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Took me more than 2 years to get 200 paying customers for my Web App (startbreakingfree.com)
236 points by barmstrong on Sept 7, 2010 | hide | past | web | favorite | 83 comments

congrats! It's always inspiring to see people having success doing what they love. 200 users seems almost laughably smalltime compared to some of the companies who get featured on here, but to me, and I'm sure much of the HN readership, it's a dream; if I can get 200 paying users of my business when I launch I'll be ecstatic!

It's really good to see a success story which doesn't focus on "hey wow, I got a million users overnight through sheer luck". It reminds us that 99% of the time, companies are built slowly and surely, not astronomically.

People have no idea how hard it is to get first 10 paying customers (not to mention 200!!). It's one thing to get people to say "I love your product - will buy premium plan for sure!" and the completely other thing to actually receive a payment ("I'm sorry I was busy", "Will buy, just waiting for my customer to place an order" etc.).

Best of luck to everyone trying to persuade their customers to pay. I'm also one of you!

People have no idea how hard it is to get first 10 paying customers

I'm kind of conflicted on this. Yes, it is hard to get ten people to pay money, in that you have to have a mostly-functioning product, a website which markets it, and some way to charge their credit cards. But this is not really that hard.

BCC 1.02 ("Like 1.00, but with less crash bugs and the brand new ability to print to non-default printers") got to ten customers in six weeks from 1.0's launch, entirely on the strength of organic search marketing on two pieces of content. That was when I was young and stupid. Y'all can do better.

I think software (let's scope it to B2C software for the moment) is like lemonade stands. You know how you get ten customers with a lemonade stand? Your price? Doesn't really matter. Your stand's design? Doesn't really matter. Your taste? Doesn't really matter. Your location? Probably matters for getting hundreds or thousands of customers, but for 10, pretty much any street will do. The key hurdle you have to get over is charging money for lemonade. I am worried that people think it is really really hard to run a successful business, and that stops them from ever charging for lemonade.

I think SaaS has WAY more friction than most people think. While all entrepreneurs LOVE recurring revenue, a lot of people temperamentally don't want to rent software-- they want to own it. Patrick, didn't you try a SaaS offering at one point, or am I making that up?

I'm currently on my third SaaS offering at some stage of development (Appointment Reminder). The first two got shelved prior to launch after I lost faith in their individual business models during development.

But how do you get over charging for something that competitors offer for free? Even if your product is better in different ways, that's a hard sell.

Stick a price tag on it.

[Edit: I wanted to leave that line alone for impact, but it might be read as overly abrupt or insulting. That isn't my intention.

I've always had free competitors. They were at the top of the three search terms I most wanted when I started, though I have since learned that I was mistaken about that. One thing I've learned over the years is that I am fairly well informed about the top twenty alternatives to my software and my customers are not. Relatedly, I was very sensitive to the notion of paying $25 for software and my customers were not. And I could put up with a little frustration and ease-of-use niggles to get a deal and my customers viscerally hate that.

P.S. I can't decide which is worse, selling to price-sensitive customers or playing price-chicken with someone whose product is free.]

Might as well show you, since it is semi-relevant: I started to make my product after an acquaintance of mine wanted a particular activity for class. I told her to Google it. She told me that this was the printed output from the #1 result.


Can you see a woman with a graduate degree feeling effing fantastic about herself for printing that out and giving it to a third grader? Just because it doesn't cost any money doesn't mean it is free.

Postscript: that competitor is still in the top 3 for a few related search terms. They run AdSense ads. For me. And they perform the best anywhere on the Internet.

Sorry just wondering if you could expand a little on this paragraph:

They run AdSense ads. For me. And they perform the best anywhere on the Internet.

I think he means that his competitors run AdSense, showing for keywords that he bids on, so in effect they're just channelling part of their traffic to him. Since it's a competitor, there's a great efficiency in the traffic since the people are actually looking for his product.

Oh okay, as in they are an AdSense partner - ie they have ads on their website?

3/10 cent a gallon for water delivered straight to the home.

$1.50 gallon for a jug in isle 13 at your super market

or $1.75 for a 20oz bottle at the checkout counter.

Are these all the same product? Do they even compete?

