Took me more than 2 years to get 200 paying customers for my Web App

http://www.startbreakingfree.com/1640/universitytutor-races-past-200-paying-customers/

by barmstrong • 16 years ago

236 83 16 years ago

user24• 16 years ago

congrats! It's always inspiring to see people having success doing what they love. 200 users seems almost laughably smalltime compared to some of the companies who get featured on here, but to me, and I'm sure much of the HN readership, it's a dream; if I can get 200 paying users of my business when I launch I'll be ecstatic!

It's really good to see a success story which doesn't focus on "hey wow, I got a million users overnight through sheer luck". It reminds us that 99% of the time, companies are built slowly and surely, not astronomically.

JarekS2• 16 years ago

People have no idea how hard it is to get first 10 paying customers (not to mention 200!!). It's one thing to get people to say "I love your product - will buy premium plan for sure!" and the completely other thing to actually receive a payment ("I'm sorry I was busy", "Will buy, just waiting for my customer to place an order" etc.).

Best of luck to everyone trying to persuade their customers to pay. I'm also one of you!

patio119• 16 years ago

People have no idea how hard it is to get first 10 paying customers

I'm kind of conflicted on this. Yes, it is hard to get ten people to pay money, in that you have to have a mostly-functioning product, a website which markets it, and some way to charge their credit cards. But this is not really that hard.

BCC 1.02 ("Like 1.00, but with less crash bugs and the brand new ability to print to non-default printers") got to ten customers in six weeks from 1.0's launch, entirely on the strength of organic search marketing on two pieces of content. That was when I was young and stupid. Y'all can do better.

I think software (let's scope it to B2C software for the moment) is like lemonade stands. You know how you get ten customers with a lemonade stand? Your price? Doesn't really matter. Your stand's design? Doesn't really matter. Your taste? Doesn't really matter. Your location? Probably matters for getting hundreds or thousands of customers, but for 10, pretty much any street will do. The key hurdle you have to get over is charging money for lemonade. I am worried that people think it is really really hard to run a successful business, and that stops them from ever charging for lemonade.

barmstrong11• 16 years ago

Yep that's a good point. Sites that have massive growth tend to crash quickly as well (Chatroulette, for example).

There is nothing wrong with slow and steady growth, I think the hardest part is behind me.

jasonkester2• 16 years ago

This is actually a significant milestone for any entrepreneur. 200 * $10/mo == enough to pay your rent.

$2k/month is the tipping point where you're no longer bleeding money and eating into savings. Sure, you're not getting richer and you might still need to take the odd freelance job for spending money, but it's a great place be, no longer watching your bank account on its slow & steady march toward zero.

From here, it's all profit!

etm1172• 16 years ago

Remember, not everyone lives in the Bay Area. ;-) Depending on where you live and if you have roommates, the $2k per month may be enough to pay rent, bills, college loans and leave some left over for spending money.

patio119• 16 years ago

When my business first made $2k profit two months in a row (late March 2009), I did some math in my project notebook and wrote down a thought I had literally never had before: "Could quit the day job!?!" It took almost twelve months to the day from there.

jasonkester2• 16 years ago

Don't you mean "not everybody lives in Honduras"? There aren't many places in the US where you can live for $2k/month all in, and the Bay Area would be the last place I'd expect to do so.

I meant "pays your rent" quite literally. As in, taking the biggest of your financial worries away and leaving you only needing to deal with the spending money part. So you still can't live on your income, but you can coast along for an entire year on $10k savings.

Up to that point, $10k in the bank meant you'd better start scrambling to pick up a contract in the next couple months before you run out of money.

Stwerner• 16 years ago

Yeah, really, here in Pittsburgh $2k/month is enough to live pretty comfortably.

absconditus• 16 years ago

Several of you seem to be confusing profit with revenue.

dgroatdrex• 16 years ago

Doesn't anyone pay taxes? $2k in revenue, minus expenses, then shave off 40% for taxes since this is self-employment income, and you're not going to be paying much with what's left.

fookyong• 16 years ago

don't fall foul to the "SaaS is pure profit!" syndrome.

I wrote a little bit about this here: http://yongfook.com/saas-is-not-pure-profit

In a nutshell, to get to 200 members you are not going to be operating on 100% profit margins unless you happen to be extremely fortunate.

The reality is more likely that a decent chunk of that $2k per month is being spent on customer acquisition costs. You won't get 200 customers just by existing. You need to advertise.

paraschopra• 16 years ago

Initially, the major cost for customer acquisition should be founders' own time. Writing articles, pitching to blogs and news, promoting on social media, SEO and all other organic means should be the methods to get initial customers until you hit significant revenue (or get funding) to start using paid acquisition methods.

The cost of customer acquisition can be very high for a bootstrapped startup to afford. For example, Constant Contact (for $20/mo subscription) spends $375 as cost to acquire one customer. Spending a major chunk of $2k to acquire just a few paying customers may or may not be a viable strategy (depends on numerous variables, of course).

Source of data: http://investor.constantcontact.com/annuals.cfm

rubeng• 16 years ago

You need to advertise.

This is simply not true. You need to be found but that doesn't mean spending money on advertising. I hit this mark without spending a dime on advertising. A large amount of my traffic comes from owning the most important keywords for my niche. The rest from WOM and blog posts from others about my product (reviews, interviews, CSS galleries, etc.)

barmstrong11• 16 years ago

In this case it was mostly profit. $85 for web hosting. And I spent about $300 on Adwords last month, but this was optional (didn't even convert very well, most of the traffic is from SEO).

