Growth is, however, slow. I have a good understanding of who my target customer is now, 1 year later, after talking to them and noticing common patterns in terms of their needs.
This is my first real business. I would really love to hear from someone experienced in building a SaaS business from scratch. Your insight would be appreciated. What should I expect in terms of growth? How fast did businesses grow in the beginning (BaseCamp, for example, Digital Ocean, MailChimp)?
Thanks
There is no general answer to your question. Are those 8 customers paying you hundreds of dollars each per month, or tens of dollars? What's the reason you haven't gotten more? Have you lost motivation to work in this space / on that project?
I was in a similar situation to you a few years ago. I had started a clone of patio11's appointmentreminder.org for the Austrian market. After 2 years, I had 8 customers and €2k monthly recurring revenue. But it was very difficult to get new customers. I decided to stop growing this business. Since then, I've lost 4 of the 8 customers, but those that remain now pay me more for additional services, so I'm back at €2k MRR. I'm satisfied with my decision.
Another project I worked on is https://fman.io, a desktop application. There, I wish I had stopped sooner. I spent 3,000 hours and made <€20k. I actually recorded videos about this and the other business I mentioned above [1], [2].
In general, I suspect most founders keep going longer than they should. The fact that you are even asking the question indicates to me that you are losing motivation. Maybe it is time to move on.
If you'd like to talk about more details privately, feel free to reach out by email. You can find my address at http://herrmann.io. Good luck!
Having said that, yes fman misses important features. It is I think the main reason why fman does not have more adoption. But adding the features would take another x,000h.
But it grew to around $15M ARR in that time. That might not sound like a huge number compared to the best known startups, and VCs would have no interest in such a company, but it does prove that slow growth does work.
So to answer your question... when should you give up? Give up when you no longer feel fulfilled by working on it. There is no magical growth rate that makes it a good project vs. a bad project. It is all about your personal goals and whether it fulfills them.
As a founder, I'd be more than happy to work on it for my entire life
The "long slow saas ramp of death" is real. Google it.
You can supposedly grow faster if you do marketing well. But from what you wrote I'd guess that you do not do marketing well. My adventures with marketing came down to the following conclusions:
* Spending money on ads is basically burning money and does not work for me. (tried Google Ads, LinkedIn, Facebook ultra-targeted ads, Quora). This became painfully obvious after I implemented my own conversion tracking, because I did not trust their metrics/analytics.
* You will find plenty of marketing experts all around you, but none of them will work for a commission, which speaks to how much trust they really place in their "skills".
* Since I am a solo founder, I eventually decided that I'm OK with my organic growth and I'd rather concentrate on making the product better. This helps in building bigger product value, improves customer retention, allows me to raise the ARPU, and in general works great. I just don't get the marketing-pumped stream of new customers. But I'm OK with that, especially at this point.
That said, I think I would expect more than 8 paying customers after a year. My ramp-up in the first year was slow (the product didn't have a lot of value back then), but it was quicker. I just checked, and I had 25 paying customers after one year from the first one.
There are many marketers who will work on commission (e.g., affiliate marketers, some/much of which is not BS). The challenge is creating a context in which a producer and seller can work well together. Specifically:
1. The seller needs to have a product that people want. That’s product-market fit.
2. The seller needs to be willing to pay the marketer enough to make it worth their time. Many producers fall woefully short in this department. Sometimes it’s because the producer is cheap, sometimes because they don’t value marketing, sometimes it’s because they don’t price the cost of marketing into their product (either not at all or not correctly).
3. On top of all of the above, there needs to be a sales funnel that converts. This can be set up (even crudely is ok) by the producer, or it can be set up by the marketer. Note that a good sales funnel takes time to develop and refine, and doing so is expensive —- expensive to the point that the marketer maybe should be a co-owner rather than a hired gun.
If a producer is missing any of the above, they will naturally only attract folks who will work for a flat fee rather than a commission, and that’s because the groundwork has not been laid for a commission system to work / be worth their time.
You won't find many developers who work on a commission either.
Also, the reason why I wanted to have a marketer on a commission is not because I don't want to pay or because I don't have money. It's because I want accountability. My strong suspicion is that most of the self-proclaimed marketing gurus do not deliver.
Your product is unproven. How do I know you can convert and retain a qualified audience?
If you want to give engineers a financial interest you do it through options / stock, which is very common.
As a marketer myself, it's not that we don't trust our skills, it's that few things happen in short term. If I'm going to work with you with commisions it's because I have trust in your product in the long run (2+ years, at least).
Otherwise I could spend a year optimizing your site, your funnel, your strategy and you could easily fire me and keep all the strategy, SEO and branding done to your site.
I've yet to find a marketer that would be interested. To be honest, I'm not that surprised — I want accountability, and there are many others out there who do not, and with faster-growing businesses.
