Why We Built Hubstaff: Personal Pain and the Need to Be Free

Hubstaff was born from a place of pain. As you read this, it’s going to get personal. I learned a long time ago that if you’re going to succeed as an entrepreneur, you better get personal. You’ve got to feel pain when you lose. An entrepreneur’s life is all about surviving the pain and sacrifice that it takes to win (or simply stay afloat) until you achieve freedom. I don’t do this for the money (I haven’t been paid in two years), I do it for the freedom. I go to battle every single day so that myself and the 30,000+ users of Hubstaff can work and live our lives as we choose.

That’s why Freedom is a core value at Hubstaff and it’s the very first one on the list.

I used the term “battle” above because that’s exactly what it’s been to get traction for Hubstaff. That battle is what my growth blog series is all about. It’s a public diary of my daily struggle to grow Hubstaff and earn my freedom – and tell you how I did it.

Recently I’ve been invited as a guest on several podcasts, and everyone who has heard me speak seems to latch onto this idea of freedom. So I decided to tell the story here as the very first post in our growth series. This startup story explains the beginning of Hubstaff, and I believe it’s a big part of Hubstaff’s success.

Cubicles and Commutes. The Pain Begins.

I loved my upbringing in the midwest USA, but it wasn’t “entrepreneurial.” My life was normal. My dad was an electric engineer (mid-level manager) for large companies and my mom was a stay-at-home mom. I was taught from a young age that the best route to take was generally the one with the least risk. This is 100% the opposite from the way I think today, but it was that thinking that guided my decision to accept a job with Abbott labs in North Chicago after graduating from college.

So I got this job offer in corporate finance and 18 months later I was gone. Hated it. I spent more than two hours a day (over 12% of my waking hours) commuting and stuck in Chicago traffic.

The surroundings of this vast “complex” of matching buildings may look impressive from the outside, but on the inside it’s all cubicles. This is where the journey for what is now Hubstaff begins. Way back in 2002, sitting in a cubicle 50 miles north of Chicago, dreading the drive home, and not adding any value to the world.

I was commuting two hours a day to sit in this cube for 8 hours a day and push useless reports that didn’t mean anything to anyone. I looked around at the managers I was working for, and I really didn’t want to become that when I was 45. I talk more about my decision to leave in this interview with Dane Maxwell from The Foundation.

My First Taste of Freedom

After patiently listening to me complain about how I felt I was wasting my life away, my dad (this had to be a great feeling for him after just dropping 50k on a college education) offered to buy me a course on how to create your own Internet business. He saw it in a newsletter called “Early to Rise” and told me that if I promised to implement it he would get it for me. It was $500 and my dad does not spend money very easily.

I devoured the course and it taught me everything that I needed to know to get started building my own online business. This course changed the direction of my life.

I decided on the golf niche (here’s why) and got to work. I started with a book, and then moved to DVDs. It was 2003, and I began building this business at night while working for Abbott in the day. So my typical day was waking up at about 5:30am, checking some emails, getting ready for work, 1:15 in the car thinking about the business, 8 hours at work thinking about the business, 1:15 in the car home thinking about the business, getting home at 6:30pm, dinner and then working on my business until around 11pm, then bed. When the business started making 5k a month, I quit my job and went into my internet business full-time. I have not had a “job” since (or sat in a cube).

From $0 to $1,700,000 in 18 Months (out of a Closet)

Once I committed full-time the business took off fast… I was making $46,000 at that corporate job in 2004, and in 2006 my personal income was for $560,000. We were generating 400 leads a day from paid media, and to this day we’ve sold more than 30,000 books and 100,000 videos.

This business was built in a closet, in a studio apartment, on a $300 eMachines computer… Again, humble beginnings.

It felt awesome to create value out of thin air and I was hooked. But at the time it felt a little too easy (more on this in a bit), which led me to not truly appreciate everything that had just transpired. I didn’t realize that all the stars had just aligned for me.

“Let’s Get an Office and Scale this Thing”

It seemed obvious that if I could do this myself out of a studio apartment, then I could get some really smart people together, rent a nice office and really scale this thing, right?

