Why be transparent about money?

I’ve been super transparent lately about a lot of things — perhaps to a fault. In particular I’ve been sharing a lot of specific numbers around money. The live financials for my business are available on a public dashboard. I wrote pretty openly about how I paid my bills over the last few years. I walked through the painful details of raising money for my solar startup and then shutting it down. All of this lead a few people — including at times myself — to ask, um, why am I doing this?

A few people have asked me why I do it. I’ve also had a few people talk about others who publish their financials — not know that I did too — and criticize it. Calling it bragging. I can see how some people might find it off-putting. Particularly when you have some entrepreneurs who do it solely to give themselves a public high-five on how much money they’re making. But I think the best answer to this is a commitment to transparency through both the ups and downs. It is annoying if you’re selectively transparent, only publishing the details about the things that work and sweeping the trials and tribulations under the rug. It’s the same problem we have with Facebook and Instagram giving us a false impression that everybody is living a happier and more interesting life than we are. Our social streams are filled with carefully curated snippets of the best parts of people lives. People rarely share when they’re bored, or lonely, or snap a selfie of themselves wallowing in self doubt. I hope that I’m doing a decent job so far of sharing both the good and the bad, but it’s something to constantly pay attention to.

This wasn’t an original idea from me. I was inspired by the folks at Buffer, Keen.io, Baremetrics and several others.

But here are few of my reasons for transparency:

Everything is more interesting in the context of real numbers

Language is imprecise. When people or companies blog about strategies or tactics that worked or didn’t work, it’s very hard to know what that means and if it’s relevant to you. In the context of real, live numbers these topics become concrete. This action added X in monthly recurring revenue, this strategy saved this many cancellations. It’s honestly just a better story.

Transparency is a marketing edge

Most people are very private about their finances and real financial numbers are a little bit taboo. Blog posts with that kind of data are just juicier than the same content without it. The first post, where I laid out the origins of my micro-SaaS business and introduced the live dashboard, received about 1,000x more traffic than any other post I’ve ever written.

Transparency gives you just the right amount of credibility

Neither too little nor too much. If I say something, and someone thinks that it’s BS and would never work, they look at the real numbers and think, well maybe this guy knows a thing or two and isn’t a total moron. On the other hand if I say something and someone reads it and thinks it’s the most brilliant strategy they’ve ever heard and they should abandon everything and prioritize it. Well, they can look my numbers and say, well this guys isn’t exactly making millions so maybe we should take this advice with that appropriate sized grain of salt.

I think this is easily the most important benefit of transparency. The world is full of people who eke out a bit of money selling scammy schemes claiming to make you millions. Transparency is the solution to credibility in an increasingly opaque and anonymous world.

The moment people think you know something there is a temptation to try to start educating and to sell that education. There’s always endless demand for it. It’s easy to fall into it. I’ve caught myself several times thinking I should start selling ebooks, courses and consulting and how it easy it would be to fake it til you make it. Publishing my numbers keeps me honest.

As internet platforms make it ever easier to publish and sell ebooks, webinars, online courses, it becomes more and more difficult to filter out the real stuff from the scams. Without transparency there is some risk, or at least some small nagging doubt that you’re being had.

When I think about even true thought leader superheroes writing about entrepreneurship there’s always this nagging question in the back of my mind. Did they ever actually build real businesses that actually made profits?

Yea maybe they have obviously become very successful. But what if it’s built on bullshit? It’s not hard construct that scenario. I don’t know from first-hand experience, but I think if you can bullshit your way to a best-selling book and start collecting big speaking fees it’s probably not that difficult to translate that momentum into further success. You get invited to advise and invest in some of the best startups and voila, now you’re a validated success story and people eat up your advice.

And it’s so easy to fake it. I know because when I was really struggling with SolarList — incinerating my savings and racking up credit card debt — people were always confusing me and the business for a big success and assuming I was crushing it. An Angelist page, a shiny website, a well-produced video and some software that works is all you need to convince the vast majority of people that you’re an inspiring and successful software entrepreneur. Throw in a solid beard for good measure you’ve got all the credibility you need.

Transparency — particularly the third-party verified variety like my dashboard, which is connected directly to my payment processor — eliminates all those questions. If some day I become a big success, everybody will have real data on my (is humble right word?) origins. And if I turn out to be a big failure, everybody will know what is was that I squandered.

Storemapper 2015 Roadmap: 100K to 4HWW

Almost exactly a year ago I moved Storemapper from a neglected side project to real business focus. It’s fitting that it just hit a pretty cool milestone: $100K in annual recurring revenue. Pretty good for a simple little widget.

Storemapper Revenues hit $100K

Check out the latest live metrics here

The business is very high margin so that number equates to probably around $90-95k in net income, which is honestly about as much money as I really could want to support my lifestyle without any dependents. Anything more is gravy.

This will be an interesting test. Working on Storemapper for the past year it’s been so easy to measure progress. Is monthly recurring revenue (MRR) going up and by how much. And in 12 months that number went up 271%. And that’s recurring revenue subscriptions. And I owned the business, that money went in my pocket (and then straight to Chase, Citi and Amex, but that’s another story). It’s basically like getting a salary raise every single week and it’s a powerful dopamine loop.

