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From:Joel Gascoigne
To:Shareholders
Subject:2023 Annual Shareholder Letter
Date:February 23, 2024

2023 Annual Shareholder Letter

Dear Buffer shareholders and community,

2023 was a turnaround year for Buffer by a variety of measures. This is something the team has worked tirelessly towards, and it is wonderful to see the positive shifts take place in our metrics and the culture and energy around the company.

We’ve spent the past few years clarifying our strategy and the principles by which we operate, and being diligent in our execution in alignment with that path.

I’d love to walk you through our results for 2023 and share insights into how we’re approaching building a long-term business.

Buffer’s 2023 Results

We ended 2023 with $1,495,870 in MRR, or $17,950,440 in ARR. This was a decline of 1.75% from the prior year and represented a stalling of our steeper declines in the previous years. Our number of paying customers declined 4.75% to 55,975, which was an improvement from the 6.94% decline in 2022. We concluded 2023 with a net loss of $572,827, a significant improvement from our $1,094,128 net loss in 2022. We ended the year with $3,219,455 in the bank, representing 21 months of runway. We improved our operating (EBITDA) margin from -2.65% in 2022 to -1.86% in 2023. Combining our ARR growth rate and operating margin, our rule of 40 for 2023 was -3.60%, an improvement from -10.22% in 2022.

Delving into our results by quarter, it becomes more clear that we have stalled the decline. The majority of our decline for 2023 occurred in Q1, where we saw a 1.22% decline in MRR/ARR. From there, we had two relatively flat quarters in Q2 (-0.03%) and Q3 (-0.07%), and concluded the year with a slightly steeper dip (-0.42%), which mostly occurred in December (typically our slowest month). On a monthly basis, we had 7 months of decline in 2023 and 5 months where we grew, in contrast to 2022, where we declined for 11 of 12 months.

It’s valuable to focus on leading indicators, as by definition, they will indicate that improvements are coming in other metrics. 2023 was a successful year for Buffer across our most important leading indicators. We saw a 2.21% increase in Monthly Active Users to 139,377. Our most significant success was in growing our number of signups, where we welcomed 946,614 new user signups to Buffer, a 28.95% increase compared to 2022. We also saw an increase in new paying customers, with 39,463 new paying customers in 2023, a 9.97% increase from the prior year. This number is likely slightly inflated as we saw a spike in spam / fraudulent new paying customers in April 2023, however, normalizing for this still puts our increase at around 7.5%.

Legacy to New Buffer transition

Buffer is at a pivotal moment in time in the transition of our pricing and packaging model. In mid-2021, we rolled out new pricing on a per-channel model, in contrast to our previous pricing model, where we bundled the number of channels (social accounts) in each paid plan. This change in pricing enabled customers to grow either the number of channels or the number of team members independent of each other for the first time. We implemented this through a separate paid team plan, also priced per channel, where customers can work with as many collaborators as they want. Along with the new pricing model, we packaged our entire toolkit into a single price rather than charging separately for Publishing, Analytics, and Engagement tools. This brings a new level of simplicity to Buffer’s product offering, with a single price for all of our functionality, which can scale based on additional channels, features, or team members.

These changes were fairly significant compared to our legacy pricing, and given our long-term and customer-centric approach to business, we made a deliberate choice not to force a migration for our longstanding customers. This started a multi-year process of a shift towards our new pricing and packaging, which we have internally called New Buffer. It’s worth breaking down the results of New Buffer compared to Legacy Buffer segments, as they tell their own story of the 2023 results. Since mid-2021, all new users have gone onto the New Buffer experience, and we have added the majority of new functionality only to New Buffer. In late 2022, we introduced a self-serve migration experience for customers to move over from Legacy to New Buffer if they wish. The model is so different that, in some cases, it could result in a price decrease, and for others, could result in a price increase. This is one of the many reasons we have chosen not to force customers to migrate.

In 2023, our New Buffer segment grew 60.63% to $12,491,457 ARR and grew to 36,943 paying customers (a 44.17% increase). In contrast, the Legacy Buffer segment declined 47.98% to $5,456,432 ARR and dropped to 19,004 paying customers (-42.66%). Notably, MRR/ARR on New Buffer plans grew from 42.46% to 69.58% in 2023. As we started the year with Legacy as the majority, we saw the impact overall in our numbers. However, as the year went on, we saw the New Buffer segment become the majority of MRR and paying customers and continue to show strong growth. This is what gives us confidence in a great 2024.

