About 5 months ago I wrote about learnings from our first year of building a bootstrapped SaaS business. Some things change quickly and some things don’t. In the last 5 months:
- ARR has grown ~3x for Ad Reform (15x year over year)
- Joined the six-figure ARR club
- Started a new SaaS business that’s off to a hot start (Userfeed)
- Started paying ourselves (2 founders) a modest salary 💰
- Raised $0 and still doing things on our own terms 😎
- Still only spent ~$15k of our own money to date
- Kyle and I are full-time with a contractor (non-dev)
All the while, one founder has been learning how to juggle entrepreneur life and a newborn, while the other (me) is 5 weeks away from the same crash course. Sleep and time have been squeezed, but somehow it seems like we’re doing more than we ever have, with an increased confidence about what where we’re going.
Here’s some of what I’ve learned…
Trust in the process
I wrote extensively about the emotional turmoil I experienced in the earliest days/months of starting our bootstrapped business. Now having gone through those early struggles and gotten over the hump (product market fit, traction, or whatever you want to call it) it’s much easier to see the signs that things are going in the right direction. When we started Userfeed a couple months back, we’ve felt so much more confident in the process, the product, and the decisions we’re making. Because of that, we’ve gotten to 10 paid customers (non-friendlies) about 10 months faster, with less money spent. Experience matters less about how to do things, and more for just being confident that what your doing will lead to a successful outcome. No one out there knows what they’re doing, but experience gives you confidence in the process, however long it might be.
Increase your SaaS pricing sooner
One small regret is that we didn’t raise pricing sooner. As we brought more customers on, no one ever seemed to fight back against pricing. Our thought was that we just wanted to bring on as many early customers as we could, but we should have been increasing pricing to the point where around 10–15% of our potential customers are pushing back on it a bit.
If I had asked more questions about the cost of customer’s alternative products/services they were using, I would have also found that we were underpricing our product. It’s never too early to ask lots of questions about the price of the incumbent, increase pricing, or iterate on what’s included in different plans. As the folks at Profitwell often preach: pricing can be the highest growth lever in your business.
To Raise or not to raise
Something Kyle and I continue to wrestle with is whether we should raise money. Not venture money. We’re pretty certain, that’s not the road we want to take. Rather, should we raise a small amount of angel money to put a little gas on the fire and pay out dividends to shareholders? It’s a hot topic right now:
- Bootstrapper’s Paradox (Justin Jackson)
- Should bootstrappers raise money (Startups for the rest of us)
- SparkToro Raised a Very Unusual Round of Funding & We’re Open-Sourcing Our Docs (Rand Fishkin)
We’re big fans of bootstrapping, but both our products have hit initial traction (product market fit) and we feel fairly confident that we could turn $1 of investment into $2. At the same time, we can now support ourselves financially while remaining profitable, we’re not putting money into sales and we’re still growing at a nice clip, and we continue to own 100% of the business. It’s a good dilemma to have, but definitely something we’ll continue to think about moving forward.
Get it out there, iterate, and repeat
As we’ve gained more experience as first-time founders, we’ve realized how important it is to get something out the door (imperfect), get it in user’s hands, then iterate, all as quickly as possible. If you’re bootstrapping, you can’t spend 3–6 months shipping something. Time is money, and you don’t have any.
Some iterations will make a minor impact, while others will move the needle quite a bit. We only had a few customers about 6 months into Ad Reform, made a fairly small tweak to the app to improve the experience for users (took Kyle a couple weeks), and over the next 12 months grew revenue 15x. Watch session replays (Fullstory), analyze feedback (Userfeed), and move quickly. You never know what iteration might be the one to really get things going. Or maybe a bunch of small iterations add up to a big improvement. Jason Fried talks about this in his post “Teaching Iteration.”
You CAN grow/manage multiple companies
Most people out there will say that you shouldn’t split your attention between two business/products. That may be true for some people/business, but people have done it. How many success stories have you heard that started like this?
- Slack came out of a video game company.
- Instagram came out of a whisky app.
- Pardot came out of a pain point they had at Hannon Hill.
There are tons of examples, with most of them being centered around something they built internally to solve a problem they had.
We built Userfeed to solve a product management problem we were having in our own SaaS business (Ad Reform), and decided to take it to market. It was a bit calculated though. Low on time, money, and resources, we said we would give it one month of our time. If it didn’t pan out, worst case was that we would have a great tool we could use for Ad Reform. Best case, our hunch was right, and many other teams were experiencing the same problems we were. So far, we’ve been right.
In terms of managing both, we’ve had to make some changes in how we do that. We hired a contractor to help us with support, and we’ve moved to a more inbound/ad/SEO focused model for sales on the Ad Reform side (previously myself and an intern spent a lot of time on an outbound strategy). We’ve had to also improve how we keep up with everything going on for both products (we have two slack accounts, two Intercom instances, two email addresses, etc.). If they both continue to do well, we’ll likely need to hire someone to manage one of the businesses and run with it. As of right now, it’s been pretty easy to run both, and we’re having fun doing it.
If you can find a way to get over the hill in the early days of bootstrapping, an incredibly flexible lifestyle awaits on the other side. A lot of people say that things don’t get easier when your company grows, you just have different problems. That may be true in some ways, but things certainly do get easier. It’s similar to when people say “money doesn’t make you happy.” Again, true, but it does make things a good bit easier, because you have much less to worry/stress about.
By no means have we made it, but my head is so much clearer now that we’re a self-sustaining, profitable business. That clarity enables us to focus on growing the business, instead of constantly trying to figure out how to survive. It also enables us to spend more time with our family, and be around for everything as our daughters grow up. Life is good 🙂