I Started Gumroad as a Weekend Project and Now It’s Making $350k/Mo

Hello! What's your background, and what are you working on?

Hi! My name is Sahil Lavingia. I run a small company called Gumroad, where we ship a super-simple e-commerce tool for digital content creators. Before that, I was at Pinterest where I designed and developed stuff, including Pinterest for iPhone.

Gumroad started out as a weekend project. I was looking for a way to sell an icon for a buck, and couldn't find anything great online. So I built Gumroad. Fast-forward over seven years and we're doing about $350,000 in revenue monthly, helping creators earn over $5,000,000 a month.

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What motivated you to get started with Gumroad?

I love building stuff. I really enjoy the process of taking a problem and coming up with a solution, and then shipping a prototype of that solution to see how good my concept was. Most of the time, it's not that great.

But sometimes something works out really well, and then I have to decide if I actually want to work on the idea some more. Very rarely, the answer is yes. That was the case with Gumroad. The question at its core was really compelling to me: How easy could one make it to sell something?

When I first got to work, my friend, John, had started a payments company called Stripe and gave me a beta invite. That made my life a lot easier. I didn't really know what I was doing, but some of that was intentional. I don't think it’s always that advantageous to study up too much about a problem before you start working on it. Knowing too much about the space that problem occupies and its consequences can be dispiriting and might steer you away from approaching it with a clear mind. Spend a weekend being as idealistic as possible—you can always study and learn later and revisit the problem with the context and perspective of added knowledge, but you can’t do it the other way around.

A few months later, I left Pinterest to work full-time on Gumroad and raised $8MM from KPCB, Max Levchin, and other investors.

What went into building the initial product?

Almost nothing, really. Just one weekend of my time in April 2011. I had learned Python while working at Pinterest, and was able to hack together a basic CRUD application. The whole of Gumroad was a single main.py—one Python file. It was deployed on Google App Engine so I didn't need to know how to do anything related to ops, nor did I.

If you keep things simple and learn how to copy/paste code from Stack Overflow and GitHub, you can get really, really far with an idea. Just make sure the idea is simple. Rarely will I ever work on anything more complicated than a weekend project.

Nothing will teach you the lessons that real life will. Sometimes you just have to go out and get started. Just make sure you're happy and having fun. And that you're learning. The rest of life will fill itself in.

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In Gumroad's case, it took about 22 hours in total to throw everything together, including the design. My only break besides eating was to meet a guy named Joseph Walla for coffee. I invested in his startup from that meeting—and they just sold for $230M to Dropbox. So that was a great weekend for me!

How have you attracted users and grown Gumroad?

People always ask me this, and the answer is always super boring: we sent a lot of emails. That's really it. We scoured the web for people who could benefit from a product like Gumroad, and then told them about it. Literally thousands of times. That's the only way, really, when you're young and no one cares or knows who you are, to get folks to use your product.

Over time, we needed to do that less and less. But until you have a lot of customers or some other force that can supply some momentum, there's nothing better than knocking on doors. Or if there is, I just haven’t found it yet. My sense is that people really just don't want to cold email people, and are looking for an out. If that's you: stop! It doesn't exist! Just hunker down and dedicate some time to finding people, reaching out to them personally via email, phone, whatever, and being okay with it sucking for a while.

And you’re not off the hook just because you have an amazing launch. Nearly 50,000 people checked Gumroad out on the first day, which was great! Even more saw our fundraising announcement(s). But in terms of real customers, almost none of them came from all that fanfare. It was a lot of really consistent growth over a long period of time–mostly driven, especially at the beginning, by a hard-working sales team.

We never invested heavily in paid marketing, SEO, or anything like that. We tried content marketing; it worked okay, not great. Manual "sales" worked the best, by far. Word of mouth grew us beyond that. Those two things are responsible for 99% of Gumroad's growth. It's not a glamorous answer, but it's true.

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What's your business model, and how have you grown your revenue?

Our business model has changed since the beginning. At the start, we took a pure transaction fee of 7.5% + 25¢. We eventually restructured this to 5% + 30¢. Then, because we wanted to stabilize our own growth and focus on our specific value-add (not payments, but e-commerce) we switched to a hybrid model with a couple of options:

  • free and 8.5% + 30¢ a transaction
  • $10/month and 3.5% + 30¢ a transaction

SaaS has a very different growth curve and take rate, but we think it's the right approach for us as we turn Gumroad from a VC-backed startup to a great lifestyle business.

