Bootstrapping a Software Product
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Happy to answer any questions anybody might have.
Can you give us a few rough details of what your initial customer acquisition strategy was? (Or even something a bit more current, although I realise that might not be information you'd like to share).
From what I can tell, Sifter is in a very, very competitive market, and I'd be fascinated to know how you gained customers - and potential customers' interest - when there are so many choices out there for them to choose from.
In terms of a competitive market, I really just kind of went the opposite direction from the established options out there. The truth is that those other apps were and are great for some teams doing large complex software development projects, but there was a whole other group of smaller teams that didn't need all of the advanced features that those big players offered. I thought the world need something between a todo list and those options, so I tried to fill in the gap.
Where did you advertise?
Are you willing to share your daily advertising burn?
Any insight as to why the first $5k in advertising was worth it, but everything after that wasn't?
Unfortunately, much of our advertising experience isn't going to be relevant due to how long ago it was. We advertised primarily on FusionAds and Daring Fireball, which has increased from $2,500 to $8,500. We don't have a daily advertising burn, and we never really have as we just dabble in advertising from time-to-time.
I'd be willing to bet that advertising has at best contributed 10-15% to our growth. Given the amount that we've spent, that's a very high cost of acquisition. However, it did help generate some awareness. There's a whole lot of context with advertising. The first $5k was relatively more effective because Sifter was so new. It was great for generating awareness. However, after that initial awareness is generated, unless you're going to spend heavily (more than $10k a month)on a branding campaign any additional impression-based advertising to the same audience generally won't be as effective.
I find it hard to develop a new solution in a crowded market. I want to develop a product I am convinced of, but doubt often gets in the way, especially if the market is crowded.
I also wonder how these services get their first paying customers.
Please think of a case where this has happened to you as a customer.
As an example: I've been leasing servers for over a decade. The industry is mature, is worth billions each year, and has plenty of competitors. I've leased servers from many companies, big and small.. one even that had 2 people working there.
Sometimes I had requirements that only large companies met, and other I did not have such requirements, and considered smaller companies.
Customers are constantly leaving and signing up at all of the large services (for a variety of reasons -- customer service problems, fees, inability to meet a new requirement, etc, etc, etc). I challenge you to find a provider that does NOT have some unhappy customers. You'll get your chance when they leave and are looking for a new provider.
What often works well for people is to enter a market that already exists and to understand the problem the existing solutions don't address.
By focusing on these problem and solving these extremely well, you'll be able to attract a small subset of users who will want to pay for your service rather than your competitors.
You'll have plenty of opportunity to steal customer from your competitors (there's no way someone can address 100% of the market).
There are plenty of markets that are ripe for disprution.
His blog [0], book [1] and podcast [2] address the exact concerns any new software bootstrapper faces.
He also runs the Micropreneur Academy, but I don't have any direct experience of that.
He also organises Microconf, and I really recommend watching his talk from last year - http://www.microconf.com/videos-2012.html
The sheer number of products he has built, launched, acquired - both successes and failures - over the years gives all of his advice a lot of weight.
[0] http://www.softwarebyrob.com/
[1] http://www.startupbook.net/
[2] http://www.startupsfortherestofus.com/
PS I don't have any affiliation with Rob. I'm just really grateful for all his excellent work.
The community is scattered around the web on blogs, Twitter, Mixergy and here. I think that's a good thing - don't seek yet another place to shoot the breeze. Just get stuff done, and when you have a specific question, seek answers from experienced people in existing forums.
Most corporations spend a big part of their IT budget on "Support". Think about it for a bit and you will start to get a clear picture of what really matters.
Make sure that the market you're going into is growing and not shrinking. In a growing market, there will always be new customers.
People like choice. You don't have to compete feature to feature with your competitors. Stand out somehow. Identify how you truly differentiate and make sure that everybody knows this.
The good thing about an existing market is that people are already looking for what you're selling. All you have to do is be there, be different and be findable. The bad thing is that the competitors are mature and it takes a lot more effort to actually compete.
