The 2 Biggest Mistakes I Made (Before Reaching $500 MRR) | Hacker News Reader

The 2 Biggest Mistakes I Made (Before Reaching $500 MRR)

wisecashhq.com

95 pointsmalditojavi38 comments

Since a couple of people were frightened about being charged at the end of the trial because they would have forgotten to cancel:

know that if you don't like WiseCash, and forget to close your account before the end of trial (and despite the fact that a reminder is sent 3 days before the end of the trial), I will refund your first month's charge, no question asked.

So go ahead and try it out :-)

EDIT: and this is something I'll mention explicitely on the next redesign of my sign-up form. Thanks all!

WSmall comment on Wisecash and the trend for video demos, not features outlined in images and text. If one is working around other people, listening to a recording may not be possible. Skimming a featureset may also be a quicker way of assessing if something would be worth then putting in the extra time to watch the video.

Of course, A/B test, and perhaps that's part of the demographic you're targeting ;)

It's a good point. The next version will have no video.

I will keep some videos in the "learning" area.

With revenue that is below your spending needs, how do you decide if you should invest more work into the product or move to something else?

Basically I looked at my growth curve - and in october I understood that I was in the "learning to sell" phase thanks to Rob Walling (MicroConf Europe):

https://www.wisecashhq.com/blog/images/build-learn-scale.png

At this point (and I discussed that with bootstrappers), the sane thing to do is focus on increasing the angle of the curve, learn how to sell better etc.

My axis of progress include things like improving the copy-writing on the home page (not catching enough) to increase conversion rate, improve the sign-up process, offer free email courses (on how managing cash flow with WiseCash will affect your life for good) to people going by my blog, offer useful articles, etc.

I split my time between freelancing and this work these days, and I make sure my company remains afloat by using WiseCash (which is fairly meta, when I think of it).

You should totally split test too, even if it's just basic things like button text, you'd be amazed what it can do for your visitor to trial conversions.

I'd also recommend experimenting with not taking card details up front, and seeing what that does to your trial/sign up metrcs.

I plan to do split testing etc but after I rewrite my whole copy to make it clear what the value brought is. Thanks for the suggestion though.

>>> too much consulting (I later changed the way I organize my gigs and balance this with product work, by using WiseCash itself),

quick question if author is listening - how did you reorganise your consulting gigs? Any detail? I find I cannot persuade anyone to wait more than two weeks so I can actually plan - any ideas?

Author here! I will write about this later on, but in short:

- I only kept 2 recurring customers

- I'm selling 5 hours-block (one per day - which leaves a bit of room for one-shot emergencies too)

- I ask my customers to book sessions around 2 months in advance

- I keep a number of dedicated days for the product each week (which varies)

This workflow creates visibility for both my freelancing clients and for myself.

The most important point here (I believe) is to build long term relationships on the consulting side (I addressed a bit of this topic here https://www.wisecashhq.com/blog/freelance-cash-flow-tips-for...).

Let me know if I didn't properly address your point!

OK - that seems a long way from where I am standing... :-)

I am a contractor (freelancer?), selling time and keyboard. I get relatively long (3mths+), full time gigs, and yet I want to change the world / build a nice SaaS product to pay the mortgage.

From what I am reading you have 2 trusted clients who want you for regular but intense work, and can estimate what they want well in advance. I seem to dive into a maelstrom of recruitment agents and CVs every 6 months.

Maybe I should stop flipping the bird at employers as I leave ...

More constructively I shall sign up for wisecash :-), and do the thing I am supposed to do - build an audience on a subject I am good at and enjoy.

Thank you for the reply. May I ask what you do for the clients (can't find a bio on wisecash other than three sentences) cheers

It's a long way from where I was one year ago as well!

I do ship Rails/Ruby code for my freelancing clients (apps, back-end, ETL, data integration, etc).

Ideally, you could move from full time gigs to 4-days a week gigs, maybe with slightly higher rates if possible to cover a bit of the loss. I think it's a good way to get started.

Use my calculator https://www.wisecashhq.com/goodies/bootstrapper-calculator to figure things out here :-)

And yes, using WiseCash to balance contracting/freelancing with bootstrapping is truely useful. I'll blog more on the topic, subscribe to the newsletter here http://eepurl.com/Fap_H

Forgot about "persuasion": I used WiseCash which computes my "time-wealth" (total number of days before reaching $0, given planned expenses and income) and worked at growing the number over time.

Once you have a time-wealth of more than a couple of months, persuading is fairly easy: you realize you can just walk away (ie: lose the contract) if you need to, because you do not actually need the money short term anymore.

This is my favorite way to negotiate rates, decide what to work on, or set my own pace.

I have noticed the email/checkbox association at the bottom of the post. After discussing with colleagues about email form to collect interested people emails, I decided to add such a form to the landing page of the small service I am building.

Doing so, because I am afraid of sending emails that people would be angry about, I had the idea of adding checkboxes to let people give me a hint about what they are really interested in. I showed it to a friend, he thought it was a good idea but felt that 4 choices were a bit too much.

Is there some information about best-practices for that kind of email collection ?

Edit: the landing page is https://reesd.com/

I wouldn't start with this (MailChimp calls that "groups") until you are mostly clear with what you want to discuss...

I don't have any best practice, but I felt than more than 3 would be completely overkill in my case.

Not having groups allows you to move around a bit more easily - angry people will just unsubscribe :-) But I also felt that having groups would help some people remain subscribed in my case.

Don't worry about segmenting the list at first, and don't worry about people being angry about email. They will either just delete it, or unsubscribe. If you have ideas for three checkboxes, that means you have ideas for at least three email topics/categories! Don't waste these as filters; use them to send more email to keep your list interested.

There may be some value to the checkboxes, in that they offer a preview of what's available to subscribers. For example the OP's checkbox "Mastering Your Finances/Cash Flow" is a nice teaser. But you could easily just make this a bulleted list for the same benefit.

What are you going to do differently than you are doing now to go from $500MRR to $5k MRR to $50k MRR (if you plan to grow that big)?

I'm aiming more at $5k MRR (ie: fully sustaining my family lifestyle). That said when I'll get there, the growth will not stop by itself, which is nice.

See https://news.ycombinator.com/item?id=7088898 for what I'm doing to get closer from $5K next.

If you're living in the US, $5k will not sustain a family lifestyle. After taxes and factoring in the risk inherent with a startup / SaaS business, if you want to depend on the revenue as a sole source of income, you're going to need to at least triple that.

I'm in France actually and used to live in Paris; but even there $5k (before company taxes, health care etc) we could not sustain our family.

In 2010, my wife and I (+ 1 kid, later 2) relocated to a rural place of France (north of Bordeaux), to improve the quality of life (more time with kids, nicer weather, nice countryside, cheaper houses) and to bootstrap a product.

Here our "required company income" per year (before taxes, excluding VAT, before healthcare etc) is 45k€ (approx $60,000, so $5k/mo), based on the last 3 years of historical data.

I use this feature of WiseCash to make sure we're on time with the revenue:

https://www.wisecashhq.com/blog/track-your-income-exceed-you...

About risk: since my wife and I are fairly risk averse, we're actually managing to increase savings as we go, despite bootstrapping.

I have no idea how much life cost in rural places of the US, that said! Is it possible to feed a family in a very rural place with $5k?

Good planning and great use of your own tool.

$5k a month is enough in many rural spots in the US to support a small family. However, there's a different issue - it's the inherent risk and unpredictability of a startup. And opportunity cost.

Basically, there's a non-trivial likelihood that the startup revenues could diminish or disappear. There are many reasons for this - churn rate, unsustainable customer acquisition costs, market changes, a new competitor emerging offering a free product, who knows. As a result, if you are counting on the startup as your sole source of income, you need to "pad" this with the expected downside risk.

If there's a 50% chance of income going to zero in two years, then you need to double your $5k to be able to have the "excess" income now to be able to weather the potential zero-income later. In this way, over 2 years, you will still have $5k a month, even if revenue goes to 0 in year 2. Make sense?

The larger the likelihood of failure, the greater this risk-multiplier.

Also, there's the Opportunity Cost trade off. If you can work for someone else with minimal risk and get the same $5k versus work your butt off carrying all the same risk for the same $5k, which would you choose? The "safer" $5k will always win. In such case, comparing $5k in startup revenues to $5k in salary is not a direct comparison. If you are working twice as hard for the same $5k with twice as much risk, you should be earning twice as much. Otherwise, just do the "easier" job. This is not as much a financial calculation as a Real Opportunity Cost calculation.

This is why I often say - if you want to replace your salaried job with startup revenue as a sole source of income, take your monthly salary, multiply it by three, and this is what your monthly SaaS revenue should be to weather future potential downside and account for greater risk for the same reward.

