Episode 814 | How to Beat a Venture-Backed Competitor (with Laura Roeder)
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
In this episode, Rob Walling interviews Laura Roeder, founder of Paperbell, about how her bootstrapped coaching software business outperformed Practice—a venture-backed competitor that raised $10 million from Andreessen Horowitz. (03:52) The conversation explores Practice's strategic missteps and Paperbell's focused approach to building the right features for their customers. Laura discusses the challenges of competing against well-funded startups while maintaining a lean team structure with no meetings and freelance-only employees. (33:33) The episode concludes with Laura confirming that Paperbell has become the market leader in the coaching software space after Practice shut down in 2024. • Main themes: Bootstrapped efficiency versus venture capital bloat, strategic focus on core customers, and the advantages of capital-efficient business models in niche markets
Speakers
Rob Walling
Rob Walling is the host of Startups for the Rest of Us and founder of TinySeed, a startup accelerator for bootstrapped SaaS companies. He has built and sold multiple successful businesses including Drip, an email marketing automation platform that was acquired by Leadpages.
Laura Roeder
Laura Roeder is a serial entrepreneur who has founded multiple successful companies including Meet Edgar (social media automation) and Paperbell (coaching software platform). She's known for running lean, efficient businesses with minimal meetings and remote teams, having transitioned from consulting and info products to building SaaS companies over the past decade.
Key Takeaways
Focus on Core Features Over Platform Expansion
Practice made the mistake of building mobile apps for iOS and Android immediately, requiring a large engineering team from day one. (15:44) Laura's team built extremely similar functionality with just one engineer for three years, proving that mobile apps weren't essential for their coaching software market. The key lesson is to resist building "nice-to-have" features until they become absolutely necessary for customer retention or acquisition.
Maintain Capital Efficiency Even With Funding
Having $10 million created a false sense of security for Practice, leading them to overspend on engineering while under-investing in marketing and distribution. (19:03) Laura notes that even with significant funding, businesses still need to validate demand through marketing before building extensive feature sets. Capital efficiency should remain a priority regardless of funding status.
Understand Your Market's Upmarket Limitations
The coaching industry presents unique challenges for scaling upmarket because enterprise coaching (corporate programs) requires fundamentally different software than individual coach practice management. (21:31) Laura recognized early that trying to serve both markets would require completely different products, while Practice attempted to expand into general client management without success.
Some Markets Are Perfect for Bootstrappers
Certain business opportunities are too small for venture capital but perfect for bootstrapped businesses. (24:15) A coaching software business that caps at $2 million annually can provide a $1 million yearly income for a bootstrapped founder, but would be considered a failed investment for VCs expecting 100x returns. Recognizing these "VC-proof" markets can provide significant competitive advantages.
Marketing Beats Engineering in Customer Acquisition
Despite having substantial funding, Practice did minimal advertising on channels like Meta where coaches are highly active. (20:35) Laura consistently invested in SEO and paid advertising, understanding that marketing spend directly correlates with exposure and customer acquisition. Technical superiority means nothing without effective distribution.
Statistics & Facts
- Practice raised $10 million from Andreessen Horowitz when they launched in 2020, the same year as Paperbell. (10:36) This created massive pressure to achieve a $100+ million exit to provide adequate returns to their venture investors.
- Paperbell has processed over $47 million in payments for coaches using their platform, operating on a simple $57/month SaaS model without taking transaction fees. (06:03)
- Paperbell currently generates low millions in ARR with just one full-time employee and a team of freelancers, demonstrating extreme capital efficiency compared to Practice's large engineering team. (05:00)
