Talking to Customers and Growing to $50,000 a Month with Sarah Hum of Canny
published October 7, 2019Episode #124
Sarah Hum (@SarahHum) got a job working at a big tech company, in part because she wanted to learn how create a startup of her own. But it didn't take her long to realize the truth: the best way to learn is to dive in head first. In this episode, Sarah shares how she went from employee to founder, why she chose to bootstrap her company and travel the world rather than staying in SF and raising money, and how she's steadily grown her revenue to over $50k/month.
Transcript
Courtland Allen:
What’s up, everybody? This is Courtland from IndieHackers.com and you’re listening to the Indie Hackers Podcast. On this show I talk to the founders of profitable internet businesses and I try to get a sense of what it’s like to be in their shoes. How did they get to where they are today?
How do they make decisions both at their companies and in their personal lives, and what exactly makes their businesses tick? The goal here, as always, is so that the rest of us can learn from their examples and go on to build our own, profitable internet businesses. Today I’m talking to Sarah Hum. Sarah, welcome to the Indie Hackers podcast.
Sarah Hum:
Hey, Courtland. Thanks for having me.
Courtland Allen:
Thanks for coming on. You are the founder of a company called Canny. I’ve been seeing Canny everywhere recently. Why don’t you tell us a little bit about what it is and why people use it?
Sarah Hum:
Canny is a user feedback tool, so we primarily sell to other software businesses, primarily B2B. We help them keep track of their feedback. A lot of times people grow into this problem, but they might be using a spreadsheet or Slack, even, to keep track of feedback on a one-off basis.
Eventually they feel the pain of, “Hey, our feedback is all over the place. Where can we put it all so we can actually use it?” Customers are often saying things they do need or feel a pain with when they use the product and so we think feedback is super important.
Courtland Allen:
If I wanted to get feedback from users on Indie Hackers and I wanted to use Canny, what would that look like exactly?
Sarah Hum:
Usually what people do is they will install some kind of feedback link into the product. So, for example, I can go to my profile, that’s maybe where I’d go look for it and look for feedback. Once I click on it goes to their Canny site so you could have an Indie Hackers Canny site.
It’s just a persistent place for people to give feedback whenever they have it, as opposed to a one-off survey, “Please give us feedback on X, Y, Z, it’s more of a persistent in-product, product.”
Courtland Allen:
I mentioned I’ve been seeing Canny everywhere. That’s because your product is public. I’ll go to another product that I use and if I want to leave feedback on them, I see their Canny board, I see all the features they’re working on and the things they’re uploading. I see the things that their team has prioritized, what they say they are going to work on now or what is on hold. What’s cool about this business is you’ve bootstrapped your way here. How much revenue are you generating and how big is your team?
Sarah Hum:
We just crossed over 50K MRR. We just had one of our best months so far, which is pretty exciting. We are a team of five.
Courtland Allen:
Congratulations. Are you profitable with 50K a month with a team of five?
Sarah Hum:
Yes, we are super proud of it. We pay our team with the money we make, which feels really good. We’re not at risk of dying at any second, which feels really good.
Courtland Allen:
That’s got to be relieving when you company can’t just end.
Sarah Hum:
Yes, for sure.
Courtland Allen:
Another thing I like about what you’re up to is you are a digital nomad of sorts. You are traveling all around the world while you are building Canny. I’m thinking about doing this next year when my lease is up on my apartment. I’ve been living in San Francisco for nine years. It’d be nice to have some variety. I’ve looked at different cities. It’s stressful just thinking about running a company while also traveling all over the place.
Sarah Hum:
Honestly, we were in the same place. Andrew, my co-founder, and I both lived in San Francisco for several years before we left. When I quit my full-time job I was like, “We’re living in one of the most expensive cities in the world and we have a company but it’s not making much money right now. Let’s just get out of here and travel and do the whole thing.” That was easy when we were a team of two. We were always there with each other, we could always bounce ideas off each other. It wasn’t a problem. But definitely as your company grows it becomes harder, but I don’t want to say it’s impossible. I’m really glad we did it.
Courtland Allen:
You and your co-founder are a couple. You are actually dating and running this company together and traveling the world together. That’s like triple hard. Some people have trouble just traveling together.
Sarah Hum:
Yes.
Courtland Allen:
Some people have trouble just being together, let alone working together, too. How do you make it work with somebody you’re so close to?
Sarah Hum:
Honestly, I think that’s why it works, almost. I think if I was in a relationship with someone I wasn’t working with, there are so many ups and downs when you’re a founder. There are so many things that just throw you off. With Andrew and I we always know what is going on with the other person, because we’re in it together. We are great at conflict resolution because couples fight and that’s just a thing. We’ve learned how to fight. It works really well.
Courtland Allen:
It’s cool to have somebody who understands the emotional turbulence of being a founder and you don’t have to come home from a long day at work and explain it to them and say, “Here’s what happened.” They try to be empathetic, but they really don’t care because they’ve heard this story a thousand times. It’s more so they’re right there with you.
Sarah Hum:
Exactly.
Courtland Allen:
I also like the point that you guys are great with conflict resolution. I run Indie Hackers with my brother. We’ve been arguing with each other since we were babies. We have 30 years of conflict resolution. There are very few disagreements that are going to get in the way of our business.
Sarah Hum:
When I read on Indie Hackers and other start up communities, when I see people arguing over equity splits and all that I just feel like, “That’s not a great place to start a co-founding relationship.” Just the fact that we can be so open with each other because we’ve been through it. It adds a whole level of comfort.
