[HN Gopher] How we built a $1m ARR SaaS startup
___________________________________________________________________
How we built a $1m ARR SaaS startup
Author : a13n
Score : 218 points
Date : 2020-10-05 16:39 UTC (6 hours ago)
(HTM) web link (canny.io)
(TXT) w3m dump (canny.io)
| cryptica wrote:
| It never made sense to me why these kinds of 'marketing',
| 'feedback gathering', 'a/b testing', 'email campaign management'
| and 'project management' tools seem to always make so much money
| when clearly they add no value at all to the businesses who use
| them or their customers. They just keep employees busy and create
| more jobs. I blame the Federal Reserve Bank's money printing. One
| of the Fed's 2 mandates is 'job creation' but people severely
| underestimate how damn good the Fed is at achieving its targets
| in that regard.
|
| The Fed will keep printing more and more money and jobs will
| become increasingly useless. It terrifies me to think that the
| situation could get worse than this and most people still won't
| notice.
|
| If it continues down this path, in the future, we'll have people
| whose entire career will be to sit at a desk and stare at a wall
| from 9am to 5pm and their employers will seriously believe that
| this activity adds value to the economy. We'll have consultancies
| which specialize in wall staring. Some will specialize in staring
| at white concrete walls, others at wooden walls, etc...
|
| It might sound like I'm joking, but I'm very serious.
| seattletech wrote:
| My new disruptive startup will TEAR DOWN THOSE WALLS for the
| wall-less experience
| HatchedLake721 wrote:
| Have you ever considered that you might be wrong about "these
| kinds of tools" not having value?
| tiffanyh wrote:
| An amazing and massive accomplishment.
|
| What should be highlighted here is just how difficult it is to
| hit $1M in ARR (took them 3.5 years and they have a staff of 9
| employees ... which is only ~$110k in revenue per employee)
| codegeek wrote:
| To be honest, 3.5 years to hit 1M ARR is pretty impressive if
| you are bootstrapped. Were they bootstrapped ?
| otoburb wrote:
| Yes, they bootstrapped their way entirely to $1M ARR. Huge
| accomplishment. HN hug of death on the original link so it's
| hard to read that right now.
| a13n wrote:
| We're back up now!
| ponker wrote:
| Uh, how do you "bootstrap" a team of 9 at $1m ARR? I
| thought bootstrapping means your revenues cover your costs.
| treis wrote:
| $1m ARR is enough to support a team of 9. Especially when
| they're remote, some offshore, and 2 are founders.
| ticmasta wrote:
| maybe with a SW company where salaries are by far the
| biggest cost, but $1M revenue isn't $110K per person like
| a previous post suggests
| a13n wrote:
| Also helps that 2 of those 9 people are founders who
| don't take a salary.
| jlokier wrote:
| > I thought bootstrapping means your revenues cover your
| costs.
|
| No, I would say almost everyone who bootstraps either
| goes into debt or uses savings to fund the business,
| hoping to break even and make a profit eventually.
|
| If you can get enough revenue from the first day to cover
| cost of living for even 1 person, that's a good start,
| but unusual. Bootstrappers who start with an existing
| client or product that's already selling can do that.
|
| Also, depending on circumstances $1m ARR may be enough to
| cover costs for a team of 9. Many people earn much less
| than $100k even accounting for costs, and some SaaS don't
| need high operating costs (hint: cloud services are not
| the cheap way), or are still working their way through
| AWS/IBM/Google free credits.
| USNetizen wrote:
| Having done the same thing myself (bootstrapped a
| services company from $0 to over $8M/year in revenue in 5
| years and grown a SaaS product from $0 to ~$800k ARR in
| 16 months completely bootstrapped), you can go into debt
| for a short time while bootstrapping, but generally not
| 3.5+ years unless you are independently wealthy or have a
| retirement nest egg you've been saving for a few decades
| you're prepared to liquidate.
|
| At some point your access to capital dries up when banks
| see your level of risk increase. You might be able to
| survive moderate losses for a year or two and cover it
| with personal debt financing, depending on how much money
| and access to capital you have personally, but 3.5 to 4
| years covering losses with personal debt is REALLY
| pushing it. You're most likely talking several hundred
| thousand dollars at that point even for a small startup.