Our Down and Wide Strategy

Serving entrepreneurs and small businesses

Buffer was founded on a love for serving entrepreneurs and small businesses. I counted myself in that category when I started the company, and we got our initial growth through a freemium model and great content marketing. With a very low barrier to trying the product, an approach of giving away a lot of value, and leading with our value of transparency, we’ve built a strong brand.

In the last few years, we have doubled down on that passion for creators, entrepreneurs, and small businesses. A large part of what drove our incredible 2023 results in new user signups was that at the end of 2022, we made our primary flow for new users go straight into the free plan. We believe that Buffer can be the best product in our space for these folks, who typically have low budgets and have very little time as they’re wearing multiple hats. It can often be seen as an unattractive segment due to these reasons, but for us, this segment is about dreams and possibility, and we love being the product that helps folks go from zero to one and beyond.

We have a team who love to serve small businesses. Many people join Buffer because they want to be at a truly product-led, customer-focused company. It's a totally different game, our volume is significant, and we have different tools we can work with.

Lessons from consumer SaaS

To serve the down market segment of creators, entrepreneurs, and small businesses successfully, we’ve leaned into seeking lessons from consumer SaaS rather than purely the widespread enterprise SaaS playbooks.

In enterprise SaaS, reducing churn is a top priority, and significantly growing average revenue per user (ARPU) is a focus. If we take that approach, we will not serve our customers well, and we will also lose our bigger opportunity to be a more widespread and ubiquitous tool in the market. Our monthly customer churn rate hovered a little above 5% for most of 2023, which would be considered too high for many SaaS businesses. Yet, when serving small businesses, you need to live with an inherently high churn rate. As Ben Chestnut, the Founder CEO of Mailchimp, famously said, “when you serve small business, the churn rate is awful.”

The way we will win when it comes to growth is combining lessons from consumer SaaS with the opportunities we have for standard SaaS growth strategies. A useful metric I came across in the last couple of years is carrying capacity, which is calculated as the number of new paying customers per month divided by the customer churn rate per month. This number gives you the number of paying customers, at which point you will cease to grow because the customers you gain will be equal to the customers you lose. This isn’t a perfect metric for us, as we do indeed get some growth from expansion and increase in ARPU, however, it highlights the impact of growing the number of paying customers versus decreasing churn rate.

I have asserted many times to the team in the past couple of years that there will always be a ceiling to how much we can reduce churn, however, there is no ceiling to how many new users and customers we can find who will gain value from Buffer. This has led us to put focus on new user signups, activation, and retention, and we are starting to see that we can see growth while focusing on this segment.

Down and wide strategy for growth and thriving

The simplest way to describe our current overall strategy is “down and wide.” By “down,” I mean that we are expanding down-market to serve individuals (creators, entrepreneurs, influencers, professionals) as well as small businesses. The goal of going “wide” is to increase the breadth of our product and serve customers with a wider range of solutions to problems.

We’ve gone further down-market in the past year by streamlining our signup and onboarding flow, adding almost all new value to the free plan in addition to paid plans (sometimes with limits), and by adding more automation and flexibility, for example, through our improved Zapier integration. One way we’ve been going wide is by offering more publishing channels; where we added two more (TikTok and Google Business Profiles) in 2022 and another two (Mastodon and YouTube Shorts) last year. Another is by offering tools beyond social media, such as Start Page, our simple microsite, or link-in-bio builder.

We believe the down-and-wide strategy is uniquely ours to take on because our passion for entrepreneurs and small businesses is embedded in the DNA and culture of the company, and we are in a unique position of being at scale without traditional investor pressure to go up-market. At the same time, the fact we are established means that we can build out a comprehensive offering and we have existing partnerships with the social networks, and a strong brand people are able to trust is here to stay and continue serving them.

How we want to grow Buffer

Given the clarity of our strategy and our cultural DNA, I have spent some time reflecting on the 13 years Buffer has existed and the ways we have either grown or declined each year.

