Funded webapp SaaS

[Gale4rc]

Bad update

Started off looking good, got our first paying customers, lot's of traffic/signups and that basically turned to nothing.

I've been stressing about how to get more customers to pay but, recently i've realized the harsh reality of were just not there yet and need to improve our product. It's nice to actually be improving the product instead of building it, really liking this stage and the next features we add should be pretty awesome to the end user.

Recently did a survey with clickinsights.io - which is an awesome survey tool for getting more feedback from your customers. On average they won't respond very well to surveys but, because this one is done through their email it generally gets higher response rate than other sources (although it does have it's limitations).

The survey was asking what features we should work on next - Shortly after I realized it doesn't matter. I didn't start making this product to compete with anyone on features, or to let customer feedback tell me what to build. I created it to innovate this industry with the vision I had for the product, not the customers who have no idea where I want to take this. Yes - We should use their feedback to cleanup the product bugs/ui mistakes but, not features. unless we somehow missed some glaring features that are majorly important to the customer.

With that being said, we need to accomplish the features that align with our vision and not worry about the small things (like our metrics that have been bugging me for the past few days). They will all get done in due time and ultimately get fixed by having a great product. Just like my signature says - Be so good they can't ignore you. That's the plan and that's the only thing we should be focused on.

So for now were just focused on improving product while also increasing traffic but, not necessarily growth in terms of revenue because our product just isn't there yet. Were about 2 months out from being where I would like to think is product market fit.


Also wrote this post on out reach which has been a huge source of traffic for us. https://www.thefastlaneforum.com/community/threads/out-reach-is-hugely-important-for-your-marketing.55529/

 

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[Gale4rc]

Update________

Good news - This company is showing all the signs of a great idea... Really exciting time, I just wish it didn't take so long to develop stuff

We've had 1 sale everyday for the past 3 days which is good, they're monthly recurring sales and we're not exactly in the growth stage yet. Like I said in the previous post, were focused on improving the product. It's no where near where any of us think it should be or can be and i'm not talking about touch ups that make it over the top, i'm talking about core features that we need and our users are asking for. There's a lot of optimization we could be doing in terms of 'growth hacks' but, we've decided to ignore them all. Our goal is get the core features out that we've decided on, then go into growth stage and clean everything up then.

Our traffic is growing everyday as well which is a little scary because I'm worried people will get a bad taste in their mouth after trying our product and not getting what they want out of it, therefore not trust us in the future. But, then at the same time it might be a good thing because those who do try us and pay attention will see us improving and hopefully build some type of rapport with this company which they've been a part of since the start. Basically I don't know if it's a bad or good thing that we're growing when we're not ready but, I see points for both sides.

Sidenote_

I have that app I was talking about getting closer to launch and it's really worrying me. I am worried about growth with it. - If anyone has a track history of solid marketing, feel free to message me if you want to do something exciting on this app.

I also started another project with a developer who hangs out in the same chat and I didn't know if it was actually going to happen but, it's happening. He gave me access to his premium 4 letter word domain and he's completely awesome. The bad thing is that he's getting really involved with it now and it's taking time away from my main project, when we initially discussed working together I told him it would just be part time and both of us would just take it lightly and see what happens. Now he's in it full-time and I gotta be too, he sounds very motivated about it now and I'm not going to be the person that kills it.

So now it's 10PM and i'm drinking coffee to get more done. Glad i'm young and got the energy to do this type of stuff without burning out.

I gotta say, having a product and people using it everyday is pretty gratifying but, having a team behind it and knowing that they believed in you and being able to show them that they made the right choice is even more gratifying.

Overly focused, it's far from the time to rest now.

 

[Gale4rc]

We're so stupid...

We were making sales everyday and then we updated the signup page to increase conversions without testing it and locked out all new signups by accident.

Things are going slow but, good.

Recently finished Traction Book - Highly suggest reading it.

 

[Gale4rc]

Quick Update :

We're slowly getting paying customers. It's not a focus at all right now but, it's definitely nice seeing a new customer come through and now recurring charges being successful.I also spam our teams chat channel on Slack with "Rick Ross - Hustling" music video, money emojis and hustling memes everytime we get a new sale.

