How long is six months? It’s not the number of days that matter, but instead what you can do with them. At the beginning of this year I wanted to know if I could turn six months into a brand new business. A business with actual demand, customers, and most importantly, revenue.
On December 31st, 2012 I announced The Web App Challenge: my journey to build a software company from nothing—not even an idea—to $5,000/month in recurring revenue within six months. You can read the announcement post here.
I bet you’re wondering the results.
What I built
After trying to find a painful problem to solve, I decided to solve one of my own: email marketing. That journey led me to create ConvertKit, my dream email marketing application. No more hacking together a system using other off the shelf providers—I made ConvertKit to follow the best practices I use, built in by default.
The product is far from perfect (more on that later) and the creation process has had its issues, but I love the app and can’t wait to grow and improve it over the years.
Every project should have one key metric by which you measure success. For me that’s monthly recurring revenue. My goal was $5,000 a month—which to me is the start of a real business. At that revenue you can support one person working full time on the project or 2-3 people working part time. It’s not a lot of money, but once you get to that point, you can really start to focus and grow.
So where am I at?
Sadly, not $5,000 per month as hoped. Assuming all current customers continue their subscriptions, ConvertKit is on track to do $2,480 per month.
I made it to 50% of my goal. Now it’s important to note that I haven’t collected money from all those people. Some of the customers are currently using the month(s) free they got from purchasing Authority, meaning they may not actually be charged for another month or two. But since I collect credit cards up front, the default is that all these people will be charged when their credit runs out.
When I first realized I wasn’t going to make my goal, I was pretty disappointed. I aim high, but it’s still frustrating to not meet the goal. Then a few friends reminded me of how far ConvertKit has come in such a short time. Even at only half the goal I have created a valuable tool—completely from scratch—in just six months. Not only that, I have customers that love it and are happy to pay for it.
When you ask SaaS owners how long it took them to reach certain metrics, they always count from their launch date. I’ve been counting everything since the day I decided to start working on this project—even before I had an idea of what to build!
So in technical terms The Web App Challenge was a failure—I didn’t meet the goal. But to me, it’s a massive success. $2,480 in monthly recurring revenue is a fantastic start to what will be a great business.
So, what happened?
A few weeks ago I wrote a post about my upcoming plans to add the needed customers. It was a bit of a long shot, but I was determined to try. My ideas included guest appearances on podcasts, guest blog posts on sites, webinars, email campaigns, and a lot more.
Some of it happened. I published one guest post on Smashing Magazine about product launches, hosted a webinar with over 50 people attending, and sent a couple emails. Not at all the blitz of content I had planned, but life just got in the way.
I spent most of June traveling to Seattle and then in Germany, Austria, and the UK. Normally I’m quite good at getting work done while I travel, but this trip had a few more snags: I got sick. Unfortunately most of the trip was spent sick in bed, the little energy I had I used to actually explore some really awesome cities and visit friends. All those guest post? They never got written.
A few great podcast interviews are lined up (one recorded last night), but they won’t go live for another few weeks. That’s just the nature of working with someone else’s editorial calendar.
The result is that subscriptions increased over the last few weeks, but not at the rate that I hoped.
While I was traveling I worked with Ben and Sam to refactor some major parts of the application. There weren’t a lot of new features to push, but some pretty major under the hood changes. This refactoring will make future features much easier as well as it radically improved the speed. The only problem is it broke things. A lot of things.
When Sam and I started building ConvertKit I wanted to get a minimum viable product (MVP) out as soon as possible, so I decided we should write the application—just the first version—without any automated tests. Of course if you don’t start with tests, it’s hard to add them in later. Habits get formed and no one wants to go back and write tests for old code—especially when there are new features that could be written.
The lack of automated tests meant that despite manual testing a lot of features broke when we pushed the new update.
Production went down for several hours multiple times and at one point you couldn’t even subscribe to a landing page. All told there were 9 critical bugs. All customer facing. It was a rough week.