With SaaS, there are a limited number of ways you can grow. One of the simplest equations for MRR is to multiply the number of paying customers by how much they pay per month (ARPU). Therefore, to grow MRR, you either need to grow the number of paying customers you have or grow your average revenue per user.

For most of our journey, we grew each year by growing our number of paying customers, alongside seeing steady growth in ARPU. In general, our paying customer growth outpaced our ARPU growth and was the key driver of our overall ARR growth.

In 2018 and 2019, we saw great ARR growth, but our paying customer growth slowed down significantly in 2018 and declined in 2019. We achieved this by building functionality exclusively for paid plans and further restricting the free plan. I later reflected and realized that to continue this type of growth, we would find ourselves going fully up-market. For many SaaS companies, a strategy of growing ARPU while seeing the number of paying customers remain stable or even decline may be sensible. For Buffer, growing ARPU aggressively goes against our mission to serve and help more entrepreneurs and small businesses thrive. Additionally, extrapolating it over multiple years would represent a drastic change in our business model and culture. Beyond seeing the challenges ahead in growing this way, I personally felt a real conflict in my own sense of purpose when we dabbled with going up-market. This is one factor which led to my decision to double down on individuals, the free plan, and our down-and-wide strategy.

Going forward, our goal is to grow Buffer primarily by growing the number of customers we serve. We expect ARPU to grow steadily as we add value to our offering. Indeed, ARPU grew 3.2% in 2023 without any changes to pricing or any reductions in our free offering. We achieved this by introducing new channels and adding more value to our paid plans. We’d love to have customers grow with us over time while maintaining a very low barrier to starting to use Buffer.

Taking this to a leading indicator and earlier step in the user flow, we have put a clear focus on significantly growing new user signups. In 2023, we saw a 28.95% increase in signups with 946,614 people signing up to try Buffer. We achieved this through a renewed focus on growth marketing, SEO, and content marketing alongside our product improvements and launches.

How we approach freemium

There’s a lot of conflicting advice out there on how to approach freemium and whether to have a free plan or just offer a free trial.

For us, our choice to offer a free plan is more philosophical than purely tactical. Where others may experiment and go with whatever they find gives them the most growth, we are making a fundamental commitment to serve those early in their journey. There’s no better way to serve creators and entrepreneurs starting out than to have a great free plan.

Having a free plan is also a long-term decision. One way to think about a free plan is an unlimited time trial. Of course, restricting the timeframe of the trial will lead to more new paying customers in the short term. Over time, however, you’ve lost those people who could gradually build a habit using the product, see value from a free offering, and grow their project or business to the point where they are in a position to pay for a tool. We want to be there for customers at every step of the way, and we’re making a bet that by taking care of them early on for free, they’ll choose us when they’re at the next level in their journey. We’re privileged in being able to take a long-term approach here, and we’re confident that the results will compound over time.

During 2023, we started a process of auditing and improving our approach to freemium across all of our tools. Our goal is to have a freemium model across all aspects of the Buffer product, where some portion of most value is available on the free plan. Unless the functionality is truly more advanced in nature, we’d like to include it on the free plan. We’ve found over many years that letting people actually use something (with a usage limit) is a more effective way to show people the value of upgrading than paywalling functionality entirely. This isn’t reflected across all our product yet, but over time, we’ll gradually make changes so that Buffer holistically reflects this strategy.

One other learning I’ve had with freemium is that if you stop investing in the free plan, it will become less effective. It sounds obvious, but it’s so easy to fall into the trap of starting with a strong free plan and then, after a few years, only improving paid plans. We’ve seen a lot of changes in social media over the years, and the world has become a lot more comfortable with a variety of media types and functionality (just think about Instagram with stories, reels, stickers, trending audio, etc.). As users become more comfortable with a wider range of functionality and variety of social networks, our free offering needs to reflect what is available at this baseline natively on the networks.

Renewed customer and community focus

One of our key efforts in going down-market and significantly increasing the number of people actively using Buffer, has been to become even more customer-centric and engaged with our community.

In 2023, we rolled out two key initiatives to drive us to not only be listening to our customers, but held accountable by our customers. This shift has helped make it easier for us to ensure we’re genuinely building functionality and making improvements that our customers need.