But there was always supposed to be a point where it was enough money. I wasn’t going to get caught up in the “money as a scorecard” trap where you just keep on trying to get more and more. Money is a tool to get back your time.

There is this fantastic anecdote from Biz Stone’s little memoir on the founding of Twitter. Biz and Ev are in a bar, at the time they are still working on Odeo, the podcasting business that preceded Twitter. Biz starts:

“If we execute the vision you laid out, we will become the kings of podcasting.” I gave a great flourish when I said “kings of podcasting.” I made it sound very kingly.

“Wow, you think it was that good?” Ev looked pleased with himself.

“Yes,” I said, “but I have a question for you.”


“Do you want to be the king of podcasting?” I asked, because this was the question I’d been asking myself. Ev took a sip of his whiskey, set the drink down, and then laughed.

“No, I totally don’t want to be the king of podcasting,” he said.

“Neither do I,” I told him.

It’s a question we so often forget to ask ourselves. I do NOT want to be the king of store locators. There are things about the business that I do love. I love that all my customers are themselves entrepreneurs, so in the process of doing support I also learn a ton about them. I love providing an incredibly simple UX and fantastic customer support. It’s sad but true that people in general, and particularly in B2B, are used to receiving pretty horrible support and grappling with terribly designed software. Customers regularly write unsolicited little notes expressing their delight, and that makes my day.

But I always saw the value in Storemapper as a way to make recurring revenue while freeing up my time to work on other projects. Well, we’re basically there now. So what happens next?

2015 plan: a true 4 hour work week

The Four Hour Work Week (4HWW) was one of the books I read back in 2010 that put me down my current path. The premise is straightforward, build a business that runs on four hours per week of your time, then use the rest of your time to do awesome things.

Here is a common misconception though, you can’t actually build a business on four hours a week. At the start of the book’s narrative, Tim is running an online nutritional supplement company that generates $30,000 per month in revenue. He didn’t build that on four hours a week. But once he has it, he then starts a process of reducing and automating that keeps the business doing well with less and less of his time.

The point is you have to build a real business first, then you can 4HWW-ify it. That’s roughly what I plan to do with Storemapper. My key metric is switching from increasing recurring revenue to decreasing my weekly time spent (while holding revenue at least steady).

When your business doesn’t have an accelerator pedal

The other thing that made this decision easier is that Storemapper really doesn’t have an accelerator pedal. It continues to grow really well (typically >10% per month) from organic customer acquisition channels like organic search and the “powered by” links, but no matter what I tried, nothing seemed to be able to increase that growth rate. Adwords was a waste, refer-a-friend programs were a flop — I document this in more detail in the first big post on Storemapper. There just wasn’t an accelerator pedal to push to turn this into a really big business.

As entrepreneurs this is a tough, but fairly common, situation. We spend a lot of time striking out, building prototypes and businesses that totally fail, on the premise that when we do strike on something it could be home run.

But sometimes you just get a single or a double. And nothing you do can turn it into a home run. And it’s really easy to get stuck there banging your head against it because the alternative is to go back to the plate and likely to more strikeouts. But sometimes the best answer is just to let it be.

How’s that for baseball-business metaphors? There’s probably a missed opportunity for a Money Ball reference in there somewhere.

2015 plan: two part-time hires

I plan to make two very small and carful hires for Storemapper to replace the two areas of time that the business requires. $100k and growing is still not a ton of cash so I’m going to compete by offering an impressive amount of money. But both positions will part-time and extremely flexible. If you’re working on a project, already living cheaply and looking for a little side money, either one could be a great fit.

1) Customer support (see also: customer happiness guru, client success wizard)

Support for Storemapper is pretty easy. The bulk of it revolves around helping merchants upload their data in the right format and get their settings tweaked the way they like. Some basic knowledge of CSS and a desire to learn more is very helpful in this role as we sometimes need to add some CSS tweaks to get the store locators looking nice on each site. I currently do support in less than 1 hour per day 5 days a week. I’ll probably be able to pay for about half-time but it would likely not be nearly that much work.

2) Ruby on Rails developer

This is a super easy and super part-time position. I have done all the coding to date. I’m looking for a good Ruby on Rails developer to basically be on retainer for occasional maintenance, tightening of screws and upkeep. We’ll get started by making my code less crappy: improving some slow database queries, writing some better tests. Once you’re familiar with the code I’m looking to pay someone some easy money to just be on hand in case of an emergency, occasionally deal with gem updates and minor tweaks. Storemapper is a pretty standard Rails setup on Heroku, Postgres, Resque, etc augmented with these services.

If you’re interested in either of these or someone who would be a great fit please reach out to me.

2015 plan: Automating systems

The second focus for the year is automating all the systems and processes needed to run a business. Mostly this is accounting, payroll, bookkeeping and taxes. I am literally the world’s worst at all these things but I’ve been working with my friend Dan Hobbs who is a master at this. Dan and I are actually putting together content from all our sessions into some kind of a package for micro-entrepreneurs and/or digital nomads like me

Basically the content consists of me screwing up in EVERY possible way, and Dan patiently walking me through how to sort things out and systematize them in the future. We’re not sure if it will be blog posts, an ebook or online course of some sort but if that sounds interesting to you, hit me up on email or twitter and we’ll put you on an early announcement list.