|
| And $1M ARR is only enough to support a team of 9 if the
| average salary being paid is around $50k-$55k/year (or if
| 2 or more people aren't even drawing a salary). Which
| makes sense because, in their blog, they describe hiring
| someone for marketing that was much less "senior" - i.e.
| cheaper - and not being happy with it. Taxes, fees,
| registrations, legal/accounting, benefits (if any),
| insurance, hosting, technical infrastructure, etc. can
| easily eat up over $300k/yr for a team of 9 - not
| including direct payroll.
| tiffanyh wrote:
| Re: $8m/year in 5 years time.
|
| That's an amazing accomplishment.
|
| Would you mind sharing,
|
| - how many employees you have
|
| - biggest driver to your revenue success
|
| - biggest mistake the company made
|
| - anything else you might find of interest to share
| csomar wrote:
| They are probably hiring from cheaper countries than the
| US. Tech engineers don't cost that much once you are
| outside the Valley and the US of A.
| ptudan wrote:
| IIRC bootstrapping just means that you don't take VC
| funding, instead rely on yourself, family and friends.
| You certainly aren't always breaking even.
| davidedicillo wrote:
| The post articulates this pretty well. > For us, ramen
| profitability was at about $50k/yr. Andrew and I are a
| couple, so our living expenses are cheaper (per person).
| We were also digital nomads, and Airbnbs in Spain are a
| lot cheaper than rent in San Francisco.
| biztos wrote:
| If you're actually living in Spain, and you manage to get
| that to $50k net (maybe not so hard if you're the only
| two "employees" and you're doing standard "digital nomad"
| tax hacks) then it's a pretty good income, or at least
| you probably know couples who make less.
|
| Still I'm sure it takes dedication when you could just as
| easily make FAANG money.
| seapunk wrote:
| Hi Andrew and Sarah! Congratulations for this milestone. I'm
| following your journey since your first blog post and it was a
| great motivation when we started building our startup as digital
| nomads too. I think many bootstrappers were inspired by Canny and
| your transparency along the years.
| a13n wrote:
| Thanks!! Best of luck with Threader :)
| davidsawyer wrote:
| Here's the Indie Hackers podcast episode with Sarah Hum from
| Canny from last October. Good episode!
|
| https://www.indiehackers.com/podcast/124-sarah-hum-of-canny
| bkruse wrote:
| Love Canny
|
| We use them at CommentSold for feature ideas, bug reports, and
| even top 1% feature ideas. The ability to tie it into our product
| and see the features voted on from an MRR aggregate not a vote-
| aggregate is phenomenal
| a13n wrote:
| Thanks for being a customer, Brandon! Definitely let us know
| how we can push the envelope even further here with regards to
| MRR/SaaS aggregation.
| ponker wrote:
| What is "comment selling"?
| bkruse wrote:
| Without doing the sales pitch, it's using comments as the
| medium for indicating purchase intent instead of clicking on
| a link
|
| "Oh, you like this item you see on your facebook feed?
| Comment sold and your size to order it"
| ponker wrote:
| Ah. Makes a lot of sense. Gets the person to a lower
| friction commitment point where they feel like they're
| going back on their word if they abandon at that point. And
| you can harass them with PMs to follow up lol.
| highfrequency wrote:
| Congratulations, and great writeup! Compared to other SaaS
| startups you have seen that eventually fizzled out, what would
| you guess are the main meta reasons you guys succeeded? In
| particular, how much value would you attribute to just not giving
| up at any point? Were there any low morale points on the journey?
| a13n wrote:
| Hmm, there's definitely a BIG lag between when you do work
| (engineering, marketing, etc), and when you see results
| (revenue). Like months. You really have to be self-driven and
| have some faith that the work you're doing now will pay off
| down the road.
|
| There's a quote, "Do nothing, and nothing happens", and it's
| super true in the early days, before you hire people. If you
| don't work, your company makes literally no progress
| whatsoever. This is motivating. Like, everything relies on you,
| so show up and get it done!
|
| I think a lot of VC-backed companies only get 1-2 years of seed
| money to try their idea. It took us 1.5 years to make our first
| dollar, and another year after that to get to profitability. If
| we were venture backed, we might not have had enough traction
| to raise our next round, and would have had to call it there.
