Funding. Such a powerful, reality-check of a word, either appreciated or anguished over in equal measure by new startups. This simple noun can enable the dreams of many or force the prospect of staying locked away in a world of nine to five for others—a word of significant weight.
Funding is not always a prerequisite, but it can make a night and day difference to a startup’s launch.
Have plenty of it, and benefit from a host of options enabling a far smoother launch. Visibility is far easier to acquire through advertising and marketing campaigns. Staff payrolls will cause less anxiety over those first couple of years, as will the operational side. Premises, equipment, and software – are all vital cogs in the startup wheel and usually require significant capital.
Don’t have it, and the process becomes far more intense. Companies without adequate funding are exposed to a far higher chance of failure through lack of cash-flow, and a much greater battle to get things running – if the operational structure has been bootstrapped.
The difference between well-funded and bootstrapping startups can be remarkably stark. Night and day.
Product: SEO tool (SaaS)
Founder: Dmitry Gerasimenko
Revenue: $100 million (ARR)
While funding is crucial in launching most new ventures, it does have an arch-enemy. A fearless, sleeves-rolled-up opponent who is not easily intimidated and has a firm self-belief. That nemesis is the intrepid, gutsy entrepreneur.
We love a fearless entrepreneur here at Startup Geek.
Imagine, if you will, a world without them. Some of the most incredible companies in history were launched by entrepreneurs who are short on funding but big on vision, determination, and drive.
There are prominent, almost cliched examples such as Apple and Google – both famed bootstrapping success stories.
There are others, of course, which are possibly less commonly known. Internationally recognized brands launched with a tight budget before eventually listing as billion-dollar companies. Mailchimp, Spanx, and Craigslist are further examples of bootstrapping success.
That said, successful bootstrappers are traditionally in the vast minority. But over the last decade or so, the landscape has changed.
With the 2008 subprime mortgage catastrophe and the horrendous stock market crash that followed, there came a considerable decrease in the number of venture funding options available. For several years, many startups had to find a way without the help of a VC. On the back of this, and in defiance of the collapsing banking industry, a new era of bootstrappers was born.
Venture capital became unavailable to many and even considered a little spiritless for those who had it. Successfully bootstrapping a new business became vogue; slogging your way through a challenging launch without adequate funding was seen as a way to earn your stripes. A rite of passage.
The Early Ahrefs Years
As the founder of Ahrefs, a Singaporean-based SaaS company providing SEO services, Dmitry Gerasimenko knows a thing or two about bootstrapping.
In reaching around for analogies and considering his success story, I was going to suggest Dmitry is the Elvis Presley of the bootstrapping world. But that immediately conjures up imagery of wild rock-n-roll superstars, which is not a fitting mental image of Dmitry, who might be described as the quiet, softly spoken, humble type.
Scratch beneath the surface, however, and you will find a tough, determined, extremely intelligent individual who has taken the SEO SaaS world by storm.
I don’t know what applied mathematics involves, but I made the mistake of googling it, I shouldn’t have bothered. I remain clueless. Dmitry studied the subject at Kyiv Polytechnic University, in his native country of Ukraine and while doing so, he ran various tech-related side hustles. Designing and selling software solutions, SEO freelancing, and consulting became his staple.
This side hustle evolved into a full-time business. Eventually, deciding to drop out of university to focus on this now growing, credible venture.
He also worked in project management for a US company, alongside his various software design projects. In time, the software design took precedence until he eventually created a quite brilliant web crawler out of necessity for his own SEO freelancing projects. With that, the very early seeds of Ahrefs were born.
The Birth Of Ahrefs SaaS Product
During these formative years, the whole business consisted only of this hard-working software tech with a laptop and a growing client list. As the demand for his services grew, he developed the web crawler into a complete SEO toolkit with features including link building, keyword research, competitor analysis, and site audits.
The software was incredibly well-received within his network, leading to volume inquiries from the wider community. Realizing he was onto something, he set about tweaking the software to make it more user-friendly and compatible with the broader consumer market.
The vision was simple. By offering the same service as other SEO engines, but making his software more optimized, he proved that you don’t need to reinvent the wheel to deliver something of high value and gain market traction.
What you might need, amongst other traits, is passion, which Dmitry has in abundance. Spending most of those early years hunkered away in a darkened room creating the software – an image further unbefitting of my Elvis analogy. By 2010, he had developed the toolkit to include backlink analysis and a search engine designed specifically for SEO. The software was ready for market, and Ahrefs was launched in that same year.
For those unfamiliar with backlink analysis, the premise is straightforward enough; a backlink is simply a third-party website linking back to your own. The more backlinks you have, the more Google recognizes your relevance and authority, which should, in turn, bolster your profile with the Google algorithm. Backlinks are a fundamental, crucial part of SEO.
Analyzing tools will look into these links and sweep for quality. Unnatural and spammy links will be flagged, and you can act to have them removed or improved. Plenty of SEO toolkits offer a backlink analyzer. Still, Dmitry’s Site Explorer can check a more extensive links database quicker and more frequently daily. This tool is the primary feather in Ahrefs’s cap.
Using his personal funds – a considerable $300,000 saved through those early freelance years – Dmitry relocated to Singapore, attracted by the government’s business ratings and incentives for startups in the technology sector. After securing office premises, he employed a small team of tech professionals to help take the business to the next stage.
Ahrefs had progressed from a solo entrepreneur to a small SEO company with premises and staff. The SEO toolkit was launched as a SaaS product and began to flourish, quickly picking up volume subscriptions.