Courtland Allen:
Let’s talk about how you two got started working on Canny. Maybe even before that. I know Canny is your first business but kind of not your first business because it existed as a different business beforehand. Why are you someone who wants to start companies in the first place?
Sarah Hum:
I started doing Hackathons. For some reason, that thrill of building something out of nothing, hacking things together, felt really good. It felt like something I could excel at, personally. I tried to whole big company thing. I worked at Facebook for about a year and a half before leaving to do Canny. I knew I couldn’t be at Facebook for very long. It just felt right. I don't know.
Courtland Allen:
Why not? Why couldn’t you stay there working a cushy job?
Sarah Hum:
At Facebook I worked on Messenger as a product designer. It’s a great job. I did enjoy working there very much. I felt limited, almost. My one job was to do product design. That was nice but I wanted to do so much more, and I wanted to learn so much more. Since I started Canny, I have learned so much more.
Product design is probably 20% of my time now, maybe even less. I just learn so much about marketing, and pricing, and sales, and everything. It’s just very fulfilling to me, starting a company.
Courtland Allen:
Do you think working at Facebook as a product designer gave you the skills that you needed to be a founder or it was a good stepping stone or in hindsight, do you think it was something you could’ve just skipped?
Sarah Hum:
I think for me, personally, it was an important starting point. I came from a small, Canadian design program. I had no entry into tech, almost. Just having that Facebook background helped me understand tech in general and also meet a lot of really cool people. That’s where I met Andrew. I probably wouldn’t have met Andrew if I didn’t work at Facebook. That was very, very important. We’re bootstrapped, so having that savings was very helpful in our early days. I would say working at Facebook did not prepare me to be a founder.
Courtland Allen:
You liked working there but it’s not the best place to learn how to do your own thing.
Sarah Hum:
I think it’s the one role type issue. I was a product designer there. There was no startup training. You don’t deal with all the problems that a startup goes through. Facebook is such an established company we are abstracted away from everything that is difficult, legal, all this stuff. We don’t touch this at all. It’s something we’ve had to learn with Canny, but I’m glad we have.
Courtland Allen:
Tell me about your very first product. It was called Product Paints. It ended up sort of morphing into Canny. You can’t say it’s a different business, but it had a different name, it worked differently. Why did you start it?
Sarah Hum:
Andrew and I had always been hacking on things together. We’ve done a couple of other projects before Canny, just really small side projects that never went anywhere. In my last year of school I had the chance to do an independent study, which meant I could do whatever I wanted. So I started a company and got credit for it, which was awesome. But we started Product Pains, which was a community for anyone to give feedback about anything. You can think like, Yelp! Uber, very consumer focused at the beginning. We grew the community to about 5,000 people. People giving feedback about things. Which is pretty amazing but over time we knew that we had to make money. We saw the potential for Product Pains is not where we wanted to be. It eventually morphed into Canny, which is great, because we reused a lot of the code. It was mostly a rebrand, almost. We repositioned it, wrote everything so it was targeting B2B companies and we launched it as Canny. It was like an early, early version of Canny.
Courtland Allen:
You said you were hacking away at a bunch of different things. You tried lots of different ideas, but you never went hard on any of them except Product Pains. What made Product Pains stand out to you as an idea that had legs?
Sarah Hum:
I think it was very exciting to build a community. I think it was really exciting to see people give feedback about certain things. Also, the chance that we could change products. We could give Yelp! feedback and they would change something was very exciting. In hindsight I think it was not super realistic. We were so small, and it would take a lot of people to make an impact, maybe. So instead of going after users first we flipped it, so we went after the company first. So the company says, “Hey, users, we are collecting feedback using Canny, here’s where you should give us feedback.” Which worked out a lot better and enabled us to make money. That was great.
Courtland Allen:
It’s cool to hear you talking about the fact that you were motivated by what was exciting. You thought it was exciting to start a community. You thought it was exciting to have an impact.
You thought it was exciting to help change products. How much of your thinking about ideas back then was related to what you were excited to work on versus what you thought would be a viable business?
Sarah Hum:
I think honestly, because it was a school project I wasn’t, my mind wasn’t, “How am I going to turn this into a business?” It was really like “What do we think is cool?” And “What can we build a cool, scrappy product out of?” And that’s what it became. The name even speaks for itself. It was so last minute, “Oh, this domain is available. Let’s just call it Product Pains.”
That sounds horrible when I say it now. The fact that we built a successful business out of it says a lot because it was really something that was just exciting to us. I think that says a lot, too. It helps us stay motivated today because we still are trying to achieve the same mission. Still trying to change products, still trying to help teams improve. It still drives us today.
Courtland Allen:
How do you, as someone who has never started a company before, who has never built and committed to a project before, grow a community into nothing into 5,000 members?
Sarah Hum:
Honestly, Facebook comes in again here. Andrew used to work on their react team at Facebook and soon after he left, one of his teammates was like, “What are you doing?” And he was like, “I’m building this thing called Product Pains.” And they were like, “What’s that?”
Then they started using it for React Native, which is a huge project now and they started using Product Pains to collect feedback from other developers and that just spread because developers usually work at some company. So when that spread naturally, other companies would hop in and join. That’s still a pretty strong mechanic for us today.
Courtland Allen:
Word of mouth growth is pretty magical when it happens. It’s hard for me to imagine being in your shoes as someone who quit Facebook and you’re working on this product. At this point you do want it to be a business because you’ve quit your job and you’re burning through your savings.