|
| Similarly, I don't love the "lean startup" approach of trying a
| bunch of stuff quickly. If you pick a good starting point (big
| market, competitive differentiators, etc.), and spend years at
| it, you're bound to have some success. Just due to the sheer
| fact that you're willing to commit more of your lifetime to
| solving that problem than anyone else is. That's what worked
| for us at least.
| ZephyrBlu wrote:
| > Similarly, I don't love the "lean startup" approach of
| trying a bunch of stuff quickly. If you pick a good starting
| point (big market, competitive differentiators, etc.), and
| spend years at it, you're bound to have some success. Just
| due to the sheer fact that you're willing to commit more of
| your lifetime to solving that problem than anyone else is.
| That's what worked for us at least
|
| This is what my thinking has shifted to as well. Play long
| term games instead of trying to make a quick buck.
|
| If you're trying to do something very innovative, I
| understand why the lean startup method is advised so you
| don't waste a lot of time. But if you're going into an
| existing market, I'm not sure it's the best approach.
| itsmefaz wrote:
| For some reason, I find the writing and decisions to be mature.
| Shouldn't the early stage product development be messy and full
| of doubts? I understand the post doesn't capture everything, but
| it feels the decisions the founders took most of the time had
| positive outcome. Is this luck or value of product-market fit?
| ZephyrBlu wrote:
| Very interesting and relevant Twitter thread from patio11:
| https://twitter.com/patio11/status/1312972409809428480
| a13n wrote:
| Early-stage definitely was filled with messiness and doubts. We
| had no idea we were going to get to $1m ARR. When we started we
| had no idea how to price a SaaS product or make a landing page.
|
| There's that quote, "hindsight is 20/20", meaning it's easier
| to understand what went well/poorly when looking back. It's
| easy for us to reflect on what went well, and share just that.
|
| Doesn't mean it was easy/obvious in the moment, but hopefully
| our post helps others with their journey!
| vmception wrote:
| How we are trying to get bought out at a 20x revenue multiple
| a13n wrote:
| We aren't looking to sell Canny. Part of building a sustainable
| product/business is sticking around for the long haul.
| welder wrote:
| The key learning: Get your product used by the React.js team for
| hyper growth.
| a13n wrote:
| I sure hope that wasn't the key learning from our post! It's
| not a very repeatable/helpful learning :)
|
| Luck can definitely play a big role in building a successful
| company. I think what a lot of people don't realize is how you
| can increase your exposure to luck.
|
| For example, if you have a bigger/better network, you're more
| likely to get lucky from that. If you talk to more people about
| your company, you're more likely to stumble across key
| partners/investors/customers.
|
| In our case, our luck with React.js can be attributed to my
| working at Facebook before starting Canny.
| welder wrote:
| I didn't mean to imply luck... just that marketing is key and
| given two amazing products the one that reaches more eyeballs
| wins.
| a13n wrote:
| Very true!
| David wrote:
| Or: Focus on finding impactful early customers that increase
| your visibility (and then make them happy). Finding such a
| great customer may require luck, but that doesn't mean the odds
| are fixed.
| ZephyrBlu wrote:
| That's far easier said than done for most people though.
| exolymph wrote:
| The key learning: People will totally ignore everything you did
| to prep and find luck, as long as there's an element of luck
| they can use to dismiss your hard work.
| welder wrote:
| Sorry if it was ambiguous, but I didn't mean luck was
| involved more that marketing and getting eyeballs is super
| important.
| personjerry wrote:
| That is seriously impressive, congratulations on your success!
| Did you guys set off to build this particular product as soon as
| you left your previous job, or did you have some pivots along the
| way?
| hartator wrote:
| Our startup (https://serpapi.com, our canny:
| https://forum.serpapi.com) is a happy customer of them and it has
| been instrumental to be able to collect issues from our clients.
| The alternative was basically a GitHub repo just to collect
| feedback but Canny is sooo much better.
| a13n wrote:
| Thanks so much for being a customer!