Wrong…

My dog, my wife and I packed up from Chicago and moved out to Phoenix, Arizona, because that’s where one of the golf pros I was working with lived. I thought that if I was closer to him, we could get all the content we needed, communicate better, etc… It was a poor decision, and a classic case of live and learn.

Offices don’t do anything except add to commute time and negativity. All the same pain points from working in a corporate world came back, and I felt trapped all over again. My creative juices dropped. I felt like I had to be in the office certain hours of the day and essentially, I was stuck back in a larger cubicle of sorts. My complete freedom was gone, and I started to resent everything and everyone for it (I took a lot of it out on my wife). I started to learn that it’s my ability to be creative, free, and to live each day as I please that makes me feel fulfilled. It felt like someone had stolen that from me.

We had a nice house and we had fun, but the business didn’t thrive. In fact, it shrunk. Competitors began to surface and vied for my spot at the top of the market. Ad prices rose by 400% and conversions dropped. I was learning…

Stress of Managing People – A New Form of Pain

The business was doing around 1MM annually at that point, but I also had five employees and two partners to support. We still made a decent living, but the freedom was gone and so was my excitement for the business. My role in the company transferred from creator to manager and it was a new level of pain for me. I was constantly worrying about where all the pieces in the business were at. Why was this project not done? What did that person work on today?

I was depressed and anxious. I drank hard for years to relieve the stress that I was feeling (I’ll do a post soon on how I got past founder’s depression soon). My breathing was always fast and shallow, and I was always anxious as hell.

I felt the pressure of making payroll and managing a team of 8 contractors, all in the same office. I tried a software system that was designed to show what your team is doing and manage workflow, but it was buggy and pretty much worthless. I then asked my team to simply send in emails and daily summaries. It worked for a few weeks and then tapered off. It’s hard to find a consistently effective communication system, no matter what kind of team you have.

I wasn’t asking for these daily reports or trying to get software installed because I didn’t trust them. They were all good people, otherwise I wouldn’t be working with them. I did this because I felt a deep need to truly understand what was going on and what my team was working on. If I didn’t know that everyone was working on the right priorities, it added stress, and I felt this deep sense of being lost and confused. I wanted and needed to make sure everyone’s priorities were aligned, especially since we were launching a new video every month as our main revenue source. I think this is a common feeling among startup founders. I recently read an article where Ben Chestnut, Mailchimp Co-Founder said, “I remember feeling insecure and lost a lot in our startup years”.

I’ve found that people have a tendency to work on whatever they feel is the best task at the moment, or the direction they get pulled in. So without close management or clear direction, they can spend hundreds of hours on projects that are not the top priority of the company. This is a common mistake when management becomes the job of the entrepreneur, and the entrepreneur is not always good at management. I had to spend a lot of time learning this skill and creating systems.

The pain and lack of freedom continued and I eventually ended up selling the golf business in late 2009, when it was doing approximately 900k in revenue. It felt like a treadmill that I was glad to get off of. You can only write so much copy and develop so many products for one industry before getting burned out.

Getting into Software and Going Remote

After the golf company sold, we decided to move back to the midwest to be closer to family as we wanted to have kids. One of the potential buyers for my golf business, whom I stayed in touch with, offered me an opportunity to buy into an SEO company. I had been wanting to get into software for a long time, but held back because I had no experience in software.

I took the opportunity because they offered me a salary to run the company and it would be set up as a remote company so I could live wherever I wanted. We bought it for $900,000 when it was doing $700,000 in revenue and $550,000 in profits. The business grew under our care, and we continued to reinvest portions of the profits into the business.

In 2011, we had grown it to $2.4MM in revenue, but I didn’t see it lasting forever because SEO changes so fast and is so reliant on Google. I also lacked an emotional connection to the business. I was running it, but it was really someone else’s product. I was an 18% owner through both shares I purchased and what I had been given when I took the opportunity (4% after 36 months). The business never really felt fulfilling to me. It entailed managing a lot of team members going in different directions.