It’s growing through word of mouth. People are using it. It’s hard for me to imagine being in a situation and deciding, “You know what? We need to take a different approach, shift gears.” Why did you decide to stop working on Product Pains?
Sarah Hum:
I wouldn’t even say we stopped working on it. It was really a rebrand. We repositioned it. Eventually we had a few companies join Product Pains and they were like, “Hey do you have a widget for us to put on our websites?” And we were like, “No, but if we built it would you pay for it?” We built it. They paid us $19 a month to put a Product Pains widget on their site, so users could give feedback directly from their site and they paid for it. That was really amazing for us. That got us to start thinking about, “Hey, maybe we should switch this up and come from a different angle and sell to the company themselves instead of trying to get the users in first.” That just naturally happened.
Courtland Allen:
How long were you working on Product Pains before that happened? Were you making any revenue at all? Was that your very first dollar from a customer?
Sarah Hum:
The $19 was probably the first money we ever made. We had just been purely making a consumer platform at that point. So the $19 was the first money we’d made. It was complicated, how long I’ve been working on it. When I started it in school, I worked on it maybe six months. Then I graduated, went to work at Facebook so Product Pains just died down a little bit. Andrew quit. He worked on it. Then I quit and I joined him, then it became Canny. That’s the whole ups and downs of Product Pains to Canny.
Courtland Allen:
Did you have a long period of burning through your savings after you quit Facebook or was it pretty quick that you decided that it needed to switch over to Canny? I know that can be pretty stressful when you quit your fulltime job to think about “How long is it going to take before this product makes money?”
Sarah Hum:
When I quit it was still Product Pains. I think by then we had made the $19 so that was in the bag, but I think in the next – it was over the winter break, so nothing really happened there, but we launched it in March.
So about three months after I quit, we had it all rebranded and repositioned as Canny. As I mentioned before we reused a lot of the same code as we had in Product Pains so that made it a lot faster. It was just one random day in March where we were like, “Why are we waiting to launch this thing? Let’s put it out and see if people like it.” And they did.
Courtland Allen:
Let’s talk about your mindset going into this rebrand. This is you really thinking about Product Pains in a way you hadn’t before. Earlier it was, “What would I be excited to work on?” Now it’s, “Hey, I’ve quit my job. This is business that needs to make money. I’ve got to think strategically. This widget thing seems to work.”
What else went into your decision making for deciding to rebrand it and deciding that’s what the business should be?
Sarah Hum:
We knew that the business we wanted to build would be bootstrapped, therefore it had to make money. There were no questions about it. We would need money to pay ourselves eventually. We would need money to hire people. So we knew we had to make money.
So a big part of switching Product Pains to Canny was adding a pricing page. That was just step number one. We had to make money. We’ve never, even to this day had a completely free plan. We had a free trial but that’s about it. That was a big change.
Courtland Allen:
Living in the Bay Area and deciding at the same time you want to bootstrap a business is not that common of a decision. I know a lot of founders in the Bay Area usually the first thing they think of is, “I need to raise money from investors then I don't have to worry about making money for several years. What was influential to you guys in deciding that you wanted to bootstrap.
Sarah Hum:
I think me and Andrew were on the same page here, but we didn’t like the idea of not owning what we were making. Being in the Bay Area we’ve heard the stories about bad investors and what it’s like to have investment. When somebody else is an owner in your company they have a say in what you do.
And that was scary to us and not very attractive. That’s not the route that we took. We thought, “Hey, we’re going to try this thing. If it makes money, great, if not then we’ll try something else.” It’s not a big deal. We’re product people. We can build things. That’s what we’re good at. We didn’t feel like it was the biggest risk ever. It is, but also wasn’t. It just happened to work out our first try, which is great. We knew from the beginning that we didn’t want to raise anything.
Courtland Allen:
There’s another company. I don't know if you’ve heard – have you ever heard of Get Satisfaction?
Sarah Hum:
Yes.
Courtland Allen:
They were around when I first came to the Bay Area around 2009-2010 and they raised a ton of money doing something that was similar to Product Pains. They’re a Yelp! For customer service and user feedback. They had a lot of drama, because they would set up these pages that looked like they were official. So it’d be, “Oh, this is the official Indie Hackers community service website.” It’s like, “No it’s not. It’s the Get Satisfaction page for Indie Hackers.”
A lot of founders would get mad at them. But they raised something like 10 or 20 million dollars, which is instantly a huge promise to investors that you’re going to build this massive company. I think they just cratered over time. Besides investors having control over your company I think one of the scary things is, if you’re not building a business that can get as big as investors would need it to be to succeed, then you’re just signing yourself up for a world full or pain.
Sarah Hum:
I heard about that drama, actually. I think we were starting Canny just around the same time. It just didn’t sound fun. We’re already trying to build a product. It’s already going to be hard, why make it harder by throwing in another voice who we don’t know, who we might not be able to trust.” It just didn’t seem like our thing. We’ve never felt the need to do that.
Courtland Allen:
Up until this point you hadn’t really found product-market fit yet. You had worked on Product Pains. That was ok. You pivoted and did this widget that customers would pay you for. It wasn’t like you were selling tons of subscriptions. A few months go by and then you launched. Tell me about your launch and how that went.
Sarah Hum:
It was great, honestly. It exceeded our expectations. We had a lot of signups. We went and launched through Product Hunt. I would say Product Hunt was at its peak around then.