In any case Storemapper is actually in fairly good shape in this respect, as a testament to Dan’s skills but I’ll be looking to really tighten things up and automate them and of course post it all here.

Storemapper Update: 50% revenue growth in 3 months

Storemapper Update: 50% revenue growth in 3 months

Three months ago I published a deep dive into Storemapper, a tiny SaaS product that I run. I thought the post (now on Medium) was too long and delved too much into the gory details to be broadly interesting but I was blown away by the response. The post sat atop hacker news for over 24 hours and my typically sleepy blog saw something like 50,000 uniques in a few days. So, here I am, back with another update.

The impetus for the original post comes from Baremetrics, the insanely simple SaaS metrics dashboard for Stripe that I use. As paragons of transparency, Buffer, Baremetrics itself, and several other cool startups had made their dashboards completely public. Josh from Baremetrics asked if I wanted to do the same for Storemapper. I had been meaning to write a tell-all about bootstrapping my Micro-SaaS business anyway so it all fit. So, as always, you can see Storemapper’s live metrics on our public dashboard.

Storemapper Update: 50% revenue growth in 3 months

50% QoQ growth

Storemapper has been on a tear since I seriously focused on improving it in March of this year. The last quarter has been great with recurring revenue increasing by 50%, up over $80,000 per year, in just three months.

I think Q3 is a great time to launch ecommerce apps. Store owners are putting in time to prepare their business for the holiday surge and are much more willing to make investments to help them better capitalize on Nov/Dec sales. That’s likely part of the story this year as well. Here are a few things I’ve been focusing on in the past three months:

  • Converting free trials
  • More Premium features and upselling
  • A/B testing prices
  • Reducing failed charges

Onboard like a boss: convert the free trials!

After a little experimentation, we’re back to requiring a credit card on signup. Most people in SaaS have a strong opinion on this. It does reduce free trial signups, and it does slightly reduce overall paid signups, but it saves so much in headache that it’s worth it.

So it was always clear that Storemapper has great retention and very low churn. Setting up Baremetrics let me really see the lifetime value for each plan. With churn below 1% the LTV for most of our popular plans is well over $1,000 per new customer. It was clear that the best thing I could do was focus on getting incredibly good at converting free trials. I re-built the signup process to show platform-specific installation instructions. I tightened up automated emails and in-app messages using Intercom to reach out to customers when they didn’t hit key milestones during the free trial.

The results are awesome. Storemapper is now consistently converting over 40% of all free trials. In October a whopping 42 out of 43 free trials who signed up directly on our site (not through an app store integration) converted to paid plans.

I’m now super happy with our funnel with high conversion from free trial, low churn and super high LTV. The next area of focus will be investing in some paid acquisition. I am a total noob at Adwords/Facebook/retargeting and would love to pay/barter for a crash course from a pro.

Push for Premium

Digging in to Expansion MRR Storemapper’s best upsell flow is convincing medium-sized customer on our Pro plan ($19/mo) to upgrade to Premium ($39/mo). Premium comes with a ton of fancy features like heat map analytics. This past quarter I added several new features like:
* Improved syncing from Google Docs * Facebook Page Tab integration * Pretty map themes powered by SnazzyMaps

I then added several Intercom notifications to prompt targeted customers to test out a few of the features. You can see the results: 20 upgrades, many of them to premium accounts representing a few thousand in new annual recurring revenue.

A/B testing prices

I have been testing prices on Storemapper for a long time but I’ve always kept it simple and just changed the prices and watched what happened. I never ran a simultaneous A/B test because even with cool tools like Optimizely it’s still a pain to setup.

Optimizely can do the front-end stuff to make sure each customer is cookie’d and sees the same prices every time they load your landing page, but you still have to do a back-end integration so they see consistent prices if they go to upgrade or change their plan.

But I went ahead and did it. I hacked up a solution using Mixpanel to track funnel conversions and Nate Kotny’s Simple Abs to handle the A/B. Then I manually did the math between the Mixpanel conversion data and Baremetrics LTV metrics.

It was still a big waste of time. It’s very hard to see conclusive evidence of superior pricing. Even if you get more revenue from a higher price point you need to wait to see if that higher cost leads to a higher churn. Blah blah blah. In a micro SaaS business you’re looking for big wins that obviously improve recurring revenue. If you need to do some math to determine that something is statistically significant then it wasn’t worth the time and effort to do it.

I’m still testing prices but I scrapped the whole setup and went back to manually tweaking and watching for big moves.

Reducing failed charges

Here’s something you don’t learn until you have a portfolio of customers’ credit cards that you charge every month: charges fail a lot! Like an insane amount. I went about 9 months on Storemapper before I looked into this and I discovered that like 50% of my customers’ credit card were invalid or failing. Initially I built a simple email notification using Stripe Webhooks but it turns out that a) customer’s don’t immediately jump at the first opportunity to update their billing info and b) it’s a HUGE pain to keep track of every outstanding charge.

I highly highly recommend using Stunning to solve this problem. It integrates directly with your Stripe account and emails customers when their card fails automatically (and keeps emailing them until they comply!). That feature alone makes the service worthwhile but you can also use it to send pretty email receipts and other email notifications, it pro-actively updates cards before they expire, has an iPhone app that shows you all your Stripe events and a bunch of other stuff.

