Growth is, however, slow. I have a good understanding of who my target customer is now, 1 year later, after talking to them and noticing common patterns in terms of their needs.
This is my first real business. I would really love to hear from someone experienced in building a SaaS business from scratch. Your insight would be appreciated. What should I expect in terms of growth? How fast did businesses grow in the beginning (BaseCamp, for example, Digital Ocean, MailChimp)?
Thanks
There is no general answer to your question. Are those 8 customers paying you hundreds of dollars each per month, or tens of dollars? What's the reason you haven't gotten more? Have you lost motivation to work in this space / on that project?
I was in a similar situation to you a few years ago. I had started a clone of patio11's appointmentreminder.org for the Austrian market. After 2 years, I had 8 customers and €2k monthly recurring revenue. But it was very difficult to get new customers. I decided to stop growing this business. Since then, I've lost 4 of the 8 customers, but those that remain now pay me more for additional services, so I'm back at €2k MRR. I'm satisfied with my decision.
Another project I worked on is https://fman.io, a desktop application. There, I wish I had stopped sooner. I spent 3,000 hours and made <€20k. I actually recorded videos about this and the other business I mentioned above [1], [2].
In general, I suspect most founders keep going longer than they should. The fact that you are even asking the question indicates to me that you are losing motivation. Maybe it is time to move on.
If you'd like to talk about more details privately, feel free to reach out by email. You can find my address at http://herrmann.io. Good luck!
But it grew to around $15M ARR in that time. That might not sound like a huge number compared to the best known startups, and VCs would have no interest in such a company, but it does prove that slow growth does work.
So to answer your question... when should you give up? Give up when you no longer feel fulfilled by working on it. There is no magical growth rate that makes it a good project vs. a bad project. It is all about your personal goals and whether it fulfills them.
The "long slow saas ramp of death" is real. Google it.
You can supposedly grow faster if you do marketing well. But from what you wrote I'd guess that you do not do marketing well. My adventures with marketing came down to the following conclusions:
* Spending money on ads is basically burning money and does not work for me. (tried Google Ads, LinkedIn, Facebook ultra-targeted ads, Quora). This became painfully obvious after I implemented my own conversion tracking, because I did not trust their metrics/analytics.
* You will find plenty of marketing experts all around you, but none of them will work for a commission, which speaks to how much trust they really place in their "skills".
* Since I am a solo founder, I eventually decided that I'm OK with my organic growth and I'd rather concentrate on making the product better. This helps in building bigger product value, improves customer retention, allows me to raise the ARPU, and in general works great. I just don't get the marketing-pumped stream of new customers. But I'm OK with that, especially at this point.
That said, I think I would expect more than 8 paying customers after a year. My ramp-up in the first year was slow (the product didn't have a lot of value back then), but it was quicker. I just checked, and I had 25 paying customers after one year from the first one.
First experiment is to see how large a customer base there is. You want to see how often people are looking for a product like yours or your competitors. Make an Adwords campaign with the right keywords, bid high enough to always be shown first, and then run this for a while to get an idea of what the search traffic is like.
Second experiment is to see what portion of that customer base you can capture. So, continuing on from the previous experiment, you now want your site to be set up, and then measure what percentage of those searches result in people actually clicking on your site. And then what percentage of those clicks result in them actually putting in their credit card information and paying for the first month. If you can't have people signing up on their own, then give them a form to submit their information instead, and then make some estimate on what percentage of those will fall through.
Then, that gives you an idea of what your baseline growth is. And then anything beyond that, i'm sure you would've already hired someone who could give you way better industry expertise than you would find by asking HN.
But I knew we had something special in the tech.
That little bit of cash helped us hire a great head of sales with experience building companies like ours from the ground up. We couldn't afford to pay him even an order of magnitude less than what he would normally charge, but after seeing the product he turned down dozens (!) of offers from VC darling startups to work with us, for free, on the basis that we would pay him when the sales worked. For most of the next year and a half, we had steady linear growth, but it was enough to attract funding.
Now we've built a great team of 20 people and are on track to way exceed our numbers for this quarter. We still have a lot of work ahead of us.
If you know you have something special, then fight for it. It takes a lot longer than you expect.
You win your first one hundred customers one at a time, through massively high touch sales.
Once you've hit a hundred, you might start seeing some organic growth via word-of-mouth - maybe. But you gotta put in the sales effort to get there.
If you're an engineer with no sales experience this can be a painful lesson to learn!
[1] - https://indiehackers.com
- do your customers know that they have a problem
- is the problem painful enough that people are happy to pay for a solution
- do your customers have money?
