Must Read before Reading (Term description)

Once again proofread the article, everyone will feel more fluent. (18/10/10)

  • 7 people Bootstrapping 7 people Bootstrapping
  • Organic: organic change or development happens gradually and naturally rather than suddenly. Naturally evolving
  • SaaS:Software as a Service
  • MRR: Monthly recurring revenue
  • ARR: Annual recurring revenue
  • LTV: Life Time Value Total revenue generated by a user for the software during its Life cycle
  • CPC: Cost per Click
  • SEO: Search Engine Optimization

Basic Information

Product: Everhour First Payer: September 2015 Number of current team members: 7 Investment: Bootstrapping

The body of the

Making $1 million in revenue isn’t a big deal, but it’s a threshold, and it’s something that every entrepreneur faces on the road. I’m no exception, so I’d like to share a few lessons I’ve learned.

In 2010 I started an outsourcing company called Weavora. The idea of developing this product came about because of internal needs of the company: we needed to inform our customers of the actual development time. At first, we used existing tools on the market to keep track of development time, but soon realized that we could make a better piece of software to do this.

In September 2015, we acquired our first paying customer, and today we are generating $1.3 million in annual revenue (and growing at a rate of 2.2 times per year), while 2,200 + companies use our products in over 70 countries. We only had seven people on our team and we did all this without any outside investment.

Here’s how we did it:

1. Have a competitive advantage from the start

Your product should have a distinct advantage. This advantage will help you stand out from the crowd while not being easily copied by your competitors. For example, you can’t sell at 10% below the market price as a competitive advantage.

The situation we face is how closely we connect with the most popular project management tools and how we embed them in their interfaces.

Although we don’t have a free version of the software (Free Plan), compared with the peers, we have few features, and we don’t have a mobile version of the software yet… But many users prefer to use our software. Why is that? Because we did an important feature really, really well.

Of course, we are now responding to user demand and adding new features, but at the beginning, we didn’t have a lot of features and couldn’t stay up all night to do a lot of things.

2. You must use your own product

I can’t believe you can make a good product if you don’t use it yourself.

Scenarios for our use of products: First of all, we are an outsourcing business, so we have to report to customers, do project evaluation work and process invoices and bills. We rely on Everhour to see which projects we are underestimating and why; Which projects are more profitable; And find out where we can save time and money; In addition, we use it to simplify and automate our processes and business.

3. Venture capital is not the master key

I can’t arbitrarily say whether using my own money (or income from a different job) to make a product is a good thing or a bad thing. But this approach has the potential to bring in a lot of money.

What leads us to do this?

As I mentioned before, we started with outsourcing. It’s much easier and faster to outsource this than to create a profitable product. When we started making money from outsourcing, we had the opportunity to reinvest that money in profits — and we did. We spent all our free time focusing on this product. We prefer to focus on the product rather than going to investors and pitching the product and making presentations.

In addition, consider that we are not in a more technologically sophisticated America.

A final consideration: the fear of borrowing money and the pressure of higher expectations. If your product already has some historical data, it’s much easier. But bringing in investors at the very beginning of the product can be scary.

Doing things on your own, in some ways, helps you launch faster and test your assumptions. Using your own money will make you more careful with your spending and force you to have more priorities.

But we have to admit that it is really difficult to outsource the business and make this product at the same time. The main problem is distraction, because we have to divide our time equally between the outsourcing project at hand, meeting with clients, and developing the product.

Can venture capital help us in this situation?

I doubt it. Because we misinterpreted the market for pivots, we did something like pivoting. Some good ideas take time to mature. Even if we were able to invest early, we didn’t know what to do with the product. These investments don’t seem to move us any faster. If we did, it might look something like this: we simply spent money on advertising and expanding the team, but we didn’t pay as much attention to early releases, and we added feature after feature, and we ended up neither making a good product nor making money.

Investor money is like rocket fuel, which can definitely help us a lot, but only if we have a good product and market fit, a deep understanding of the key market indicators, and a good development strategy.

4. Free versions of software can lead you astray.

We decided not to do the free version in the first place. Here are a few reasons why:

Our competitive advantage is integration. However, these integrations have API access limitations. One of our paying users has 5 projects to sync, but a free user has 100 projects. It’s very easy for free users to eat up more of our resources.

In our experience, free users will request support more often (because they have a larger base), they will react more harshly to your failure, and they will demand completely different features than paying users.

In addition, the conversion rate from free to paying users is very low, usually 0.5-1%

5. Advantages of annual fee plans

In the beginning, we didn’t want to offer an annual subscription plan. The reason may be that we have some self-doubt. But then we tried it and it was a really good idea.

Annual payments can significantly increase your cash flow, increasing your monthly recurring revenue (MRR) by around 10%-15%. In addition, this will reduce the number of monthly payment failures and payment defaults.

If the average user has used your product for less than a year, then an annual subscription will increase the LTV of your product because they have already paid for it for a year.

Last, but not least: Having an annual payment plan is a credible thing to do, because it shows that your company is serious.

Find your distribution channel

It’s important for any product to quickly find a stable and affordable channel that attracts traffic. For us, that channel is partner directories. For example, Asana and Basecamp (both project management products) have integrable sections on their websites so you can publish your product information on their platforms.

Don’t hesitate to contact these companies if your integration will help their users, make their product better, and keep them engaged for longer. And for you, it’s a very high quality deal. The conversion rate for deals in partner directories is 30%, so it’s a win-win.

We also tried Google Adwords a few times and spent thousands of dollars without getting a single paying user. That’s not to say the channel is bad and we’ll never use it again. But keep in mind that this channel is not easy to convert users to, and it’s also expensive, because the best keywords have a CPC cost per click (CPC) of $10-15. Also consider the need to convert those viewers into users and then into paying users. Plus, you need to optimize your login screen, your ads, your copywriting, etc.

The other one is long-term for us (organic). This channel is great, but it requires a long-term investment in content and SEO. We wrote an article comparing our product to two other time tracking tools, and when people search for it, they know about us. In the first year, the article brought us 1,000 visitors a month.

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