Storemapper Update: 50% revenue growth in 3 months

In this quarter I tightened up my Stunning integration, taking advantage of everything they had to offer and hunted down some very very negligent customers as well. Failed charges is still a huge deal but my process is 99% automated now.

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How I pay my bills

A lot of folks regularly ask me this question so I’m going to blog about it. It seems weirdly narcissistic to think anyone would be interested in my finances but let’s give it a go.

My last paycheck was in June 2011. I quit to start a startup, or build a company, or something. I didn’t have much of a plan or much in the savings account.

I also don’t buy into the mythology that founders of meaningful companies need to spend years living in their parents’ basement and eating ramen noodles. My folks live in Florida so they don’t have a basement. And they wouldn’t let me live in it even if they had one. And I wouldn’t live there even if they let me. I wanted to become an entrepreneur and live on my owns without sacrificing my quality of life.

In those three unemployed years I’ve lived a pretty good life. I’ve lived in Manhattan, Brooklyn and Washington DC. I spent more than a month each in San Francisco, Barcelona, Buenos Aires, Cusco, Thailand and Bali. I spent more than a year homeless, traveling out of a backpack and working in coffee shops around the world.

I also had several close calls, ran up some credit card debt and spent a few sleepless nights googling personal bankruptcy. It’s been a wild ride.

So, first I’m going to list the various ways I scraped together money, then I’ll close with a few tough lessons learned.

Independent Consulting

My last job was at a consulting company advising cleantech investors and cleantech companies. While I was there it wasn’t crazy to book a six week project, where I did nearly all the work, for $75,000 – 150,000. Meanwhile over those six weeks I was paid maybe ten or twelve thousand dollars in salary and doing a lot of other work. Like many of my colleagues, I thought surely, there must be way to do this on my own. Bringing in just 50% or less of that amount would be a huge raise and I’d be able to operate on my own terms. So, after I quit my job, I reached out to companies for private consulting gigs. Here’s what I found out.

It’s totally true that you can split the difference and make (nominally) a lot more money. The first gig I booked was for a month or so of work for over $20,000. On an annual basis it was about $270,000, not too shabby even in NYC. But the sheen of independent consulting faded quickly. As a solo consultant you face a lot of tribulations that rapidly erode that shiny dollar per hour figure. Accounting is a nightmare, I spent hours tracking down invoices that were weeks or months past due. As a small consultant, clients feel entitled to bully you around constantly expanding the previously agreed, fixed-price scope, pushing back on hours and in general just making your life pretty shitty even without intentionally being jerks. This type of work is decent as a bridge to somewhere else but I got tired of it very quickly. It did however allow me to start earning some side income immediately after losing my paycheck, which was valuable.

I was working a lot with cleantech projects and was often offered success-based contracts, with big fees if I closed an acquisition, financing, or won a bidding process. I signed contracts with the possibility of earning over $250k over the course of a few months. I actually delivered about $75k worth of successes but my total take home was zero. Big fat waste of time and I would caution strongly against these “opportunities.”

The switch to software freelancing/consulting

The reason I quit my job was to build a startup that made educating homeowners about their rooftop solar insanely easy with software. I had no background in software, but I knew that I would need to learn enough to be dangerous, even though my initial plan was to hire or recruit software developers for equity (some of you are laughing at me already. Yes, I’ve since learned my lesson).

So in late 2011 I was devoting a decent amount of my time to learning to code. I was making steady progress when I had a realization. There was then, and remains now, a huge demand for software development. Instead of paying to learn to code, I thought I could big for freelance jobs, that I didn’t know how to do, and get paid to learn. So I went to freelancing sites like odesk.com and elance.com and created a profile. I barely had a portfolio (just some wordpress sites I made for myself and friends for free) and had zero credibility. So I made it a numbers game. I setup a workflow, with pre-written templates and automation that allowed me to apply for tons of small web development gigs.

Eventually I started to get some small $200 or $500 contracts here and there. Once I got a gig I would dive into the topic, reading every blog post and ebook I could and massively over deliver, winning both a happy client and a ton of knowledge in the process. By 2012 I was able to consistently get small jobs at a decent per hour rate. I worked very little, 10-20 hours a month and the net amount put me well below the poverty rate for the full year. But it was something.

In contrast to the strategic consulting I was doing in cleantech, software consulting is much lower stress. The client says “I want my website to X”, you do the work and show them “Look, your website now does X” and you get paid without much fuss. I’m not trying to make a broader point about the long-term benefits of different types of consulting. But if your goal is just to make some short-term cash, look for consulting opportunities where the deliverable is extremely concrete and success is very well-defined.

Geo-arbitrage is a bootstrapper’s best friend

I quickly realized that bootstrapping my business in New York City just didn’t make a lot of sense. Yes there are tremendous networking opportunities, but in the early days it’s mostly you on your laptop in a coffee shop building things, which you can do equally well anywhere in the world without NYC’s insanely high cost of living. I think NYC is an amazing place to build a funded startup, but if you’re on your own you should do what I did in early 2012 and run! I put all my stuff in storage and went full nomad, with just a backpack and laptop. I initially went to Spain for a few months but quickly headed to Latin America (Argentina and Peru). Compared to some big cities, traveling and living in hostels and Airbnb can still be a big savings. One month in Peru my total cost of accommodation was $180, about 10% of typical NYC/SF rent.