>"Spending money on ads is basically burning money and does not work for me. (tried Google Ads, LinkedIn, Facebook ultra-targeted ads, Quora). This became painfully obvious after I implemented my own conversion tracking, because I did not trust their metrics/analytics."
When I hear about solo founders decry poor results from paid media, lack of trust in tracking and metrics, etc., I often wonder how much time they've actually invested in learning what they are doing.
Managing paid media is a career and industry in and of itself that is highly-technical, rapidly evolving, and requires deep understanding of the specifics of individual platforms, creative, audience, etc. The metrics themselves are INCREDIBLY nuanced, and I've come across more fellow marketing professionals than I would like who aren't familiar with the impact of view through conversions, how they should be viewed in relation to other efforts, where/when/why they will mess up your analytics in different platforms (for example, FB view throughs are counted by default, but will not show up in Google Analytics).
So when you say they are basically burning money and not working for you, my gut tells me that there are decent odds things were not setup, tracked, or optimized according to what many in the paid media industry would consider best practices.
This is NOT a knock against you. This stuff is difficult, but the platforms go out of their way to make it easy to get started and spend large sums quickly with settings that may not actually make sense for what you are trying to accomplish.
Which brings me back to the commission thing again. People who know this stuff work on a variety of models. Many of them value their time quite a bit (myself included) and would not be willing to shoulder all of the risk. That said, paying for an initial flat rate consult to evaluate your previous efforts to validate your approach and gauge how much they reach the same conclusion (ads don't work for you) might well be worth the time and money.
As to commission-based work, I still think that when presented with a SaaS with a good 4-year track record, a confident marketer should at least consider something else than a flat rate. What exactly is the risk here? There is organic growth, there is customer retention, there are MRR numbers. After a customer learns about the service, everything else is known and very clear. What remains to be done is work on what happens before a customer learns about the service, which in my opinion is entirely on the side of the marketing person.
I guess my skepticism is also before I haven't met a marketing person that is convincingly good at what they do.
First experiment is to see how large a customer base there is. You want to see how often people are looking for a product like yours or your competitors. Make an Adwords campaign with the right keywords, bid high enough to always be shown first, and then run this for a while to get an idea of what the search traffic is like.
Second experiment is to see what portion of that customer base you can capture. So, continuing on from the previous experiment, you now want your site to be set up, and then measure what percentage of those searches result in people actually clicking on your site. And then what percentage of those clicks result in them actually putting in their credit card information and paying for the first month. If you can't have people signing up on their own, then give them a form to submit their information instead, and then make some estimate on what percentage of those will fall through.
Then, that gives you an idea of what your baseline growth is. And then anything beyond that, i'm sure you would've already hired someone who could give you way better industry expertise than you would find by asking HN.
But I knew we had something special in the tech.
That little bit of cash helped us hire a great head of sales with experience building companies like ours from the ground up. We couldn't afford to pay him even an order of magnitude less than what he would normally charge, but after seeing the product he turned down dozens (!) of offers from VC darling startups to work with us, for free, on the basis that we would pay him when the sales worked. For most of the next year and a half, we had steady linear growth, but it was enough to attract funding.
Now we've built a great team of 20 people and are on track to way exceed our numbers for this quarter. We still have a lot of work ahead of us.
If you know you have something special, then fight for it. It takes a lot longer than you expect.
Same reason a later seed investor put money in. "If it works, why wouldn't any company buy it?" As we learned (and are still learning) great tech and an obvious market need are only tiny pieces of the puzzle to figure out.
None of us had any experience in the industry, and the company was 3 people at the time our head of sales came on board--not much of a culture to speak of.
If we could get it to work, it would reduce costs massively for businesses, so it seemed to me at the time that it wasn't a question of product market fit. Of course the market wants this. The only question was, can we build it? Will it work?
When we saw it working, we knew we were close. Didn't know that close was still 3 years away though!
You win your first one hundred customers one at a time, through massively high touch sales.
Once you've hit a hundred, you might start seeing some organic growth via word-of-mouth - maybe. But you gotta put in the sales effort to get there.
If you're an engineer with no sales experience this can be a painful lesson to learn!
I built an app that helps people have a better gaming experience and my domain is basically just the best Google Trends keywords concatenated. I immediately had 500 monthly unique visitors just from Google organic search.
But launching a bikini brand, for example, took lots of advertisement and social media presence and sales dropped as soon as we stopped paying everyone for ads.
[1] - https://indiehackers.com
- do your customers know that they have a problem
- is the problem painful enough that people are happy to pay for a solution
- do your customers have money?
I've been running a SaaS for professional freelance photographers for 10+ years now. Customers going bankrupt really drives up my churn rate. It's a frustrating market. I keep the company around because it's profitable, but I would never want to invest additional work in that product.