We launched a new feedback forum called Buffer Suggestions for customers to request features and improvements and vote and comment on existing ideas. This is a public and transparent forum where if we do not actively manage it and engage with customers, it will reflect poorly on the brand. This was a significant step towards a strategy of embedding customers much more into how we work and build as a company. We’ve already found this to be a goldmine of insights for us in building the product.

Additionally, we also launched an Open Beta program. In the past we’ve included customers in the rollout of new functionality, however this was done through a closed beta approach where we would reach out specifically to a subset of customers and invite them to try new features. With Open Beta, we’ve made it possible for any user to opt in to access and receive new functionality on beta in advance of it launching to the wider customer base. We have a new page available in every Buffer Account where users can view all the current functionality in beta, enable or disable beta at any time, and a button to share feedback (this links to the Buffer Suggestions page for that feature).

We have continued to invest in our community space, which exists primarily in Discord, alongside actively engaging with our community across all of our social channels. We had a thriving community in our earlier days, but neglected it and let it wither during years where we had a strategy more focused on businesses. With our renewed focus on the down-market segment, our community is once again a vital component of the equation of Buffer thriving. It has taken some concerted and diligent effort to rebuild our community, and it is now on track and feeling like a win-win for community members and Buffer.

Finally, we started an effort in the later part of the year to make a step change improvement to our already great customer support. We finished the year with a median first response time during business hours of 2.15 hours, a 41% improvement year over year. Our current baseline goal is to have the majority of customers receive a response to any customer support request within 2 hours and for 99% of requests to be answered within 24 hours. In an industry known for awful customer service, we believe this can be an additional competitive advantage.

Investing in modernizing Buffer

For a 13-year-old product and company, tech and organizational / process debt is a given. In the past year, we’ve recognized this is a significant threat to our long-term success and have introduced a few key projects to pay down this debt. We are especially at risk in having inferior UX to newer competitors in the space, as they have the benefit of building from scratch with modern tooling. We’re energized to improve in this areas as it makes using the product ourselves much more enjoyable, and improves the developer experience for engineers too.

On the product side, we started an initiative we’ve called Consumer Grade User Experience (CGX), with the goal to level up the UX and clarity of the product significantly. This is taking the form of establishing a complete design system, upgraded components and a visual refresh. We’ve taken an iterative approach and the new design system and components are already going live across our newer functionality launched later in the year. This work is already making Buffer feel snappier and more fun to use, and it also paves the way for some welcome side benefits such as theming or dark mode.

We’ve also made an effort to move faster with some features that are expected in modern software, and in September rolled out our cmd/control K “Quick Navigator” functionality. This came out of our annual build week, where we spend a week working in small teams across the whole company on ideas contributed by anyone in the company.

We’ve also made a variety of process and organizational improvements to pay down the debt that can build up over many years of operating. One of the most significant efforts in this area was to reimagine our salary formula and eliminate discrepancies and inconsistencies which built up over a number of years. The results of this was our new Open Salary System.

A Long-Term Company and Product

Buffer’s Operating Principles

In the second half of 2023, I established Buffer’s Operating Principles. These are principles I had been reflecting on for many years, and the time felt right to introduce these principles to the team. The four operating principles are intended to give us high-level guidance and clarity on how we operate the business. Whereas our Values describe how we work individually, the Operating Principles guide how we run the company. Our operating principles are:

Long-Term: We have a goal for the company to exist and thrive for decades. We prioritize patient compounding company and personal growth over shortcuts. We think and plan ahead based on the shifts we’re seeing in the industry and the world.

Independent: The company is primarily owned and controlled by those working week in, week out on it. We go our own path with our product and culture. Owning our destiny and being founder-led enables genuine mission-driven focus.

Ambitious: We have a lofty goal and belief that more small businesses is better for the world. We must be growing in order to serve more customers and fulfill our vision.

Efficient: We’re a tight-knit, small-for-revenues team. We have a goal to run the company with a healthy profit margin. Every person on the team matters, we must be deliberate in our decisions, and everyone must be continually growing.

These operating principles felt natural to us all when I shared them in our October All Hands, and at the same time, the additional clarity has driven great proactiveness across all teams in pursuing and meeting the principles to a higher bar.

Our opportunity

We’ve now weathered several years of declines, all while clarifying our strategy and the customers we are serving and increasing our diligence and efficiency as a company. Looking ahead, I see healthy growth for us in 2024, but even more importantly, we are now set up to pursue a more significant opportunity.

