The other thing to realize is that 37signals ideals and brand directly serve their marketing. I'm not questioning their wisdom per se, but realize that it is a tremendous positive feedback loop—one that they started cultivating for at least half a decade before they released their first product. And at a time when web know-how was a lot thinner on the ground than it is today, and being any kind of professional agency that knew what CSS was actually a shockingly huge differentiator. The other product launch I can think of with such a huge audience and explosive success out of the gate was Stack Overflow that followed a similar pattern of massive precision-tuned audience to market to with an already-authenticated-and-trusted human voice announcing the product.
That's not to say that their audience made their success—they obviously came out of the gate with great products as well. So if you can make a great product then you have half the equation. But the really interesting question to me (since I can build a product) is how to get the marketing right from a bootstrapping perspective.
Getting Basecamp linked up with any mention of Ruby on Rails helps too. Outliners (like 37Signals) work hard and do great work but they're not the standard we should compare ourselves to. Well unless you always want to fall short and feel like shit.
Myth: All I have to do is get TechCrunch. That’s marketing.
Reality: You’ll have 2,000 unique visitors today and zero tomorrow. Spend five hours on the HackerNews front page and get a few thousand uniques from the most cynical, judgmental visitors you can imagine. Traffic from press outlets and link aggregation sites are NOT primed to buy your product and thus come and leave.
We've built a bootstrapped $5M Revenue (70% pbt margin) run-rate business in ~1 year on the back of a HN post. Generated business that led to something like $500k on the first few days alone.
Yes, I'm pretty sure your particular use case (if we assume it's genuine, since you won't go on revealing anything about it which makes it worthless) is representative of the situation at large.
Can you really attribute all of your success to an HN post, or maybe you just had a slam dunk of a product? Not everyone can nail product market fit out the gate, for most people this is hard work
Posted about it under a different handle. This is my "venting" handle. I didn't want to talk about the product under my real handle for competitive reasons. The amount of money that we're making is not immediately obvious to outsiders.
Which would you find more important: protecting your ~$5mil business or proving to anonymous people on the internet you're not lying? Food for thought.
Again congrats on your successes, I don't think hackernews should be a marketing tactic for most businesses but it could probably work for a small select few. (Github, Sublime Text, Twilio, SendGrid etc.)
Understandable. Are there any non-identifying details you're able to provide that might elucidate what separates your business from those who are unable to achieve such success from posting on HN? Do you think the HN post itself was critical to your success, or would it have been just the same if you'd been featured on Reddit, TechCrunch, Pando, Lifehacker, NYT, etc?
The product is priced highly ($10k minimum) and provides a tremendous amount of value. We only need ~350 customers to get to $5M. (The serviceable market is something like 10M in the US alone, so it's not very niche either).
I think HN gave us a great launching pad, and because we have a lot of friends who read HN, it was easy to push our product announcement to the front page. Wouldn't have been easy to do on Reddit. Techcrunch still won't cover us :) That said, we've been covered by larger outlets than Techcrunch and yeah, they have a similar effect to HN.
Myth: It’s easy to go from client services to products.
Reality: It’s really really really hard. As you’re selling client services you’re also marketing and building a product, so you’re basically working two jobs. You’re promoting two company offerings, the product and the consultancy. In your brain you’re working through two problem spaces, juggling and assessing opportunities for two company, all without going insane or broke first.
I know many consultancies of all sizes that have tried to make the hop. They look at valuations of services firms (1.5 times revenues) and compare it to SaaS firms (10-12 times revenue) and try to make the move. The Accentures have tried this, as have the 5-6 people shops. The reality is it is very hard to go beyond reusable deliverables and into technology that people independently pay for.
Albeit we (2 people, a couple with children) are still small but growing on the SaaS side, I found that mixing freelancing and products works fairly well for us.
I think what made it work is 1) reduced expenses by relocating to a less expensive place and leaving frugally, 2) fine control over our cash-flow and balance between freelancing and product.
I recently shared this little calculator which helps do the math:
Glad that you can make it work. It sounds like you're very reasonable about the costs and sacrifices involved. It's not just "invest consulting money in product development", rather it's "invest and save every dollar possible."
Again, it's good to see that it works for you, and that you haven't had to sacrifice your family for it. Perhaps the supporting family is one reason why you're able to pull it off. (Kids care more about your time more than money anyway)
I will try to think about the things that could be replicated and share that in an article later on; yes I think it requires a fairly accurate financial navigation, and focus on family for sure.
Any insights are appreciated. It seems like people look at the outcome first (steady passive income) which is a good strategy, but hard to do if consulting is the first master. At larger places that I worked, either the skills were missing for the SaaS switch, or there wasn't a stomach for the investment involved.
You'll find that unless you sell an impulse purchase (sub $35 price) targeting developers HackerNews traffic doesn't equal sales. Being that we sell accounting software for small business the traffic really doesn't affect our revenue. Overall programmers are highly critical of software applications, giving the most judgement support requests and demanding features deeming them "easy to build".
Realize to have $3,000 in monthly revenue, that’s anywhere from 100 to 600 paying customers
If you're charging $5-30 / month, you're not going to grow well unless you are truly a fully self serve company. Charge 10x more and have happier customers. Even apps moved towards a model where they earn most money from high spenders from in-app purchases.
The technical platform problems around bootstrapping have gotten much easier, due to Heroku, AWS and all the services out there (Papertrail, Exceptional, New Relic, etc.)
Unfortunately relatively little work has been done on the "requires that you be a stubborn bastard" problem.
1) Creating any business is hard, unless you sell blue meth.
2) Creating two businesses is even harder (bootstrapping + consulting to make a living).
3) Technical hurdles are getting easier but rarely does the best product win. Marketing is hugely more important that product, although I wish that wasn't true.
I suspect you'll find even the meth business is tricky. Indeed, I believe there's a popular TV series about it.
Serously, Breaking Bad is an excellent primer on entrepreneurship. It covers everything: distribution, marketing, negotiation, finding business partners, scaling, exit strategies...
To me the SAAS space is no different than starting a band, being an actor, etc. It is easy to get into at some basic level but almost impossibly hard to become the next Rolling Stones, Tom Hanks or some other crazy successful example of the field.
That is by no means a reason not to do it, just that expectations need to be set about what reality actually looks like.
Its pretty interesting that how people come up with the rules/"myth busting" like its a Science. Every case is different and no one can teach you or tell you how its going to be unless you try.
I suspect we'll be reading another post from this author in a year's time. About how after investing in his people, many of them walked out to other jobs.
I hate to put a negative comment, but hey, bad reviews travel 10x faster than good ones for a reason, right? Did anyone else get the chat model pop up baiting me into reading another article? Completely pulled me out of the engaged reading of the article. Poor form. I exited the window and don't believe I'll be going back to the site. </rant>
That's not to say that their audience made their success—they obviously came out of the gate with great products as well. So if you can make a great product then you have half the equation. But the really interesting question to me (since I can build a product) is how to get the marketing right from a bootstrapping perspective.