Over the first few years, his vision was mostly built on product quality, focused on building an SEO tool so good that the community would almost consider no alternative. Create a technology so much better than the competition, he assumed, and customers will be drawn to you.
These might not sound like the words of a savvy, modern-age marketeer, but we imagine Dmitry would have no issue admitting that; his passion, creativity and knowledge are far more abundant in software development than in marketing. He decided to play to those strengths by developing his already quite brilliant software further and organically finding customers. People will talk, he figured. Word will spread.
Without a comprehensive marketing strategy in place, he promoted to his network through email and DM’s, in addition to regular posting on various group pages, forums, and the Ahrefs blog. Through positive feedback and reviews, the tech community would act as a proxy sales and marketing team, creating an organic brand awareness campaign simply by one SEO enthusiast telling another how good it is.
Combine this with guest posting, occasional interviews, and steadily increasing website traffic, and you have the basic foundations in place to develop as a brand. Not an unreasonable strategy – providing the product is popular.
As an SEO professional, he knew Ahrefs would prove popular amongst his peers. And it was. User reviews were mostly highly positive, and the SEO community started to talk about this new feature-rich SaaS toolkit. Monthly subscriptions began to take shape mainly through word of mouth and peer recommendations.
You might view this strategy as rather simple in nature, possibly even a little risky, putting all of your eggs in a product-driven basket. But the vision translated perfectly, rolling out precisely as he had hoped. Ahrefs hit the ground running with a successful launch and ARR of $1 million in the first 12 months. By year five, that had grown to $10 million.
That’s quite remarkable when you consider this was achieved organically, with a staff of 15, no sales or marketing team, and no concrete marketing plan to speak of.
However, this build it and they will come approach will only carry you so far without deploying some semblance of a marketing strategy in the long term. Ahrefs had an excellent product with huge potential and a very healthy ARR. But they now sought a bigger slice of the SEO software market. By 2015, with the company foundations, systems, and practices settled, Dmitry decided to step up customer acquisition efforts by creating a CMO position.
Content Marketing Drive
Enter Tim Soulo. As an SEO consultant, blogger, and content developer, Tim knew a thing or two about the industry, but it was this knowledge, coupled with a background in marketing, that caught Dmitry’s eye, and an offer was made. Tim was the first official marketing employee with Ahrefs, with a brief to increase ARR by any strategy of his choosing.
Tim knew the software was pretty good, and industry feedback was encouraging. But even with a growing customer base, it is evident that the marketing was lacking. With just the most basic of strategies, expediential growth was almost a given, in his view. Dmitry had a fantastic product – Tim just needed to spread awareness.
The core of Ahrefs success to date has been built on recommendations through end-user experience, mainly through social media dialogue and networking. Immediately, Tim capitalized on this approach by accelerating the content drive on social platforms such as Reddit, and various SEO groups, forums, and communities.
He then created educational content through blogs, tutorials, and free courses. Aware that most content can have a limited shelf life, this more educational approach would eventually provide continual volume traffic. The Ahrefs free SEO course alone, for example, brings 500K unique visitors to Ahrefs each month.
Over time, a dedicated marketing team began to take shape at Ahrefs with a critical focus on content marketing through blogs, articles, and YouTube videos, mainly of an educational theme.
Interestingly, the team has never used any ROI measurement, with all marketing verticals judged as one combined effort. Providing there is consistent annual growth, they pay little attention to the stats of each specific marketing channel. Customer feedback always takes precedence over carefully analyzed ROI. *
Suppose customers are tweeting to say they subscribed because of an Ahrefs article they read, for example. In that case, that is all the team needs to determine the article’s success and continue with the strategy.
It seems like a casual approach for a CMO, but who are we to argue? ARR has increased by over 60% since Tim joined in 2015. His employment has been a critical element in Ahrefs explosive growth over the last few years, driven mainly by a vast content push.
You won’t see highly creative, catchy, multi-platform advertising campaigns because they don’t run any. Even the more current, on-trend strategies such as pixel tracking are disregarded. Almost everything is content driven; remarkably, they do not have a single salesperson in their staff of now around 70 people.
Potential Google Competitor?
By 2021, Ahrefs reached an ARR of $100 million and had become one of the world’s leading SEO software brands. For several years they have remained highly profitable with excellent strong margins. Because of that, Dmitry continues to refuse interest from venture capitalists. Bootstrapping has been a success for this entrepreneur from day one. It is difficult to imagine a different outcome if he had sought outside investment years ago.
In a recent interview, he explains a preference for a more patient approach to growth with a philosophy he describes as laddering;
“Lots of startup founders want to avoid climbing a ladder and would rather take the elevator. The ticket to that elevator is sold by VCs and is being paid for with your company’s equity, loss of full control, and smaller chances of success.”
With a subscription-based model relying heavily on word of mouth and organic content drives, Ahrefs preferred to take small but frequent profits and reinvest them into the company to move forward.
They have recently announced plans to launch a Google competing search engine called Yep! With a business model similar to YouTube’s monetization system – content creators will receive 90% of the advertising revenue generated through ad placements.
Many search engines have launched over the last ten years, with many self-promoted as future Google killers. None have posed much of a threat, with one or two nipping at Google’s heels without causing disruption. Google continues to dominate the space without serious competition. For now. Yep! might be the first to pose a real threat to Google’s dominance – time will tell.
The future looks good at Ahrefs. With substantial annual growth, a sizable share of the SEO market, and an imminent, unique search engine launch on the horizon. They are a great example of bootstrapping success who have likely motivated other startups to adopt the same tactics.
* Customer feedback always takes precedence over carefully analyzed ROI is a paraphrased quote taken from an interview with Tim Soulo. You can watch that video here