Buffer has existed for 13 years now, we have over 55,000 paying customers, and we see over 80,000 new users sign up per month. We have the strength of our long-term journey so far, and we have the independence to grow Buffer into something special without short-term investor pressure. In 2023, we made a significant investment into modernizing the product and paying down our tech and org debt, to ensure that we can remain a flexible and fast-moving product and company.

With this foundation, we have the opportunity to be the most widespread product and work towards being the ubiquitous organic social media marketing (and eventually, organic marketing overall) platform for creators, entrepreneurs, and small businesses. As we work towards this larger opportunity, we will have the privilege to serve hundreds of thousands of people and help them to get their dreams off the ground. As we see this vision come to fruition, we believe that entirely new opportunities for product expansion and growth will arise.

Flexibility in the product

To succeed in our down-market shift and our goals to be a much more widespread product, we need to achieve both breadth and comprehensiveness of functionality (to cater to a wide range of use cases), and simplicity (to ensure the product is intuitive and easy to use for individuals). One of our key approaches to achieving this is by creating a much more flexible product.

In 2023, we made a significant upgrade to our existing Campaigns functionality, in the process transforming it into Tags. Whereas Campaigns was very prescriptive as to the use case, Tags are much more flexible. You can use tags for campaigns, but you can also use them for much more, such as for the type of post, for goals, or verticals. We launched Tags for all plans, with a limit of 3 tags on the free plan, adhering to our strategy of freemium across almost all of our functionality.

AI is also a way for us to add flexibility and save customers time. We see AI as one of our biggest opportunities, and also something that could be a threat. If we execute well, we can stay ahead of the ways that AI can transform the social media management space and continue to be a thriving and successful offering. This is why we launched our AI Assistant early in 2023, and made two further iterations to improve it along the way. We have still only scratched the surface with how much we can incorporate AI into the product to streamline usage of Buffer.

One of the investments we’re making in 2024 is to rethink how we approach supporting new and a wider range of channels. We have 13 years of experience adapting to a variety of levels of API access for publishing, analytics and engagement with social networks. We’re planning an upgrade which will enable us to help customers no matter the API limitations, through functionality that gracefully adapts to the access available. This will also allow us to accelerate the number of channels we support, which we have validated correlates with growth.

The social media landscape

There have been some fascinating shifts across social networks and the social media management space in 2023.

Where vertical video dominated in the prior few years, 2023 saw the return of text-based social networks with the rise of Mastodon, the launch of Meta’s Threads, and other contenders such as Bluesky. Much of this was driven by the changes made at X (Twitter), and it is a welcome change in terms of the variety of options for consumers. We’ve seen an increase in the opportunities to serve customers, given the increased complexity that these changes bring about.

Another important shift taking place is the advent of decentralized social networks, including the Fediverse. We believe the efforts being made towards open standards for social networking are important for the Internet and the world, and we were one of the fastest to move to support Mastodon in early 2023.

Across our space, we’ve observed a number of the more established players move up-market, which has opened up even more space as we’ve made conscious efforts to expand down-market.  We now see an opportunity to be the largest product in our space by volume of active users and paying customers. Early in 2023, X (Twitter) increased the cost of their API significantly, and this led to a wide number of the smaller products being unable to continue to offer X (Twitter). Social media management continues to be a crowded market overall, and so we’ve made increased efforts to be clear in our strategy and establish a position that is uniquely ours to take and hard for others to replicate.

Buffer’s ownership now and in the future

As of the end of 2023, Buffer’s ownership breakdown is as follows:

  • Founder CEO: 57.12% of issued, 44.49% fully diluted
  • Investors: 38.06% of issued, 29.64% fully diluted
  • Teammates: 1.16% of issued, 6.75% fully diluted
  • Alumni: 3.66% of issued, 5.86% fully diluted
  • Vendors: 0.2% fully diluted

Our ownership breakdown by share class:

  • Common: 91.4% of issued, 71.2% fully diluted
  • Series AA (seed): 5.6% of issued, 4.4% fully diluted
  • Series A: 3.0% of issued, 2.3% fully diluted
  • Stock options: 8.9% fully diluted
  • Remaining option pool: 13.0% fully diluted
  • Warrants: 0.2% fully diluted

We have raised just $4M in total over our 13-year journey, and our last round of funding was in 2014. Since 2017, we have repurchased 21.2% of fully diluted shares, increasing the value of existing shareholders. This has also enabled us to shift the shareholder base to a group aligned with our long-term approach.