| hartator wrote:
| Feel to email me if you guys want to do a case study! (julien
| at serpapi.com)
| 0x62 wrote:
| Down for me, cache link:
| https://webcache.googleusercontent.com/search?q=cache:a7QDlH...
| a13n wrote:
| Back up now! Upgraded our AWS Lightsail instance.
|
| Thanks for posting that cache link :)
| WrtCdEvrydy wrote:
| > Upgraded our AWS Lightsail instance.
|
| Use ElasticBeanStalk... nah, actually that's a terrible idea.
|
| Edit: Use Caprover inside of an AMI on an autoscaling group
| on EC2 (t2.smalls if you want)... or use ECS on Fargate.
| a13n wrote:
| Fair point, but honestly not a huge priority. Lightsail is
| a super convenient and cheap way to host our blog.
|
| The main problem is we were on a $10/mo server, which is
| plenty for our typical blog traffic. But definitely not
| enough for HN! Heh.
| WrtCdEvrydy wrote:
| Yeah, it happens. Trust me, we've given up on static
| resources because of the fact that social media can blow
| something up very quickly.
| [deleted]
| ghiculescu wrote:
| Congratulations to the Canny team. It's a great product,
| apparently we've been happy customers since they were 20x smaller
| :)
|
| I found the note about luck in the Zero to One section
| interesting. I don't know anyone who runs a bootstrapped SaaS
| that's made it past 1M, who doesn't feel like they got super
| lucky with their first customer. We did exactly the same thing -
| a random connection that just happened to work out. And yet, most
| people starting new companies don't seem to focus much on making
| this luck happen.
| a13n wrote:
| Thanks so much for being a customer!
|
| And yeah, it always feels bad to write that "we got lucky", as
| it isn't really that repeatable/helpful. But it's true.
| RangerScience wrote:
| Fun story: The lead artist/dancer of
| https://www.skyfirearts.com/ had had that dream for years,
| and that "first lucky break" came when (8-9 years ago) he was
| getting coffee and the guy behind him in line was _the_ guy
| for Tesla Coils in the US, who then helped Skyfire get up and
| running.
|
| AFAICT, what's repeatable / helpful is a bit more nuance
| about "how to make luck": 1) Know what you want so you can
| recognize it when you encounter it 2) Give yourself lots of
| opportunities to encounter it 3) Have the self-direction and
| resources to jump on it when you encounter it
|
| Of course, there's also just pure blind luck.
|
| Edit: I know there's another step in here, but TBH I'd love
| advice for it: Making sure the other party recognizes _you_
| as something they 've been looking for (aka, all the above
| but from their perspective). Advice?
| biztos wrote:
| Not advice exactly, but I have a few friends who've had
| lucky breaks like that, and I'm pretty sure it came down
| to: _be interesting, confident, and friendly._ Plus the
| things you mentioned.
|
| When they randomly met people who could open doors for
| them, they just seemed like interesting people to open
| doors for, and who wouldn't waste the opportunity nor abuse
| it.
|
| Anyway that's my take, but I'm still struggling with #1 at
| 50, so I might be over-thinking it.
| auto wrote:
| I don't think it's something to feel bad about; on the
| contrary, with your level of transparency here and in the
| context of everything else you did that wasn't centered
| around luck, I think it's an honest aspect about this kind of
| growth.
|
| Congrats on the milestone!
| technotony wrote:
| What do you think you did that helped make that happen? I
| guess you guys worked hard but did you try a lot of things
| that didn't work before this hit?
| a13n wrote:
| The reason the React.js team started using Canny was
| because before Canny I worked on the React team at
| Facebook.
|
| I didn't plan it this way. My ex-colleague, @vjeux,
| messaged me and asked about my new startup. I told him it
| was a user feedback tool, for tracking feature requests. He
| said React Native had that problem, and they just started
| using it.
|
| So I think working at FB on React is what exposed me to
| getting lucky here. I think a lot of luck in startups is
| about increasing your exposure to getting lucky.
| refaelw wrote:
| Couldn't agree more about luck, start-ups take a lot of luck,
| but their is a huge amount you can do to improve your luck.
| andrewmcwatters wrote:
| Why would you write an article about your first fire? How
| immature can you be? "We really wanted someone who would live and
| breathe Canny."