That example is going in my playbook. (And the product is available for free, in nigh-infinite quantities, in every occupied building in America. You don't even have to ask for it. In fact, asking for permission to take some would have whomever you asked immediately question your mental state!)

There is an interesting book by Adrian Slywotzky, The Art of Profitability, that goes over various profit models. I think the above example falls into 'Multi-Component' profit, in that the same product (water) is priced differently in different businesses (super market, convenience store, delivery); since customers behave differently in each purchasing situation you see the ability to price the product in various ways.

Another example would be how Coke is priced (to restaurants, grocery stores, vending machine).

How often have you picked one product over another because of a key difference between them besides price?

Price is an important difference but not the only one and not the most important one for all people all of the time. Be different on something besides price and move on.

Before heading down the freemium path be sure to take the time upfront to build two bottom up revenue plans. One plan for freemium and one for strictly paying customers. Be sure and include a detailed breakdown of each of the channels you'll be using to acquire customers and their costs. It's ok to make educated guesses here.

It can be quite painful so see how many customer you'll need with freemium before you reach your revenue goal and what it will cost to get them vs. just charging. Are you sure you're setup for that? Does it make sense given the size of your market? Given the likely customer acquisition channels available to you and their costs. Does it work with your budget?

Not everyone is Facebook.

Yep that's a good point. Sites that have massive growth tend to crash quickly as well (Chatroulette, for example).

There is nothing wrong with slow and steady growth, I think the hardest part is behind me.

This is actually a significant milestone for any entrepreneur. 200 * $10/mo == enough to pay your rent.

$2k/month is the tipping point where you're no longer bleeding money and eating into savings. Sure, you're not getting richer and you might still need to take the odd freelance job for spending money, but it's a great place be, no longer watching your bank account on its slow & steady march toward zero.

From here, it's all profit!

Remember, not everyone lives in the Bay Area. ;-) Depending on where you live and if you have roommates, the $2k per month may be enough to pay rent, bills, college loans and leave some left over for spending money.

When my business first made $2k profit two months in a row (late March 2009), I did some math in my project notebook and wrote down a thought I had literally never had before: "Could quit the day job!?!" It took almost twelve months to the day from there.

$2k is plenty for a thrifty, healthy single, but what about kids or health insurance or retirement money? I guess ideally $2k is just a starting point.

Yeah, I wasn't quite intending on putting the business into park and then going fishing for the next forty years.

Several of you seem to be confusing profit with revenue.

Doesn't anyone pay taxes? $2k in revenue, minus expenses, then shave off 40% for taxes since this is self-employment income, and you're not going to be paying much with what's left.

I couldn't have said it better... and that assuming either no corporation or a pass-through entity.

There is no way I'd leave a job for 2k/month startup when virtually any job I can get employing the skills I used to build the startup would easily get me 3-5x my startup income (and health insurance too).

Yeah, really, here in Pittsburgh $2k/month is enough to live pretty comfortably.

Yep. When my salary bumped up to $2k/month, I was ecstatic; I could finally start putting some money in the bank. It's the most I've ever made, in my last 5 years of financial independence.

Also, if you are married (or committed to your SO) and you have 2 incomes in the household, then $2k/month is actually a good amount of dough. It is probably getting in the zone of quit your day job money if you have further plans for your startup that require more focus and time.

Don't you mean "not everybody lives in Honduras"? There aren't many places in the US where you can live for $2k/month all in, and the Bay Area would be the last place I'd expect to do so.

I meant "pays your rent" quite literally. As in, taking the biggest of your financial worries away and leaving you only needing to deal with the spending money part. So you still can't live on your income, but you can coast along for an entire year on $10k savings.

Up to that point, $10k in the bank meant you'd better start scrambling to pick up a contract in the next couple months before you run out of money.

There aren't many places in the US where you can live for $2k/month all in

$2,000 / 160 = $12.50, which is substantially higher than the minimum wage in all fifty states of the Union, so I'm guessing that there exist at least a few people who are somehow making do...

This is not entirely dependent on states.


Plus you're probably not clocking an even 40 hour work week working on your small business. $2k a month is likely minimum wage-ish or below in SF.

