had is a picture on there kind of describing what it did. Okay, so go back to the waitlist. So you're basically finding where people are having conversations online about community platforms. All of you guys are kind of mentioning circle and just getting it on the radar.

Omar Khan

You're doing those kinds of things to drive people to your wait list form. They fill out the information. You're using that information to basically qualify them both in terms of are they good fit? Are they willing to pay this much? And then a subsection of those that you think are probably the strongest fit, you're reaching out to them, personal email, not automated reply.

And then you're scheduling one on one demos with these people. I think a lot of people listening to this bis will be like, okay, I get it. That doesn't sound that hard. I could do it one of the differences with what you guys were able to do was the amount of effort you were willing to put in to make this thing happen. And I think the best way to explain that to people, maybe just so they can understand that, is just tell us how many demos, roughly did you do in the first year?

Andrew Guttormsen

One on one demos with people, about 1500 demos. Which is like, basically spending all your day, every day, doing a lot of demos. Yeah. And actually it was about a year and a half. Um, and I really, I want to emphasize this point because, like, if you had to ask me what, obviously there's a lot of things that got circle off the ground in the early days, on the product side, on the go to market side, what I had the most control over, the thing that truly made a big difference that is not obvious at all to any outside onlooker, is that we had great word of mouth.

But why did we have great word of mouth is because somebody would come in interested, they would get a one on one demo with me for 30 minutes or 45 minutes. I would do eight or ten of them a day. And so then they've had an experience, like, literally with the people building the product. And so it's just such a great way to get introduced to a company, to a product, to a business, and then all of them would be like, wow, I'm literally talking to the team that's building this for me. I had a great experience on that 30 or 45 minutes call.

And then again, we go back to Twitter or social or whatever, they would be singing our praises because they had a great experience and they know us, so they kind of, like, knew the people behind the product and the business, and they were rooting for us. So all of a sudden, you do eight or ten of those today, and then the rest of the week, I just did 40 conversations with amazing people building communities this week. And so that would really help with that word of mouth, the virality, the conversation, the introductions, referrals, all of that. It was like a big snowball. Yeah.

Omar Khan

And I think it was around that time that you and I first met, and I was instantly sold as a customer. Anyway, my only regret from back then is I didn't find a way to invest in the company as well. That would have probably been a. As good thing to do. But, yeah, I just, it was like, yeah, these guys are onto something special here.

And, like, I had no idea where I was going, but it was just, there was, there was just this, this energy behind it and a very clear vision, you know, it wasn't like, oh, we're trying to build this and this and it's going to do this and whatever it was. Just very clearly, people don't have this. This is what they're currently doing. And we think we can build a better experience. And it wasn't hard to understand.

Right. And then when you see what you guys are building, it was like, yeah, I think there is something, something potentially special here. So let's talk about the inflow piece, influencer piece. So you talked about Pat Flynn and Brendan Burchard and you said, you know, we used our contacts to go and get, you know, meetings with these people. That's great because, I mean, you can use, you can use your relationships, and it's smart to do that to get your foot in the door to talk to these types of people.

But I'm sure that, you know, Pat is getting pitched on hundreds of products, you know, left, right and center, any opportunity people get. So your relationships get you, you know, some time. But how did you, what did you do differently for people like that to get interested enough to want to be part of what you were doing? The thing that makes it less overwhelming is you actually probably only need like two, maybe three, maybe one anchor customer. Right?

Andrew Guttormsen

So let's imagine if I was starting any software company from scratch. I need to go out and get my first hundred customers. Let's say I was able to get my first five. Just regular old customers who are going to get value. They're not influential.

Just anybody who can pay me. I got 510 of those. But now I'm trying to think, how am I going to get to 500? I would go and I would find somebody who my product is absolutely perfect for and I would bring them in and incentivize them to help promote it. And that's what we did.

And so the thing with Pat Flynn. So Pat, we made patent advisor. And that comes with a small amount, relatively, at the time seemed small amount of equity, but now very valuable equity. But the thing is, we didn't just pitch Pat on the product because, hey, yeah, you should be an advisor. It was like truly the exact product that Pat needed more than any other product on the planet.

