In 1998, before people had much of clue about what represents success and how big things can get given time, I built a software product and posted it to the net. Within a week or so there had been a handful of sales at $100 each.
That looked like failure to me at the time - "that's a trickle of money - extrapolating maybe $25,000 per year? Not enough to pay my bills. I need to get a job".
Today that sort of start looks like a whopping success.
I've been trying to replicate that start ever since.
The upside is that I did go and get a job, and through that job met the woman who I had kids with..... if that's that path to getting my fabulous kids then I don't regret it.
Man that last paragraph is the kind of success to keep in mind. I have loads of regrets on businesses and opportunities missed since 98 as well, but a huge number of them would not have lead to my family today.
A more spiritual approach to the decades is how I am hoping to live in the future - that and still plenty of coding.
The internet is becoming a bigger and bigger playground. Even getting that first bit of attention is extremely meaningful now. There are so many different services and other attention-suckers out there at this point that everything really does matter.
What type of software product did you make back then that warranted $100 sales?
Back then, every software product cost that much. Well OK maybe I'm exaggerating a bit, but certainly anything that was B2B focused. 'Personal' sales would be $25 for something really simple, $50 for something established that people would use a lot.
Car expense tracker for Palm - $19.95. Today if you even want to charge $1.99, you'll be competing with several free (ad-supported) ones.
To share our experience (we sell SAAS in financial services): our first solution took us 6+ months of development (one person) to get our MVP launched and another year to get people to use it actively without active outbound selling (that is to say it was sold but we had to hold your hand the whole way through).
Some thoughts: internally we consider the "V" in MVP to encompass not just what is the minimum you need to do to solve a problem but the minimum to solve a problem (worth solving) at a level someone is willing to pay you for the solution. That often is more extensive than a traditional MVP which is why SAAS solutions require so much up front development. Consumers are not fond of subscribing to services and businesses don't like beta products.
A couple additional thoughts as we now actively sell 4 SAAS services:
- to be successful in SAAS you need to build something people need. They say there are two types of businesses: painkillers and vitamins. If you're a vitamin you are 20x more likely to fail than a pain killer. The value prop is just too hard to communicate and people's attention spans are too limited
- the more you understand the user / workflow / domain the better. I realize this may sound obvious but I do my best to pay forward the mentorship I received and I am shocked at how often I come across people trying to solve other people's problems as an outsider.
- with the exception of notable billion dollar startups we all love and read about daily, I believe the dream of "build it and they will come (register, put in their credit card and bam you're done) is just that, a dream. Yes organic growth is real but all my buddies who have successful SAAS companies spent a ton of time and effort selling them before that organic growth kicked off. This could be an east coast vs west coast thing as my network is hitting niche workflows but worth sharing regardless.
Thanks for sharing this. I'm by no means successful in SaaS, but I've been running a niche healthcare SaaS for a few years, and our experience is similar. Especially when you're talking about higher-priced SaaS offerings - the buyer sophistication goes up and ability to bullshit goes down.
On vitamins vs painkillers: conversely, do you think if you are able to build a vitamin product that does make your worklife better/easier, wouldn't it be a harder barrier to entry for newcomers? i.e., greater entrenchment?
I'm currently doing customer development on such a product. I've burned my fingers previously building nice-to-have products and don't intend to repeat my mistake. With this one, I'm validating the market before I build anything.
There are ways people do this thing (inefficiently and poorly IMO) today. Their business isn't likely to suffer if they don't adopt my product but I'm hoping to prove a factor of efficiency improvement if they adopt it.
What would your advice to me be (aside from don't do it)?
First let's level set: the benefit of taking vitamins is that if you take them regularly, at some point in the future you will be better off than you are now (in other words there is no immediate perceived benefit - it requires an investment). Alternatively, a painkiller has immediate physiological benefits.
Assessing a service as a painkiller vs a vitamin is not totally black and white - generally I would say a service qualifies as a vitamin if there is no immediate perceived benefit to its use (ie it doesn't meaningfully save me time in aggregate, does not enable me to do something else that I can directly ascribe value to, doesn't reduce a painpoint I feel at this moment). A mental test I use is if someone goes from using my service for two months to immediately not using my service, how will their workflow change? If it doesn't change meaningfully, you are likely a vitamin. Note that I recognize that by this definition Facebook is a vitamin. Vitamins can make money.
