How Being Profitable in 2023 Changed the Path of SimpleDirect
We started SimpleDirect in a dorm room in 2019. Four years later, in 2023, we reached profitability and began expanding in ways we had only dreamed of before.
The Early Days
Founded in a dorm room in 2019, SimpleDirect was all about innovation and solving problems. In our first two years, profitability seemed like a distant concept.
As college students, our days were filled with coding sessions and fast food dinners. We were fueled by passion, not salaries, focusing solely on creating something impactful.
Learning from Early Mistakes
Our financial naivety first showed in 2019 when we hastily assembled a sales team in San Diego. This decision drained our resources significantly, as the team's costs far exceeded the revenue from our financing product.
Weekly, we managed to secure 1-3 new customers, but by the end of the year, our accounts were deep in the red, forcing us to let our sales team go. This painful cut was financed by scraping together $3,600 from our personal savings to pay off the remaining sales salaries.
The Rough Years: 2020-2022
Over the next three years, our losses totaled over hundreds of thousands of dollars.
The struggle wasn't just about cash flow; it involved coming to terms with our operational naivety. Our 2022 attempt to raise a seed round fell through, a stark reflection of both our financial model and market conditions.
Pivotal Changes: Restructuring in 2023
By 2023, we had started to make more revenue from our operations. Desperate for a turnaround, we expanded our team from 4 to 14 in a risky move to scale operations.
This growth was unsustainable, and by April, we faced the grim task of laying off many valued team members. This reset reduced our burn rate by ~65%, setting the stage for recovery.
Achieving Profitability: A New Financial Discipline
In June 2023, the appointment of a new CFO marked a turning point. With rigorous financial reviews, we slashed our monthly expenses by another ~35%, discontinuing costly SaaS products and shifting design tasks to more economical agencies.
By August, these measures helped us achieve our first month of profitability, earning net profit for the first time after ensuring every team member gets paid well at the same time.
Embracing Efficiency: Life After Profitability
Post-profitability, our spending philosophy transformed.
We prioritized essential tools like Google Workplace and Slack but eliminated thousands of dollars monthly in superfluous expenditures.
My dual role as CEO and CTO brought me closer to the operational core, enhancing both my oversight and our product development.
Lessons Learned: Beyond Financial Gains
Profitability isn't just about financial metrics; it's about sustainability and focus. We've learned to scrutinize every expense and operational expansion with a long-term view.
Our approach to growth is now more measured and reflective, acknowledging past oversights and planning strategically for the future.
Moving Forward: Focus on Core Products
With our finances stabilized, we've realigned our efforts towards enhancing our core offerings and forgoing the distraction of fleeting trends. This focus has solidified our market position and allowed us to plan for future innovations without the constant pressure of immediate returns.
Conclusion: The Power of Perseverance
Profitability has brought its challenges, but the clarity it provides is invaluable. We are more committed than ever to building solutions that not only meet but exceed customer expectations.
For those walking a similar path, remember: transparency and resilience are your greatest assets. Keep your vision clear and your operations lean, and the success will follow.
Feel free to reach out (@TheGeorgePu on X) if you're navigating these waters yourself—I'm here to share insights and support your journey.