He needed that product and we knew that. So we didn't say, oh, let's go to Pat because we have a relationship with Pat. We went to Pat because we knew this is exactly for him. It would be perfect for him. It'll make his life so much better.

We're uniquely qualified to deliver it to Pat. And we have a relationship with Pat there's probably 500 people that we could say, hey, this is actually kind of perfect for their business. But there were only a handful, maybe ten or 20 that we thought were really great, that could be that partner, and really only a handful that we were close enough with. So we just cut an equity deal. He got a small amount of equity advisor equity.

We built the product for him, but with him, we took a ton of his feedback, and that's what I would do. Like, I would do that. I'd figure out if I started a software company, like, who are those people in my space? Are you an entrepreneur looking to buy a profitable online business or a founder ready to sell? Boopos is the number one platform for buying and selling profitable online businesses.

Omar Khan

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Sign up today and get qualified to start your entrepreneurial journey or sell your business at the right valuation with boopos.com dot. Right. So that's, that gives you some social proof. These people, you know, are involved. And did that, like, how successful would you describe those, those initial, like, influences?

Did it lead to, you know, a bunch of people that, in their communities, like, wanting to get on board and drive more demand for circle? Or was it more like, yeah, it's kind of opening doors, but it's not like, you know, the floodgates just open. Like, what was that experience like once. You had these people on, it was transformational. And that's the thing is, like a lot of people, we had a very clear path to, like, what 30 or $50,000 in MRR was gonna be within a few months.

Andrew Guttormsen

Like, we knew the playbook before we even started the company. We were like, we wrote it down. Here's what we're gonna do. If we could just build a product, this is how we're gonna market. And what we figured out is we're like, all right, we want to get to 500 employees, 500 customers.

So we go to somebody like Pat, and we're very transparent with Pat about our goals. Look, we're coming from a good place. We want to partner with you. We want to build an amazing product and we think it'll be better if you do it, but very tactically so, like I know that if we do a JV webinar with Pat where we come into his audience, we teach, he announces it to his audience. I think that alone drove 300 customers right there for us.

Just one webinar teach, you have hundreds of people live or a thousand people live, then follow up over email, say, hey, come join Circle. Pat also tells his story of how he's using circle create like a little mini course and some training content around it that was very timely for his audience that was just going to be joining Circle, a few hundred customers right there and then you'll create some co branded content and things like that. And then, by the way, because we have Pat, and to his credit, Matt and Pat are the two business partners there, they said, look, we're going to push the boundaries of circle and your product and we're going to make you better. And, you know, so that's what happened. And then every single sales call we have would say, by the way, here's like what the best version of this could look like.

And we showed them the SPI community, so it helps us close all the other deals that are coming in. So we're getting the word of mouth. And by the way, Pat, his customers are also good customers of circle, right? So like the members of his own community. So with somebody that you're partnering with, there's will they help you close more of your existing pipeline that's coming in?

Will they help you drive new opportunities that are coming in? Will they help you even make your product better because they're super users of it. That's three key things. And Matt and Pat, we're all, all three of those. And so, you know, if you can create a list of ten of those types of people, the path to getting your 1st 500 customers, as long as if your product is strong, that path is very clear, like how you get there.

You just do a bunch of these collaborations and you really invest deeply in the select few versus going super wide. Love it. I think there are some great lessons and insights. In many ways it's a good case study on how to do influencer marketing or even just generally partnerships. And I love that you made it real by saying it doesn't have to be hundreds of these people that you go and find.

Omar Khan

You just need couple a few just to get things moving right. And it's just being smart about thinking about who those people are and then trying to build those relationships. And then in an ideal world, it would be like once you set out to build the product, like, stop finding those people and building those relationships before you've done anything else. Right? Because six months down the line or whatever, it's going to be a much better, easier conversation than reaching out to them for the first time when the product is done and you're like, they're now trying to sell it and everything.

So I think great lessons there. At the same time, there were also situations where working with these types of influencers didn't work out. And there are a couple of examples that you shared with me. You don't want to mention names, it's fine. I don't think we don't have to do that.