So back to you. If your service does improve work/life or actually provide a "factor of efficiency improvement" over whatever their alternative is (e.g. Doing nothing) you may have a painkiller on your hands instead of a vitamin. The problem is you aren't the ultimate judge of what is a painkiller or a vitamin (you are operating on a hunch) until you go out there and try to sell it. The market will tell you.
So my advice is to spend as much time thinking about how you will package and sell this service as you are designing the service. Create a few marketing materials, hone the pitch and sit down face-to-face with as many people as makes sense and pitch them. In fact, I am 100% happy to genuinely consider purchasing this from you so you can try it on me. At the end of the day, the customer decides if you are adding value by voting with their time and dollars so developing a sales strategy early is important. You may discover you have a great service for a specific type of buyer profile but finding that buyer profile is too expensive. It happens.
I often remind myself of Ali-G's pitch to Donald Trump of a glove to prevent ice cream from getting on your hands (if you haven't seen it please watch - hilarious). Anyone who loves ice cream has this problem and the potential market of people who eat ice cream is huge. You could probably find someone willing to pay $1 for it but there is no way anyone can build a real business off this. Of course, you never know.
> Note that I recognize that by this definition Facebook is a vitamin.
Facebook started its life as an immediate painkiller. They solved several problems for the most hyper-active of social groups: college students. The facebook-equivalent products at colleges at the time were either non-existent at most schools or atrocious. Then to amplify the Facebook benefit, the connectivity between the primitive school products was basically non-existent (that is, to the extent they existed, there tended to be no wider connection school to school). Circa ~2004-2007, Once students acquired the benefits of having Facebook as a social booster, leaving it would have left them worse off.
I've crashed and burned on SaaS enough that I'm very into the landing page approach -- don't build the product, but convince people you have so that they can click the "buy now" button. That way you feel more confident that the market exists while you're actually building it. After all the projects I've failed at, nothing is harder for me to do than spend 200+ hours on something without having a clue whether it will reap benefits or not. Corey spent 100 hours trying to gather traction. He could have potentially skipped the 100 hours it took to build it and instead just tested the sales side.
There are people who can know where a market is and confidently blaze straight into it without any validation. I think I'm just not that genius or lucky.
If I understand you correctly: You whip up a bootstrap page that describes the product with a 'beta sign-up & pay' button, and if enough people sign up and pay, you build it?
- What sort of demo do you have on the website? Or is it just a basic description of the product and a list of features?
- Does this mean you get payment processing setup before development every time?
- How do you manage returning money if you decide not to do it?
I usually just do believable screenshots and a call to action like, "Request a trial" or "Buy now" it depends on what it's for.
I never take any money I just log the actions people took on the site. If it's a buy button, then you can just say, "Thanks for your interest. We are launching soon."
Let's say you get 20 people to signup, all of whom think it is (rightfully) vaporware. Well, at least now you can be sure there's a real market (>>20) to justify development. Even if you drop those 20 on the floor... the validation is more than worthwhile.
My experience in doing this has been that a surprising number of people who click the buy button still put their email address down afterwards, and none of the people I've talked to who did were remotely miffed about the deception.
It probably depends on the audience, but people are more understanding than you'd think about the need to look before you leap, especially when they know you're just a solo entrepreneur.
If I clicked on that button and received that response, everything I could find connected with you and your domain would go on my blacklists. Misleading people is a poor way to build trust.
Really? You maintain a 'blacklist' somewhere on Dropbox or so, and every time you make a purchase you look through who is somehow connected to it, and cross check your 'blacklist'? I think it's much more likely you're showing some internet outrage here, but when you actually run into it, you won't even remember a week later.
Yes I do maintain a blacklist. The main vehicle is: when I see something I find unconscionable from a company with I'll add an Adguard rule to block their domain name. It's hardly water-tight, but what is?
Your "I think it's much more likely" is a bit odd considering what you know about me (ie. almost nothing). "Outrage" is also pretty exaggerated. There are millions of commercial outfits out there in the world, the vast majority of which I'll never have anything to do with. There's a low bar for me to exclude just one more from consideration.
