On January 21, 2014, Geocodio was officially launched into the world.
By some miracle of luck, we landed on the front page of Hacker News for almost the whole day. In the pre-Product Hunt era, this was about as good as a launch could possibly go. The traffic surge quickly faded and not everyone had positive things to say, but hey, it’s the internet. To have that much publicity for just a little side project? We were beside ourselves.
At that point, Geocodio was a just a side project — something we created because we needed it ourselves. Before we launched, I defined several levels of success, and to show you how low our expectations were, our definition of a wild-beyond-our-dreams success would be if it paid for its servers. Not profitability, not growth, not employing us full time. Just other people covering the server costs so we could use it for free for our other side projects rather than having to pay another company for a similar service.
Much to our surprise, it covered its costs in the first month. We made $28.29 after processing fees ($30.68 gross), and had spent $20 on two little virtual servers from Digital Ocean. Amazing! It felt like we’d somehow done the impossible, and we were elated.
Now, five years later, our average revenue per customer is $139, and we recently passed $1 million in all-time revenue. Needless to say, our server costs are way more than $20 a month. And this little low-expectations-just-a-side-project now employs both of us full time.
I bet you want to know the secret now: how we got here. How we grew. How we attract customers. How we prioritize new features vs. infrastructure sustainability. How we manage to not tear our hair out over health insurance costs. How we managed to do it all without taking out loans, going into credit card debt, or taking on investors.
Unfortunately, there is no secret, and there’s no sage advice that I can give you that will help you do the exact same thing.
The keys to our growth are all simple and uncomplicated things:
- Creating a product people needed
- Treating our customers with kindness and respect
- Making small improvements and changes
- Keeping costs in line and maintaining profitability
If these things sound obvious, it’s because they are. But when you’re reading hustle porn on Medium about “what it really means to have a startup,” you won’t find that kind of advice. Quite frankly, aside from notable exceptions like Jason Fried and DHH and the articles on IndieHackers, most startup strategy advice is largely irrelevant for bootstrapped software companies.
Venture-backed startups focus on growth, growth, growth, because their investors are going for home runs and they need to scale quickly. This incentivizes companies to use sophisticated, complicated approaches, like using AI to analyze coffee consumption.
A bootstrapped software company has very different concerns: slow growth, managing costs, maintaining profitability. Without profitability, we don’t get paid. A venture-backed company can simply go ask for more money. The paradigm is completely different.
If you came here hoping I had some secrets and magic to share about how to create your own small SaaS company, I don’t. I’m sorry.
If this were How I Built This and Guy Raz were asking me “whether of our success is attributable to our own intelligence and hard work or to luck,” I’d have to say that it’s mostly a product of luck and hard work. But intelligence? You don’t need to be exceptionally smart to bootstrap a business.
You just need to avoid over-complicating things.
Huge respects for sticking with it and going down the longer bootstrapped road.
As a fellow bootstrapper, I tried writing the shortest bootstrapping guide to help anyone else get into that mindset.
I feel it might be appropriate to attach it into this thread.
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The Shortest Bootstrapping Guide on IH Ever (no BS)
Or how we are doing it (as an apparel company).
Keep your day job
Develop and produce the first production batch with savings. The quantity of the inventory will be determined by your savings / per unit production cost.
BONUS POINTS: During development, create extra samples and give them away for free to start generating feedback, an early audience/user base, and in general, a buzz around your product prior to launch. Many of these folks will become your first customers.
Ship the whole inventory to your house = no recurring costs for storage/warehouse/fulfillment centers.
Fulfill all orders personally ($20 printer + some paper). Might as well include a handwritten note while you are at it.
By sticking to point 1, congrats, you have an unlimited financial runway.
Spend what you earn.
Price your product at at least 3x the production cost, this way you can spend what you earn for any marketing efforts + all other profits will be going into funding the next production batch, for AT LEAST the same quantity, you don't need profits for now (refer to point 1), you're building that vital early audience/community/fans.
Rinse and repeat. The process will scale itself.
Rely on content, word of mouth (have a VERY strong focus on product quality and functionality during the development phase), collaborations and giving away stuff for free (that's why you need a bit of a higher price point to cover those costs) as your marketing ammunition and in general spreading the word about your product.
Keep your day job, until you don't need/want to (the timing of this would strongly vary per person/goals/ambitions/discipline).
Now, all you need to do is to sell (duh), but that's where you get to learn marketing, branding, distribution and content creation without the stress of a limited runway or investors breathing down your neck.
Would love to clarify anything or answer ANY regarding this guide.
This is great and exactly describes my journey so far (5 years in; my side income has reached my day job income level at a big IT corporation). Deliver real value, improve quality and see the word of mouth at work. One missing point is that to build up a product with its audience just takes time.
Interestingly, some articles here on IH focus on marketing (I still have no idea how to do that) and say that quality doesn't matter much.
One important point to add (from Rework) is that you can "underdo" your competition/large corporations by focusing on depth and quality rather than on an abundance of features. Combined with the unlimited runway (a side hustle) and a focus on a niche, you can afford to sell at a price that would not be sustainable to medium or big businesses.
Very important indeed!
The Rework point is also very valuable and we'll keep it in mind!
Thanks Dave!
Interesting perspective! Bootstrapping is definitely very different when you're working with digital products vs. physical products.
Indeed. I would guess digital is less complicated?
The lower startup costs and lack of physical inventory certainly change things. Scale can get out of hand faster, I'd imagine. I'd be curious to hear someone's perspective who has done both.
I work as a developer for my day job, so can somewhat compare :) But varies on the context (what kind of company is building the digital product/how successful/what stage etc.) greatly.
Very inspiring Michele! I'm currently in a similar situation where you were 5 years ago. Opened up doors to my paid offering and hovering at $50.
Out of curiosity, what did the following month look like? What about the end of that first year?
You're not alone.
I've been bootsrapping solo for just over a year. Only couple months back I reached $500 mrr. First year was about $2K in revenue.
Congratulations!
Month 2 was $135 gross. We ended the first calendar year at about $12k.
Great article, and I love that you went this approach. Too many companies go the investor route, which ultimately creates technical culture based around the wrong success metrics.
Now if only I had any idea of something to build to follow this pattern 🤔
I have two approaches you can try:
#2 is a lot more work but it's how well-run larger companies do their product development.
Great article, Michele! Congrats on 5 years in business.
Thanks Justin! Glad to have met you along the way.
This article is super thin and hard to differentiate from the "hustle porn" the author complains about. The values promoted probably have little to do with their success and frankly aren't much different from advice given to VC-backed founders, too (focus on the user, build something people want).