Esben Friis-Jensen, a seasoned entrepreneur, teamed up with SaaS Mag to commemorate his remarkable 10-year journey in the SaaS industry and share his inspiring experience and lessons learned.
From founding two successful SaaS startups to navigating the challenges of the industry, Esben’s story is a testament to the power of adventure and stepping outside one’s comfort zone.
In this exclusive article, Esben reflects on his early inspiration, the transformative experience of joining an accelerator program in Silicon Valley, the struggles of raising capital, and the pivotal moments that shaped the growth of his companies.
Join us as we delve into Esben’s entrepreneurial odyssey and glean valuable insights from his decade-long adventure in the SaaS industry.
10 Years in SaaS Startup Land
In July 2013, I flew to Buenos Aires to join my three Danish co-founders to build the MVP for what became Cobalt (back then, Crowdcurity….yes, I know). So, this year marks my 10-year anniversary of living abroad and being part of the fantastic world of building not only one but two SaaS companies.
Today, one can start and scale a SaaS startup from anywhere with a strong internet connection. This has led many founders (especially Danish founders like myself) to stay in their home country. But one thing I believe you will miss out on when doing this is one of the most exciting parts of building a startup: The adventure.
Below, I will share my story, hopefully, to inspire more SaaS founders to not forget about this.
Early Inspiration
From a young age, I have played with computers. It started with games, and later with my brother and me coding basic websites. In the 90s and early 2000s, the internet was a playground with endless possibilities. Reading about Danish success stories like Jubii and Skype further inspired me to think big about the internet.
When I started studying Applied mathematics and Engineering at the Technical University of Denmark, computers and online software became a business tool, which I further grew interested in through my student jobs at a Software company Auditdata and the IT department in the Danish government.
Taking the startup leap
After university, I joined Accenture, where I worked on implementing large-scale SAP systems in global organizations. Founding or joining a startup was not really an option on the traditional career path in 2010 (Luckily, this has changed today).
Working at Accenture was exciting, with lots of responsibility. Still, I always missed the kind of impact I felt you could have by building something on your own that can impact not only one company but multiple companies or people.
Luckily I met a colleague Jacob Hansen with the same thoughts, and he convinced me to join him, Christian Hansen, and Jakob Storm on a startup journey. In early 2013, the 4 of us met at a Google meeting to decide what to build.
One of the big problems of the internet back then (and today) was that websites were getting hacked, and nobody seemed to have a good solution to fix it. However, larger tech companies like Google and Facebook had started to do bug bounty programs to incentivize security researchers to find the vulnerabilities in their websites before the bad guys. This inspired the idea to build a SaaS platform that could facilitate this kind of bug bounty program for online companies of all sizes.
Buenos Aires
Jacob Hansen had moved to Buenos Aires 1 year prior, so we decided to all meet up there for three months to build an MVP (minimum viable product). Buenos Aires is a beautiful city with a strong tech startup community (even back then), and the good steaks and red wine did not hurt.
In three months, working out of La Maquinita Co., we were able to build a good baseline platform despite limited development skills, and we facilitated the first bug bounty program for first ourselves and later for our customers, which we found through our network.
All the bug bounty programs were successful, and we got the appetite to do more. Back then, the SaaS ecosystem (especially in Denmark) wasn’t very big, so the dream was to go to Silicon Valley. We applied for accelerator programs, and luckily, we were accepted by Boost VC an early-stage accelerator with a focus on crypto/bitcoin startups.
Boost and Silicon Valley
In November 2013, we arrived in San Mateo in Silicon Valley to join the Boost Accelerator Program.
Boost was a 3-month program with 10-15 other startups. We got a small investment and free-living and working arrangements. It was the true startup experience; we lived in hotel rooms with bunk beds and worked in a basement across from where we lived.
The accelerator program immediately showed us the power of Silicon Valley.
Not only were we the oldest people in the group, but many of the other startup founders were on their 2nd startup. Secondly, the accelerator was led by Adam Draper, who is part of one of the most successful investor families in the US. The accelerator gave us access to their amazing network of startup founders and investors.
The accelerator was also a great startup school, which taught us the power of being focused on solving one problem well and a lot of other golden nuggets, which I still use today like “Be the cockroach”.
It all ended with a demo day, where we raised USD $1M from Tim Draper as well as some great security angels (e.g., Gerhard Eschelbeck, who later became the CISO at Google). Raising this amount of money from this type of top angel investor was impossible in Denmark in 2014.
Moving to San Francisco
After raising the initial money, we could afford a salary and moved away from our bunkbed rooms to studio apartments in the modern-day Silicon Valley of San Francisco.
San Francisco was buzzing with lots of amazing startups, and we worked out of co-working spaces with a bunch of them. Larger tech companies like Mulesoft, Stripe, Zendesk, and others all had their offices in the city, making it possible to go and meet with buyers from those companies in person.
In San Francisco, we also met with like-minded Danish people who had also moved to San Francisco to found their startups, e.g. my future co-founder of Userflow, Sebastian Seilund. It was a truly inspirational time with a lot of challenging work and fun.
Struggling to Raise Money and Finding Product Market Fit
At Cobalt, we continued the work on our product and got more customers. But in late 2015, we were starting to run out of money from the first capital round. We started to raise more money but struggled to do so.