If you are managing a remote team, do check out our ebook on remote management.

Learning the Skills of Remote Management

The SEO company is where I feel I truly learned how to build and manage a virtual team, so I was starting to alleviate that pain and I didn’t have an office anymore so that pain was gone as well. I decided that remote work was the way to go for my freedom. I was getting happier, and I was learning how to truly run a company. I learned how to move projects forward on a timeline, how to ensure tasks get done in a timely manner, and how to utilize project management software.

We used Teamwork based on the recommendation of our lead developer which Hubstaff now integrates. This got us out of the email hell that is billions of jumbled up messages and threads. Teamwork was able to document all of the communication going on in our company and allow me to follow up on tasks and projects on my own time.

The team consisted of:

• 4 PHP developers
• 2 customer service reps
• 3 marketing associates
• 2 server engineers (part-time)
• Myself

The Lightbulb Moment

We tried out a few other remote team management software systems that didn’t work out because of bugs. We experimented with oDesk (now called Upwork) for a brief period of time, but it wasn’t enough value for the price. I was paying them 24k annually at my payroll level, and it was only for the software (I brought my own team and didn’t find people through their network).

I felt that others most likely had the same need that I had. I also felt that remote teams were on the rise, and through my experience running the software company I learned that there are millions of smart, nice, talented, and hard working people all over the world.

I started to formulate ideas about how to start a software service that would help manage remote teams and provide a solution for my needs as a remote team manager.

I focused in on time tracking with some kind of management aspects (screenshots and activity) and getting analytics based around what your team was working on. Ideally it would integrate with various project management systems and payroll suites so that could be the “hub” for your remote “staff”. That’s how I named the company.

I also felt that there was a lot of everyday value in this software which was important to me (with our SEO software people really only logged in a few times a month, thus churn was high). It would be a platform that people would use all day every day. People would need this software. It would enable them to experience the same freedom that I had come to love, run a remote company better, and it would also allow team members to be more productive and understand the priorities in their company automatically (while working when and where they choose).

First attempts and failures at Hubstaff

In late 2011, I did a white-label deal with a software product that had some basic features we needed (time tracking and screenshots). I knew that it would cost hundreds of thousands of dollars to build this on my own so it was no small venture. Also, I really didn’t have any validation other than my own feelings.

I ended up getting approximately 15 paying customers on board over the course of a few months and I realized immediately that this would not be an easy business to market and sell. But that validation laid the eventual groundwork that would help me convince Hubstaff’s co-founder, Jared, to come on board as the technical lead behind what is now Hubstaff.

The white label deal failed because the software was still buggy, I was personally paying another company’s developers to make edits and fixes to their own software. In addition, there was the feeling that that they could rip it out from under my feet at any time. I knew that if I was going to go for this venture, I really couldn’t build on a shaky foundation.

Development Begins

In early 2013 we started building the current version of Hubstaff. It was the hardest thing I’ve ever done in my career, but at the same time it felt great. We’re just now starting to get traction after two labor-intensive years (writing this in July 2015) and I feel like we’re truly solving a big problem.

Every day is about creating better solutions for customer pain points and helping small business owners run remote teams more effectively.

We get to work where we want, and when we want. We have no office, and probably never will unless something drastically changes. To me, it feels like living the dream. Even though we work very hard, I’m still able to coach a t-ball league, and I don’t have to dress up for work or make a commute.

Our Transparent Story Continues on Our Blog

It’s July 6, 2015 and we are at $40,809 in monthly recurring revenue. We are a transparent company, which means we share everything that we do and all of our stats.

You can follow the progress in real time.

There have been a ton of lessons learned while building Hubstaff to this point. It didn’t actually meet all the criteria that I would consider today if I were starting a new business.

Read “Test your startup idea: A list that took me 8 years to develop” next to learn what kind of company I would get into if I was starting over today. Or jump to an article on how to grow a Saas business by David Darmanin of Hotjar.

Questions / Comments? Ask or say anything below in the comments. I’d love to hear from you. It’s not easy for me to be this transparent because I am a very private person, but I hope you got some value out of my story.

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