There were a lot of people chiming in and supporting us. It was really great. We still have some customers from that day, two and a half years ago. I don’t think it could’ve gone any better.
Courtland Allen:
You have a post on your Indie Hackers product page from October 1, 2013. It says you reached Ramen profitability. I think you had just launched in March of that year?
Sarah Hum:
Yes.
Courtland Allen:
What is that? Seven months from launch to Ramen profitability. Pretty fast.
Sarah Hum:
I don't know, maybe it is.
Courtland Allen:
Yeah, it’s great.
Sarah Hum:
That was just what we felt at the time. That post hit Hacker News, which was big for us. It was probably one of our first posts that hit Hacker News, so we got a bunch of traffic that day. We like sharing stories and sharing our journey.
I think that post came off very authentic and very interesting to a lot of aspiring entrepreneurs. That was an exciting time. We felt like we had something.
Courtland Allen:
Some point during all this is when you just took off and became a digital nomad?
Sarah Hum:
Yes, I’d say probably May or June. A couple months after launch.
Courtland Allen:
Right after you launched. Tell me about how you made that decision.
Sarah Hum:
Honestly, it was such a last-minute decision. I think it was the week before we were talking about it, the day after we started talking about it, we told our roommates, “We think we are going to leave. We are going to have to find someone else to fill our room.” I think they were shocked, but I think excited for us.
We took off and did a little tour of the United States first just to say, “Hi” and “Bye” to friends. From there we hit up London, which was an easy ease into the digital nomad life, I think. All English, all very similar culture I would say-ish. From there we hit up 26 cities in two years. It’s been fun.
Courtland Allen:
How do you manage to get to profitability while also traveling to 26 cities? It doesn’t sound cheap to travel that much in two years.
Sarah Hum:
Honestly, I tell people that I save money. My rent in San Francisco, I’m sure you’re familiar, was not great, even though I had several roommates. When you’re in Thailand your rent is next to nothing compared to that. You are paying more for getting around, your flights and buses and whatnot. Honestly, compared to San Francisco I think I saved money. I did.
Courtland Allen:
It’s not that hard to save money compared to San Francisco. No matter where you’re traveling it’s usually cheaper. Especially if you’re hitting up these digital nomad hotspots which are known to be pretty affordable. Bali, Thailand, South Africa is another cheap one that not a lot of people go to but it’s super affordable there.
Sarah Hum:
We’ve always had our eye on South Africa, but we’ve never made it out there. We did the Southeast Asia little round trip. That part was tough. When we have customers that demand our attention almost every half hour, it’s not easy. But tradeoffs, right? We wanted to travel, and we wanted to see Asia, so we had to do 1 a.m. meetings.
Courtland Allen:
Give me a sense of what your day to day was like when you’re traveling and working on Canny in the early days as a co-founder couple.
Sarah Hum:
We tried to stay in each city about a month. We felt like we had a chance to settle down a little bit before we were on the move again. Travel days are the toughest. Guaranteed you won’t get any work done that day. We tried to stay in each city about a month so that enabled us to get a feel for the city understand where we would work and where we would eat and all that stuff. A lot of it was working out of cafes, which I love.
You also get to see the city and experience it as a local would as opposed to going to the tourist hotspots and all that. We spent a lot of time going from café to café and exploring the city on the weekends. It was totally doable, and I would recommend it to anyone.
Courtland Allen:
You traveled all over the world. What was your favorite place?
Sarah Hum:
I always say in Europe it was Valencia, in Spain, which is just south of Barcelona. We had a really cool community there. There were a bunch of other remote workers and really friendly cafes. That was really big highlight for us. In Asia we would say Seoul, Korea. There’s so much stuff and the coffee is really good. There is very, very fast wi-fi. Unbeatable, pretty much. We enjoyed Korea as well.
Courtland Allen:
If you’re a founder and you’re traveling, wi-fi is crucial. You’ve got to get work done.
Sarah Hum:
Exactly. We always did our research on Nomad List. Who has good wi-fi and where can we have reliable cafes to work at? It was a thing. People are pretty well connected now. We almost never went offline.
Courtland Allen:
While you’re doing all this traveling, you had just launched on product hunt a few months before that. Generally speaking, there’s this trough of sorrow period after you launch, where you’re super excited, your launch day goes well. There are tons of people in the door and then after that your launch is over and it drops back down.
Now you have to figure out how you’re going to grow and how you’re going to find customers in the future. What was your strategy in the first few months and how did you grow from basically zero dollars in revenue to Ramen profitability?
Sarah Hum:
We tried to write. Even though we are very product minded, the two of us had to say, “Hey, we are going to spend this amount of time every week to write something.” That was hard for us because we just naturally gravitate toward building cool things and writing was not that.
That felt weird. It was very impactful for us. We wrote several blog posts and a lot of them were just us telling our stories. I wrote a post about pricing, which is this whole thing. We built a community. People started hearing about us. The word of mouth helped a lot. It just naturally crept up and it’s been going ever since, honestly. Today we still try to write a lot. We’re trying to do less of the one-hits.
We posted on Hacker News. If it doesn't work, we try again. That kind of strategy, to more of an evergreen SEO focus strategy, which is working well for us, too. You take it as it comes, try things and make sure you can tell if something is not working. And, yeah, you keep pushing. I think it helped to always charge money. Always. Because everyone who is a potential support ticket should be paying money. Your time is the most valuable thing.