|
| Delusional owners.
| _benj wrote:
| Congratulations! This is a really inspiring story and I really
| appreciate you guys opening the backdoor to show us how the magic
| happened!
| a13n wrote:
| Glad you enjoyed it! We're eager to write more transparent
| content like this, so let us know if there's anything specific
| that'd be interesting (eg. recruiting, finance, etc).
| fakedang wrote:
| Why are you repeatedly posting this since the past week?
| a13n wrote:
| Sometimes it takes a few submissions to make it to the front
| page. There's nothing against this in the guidelines. We don't
| usually submit stuff to HN but this felt particularly worthy!
| jamesmishra wrote:
| Congratulations! I remember meeting the Canny founders around
| when they first launched in March 2017. It's great to see how far
| they've come. They've built a very well-designed product.
| dimitrios1 wrote:
| Yet again, not a single person over 40+ (probably even 35) in
| that happy-go-lucky clique team photo. Happy for you all, sad for
| the ageism that is rife in our industry.
|
| For all the talk about representation matters, and tech workers
| champion social issues, this just seems like a really frustrating
| and curious massive blind spot.
|
| Anyway, again, not to detract from the success, but I just see
| examples of this weekly here.
| randomchars wrote:
| Ageism? Generally speaking older people are:
|
| - more risk averse, less likely to join a small startup and
| prefer the security of a 9 to 5 job at a larger company.
|
| - more experienced, and more experienced people require higher
| salaries, which a smaller company might not be able to afford.
|
| Don't look for opression when there's none.
| skrebbel wrote:
| I'll bite. I'm 37, a tech startup founder. I'm wary of ageism
| and I've long believed that _not_ being ageist would allow us
| to hire smarter than competitors.
|
| However:
|
| - The amount of programmers grows exponentially. I've seen
| stats claiming it doubles every 5 years.
|
| - This means that at any time, 50% of the available workforce
| has <5y experience. Often this overlaps with young ages.
|
| - It also means there are simply _way_ more programmers under
| 40 than over. If you randomly hire 9 programmers there 's a
| fair chance they're all under 30.
|
| - Anecdotally, less than 5% of the job applicants we got was
| over 40.
|
| - Young programmers haven't had time yet to make the mistake to
| "repeat the same year of experience 10 years in a row". If you
| hire a young, junior programmer, you know they're junior - what
| you see is what you get. If you hire an older programmer they
| might be great or they might be that same junior programmer but
| more stubborn and with higher salary expectations.
|
| As an avid anti-ageist, in fact I'm rather disappointed about
| that last point. I've met _many_ programmers at around or above
| my age that have gotten completely stuck into a tiny niche of
| experience and, even there, seem to not really have progressed
| much in terms of depth. Why do people let this happen to
| themselves? I mean I met people who spent the last 10 years
| developing just-not-the-same custom Magento webshop plugin over
| and over again, each time with a slightly different twist for a
| different customer. Not hiring someone like that isn 't ageist,
| it's common sense. Once Magento is out of fashion these people
| have a pretty serious problem.
|
| The reason I don't understand this is because with each new
| technology you learn, there's a diminishing effort to learning
| the next because there's so many similarities to a thing you
| already known. There's a reason most people complaining about
| "javascript fatigue" are young.
|
| As an example, when React/Flux/Redux first came to the scene,
| old farts like me could recognize that its "unidirectional data
| flow" wasn't fundamentally different from the good old desktop
| MVC UI pattern (before Rails hijacked the name and gave it a
| different meaning). I imagine that this made learning React and
| architecting decent apps on it easier for me than for people
| who'd never seen data "flow" in circles before.
|
| Age definitely can be an advantage. But it isn't by definition.
| Keep learning new stuff folks! And if that ever stops being
| fun, you can always become a manager.
| porker wrote:
| > As an avid anti-ageist, in fact I'm rather disappointed
| about that last point. I've met many programmers at around or
| above my age that have gotten completely stuck into a tiny
| niche of experience and, even there, seem to not really have
| progressed much in terms of depth.
|
| I'm the same age as you and consider this a narrow
| characterisation of an older programmer.
|
| I know there are better younger programmers than me. I know
| that I've got suck with the same experience over and over,
| because as I got more senior, that's what people wanted from
| me.