But tell me about what happened and generally why it didn't work out with everybody. The first thing is it's pretty high stakes. We are not selling a toaster oven. We're selling your community platform for a lot of people. They're running their entire business on circle.

Andrew Guttormsen

So, like, our team, we take it as a big responsibility because it really is. And so the, you know, there have, there have been moments, we talk about 1500 demos, like, I know these people who are coming in and becoming customers. I ask them all the questions and then I make a recommendation to them. Sometimes I tell them, don't use circle, but other times, you know, I do. And so, you know, when they come over, I always have to keep myself honest and know, like, are they going to do well on circle?

And now there's a lot of things that can go wrong. But we talked earlier about being in the conversation and being very up close and personal with the real people who are using the product on places like Twitter and social and all of that. And so that's playing on the knife's edge, right? It can go in your favor very publicly. When people are talking great about you, they're having great experiences, but what if somebody doesn't have a good experience?

And so I can remember one time, and it was right when Circle was really starting to take off and get more attention at the time. And back then we had just got, there's a very high profile kind of influencer who signed up for Circle, moved their community over to circle, and they had like a slack group, and the Slack group was like very active and people loved it. But the guy running it, he hated it because it was just madness, couldn't control it. Circle is known for having really calm communities, so moves it over, makes a nice announcement about moving over to circle. And by the way, that's what we love, because everybody talks about, you know, the move and people see that, and that's what creates that brand, the reputation.

You know, your brand is your reputation and, and the reputation helps. So all of that's great, but you really have to deliver. And what happens if somebody fails? What happens if people come over and their members have a worse experience or the community becomes a ghost town? Or something happens where, like, when they do the migration, there's some technical issue or whatever it is.

There's a million things that can go wrong when we're talking about something as dynamic as a community. And so I remember one time, all of a sudden, I wake up in the morning, I have a text on my phone from Sid, and it was my co founder, Sid, and it was just, it was yikes. And then a link to Twitter. And by the way, I get those all the time. Normally we're just some random Twitter thing, or it has nothing to do with us.

And it was a long link to a blog post about why I'm moving off of circle and how bad of a decision it was for me to make that move. And that was really painful because actually, I was a huge fan of that person. The work that they did, then you have to dig down and really be honest with yourself. Where are the valid points here? How can we learn from this?

To make the product better, you gotta take that stuff, you know, really seriously. And we do to add on to it. I remember, you know, one of my, I don't know him personally at all, but somebody who I've always been a fan of is Gary Tan. Now he's the president of Y Combinator. I remember one time somebody, I think he, I've followed him on Twitter forever, and I always like consuming his stuff.

But I remember one time he writes, he took a screenshot, it was a screenshot, and it said something along the lines of, like, I never understand why people do this or whatever. And it was referring to, it was a screenshot of our product and, like, some product design decision or something like that. But I was just like, man, Gary Tan is not a fan of the product today. Like, you know, that stuff is not a big deal in the grand scheme of things, but it's like, they're very out there. When you build a product for people, especially when you build a product that's, you know, serving SMBs and a lot of people, there's a lot that can go wrong.

And so, you know, it's a two. Way street in terms of that first person and realizing that they were moving off. And not only they were moving, but they had told the world about how much your product sucked and they were moving. Like, how did that feel? What did you use a term that you said?

Omar Khan

You tell me what it felt like. Yeah. So it's a punch in the gut, right? The feeling that you get. There's a couple feelings that come over you.

Andrew Guttormsen

So the first one is you let this person down because their business, again, business relies on circle. The other one is, you know, where my head always goes is also, the team, like, our team, they take it very seriously, too. So I know if I'm feeling something, they'll. They'll feel it, too. And then the other thing is, like, we gotta learn from this.

Like, if somebody else had this experience, if this person had this experience, like, who else is having this experience or about to have this experience?

Yeah, but, so, yeah, it's deflating in that moment. Very, you know, deflating. Yeah. You start thinking, like, who else is writing a blog post at this moment that's gonna go out tomorrow or next week or something? Yeah, yeah, exactly.