Combining the very small income from software consulting and my much lower cost of living I was able to squeak by through most of 2012. The details are for another blog post but 2012 was mostly a year of educational failures for me with three successive abortive attempts at launching my startup and three return trips to the drawing board. If I had not cut my costs to the bone I would certainly have been forced into getting a job by the end of that year.

I’ve used this kind of geographic arbitrage several times and it’s a great escape hatch in a cashflow crunch and good reason to stay away from long-term leases that you can’t easily sub-lease.

Storemapper: my tiny software business

Throughout this whole period I carved out some of my time for side projects. This was probably the smartest thing I did and it saved my butt several times. Sometimes collaborating with friends and sometimes on my own, I launched several small products. Almost all of them were failures but one of them, Storemapper, survived. I’ve detailed Storemapper extensively here where you can see that I launched it in late 2012. At first it was just a tiny trickle of subscription income. By mid-2013, when I moved back to NYC, it made enough roughly cover my Brooklyn rent. The whole time I was back in the city I was running my personal finances very close to the edge and at one point I completely messed up the accounting. I literally had like $300 in the checking account and rent was due in a week. At that point most Storemapper customers were paying me $5-9/month so I quickly hacked up a solution where they could switch to annual billing for $99/year and emailed all the customers. Fortunately about 15 of them took me up on the offer and I made enough money to pay rent and buy myself a small victory beer. These days Storemapper generates about $80,000 in annual subscriptions, which is freaking awesome. This whole story would look very different if I had not found this source of subscription revenue through trial and error. By very different I mean that I probably would’ve been bankrupt. So, hard to overstate the importance of side-projects.

Friends are awesome

I would be massively remiss here if I didn’t mention the help of friends. I was never one for asking for favors until I decided to try to build a company, and a life, on my own. You get over that pretty quickly. Friends of mine have come through big time in the last few years, letting me crash couches and housesit for much longer than reasonable lengths of time. They know who they are and they are awesome.

Credit Cards are useful

Saving the most controversial for last, yes, during the last 3.5 years of trying to build several different companies I racked up a five figure credit card bill. Right before I quit my job I signed up for a ton of credit cards and loading up on both ready to access capital and bonus frequent flyer miles (almost all of the traveling from above I did using miles for basically free).

I’m honestly not sure where I stand on credit cards. For sure I could not have gotten access to that much capital through a traditional loan of any sort. As I started this journey I was convinced that it would be at least as educational (if not radically more so) as an MBA. At its peak my credit card debt was less than one-fifth the cost of a top tier MBA so I genuinely think it was a good wager in the long run. That’s still a lot of debt though. In the short run it’s much more stressful than nice subsidized and negotiable student loans.

I think it’s a huge shame that it is so easy to get a loan for a $100,000 grad school with pretty dubious value and nearly impossible to get $20,000 to cover living expenses while you build, learn and experiment. But those are the facts. Without access to that credit I certainly would have had to quit and get a job. It worked out for me and I’m on track to nuke all my debt by early next year, but it’s also a risky and stressful move.

Lessons learned

I’m in a good mood right now, just finishing up three weeks in Iceland. I saw some great Northern Lights last night and they’re supposed to be better tonight. So I’m concerned this blog post paints too rosy a picture. I quit my job with very little savings and no real plan on how I would make nearly enough to cover my cost of living. I plowed my little savings into learning things and failed spectacularly for a long time at launching my company(ies). There multiple times where I was very seriously googling personal bankruptcy and several times where I only barely was able to make ends meet. I feel now like I’ve only just barely made it out of the gauntlet. There’s still some credit card debt to deal with and my taxes where a complete clusterfuck that I’m only just now getting in order. But, here are some key things I feel I have learned:

  1. Keeping overhead low is essential. The biggest mistake I made by far was moving back to NYC before I had any meaningful income. Every month you live in that city you need to spend like five grand. It’s stressful, it limits your options and kills your creativity.
  2. Maximize flexibility. I have never signed a lease in my life. I don’t have a car, a dog or a cell phone contract.
  3. Ask for help. When you do some stupid and crazy, you’ll be surprised how much your friends want to see you succeed.

There are more lessons learned but this post is getting too long. I’ll think harder on this and write another post.

Storemapper: Bootstrapped to $50,000/year in 2 years (with live metrics)

Two years ago I launched Storemapper an embedded store locator service that runs on any website or ecommerce platform. Today around 500 brands use Storemapper to help their customers find the closest place to buy their stuff.

storemapper screenshot.png

The service has grown from bootstrapped to over $50,000 per year. It’s not cool like a billion dollars, but not half bad for a side project. T

oday I want to share some data, stories and things that did and didn’t work.

Thanks to Baremetrics, which offers one-click SaaS metrics for Stripe, you can see the real metrics for my business on this live dashboard.


NB: Stripe processes about 70% of our revenue so all top line numbers are 1.5x more than you see in Baremetrics. (they have since added support for non-Stripe data, numbers on live dashboard are accurate)

36 hours in a first class cabin

Two years ago, August 2012, I was doing freelance work for ecommerce merchants on Shopify. Within the span of a few weeks, several of my clients asked for a store locator for their site. You know what I’m talking about, enter your zip code, find the closest store near you, go buy the thing.

cuppow store locator.png

Given how ubiquitous store locators are on the web, I figured their must be a plug and play solution. An hour of quick research and I didn’t find any good options so I made a note to prototype a no-coding-required solution for merchants.