Courtland Allen:
Combination of blogging. The product was never free. One hundred percent of the customers coming in the door contributing to your revenue growth. So you’re getting there. Let’s say I’m a brand-new founder. I go through the same process. I launch. It goes okay. What are your tips for me in how I should set up my blog and my writing strategy? It’s not always obvious how to write successfully.
Sarah Hum:
Our most successful blog posts from the beginning were very much, “Here’s what we did and here’s what we learned from it.” It was almost a recounting of certain things we had tried. For pricing, for example, I wrote about four different pricing strategies that we tried and the good and bad things about each, and why one thing was working and why other things weren’t. People really liked it.
Pricing is one of those things where you can’t say, “This is your price. This will always work.” There is no formula really. So I think hearing our story and how we thought through pricing really helped other founders. If you’re an entrepreneur and you try a certain thing that is different and interesting in a certain way, write about it.
The nice thing is you’re just telling people what happened. You’re not “creating content” out of nothing. It’s something you did so it should be really, really easy to write about. I definitely recommend doing that and sharing the knowledge, sharing the love.
Courtland Allen:
That’s the whole strategy behind Indie Hackers content. People sharing their stories. The thing is, you don’t have to be an expert on any particular subject matter because you’re already an expert on your own story. All you have to do is share that and if you learn something chances are other people will probably learn something from reading about your experiences.
Sarah Hum:
Exactly. Nobody can tell you your story is wrong, or you experienced something wrong. This is what we did. You can’t really argue. Take it or leave it. If it helps, great. If it doesn't, we will try again next time.
Courtland Allen:
Is there anything from your blogging experiences that with the benefit of hindsight that you would’ve done differently if you could go back and start all over again?
Sarah Hum:
I think all we would do differently is do it more. We always gravitate toward product. Like I said, we would always be drifting back to product even though we didn’t have to. We would just want to build the next cool feature.
When you are resource limited it’s really important that you focus on the right things and I think we could’ve focused a lot more on writing. But that’s ok. We are not lost. We are continuing to write today. We just take it from here. I hope me saying that now will help other founders do that earlier.
Courtland Allen:
I know you’re still working on it, too, because I was googling you, Sarah, and I found your account on 200wordsaday.com. You’ve got quite an impressive streak going on. You write every single day.
Sarah Hum:
Thank you, thank you. Somebody noticed. I write 200 words a day. It was purely for me to get in the habit of writing, get in the habit of ideating different blog posts that I should write. So what I usually do is write 200 words of a blog post a day so by the end of a week I usually have a full blog post.
And it doesn't feel like the barrier to entry, the wall is not as high because I only have to do 200 words. That is helping me a lot, the streak of course. I don't want to break it. I think I’m almost at 200 days in a row or something like that. I think it’s very motivating. I think it is business impactful, so both good things.
Courtland Allen:
Is there anything else you do every day as a founder? I try to have these habits, where I’m like, “Ok, this is so good to do. I should do it every day.” But I can never sustain more than one or two things like that.
Sarah Hum:
It’s definitely hard. I think I just try to cut off at the end of the day. My brain is fried. I’m done. I make time for my brain and myself to watch Netflix or do my drawing or whatever so that I’m refreshed and ready for the next day. It’s not really doing anything, it’s almost like doing nothing. But it’s definitely important, I think. And I think, especially for early founders they think that they must spend all of their waking hours on their product. I think there’s something to be said about detaching and replenishing all those brain juices for the next day.
Courtland Allen:
I just talked to Patrick Campbell, he’s the CEO of Profitwell, on the podcast. He was talking about how there are three different levers to pull on to grow your business. So one of them is user acquisition, getting new customers in the door. That’s you blogging, that’s creating a really good product that spreads through word of mouth. Another one is monetization, which is everything to do with pricing. How much do you charge? What do your plans look like? How do you upgrade people? How many people upgrade to a paid plan? How often do you charge them? All that stuff. That can raise your revenue significantly if you make the right decisions, or really hinder you if you don’t. The last one is retention, which is like, how long do these folks stick around? If they leave, it doesn't really matter how much you’re charging them. You’re not going to make that much money. Let’s talk about monetization. You’ve brought up the fact that you’ve written a couple of blog posts on four different pricing strategies that you’ve tried. What have you learned about pricing in the course of running Canny?
Sarah Hum:
As I mentioned, we haven’t tried Freemium, which is the big – should we or should we not in startups, I think. Or SaaS, anyway. At the beginning we had a $2 plan. That was our lowest plan ever.
Courtland Allen:
Two dollars a month?
Sarah Hum:
Yes, two dollars a month.
Courtland Allen:
Basically free.
Sarah Hum:
We were referring to it as cheapium instead of freemium. We thought we could get the eensy bit of signal that somebody thought it was valuable, so they might at least pay $2, right? What ended up happening was that people were just – we had to chase people for $2 a month, which is not a good use of time. It just didn’t work. Now, we’re talking about doing freemium again. We always talk about it, I feel like. We feel like it might be a good time to try it out. I think pricing is never a set it and forget it thing. You will be iterating on it. Your product is getting more and more valuable. You should be able to charge more and more for it. We’re hoping to charge more because we have built so many things in the last year that we feel like are valuable and should be paid for. I think adding that freemium level on top might help acquisition and boost word of mouth even more. I have no answers but that’s what we’re trying.
Courtland Allen:
The thing about charging $2 a month is you really can’t afford to do very much for any customer who are only paying $2 a month. Can you afford to talk to them over email? Is it worth your time? You can’t do sales, you can’t do ads.