Finally we're about to fix one of our major bugs that's been an issue for a while and then we have 1 more major one with IE but it shouldn't be more than another week at most to fix it.

After that we have about 2-3 weeks of features left AT MOST - before we are going to try to start scaling.

When we get to 'scaling' stage, we're going to focus on optimization first. (Onboarding, Retention Emails, and implementing a referral program). After that is all setup we will start actually scaling with paid ads.

Things are looking good but, we're about a month out before anything gets exciting.

Also just finished Hooked book on product psychology, really good and highly suggest.

Stay tuned

 

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[Iwokeup]

Thanks for the update! I've been wondering what's up with you.

If I may ask, how big is your team? At first I thought that you were a solo or 2 person shop but now I'm realizing that you're much larger. Is most of that outsourced?

Cheers!

 

[Actionary]

Good Stuff Gale.

Question: How much has development costed you overall?
I recently got done with development (sortof) with my saas app, but the cost of working with the developer for a few months has been hefty (to me at least). I applied to product hunt, etc. But Now Im marketing to sell this app and have funds to fix bugs, etc.

 

[Milkanic]

Great thread, keep the updates coming. Some golden links here.

This is great and I was just looking for something like it last week:
http://ad-spend-calculator.qwilr.com/

 

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[Gale4rc]

Thanks for the update! I've been wondering what's up with you.

If I may ask, how big is your team? At first I thought that you were a solo or 2 person shop but now I'm realizing that you're much larger. Is most of that outsourced?

Cheers!

We're a 2 1/2 person main team - I add half for the investor he's involved but, not in everyday activity.

And we also have 2 freelancers working with us right now - so 4 1/2 total. One of them is my main devs friend so he's in the team chat on a daily basis even if we don't have work with him. He actually had a growth strategy he pitched yesterday (even though it doesn't benefit him at all) which was pretty good! (Actually writing this reminds me I should thank him and tell him to keep thinking of more. I just told him "we will but, there is where we're at now before we focus on that).

Good Stuff Gale.

Question: How much has development costed you overall?
I recently got done with development (sortof) with my saas app, but the cost of working with the developer for a few months has been hefty (to me at least). I applied to product hunt, etc. But Now Im marketing to sell this app and have funds to fix bugs, etc.

Development hasn't been expensive because I made the main dev my co-founder and he's working for equity. Rather not say exact costs on the forum, sorry!

Also I have other devs that I've talked about doing ideas with, all willing to do equity deals. It's actually pretty easy to find a dev to partner with as long as you have a good idea, track history and something for them to fall in love with by working with you.

In my case it's funding, in the other cases it's because I have a startup making $ which all devs know is very hard and it gets me an automatic level of respect without having to say anything. So I would suggest displaying those traits if you are looking to partner with someone for equity in the future.

Sample conversation I had yesterday with a dev that we might partner on a project:

I actually had one start another project for eCommerce and I had to have him cancel it because I just didn't have the time for that battle (it's all uphill, no solid / easy growth strategy.)

You can also 'poach' them by finding single devs working on projects that look like they've done great work but, it's not getting them anywhere. Find them, contact them and convince them.

Great thread, keep the updates coming. Some golden links here.

This is great and I was just looking for something like it last week:
http://ad-spend-calculator.qwilr.com/

Thanks! I'll keep adding more tools for everyone


I've already posted these but, if you're into marketing you definitely need to check these two sites daily:

inbound.org
growthhackers.com

Awesome book on growth http://tractionbook.com/
Amazing read on product psychology - Probably involves the easiest concept to remember that you'll use /know for the rest of your life. It's 4 main steps.

And we're using slack for team chat - Which is completely awesome (ps that's my referral link, we both get $100 credit for using that)

^ is slack - It has different channels for different things, this is our notification channel which plugs into all the outside apps we use such as asana, stripe, bit bucket, rollbar, etc

 

[Actionary]

Thanks for the great advice gale!

I unfortunately signed up for slack literally a few hours ago (from reading a blog post on saas selling).

 

[Gale4rc]

Quick Update_

Nothing new happening, We're about finished the the bugs (1 small detail left) and then we're going to start trying to scale a little bit with paid ads.

