<< Chapter 5: Getting Your First Customers
So you’ve run dozens of ideas through the meat grinder, launched a few that went nowhere. Finally, you launch one that starts to attract paying customers. Congratulations, you’ve made it far farther than most.
What happens next?
Most SaaS businesses will at some point encounter “the long, slow, SaaS ramp of death.” Take a look at two examples. Baremetrics was a rocketship (by bootstrapped SaaS standards) going from idea to $8,300 in monthly subscriptions in just six months. As a solo founder, this is about as good as it gets for a SaaS launch. As the revenue poured in they raised a bit of money and staffed up for the hockey stick revenue growth to come. However, most revenue charts end up looking like this:
Baremetrics almost ran out of cash because of slow grinding revenue growth, but after making some tough changes, they found their way to profitability
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Convertkit, an email marketing app, had almost the inverse experience. Nathan Barry spent over a year and a half with monthly recurring revenue (MRR) hovering around $2,000. His long, slow, grind happened right at the beginning because eventually they found the right product/marketing combination and took off. Two years later Convertkit is running at $600,000 a month in subscriptions!
My business, Storemapper, was a grind in the beginning, in the middle, and basically still is. Revenue growth has been more or less linear since it’s late 2013 launch date. While I certainly wouldn’t complain about a period of hockey stick growth, a consistent grind is not entirely a bad thing. For one, it’s predictable. I haven’t had to deal with any of the cashflow crunches that fast-growing SaaS companies seem to inevitably run into. It has also allowed me plenty of time to develop strategies for managing, and thriving, in the long, slow, grind that is SaaS.
The power of SaaS is that recurring revenue compounds, eventually yielding a very predictable stream of revenue. But it can take a long time to get there. For many Micro-SaaS businesses, it seems to take at least a year before the revenue can meaningfully affect your lifestyle: either allowing you to work full-time on it or hire people to help you run it. Before you launch, consider how you will manage your life if you have to keep your day job and run a growing Micro-SaaS on the side for a year. Here’s what the first year looked like for me.
On my Micro-SaaS journey, this was the full year of 2014. Monthly recurring revenue chugged slowly upward from $150 (beer money) to $2,180 (rent money… yes, in Brooklyn that is barely rent money after taxes). The funny thing is that is actually pretty healthy month over month growth. By all accounts not bad, but still, more than a year later, nowhere near enough to live on in the US.
During that time Storemapper was a side project for me. My main focus was a solar energy startup, which was immensely time-consuming. I wanted Storemapper to grow, but I categorically refused to let it become my primary focus. Except for a few minor crises, I capped my time allocation at 15-20 hours per month. That’s product development, marketing, and support. This is a kind of extreme test case as most folks will not build a Micro-SaaS while founding another startup and will have more like 15-20 hours per week to spare.
In my case the time constraint was mandatory. I was working insane hours already and literally did not have the spare time and energy to put more effort into Storemapper in the early days. But I think it’s a great idea to put a time constraint on yourself even if you have more time to spare. Setting a limit of something like 15 hours per week is beneficial for a number of reasons: