SFN192: How to scale like one of the fastest-growing bootstrapped startups online
Are you having trouble getting your first few customers? Is it hard to scale from $5k a month to more?
Nathan Barry has run into the same obstacles – and he developed strategies for overcoming them.
Nathan is Founder and CEO of ConvertKit, one of the fastest-growing bootstrapped startups online. In just 18 months, he grew from less than 5k monthly recurring revenue to more than 400k monthly recurring revenue.
In This Interview I Ask:
- 6:40 - When did Nathan start The Web App Challenge?
- 7:15 - Why did Nathan start building ConvertKit? Where did the idea come from?
- 14:15 - After 1½ years, most people would decide their business doesn’t work. Why did Nathan stick with ConvertKit?
- 21:50 - Is Nathan doing direct sales through all of his early growth?
- 29:10 - What would Nathan do differently?
- 32:50 - For people getting started, what do you wish you had known back then or what do you think people should know before making that leap?
The Web App Challenge
Nathan’s first step towards starting a software business was The Web App Challenge. He publicly committed to starting a SaaS application, building it to $5k /month in recurring revenue in 6 months and blogging about the process along the way.
He settled on an email marketing product and used The Foundation’s process of identifying a primary audience and their pains.
From $1k MRR to $448k MRR
“A little bit of success is the worst thing that can happen.“
ConvertKit didn’t reach Nathan’s goal of $5k MRR in its first 6 months. It reached $2k MMR. Then the business remained fairly stagnant for the next year, until it actually started to decline.
Nathan asked himself two questions:
- Do I still want this as much now as the day I first started?
- Have I given the business every possible chance for success?
The answer to the first question was a definite yes – the answer to the second question was a resounding no.
In October 2014, Nathan doubled down on ConvertKit.
- He put all of his savings into the company
- He hired a dedicated developer
- He embraced direct sales
In March 2015, ConvertKit reached $5k MRR.
In June 2015, they reached $10k MRR.
In July 2015, they reached $15k MRR.
In September 2015, they reached $25k MRR.
In December 2015 they reached $98k MRR.
In April 2016, ConvertKit reached $448k MRR.
Sales that Scale
“Every sale that I made made the next sale a tiny bit easier because we had a bit more revenue, we were a bit more established and we had one more name.”
Direct sales are a great way to get good customers, but they don’t scale. However, direct sales enable channels that do scale.
Traditional affiliate marketing programs don’t work well with SaaS businesses. There’s no reason for a customer to sign up for a service today as opposed to tomorrow, so you have to create a sense of timeliness or urgency.
Nathan used direct sales to recruit influential affiliates into the program. Then he combined affiliate marketing with webinar events to create a repeatable system that incentivizes both affiliates and their audiences to sign up for ConvertKit immediately.
A SaaSy Mindset
Business is a skill, and it’s okay to practice making money. As you start a new project, ask yourself if it is a practice project. If the desired outcome is learning, then you’ll do great.
As you start a new project to build a new company:
- You need a long-term outlook – at a minimum, look 5-10 years ahead.
- Make sure you like the market you are going after and will enjoy being around those people for the next 10 years
- Connect with Nathan: Website | Twitter | Email
- Learn more about ConvertKit
- Watch “The Long, Slow, SaaS Ramp of Death” on YouTube