From Idea to $5k/month in 5 Months

At Microconf 2014, Josh Pigford , Founder of Baremetrics (SaaS metrics for Stripe), spoke about how he founded Baremetrics and what led to it becoming a successful business.

You can view the video here. The detailed presentation can be viewed here.

Transcript

Josh: Like Rob said, my name is Josh Pigford and today I’m going to talk about what I’ve learned, building Baremetrics and specifically taking it from Idea to $5k a month in recurring revenue in 5 months. So there is me and that stuff. So Baremetrics – what is it? Baremetrics is one click, zero setup SaaS Analytics for Stripe. So you connect the Stripe, you import all your data, turn out a bunch of stuff and you get lots of tasty metrics. So you can check out a demo, a Demo.BareMetrics.io and kind of thinking there is that the numbers that, if you go to Demo.Baremetrics.io, the numbers there are are actually Baremetrics own numbers, so you can see my lifetime value churn, monthly recurring revenue, all that stuff and you can spy on me.

So quick history here, so how did all this come about. Like Rob mentioned, I have a couple of SaaS products that both have used Stripe for a couple of years, have all this data in there, so it’s kind of like, you know, the data in there or how do I get out the business metrics that I need? So hooking up to other Analytics platforms were always kind of a hassle, like I was duc-taping stuff together to make it happen. There was so much work required on the [inaudible 0:01:17] side of things and then I felt like, “Well, I probably missed something,” so I didn’t trust it. So I decided to just build something myself.

So October 14th, I have the idea. It’s like 7 ‘o’ clock at night and I’m frustrated with all this stuff and so I tell my wife, “Honey, I’m building business tonight,” and so I stayed up all night and in the morning, I am going to have a new business. So if you are …like light treading all this stuff, and you see like three hours later, [good night 0:01:48], so I did not stay up all night because I’m too old for that. Then launched on November 14th, so literally like idea on October 14th; at the door, people are giving me money on November 14th. Now, the timeline for that – first month, nothing, because I’m just designing and developing everything, but this is the first month that it’s available for people to give me money, so a $1000 of recurring revenue and a couple of dozen customers. Month 3 – 1650 and a few more customers and then something interesting happens on Month 4 – I double recurring revenue and double the customer count. I’ll talk about what happened, how that came about and then Month 5, to the day, I crossed into $5000 in recurring revenue. So this is Idea to 5k in 5 Months.

So then today, this flyer is actually a couple of weeks old. It’s actually at about, I think, appears like 8000 something on the recurring revenue and a 120 something customers and then like any good startup, I needed hockey sticks somewhere, so what I have done is I have taken my current growth rate, monthly growth rate, and I’ve made the assumption that it would be the same for the next 12 months. So next trip MicroConf. I’ll have another recurring revenue of $4.1M and a…ton of customers. So I’m excited. I will go Opera New, if I have $4.1M. New Car! So five takeaways here from the past 6 months of building Baremetrics and really a couple of years worth of building products in general, kind of the philosophies that I throw at stuff to get stuff out the door.

First is: Build what you need, not what you think others need, so we could debate into the ground whether use some scratcher an itch or not. I’m in the camp that, “Yes, you should scratch that itch.” So I think that when you kind of got this pain point, it’s a really easy sort of a segway into building the start of the business by trying to solve your own problem. It’s certainly no guarantee that it will turn into a sustainable business, but it’s a start, right, and chances are you are not like this rare unicorn of a business that has problems that no one else has; chances are there are other people that have similar issues that you have, so if you are solving a problem you have, you can probably find other customers…again, it may not turn into a viable business, but it’s a start. So it’s a runway to atleast build something which can be a jumping block, rock, something into something else. So in worst case, even if it turns out nobody wants to give you money for, you have solved your own problem, so that’s a win!

Charge from Day One – This kind of hits on what Hugh said about, like we have this aversion to charging, but you need that. You need to charge money, right, and when you are building a sustainable business, the thing you need more than anything is validation and so you’ve probably read lots of tips about how to validate an idea, how to do Adwords Campaigns or send out emails, and you’ll validate your business idea. Unfortunately they are all bogus and there is only one validation tip that matters and it’s making money. So if you charge money for it, you get atleast on some level, some validation for it. That’s again, it’s not guarantee that this will turn into this some huge business, but if someone says, “Yeah, I’ll give you money for that,” then they have atleast said “You solved a problem for me on some level.” If you can’t get anybody to give you money for it, then you have a problem there and you need to do something about it. But again, like, we have this like psychological barrier to charging money and it shouldn’t be scary.

