Unlike many of its competitors, the Everhour time tracker synchronizes with Asana, Trello, Basecamp, GitHub, and other platforms for managing projects, accounting tools, and so on. The tracker started as software for internal use; today 2.600 teams work with it in 70 countries.
— Michael, how did the idea of the tracker come about and why did you make the transition from a free to a paid version?
— The idea, as often happens, appeared from our own needs. The first business I was involved in was outsourcing. We founded it together with partners Yuri Tolochko and Sergey Staroverov. Like all outsourcers, we had to report to clients the hours we spent on the project and to issue invoices. Why did we need a new tool for this, why couldn’t we fill out some Excel spreadsheets? In fact, we started from the simplest, then tried different products of companies that later became our competitors, starting with Toggl and Harvest.
But at some point, we realized we could make a product for ourselves that would be better and more convenient than the existing ones, and released the first Everhour prototype in June 2013. We saw that it was good, and decided to bring it to the market. Solving a real problem based on our experience worked better than our previous attempts to do a product business. Before that, we experimented and didn’t really know what the problem was, how to solve it, and why we are better than others in this matter.
At first, Everhour was free, and we were still focused mostly on outsourcing. But in September 2015, we decided to make a full-fledged business out of our tracker. We already had several hundred companies using the service for free, but as we switched to a fee-based model, didn’t know for sure whether anyone would pay for it. But right after we introduced the fee, we already had about 7-8 thousand dollars MRR (Monthly Recurring Revenue) from already existing customers. Many people have fallen off, but since September 2015 we have been constantly growing at the rate of 2.2 times every year — and we hope to continue growing like this.
Everhour now has turnover of $1.5 million a year — not the biggest numbers for product companies, but for us, this is the first more or less significant milestone. We approximately know how much our competitors earn, and we see that we still have room to grow. It motivates.
— How would you describe your typical user?
— Our clients are basically teams that need to know exactly how much time their employees spend on work, and what exactly they do. Everhour brings benefits to teams of more than 5 users — teams that need to organize processes. But we’ve never made up a composite profile of our users. There are many advertisers and marketers among them, but I can’t say that they are only IT specialists. I would say that in part our users are those who use our integration platforms. For example, Everhour is suitable for those who use Asana, which is one of our three top integrations along with Trello and Basecamp.
— For a long time, you didn’t talk about your product at all, especially in Belarus. Why?
— We didn’t see a sales market here. There was no one to try to work with in Belarus, so we decided to immediately to go global. So far, only 2% of the total number of our clients is from the CIS, while the majority of clients are in the USA. Now we’ve decided to tell our story locally because we already have some experience that we can share. In addition, SaaS is a rather rare topic in Belarus, unlike mobile apps. It’s also more satisfying for the team when their friends hear something about the company where they work.
It seems to me that the majority of projects fails at a critical early stage of growth largely because they have misunderstood what the market needs, underestimated costs or didn’t raise a funding round, among other reasons—even though they may have a good product. I hope that Everhour’s experience can help other young companies.
It was difficult for us to find investments at the beginning of our journey because the VC [venture capital] in our region wasn’t developed enough when we were starting in 2013. But now it’s completely different. We already have clear metrics, we understand how we are growing. After the article on vc.ru, 6 investors from the CIS only contacted us and tried to offer investments. I’m sure that such attention from investors would be much harder to achieve at the initial stage.
— In a recent article on Medium, you discuss that fact that your company hasn’t attracted investment from outside. But aren’t you afraid that competitors will overtake you the because their capital from the outside might allow them to move faster?
— I’m not afraid of that because none of those competitors that I know has attracted investment. Time-tracking tools, unlike project management, is not a sexy market for an investor. In time-tracking, as far as I can see, we are not solving some kind of a global problem. Nevertheless, we provide our own approach to solving a problem that is vital for those who charge an hourly fee.
Investors probably don’t see a super-profitable exit in this industry. Of all the exits that I heard of in time-tracking, only TSheets managed to negotiate a takeover by QuickBooks for $340 million. But it’s more like a corporate takeover — the deal suited QuickBooks very well.
We are not afraid that a competitor will quickly repeat our features and take business away from us. And we are not afraid of competition from someone, just because they’ve attracted money. First of all, in order to simply duplicate what we have, they need to invest a decent amount of money that will not pay off soon. Marketing will require a lot of effort and money. Besides all that, we’re also growing bigger.
When we entered the market, we offered something unique and immediately focused on it. I understand that we wouldn’t have been able to achieve the current results if we simply made another time tracker without integration.
— Have you ever had a payroll job? What are your impressions of this kind of work?
— I was employed by BelIngosstrakh when I was still a university student. Then I grew from an ordinary programmer to a project manager at iTechArt. I was employed by Belgosstrakh when I was still a university student.
Recently, I asked one of my friends, who holds a very good position in an international holding, why he hadn’t yet started his own company. He replied that of all his friends, only me and another person had succeeded in starting up a? business. This motivates him to stay employed. But everyone decides for himself whether to risk or not. It’s especially hard for people who have worked longer as employees, who already have families and children. They can’t just leave and go almost nowhere.