I've been running a SaaS for professional freelance photographers for 10+ years now. Customers going bankrupt really drives up my churn rate. It's a frustrating market. I keep the company around because it's profitable, but I would never want to invest additional work in that product.
I also once built a sound plugin to add 3D audio support to existing movie production software. Pretty much no chargebacks and no returns at a much higher price. Here, marketing was easy because a good prospect would buy 20 licenses in bulk for the entire studio. We got featured on magazines, had interviews with famous actors, musicians, and directors. In short, everyone was feeling great about working on it.
I've also released some games that gained no traction even when I made them completely free with no ads. That was pretty frustrating.
What I'm saying is choosing the right market can make the difference between you feeling great and making easy progress, and wasting lots of effort only to feel frustrated later on. Make sure you choose a market that makes you happy.
There is a reason why nobody is making X optimized for broke cynics.
Your choice is to either slog this one, or use the experience and pivot.
BaseCamp - used Ruby on Rails consulting to promote and finance it
Digital Ocean - rode pre-AWS hosting craze
MailChimp - founders worked full-time until enough revenue, rode moderately-early email marketing craze
Are you riding a craze, and/or funded from side gigs?
How fast SAAS companies hit ARR milestones:
https://baremetrics.com/blog/how-fast-saas-companies-hit-arr...
In my very personal opinion, having 8 customers shouldn't give you the sensation that your product is finished and that you can scale (although I really don't know what you do so I may b wrong), so you must figure out what is missing to acquire more customers before thinking in terms of "Growth"
"So what are considered some of the best tests for PMF? Rachleff writes that “You know you have fit if your product grows exponentially with no marketing. That is only possible if you have huge word of mouth. Word of mouth is only possible if you have delighted your customer.”"
Generally, if growth is slow, your product is not good enough, or rather there's no market for it. You should try different things until you get to a point where you have more customers than you can deal with. Slack originally worked on a MMO, then shut it down and worked on the messaging tool they used while building it.
Alternatively to everyone in this thread: find a partner. There are plenty of folks like me who can’t dev but are able to grow businesses, you just have to find the right one that fits the channel your customers hang around in and you enjoy talking with.
One of my partners and I talk all day every day, we met on some random subreddit and three years in he’s one of my closest friends and we have quite successfully generated ARR
The side benefit of this is it allows you to focus on what you’re good at which is building the product.
I don’t have capacity but I could probably connect you with some potential people if you’d like or at least willing to talk through some potential marketing thoughts with you if you’d like to talk. Just let me know how to connect
I had a business once that was not fast moving and I thought "probably because I'm not much of a salesperson". Then later I started another business and the work started flowing in hard and fast. I was the same person but it was a different business. That was a huge lesson for me - when you're selling the right thing, clients come running to you "take my money!".
If you've built something people want then the difference will be amazing - the work and customers will fly in on their own because they'll hear about it and want it.
Other less compelling businesses will be a grind forever.
From what you describe, there's no reason to think your product will suddenly take off. Sounds like it will be a long slow grind.
I’ve been in projects before where things grew very easily due to no effort simply because people wanted that product. And then in other projects where the solution is elegant but people were already satisfied with existing solutions. And so the few who wanted it simply meant the product was niche.
Zapier is one that comes to mind where I could see the solution, before its successes, could have gone either way. Either people were happy with their existing workflows and ignore what Zapier could do, or it would change their lives. If your product is defining a new segment, this could be the problem.
- Very difficult to be successful if this is your side project, if you cant take the leap because of funding then try to raise money, your in a better position than most because you have a product and traction (although without knowing the domain hard to say if someone will be interested).
- If your thinking about giving up, perhaps your not convinced enough to go full time on it (fair enough) then look to potential sell it - OR - merge it with a complimentary offering. There are SO many SaaS products now (just look at ProductHunt) but very few of them I would say are viable businesses on their own right but put together that could be a different story.
But don't give up easily! Don't expect you should grow as fast as the popular startups you've mentioned. You can allow yourself to grow slow and steady and still be extremely successful. Growing fast is what investors want, not necessarily what your customers want. Focus on working for your customers, not your investors (or potential investors).
If you're delivering value for those 8 customers, get closer to them, get into their shoes and then find more customers just like them (maybe they can even help you with that).
Then automate your operations as much as possible, and focus on getting your SaaS really stable for them. Then, slowly, deliver the most critical and important features for those customers, always focusing in high standards for quality and security.