Given our strong bank balance going into a period of decline, with some investors seeking liquidity, we have taken a number of opportunities to repurchase stock in the past few years. As we started to see the signs of a turnaround year and our journey back towards growth with a healthy bank balance, we took the opportunity to carry out three stock repurchases in 2023, at a collective cost of $889K.

For most technology companies, the path to liquidity is through an exit, i.e. being acquired or going public. As a company with plans to continue to exist independently for the long-term, our approach to liquidity needs to be different than the norm.

The topic of achieving liquidity in alignment with our independence and long-term goals is one I’ve given considerable thought to over the years. At times, I even considered whether it makes most sense to do away with stock options, and instead focus more on profit sharing.

However, I’d like to give team members the opportunity for real ownership in Buffer, and for those who stay at Buffer and grow in seniority to become meaningful genuine owners of the company. To accomplish this, we need a way to issue options for new team members, and additional options for tenure and growth in impact.

An ownership mindset is a core part of our culture and strategy. Having a team who feel a genuine sense of ownership is integral to making the equation of Buffer as a company work. We provide a lot of flexibility and aim to have a working environment that enables people to thrive and contribute long-term without burning out. This doesn’t work if team members don’t feel a connection to and a sense of ownership of Buffer. The ownership mindset is one element that motivates people to go above and beyond in order to make Buffer successful.

There are few ways more powerful in creating an ownership mindset in the team, than giving people true ownership in the company. Combining this with documentation and education that helps in understanding that ownership stake they hold, is where it becomes especially effective. For this reason, in 2024 we will be rolling out a new approach to equity and stock options with a new formula with initial grants as well as evergreen (tenure) and promotion grants. I plan to use sizable portion of the remaining option pool to get this off the ground, accounting for future team growth too.

To make Buffer sustainable long-term with stock options and genuine ownership, as well as liquidity, without a plan to exit; I have started to reflect on opportunities for regular liquidity events where we invite long-term minded investors to purchase stock from team members, alumni and investors who have held Buffer stock over the long-term. In this way, I believe we can achieve a long-term, independent company with great returns over time for everyone involved.

The Buffer Team in Build Mode

Making corrections from our previous era

Over the years, Buffer become fairly slow-moving. This was true both in terms of what we built and also how we worked internally. The simplest reason I can point to for that decline in pace is that we became debilitated by debt. At around 10 years old as a company, we had accrued significant tech, process, and cultural debt. Our market had become very crowded, and we had not adapted effectively to maintain our market leadership position. We lost the clear differentiation we had, both in terms of our market position with the product and additionally, our culture, to a certain extent, had become diluted and less bold and unique.

We had been resting on our laurels and continued building layer upon layer on top of what initially got us our growth and success, without real breakthroughs, changes, or reflecting from first principles. Our attempts to find new growth were inconsistent and lacked grounding in a clear overall mission and conviction. The very high quality we once had of both our product and service gradually degraded. All of these issues were reflected in our numbers, which plateaued and then started to decline. The numbers started to feel out of our control, but were the result of our many cumulative actions. We had made changes to the product and our pricing and packaging that moved us away from the very people we initially served. I felt my own passion for what we were doing start to wane, and I knew that I needed to do some deeper reflection in order to feel motivated once again.

Personally, I was becoming less and less proud of what Buffer had become, and the ways I had allowed it to slip there. As the CEO, I was too hands-off and was too many steps removed from the work and customers. So, at the beginning of 2022, I started to make an increasing number of changes to get us back on track to the nimble, bold, unique brand we’ve become known as.

A focus on efficiency as a team

A key change we made was to get back into “build mode” as a company. We had slipped into maintenance mode, which is easy to do when growth is consistent and feels like it can be expected. As we started to plateau and decline, it started to feel even more alarming, as we were effectively managing and maintaining our decline rather than taking necessary action to turn it around. This has served as a reminder that no matter the season, we can only keep growing and innovating if we keep building. Embracing “build mode” led to a variety of changes across the organization to shift us back towards being a group of builders.