A few weeks later I was headed from San Francisco to Buenos Aires, Argentina. I booked the flight with miles and in some fluke I was able to upgrade to First Class if I routed through New York JFK. With an eight hour layover in the Flagship Lounge I was looking at nearly 36 hours of free wifi, unlimited champagne and coffee and very few distractions.

So I set a goal, to build an entire Minimum Viable Product on the flight and launch it as soon as I landed in Argentina. So that’s what I did. I built a very very stripped down, barely workable version, launched it when I landed, sent an email to all my freelance clients: “Here’s this thing, here’s what it does, sign up here, put your credit card in there, it costs $5/month.”

On Day 1 Storemapper had 3 paying subscribers.

With hindsight and the experience of building other products that didn’t get any traction, I know that starting from this position, with certainty that some customers will pay for the product is a fantastic starting point for a small business or passive income side project.

Minimizing time suck

At the time I launched Storemapper I was juggling lots of other competing priorities. I was heading to South America to cut my cost of living so I could work on building the first version of my main startup idea. SolarList was a much larger technical problem and I needed to dedicate lots of time to it, on top of freelancing to pay the bills. So from the start the most important metric for Storemapper was minimizing my time commitment to 10-15 hours per month, total, including support emails.

SaaS (software as a service) subscriptions can take a long time to build up to meaningful revenue. See also: the long slow SaaS ramp of death. So it’s important not to get bogged down over-optimizing early on. I forced Storemapper to stay low priority in the beginning which ultimately lead to a better product and happier customers.

The first version of Storemapper was a true minimum viable product. It lacked tons of important, some might say critical, features. I didn’t make a logo or get an @storemapper.co email address. The landing page was literally a few lines of text and a big blue sign up button. You couldn’t change your password or even cancel your account. There were no receipts for payments and the first few credit card transactions were even handled over non-SSL connections (sorry Stripe!). No terms of service, no privacy agreement. Really a lot of missing things.

But because it clearly met an unmet need that customers were willing to pay for, it continued to grow slowly (5-10 new paying customers per month), without consuming my life.

A few things that worked well during this period:

Build features slowly

I didn’t build features until 1) a large group of potential customers said they wouldn’t sign up without it or 2) many existing customers said they would cancel without it. I kept a detailed backlog of every possible feature request, but held a very high threshold for actually building them.

Batch support requests

It’s such an awesome feeling to nail a customer support request. When a customer emails me asked for something and I can ping them back in a minute with exactly the right answer, I love it. But early on I think you can’t compete on support speed. You should batch support emails, answering them every few days. I kept support emails in a separate gmail account and only logged in infrequently, knocking out the requests at once. I definitely lost a few customers in the process but it was essential to maintaining my sanity. It’s hard to do support requests at all in the early days of SaaS. You constantly do the math on how an entire year of this customer’s subscription doesn’t add up to one hour of your freelance rate. The amazing part is a high percentage of those support requests solve themselves, customers end up answering their own questions.

Let bad shit happen

Storemapper was my first product. I had done freelancing and consulting before, but this was the first time customers had given me their credit card in exchange for a product that was supposed to work. Bad shit is going to happen, so zen yourself up before you get started.

I got my first furious email from a customer who simply couldn’t believe how difficult to use my (five dollar a month!) product was. I got my first midnight phone calls from a frantic designer on a deadline trying to get a store locator up for a client. If you build software you’re probably used to striving for things to be 99.99% excellent but it’s just not possible when you launch a product. You won’t even get close to that in the early days so don’t give yourself a heart attack.

Never underestimate the power of saying, “I’m sorry, that happened, here’s how we’re going to fix it.”

Growing to meaningful revenue

In Spring 2013, Storemapper was pushing about 50 customers and generating a few hundred dollars per month in subscriptions. The money wasn’t meaningful, but Storemapper was valuable to me as an experiment. I had only started learning to code about a year before I built Storemapper (in late 2011) so I was learning all about scaling a real product with paying customers, in a low-risk environment. We had some outages, some downtime, some accidentally deleted accounts, incredible lessons for me as a software entrepreneur and ultimately not that costly for anyone.

But I decided to get more serious. I set a target in six months I wanted Storemapper revenues to cover (Brooklyn) rent. I got there and a little more. By the end of the year, December 2013, Storemapper was doing around $2,000 in monthly recurring revenue.

storemapper run rate 2013.png

Throughout I stayed within my cap of 15 hours per month. This was a classic example of effectively using Parkinson’s Law containing time allocation to force creativity. I was now over two years after quitting my last salary-paying job so I also didn’t spend any money, literally zero dollars, on any growth strategies.

I tried some things that worked and others that didn’t. Here they are:

Raised prices, a lot (do this)

This was the best growth hack by far. $5/month was an arbitrary number that I picked initially reflecting how incredibly crappy the first version of Storemapper looked and felt, even though it did actually do its core job well. 6+ months later it looked and worked better and had lots of new features, options, knobs and faders to it so I raised prices 80% to $9/month for new customers. Month-over-month growth in signups continued to rise so three months later I raised prices again to $20/month, a 300% increase in pricing over four months. It turned out I had dramatically underpriced Storemapper as new signups continued to increase at the new price point. Lesson learned: always test higher prices. I didn’t bother with the setup required to run simultaneous A/B tests. I just raised prices and watched what happened.