Omar Khan

And I think Gary Tan, it was probably, like, for him, it was probably like nothing, right? It was just a tiny comment on some random thing, but. But it's like someone once described to me, like, whether, you know, when you're a leader or someone in a position of influence, right? Like, you like these cogwheels that are connected, right? And you're like this big cogwheel, and you turn, like, you know, one degree, but the knock on effect is that there's a tiny cogwheel somewhere, which is kind of spinning because of what you just did.

Right. And it feels like that, where it's like it wasn't a big deal. Right. But you're probably like, what the hell, right? This.

This is, you know, it's. It's. And I think you had a fair amount of customers at that time, and it's still like, that's the one thing, you know, you can't help but focus on. And look, and I'm sure, like, actually, I think Gary Tan was probably right. It was probably like some, you know, crappy design decision or something like that.

Andrew Guttormsen

So it's totally right. Yeah. And it's. It's just part of it, though. And I think, you know, more so to Sid and Rudy, my co founder, to their credit, like, we are upfront and personal on calls with customers every single day, and so we know what people's experiences are to the good and the bad.

We know all of it. And you kind of just have to address it head on because otherwise the product's just not going to be good enough. Customers aren't going to get enough value. They're going to churn. And what are we all doing doing this for?

It's easier now to have the hard conversation upfront and solve the actual problems than to wait and let it stack up and have to deal with ten hard conversations later. All right, let's talk about growth beyond the first million. So when we think about getting to the first 5 million in ARR, I think you guys started to get a rhythm. You, you started to get more methodical about the way that you were growing. You started to get really good at forecasting your growth.

Omar Khan

And tell me just a little bit about what that was, how you got to that point. And then we'll go on to the whole lack of sales experience and what you did with that. The thing about think about our software company specifically is that, yeah, we do have a self serve motion. Most people who come in, they create a free trial and then they convert. And so for us, our business has been pretty predictable since the early days.

Andrew Guttormsen

But for me, I really like to feel like I'm in control. I hate not knowing where the revenue is going to come from, what our growth is going to look like. And I have other leaders on our go to market leadership team who I think it's a good thing. They all feel the same exact way. They're all, they really want to know that they're in control.

So for us, what we do is we actually have like a weekly revenue meeting every single week. We've had this since probably about a million or so in ARR, where we look at our full funnel. How is our pipeline doing? Are leads closing? How much time is it of those leads who come in and convert?

Are those customers getting value? How many of them are expanding their accounts? We look at the different initiatives that we're doing and are they all on track? If there's anything that's off that's going to drive revenue, like three months from now, we want to know ASAP. And so we just copied Amazon's weekly business review, which is essentially the whole point of the meeting.

You can just google it, Amazon Weekly business review, and you'll see how they run it. But essentially the whole purpose of the meeting is to figure out, are we on track to hit our revenue targets or not? And if we're not, each functional leader should be able to say, like my area, just business as usual, things are good. We don't have to talk about it. But if things are off in my functional area, I need to know why they're off.

I need to identify why they're off, and I need to so go through the diagnosis, and then I also need to basically say, hey, here's how I think we're going to fix it. I need to come to that meeting prepared. So we do that just to feel like we're always in control, we're always ahead. We're never surprised if we're tracking to miss a number. But the channels, word of mouth is really key for us.

It was since day one. We have a product where people create the product and then they have members who get exposed to our product. So there's actually a little bit of some virality there, a little bit of a loop. We call it word of mouth, but the product helps with that. And so our product actually, like, we're a product led company, so our product actually drives a ton of our growth, which is great.

Omar Khan

Yeah, that's awesome. So typically when you look at a company of this size and chief revenue officer, not always, but mostly I've seen they tend to come from a sales background, although your role is much broader than that. How much sales experience did you have coming into this? The chief revenue officer role? I would say like a third of the time, it's like a marketing leader.

Andrew Guttormsen

Maybe two thirds of the time it's like a sales leader typically oversees sales, marketing, customer success, revops. Sometimes it's like a very sales oriented company. It's literally just like a sales role. Right. So I had no formal, formal, like sales.org management experience.

I even at Teachable, my role there, I was the vp of marketing and growth and oversaw like, the marketing side of the house. We didn't even have a sales team there. It was all self serve, right.

