Ask HN: Out of beta with paying customers. What's next? | Hacker News Reader

Ask HN: Out of beta with paying customers. What's next?

19 pointsvital1017 comments

Hello HN,

I've been working hard on a side project for the better part of a year. After a 6 month alpha and a 2 month beta, it exited beta with 160 users and around 20 actual paying customers.

The question I have is what do I do next? I've bootstrapped this far just by working on weekends and in the evenings after my day job, but my ultimate goal is to work full-time on this and grow the product and business. Is this enough traction to take to angel investors or am I better off taking the slow road of continued bootstrapping?

Some more info that might help you understand the situation better.

- Kernl - https://kernl.us

- Private Wordpress Plugin & Theme Updates, continuous deployment, and purchase code validation

- Processing roughly ~200k update pings a day.

- Hosting around 175 plugins & themes

- Averaging 1-2 new sign ups a day.

Any kind of insights, thoughts, critiques, or questions would be helpful.

Thanks

You have paying customers - that's more than most people achieve, so congrats.

You mentioned possibility of angel investing so I'll address just that part.

Do you expect that, in your best case scenario, this business will ever reach $100M of yearly revenue?

If not, then venture capitalists (including angels) will not be interested in investing.

Business model of VC is based on 1 out of 10 companies getting really big. If a company has no chance of ever getting really big, VCs have no reason to invest in it.

You seem to have what might, at some point, be a small business.

The chances you can grow it into a big business is small (on one hand, WordPress market is huge, on the other hand you're only solving a small pain for people creating themes and plugin, which is relatively small number of people).

So it seems like bootstrapping is the way to go.

Given that you have a working product that people are willing to pay for, you probably have a marketing challenge at this point.

A small tip: you have a decent website but your copy could use some tweaking to focus on the product and what it does for users. Remove the parts about you ("We've worked hard to make Kernl awesome and affordable.", "We take development seriously at Kernl." - nobody cares), superfluous parts ("so give it a whirl.").

Thanks for the response (and critique). I think you're probably right. Unless this can target a much larger part of the Wordpress development community, it probably won't attract VCs.

Am I understanding the business model right?

Say I'm company X, and I develop a custom Wordpress theme, then I can remotely update my theme using Kernl?

If that's a yes - I think I dare say you're undercharging by a factor of 40.

If I pay $50 for a wordpress theme (as a user), I'm probably getting a grand or two worth of value. That's why some themes are able to sell 200k units at $50. In your pricing structure, that'd be 1 theme? Currently, it seems that a company that made $10m in gross revenue from their theme is able to pay just $5 a month.

Wouldn't it make sense to split pricing up between a theme or a plugin? Plugins are usually niche, lower priced and lower value. Themes are generally higher priced, and higher value. How about charging $200 or $500 per month for a theme, and $50-100 for a plugin? Clean and simple.

If I'm a WP company, there's no way I can roll that out for < $200 a month in a reliable way.

Forget VC - find 50 customers at $200 and take it from there :)

Yes, thats correct. I initially priced this based on what others in the industry were pricing. I think eventually I'll experiment with pricing a little bit, but I'm worried that with higher prices developers will just say "Meh, I can implement this myself" and go the other direction.

Most developers forget, especially in for profit situations, that there are only 24 hours in a day. Given sufficient time, a developer can do everything themselves. But do you want to?Thing is, in your current situation, almost no one will buy the top tier plan, because there's no reason to.

I personally don't have much experience with Wordpress, but I do with mobile and desktop apps, and charging $10 instead of $0.99 has always netted me 10x the revenue. People that are buying this probably have a problem that is annoying enough to pay for - whether they pay $5 or $50 or $500 is probably irrelevant to them. They just want the problem gone so they don't have to think about it.

What's the worst that could happen if you increase prices? :-) Just test the page and see if it works. (+ if you do decide to increase prices, grandfather your existing users)

Thats a good point. If I can differentiate the plans more, charging more becomes a lot easier. +1 to grandfathering existing users.

I'm glad you've got paying customers and absolutely do not wish to interfere with that. This might be a bit of a faux pas, but, it is good for the community: I developed some code to build a service like this back in 2012. It is released GPLv2 if anyone is interested: https://github.com/gburtini/Private-Plugin-Updater

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