Yes you're right on your count, but you have to consider this scenario (which involves thinking beyond yourself) - - it's only you, and 20 others - - who would be mildly mislead (considering you actually didn't pay anything)
Now the dev can go build a working version putting in 200-500 hours into the MVP and find the next set of 20 people who are ready to use that software, with validation at hand.
However, I agree that better messaging can be used instead of straight up misleading people. Since if it does become widely practiced, people will generally become mistrustful (again, the odds of that happening is low).
> but you have to consider this scenario (which involves thinking beyond yourself)
I'm not denying that poor behaviour can net more customers -- on the contrary, it's by far the easiest way of doing so. My response was in the domain of ethical, not commercial, calculus.
Exactly. Don't think of people landing on the site as an infinite stream of people. There are influencers who land first and you don't want to be in their bad books.
Not necessarily, you can buy adds and get random visitors for testing purposes that way. Also you can write a better explanation, so that people don't feel tricked.
Only if you take a point of view that ethics can be shelved in the interests of business. It's a common point of view, in fact pretty clearly it prevails. It doesn't happen to be mine.
You don't have to make people pay, when they click on "buy" or "prices" you just display a page that explains the project isn't ready, with a newsletter form. Search for "buffer MVP" to see a classic example of this.
The demo can be extremely simple, a sentence describing the concept and a (fake) screenshot.
Be aware that presenting the same product in different ways to different people lead to very different results, so you can run multiple tests like this to find the approach that has the better chances of working.
I built a competitor to Reddit and Digg (at the time) called RatherGather that had some differentiators that ended up not mattering to people. I wish I understood Metcalfe's Law better at the time.
I built a mobile game called Roaring Racers where you had to use your voice to make your car move (roar louder, go faster).
I built a stickers app for iOS stickers launch that allowed you to import anything. This one wasn't a total dud, but the way Apple positioned the store, the traction wasn't at a scale that made it worth my time.
And then of course there's the laundry list of companies that I've been employed by and built products for where months into it I discovered nobody in the company had really done any market testing, but they got clearance to build something for $XXX,XXX anyways.
9/10 startups fail, so just by nature of that fact, most of us spend our time working on building tech that never really "makes it".
There have been great successes too, but you asked about the failures.
I forgot one that is fairly recent too. I built a Windows app that allowed you to watch Twitch picture in picture while playing a game. Sold one copy before shutting it down.
It came out maybe a year after the App Store launched, and the 100 copies I sold never justified maintaining it. It's long gone. Only way to play it would be an old iPhone that still has it installed and I don't even have one of those.
I'm building something to do exactly this at https://nichetester.com - I should note that I used the method described in the OP to validate it and it worked really well :).
That's essentially what Kickstarter is. You get backed before you build your product, and you don't even need to convince people it exists because they expect your product not to be finished.
I think it's an excellent model as long as you live up to your promise and deliver above and beyond expectations.
It's how I started my software developer course selling business and validated the idea (spending hundreds of hours making a course is no different than a SAAS MVP).
I don't mean to sound harsh, but, just 200+ hours? That's a little more than a month of work. I wouldn't even begin to expect any meaningful returns with just one month of full-time work.
Separate from finding someone who is willing to make a purchase, getting the technical bits in place in order to properly accept a purchase can be challenging, too. It's not just about being able to charge a credit card.
In our case we're an infrastructure service that charges customers based on their usage level. This required collecting the right metrics, consolidating them durably, making the metrics visual somewhere so customers understand how they are being charged, implementing notions of billing cycles, syncing with the payment provider (in our case Stripe), UI elements to indicate if the account is paid or not, ability to cancel paid service, etc.
All in all it took us a good two months from when we wanted to charge people to when we could actually charge people. Of course every service will have different technical needs. Congrats on the first buck. :)
Took a look at the site https://www.placecard.me/ and went through the flow of making a card and couldn't see a single place to pay for the template or order prints. Its possible I hit some kind of A/B test but i think the call to action might be buried too deep in the process.
It should be the case that if you pay for a template you get a preview link where the PDF has a watermark on it, and the only way to remove that watermark is to pay.
I agree it's way too many steps and am trying to figure out how to make it easier and more seamless without delivering people something they don't actually want.
Maybe having the cards on the front page might help. You've invested a lot of screen realestate on explaining the product. You could probably make this https://www.placecard.me/try/ your homepage, have the instruction in the banner and have the product in front of the user right away.
I like the product. But I wouldn't invest in automation of all the stuff upfront. I would just process the upload/order manualy for a couple of first users just to validate an idea financially.
From my experience people fear more of success than failure therefore overdo the product to survive an imagined scale explosion. But there wouldn't be much outrage from users that once flooded you have just raised the prices or temporary suspended the service. I guess queue with bucks in front of the door would boost your motivation to finish up the process implementation in half of the time.
I feel like not adding affiliate links is a missed opportunity. The guides section would be the perfect place to recommend a paper cutter, envelopes and paper and link to Amazon. The income probably won't be very big, but people who print their own place cards will probably need that stuff anyway, so it might add some revenue.
It might have been a conscious not to do it though, which is of course fine. But if it wasn't, I'd look into it.
Very inspiring and well executed; I can certainly learn something from chasing problems that is so small that one can actually implement and promote a well-functioning product within reasonable time.
"You might be wondering where my server costs are, and I’ll admit that I’m cheating a bit on that one. I host all of my projects on the same server—one that I’ve been paying for for more than five years—so I’m not including that in the budget for this project specifically. In reality I should probably include a portion of those costs here."
I don't want to hear about the first dollar you made. I want to hear about how you went from $40,000 to $80,000 MRR. That's the key area. This post is just an ego stroke for a guy who made $1.00 ($.96 after fees).
Ill take a crack at this though I'm going to paraphrase and ignore thousands of small details but here was my experience:
At the time we were making 40k we only had one product. As such, growth could only come from either:
a) winning new clients with the service we had as is ("sell what you have to more people")
b) adding new functionality we knew our clients would be willing to pay more for ("figure out a way to upsell what you currently have") or
C) create a new service altogether that you could cross sell ("find something else to sell them")
We did a combination of a and c.
Strategy A is clear-cut. If you want to make more money go find more people to buy what you have. Of course, this is easier said than done. Is your solution any good? Is the problem worth solving? Is the lifetime customer value sufficiently higher than your customer acqusition cost? All of these things play a roll here. For us, I think all of the above were true. Our biggest challenge is we sell to enterprise and financial services at that which requires a robust outbound sales process (in other words, no one is going to sign up for our tools because of a twitter post or mention in a news paper). The key takeaway about this is that to grow a SAAS solution, you need to be thinking about how you are going to sell it from day one. Internally we are constantly asking ourselves "how do we merchandise this?" (I realize that is not the best word but it captures a lot of things you need to be thinking about). We don't initiate development of any feature or product without seriously considering and designing a sales strategy around it.
Strategy C (cross sell) is worth highlighting here. I believe people mentally don't like paying more for the same service once they have been anchored to a price point regardless of how much value they get from it. As such, I spend a lot of my time pondering services or tools that I can cross sell. People like vendor consolidation and once they know like and trust you it's easy to get them to open up about other solutions. Because they are distinct solutions you can start the pricing discussion from scratch and command higher fees. Another huge benefit is bundling always improves attrition and can become a major barrier to entry to the extent you are in a competitive space.
That's not to say B isn't important, we are constantly innovating. I find pricing to be a bit more sticky in the SAAS space so improving a product is more about creating moats, reducing attrition, building brand etc.
Not sure this answer will help as there are a lot of "it depends on what you are doing for who imbedded in my answer".
Thats relatively easy compared to getting your first dollar. Having 40k in MRR suggests you already got a decent userbase to sell more products/services or retarget to. You can also get PR easier than a no name startup with 0 customers.
I'm not sure why this is on the front page. I mean, $1 that you just made yesterday doesn't really indicate product/market fit, nor seem very noteworthy in general. If anything, it seems more like a midway point in the journey of what you might expect to get there. You might have to pivot several times after realizing traction is not stable or perhaps not scalable vis a vis marketing efforts, as has been my experience. Kudos to building something though.