|
| I also know that the breadth of other skills I bring is
| significantly more than a young programmer. I've had to
| master how to deal with management, seen projects fail for
| many different reasons, mentored juniors, pulled together
| international teams of programmers (with varying success -
| motivating certain nationalities is a skill I've yet to
| gain), architected projects, held the peace between junior
| programmers who saw everything in black and white, and
| continued to write code that was distinctly less buggy than
| others.
|
| I am a programmer. One who needs to take a sabbatical and
| learn some new programming languages, but at heart I am
| someone who makes stuff happen by writing software. I like
| working with younger and older programmers (the oldest is in
| his early 60s); both keep me sharp and challenge my outlook.
|
| But if you look at my resume, sure I've gotten completely
| stuck and haven't progressed in terms of depth.
| jnwatson wrote:
| I'll add a few points as an over-40 developer/recruiter
| currently working for a startup:
|
| * By 40, they've probably already done the startup thing once
| or thrice, and many have been there, done that. They are also
| less motivated by startup stock options, having seen them
| evaporate personally.
|
| * By 40, they are more likely part of a family unit that
| values financial stability.
|
| * By 40, they are at their salary cap. They are simply more
| expensive. They've also been around the block enough to have
| connections and to play the regotiating game harder.
|
| Overall, I think the strongest factor is simply the
| demographics you mentioned. There weren't that many folks
| that graduated in CS until the 2000's. Also, many of the
| folks that are around my age have switched careers away from
| development.
| cryptica wrote:
| >> The amount of programmers grows exponentially. I've seen
| stats claiming it doubles every 5 years.
|
| The worst part about this is that the world doesn't need so
| many developers. It also doesn't need so many marketers and
| data scientists either. The jobs are being created
| artificially as part of the Federal Reserve Bank's job
| creation mandate and financed by fiat money printing.
|
| The economy of the past decade is a complete farce. When will
| people wake up and realize what's going on? Soon it will take
| 100 developers to do the same work which used to only require
| 1 developer and the outcome will be worse.
|
| I think the strategy is to create a large population of
| developers who are incapable of creating real value outside
| of their extremely narrow niche... Thus making them (and the
| society that they are an increasingly large part of) totally
| dependent on corporations and allowing corporations to
| control and shape our politics and society and suppress our
| free speech.
|
| I'm a developer so it's not in my interest to say this. I
| wish it were not the case. Nowadays people only get into this
| industry for money. Nobody cares about coding.
| motoxpro wrote:
| Wow...
| ticmasta wrote:
| >> with each new technology you learn, there's a diminishing
| effort to learning the next.
|
| You kind of answer this in your following paragraph, but
| there's also diminishing benefits with learning the next
| great tech stack. Coupled with the exploding growth in
| frameworks et al, it's impossible to learn them all.
|
| So I'd counter your fear of the 10x 1 year experience
| "veteran" with the very real scenario that you have a 10x
| technologies for doing the same thing. This might help
| someone get a job but not too many companies need this
| specialized, redundant skill set.
| ticmasta wrote:
| Q: You're a 20 or 30-something start-up founder, pulled a
| million different ways, trying to grow your company on a shoe
| string budget and decide you need to hire another team member;
| what do you do?
|
| A: Spend all your energy to target potential hires from a
| demographic into which you have no insight or contacts, that
| typically wants more reward and less risk than you can possibly
| provide.
|
| They can most certainly be open to having a diverse team but
| it's not up to every startup with a few employees to fix the
| system*
|
| *the opinion of this 50ish visible minority
| boldslogan wrote:
| Cool read! Very inspiring. Just curious, what kind of metrics are
| you running for the sales part? Or some new strategies learned
| from hiring a sales position?
| a13n wrote:
| Hmm, we're still pretty new to sales.
|
| Inbound: VIP trial sign-ups, demos booked, demos given,
| opportunities created, opportunities lost/won
|
| Outbound: Emails sent, emails opened, reply rate, calls made,
| calls answered, conversions to trial/demo
|
| We use SFDC for our CRM, and Apollo for outbound activities.
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(page generated 2020-10-05 23:00 UTC)