How this Founder Bootstrapped a Profitable SaaS Product for Dentists in Under Three Years
Sophia Chou, Boston raised, dentist turned web product professional has co-founded and been building for the last three years, Auxpanel, a business intelligence dashboard to help dentists manage the business side of their practices.
As a once practicing dentist herself, Chou saw that existing software vendors weren’t enabling the next generation of dentists to thrive in the business of practice ownership. With Auxpanel, her mission is to provide the best and most intuitive practice management tools to as many dentists as she can.
The company became profitable in year two, and can now call dental practices all across the country, from single location private practices to larger dental chains, their customers.
Chou shared with me how she was able to become profitable in under three years with no outside funding, why entrepreneurship continues to drive her, and how she overcomes (many common) startup struggles.
Below is a condensed version of our conversation.
Gilbert: At what point did your business become profitable and how did you get there?
Chou: Much of the first year, we were just focused on religiously building product and talking to select people within the dental industry. Our software provides analytics, KPIs tracking, and automated reporting on top of the existing software that dental practice owners and providers use, and we invested a lot of up-front product development time to ensure our platform would seamlessly integrate with the different types of software that dental practice owners were already using. During this time we also started talking to practice owners, getting their feedback, and incorporating their feedback to get to product-market fit.
By year two we started bringing on board paying customers. With each customer, we iterated on the product and kept laser-focused on making them happy. We put a lot of technical time in up-front to meet the needs of our earliest customers. We totally did things that didn’t scale in the beginning, but it was these things that hooked in our first customers and helped get our MVP to product-market fit.
Our first customers were friends, then friends-of-friends, and from there it organically started to grow by word of mouth. We haven’t spent any money on marketing to date, we’ve focused on improving the product and delivering more value so that the product speaks for itself.
Gilbert: What made you decide to bootstrap this business?
Chou: We decided from the beginning that we wanted to bootstrap this. We spent a few years saving for it. We knew we had low capital needs because we were able to ourselves build the product from beginning to end and go to market – my co-founder is an engineer and I have deep product experience from working on several startups after my career as a dentist.
More so than anything, though, we decided to bootstrap because we wanted the freedom to experiment and to iterate without the pressure of outside investors asking why all the time. We stay accountable to customer needs and I suppose my innate self-critiquing and desire to push forward might be just as good as a board of investors.
Gilbert: Do you think that you can support growth with bootstrapping and self-funding?
Chou: There are particular milestones that we want to hit as a business before we even want to consider going out there and raising a round of financing. But even then there's just not much pressure. We're seeing steady, reliable growth and have generated enough of our own capital to be able to hire alongside that growth.
I’m not excited about the idea of raising a large round with the premise of pushing toward likely unsustainable, hockey stick growth. Instead, we’re building a sustainable company, growing revenue, and evolving our product. And historically, many small, medium, and even large companies have grown that way. We’re totally ok building a company outside of the mold of VC.
Gilbert: What advice do you have for starting-out entrepreneurs who are trying to figure out if/what outside capital is right for them?
Chou: In the beginning, you have to create your own experiments. Go out into the world, talk to your customers, have your hypotheses proven or disproven. All of this is free, you don’t need to raise money. I know it's so tempting to have a great idea, and because you haven’t failed yet and everything is still an unknown, go out there asking for funding.
Over time, I’ve started to believe that raising money too early, prematurely even, is disadvantageous to founders. Capital almost shields us from realizing the truth because we’re too busy hiring or getting distracted doing all the other things capital affords. We can get so disconnected that we may not even realize that there isn’t product-market fit. You need to continue discovering, iterating, and maybe even pivot. But since capital buffers you, startups with outside funding often learn this too late, which is not surprisingly, when they start running out of cash.
Gilbert: What has been a primary struggle for you as you've been building the company?
Chou: There are so many little struggles! We’re a small team wearing all the hats, so allocating our time has at times felt like an unsustainable juggling act between product development, outreach, support, marketing, and customer acquisition/retention. I’ve tried to do as much of this as possible to gain visibility into all the parts of what we’re building, but I’ve found that I don’t love wearing each hat. In the beginning, I felt a lot of guilt from not enjoying, or even dreading, certain parts of company building. I’ve learned to embrace that discomfort and even seek it out because that’s where the growth is.
Also, recognizing little wins was a struggle. I’d get so focused on big-picture goals that were months or even years away, that I lost sight of the smaller wins. I’ve learned to pause and celebrate all the wins – it builds morale, grounds you in gratitude, and keeps you going.
Gilbert: What’s one of the biggest personal growth lessons you've experienced on your entrepreneurial journey so far?
Chou: Learning to maintain my energy, morale, and perspective.
When we started out three years ago it felt like an endless reservoir of energy and excitement. We were putting in 16+ hour days and not thinking twice about it, but months in, we really started to feel the physical and psychological exhaustion. The initial MVP was taking us longer than expected to build out, there were technical challenges that felt like “the end”, and despite practice owners telling us they needed the product in conversations and interviews, we just didn’t know for sure yet if we had reached product-market fit. The reality is building a company is more like running a marathon and there’s no finish line.
Maintaining perspective has been the other part. All startups are sprinkled with failures, and in the beginning, I let them color my perspective. I was only noticing the recent failures. What I’ve learned to do is zoom out, way out, and reframe the entire picture to notice that despite the immediate challenges before us, we're still growing, we’re still trending up and making progress.
I’ve also learned it’s really important to take care of myself. I know that I'm the type of person who very easily throws myself into something and then I burn out or I get obsessed with all the little details. I can be bit of a perfectionist. Perfect is not possible when it comes to the product when it comes to anything, really, good is good enough.
Gilbert: That seems like another lesson you’ve learned – not to strive for perfection?
Chou: Definitely. Perfect implies an end, and maybe that's your gold standard or objective, but framed that way there’s also no more room for improvement or growth. I think as a product-focused founder, it was so tempting to want to “perfect” our product, to coddle it, and to not put it out there too quickly for fear of it being disproven. But I’ve learned to let go. Customers change, their needs change, the industry we innovate within will also change, and we have to be willing to engage in that dynamic world and, if needed, break what we’ve built to continue.
Gilbert: Why is entrepreneurship important to you?
Chou: I believe entrepreneurship is the most direct path to creating the change you want to see. I did the 9-5 thing after grad school practicing dentistry, and found myself complaining about particulars, like organizational inefficiencies or having to use unintuitive software, which didn’t sit well with me. I felt like I shouldn’t complain if I wasn’t making any effort to fix those problems.
I've also been reading Skin in the Game, Nassim Taleb's latest book. At one point, he describes entrepreneurs, especially those who bootstrap and aren’t doing it to just flip their company, as having true skin in the game. They’ve put it all on the line, even their soul, and it makes them courageous. And it just seemed so true to me reading this. There’s something very life-affirming in owning all the risks, failures, and success that comes with creating something.