21 Jan

Profit is leverage

The founder on the other side of the call had over 100 clients he wanted to bring over to ConvertKit. With an opportunity that size I wanted to make sure we got it right and could answer every question, so I pulled one of our senior engineers into the conversation.

Just a few minutes into the call it was clear this wouldn’t be a good fit. Their unique use case would push the limits of ConvertKit in a different direction than our planned roadmap. While we could have found a way to make it work, it would have strained our engineering and product teams, as well as our relationship with them.

We have product market fit, and they would be outside it.

But it’s still painful to say no to such a big opportunity. It took me over two years to build up to the amount of recurring revenue they would add in a single deal. But I knew this founder’s use case would be a pain for us and for him. So that means simply saying no.

Profit gives ConvertKit the leverage to focus on the right revenue, rather than chase any revenue.

If we were struggling to make payroll, close our next funding round, or cut our burn rate it would be much harder to say no. But thanks to our focus on profitability our default path is one of success. Even if our growth slowed, ConvertKit throws off well over $100,000 in profit each month.

Profit isn’t just making more money, it’s carefully managing expenses. We have a 30 minute call at ConvertKit each month going through the spending from the previous month, all to make sure don’t bleed away money in the small things. We should be just as aware of our spending as our revenue.

We also have an incredibly high revenue per team member ($380,000) when compared to similar SaaS companies. Whatever happens we can act deliberately and take care of our team.

Profit gives clarity and focus, allows me to be patient, and ultimately gives me leverage to pursue my vision for ConvertKit.

 

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2 Responses to “Profit is leverage”

  1. Good stuff man. I love the approach here. It makes so much sense. It’s amazing what happens when you have a vision and the pieces in place to see it through.


  2. This reminds me of Charlie Munger’s (Warren Buffett’s partner) advice: stay within your circles of competence. There will a ton of opportunities like this, but rejecting them lets you stay focused on what matters.

    Congrats on building a business that has the ability to choose!


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