EPISODE 6... How PBworks' was built in 24 hrs, gained 5K users in one week, grew to 300K users in 30 months

PBworks was launched 6 years ago on May 31st 2005, and now has over 1.3 million accounts. It is now used by everyone from school teachers to Fortune 500 companies and Presidential candidates. This interview focuses on the early period of PBworks' growth.

PBworks: Early User Growth by the Numbers

May 31, 2005 (1 day): Developed & Launched

• Yes, this is not an error, it was built and launched in 1 day

First week after launch: June 1, 2005 to June 6, 2005 : First Users

• 0 – 5,000+ users
• All growth through personal network & word of mouth

First 15 months after launch: June 7, 2005 to Fall 2006: Early Adopters

• 5,000 users – 150,000 users
• No traditional marketing done
• Grew virally from its user-base & association with groups like Barcamp & SuperHappyDevHouse (interestingly enough, SHDV was also mentioned as one of the groups that helped launch another startup that we interviewed) 

15 - 30 months after launch: late 2006 to early 2008 : Early Majority

• 150,000 users – 300,000 users
• Users in the education sector were big early adopters
• Some marketing was done such as giving away t-shirts & free licenses at conferences  
• Chris joined as head of marketing in early 2008

30 months to 6.5 years after luanch: early 2008 - present: Late Majority

• Grown from 300,000 users - 1.3 millions users
• After Chris joined, he shifted the focus from growing users to growing the paid accounts -> Most of the relevant growh since then has come in this segment. 
• Currently focusing on two main markets: law firms and advertising agencies

What was your early invovlement with PBworks?

I do a lot of angel investing and advising. In the case of PBWorks, I knew David Weekly since before he started the company. After he created PBWorks, I really liked the product so I became an early user and an evangelist.

How did PBWorks get started?

It’s a classic Silicon Valley story. David decided to become an entrepreneur and raised a little bit of money from friends & family. It wasn’t an investment in a particular idea, it was an investment in whatever company David was going to create. He then devoted 18 months of his life to working on a product called "I Am Smarter" which was going to be enterprise grade instant messaging service.

Along the way he organized a SuperHappyDevHouse hackathon and some people asked him if he could set up a wiki for them. Same thing happened at BarCamp. Eventually he got tired of setting up media wikis. He decided for that Hackathon, for that one night, to build a simple wiki product so he don’t have to set up this service over and over again. So he built PBwiki in that one night, got it running, launched it and emailed his friends about it.

How did PBWorks get its first 1,000 users?

David’s example is an unusual one because it’s not usually the case that from the time you start working on the project to the time you have your first 1,000 users is measured in 24-48 hours. That’s how quickly it happened. He started writing it the evening of the 31^st, launched it the next day, and within couple of days he had a few thousand users. BoingBoing then picked it up and within the first week he had 5,000 users. None of those users were from I Am Smarter, David’s original product. As far as I know David didn’t have any clients for "I Am Smarter".        

How did you get involved with PBworks?

I got involved as an investor in Fall 2006, almost year and a half after it started. What happened was I became a user of the product and I began using it pretty enthusiastically for organizations, volunteer work, and a company I was starting. By the time I came in as an angel there were about 100,000 to 150,000 users, and they were growing at about 10,000 users per month.

How did they grow to 150,000 accounts in 18 months?

Most of these wikis were public and some of David’s friends started using it for Barcamp which ended up exposing it to a ton of influencers. This is a classic example of driving a lot of growth by getting your product to the right early adopters. Interestingly, in addition to early adopters, another group that adopted early on was educators. That happened by chance, tt was definitely not intentional. Educators just came in and started using it. After it became apparent it was a big usage platform, that’s when the company began to do things to encourage usage by educators, like giving away free t-shirts, licenses, access to conferences, etc. There wasn’t much focus on traditional marketing until that point.

When did you join the Company and how big was it then?

I joined in early 2008. Until then Ramit Sethi was running marketing. By then there were abou 300,000 uses and some minimal revenue.