Not only did we struggle to raise new capital, but the bug bounty product also had its challenges. It was mostly a nice-to-have for companies who were already doing other kinds of security testing. We needed a true product market fit.
The hardship of growth and raising capital forced us to reconsider our product, and based on customer requests, we decided to try to deliver a more structured penetration test (a structured manual security test done by a smaller, vetted, selected team of testers). This showed good signs. Not only did customers see this as more of a need-to-have, but we could still differentiate it from the traditional ways of delivering manual security testing by making it a modern experience using our SaaS platform and a freelancer sourcing model.
In 2016, we decided to pivot fully to pentests, and we were “lucky” to also raise a seed investment of $1.5M from a smaller VC eLab Ventures.
Raising a smaller round was not what we had initially hoped for. But in hindsight, raising a big round from a brand VC is really a vanity measure, and I believe that us raising less at a more realistic valuation allowed us to pivot into a better model (pentests), with more potential than bug bounty programs.
Happy Days
With the seed round, we were able to hire some fantastic VPs like Mike Shema, Caroline Wong and Chris Tilton who came from the security world and knew the right people as well as how to go to market in the space.
We moved into our new offices in the Mission District in San Francisco and started building out the pentest product, our company as well as our customer base.
We hired more great people and had amazing parties, including the annual Julefrokost (to bring some Danish traditions to the otherwise American company). The energy of those days is hard to replicate in a modern remote-first world.
The company started growing in the 3-3-2-2-2 ARR multiples expected from successful SaaS startups, and it was a very exciting time.
Scaling
As we grew, we started seeing challenges with being in San Francisco. The job market was highly competitive, and it took a lot of work to hire and retain employees, especially on the engineering side. In 2018 the startup ecosystem had furthermore evolved beyond Silicon Valley, and it was now a viable option to be present and source SaaS employees in other cities.
That led us to open a new office in Berlin, and one of my co-founders Christian Hansen moved there to start it up. Due to our roots, Europe was already a good market for us, but with a presence in Berlin, we could both easier find strong engineering (and other) talent as well as build out the European market further. The Berlin office quickly grew and, later, we also opened an office in Boston, which had a great security ecosystem of talent due to successful security SaaS companies like Veracode and Rapid7.
Growing the team and expanding beyond San Francisco created a very different kind of company. We were no longer a small team in a small San Francisco office, we were a global startup company with everything that involves incl. asynchronous work, team structures, etc.
To further fuel this growth, we raised a $5M Series A investment round led by the Danish fund byFounders with support from the existing investors. Being able to raise money from a Danish fund was one of our unfair advantages in this new global startup ecosystem.
Sabbatical and Remote First
In 2019 we were six years into a long journey. I had helped build out a large part of the go-to-market organization in Cobalt, and despite us being successful, I needed new inspiration and energy.
Therefore I decided to go on a 6-month Sabbatical with my partner. We went to New Zealand and South America. Visited white sand beaches, dived with sharks, and hiked in beautiful mountains. Not only was the sabbatical a great way to re-energize, but it also proved that I was no longer a “need-to-have” person for the company to thrive.
As I returned from my sabbatical, the San Francisco office had become even smaller, and most of our employees were based in Berlin and Boston. Furthermore, as Cobalt grew further, a new trend in the industry started to evolve. Employees no longer wanted to be in an office. They wanted the flexibility of remote work.
Initially, I was hesitant about supporting this new trend, as I had loved the early days of Cobalt, as a small team in a small office. But in the new world with three offices, we were already spread out and did asynchronous work, so it became more natural. As COVID hit in 2020, this trend accelerated and Cobalt became a remote-first company.
Traveling and the Next Adventure
The remote work environment allowed my partner and me to go travel and see other great parts of the US, staying in different states e.g., Hawaii, Colorado, Wyoming, Washington, and Alaska.
As 2020 progressed, Cobalt was still going strong and growing fast. We raised a $29M Series B round from Highland Europe and hired more great people, reaching a total of 200+ employees and further developed the product.
However, personally, I was ready to part ways with Cobalt operationally. I had an eagerness to start a new and exciting startup. Luckily my friend Sebastian Seilund reached out to me, as he had built a SaaS no-code onboarding product, Userflow, and he was looking for a co-founder to help scale the growth of the company.
In December 2020 I made the decision to join Sebastian. It was a tough decision to leave Cobalt, but I felt Cobalt had all the conditions to continue being successful without me, and I needed a new adventure.
Userflow – Bootstrapping and Product-led Growth
Userflow is a different company from Cobalt. From the beginning, Sebastian and I decided that we did not want to raise investment money, but instead bootstrap.
We are also a highly product-led company, where we rely a lot on the product as a lever for the growth and retention of our customer base, with a great product with a free trial, and product-led onboarding.
The last two years have been super exciting and we have been able to grow to millions in ARR with a team of just three people (Me, Sebastian, and Jonas Kelstrup). We have done this using a lot of the learnings I have from Cobalt, and Sebastian from his previous startup.
We all work remotely, and my partner and I have continued to travel to different places to get a mix of adventure and work, and it has been fantastic. But part of me still looks back on those early Cobalt days, when we were a small team in first Buenos Aires and later San Francisco, and see them as a great part of the 10-year journey.
What’s next?
Userflow is still growing fast, and I am enjoying this new kind of startup with fewer people and higher flexibility. I will continue on this journey, and I am excited to see what new adventures will come along.
Cheers to the next ten years!