I'm guessing you've never tried to live on $12.50/hr. And if you take that as a gross number not a net number its even worse. Sure, people are "making it work" but if you aren't single without kids and have zero college debt then you aren't doing it without some sort of assistance. Just because the minimum wage is $7.25 or up to $8.55 (depending on the state you live in), doesn't mean you can live on it.

I'm guessing you've never tried to live on $12.50/hr.

Please don't make me do division with regards to my last salary, it would just depress me.

10 years ago, a friend worked his way through school making 7.50$ an hour working as a cook at Shonies, by the time he graduated he had a stay at home wife, two kids and almost zero debt. In the summer he worked 80 hours a week and during school he worked 40.

PS: He did get an internship that played 13.50 his senior year, but he did not quit Shonies until he graduated.

80 hours a week plus 40 hours a week during school is ridiculous. I'm truly surprised he had time for a wife and kids. Kuddos for him if it all worked out and the family unit is still together, but I'm just pointing out that under the vast majority of situations its not feasible. There are exceptions to every rule, but lets not make this sound like the norm.

Which is significantly more money than $2k a month;)

I don’t know what their home life was like, but they seemed happy.

PS: Average monthly pay was ~= 7.5$ * (40 + (1.5(overtime) * 40 (hours) * 4 / 12)) * 52 / 12 = 1950$ a month.

Granted this is 10 to 15 years ago so it went further, but he was also paying for school at the time.

Really? negative points for a post that simply points out the fact that $12.50/hr is a lot harder to live on that what the majority of people on here want to make it sound? I'm not trolling, just offering a different point of view from different observations. I live in rural PA not a metro area or anything like that. I'm not saying it can't be done, but its not the norm.

Really? negative points . . . ?

Well, you opened with,

I'm guessing you've never tried to live on $12.50/hr.

I consider this aggressive and personal. Rather than stating your position and evidence, you've attacked the credentials of anyone who disagrees with you. Aside from the fact that it's naive and almost certainly false (there are folks on this site from all walks of life with all kinds of experience and opinions), it is distracting. I do not care at all whether someone has the particular credentials you think are necessary to comment on the topic; I care only about what evidence and experience they do have.

Above all, I want to hear about ideas, not people. If you speculate on people's motives or qualifications (especially if you're suggesting downvotes are the result of disagreement or censorship), or any time in general that you attack the person of other commenters, you won't interest me. You'll annoy me. And unless you say something particularly redeeming, I'll probably downvote the comment.

Understandable, I agree I came off a bit strong. It struck me the wrong way a bit, and I overreacted. I certainly mean no disrespect. I hope that what I said after that was on point with what I was trying to get across. I'll be better, thanks for the heads up.

"Living off of $12.50 an hour" is a nearly meaningless concept without a specific number of hours.

That said, living off of $2,000/month is easily doable if:

1. You live in an inexpensive location.

A bit of research on Craigslist can give you a general idea of where to find inexpensive apartments. Sometimes they're rural, sometimes they're not. The key, though, is being willing to move to the inexpensive location.

2. You have very little debt.

This is probably the difficulty that most people encounter. And unfortunately, there isn't an easy way to make it happen unless it's always been a priority for you.

3. You're reasonably good at keeping your other living expenses low.

This means lots of cooking at home, not going to the movies all the time, and probably saving up for several months if you want to buy a shiny new television or game console.

Rural areas can actually be quite expensive compared to a cheap city. Utilities are usually higher since low density means higher cost to the utility companies (more infrastructure for less people). Prices for most goods are higher at local stores than they are in town. And it's easy to rack up a lot of miles on your vehicle when work, shopping, and entertainment is miles away.

I say this as someone who grew up in rural northeast Ohio and now lives in Columbus. In the city, I don't even have to own a car to get around. Consider how much extra money you'd have every month if you didn't have a car payment, car insurance, and fuel costs. That's just the beginning of what you could save by finding a decent place in a cheap metro area.

I agree, you can save in certain areas. But is the public transportation in Columbus that great? I've been to Columbus, and I don't think I would live there w/o a car. You're only a couple miles from Amish country, literally. I guess growing up with a car and visiting places with public transportation really makes me appreciate my freedom of movement.