Automate common on-boarding support requests (worked)

Storemapper is a somewhat unique product in that it has exceptionally low churn. Once you get a customer set up, you get the locator on their site and get their locations loaded in the database, they are pretty likely to stay a customer as long as they stay in business. So I focused intensely on converting every customer that signed up. One thing I found from follow-up interviews of customers that signed up for the free trial but didn’t convert was that they often would quit the product because of a perceived lack of feature that we actually did have! They just never bothered to shoot me an email and ask about it. So in a few hours with Screenflow and Youtube I made a ton of rudimentary screencasts and embedded them all over the app’s interface prompting users to watch a tutorial about what was in front of their faces. I wasn’t winning any minimalists design awards but it definitely worked. Getting out in front of common questions like “Do you have X?” or “Can I change Y?” both increased conversions and cut down on support time.

Referral marketing (total bomb)

During this period I did a pretty good job of maximizing value out of each potential customer that signed up for a free trial, but I really struggled trying to find a way to increase the top of the funnel. The number of free trials signups was relatively flat at around 30/month (more on this later).

On occasion we found that a developer/designer or “web guy” would sign up for Storemapper on behalf of a client and then sign up subsequent clients. I decided to try to encourage that kind of referral growth by building out a referral marketing system. I briefly tried a few third-party solutions but found them too expensive for this stage. I put in a solid day of coding to roll my own solution, creating unique referral bit.ly links for each new user, making nice Facebook/Twitter/email share buttons and building a cookie-based tracking solution that would give each user credit for their referred customers. I pitched customers through email, in-app pop-ups, flash notices, offered 1 month free, then 3 months free, then a perpetual revenue share… total new signups through this channel to date: zero, zilch, nada, not a single click or share. I do not have a clue why.

For more on how this strategy can in fact actually work, check out this detailed post on Tim Ferriss’s blog on how Harry’s was able to use something similar to capture 100,000 emails. If you’re a Ruby developer definitely use their open-sourced code here as a starting point.

Hiring a growth-hacker hit man (badly mis-managed expectations)

As I mentioned, customer conversion was doing well, but I wasn’t making much progress on new customer acquisition. I knew almost nothing about Adwords and other paid acquisition channels so I reached out to the author of a very popular marketing blog with the following email:

Dig your blog. I run an e-commerce SaaS app. It’s solid and growing slowly organically, customers are happy and it requires almost none of my time but my passion project (a solar energy business) is keeping me from doing any real time investment in customer acquisition. The app, http://www.storemapper.co is the slightly dull topic of adding a Store Locator to any website. It’s the best solution on the market and there are of course 100,000s of potential customers. It’s a waste that somebody is not building this out with heavy customer acquisition and growing this to a massive user base (users pay $9/mo w/ very low churn). Any tips for finding a solid marketing partner, either equity partner or pay-for-performance? Thanks for the advice and all you do.

To my surprise a response came back with two connections cc’d. I set up a quick discussion with one who was extremely smart and competent and just setting out on his own so, I hoped, keen to do some work to build the portfolio. My terms were a long shot: a strictly performance-based compensation with firm user growth targets in return for a percentage of lifetime revenue of the company and equity that ratcheted up to 50%. Miss the targets and get nothing. The targets I set out were super-aggressive but we agreed on the structure.

Long story short, we didn’t come close to the first (again, very aggressive) target. When it became clear that I was serious about ‘hit the targets or get nothing.’ We amicably agreed to dissolve the deal. I have a lot of respect for the growth hacker in question and I’m honestly not sure what the takeaway is from this story, but I definitely could have handled it a lot better.

The powered by link (SaaS viral superpowers)

In a happy coincidence the customer acquisition channels that did, and do, work for Storemapper are all totally free and largely passive channels with self-reinforcing growth loops. Today almost all new customers come via organic search (and no I’m not going to say a word about the dark arts of SEO), app stores like Shopify’s and the little “powered by Storemapper” link at the bottom of nearly all of our store locators.

store locator powered by link.png

Tons of our customers saw a Storemapper on another site, wanted it, clicked the link and signed up to become a paying customer. I begrudgingly added the “feature” of removing this link for our Premium pricing plans a few months ago but almost every new customer becomes another little acquisition channel adding up to 1,000s of click-throughs to our landing page per month.

Up-selling to annual billing (how to make $2,000 in an hour)

This isn’t so much a growth hack that did or didn’t work but an example about how having a customer base can save your ass sometimes. For most of 2013 I was riding pretty close to edge of financial oblivion. I had moved back to New York City, hugely increasing my monthly cost of living, still trying to get my startup off the ground, run Storemapper on the side, and freelance enough to pay the bills. Shortly after moving back, I realized I had misjudged the timing on some inflows and outflows. I didn’t have enough cash to cover rent and some other bills and wouldn’t get paid an invoice until a week too late. I literally had about $500 in the bank and sat for a few hours trying to figure out how to make some quick cash. In an hour I hacked up a way for Storemapper customers, most of whom were paying $9/month, to switch to annual billing for $99/year and sent out an email blast. 11 people switched over. 10 more the next day. In two days I had another $2k in my bank account. Phew!