Those costs will be largely fixed as the site grows. I may experiment with other advertising to see what if anything converts, but I think the site would do fine without it.

dfischer• 16 years ago

Congratulations. That's a great milestone.

stretchwithme• 16 years ago

Congratulations. A great idea and an important niche to serve. I just told two friends that do tutoring about it.

barmstrong11• 16 years ago

Awesome, thanks!

rubyrescue• 16 years ago

congratulations! when barmstrong was down here in Buenos Aires, we talked a lot about universitytutor.com and it's cool to see him just make little tweaks to the site and let it grow slowly and steadily. very inspiring!

barmstrong11• 16 years ago

Yep - those were some good discussions, learned a lot from you down there!

cinimod• 16 years ago

That's an AWESOME dating service.

spencerfry• 16 years ago

Congrats! With 200 paying customers, you now have more than enough information to start tracking churn, CPA, life time value, life time profit, etc. You can turn those 200 paying customers into a lot more by accurately tracking your metrics and building from them.

I recommend reading:

http://thinkvitamin.com/web-apps/how-to-track-six-key-metric...

tnorthcutt2• 16 years ago

I may be assuming too much based on my reading of your post, but it sounds like you could really stand to implement some (or more) A/B testing. The fact that it took two years to reach 200 customers but in only a week or so you've added another 20 customers after making some changes makes me think you should have been making (and testing!) changes like that all along. Either way, congratulations, and best of luck in the future!

barmstrong11• 16 years ago

Yur right - I just didn't have the idea to do this test until recently :) Have done some split testing on price etc, but could def stand to do more.

tnorthcutt2• 16 years ago

Hopefully you'll continue to see a faster increase in signups. Good luck!

JangoSteve• 16 years ago

Congratulations on the 220 paying customers, that's certainly no small feat. I've been running RateMyStudentRental.com for about 3 years now (well, really I stopped actively working on it about a year ago), and it only reached about half that in revenue.

Then, LeadNuke sprang forth as an internal sales tool for RMSR barely a year ago and it's approaching that level already. In hindsight, I'm really glad I didn't have this kind of success the first time around, because I have a much more realistic perspective now and I can appreciate it that much more.

In summary, mad props and respect to you.

steveklabnik3• 16 years ago

> In summary, mad props and respect to you.

Totally off-topic, but some of my friends lately have started joking around about making a subgenre of Nerdcore devoted to startups. There's so many good names and parody opportunities...

> I got 99 problems, but my pitch ain't one.

> whatddup, founda?

> An east vs west style rivalry between the 'Limited Liability Crew' and 'S-corp'.

> Names: 'Series C', ... I forget the rest. There's others.

trafficlight• 16 years ago

That's awesome. Have any of them been so brave as to actually record a song?

adamt• 16 years ago

Congrats. As other people have said - it's refreshing to see some stories like this rather than just the 'here's my web app I built in 48 hours'. Hopefully it will help people reliase the difference between building something and building a business.

At 200, you are close to what I consider to be a major inflexion point. It's often as easier (big separate post that I won't go into the full reasons why) to go from 200-2000 then it is to go from 20-200.

Well done and good luck!

barmstrong11• 16 years ago

Yep, I think you're right on that - the first 200 was just figuring out the right place for everything. Should get easier from here...

mrbird• 16 years ago

Maybe I missed this in the post, but are you working on this full time? If not, how many hours/week would you estimate you've invested, on average?

colonelxc• 16 years ago

read his about page: http://www.startbreakingfree.com/about/

Shows he's started a few other sites, including working on a YC funded (stealth) startup.

barmstrong11• 16 years ago

Yep, I have a day job. Right now it takes very little time to run the site, maybe a few hours per week. But I definitely spent a lot of time building it up front, and occasionally still do when I add new features. As a strict hourly ROI I could have made way more at a job or doing consulting work, but it's an investment that may pay off long term (or not, but either way it was way more fun :)

antidaily• 16 years ago

The site is beautiful. Nice work!!

barmstrong11• 16 years ago

I did the programming, but hired this guy to design it: http://www.jackherbert.com/

I'd recommend him, he was good and fairly priced. (Found him on 99designs).

ryanb• 16 years ago

How did you get 16,000+ tutors signed up? That's an impressive number.

barmstrong11• 16 years ago

Tried a bunch of ideas, but the most successful was posting jobs to university websites. Can email me if you want more details.

senthil_rajasek2• 16 years ago

Not to nitpick but your about page shows that universitytutor.com was started in 2004 but your post shows that you started the site in 2008? Also the dashboard shows decreasing timeline which means you are either losing customers and below the 200 (can't guess the scale) subscribers or there is a simple error somewhere...

What are we missing ?

barmstrong11• 16 years ago

Good point - I actually first registerred and built a site back in 2004 but it was a different business (matching people manually in Houston only). 2008 was when I switched it over to a directory site that was open to anyone and let tutors and students contact each other directly (also rebuilt it in rails).

Not sure what you mean on the graph though - it seems correct to me.

senthil_rajasek2• 16 years ago

The dashboard graph shows just a months worth of data and for some reason I thought the timeline was decreasing. Congratulations on your success.

ohashi• 16 years ago

Congrats :)

qq66• 16 years ago

Nice job dude! -Amal

Took me more than 2 years to get 200 paying customers for my Web App

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