I used to think this aswell, and I was proven wrong. I think this assumption is almost always wrong. Unless you are building a facebook competitor, you will find customers, regardless how crowded the market is.
Really, though, it's not the first customers that are hard. It's maintaining and continuing to work on it and grow it during the time where growth isn't amazing and it isn't yet a full-time job.
What we did to get out first few users was simple: we wanted to build cool software, and we had a few ideas. We took our favorite, built a cool landing page that spelled out the features with a demo, and then set it free on Twitter. We had 1500 early beta signups before we went into private beta. We now have over 100,000 users and we never spend money advertising.
In terms of getting our first paying customers: we just charged for it. People will pay for things that they think are valuable. However, pricing and the pricing "model" have been the #1 source of missed opportunities and optimization points for us (though we have fixed a lot of that), so they are really important to think about.
As such, I chose revenue and how it related to our ability to pay me a salary.
Also, is your partner on full time as well or still part time in your venture?
I have a co-founder that I'm starting a small business with and we frequently talk about what level of reduced salary we would accept to come on full time to grow the business.
Keith, my partner, has never been full-time. He's always been involved at about 5-10 hours per month, and that's still the case these days as well.
I have a blog post that talks about the pay cut side of things a bit on my blog. http://garrettdimon.com/post/34571624540/can-you-afford-a-pa...
Thanks for sharing your knowledge!
Questions re the pricing tier slides: (a) did you experiment with the prices & number of tiers? It would be interesting to hear your experience with that. (b) The lowest tier had the highest churn and demands ... but they were 25% of revenue ... which is too big to ignore, no?
That said, removing the $14 plan did not hurt us at all. Since the $14 plan was half the cost of the next plan ($29), we were simply hoping that 50% of the people that would have signed up at the $14 level would go ahead and be willing to pay $29. At that point, the decision means we make the same revenue on fewer customers. My theory was that would help me stay on top of providing sub-30 minute email response times to all of our customers without going crazy. :)
While I don't have exact numbers, based on our growth after the change, probably 75% of people that would have chosen the $14 plan simply signed up at the $29 level and the other 25% didn't sign up. So, the net effect was great for us.
The sub-30 minute response time does feel good on the receiving end.
The short answer is redundancy. With virtual servers, problems on the host machine due to neighboring virtual servers can be frequent. This can slow down the application server and lead to performance problems. With two load-balanced application servers, this isn't as much of an issue.
For the database, I'd suggest reading up on replication. In addition to the master/slave databases, we also have hourly, daily, and weekly snapshots stored offsite because a slave database isn't enough protection from some types of data loss.
Application architecture is a whole beast unto itself, and my real recommendation would be to find and hire a professional to handle this kind of stuff for you.
"Know your costs" (Slide 67)
It is so easy to overlook the cost components that need to be factored in while running a bootstrapped operation.
Why do you now offer 14-day free trials when one of the slides is "don't do free accounts, people will use anything if it's free, etc"?
I've had good luck with free SaaS beta/pre-launch and continued free trial accounts (no cc required).
> Didn't get a tech partner: I'm more of a designer first
> and developer second...
Fortunately, as we've grown, we've been able to contract work to friends who are experts in each of the areas, but it can be rather daunting at first.
The other downside is that when designing, I always begin to think about how design decisions will trickle down the front-end to the application to the database and sometimes even to the server. As a result, it's hard to just design and implement. I'm always caught up thinking about implementation even when I'm working in Photoshop.
These days, the biggest benefit is that even though I'm far from an expert in any of the areas, I can competently navigate all of the topics and maintain a pretty holistic view of both the business and the product. That makes it much easier to effectively coordinate everyone as the team grows.
I had no idea you were in this thread so please feel free to disregard my email as you've answered my question here!
If $16 K is bootstrapping then most YC startups are bootstrapped.
I think a "real" bootstrap starts with way less than that.