Sarah Hum:
No, it’s not. We tried it and it’s a cool story, but we probably won’t ever do that again.
Courtland Allen:
One thing, I think, that makes that story more common than it should be is as an early stage founder you’re looking out and thinking, “Well, my product is going to get more valuable over time and it will be worth a lot someday but right now it’s just me and my co-founder working on this really tiny thing. Why would anybody ever pay $50, $100, $300 a month for this thing?” Did you feel like that in the early days of Canny?
Sarah Hum:
Yes, I read the advice. I read that product people are notorious for valuing their product too low and so by reading that I was like, “Maybe I can bump it a little higher and not feel horrible about it.” Over time we tried to push things a little more. So we’d set it a little higher than we felt comfortable and then we’d wait and see what people say. People say, “Oh, this is insane.”
Okay, that’s a data point. “Oh, this is totally reasonable.” That’s another data point. Pricing is this very flexible thing. Don’t worry, you can change it. It will take work to grandfather people and it’s a whole thing but it’s a huge part of your business and it could drive it much, much higher. I would say it’s a risk worth taking.
Courtland Allen:
What kind of pricing plans did you end up on after all the experimentation that you’ve done so far?
Sarah Hum:
Our current pricing starts at $50 a month. So we think startups around 10-50 people, teams. Then we have $200 price point for teams bigger than that. Then we have a custom bucket for anybody who may surpass all those features we have available but at the same time we also have a valument trick which Patrick can tell you about as well. It scales based on the number of people that give you feedback.
We get a significant amount of growth from upgrades every month, which feels great. It’s been working really, really well for about a year. I think it’s time for us to switch up our pricing again but it’s definitely something that we felt has worked in the past so we will definitely use it inform our future pricing.
Courtland Allen:
It’s interesting that your pricing is so connected to every other part of your business. For example, what kind of customers are you even dealing with? If you’re dealing with really big companies, you’re going to have to have that huge, custom plan and a lot of infrastructure built out for that.
If you’re dealing with really small customers maybe your volumetric cut-offs have to be lower. You have to say, “Well, ok, once you get to five people giving you feedback you have to pay us more because you’re a tiny team. You’re not going to have very many people.”
Sarah Hum:
From the beginning we were trying to charge based on people. I think that showed what kind of business you are and how successfulish you are and how much you might be willing to pay. So that’s the metric that we landed on.
Courtland Allen:
People giving feedback or people working at the company who can log into the account?
Sarah Hum:
People giving feedback, so your user base, basically. At the beginning we said, “Oh, if you have this many total users, you’re in this bucket.” But honestly, there is no way we can know how many users you have. So people were really just self-bucketing themselves, which was surprising. But honestly you could’ve had a million customers and signed up for our small, startup plan. It’s a bunch of trial and error. Sometimes- people sign up for the bucket their suited for. You learn and you see what people say about your different plans. The reason we’ve stayed on our current plan so long is because we’ve gotten good feedback about it and people think it’s reasonable. So, I think now is the time to make that change. Also, at the very beginning we were trying to target almost everyone. We were trying to make pricing that qualified consumer companies and the solopreneur and the big B2B business and --.
Courtland Allen:
Be everything to everybody.
Sarah Hum:
Yes, exactly. I think that’s just the mistake that everyone has to make to feel the pain of it. You try to serve everyone, and you serve everyone very badly. We eventually started narrowing down our target audience and started figuring out who was going to pay for this. Who really wants this, who is going to find value out of this? With that we were able to make our pricing more targeted and make more sense for the people we actually wanted for customers.
Courtland Allen:
How do you do that? You have so many people using your app. You have people who you don’t want to cut off because they’re paying you money and they’re saying good things about your product. How do you strategically figure out which type of persona is the best for using your business and also emotionally how do you feel good cutting other people off and not serving their interests?
Sarah Hum:
Don’t get me wrong, there are still those people who will sign up and pay and that’s totally fine but our marketing and pricing pages, they are not written for those people. They will get through and that’s ok. I’m not going to turn them away. I think you pay attention to your data that you have. We saw the usage of certain kind of companies was stronger than others. People expressed more value. People that were B2B business for us expressed that they got more value out of Canny. I think that’s due to talking to customers. We have live chat on our site. It’s really simple just listening to people, what they were saying. We just started shaping this vision of what our customer looks like in our heads. It doesn't feel great to cut people off, but I think that’s how you build a strong business. When you’re building a product and you’re considering a bajillion different features, you want to make sure the features you’re seriously considering are for those people, specifically, your target people. Our product today could be 10 times bigger but not useful for our target if we weren’t paying attention to that.
Courtland Allen:
This is the perfect segue into Canny itself. Paying attention to what your users want, what kind of features do they need. Do you use Canny in a dog fooding product sort of a way to figure out what people want from Canny?
Sarah Hum:
Yes, absolutely. When people ask, “Do you have a Canny for Canny?” Yes, of course, here’s where it is. The fact that we can dogfood our own product is super helpful. We know a feature we’re considering will be useful to us and that’s a good gut to say that, “Oh, this will be useful to our customer base.”
We can feel the pains of our own product. We can feel what the product needs. We feel everything. That’s been really nice. When we can use our own product for something we’re really excited. “Just put that on Canny.” “Just check out the Canny board.” It feels really good.
Courtland Allen:
I use Indie Hackers sometimes to ask for business advice. That’s the entire purpose of Indie Hackers. It’s perfect, I feel like I’m my own user. Not every business can do that. A lot of people are making products for people who aren’t them which makes it that much more challenging to figure out what you need to add.