Awesome Resources:
http://info.qualaroo.com/psychographic-targeting-unhinged-webinar-recording -The best webinar you will ever see on advanced remarketing.
http://www.helpscout.net/blog/lifecycle-emails/ - Great post on onboarding your users. My key take away was "the benefit the user will get by taking that action" - This is an obvious sales point but, using that in your onboarding email while teaching users how to get value out of your product is an amazing idea and I will be implementing it today!

Will give another update sometime next week after paid ads have ran a little bit.

 

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[justbreathe]

@Gale4rc Check out http://reallygoodemails.com/ for examples of how other companies send out their emails. Thanks for the resource share!
http://reallygoodemails.com/

 

[Gale4rc]

@Gale4rc Check out http://reallygoodemails.com/ for examples of how other companies send out their emails. Thanks for the resource share!

This is awesome, thank you !

 

[Actionary]

Any updates on this?

 

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[Gale4rc]

Any updates on this?

Sorry for the long response I wanted to get everything together before posting this update

Things have been HORRIBLE.

Probably the worst since i've started this idea.

We had our first churn(s) - 4 customers. gone.

Development speed - Turtle slow. This is really getting to me, I wish we could be even faster. We are already planning on getting rid of the second dev we hired and hire a better one but now we cant.

We we're about to hire another developer to move faster and guess what happens?


My main developer (now co-founder) ran out of $$$$$$$$$$$ so that left us with some shitty options:

1. Pay him - which adds to the burn rate and will force us to move slow. Also his expenses are high - He wants $4k/mo if we do give him salary.
2. He gets a freelance job - then we hire a dev full-time and have him work part time
3. Transfer from turtle to snail slow and have him work part time with no one else
4. ???????????? any ideas?
5. Raise another seed round which is likely possible since we have paying customers and we're growing.

We're about 3 months away from having a really solid product.

This is frustrating because that's 6 months from any decent $ - growth wont be instant even when we get there you know?

So 6 potential months of him at salary is $24k down the shitter on top of everything else we've spent. That puts us really low on funding and not in a good position for growth.

So that situation effing SUCKS. Really, really frustrating. Either way i'm not quitting.... It's just I gotta figure out the right move to move forward

Pricing changes:
We tested multiple price points

• $25/mo - 0 customers
• $20/mo - 2 customers - Over 2 or 3 weeks of testing. Not good.... Normally we get at least 5 new customers a week.
• $17/mo - 1 customer
• $15/mo - 1 customer

Lost a lot of potential customers doing this and none of them ended up working out like we hoped.
$9.99 is the sweet spot with our current product


Basically December was anything but a good month for us.

 

[tafy]

Pay him, get it the right quality so you stop churning. Can you afford it?

 

[Gale4rc]

Pay him, get it the right quality so you stop churning. Can you afford it?

We can afford him but he doesn't want to take the money either - he's a co-founder... None of us want to increase the burn rate / capital spent ... But we may have to....

 

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[tafy]

You didn't do a quora thread on this did you?

 

[Gale4rc]

You didn't do a quora thread on this did you?

Lol no - someone in a similar situation ?

 

[tafy]

yes exactly the same

Solution - Pay the developer, but also pay the other founders similar wage but in debt, when the company makes enough money that money can be paid in cash.

 

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[Gale4rc]

yes exactly the same

Solution - Pay the developer, but also pay the other founders similar wage but in debt, when the company makes enough money that money can be paid in cash.

Mind posting the link so I can read it?

 

[tafy]

https://www.quora.com/My-CTO-and-co-founder-wants-a-big-salary-to-work-full-time-What-would-you-do

 

[Gale4rc]

https://www.quora.com/My-CTO-and-co-founder-wants-a-big-salary-to-work-full-time-What-would-you-do

Holy crap only a quarter way through and this is crazy how similar it is !!! All the numbers hahaha !!

 

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[Actionary]

We had our first churn(s) - 4 customers. gone.

It Happens, It would be good if you can put a sort of survey or personal email in place to ask them to give input on what made them leave or what you can do to improve the product. You could also mention that you are 3 mo away from a better product and if they would like to try you guys again in that time to join blah blah blah....

My main developer (now co-founder) ran out of $$$$$$$$$$$ so that left us with some shitty options:

1. Pay him - which adds to the burn rate and will force us to move slow. Also his expenses are high - He wants $4k/mo if we do give him salary.
2. He gets a freelance job - then we hire a dev full-time and have him work part time
3. Transfer from turtle to snail slow and have him work part time with no one else
4. ???????????? any ideas?
5. Raise another seed round which is likely possible since we have paying customers and we're growing.

We're about 3 months away from having a really solid product.

If I were in your shoes, I would self assess. Are you drawing an income from this as a co-founder?

If yes: If it is less that what your dev is asking, impose this ceiling on him until you are ramen profitable. On that note, is there anything you can do to reduce the amount of money that you are getting from the company? If you show that this money is not for our living expenses, but for business growth, then the tone will be matched appropriately.

Take the attitude of spending your child's private education/ or college fund on yourselves. would you be satisfied with the purchases that are being made? Even if you are the parents, are you being resourceful and saving enough money for the baby's needs (product runway) later from the godfather/godmother (the investor)?

My Advice: Don't take money thats meant for diapers (Bugs and fixes), clothing (UI/UX), food (Marketing and Biz Dev) and spend it on yourselves. Money has an exchange rate, and the money that you are using comes from an investor (already leveraged) AND, $1 may spend like $8 in your startup, while $1 is still spends $1 at MCDs.

If NO:

The Dev has no right to ask for income now that he works for equity like you. If you want to pay the dev/co-founder, there will have to be a trade for equity. A certain percentage for money back (get this in contract writing). This would be like a reverse mortgage, where for the number of months that he/she needs the cash, you supply it, on the basis that you receive back 2-5% of the company. They may not like this deal, but it will be motivation enough for them to get another job, OR revert back to the position of developer without equity.

I would try to work it out so that if 24k is greater than or equal to the amount that they have invested:
After the 24k runs out, they run out of percentage in the company.

If you wish to be courteous you can leave them with a small percentage like 2-5% with "founder vesting" so that they will have the hunger of an employee but the farsightedness and hunger of someone working with a bigger goal in mind the can get some benefit for working longterm with you.


Furthermore, if you do pay him, if you do not already have founder vesting, make sure to get founder vesting in that contract to protect your hides. (it means that one co-founder can't "walk" away from the work and expect to get paid whatever percentage agreed upon.)
[/QUOTE]

So 6 potential months of him at salary is $24k down the shitter on top of everything else we've spent. That puts us really low on funding and not in a good position for growth.

So that situation effing SUCKS. Really, really frustrating. Either way i'm not quitting.... It's just I gotta figure out the right move to move forward

Can you get the dev an extra job? now that they are a co-founder they can't cry for cash, because their living is tight (because of the "yes" answer). What can they do to directly increase the income of the company?

Can you give them a sales commision based side-job, where if they sale a certain number of software they directly get paid a percentage? This would keep them working FOR THE BUSINESS and WITHIN THE BUSINESS, without getting their focus mixed up with some other business.

Pricing changes:

We tested multiple price points

• $25/mo - 0 customers
• $20/mo - 2 customers - Over 2 or 3 weeks of testing. Not good.... Normally we get at least 5 new customers a week.
• $17/mo - 1 customer
• $15/mo - 1 customer

Lost a lot of potential customers doing this and none of them ended up working out like we hoped.
$9.99 is the sweet spot with our current product

For the people that leave, Perhaps you could use a popin that bounces moments when they are leaving, but you ask them 2 questions like: "(insert reduced price offer)" with the option of No thanks, I'm not interested right now, or yes, ill take the 9.99 deal plox.

And for the people that say no thanks, you could possibly go one thing further and ask them what you are doing wrong (multi answer buttons)

"Bad Design" "Not Fast" ..... and other things that you believe to be a problem. If you can start emailing people who used your product and churned, you can get a better idea of why people might not want to buy it, and then use those to quantify pre-customer opinion. for those who choose one of these, you could follow up with an explanation that you guys "3 months" blah blah, and try to get them on that email list.

If you are making some good content on your blog, definitely have the retargeting running, to get people into that funnel.

Hope this helps (thanks for the update)

-Actionary

 

[mentalic]

I think that it is very normal to have a high churn rate for a B2B SaaS in the beginning so there is nothing to worry about that. You should continue to building and improving your product so that the churn rate decreases.