Edit:
I get the point others are making about celebrating a milestone and your first sale being the stepping stone to the next, but I don't think it addresses mine:
Is $1 that you made just yesterday really enough data to demonstrate to others what to expect? Is there really any conclusion that can be drawn from such a small experiment? Maybe it's just me, but I feel like there would be much more interesting insights to discuss after waiting more time or when more sales occurred.
Honestly this looks more like an SEO piece given the keyword rich external links in the article from a high PR domain and boost from HN. The author has mostly just submitted his own articles on HN to boot.
That "Zero to One" customer is a big deal. You can now ask that customer why did they buy it in the first place? Why did they take their credit card out of their purse/wallet, type their info in, and click buy? What would keep them as a customer, etc.
The next step is to get to 10 customers, then 100...
This is consumer product with a really low profit margin, which means he'll need a lot more than 100 customers paying $1 each to have a sustainable business. At $1, the product might as well be free. Imagine if this article was retitled "What actually goes into getting your first user." Would anyone care then?
Regardless, it would be much more interesting to hear why the customer took out their credit card and entered their payment information. Unfortunately, that's not what this article is about.
The first dollar is usually the hardest though. This is a true account of one person's experience and I think a lot of people don't understand what that feels like. 200+ hours to cheer for $1 and some people don't even get to the dollar.
The first $1 is easy.... If you're struggling to attract a single customer you seriously need to re-evaluate what you're doing. As mentioned earlier in the comments; doubling from MRR from $40,000 to $80,000 is a way bigger challenge than making that first buck.
There are a lot, lot, LOT more people trying to get to dollar #1 than any other phase of the process. It feels good to read about someone else going through the same struggles as you, especially if they're willing to share behind-the-scenes information (i.e. how many hours they worked).
Is this enough data to produce a valid scientific experiment? No, but that's a high bar that would disqualify pretty much every conversation anyone is having anywhere about anything :-D
Everyone keeps repeating that it's really hard to get to the first dollar and celebrating that as a common struggle. I rarely see SaaS products charging a dollar. And never for it to be a $1 one-time sale. That's why this makes no sense to me.
Hmm, it's not about the amount being literally $1 though. It's about going from $0 to >$0. There are a ridiculous number of people who are stuck in various early phases, trying to get over humps, and you can reach a lot of them by answering the questions they have:
- How do I come up with a decent idea? What should I work on?
- Where can I get the motivation to even start thinking of ideas? Are there inspirational stories of people like me doing this stuff?
- How do I validate my idea to ensure it's good?
- Do I need to learn how to code? If so, how can I do that?
- I have a full-time job, a family, etc. Is it possible for me to work around this? What are some tips?
- I keep starting but never finishing. What are other people doing that allow them to get to the finish line?
- Nobody is using what I've built. How to I get my first customers?
The list goes on and on. There are hundreds of questions like this, and millions of people asking them, and they're all pre-revenue. They come before the metaphorical first dollar.
The first dollar is metaphorical. Substitute first sale/income if that makes it easier for you to think about. (As an aside, I've seen many businesses frame and display a single dollar representing their first sale. http://framebiz.com/index.php?products_id=187)
Yes, I understand that it should be metaphorical but in this case it's quite literal. This story demonstrates more of a user acquisition exercise and dresses it up as a SaaS business exercise. You will have different problems charging $1 once versus $10 per month. This story is really not about SaaS products.
I really think you're missing the point of the article and why people appreciate it. It's extremely straightforward: "Hey everyone, here are some interesting stats + an entertaining story about what went into making the first sale at a SaaS business." It's not pretending to be anything more than that.
It's one person describing what it took to make their first sale. Maybe that information doesn't have value to you, but it does to other people who are considering doing something similar.
That looked like failure to me at the time - "that's a trickle of money - extrapolating maybe $25,000 per year? Not enough to pay my bills. I need to get a job".
Today that sort of start looks like a whopping success.
I've been trying to replicate that start ever since.
The upside is that I did go and get a job, and through that job met the woman who I had kids with..... if that's that path to getting my fabulous kids then I don't regret it.