I also once built a sound plugin to add 3D audio support to existing movie production software. Pretty much no chargebacks and no returns at a much higher price. Here, marketing was easy because a good prospect would buy 20 licenses in bulk for the entire studio. We got featured on magazines, had interviews with famous actors, musicians, and directors. In short, everyone was feeling great about working on it.
I've also released some games that gained no traction even when I made them completely free with no ads. That was pretty frustrating.
What I'm saying is choosing the right market can make the difference between you feeling great and making easy progress, and wasting lots of effort only to feel frustrated later on. Make sure you choose a market that makes you happy.
There is a reason why nobody is making X optimized for broke cynics.
People really do underweight enjoyment when they choose something to build. There's a lot of dimensionality when choosing something to work on, but enjoyment is one of the most important.
Your choice is to either slog this one, or use the experience and pivot.
BaseCamp - used Ruby on Rails consulting to promote and finance it
Digital Ocean - rode pre-AWS hosting craze
MailChimp - founders worked full-time until enough revenue, rode moderately-early email marketing craze
Are you riding a craze, and/or funded from side gigs?
Hats off to DO (2011) for rolling their own cloud after AWS (2006), and gaining mindshare!
Anyway, to the GP: what DO has done when head-to-head with a giant like AWS is pretty rare.
How fast SAAS companies hit ARR milestones:
https://baremetrics.com/blog/how-fast-saas-companies-hit-arr...
In my very personal opinion, having 8 customers shouldn't give you the sensation that your product is finished and that you can scale (although I really don't know what you do so I may b wrong), so you must figure out what is missing to acquire more customers before thinking in terms of "Growth"
Shouldn't this be the other way round? The MVP of Mailchimp is a generic CRUD web app TM hooked up to a mail server, while the MVP of Digital Ocean needs something approximating a data centre.
"So what are considered some of the best tests for PMF? Rachleff writes that “You know you have fit if your product grows exponentially with no marketing. That is only possible if you have huge word of mouth. Word of mouth is only possible if you have delighted your customer.”"
Generally, if growth is slow, your product is not good enough, or rather there's no market for it. You should try different things until you get to a point where you have more customers than you can deal with. Slack originally worked on a MMO, then shut it down and worked on the messaging tool they used while building it.
Alternatively to everyone in this thread: find a partner. There are plenty of folks like me who can’t dev but are able to grow businesses, you just have to find the right one that fits the channel your customers hang around in and you enjoy talking with.
One of my partners and I talk all day every day, we met on some random subreddit and three years in he’s one of my closest friends and we have quite successfully generated ARR
The side benefit of this is it allows you to focus on what you’re good at which is building the product.
I don’t have capacity but I could probably connect you with some potential people if you’d like or at least willing to talk through some potential marketing thoughts with you if you’d like to talk. Just let me know how to connect
I had a business once that was not fast moving and I thought "probably because I'm not much of a salesperson". Then later I started another business and the work started flowing in hard and fast. I was the same person but it was a different business. That was a huge lesson for me - when you're selling the right thing, clients come running to you "take my money!".
If you've built something people want then the difference will be amazing - the work and customers will fly in on their own because they'll hear about it and want it.
Other less compelling businesses will be a grind forever.
From what you describe, there's no reason to think your product will suddenly take off. Sounds like it will be a long slow grind.
I’ve been in projects before where things grew very easily due to no effort simply because people wanted that product. And then in other projects where the solution is elegant but people were already satisfied with existing solutions. And so the few who wanted it simply meant the product was niche.
Zapier is one that comes to mind where I could see the solution, before its successes, could have gone either way. Either people were happy with their existing workflows and ignore what Zapier could do, or it would change their lives. If your product is defining a new segment, this could be the problem.
- Very difficult to be successful if this is your side project, if you cant take the leap because of funding then try to raise money, your in a better position than most because you have a product and traction (although without knowing the domain hard to say if someone will be interested).
- If your thinking about giving up, perhaps your not convinced enough to go full time on it (fair enough) then look to potential sell it - OR - merge it with a complimentary offering. There are SO many SaaS products now (just look at ProductHunt) but very few of them I would say are viable businesses on their own right but put together that could be a different story.
But don't give up easily! Don't expect you should grow as fast as the popular startups you've mentioned. You can allow yourself to grow slow and steady and still be extremely successful. Growing fast is what investors want, not necessarily what your customers want. Focus on working for your customers, not your investors (or potential investors).
If you're delivering value for those 8 customers, get closer to them, get into their shoes and then find more customers just like them (maybe they can even help you with that).
Then automate your operations as much as possible, and focus on getting your SaaS really stable for them. Then, slowly, deliver the most critical and important features for those customers, always focusing in high standards for quality and security.
Be a strong business, even if a small one. Run your business in a profit first approach. You might grow slow, but you grow healthy and strong this way, and if you persist, you may eventually find yourself grow really fast later.