Be a strong business, even if a small one. Run your business in a profit first approach. You might grow slow, but you grow healthy and strong this way, and if you persist, you may eventually find yourself grow really fast later.
The latest episode is right up your alley.
https://www.startupsfortherestofus.com/episodes/episode-499-...
Some ideas/products will grow faster than others. Congrats on launching and having paying customers that is a BIG accomplishment.
Since you have the experience of creating one, start thinking about your next SaaS. Think more about the value it would provide, niche, market size, how would you market to them and idea validation.
I've built and manage SaaS for clients, I'm building my first one for myself right now.
I've been following SaaS for years, some have taken off right away to $10k, for most though the growth is very slow.
I think it depends a lot on your market/niche. How many people have the problem your app solves and what marketing channels you have available.
If you have happy paying customers chances are you're on to something. It just might not grow as fast as you want. Think about how to market it to potential customers similar to your current signups.
Congrats and good luck.
Without more information on the business (MRR, vertical, customers, etc.) it is difficult to provide better feedback, but now that you know more about the customers, do you have a plan to grow faster or at least a path of sustainability?
One year in most cases is not enough time to know whether to give up.
Starting from a point of passion and personal interest isn't always the best strategy.
I never give up on my side projects, I have too many to count now.
Maybe you've not done marketing correct, maybe your product has steep learning curve. Maybe too many alternatives exist at lower price point.
There are lots of maybes, so send me an email I'll take a look zerocorebeta@gmail.com and offer some feedback.
I worked on watch.ly for about five months. Cool product, no customers. Didn't do any significant marketing.
FastComments - couple months in had a handful of customers. I think almost six months in now. There were Sundays where I would wake up and just do marketing stuff all day, crash from the coffee, and then work the next day.
What you're trying to do is not easy. After you have something that even mildly works you should start spending most of your time trying to talk to potential customers.
As a famous salesman once said - "Major time is for major things".
Think and visualize your end goals here, then plot a path to them. You might realize you are way off.
Good luck!
if you're building a notifier for recent job postings for $9/month, stop
But to be honest, i still focus more on my carrier and it looks good. I don't think i would make more money as a business owner.
It still sounds great to have your own business.
But what is your motivation? Did you create that specific SaaS because you wanted to have a SaaS Product or because you like your SaaS Product/Idea and you use it yourself?
Do you dream of becoming another Zuckerberg? If yes, forget it.
I once worked for a product in the SaaS business and what helped us is understanding "where are our customers". So, where are _your_ customers? How do they come to your product, how do they discover your product? After having this answer we focused on improving that conversion rate (for us it was all about being first on google and having a high-converting landing page, but in your case forums might be a better place to look at. It all depends on the target customer)
Also, one issue I've often encountered is that knowing the customer and selling to the customer might be very different things. Did you only sell online? One great piece of advice is try to sell the product IRL and record the audio. After many failed and successfull attempts you'll have recordings of _what works_ and what doesn't work for the kind of customer. That information will be useful to convey the benefits into your landing page / homepage.
Back to your question: How much growth should you expect? It is a generic question. How many people are impacted by your product? How many have that specific itch to be scratched? How fast can you get to them? How good is your product at scratching the itch? The (partial) sum of these questions might lead to the answer. If you have many people impacted by your product, if the product scratch a big itch and you can reach all the people at the same time, chances are you're going to grow fast.
If you grow slow, is it bad? It might be bad if you're asking 5$/month for an extra. If it is 100$/month maybe a slow growth might make sense.
In the end, if I were in your shoes, I'll wait a year to decide if it's time to give up, but at the same time I'll set some monthly checks to see how growth is going, what are the feedbacks and how the community is reacting and test each month a different way to market the product. A good book on this is "Traction" by Gabriel Weinberg
PS I also run a side business creating cosmetic products (not saas) and my growth has been relatively slow. The product (in my case) fixes a big itche and had no competitors. Reason for that is that achieving a stable efficient result is quite hard, but we somehow made it (bootrapped obviously). In our case slow growth was a good thing because it allowed us to fix the issues in the product before being too much known in the public.
Your goal can be 10 or 100 paying customers by the end of the year, it doesn't really matter, you just have to make conscious decisions whether you are okay with those numbers.
The long, slow, SaaS ramp of death
https://businessofsoftware.org/talk/how-to-negotiate-the-lon...
Is there something else you want to do?
If you're still motivated and want to do it, keep at it. I don't think timelines for success (depending on how you measure that) are fixed.
If you're not motivated / want to move on, you probably should.
But if you understand your customers better now, focus on a marketing towards the same kind and see where it gets you.