Relocating to reduce financial pressure seems to be a good idea. We live in Paris and we need ~6k€/month to sustain current (frugal) lifestyle. This is mainly due to our monthly mortage payment (2k/month).

So at 500$ MRR I would most likely go from 5 days per week job to 4 days per week job in order to invest more in bootstrapping my business.

At 5k$ MRR I would quit my job.

At 50k$ MRR I would pay off the mortage earlier and start investing in order to increase passive earnings.

What does MRR mean in this context?

Monthly Recurring Revenue I think

Sorry for the confusion. I initially had no idea what this meant, and then forgot I had no idea.

MRR is monthly recurring revenue indeed, by opposition to one-off sales (eg: buying an ebook).

MRR = Monthly recurring revenue. This might help:

http://www.quora.com/Software-as-a-Service-SaaS/Can-you-help...

What were the things you did well that brought you the $500 MRR?

I think the most important part is that WiseCash helps my users increase their rates (earn more / work less, because they know exactly their "time-wealth", how much time their business can remain alive given their expenses/income), have a better family life, or work on a product in a sustainable fashion.

So it brings important changes to their lives in a very concrete way (and I must improve the home page to do a better job at telling this). In that way, I believe the value can be demonstrated and measured.

I avoided freemium, focused on B2B, too, and it definitely helped.

As well, taking Amy Hoy's course was a great idea (even if I didn't apply all her advices properly, otherwise this blog post wouldn't be up online).

How did acquire your first few customers? Was it all from that initial email list of 900 subscribers? What are you doing now as far as finding sources of new customers?

I like stories like this because I definitely feel like it is much harder to go from $0 to $500 MRR than it is to go from $1000 to $5000. Finding those first few customers is the challenging part if you have no previous email list or audience in the industry.

My first customers almost only came out of the newsletter (people who had received a invitation to try out the beta). I sent a 20% discount lifetime offer, with 2 reminders.

Now I'm doing blog posts like this one, growing my newsletter patiently, I speak at conferences on the topic of cash flow/bootstrapping, and my SEO traffic is growing.

Glad you liked my story - and yes it was fairly hard :-)

I'm really interested in starting a SaaS business with 500-1k MRR a year after launch. I'm frugal and the cost of living here is quite small.

I keep hitting a block where I can't find a SaaS idea that could guarantee this revenue that wouldn't require a lot of upfront effort in development. I think I'm better at designing an app and improving its marketing strategy than actually writing the code, but I can't hire a developer.

I read the gospel (ahoyhere's blog, http://unicornfree.com, closer to us mere mortals than 37signals/svn) and understood it as: find a group of people, watch them in their natural habitat, pay attention to the problems they mention having, and if you know a way to solve that problem, turn it into a product.

I still haven't had a solid idea. Every time I identify a group with a problem, the solution is something that would take a lot of upfront work for me on my spare time. I know there's an idea or problem I'm overlooking, but I can't find it.

Well, to be frank, if you want 1,000 MRR, you're going to need to put in the work. You seem averse to the 'upfront work' part of things, but money isn't free. Well, unless you're already rich.

I'm not averse to working hard to make my app reach 1,000 MRR.

There's a big difference between having an MVP done in 3 or 4 months vs. in a year when you're the only person designing, developing, marketing and supporting it. When I take too long to ship something, I get discouraged and bored of the project.

A better way to put it: I'm having trouble thinking of anything I could ship a v1 in 4 months.

Not complaining, just sharing my experience as I think other HNrs may be in a similar situation.

Why no do it and just ship whatever you have after 4 months?

I think you should look for a niche. They are everywhere. Select a professional, then find where their pain comes from, and offer a solution.

Dentists? no shows are a problem for them. Same for hotels. Car repair? is it easy to find one close to you?

Find someone you can have easy access to: you'll have to talk. Talk to your friends. Learn to HEAR when they tell you what's their pain.

Have you done this before?

yes... kind of... I had another job, and used knowledge from that other job. And I still see many needs that are not fulfilled. I'm around 1000€ MRR now... The app was 100% free for one year, and 600 users signed up... 100 of them stayed (10€/m) when it became a paying service. 6 months later, it's not growing anymore :( I need to work more on that project!

"pay attention to the problems they mention having"

Pay attention to the problems they don't mention. You'll learn more from grumbling and swear words than from an interview. So... your test subject is doing something, and apparently not having much fun with it... This also applies to UI design.

There's no such thing as easy money, and I think most people will tell you that going from $0 to $1K MRR (and sustaining it) are a hell of a lot harder than the journey from $1K to $2K.

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