During 2023, we simplified our communication by significantly reducing the number of slack channels and establishing a clear and intuitive naming convention for all future channels. We also streamlined our organizational structure by reducing layers and choosing not to backfill and replace every manager who moved on. We made the tough decision to say goodbye to a few folks in cases where we had more managers than necessary, or where we were skewed too junior. Through these changes, we have been able to reduce the manager:individual contributor ratio.

We increased the expectations of all leaders and managers being in the details, having on-the-ground context and truly owning the results of that team or function rather than primarily being concerned about managing people.

Finally, we’ve set our sights on getting back to profitability and believe we can achieve this in late 2024 or early 2025. There are a variety of reasons that profitability is so important to us at Buffer. We're not on a path of raising continual rounds of funding, and we have not raised a round of funding in nine years. We are essentially customer-funded, and therefore we must be profitable for that to work long-term. Beyond that, profitability allows us to breathe and put some resources into bigger bets and innovations that could lead to more step-change outcomes.

Raising our bar of ambition

Throughout 2023, we systematically raised the bar for what we put out there and accordingly raised expectations across the team. The mission and strategy we have is lofty, and we've clarified with our operating principles that being ambitious is a key part of Buffer. Personally for me, I see hitting a higher bar overall as genuinely feeling proud of everything we ship, the service we provide, and the way that we work.

To hit our more ambitious goals, we need managers and leaders who are highly proficient in their craft. This means that those leaders can provide guidance for the team at a much more detailed and tangible level. This point also relates to the earlier one on leaders owning their team's results.

We’ve also firmly established an expectation of continual growth in every role and that individuals are the primary ones leading their own growth. Self-led growth is aligned with our longstanding value to Improve Consistently. If we stand still, the world will change around us, and we will fail. We, therefore, need everyone in the team to be continually leveling up and growing. This is not something we've been clear on in the past, and so we took some time to share this shift with the team.

We’ve introduced the expectation of an ownership mindset, rather than an entitlement mindset, to our flexible work practices such as remote work and the 4-day workweek. These practices are designed to enable all of us to do the best work of our careers and to sustain that high level for many years. It's imperative that we take an ownership mindset to this type of flexibility that we've offered for years at Buffer. Put simply, we have to keep earning these benefits. These benefits are not something that individuals should feel entitled to, but rather something that we work hard as a group to achieve outcomes that allow us to keep maintaining this type of incredible working experience. It is important that we all give flexibility in order to get flexibility back. This means making ourselves available at odd hours from time to time to jump on an early morning meeting or late night meeting in order to have the connection and level of collaboration with our team to achieve all of our ambitious goals.

Dogfooding as an expectation

Dogfooding is the term used to describe using your own product. With our down-market focus, we are building for individuals as much as we are for businesses. As we work on building a product that can deliver significant value for individuals such as creators, entrepreneurs and professionals looking to grow their audience, we will be better served if everyone at Buffer has that focus themselves in some form.

In 2023, we reinstated the expectation that as a Buffer team member, you are an active user of the product. In the past year, we’ve hired with this in mind and have brought some talented team members who are passionate about the potential of social media for growth and learning. Some of them are very impressive creators in their own right.

Being a strong team of around 80

I've challenged myself to think about the team size from first principles. In other words, reflecting on: what it really takes to support Buffer as a product, with the breadth of the product and the number of customers we have, the choice to service them with fast and accurate responses, as well as our desire to grow further from where we are, and the requirement to maintain, expand, innovate what we already have. I’ve come to the clear conclusion that 75-85 people is the appropriate size for Buffer currently.

Furthermore, as we have worked towards seeing consistent growth, lowering our burn rate and achieving profitability, we do not want to grow the team (i.e. employee / salary expenses) at the same pace as our revenue is growing. We want our revenue to start outpacing the team growth. We will likely want to grow over time in order to support more revenue, MAU, customers, just not exactly in proportion. This is what will enable us to grow our profit margin over time, which we'd like to do until we reach a really healthy profit margin, say 10%.

While I believe around 80 is the right size for us, this is a small number for the revenue we have and the number of active users and paying customers we have. Our revenue (ARR) per employee at the end of 2023 was $233K, a high number compared to most tech companies. It's a testament to how much we achieve with the small team we are. Our above-market salaries reflect that we compensate in line with achieving a high level of performance. Every person really matters, great output from everyone in the team is vital if we're going to pull this all off. Therefore, we will make tough calls if needed where we don't see the level of performance we need to make the whole equation work.