So what I did was I got real and I was like, I'm gonna have to hire a coach and figure this out because I didn't know what to do, but I knew that I didn't know enough. I was doing all the sales, and frankly, after 1500 demos, I was kind of tired of it. I wanted to go out and hire a couple people, but I wanted to get it right. And, you know, I had made mistakes in the past actually hiring salespeople, and I didn't want to repeat those mistakes. And so I went out, I found a coach.

It was actually, it was actually a customer of ours who ran a community called SDR Nation for SDRs. And he had previously been a vp of sales actually multiple times. And so we just, you had a conversation, hit it off, and I was like, hey, like, I know you're doing coaching. I'd love to hire you. Like, let's 8 hours.

Let's just do 8 hours together, see how that goes. Then he became my coach kind of longer term, and I realized the more I talked with him how little I knew about properly running a sales team. And so I was like, wow, I can't imagine not having a sales leader. And his name is Charlie, like Charlie. And so put up a JD and at the same time I sent him an email and I was like, look, we're going to have this role and I really think you'd be a great fit for it.

He basically said no. And then I tried to convince him more over the couple of weeks. He was actually already working on another venture, exploring something else that he was gonna take on. And so, you know, eventually I just wrote him a really long email trying to convince him to join the team and it still seemed like it could go either way. I found out later, so he flew in a week later.

We were gonna kind of go through. All right, how would you come in? Like what would you do? He was gonna test out. Would he like working with me?

So we go to this, wework, we hop in a room, carve out like three or 4 hours together, go through. He comes super well prepared, tons of questions around the business, thinking about how he would start things up. I left that meeting just being like, man, we have to get Charlie. We gotta get Charlie. And it turns out he left his house a day before that and his wife said, you gotta go get this job.

You have to join circle. And so we were both trying to convince each other to start, to start this kind of like relationship together where he'd come on and we landed Charlie. And so he's been great. Now he runs our sales team, but it's a 20 person team now. And he's just kind of started.

Omar Khan

It's a great story. We're going to have to wrap up in a minute. Just briefly, tell me, like you said, you were at about 19 million in ARR last year. You were at about 8 million.

Whats driven this dramatic growth? And I think you mentioned that it was mostly expansion revenue, but just give us a sense of the kinds of things that youve been doing to drive that kind of growth in a relatively short period of time. So I think when you want to grow, you know, at a venture scale rate, and we'll say at like this stage, we'll say it could be 70%, it could be 100% plus 150%. Right. You know, for us, we wanted to double last year 100%.

Andrew Guttormsen

When you want to grow that rate, you got to do multiple things. So, like, you need to acquire new customers. So, like your gross, like new business bookings, that revenue. Right. So new customers, you need to be growing.

But then also there's expansion. Right. And so you also need to expand the accounts of the folks that you bring in by delivering more value to them. So we've done a lot of pricing and packaging work. We ship a lot of new product improvements that people can get more value from, which increases size of their accounts.

And the other thing is you need to retain customers. You have lower churn and you don't decrease churn overnight. It just has to kind of like, you need to be constantly acquiring the right kind of customers, building a really great product, delivering more value. And then over time, you can see the churn slowly come down. Right.

But ultimately with expansion and then gross churn, if you kind of like, put those together. We really spend a lot of time thinking about net revenue, revenue retention and how can we increase net revenue retention. If you look at all of the companies that become really big in software serving our types of customers, there's very few that serve very small customers like the way that we do. So we spend a lot of time think about net revenue retention, how to increase it, how to get as close as we can to 100% nr. And to do that, we've also made some, like pretty big product investments.

So we rolled out this big workflows product, which is an extra product you can add to your account. You know, on Circle, we've rolled out a mid market product. You know, normally the average customer on Circle used to pay us dollar 150 a month or a month. And then we added a $30,000 a year. Your own branded apps do all of it, like just on Circle, it's $30,000 a year.