The latest episode is right up your alley.
https://www.startupsfortherestofus.com/episodes/episode-499-...
Some ideas/products will grow faster than others. Congrats on launching and having paying customers that is a BIG accomplishment.
Since you have the experience of creating one, start thinking about your next SaaS. Think more about the value it would provide, niche, market size, how would you market to them and idea validation.
I've built and manage SaaS for clients, I'm building my first one for myself right now.
I've been following SaaS for years, some have taken off right away to $10k, for most though the growth is very slow.
I think it depends a lot on your market/niche. How many people have the problem your app solves and what marketing channels you have available.
If you have happy paying customers chances are you're on to something. It just might not grow as fast as you want. Think about how to market it to potential customers similar to your current signups.
Congrats and good luck.
Without more information on the business (MRR, vertical, customers, etc.) it is difficult to provide better feedback, but now that you know more about the customers, do you have a plan to grow faster or at least a path of sustainability?
One year in most cases is not enough time to know whether to give up.
Starting from a point of passion and personal interest isn't always the best strategy.
I never give up on my side projects, I have too many to count now.
Maybe you've not done marketing correct, maybe your product has steep learning curve. Maybe too many alternatives exist at lower price point.
There are lots of maybes, so send me an email I'll take a look zerocorebeta@gmail.com and offer some feedback.
I worked on watch.ly for about five months. Cool product, no customers. Didn't do any significant marketing.
FastComments - couple months in had a handful of customers. I think almost six months in now. There were Sundays where I would wake up and just do marketing stuff all day, crash from the coffee, and then work the next day.
What you're trying to do is not easy. After you have something that even mildly works you should start spending most of your time trying to talk to potential customers.
As a famous salesman once said - "Major time is for major things".
Think and visualize your end goals here, then plot a path to them. You might realize you are way off.
Good luck!
if you're building a notifier for recent job postings for $9/month, stop
But to be honest, i still focus more on my carrier and it looks good. I don't think i would make more money as a business owner.
It still sounds great to have your own business.
But what is your motivation? Did you create that specific SaaS because you wanted to have a SaaS Product or because you like your SaaS Product/Idea and you use it yourself?
Do you dream of becoming another Zuckerberg? If yes, forget it.
Starting businesses is no guarantee that you'll see that benefit of course. Chances are you'll earn less running your own business than you would if you worked for other people instead. But there's a small chance that you'll do a LOT better.
like if I ever got laid off, my world would begin to fall apart. I have savings but the couple of times I've had to live of savings has convinced me that savings are just not viable.
I once worked for a product in the SaaS business and what helped us is understanding "where are our customers". So, where are _your_ customers? How do they come to your product, how do they discover your product? After having this answer we focused on improving that conversion rate (for us it was all about being first on google and having a high-converting landing page, but in your case forums might be a better place to look at. It all depends on the target customer)
Also, one issue I've often encountered is that knowing the customer and selling to the customer might be very different things. Did you only sell online? One great piece of advice is try to sell the product IRL and record the audio. After many failed and successfull attempts you'll have recordings of _what works_ and what doesn't work for the kind of customer. That information will be useful to convey the benefits into your landing page / homepage.
Back to your question: How much growth should you expect? It is a generic question. How many people are impacted by your product? How many have that specific itch to be scratched? How fast can you get to them? How good is your product at scratching the itch? The (partial) sum of these questions might lead to the answer. If you have many people impacted by your product, if the product scratch a big itch and you can reach all the people at the same time, chances are you're going to grow fast.
If you grow slow, is it bad? It might be bad if you're asking 5$/month for an extra. If it is 100$/month maybe a slow growth might make sense.
In the end, if I were in your shoes, I'll wait a year to decide if it's time to give up, but at the same time I'll set some monthly checks to see how growth is going, what are the feedbacks and how the community is reacting and test each month a different way to market the product. A good book on this is "Traction" by Gabriel Weinberg
PS I also run a side business creating cosmetic products (not saas) and my growth has been relatively slow. The product (in my case) fixes a big itche and had no competitors. Reason for that is that achieving a stable efficient result is quite hard, but we somehow made it (bootrapped obviously). In our case slow growth was a good thing because it allowed us to fix the issues in the product before being too much known in the public.
Your goal can be 10 or 100 paying customers by the end of the year, it doesn't really matter, you just have to make conscious decisions whether you are okay with those numbers.
The long, slow, SaaS ramp of death
https://businessofsoftware.org/talk/how-to-negotiate-the-lon...
Is there something else you want to do?
If you're still motivated and want to do it, keep at it. I don't think timelines for success (depending on how you measure that) are fixed.
If you're not motivated / want to move on, you probably should.
But if you understand your customers better now, focus on a marketing towards the same kind and see where it gets you.