I have acquaintances and friends who have not succeeded in getting something off the ground. And, frankly, I would not like to be in their place. Many say that a failure teaches something, but it can also drive depression. And that’s not a good place to be at all.
— Is it possible to start a business if you are completely alone?
— I will only talk about the IT business because I’ve never done anything else. I would say that it is very difficult to start alone in IT; I practically don’t believe in such stories. At least three co-founders are needed in the IT business. There were several cases in my example when two founders had different positions on different issues, creating conflict. If there are three people in the team, two of them will easily convince the third one. I was convinced of this several times.
In terms of skills, you need at least two specialists — a tech worker and a designer. You can trust your technical co-founder to deal with infrastructure issues to. The CTO must be a partner, not a salaried technical officer who works from 9 to 6.
Why do you need a designer? You’ll need to draw a lot. Of course, there are corporate software systems where the design is so-so (and this is OK, people don’t care so much about it). But if you have a lot of landing pages, you have to stand out. When a client comes to your landing page, he will refuse to register if it looks terrible. The design is very important.
— What is the main lesson you learned from doing Everhour?
— If you want to make a product, you need to very clearly understand what your unique advantage over competitors will be. It will be very difficult to get customers without a competitive advantage. The message should be very clear. For us, as I said before, the integrations were a competitive advantage. At the start, we didn’t have a mobile or a desktop application, we didn’t have all the other features that competitors had. But there was the possibility of integration, which set us apart from the crowd and allowed us to compete with other products. And even if 9 out of 10 users refused our services, because their priority was the availability of a mobile application, one of them made a decision in our favor, because he liked this particular feature. Later we began to expand our features, but the first one, which we did very well, pulled us out.
It’s not so difficult to find your unique difference. Sometimes there’s one huge player on the market, and everyone around thinks that he already has everything, so it is impossible to compete with him. But if you have something that makes you technically very different, and it’s not so easy to repeat, it will also be inconvenient for the giant to change something. He can’t change something at once, because it will greatly affect his existing customers. The little player can stand out and feel quite comfortable near the big one.
— What mistakes did you make while doing business? What have you learned in the role of an entrepreneur?
— My partners and I poorly delegated our responsibilities, we were doing too many things by ourselves, and because of this, growth took a little longer than it could. Growth from zero to a million took us almost three years. Companies that attract investment, ideally, cope with this in a year. On the other hand, if we hadn’t been involved in customer support for some time, we wouldn’t understand the problems that are important to customers. If feedback is transferred through another person, it gets distorted.
We no longer accept ideas for new software features by one person. Previously, I could offer something and accept the sole opinion. Now we discuss such things as a team, discuss them with partners. If you consider the suggestions of other people, it turns out even better. And, of course, making any serious decisions should be supported by data analysis.
My own childish habit of constantly checking Google Analytics is now gone. No need to spend a lot of time on unnecessary metrics.
— The HTP has been criticized for helping only IT startups. Does this discourage entrepreneurs in other areas?
— Such huge things can’t be rightly done right away; some time is needed for evolution. The HTP is a relatively small environment in which you can try out some experimental conditions. No one has yet said that these conditions will not be transferred beyond the Park. If it works there and the state will see that it has a positive effect, this experience can be transferred to other industries.
Naturally, those who are engaged in some other business may say, “Of course, they feel good at the HTP, there’s no income tax.” On the other hand, we must understand that IT companies have to compete literally with the whole world, it’s difficult. If these conditions hadn’t been created, Belarus would have lost many specialists and businessmen, they would simply have gone to other countries.
The benefits made for the HTP made the salaries competitive, and we don’t have the same outflow of personnel that exists in Russia or in Ukraine. Young people are now joining the HTP, and it is difficult for small companies to pay taxes. The park gives them the opportunity to save money, but at the same time it teaches them to do business properly, teaches them to respect the limits of the law.
— Businessmen of the “old school” tend to hide their capitals their financial situation. Are IT entrepreneurs, who earned money in the last 5-10 years, ready to speak about their profits?
— Globally, there is such a trend. More and more people are sharing information about how they have grown to a million and beyond. The Buffer company publishes the income of each employee. The Baremetrics service publishes MRR, ARR and all financial information for all of their clients who are fine with that. Any startup can be added to their dashboard to display their metrics.
But I don’t see this openness in Belarus. There have been so many loud deals lately, all of which are closed. No one knows the acquisition prices of MSQRD or Apalon, AIMATTER, Viaden, Maps.me… It also happens that entrepreneurs sometimes want to disclose the price of their companies, but the investor doesn’t.
We reported some information, but we are so small that some cafeteria’s turnover is bigger than ours. Indeed, there are cafeterias with a $2 million turnover.
This transparency is worth respect, and this is an opportunity for communication to be more interesting and useful. Businessmen with a comparable scale of companies will speak the same language. I might be interested in talking to a person with a 5 million MRR — but will he be interested in me? However, you know, if I earned $100 million, I would also think twice before talking about it.