And so that really helped to us grow the new business number, expand our accounts that wanted to go from paying us $200 a month for their core experience, having full branded apps, $30,000 a year. There's a lot, all of those things together, they kind of stack and add up to help. Maybe instead of growing 50% naturally, if you didn't do all the stuff, add those things in, grow 100%, you know, so it's more so like, how can, what can you do to just grow marginally, incrementally faster than the growth rate you would have otherwise just naturally without doing those things. Yeah, yeah. I know that you now even have an enterprise plan and you're, you know, a lot of the times I see you get SaaS companies that start to go up market, they go for these bigger customers.

Omar Khan

It's a tough thing to do to serve enterprise customers and the smaller customers. So, like, where are you guys headed and how do you, how you kind of balance that? So the truth is, a lot of the people that are buying are what we call our mid market plan, which is a whole different price point. They actually tend to be the same type of ICP as the smaller creators. A lot of times the person that's buying just normal circle plan is a creator and they're pretty successful and all that.

Andrew Guttormsen

The people who buy the branded app experience where it's all their brand, nothing related to circle. A lot of times they're just like that original person who's a few years ahead, who's doing $500,000 in revenue or $5 million in revenue, but maybe they also have an extra person or two on their team. And so it's actually pretty similar in terms of the ICP. What's challenging, but the real challenge is more so getting them onboarded, the expectations and making sure you deliver on that, because there's a different relationship when you charge somebody $1,000 versus $30,000. And so just really making sure you can live up to that and deliver.

Omar Khan

Well, I mean, it's been incredible to see you. Basically, it feels like I've been on the sideline watching this thing, starting up and getting to the first million and then growing and kind of where you are today. And it's exciting to kind of think about where you're going to take this business in the next few years. So definitely we'll have to get you back at some point and talk more about this. I feel like there's probably a whole bunch of things we haven't talked about that we could, but for now, we've got to wrap up.

So let's get on to the lightning round. I've got seven quick fire questions for you. Sounds good. Let's do it. What's one of the best pieces of business advice you've received?

Andrew Guttormsen

Just be willing to have the uncomfortable conversations up front and early and often, and don't put them off. What book would you recommend to our audience and why? The one that I'm reading now, which I'm really enjoying, is it's called Titan. It's about John D. Rockefeller.

It's his biography. It's super long, but it's just a great story. What's one attribute or characteristic in your mind of a successful founder? Resilience. Just like staying power.

The ability to just, like, really keep going and go through pain and do it for a long period of time. What's your favorite personal productivity tool or habit? Long walks. I've had quite a few people say that I should try it more walking. What's a new or crazy business idea you'd love to pursue if you had the time?

Honestly, I'm so focused on circle, I never even think. I don't even want to do any other think about other businesses right now. I do too much business right now. You know what's an interesting or fun fact about you that most people don't know? I played a lot of too much online poker, competitive poker, higher stakes poker back when I was 1819.

Omar Khan

And finally, what's one of your most important passions outside of your work? I love going to cities like New York and doing a bunch of research on, like, the streets and what were like, interesting locations there and kind of like understanding the history of some of these cities. I started a little app company, which basically you would do scavenger hunts through, like, cities and zoos and aquariums, and it'd be like a game because it was a hobby of mine, passion of mine, understanding what was happening in the city 200 years ago. Yeah. And these days with AI, you can probably see it as well.

Andrew Guttormsen

Yeah, totally. All right, Andy, thank you so much for joining me. It's been a pleasure. If people want to check out circle, they can go to circle, so. And if folks want to get in touch with you, what's the best way for them to do that?

Yeah, so you can just, you, you can know, find me on twitter. It's just agathormson. It's my last name, and just literally, feel free to reach out anytime. My email is just Andrew, so. But Omar just really appreciate having me on.

I feel like we could literally talk for hours and it would be a blast. So thank you. It's been a pleasure. Thank you so much. Always great to catch up with you, and I wish you and the team the best of continued success.

Thanks so much. Yeah, good to catch up. It was fun. Cheers. There's a world where your CRM is powerful, easily configured, and deeply intuitive.

Omar Khan

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393: Circle: Scaling a Community Platform from Seed to $19M ARR - with Andrew Guttormsen

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1: Introduction and Background

2: Overcoming Early Challenges

3: Growth Strategies and Market Response

4: Scaling and Future Vision

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