I think this is pretty common knowledge now, but even though it decreases your annualized revenue, switching customers to annual billing is great for your cashflow and sanity. Make it as easy and enticing for customers as possible.

Odesk lead generators (a flop for me but maybe not for you)

I thought this idea was pretty clever at the time but ultimately it didn’t work for me. It’s pretty easy to glance at a website and see if they are a good candidate for a store locator. In the main navigation is a link “Find Us” that goes to a page with a uselessly massive list of locations and addresses. If you have this kind of distribution, a store locator will absolutely pay for itself many times over by making it easier for people to find your distributors. So I went to odesk looking for people who do outsourced data mining, put together an little tutorial on how to identify these sites and put up a ton of listing. I hired about 12 workers on test runs, experimenting with pay for successfully finding a good lead, pay by the hour, pay for successful closed customer, etc. Ultimately I spent about $100 before deciding it wasn’t bearing fruit. The key problem was that I didn’t have a master list for them to churn through. I think this idea would have worked really well with some kind of huge list of websites as a starting point, but just telling them to go out and “sift through the internet” for this kind of website went nowhere.

Okay, this list is getting a little long, let’s talk about the (first) time I tried to sell Storemapper

At the end of August 2013, my solar energy startup was launched out of Beta and we were just about to close an angel round. Storemapper was a solid little product with predictable, growing recurring revenue and a lot of room to get bigger with a focused owner or team behind it. So I decided to see if I could sell it. I wrote a single email to a few people in my network and the NYC Ruby community. You can still read it here. The response was crazy. I got nearly 50 emails back. Some of them were clearly scammy. A lot of them were people wanting to partner without putting any skin in the game, which was of no interest to me. But it also launched some really great discussions.

The market for selling/acquiring small software businesses, and probably the overall market for small businesses, is very inefficient. Unless you’ve created some kind of bidding war for your business, to make a deal happen it seems you have to take a much lower price than the true value of the business. There’s so much uncertainty that buyers only buy when they feel like they’re getting a steal.

I had a few discussions with people who properly valued the business and offered deals that were pretty close to “fair” but they weren’t willing to risk the cash upfront. The complexity of the deals, with sliding payout structures and claw-backs and everything else just didn’t justify the economic value. I did get a few tentative cash offers, but despite the fact that I pointed them Fred Wilson’s clear assessment of appropriate SaaS multiples, the highest offer was twice annualized revenue of $20k, so $40k. At that point I probably would have sold for around $80k, but in all cases the option to keep Storemapper felt much better.

I did however meet some really cool people in the process. Totally worth the experience despite no deal.

Growing the team: Awesome people that didn’t work out

Another part of the reason I didn’t sell Storemapper, at that time a good friend and one of his colleagues made me a counter-offer. They would take over product development and marketing of Storemapper. I would scoop most of the existing recurring revenue monthly and we would split new subscription revenue, with their share of that increasing over time, up to 66%, as they hit performance targets.

Aside: The structure seems similar to an interesting deal the Coderwall team did with Assembly recently.

I was thrilled. Despite the fact that they both have demanding full time jobs, on paper these guys were the dream team to take over the product and grow. The deal lasted about 4 months before unraveling. After coding on my own for over a year, adding the first new collaborator, going to n > 1, was really hard and product development slowed and took up more of my time not less. It was nobody’s fault, but none of us had experience with stage of building an engineering “team.” Coordinating schedules made it really tough to find time to work together and consensus on any issue, from product to marketing, took way too long.

In the meantime we weren’t growing very quickly so the new partners’ revenue streams were hardly any incentive at all.

Like the previous partnership, things ended largely amicably, with everybody acknowledging that things just weren’t working.

For me this is a big lesson learned. I think for these kinds of deal to work out, one side really needs to commit. In both cases, everybody thought they were being really clever by putting together an elegant solution where nobody could really lose much, but that also just made the incentives too unattractive to justify the work. Either the new guys coming in need to put skin in the game and buy into the company, or the owner needs to take a bigger gamble and offer a chunk of the existing business to bet on growth.

I was way too conservative with this and neither deal netted much except experience.

Re-investing for growth

storemapper run rate 2014.png

In February of 2014 I was back to being a solopreneur, running Storemapper on my own. I also found myself with a lot more free time on my hands. If you’ve been following the background story you’ll know what that means for my other businesses. So for the first time, a year and a half after it went live, I made Storemapper a priority. From all that time, I had a really robust and well-prioritized list of potential features and improvements to be cranked through and within a month of half my time Storemapper was dramatically improved.

I saw an immediate big uptick in converted users.
Customers loved the analytics suite, with the back-end powered by Keen, that allows merchants to see detailed data on where people want to buy their products, and in particular where they want to buy it and can’t find a place to buy it.
On the back of that and several other big features we launched tiered pricing including a Premium tier a higher price point that is seeing good adoption. We now have six plans in all: Micro for early and small businesses, Pro which suites the majority of our customers, and Premium for power users and big brands, with a monthly and annual option for each.

In the last four months total annual recurring revenue has more than doubled to around $54,000/year. Not too shabby for a side project.

I’d love to hear any thoughts or comments on the business and I also hope a few entrepreneurs find some bits of this tome a somehow useful.

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