The public transportation (buses only) isn't great, but it's serviceable. A bus to downtown stops a few blocks from my house every 10 minutes in the morning, every 15-20 minutes in the afternoon-evening, and every half hour after that. If you're near High St., there are several buses that run quite frequently -- at least every 10 minutes between downtown and Ohio State's campus. From downtown, you can get literally anywhere in the city. Most buses run from at least 6 AM to midnight.

The cost is somewhere around $50 per month, but I'm not totally sure because you ride free with an OSU student ID. For those times when you really do want a car and can't ride with a friend or borrow one, rentals are quite reasonable: I just looked at renting a car from noon Friday to 8 AM Monday and the cost is under $70 from Budget.

I've been without a car since April 2008, when a driver crossed the center line, totaled my car, and ran off. I love driving and I miss having a car, but I've been able to get around all right without one. Of course, getting around is a huge pain when I go back home to visit.

Last year I was in a reasonably nice 3 bedroom apartment on the Mississippi Gulf Coast. Rent = $600/month.

If you don't have too many other expenses, then you could definitely get by on $2,000/month income.

Really? I've managed to live on a little over $2k/month in even the NY metro area with a reasonably comfortable lifestyle.

I'm renting a 2.5 bedroom house with a yard in a reasonably-good neighborhood for $250/month in Columbus, Ohio. Utilities (water, gas, electric) come to about $200; Internet and cell phone is another $150, so we're talking $600 a month, total. Throw in $1000 in debt payments and another $400 for food and entertainment, and I could easily live on $2000.

If I got a roommate, my monthly cost would drop by about $200 (I could afford a car). Once I pay off the debt, making $2000 a month would mean I would be putting $500-1000 in the bank every month.

$250/month is less than I'm paying for a small bedroom in Columbus. How did you find that deal? Or is there a catch?

I lived in a 3-bedroom place with two friends near OSU for $238/month for about two years before someone I went to school with gave me an offer I couldn't refuse. She owned a house on the other side of town but had to move back to where we grew up for a couple years, so she told me I could stay there for the cost of property tax and insurance (it's in the Hilltop, and she just wanted tenants she could trust). A friend and I lived here for a year (paying $125 each!), but he just moved out.

So yeah, what I'm paying now is abnormally low, but with a roommate or two, $250/month is not at all uncommon.

3 of us pay $600/month (total) for a nice single family home 5 blocks from downtown Columbia, SC.

don't fall foul to the "SaaS is pure profit!" syndrome.

I wrote a little bit about this here: http://yongfook.com/saas-is-not-pure-profit

In a nutshell, to get to 200 members you are not going to be operating on 100% profit margins unless you happen to be extremely fortunate.

The reality is more likely that a decent chunk of that $2k per month is being spent on customer acquisition costs. You won't get 200 customers just by existing. You need to advertise.

Initially, the major cost for customer acquisition should be founders' own time. Writing articles, pitching to blogs and news, promoting on social media, SEO and all other organic means should be the methods to get initial customers until you hit significant revenue (or get funding) to start using paid acquisition methods.

The cost of customer acquisition can be very high for a bootstrapped startup to afford. For example, Constant Contact (for $20/mo subscription) spends $375 as cost to acquire one customer. Spending a major chunk of $2k to acquire just a few paying customers may or may not be a viable strategy (depends on numerous variables, of course).

Source of data: http://investor.constantcontact.com/annuals.cfm

In this case it was mostly profit. $85 for web hosting. And I spent about $300 on Adwords last month, but this was optional (didn't even convert very well, most of the traffic is from SEO).

Those costs will be largely fixed as the site grows. I may experiment with other advertising to see what if anything converts, but I think the site would do fine without it.

Try Reddit self-serve advertising. There are lots of college students that read Reddit!

Good idea, will look into it.

You need to advertise.

This is simply not true. You need to be found but that doesn't mean spending money on advertising. I hit this mark without spending a dime on advertising. A large amount of my traffic comes from owning the most important keywords for my niche. The rest from WOM and blog posts from others about my product (reviews, interviews, CSS galleries, etc.)

Congratulations on the 220 paying customers, that's certainly no small feat. I've been running RateMyStudentRental.com for about 3 years now (well, really I stopped actively working on it about a year ago), and it only reached about half that in revenue.