Payment processing is core to using Gumroad, but really we're just a layer on top of Stripe and PayPal (38% of our volume!). And we'll add other technologies soon. So, we decided to pitch ourselves as e-commerce and charge like an e-commerce company would. We currently make about $330-350K a month.

If you're interested in following our growth, you can do so on Twitter. It's been pretty consistent thus far–almost nothing we build helps or hurts it. Gumroad just grows at the size of the market! Make sure you understand that before you decide to commit to something because it's very, very difficult to go against market trends and existing consumer behavior.

After payments, hosting, and risk—our only three costs of doing business—we take home about 30% of the in gross profit.

Quarterly Revenue
Apr ‘12 12009
Jul ‘12 46762
Oct ‘12 57399
Jan ‘13 183481
Apr ‘13 167775
Jul ‘13 267498
Oct ‘13 542430
Jan ‘14 812664
Apr ‘14 895899
Jul ‘14 1198073
Oct ‘14 1677639
Jan ‘15 1229531
Apr ‘15 1584734
Jul ‘15 1832522
Oct ‘15 2047459
Jan ‘16 2580108
Apr ‘16 2900184
Jul ‘16 2716201
Oct ‘16 3139282
Jan ‘17 3307551
Apr ‘17 3192912
Jul ‘17 3053258
Oct ‘17 3456455
Jan ‘18 3732041
Apr ‘18 3956820
Jul ‘18 4296066
Oct ‘18 4354476
Dec ‘18 5146240

What are your goals for the future?

I want to grow Gumroad into not just a great product, but a great company. A company that is having a large impact on the world in many ways beyond just our product. Our largest project on the horizon is open-sourcing the whole thing, so that people can build their own versions of Gumroad, and even compete with us.

What are the biggest challenges you've faced and obstacles you've overcome? If you had to start over, what would you do differently?

I think the biggest challenge has been in having to reconsider my identity as someone who isn't running a billion-dollar company, and maybe never will. From pretty early on in life I was obsessed with becoming a billionaire. It was a naive fantasy and probably led me to make some bad decisions.

If you keep things simple and learn how to copy/paste code from Stack Overflow and GitHub, you can get really, really far with an idea. Just make sure the idea is simple.

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I'm in a healthier place now. I'm not trying to be a visionary—I'm just iterating upon a product based on our users' real feedback. It's simple, not sexy. And it's leading to a much more sustainable lifestyle for me, Gumroad, and our creators.

There were more "obvious" or tangible hard things, like laying off 75% of the company, including my best friends. That was heavy. Everyone knows that's hard, but it's the small, existential stuff that will take a toll and you have to be prepared for the fallout.

Have you found anything particularly helpful or advantageous?

Almost nothing, to be honest. Nothing will teach you the lessons that real life will. Sometimes you just have to go out and get started. Just make sure you're happy and having fun. And that you're learning. The rest of life will fill itself in.

What's your advice for indie hackers who are just starting out?

First, build something for yourself. That way you're starting with at least one user, which is more than most startups have! Start as small as you can—a "quanta of utility," some people call it.

Then, make sure you have a good understanding of the market. Talk to people within the market. Sell them on your product. Get them to use it. Ask for their feedback.

Once you have loving users, the rest becomes a lot easier. It's still tough—but focusing on the first two points will get you headed in the right direction!

Spend a weekend being as idealistic as possible—you can always study and learn later and revisit the problem with the context and perspective of added knowledge, but you can’t do it the other way around.

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Where can we go to learn more?

You can follow or message me on Twitter, where I tweet mostly about Gumroad (and never about politics): @shl

I also write on Medium (very) occasionally.

And of course, you can comment below!

Sahil Lavingia , Founder of Gumroad

Want to build your own business like Gumroad?

You should join the Indie Hackers community! 🤗

We're a few thousand founders helping each other build profitable businesses and side projects. Come share what you're working on and get feedback from your peers.

Not ready to get started on your product yet? No problem. The community is a great place to meet people, learn, and get your feet wet. Feel free to just browse!

Courtland Allen , Indie Hackers founder

  1. 7

    Thanks for the great interview @sahil & @csallen!

    Sahil, I'm curious to hear a bit more about your transition from VC-backed startup to lifestyle business.