Sarah Hum:
It’s harder to empathize. You don’t, you’re not trying to solve the same problem. For us, we’re trying to build a better product. That’s what Canny tries to help you do. If Canny does that for us, it must be doing it for other people. At least that makes sense.
Courtland Allen:
Even when you have a list of feature suggestions from customers, a list of problems and bugs they’re running into, it’s still not necessarily easy to figure out what you’re going to build. Customers have a very different perspective than you do as a founder. You’re trying to think strategically, at least to some degree. What’s going to make us bigger and better and help us out.
Customers are just like, what’s going to make the product itself more comfortable for me to use. They’re usually requesting these small incremental changes. How do you think about which features to prioritize at Canny? Do you have a framework in your head of what you should build at any given time?
Sarah Hum:
If this was easy, product managers wouldn’t be a thing. It would be crazy.
Courtland Allen:
Just give me the product manager checklist so we can fire all the product managers.
Sarah Hum:
Yeah, right. What we do is at a given quarter or given month or whatever, we have some kind of a target goal. For this month we were looking at increasing trial to paid so the more people that start a trial, we want a bigger percentage of them to end up paying. We considered features that would impact that goal. A lot of it was to do with onboarding and our drip campaign and stuff like that. We put a list together of different projects would impact that goal and rank them by effort vs. impact. If it’s in Canny that’s a big bonus, we get to go in there and say, “Here’s what different people are saying about the issue,” or maybe they have some insight into something that we’re not currently doing or that we’re doing wrong. It’s also a place we can go and say, “Hey, this is what we’re thinking about for X, Y, Z. What do you think?” Canny is a place for you to get insights out of. We’re not going to give you the answers, like, we’re not going to tell you, “Hey, this is what you should prioritize this month.” But it’s there when we need it to inform the decisions that we make.
Courtland Allen:
What are your thoughts on getting feedback from potential customers before you reach product-market fit and after? Are you asking the same kinds of questions? Do you want the same kinds of feedback? Do you prioritize user feedback the same way now as you did when you were just trying to figure out what kind of product to work on?
Sarah Hum:
I think the day after we’ve found a decent fit it’s more, how do we make the product better for our target audience? Because we’ve figured out who that is. In the beginning it’s a little more scrambled. A lot more guessing because you probably don’t have enough data yet. We tried doing A/B tests at the very beginning but there just wasn’t enough people, so there’s no point in doing this. I think it does change a little bit but ultimately, you’re trying to build a product for a specific type of person so that didn’t change but I think the audience changed.
Courtland Allen:
You mentioned your pricing right now, minimum plan is $50 a month. That’s 25 times higher than your old minimum plan. But now you’re considering a move to freemium so people will be able to sign up for Canny for free, try it out and they’d eventually upgrade. Why even consider that? Why go back to the drawing board with your pricing?
Sarah Hum:
I think we’ve always, since the beginning we’ve always wanted to serve small companies. We are one of them, we want to help them. Our pricing today blocks a lot of them. I think that’s just one of the feel-good reasons for us to do freemium. But, also, like Patrick says, “It’s an acquisition strategy.” We get more people, more eyeballs on the product. We get more people trying it out. Hopefully we get really good at convincing them to upgrade. Word of mouth public product helps generate revenue a lot. If we can have more people using the product in general, I think it will definitely help.
Courtland Allen:
Let’s talk about competition for a little bit because I think this is a pretty big factor in why a lot of early stage founders either don’t decide to work on a particular idea, because they see a competitor is already doing it, I’m too late. Someone already took my idea, or why they charge very little, which we already talked about. How do you think about the competition for Canny because you aren’t the first company to exist to allow companies to collect feedback from their customers?
Sarah Hum:
In the early days since we were building Product Pains and not really paying attention to anything, which is probably not good advice, we weren’t really paying attention to User Voice, which was the big player and maybe still is the big player so we just built what we thought was good and what we thought was helpful.
I’m grateful for it now that I think about it but on the flip side I think there have been a lot of similar products cropping up recently that people compared to us and honestly, I think competition is a good thing in general but it’s definitely a thorn in our side. It’s hard.
We are confident that we are good product builders and we can stay ahead of the curve instead of following in the footsteps of someone else. We are aware of them, but we don’t let them get to us.
Courtland Allen:
I would guess that your biggest competition is people using nothing. If I start a company, my default decision is I’m going to put my email address on my contact us page. People will send me emails with suggestions, and I’ll reply and that’s my solution. How do you convince someone who is doing it like that who might not even be looking for something like Canny that they need a tool to help them collect customer feedback?
Sarah Hum:
I would say if you don’t have customers you probably don’t need us.
Courtland Allen:
You’re probably not going to use Canny.
Sarah Hum:
Talking about target audience again, you’re probably not there yet. I’m totally fine with that. A lot of people start with spreadsheets, a lot of people start with email address like you mentioned. And that’s okay.
It’s our job to convince you at the time that you start feeling the pain that you move to a more dedicated system. That’s what we found with us. Spreadsheets are the enemy to a lot of startups and that’s totally fine, but we have an import tool. We just help bridge the gap when you’re ready. That’s how we handle that. It’s not a concern for us.
Courtland Allen:
Let’s talk about hiring for a minute, Sarah. Canny is now a five-person company. It’s no longer just you and your husband but you’ve also got three employees working under you. How’d you go about building up your team?