They were growing a lot but only bringing in a small amount of revenue. Of the 300,000 accounts, only about 0.5% or 1,500 were paid accounts. These accounts were priced at $99/year. There were some Companies that were paying for the product but most of the paid users were teachers.

It didn’t seem like there was about to be a radical increase in the number of paid accounts. So the company was at a crossroads. We either had to increase our user-base by 10 times (which we knew wouldn't work) or try something different. That’s how I got involved. David came to me and said he didn’t know much about selling to businesses and so I came on board to help them make that happen.

So what changed after you joined? 

What changed was growth in the segement that generated us revenue. Our focus became less on the overall growth and more on the areas where we thought we could monetize - namely companies and educators. One way we dramatically increased the revenue was simply by changing pricing. Historically we priced it at $99 per classroom per year and a teacher could pay for that. Usually teachers would pay for it out of their own pockets. One of the things we did was we created a Campus Edition that allowed up to 1,000 users (the size of a small school) for $799/year.

This now became very appealing to schools. So by focussing on the market we figured out how to price the product and just by setting up the Campus Edition, our education revenue spiked. It was purely a function of pricing, not of increased functionality. This is why pricing and marketing are extremely interconnected.

We also changed the brand from PBwiki to PBworks because it was no longer a piece of wiki software; it included project management, file management, and functionality that was relevant for businesses.

By doing this we really began to appeal to businesses and this was also when we were able to turn things around. Until that point the majority of our revenue was coming from education; now we’re at the point where business accounts represent the vast majority of the revenues. Instead of $99/year sales or $799/year sales, the vast majority of revenues come from $10,000/year or more contracts.

How has growth continued since then?

Every year there’s more consumer adoption and of course more business adoption as well. We care more about business adoption but consumer adoption is relevant as it builds awareness. Since most of our revenues come from business adoption, most of our marketing focus is within that sector.

It's very important for people to identify their most successful customers and then try to learn from them. Not everyone’s going to react to your product in the same way and not everyone’s going to use your product in the same way. The people who get more value out of your product are going to stick around, the people who don’t are going to leave. You should make a concerted effort to figure out which of your users are really successful by using your product and how you can get more of them.

In the case of PBworks, a lot of what we did was look inside our database, find the people who were most successful, and find out what they were doing.

Can you talk about that, about engaging your users and discovering your market that way?

Yes, absolutely. The market is constantly changing, so you have to constantly be learning about your new market. Over time our customer base shifted from educators to libraries to consulting firms. We’ve always accepted all businesses but we have steered it certain directions because we saw there would be greater opportunities. Using this approach two focused markets have emerged – advertising agencies & law firms. Two very different groups who use our product in very different ways.

It was important to be able to identify those uses early on, cultivate them, and push them along in order to make that actually work as a market. Marketing is not just about finding the right message and selling to these people. Marketing is about figuring out what your users needs are and how to meet those needs.

What are the lessons to be learned from David’s story?

There’s are a couple lessons for entrepreneurs to be learned here. First one is that David spent all this time and energy on this product and he had to have the wisdom to see that it wasn’t going anywhere. He had to come to a realization that even though he spent 18 months of his life and thought this was going to be it, it’s not it. The market has spoken. What they want is PBwiki and he better spend his time on that.

The other side of the coin is that if you spend 18 months building a product then that’s probably too long. You need to be getting feedback from the market constantly, and you need to be honest with yourself about what that feedback means. So let me put it this way: if you have a product, you take it to people and they all say “Oh yeah that looks like a great product!” that means absolutely nothing. You need people to say things like “My god! How soon can I have it?”

The second lesson to be learned is David noticed people kept asking him to set up a Wiki for them and the media Wiki software available at the time was garbage, at least for any sort of individual purpose. That’s why it made sense because what David was doing was serving latent demand. A big part of being an entrepreneur is figuring out where there is latent demand for a product and where people are screaming for a solution.