    • Do you have any regrets taking that much funding? Would you do it differently now?
    • Did that funding give you the results you were hoping for?
    • What does the transition look like? Are you looking to buy back your equity from investors?

    Thanks again for the interview!

    1. 6

      I'd recommend reading this. It elaborates on the journey a lot:

      https://medium.com/@shl/reflecting-on-my-failure-to-build-a-billion-dollar-company-b0c31d7db0e7

      TLDR: I don't regret taking that much funding. It let us build a phenomenal product with a world-class team.

      1. 1

        Also - man - 72k claps! 👏

        1. 2

          Yeah, it did better than I expected. No complaints!!

      2. 1

        Thanks Sahil - what an interesting story. Thanks for sharing it so openly!

  2. 2

    I use Gumroad selling digital products on https://careerasaurus.com and https://12criticalthings.com and I'm happy to recommend it as an easy and reliable service. Thanks @sahil!

    1. 1

      hey bro/sis, you have a small UI bug with the mid price div. In your landing page, the premium one, it is currently overlapping the header nav as if it had a bigger z-index number in careersaurus.

      1. 1

        Thank you so much @cooervo. I really appreciate your help!

    2. 1

      I am curious, I never thought about selling ebooks, How much money are you making on those two sites. Maybe you should do a indiehacker intterview

      1. 1

        Hey @irishgeoff. I apologize for not seeing & responding to this sooner.

        12criticalthings is doing okay, but Careerasaurus is sucking wind (I'm going to try a pay-what-you-like model, and also selling a $12 print version on Amazon via print-on-demand KDP).

        If you can create useful content for an audience you can reach, the rest is easy (with good margins).

        Instead of professional software like Adobe InDesign (unless you already have it and are comfortable with it), use simple software like Apple Pages to create a PDF with spaces for users to write/type their information.

        Next, open the PDF in Adobe Acrobat Pro (there are probably other free software options for this) and create "fillable form fields."

        Put that on Gumroad as the file to be delivered upon purchase.

        *** I just created an offer code - indiehackers - for 500 free premium digital copies of each (enter at checkout and credit card fields disappear, w/ no newsletter or spam).

        Best of luck!

  3. 2

    Have always wondered who ran Gumroad and have used it extensively over the years for sure! @sahil My question is...do you think you could have gotten this far without the 8MM in VC money? Great story though and you are an inspiration to us all! I needed to hear this story today!! It helped me a lot put things into perspective.

  4. 2

    You have a great product, congratulations ! very positive and encouraging interview

    1. 1

      Thanks Tim!

  5. 2

    Best interview so far!
    You just coded the whole business landing page via python @sahil.
    What advise you would like to give to the beginners/freshers like me where to start from while stepping up into the coding world?
    Which languages?

    Is it necessary to know fully how to code?

    P.S. I am learning javascript as a beginner.

    Many Thanks!

    1. 1

      Doesn't matter. Learn how to code, because why not? It took me about 2 weeks of learning Python to ship Gumroad.

  6. 1

    Got to know about GumRoad while buying some stuff on the platform. Quite interesting. It could be soon just like YT. Great one man!

  7. 1

    I am looking for a payment processor, and I notice you dont deal with phone services. Can you recommend your underlying bank so we can get a merchant ID?

  8. 1

    Thanks for the interview, @sahil . I've been following you for quite some time now and absolutely love your tweets. No bs, straight to the point and very inspiring.

  9. 1

    @sahil, your honest expression of thoughts are just a breath of fresh air. Thanks for sharing your story.

  10. 1

    Great interview. Thanks for this. I have used Gumroad and liked it a lot.
    Just could not find an option to pre-fill custom fields during payment. That is a little pain. Am I missing a feature here?

    1. 1

      Not possible yet, but coming soon! Next month or so.

      1. 1

        Super! That would be so so awesome. :)
        Thanks.

  11. 1

    Great interview! Thanks for sharing your story @sahil

    I used Gumroad for the first time in 2014! It was very easy to setup and that's appreciated when you're first starting out.

    I've only got one question, what's a "CRUG" app? I'm assuming that's a stack but I couldn't find anything on it after a few Google searches.

    1. 1

      It's 'CRUD', which stands for CREATE, READ, UPDATE and DELETE, which are the core functions of a web API.