Miraculously no one canceled because of those issues. The emails I received from customers were very helpful bug reports and very patient feedback. One customer did say “Only reason I’m not canceling immediately is that I want you to succeed with this project.”
I bet a lot of customers thought that, but didn’t actually say it.
It just goes to show that the more personal your connection with each customer (by being transparent about everything), the more patient they will be with your mistakes.
To all the ConvertKit customers who put up with the issues and are still with us: thank you very much!
Budget and finances
I started with a budget of $5,000 from my own initial investment. That was one of the constraints on the project. Beyond that everything needed to be funded with revenue from customers. Here are the financial details from the last 6 months:
- Rackspace: $997.00
- Sam: $6,344.40
- Ben: $3,471.00
- Domain & Certificates: $37.30
- Amazon EC2: $29.42
Total expenses: $10,879
- Preorders: $4,541
- Stripe payments: $1,093
Total revenue: $5,634
Initial Investment: $5,000
Cash on hand: -$244.49
Oops. I spent slightly more money than originally planned. Basically a little extra development time in the last week (bug fixes) pushed me over. Overall I’m very happy with the returns on my initial $5,000 investment. I’d count that as money well spent!
I should also comment on the rather large hosting bill. Using Rackspace we had too many servers setup. The setup included two web servers, a load balancer, and a server for the email queue. Basically we designed for what we would want down the road, but had it running now. Ben kept telling me that could be trimmed down, but I hadn’t done it yet. Then today I was quite surprised that the Rackspace bill was almost $300/month! Way more than needed.
Documenting the process
One of my goals for The Web App Challenge was to document the process in public. I did my best to keep track of each step of the process. You can read all 16 posts here:
- Category: The Web App Challenge
If there are any other specifics you’d like me to write about, I’d be happy to do it!
Quite simply, keep working. Nothing actually changes from yesterday to today. The goal is still to keep making ConvertKit better and keep acquiring more customers. I plan to continue growing aggressively for the rest of the year. I’d love to be at $10,000 in monthly recurring revenue by the end of the year.
Actually my next big decision is what to do with the finances. All of the current $2,480 per month (actual cashflow is less since many customers have a few months free from buying Authority) is going right back into development—so I’m not personally making anything from ConvertKit. But it leaves me with a question: now that my $5,000 initial investment limitation has ended, should I invest more of my own money?
I don’t know where I read it, but someone was saying the only time insider trading is legal is if you invest in your own private company. I have more knowledge than anyone else about how likely ConvertKit is to succeed and I am confident it will be successful. I have the money from book sales and it needs to get invested somewhere: either in traditional investments (stocks, etc) or ConvertKit. Would an extra $15k or $20k (invested personally) help it grow that much more quickly?
There are things I’d love to hire out, like a logo design, and have a larger budget for development. I just can’t decide if I should grow exclusively based on revenue or not. This would probably take the form of investing $5,000/month of my personal money for four or five months in order to get ConvertKit to where I the features and user experience to be.
What are your thoughts? Build only with existing revenue or add more cash?
Thank you for following me on this journey. I hope it has been helpful and inspiring to create your own products. It’s a lot of work, but completely worth it in the end. I’ll continue writing about ConvertKit here on this blog—in fact, if you want to learn how I use email for marketing take a look at my latest post.
And of course, you can sign up for ConvertKit here. Once you do, send me an email (firstname.lastname@example.org) and I’ll help you get setup.
I also want to say thank you to everyone who helped me through this process. If you used ConvertKit and gave me feedback, thank you so much! In particular I want to thank Brennan, Patrick, Amy, Sam, Ben, Garrett, and Hiten for all the help, feedback, and support. You guys are wonderful!
Last of all, I want to ask for a favor. Over the weekend I celebrated my birthday. Instead of friends giving me presents, I’m asking for donations to Charity:water. They do fantastic work all over the world and I’d love to help them raise more money.
If you enjoy and have learned from this blog and my writing, please make a small contribution. I’ll match every donation up to $2,300.