Appointment Reminder

Patrick McKenzie discusses growing Appointment Reminder to $12k/mo, and shares his wisdom around building profitable software businesses.

What is Appointment Reminder?

Appointment Reminder is a SaaS application which delivers automated SMS messages, phone calls, and emails to the clients of professional services businesses to remind them to come to their appointments.

What led you to work on it?

A combination of good reasons and bad. A bad reason to start a business, but a true one for me, is that I was blown away by the capabilities of the Twilio API and knew there had to be some way to make a new SaaS application which leveraged it to do something that was not previously available in the small business market.

A better reason is that I actually went out to talk to customers, and had more-than-minimal validation from massage therapists and salon owners that they'd prefer to give reminder calls but weren't actually effectively doing so because, in the words of one therapist, "If my hands are on the phone they're not on someone's back, and if they're not on someone's back I'm not getting paid."

It turns out that the actual market for AR is quite different than the low-end professional services (massage therapy, hair salons, etc) which I was expecting — we have about 25% of accounts in medical, 25% in high-end professional services (lawyers, accountants, etc), 25% in trades (HVAC, extermination, plumbing, etc), and 25% in a grabbag of everything from piano tutors to seed delivery companies which want to make sure someone will be ready at the farm to take delivery of the seeds.

What did it take to get AR up and running?

I started coding it in approximately April 2010 off and on, and got serious about launching in November. We launched in early December after about 6 weeks of full-time work.

The total investment before it started paying for itself was on the order of $2k. It came out of the profits of my last software business (Bingo Card Creator).

Did you ever hire anyone?

I've had one or two tactical engagements from freelancers for e.g. design of particular pages on the website, one longer engagement with a contractor to handle sales and support (which lasted about a year, until she took a COO job at another small software company), and presently have an ongoing relationship with another contractor doing the same work.

What has been your approach to growth and marketing?

The single biggest problem with AR for the last several years was that, while I enjoyed learning how to do meat-and-potatoes execution on growing a SaaS business the first time I did it, I was not really enthusiastic about putting in the time to do it for AR, and the problem didn't thrill me enough to consistently motivate me to do that. Accordingly, virtually all AR growth is organic, and that is a slow, slow process.

How is AR doing financially, and what are your goals?

Appointment Reminder charges customers on a SaaS model, with several plans ranging from $49 to several hundred dollars, distinguished largely based on their appointment volume per month and whether they're a healthcare provider. (Healthcare providers are covered by privacy legislation which makes them more expensive to service but which also makes them absolutely have to tell us that they're a healthcare provider, and as healthcare businesses are substantially more lucrative on a per-appointment basis than hair salons are, we use this as a pricing segmentation factor.)

In the recent past, AR's average monthly revenue is roughly $11k or so. (This compares to, oh, $29 in our first full month.)

When excluding enterprise deals which I can't talk about, the peak monthly revenue is $18k on a cash basis or approximately $12k on an accrual basis. We are growing, slowly, so we hit a new peak every month (at least on an accrual basis). (A fun thing you'll learn when running a business is the difference between the two. Briefly, cash basis accounting just counts money coming in and going out the door. Accrual basis accounting recognizes revenue only as services are delivered. The chief difference for SaaS companies is that accrual-based accounting recognizes an annual prepay over the course of the year where services are provided, whereas cash-based accounting recognizes it in the month the check arrives.)

My goal with Appointment Reminder was to grow to first a sustainable business and perhaps something larger, on the VC-funded track. I never actually doubled down on it and sought outside investment. I'd describe AR as a modestly successful SaaS business — it was the primary way I've fed my family for the last several years, and also meaningfully contributes to the lives of its contractors and customers, but it isn't a massive success by any stretch of the imagination.

What have been your biggest challenges or mistakes?

My biggest challenge is that I gratuitously violated the Peldi Rule, which is to work on something you'll be bouncing up with enthusiasm for for the next five years. This impacted both my desire to execute and also our marketing success, as described above.

What do you fear the most going forward?

I think that fear is generally a non-productive emotion to have with regards to a business. That said, to the extent that there is a risk involved with AR, the risks which I spent the most time controlling for are "What happens if this very mission-critical service goes down hard and we don't learn about that immediately? What happens if we lose data? What happens if we have a reportable breach under the HIPAA rules?"

The answers to these questions are rather boring: after you know your risks, you control them. I put substantial efforts into making the service robust and improving our monitoring infrastructure so that it fails loud rather than failing quiet. We have backups for the data, both within our own infrastructure and elsewhere (shoutout for Tarnsap, the only encrypted backup provider worth mentioning). I spent adequate time securing the system and understanding the consequences of the HIPAA rules, and then pay Warren Buffet a meaningful amount of money to shift the tail risk of a breach to one of his insurance companies.

What have been your biggest advantages?

With regards to Appointment Reminder, a major advantage is having run a spiritually similar business before, which meant that to the limited extent I was willing to do hard work in the business the hard work went to things which directly affect success (development, sales, etc) and not towards learning how to do things which are necessary but which don't directly cause success (bookkeeping, server administration, etc).

What advice do you have for hackers who aspire to be their own boss?

Ship. Ship. SHIP. The overwhelming failure case among people who read interviews like this one is that they spend 98 units of effort reading about running a business for every 2 units of effort running a business. Flip that on its head.

There was no one in the world less qualified to build a software business than I was when I started. The degree of unqualified started to go down precipitously after I already had a business in the market and was working on it, even though that business was a tiny hobby when I started.

Talk to customers. Build things. Ask customers to buy them. Repeat until you achieve your goals for the business.

Where can readers learn more about you and about Appointment Reminder?

I write a lot at the Kalzumeus Blog and on Hacker News as patio11. Rather little of it is directly related to Appointment Reminder. You can find AR here.

You can also leave a comment below, and I'll try to get back to you!

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