Lot of times what will happen is we are afraid that we put something out there, that we have worked for months and months on, we are afraid that someone will tell us, ‘No’; like, ‘I don’t want to pay you for that. All the hard work that you’ve put into that is not worth it for me.’ So we do things like have a over-generous free plan that kind of gives away the farm and then we tell ourselves, “Well, I’ve got a 1000 people on my free plan, and that’s a valid…that means my business idea is validated.” No, it’s not! Like they are actually sucking your business dry by having all these people on your free plan.

So you know, even if…I guess, for me, like the rule here is, if you are saving someone time or money or creating value for them anyway whatsoever, you should charge for it and as everybody says, you should charge more for. You are probably also not charging enough and not giving yourself enough credit. So charge for it. And then even if you think your product is not ready, it probably is. So go ahead and get it out the door as soon as possible, which kind of takes us to our next point.

Stop trying to attain the perfect product – Reid Hoffman from LinkedIn has this quote; you’ve probably heard this before. “If you are not embarrassed by the firs version of your product, you’ve launched too late,” and that’s true, that’s so true because when you spend, say like, 6 months or a year or even a couple of years building a product, like you are in this tunnel of this turning point stuff and when you put it out there, you kind of…there’s been all this time that you could have been charging for it, but instead you have kind of…you make a lot of assumptions when you are just working in the tunnel without customers and a lot of times you make wrong assumptions there.

So for instance, the first version of Baremetrics had like half the metrics it does now; they were all forced into these individual calendar, months. You can do like custom date rank just to compare metrics and it all did once a day, if that; half the time that didn’t even work, but the first couple of $1000 in recurring revenue came from that version and that kind of had a interesting benefit for me, in that, it bought me time. So I knew what Josh’s problem looked like and I needed the solution for that. I knew what that looked like. That’s why I built the initial version for, for myself because I needed the solution.

But I didn’t know what that looked like on a larger scale, across lots of different business models and more importantly across lots of different ways that people were using Stripe. So Stripe’s got this great API, but you could use it in a like infinite number of ways. So that led me, it bought me, literally bought me time to kind of figure out what this looks like on a larger scale. So what I did was I scrapped the entire…so two months after, I scrapped the entire code base; literally started a new [inaudible 0:08:23] project throughout the previous design, all the front-end code and then over the course of 2 weeks, I rebuilt it from scratch, and then I relaunched it. And the result was doubling the recurring revenue – that was between Month 3 and Month 4 – that happened when I relaunched things because what happened is I created all this additional value, so people who previously wouldn’t have got enough value out of the first version, now there is a lot more value to be had with this new version. So they are more than happy to pay for and to continue paying for it, which takes us to our next point here.

Ship fast and ship frequently – so the first version of Baremetrics, in reality was about 80 days of design development, that was sort of man-hours, me sitting in front of the computer. That was spread out over the course of 30 days of juggling other client work, two other SaaS products and I was out of the country for 10 days with no option to really even think about Baremetrics. So you don’t make excuse. Ship it! But I…that applies after the fact too, so you have got something out the door, but you can keep shipping it quickly. So, a feature for instance. You have got some feature that lots of people have been asking you about or you’ve got some idea that you want to implement, instead of spending months…again in that tunnel, just working out some feature, you can go ahead and ship it quickly just to really basic version and then see how people actually interact with it, because the stuff that people will tell you via email or even be a phone call, a lot of times it’s pretty different from how they actually end up using the feature or they may not actually use it at all. So if you go ahead and ship it quickly, you create small amounts of value a lot faster. So instead of, you know, risking some big amount of value that we can get out the door, warranted after a lot of effort, you can ship small bits and then adjust accordingly and that make us mini-waves or tick off customers as quickly, so shoot for small pieces of larger features.

And then final point is the price for the customers that you want. A $9 customer is an entirely different customer than a $99 customer, whether that’s $9 a month or just for a single product. They are entirely sales process. They are an entirely different…they were usual product entirely different ways and more importantly, that $9 customer will create a large portion of your support load. They will nag you the most; they will demand the most and they are the most likely to jump-ship when your competitor creates something that’s $8 a month. They are not loyal at all! But the $99 customer, on the other hand, tends to be pretty loyal, and they are not price-conscious. So for me, I want to focus on customers that are not price-conscious.

I want customers who say, “Hey, you’re solving the problem that I have. Here’s money. I’m glad to give you money to take away the pain that I have or to create new value for me.” They are more than happy to do that. And on top of that, the general rule for me is, the businesses that I am after, so the customers that I want, are businesses that also make lots of money from their customers. So if the business that you are targeting does not make much money, so they are making like 5 bucks off a customer, you can’t possibly expect to be getting $50 from them. You are taking from a small pie; they don’t have…there is not much to go around whereas a larger customer tends to have a little bit more money to go around.

So wrapping up, build what you need, charge from Day One, stop trying to attain the perfect product, ship fast and frequently and price for the customers that you want. That’s my info and then slides for this are: [JoshPigDummy.Ideato5K].

Thank you very much.