Then, LeadNuke sprang forth as an internal sales tool for RMSR barely a year ago and it's approaching that level already. In hindsight, I'm really glad I didn't have this kind of success the first time around, because I have a much more realistic perspective now and I can appreciate it that much more.

In summary, mad props and respect to you.

> In summary, mad props and respect to you.

Totally off-topic, but some of my friends lately have started joking around about making a subgenre of Nerdcore devoted to startups. There's so many good names and parody opportunities...

> I got 99 problems, but my pitch ain't one.

> whatddup, founda?

> An east vs west style rivalry between the 'Limited Liability Crew' and 'S-corp'.

> Names: 'Series C', ... I forget the rest. There's others.

That's awesome. Have any of them been so brave as to actually record a song?

Not yet, but this is pretty close: http://www.kalzumeus.com/2010/01/12/the-solo-founder-startup...

Patrick doesn't know about what I'm talking about though, this is unrelated.

Congrats. As other people have said - it's refreshing to see some stories like this rather than just the 'here's my web app I built in 48 hours'. Hopefully it will help people reliase the difference between building something and building a business.

At 200, you are close to what I consider to be a major inflexion point. It's often as easier (big separate post that I won't go into the full reasons why) to go from 200-2000 then it is to go from 20-200.

Well done and good luck!

Yep, I think you're right on that - the first 200 was just figuring out the right place for everything. Should get easier from here...

congratulations! when barmstrong was down here in Buenos Aires, we talked a lot about universitytutor.com and it's cool to see him just make little tweaks to the site and let it grow slowly and steadily. very inspiring!

Yep - those were some good discussions, learned a lot from you down there!

How did you get 16,000+ tutors signed up? That's an impressive number.

Tried a bunch of ideas, but the most successful was posting jobs to university websites. Can email me if you want more details.

Congratulations. A great idea and an important niche to serve. I just told two friends that do tutoring about it.

Awesome, thanks!

I may be assuming too much based on my reading of your post, but it sounds like you could really stand to implement some (or more) A/B testing. The fact that it took two years to reach 200 customers but in only a week or so you've added another 20 customers after making some changes makes me think you should have been making (and testing!) changes like that all along. Either way, congratulations, and best of luck in the future!

Yur right - I just didn't have the idea to do this test until recently :) Have done some split testing on price etc, but could def stand to do more.

Hopefully you'll continue to see a faster increase in signups. Good luck!

Congrats! With 200 paying customers, you now have more than enough information to start tracking churn, CPA, life time value, life time profit, etc. You can turn those 200 paying customers into a lot more by accurately tracking your metrics and building from them.

I recommend reading:


Maybe I missed this in the post, but are you working on this full time? If not, how many hours/week would you estimate you've invested, on average?

read his about page: http://www.startbreakingfree.com/about/

Shows he's started a few other sites, including working on a YC funded (stealth) startup.

Yep, I have a day job. Right now it takes very little time to run the site, maybe a few hours per week. But I definitely spent a lot of time building it up front, and occasionally still do when I add new features. As a strict hourly ROI I could have made way more at a job or doing consulting work, but it's an investment that may pay off long term (or not, but either way it was way more fun :)

Not to nitpick but your about page shows that universitytutor.com was started in 2004 but your post shows that you started the site in 2008? Also the dashboard shows decreasing timeline which means you are either losing customers and below the 200 (can't guess the scale) subscribers or there is a simple error somewhere...

What are we missing ?

Good point - I actually first registerred and built a site back in 2004 but it was a different business (matching people manually in Houston only). 2008 was when I switched it over to a directory site that was open to anyone and let tutors and students contact each other directly (also rebuilt it in rails).

Not sure what you mean on the graph though - it seems correct to me.

The dashboard graph shows just a months worth of data and for some reason I thought the timeline was decreasing. Congratulations on your success.

Congratulations. That's a great milestone.

The site is beautiful. Nice work!!

I did the programming, but hired this guy to design it: http://www.jackherbert.com/

I'd recommend him, he was good and fairly priced. (Found him on 99designs).

Nice job dude! -Amal

Congrats :)

That's an AWESOME dating service.

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