Also, if possible (and if allowed, not sure if it is allowed at US), I think that you should call those that stopped using your app. Questionnaires etc are good if you have volume and if you have an idea about what's going on, which since you are starting now, I think that you don't.

If you would like, I would be interested if you sent me the link to your SaaS product with a pm.

ps I totally agree with @Actionary about equity, income, vesting etc

 

[omar]

It doesn't seem like he is as invested as you are in the company. Otherwise, he would have made this work instead of giving such an ultimatum. If it doesn't make sense financially for the startup, I would let him go.

Also, Can't you continue selling with the prototype as is until you find a replacement. I'm assuming it's already up and running since you have customers.

 

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[Gale4rc]

Thanks @Actionary @omar @mentalic and @tafy for your replies!

I didn't mean to make it sound like he's not vested in the company. He's been working 9 months for free essentially and the money made is just sitting in the bank account right now. I also didn't realize it's been so long, wow time fly's!

We decided to have him work part time freelance, part time for the startup and hire a full time developer.

We both rather have him work part time so he doesn't burn through our capital as fast as another developer. He doesn't want to take the money.

I have somewhat decided our best move is this:

1. Let him work part time and hire a full-time dev for cheaper...
2. Run this month full-force as far as paid ads... We have a 6% overall conv. rate to paid. Not bad but I know it could be way better when we optimize for this and have a better product...But we don't have the resources to do this right now so our focus has been product, product, product.
3. Next month he has a really big investor who has been checking us out and following our progress from the start so give him an ultimatum. Either we sell that guy and get funding to pay for his salary + another developers salary or he loses some equity for not being able to work full-time.

We should probably take some equity from him either way since he's forcing us to get even more seed $ and lose more % from the company right ? How much would you guys say is fair for this?


I struggle with this because sure I could've done it without him but he did so much work, taking anything away from him seems wrong.

And yes we're going to continue selling, we just got two new monthly members today





Edit___

New plan...

We're going to hire a full-time dev
Keep the part time dev
And have my co-founder stay a full-time dev for equity with no pay BUT, we're going on a two month development sprint.

After that, we are hoping we will be product market fit and he will go to part time... I'll go to straight selling and then we should be able to work something out in a few months after that..

e.g. if profits are 4k, we can take 2 out pay him and then pay 2 with our capital and it offsets the cost a lot.

Or is this dumb / crazy ?

 

[mt_myke]

Are you using the "grunt" methodology for equity? If not, check out the book "Slicing Pie". In your case the problem solves itself, as he starts working on your project part-time his equity (slice of pie) starts shrinking relative to what it was when he was fulltime.

 

[Gale4rc]

Quick Update:

Haven't stopped grinding at all, we're about to try to start scaling at the end of next month.

Conversions are up, are product is improved and our traffic is increasing.

It's a really exciting time right now.


Quick tip that I've just made up on the fly that I've already seen results from:

I don't have enough resources to develop or implement a really good referral program. I want all the attention focused on improving the product. With that being said, we still need a referral platform to enhance growth.

What I've done instead is two things

1. Implement a chat service (olark.com for the screen sharing feature, zopim.com is a great free tool just without the screen sharing). This has helped tremendously with customer feedback and just converting more users. Talking to them while they're in the process of using the product and helping them naturally helps you get more sales. I don't try to be salesy at all, I just help them and make sure that they get the most value out of the product that they can.
2. Give them a free month if they seem optimistic / supportive. This is what sparked my new idea for referrals.

Instead of just giving them a free month (with a coupon code), I also give them a code that they can share with other people they know who need our software and actually tell them that i'll give them another month for anyone that signs up using the code. This builds huge rapport because i'm already talking with them 1 on 1, then i'm giving them a month and then i'm also giving their friends a free month THEN on top of all that they also get more free months for anyone that they give their code too.

It's a DIY referral program with a much higher engagement rate because you're only giving it to people you talk to and have a relationship with. It's making them feel special because I also make the code their first name so they know it was made especially for them.

Things are looking good and I can't wait to see where we are in a couple months.

 

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[James Fake]

Awesome!