Independence and tenure as an advantage

We’ve long been focused on remaining independent as a company. This has brought a variety of advantages, one of which is simply the fact that we’re still existing and thriving in a space that has had many products come and go. Not only that, we have remained true to our customer segment where in general the longer term competitors have gone up-market and left them behind. With that said, we haven’t leaned as much into our uniqueness and independence as a competitive advantage as we can. We have some opportunities to ensure that our independence truly acts as a benefit for us in the way we operate.

Throughout 2023 we did a much better job of being bolder about our independence and market position. Our Keeping Buffer Free campaign early in the year was highly successful, and was one of our more punchy messages we’ve shared. And my celebration and reflections in November on 13 years since starting the company were very well received.

Our independence also enables us to move faster at scale than our competitors. We don't have a complicated board approval process to make changes, and we are able to take actions that those controlled by investors simply cannot. In 2023, we leaned into reducing overhead and bringing focus to what really matters, for example, in our planning processes. We've dug in and acted more quickly when it's been clear that something isn't working or something could improve. And we've taken more opportunities to rethink and rebuild things from the ground up such as what we did with the new Salary System.

We’re fortunate to have a team who feel a sense of purpose in what we’re building, and who choose to stay and grow with Buffer over the long-term. We are very selective about who we bring on board, and in many cases, we find folks who are choosing to apply to Buffer and nowhere else. The strength of mission and cultural alignment is represented in the tenure of our team as of the end of 2023:

  • Average tenure: 5 years 2 months
  • On the team more than 5 years: 49.4% (39 teammates of 79)
  • On the team more than 7 years: 40.5% (32 teammates of 79)
  • On the team more than 10 years: 6.3% (5 teammates of 79)

We’re privileged to have the benefit of a long-tenured team who not only have the historical context and ingrained DNA of Buffer over the course of many years but who have grown personally as we have leveled up as a company. We will continue to invest in the culture and our uniqueness to ensure we attract folks who are finding their new long-term home rather than a stepping stone.

Meeting as a company in 2024

We couldn’t be more excited to meet in person in Cancún, Mexico as a whole company in early 2024. It’s hard to believe that our last company retreat was in 2019. We had one planned in early 2020, but of course, had to cancel it due to the pandemic. Once the world was in a place where travel made sense again, we prioritized smaller team meetups over a whole company retreat. With that said, we are definitely feeling some connection debt as a team, and we will benefit immensely from being together as a group.

I’ve always found that retreat is the one time where we are able to truly comprehend what the whole team looks like as a collective group of humans. There’s nothing quite like working remotely and then walking into a room and seeing the whole team in one place. There’s an immediate sense of gratitude that comes from seeing everyone together in one place, and realizing the variety of roles and skillsets it takes to make Buffer a success. The level of diligence we place on the alignment of company and personal values also means that something pretty special happens at retreat; you can talk to anyone and have a wonderful, meaningful conversation. Retreat really highlights that you’ve found your people.

We’ve been a remote company since our earliest days, however we’ve always valued in person time as a vital part of what makes the business work. Company retreats come at a significant cost (around $400-500k), however we have found again and again that the level of alignment and deeper connection we are able to achieve in the week we are together, pays dividends for many months beyond the retreat itself. When you’ve met someone in person and had the opportunity for casual and serendipitous conversations across the spectrum of work and life topics, as well as get to know their mannerisms and quirks, you have a higher level of trust and collaboration improves.

In Closing

2023 has truly been a turnaround year for Buffer. I’m so grateful to the team for the passion, diligence and care put into creating the results, and setting us up for a great 2024. I am feeling more confident than ever that with the clarity of our strategy, and the scale of the opportunity, we will be able to grow considerably over time.

Our plan is to keep doing what we’ve been doing for over 13 years now; to exist and thrive long-term and to continue supporting entrepreneurs, creators and small businesses in getting off the ground and growing. As we do this, we will continue to share our successes and failures in an attempt to show what building a real business steadily over the long term looks like.

Thank you for supporting us in taking a path less traveled,

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