      1. 1

        Thanks @jvke - I just read CRUD on another IH article too haha. Appreciate the clarification. I swear it was CRUG before :P

        1. 1

          It was, but I think it was a spelling mistake. 😂

  12. 1

    Hi Sahil,

    Thanks so much for doing this interview!

    I was wondering, how did you go about finding potential customers’ emails in a scalable way? And what did you write in your emails that made the conversions better?

    Thanks so much!

    1. 2

      Not sure if we did it in a "scalable" way. You could probably send out a hundred emails a day, easy, just with public information (Google -> Twitter handle -> Personal website -> Email).

      If you need to do more than that, they're probably not going to be very receptive to your email anyways! Focus on the easy wins first.

  13. 1

    This is awesome, can I ask how you scoured the internet for people interested? Im sure you found communities that would use it but how did you find out they were interested?

    1. 1

      Just a lot of cold emails.

      1. 1

        I think the question he's asking is how did you know who to email?

        For example, I'm building a Japanese language app but I wouldn't have a clue how to find the emails of people who are potentially interested in learning Japanese.

        1. 2

          Search Twitter for "learning Japanese" or the relevant subreddit for active users? It'll be different for every product.

      2. 1

        @sahil - would be really helpful to get a sense of magnitude and conversion rates required to acclimate my own baseline. Trying to get the word out there about an app, and I'm not sure how many cold emails I have to send to start getting people somewhat interested!

        1. 1

          I'd say 1-2% conversion seems reasonable.

          1. 1

            Thanks for the baseline! After reading through your medium post as well as this, it's pretty amazing the hardships you pushed through to get to where you are today!

            I'm curious what propelled you through the early days where you had to blast tons of emails and only get 1% conversion rates? I find that I've played with some side ideas only to give them up since the the initial reception wasn't as good as I hoped (that made me judge the idea as not 'good enough'). What was the mentality that kept you going through that uphill grind?

  14. 1

    Hi Sahil! Are there any good examples of software products being sold as subscriptions with Gumroad or detailed articles about how to set this up? I was looking at using Gumroad for a subscription based Chrome extension (https://www.checkbot.io/) a while ago. I was aware of the license code checking API docs but apart from this I was discouraged because I couldn't find a lot else to read about at the time.

    It felt like Gumroad was more for selling products to individuals instead of a payment processor you would use for SaaS products selling to businesses. Any thoughts on this?

    A big draw of Gumroad for me was that you dealt with EU VAT, the simple integration and the modern interface so good work on that side!

    1. 1

      did you ever find a solutions for doing subscriptions?

    2. 1

      Yes, Gumroad is more for selling products, but we've seen quite a lot of growth on the SaaS side too. You can look at Principle, or Meta Box: https://metabox.io/pricing/

  15. 1

    great interview. thanks @sahil for sharing your story and being a voice for us indies. Are you still living in Provo? Would love to buy you lunch and chat.

    1. 1

      Yep, still in Provo. Send me an email and we can figure something out? [email protected]

  16. 0

    Thanks but I am a little bit disappointed. After reading the title on Instagram "how I made 350k a month", I was thinking, wow it's possible. Then I started reading here, first I realize he knew John Collison, then I realize he actually had money to invest in other companies while he built his own, then you realize he actually had 8M from VC, then... then I realize its not "how I made it", its how WE, a company with a team and a lot of money, how we made it. I thought indie hackers , as the name imply, is not about big (8M!) VC backed startups, that have connections with Stripe and Max Levchin, but about individuals. It pushed me down a little, wondering if all stories have some "connection" inside.

    1. 2

      Thanks Rani for your brilliant, smart, and insightful comment. It helps everyone to finally understand that behind every good company they have friends, money and everything we don't have. We should sit silently here and wait for the right moment doing nothing.

      1. 0

        Yea that is a typical lefty irony respond that don't deal with the actual statement and instead exaggerate it, because it's hard. Anyway it seems, the website's name does not reflect its content(indie+hackers), but just an ad for Stripe.

  17. 0

    Great interview and very inspiring! Are there any updates on the open source version of Gumroad? This is a very exciting prospect for related industries!

  18. -2

    This comment has been voted down. Click to show.

    1. 3

      From the FAQ: "You're generating revenue directly from your customers, not indirectly through an employer. Other than that, there are no requirements!"