Sarah Hum:
It took us a while to make the amount of money we needed to start hiring. But we stuck it out, we saw it in the distance and knew it was achievable. So we just waited. It was the two of us for a while. We waited until we could afford someone. But the first person we hired was someone for customer success.
So they cover our support and success which was a huge weight lifted off of us. We now do not wake up to a huge queue of support emails and live chats. That’s been really nice. Over time we’re just thinking about it like, what is the biggest part of our brain that we dedicate to something that might be a little less important than what I’m good at and how do we bring someone on to fill that role?
That’s what we’ve done. When we feel the need for someone, we put up a job listing and try to bring someone on. That’s another reason I think bootstrapping was the way to go for us. We’re never like, “We must hire someone now.” We’re taking it easy, we’re thinking about it hard before we make the decision to do something. We’re at a nice family size now.
Courtland Allen:
Hiring can be nerve racking, especially if you’ve never done it before, if you’ve never interviewed somebody before, if you’ve never managed someone before. And you’re going to do it remotely, so you don’t even get to talk to this person in person all the time. What are some things you’ve learned about hiring and managing people that others might want to know?
Sarah Hum:
I haven’t been a manager before and that was and still is one of the hardest parts of my job for me. Just understanding how to help people do the things that they are here to do and that they’re happy doing it and they feel fulfilled. It’s something that’s on my mind constantly. But I think the fact that I am pretty self-aware helps a lot. I can tell when there’s something wrong about something, when there’s stuff I need to say.
I don’t hold things in when I feel it’s important to be said. I feel like transparency is number one. Be open with the people that you work with. You are a family. You see each other – well, you don’t see each other really but you’re working together for a lot of the day and it’s important for people to trust you and feel good about working together.
I think that’s one of the main things I’m trying to achieve. We’re trying to do that with our team off site as well. We try to see each other three to four times a year. We’ve done three team retreats so far. Keeping the relationship really honest and open, I feel like, is what’s working for me right now.
Courtland Allen:
What are your goals with hiring and bringing more people on and with Canny in general? Where do you see this going in five or ten years?
Sarah Hum:
Five or ten, that’s hard.
Courtland Allen:
You’re right. How about in one or two years?
Sarah Hum:
I think we want to keep growing our team very sustainably. When one person is onboarding, I want them to be the focus. I want to make sure that they are comfortable, and they feel good about the work they’ll be doing here. I do want to grow it bigger. We have a lot of cool stuff that we want to build.
We have cool things that we want to do. I definitely want to grow it bigger. Product-wise I see Canny working for bigger companies soon. From the beginning we’ve really built the product up to work for small and medium businesses. And there are bigger businesses knocking on our door. So if we can serve them as well, that would be great.
And just continue to help teams make better decisions. I feel like people make decisions based on almost nothing and if we can help inform them with what their actual customers are saying, that’s what Canny is here for.
Courtland Allen:
What kind of affect do you want your business to have on your life as a founder. I know some people who are like, “I never want to hire. Then it gets real. Then I have to manage and it’s not just a fun thing for me anymore.” I know some people who are like, “I want to hire hundreds of people and run a massive company because that’s how I see myself.” How do you want to affect your life personally with Canny?
Sarah Hum:
Canny has enabled me to travel for the last few years, which is great and I never want it to get to this place where I feel icky about going to work every day and I feel unfulfilled and like we’re doing the wrong thing. I never want to get to that point. But I think growing the hugest team isn’t super interesting to me.
I never want to be so detached from the product that I don’t even know what’s going on. So personally I do want to keep it kind of cute and small. At the same time having a big impact with just a small team. That’s what I want.
Courtland Allen:
That’s the power of internet-based businesses. You can have a giant impact with a really tiny team. You can have a giant impact by yourself, really. So this show is listened to by a lot of people who were in a similar position to where you were two and a half years ago, who are maybe just starting on things or considering getting started.
What would you say to someone in that situation, Sarah? What would you want them to know?
Sarah Hum:
I think if you’re at a full-time job right now and you’re considering starting a company nothing will prepare you for that really. Just take the leap and do it because I have learned so much more in the last two years than I have in my whole time at Facebook. It’s something else. You really need to experience it to know what it’s like and make mistakes and realize making mistakes is ok. Just try it.
Courtland Allen:
Just try it. You heard it here first. Sarah, thank you so much for coming.
Sarah Hum:
A+ advice.
Courtland Allen:
It is true, people need to try. It’s good advice. You can’t just listen to podcasts all the time. Anyway, Sarah, thank you for coming on the show.
Sarah Hum:
Thank you for having me.
Courtland Allen:
It’s been my pleasure having you. Can you let listeners know where they can go to learn more about what you’re up to at Canny?
Sarah Hum:
Me, personally, I’m on Twitter @SarahHum. We share cute photos and team photos and team events on Instagram @carryoncode. And Canny is Canny.io. Check us out. Thanks, Courtland.
Courtland Allen:
Listeners, if you enjoyed hearing from Sarah, I’d love it if you reached out to her and let her know. She is @SarahHum on Twitter. If you learned anything or appreciated hearing her story take a second and tell her thanks.
I also love it when you reach out. You can find me at IndieHackers.com, which is a community of many thousands of founders and developers who are helping each other getting started building profitable online businesses.
It’s not just a podcast, it’s also a website. If you’re working on something new or just thinking about it, I encourage you to make a post there and tag me so I can respond. I’m @CSAllen and again, that’s IndieHackers.com. Thank you for listening and I will see you next time.
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