ConvertKit: How Nathan Barry Bootstrapped an Email Marketing Business(indiehackers.com) |
ConvertKit: How Nathan Barry Bootstrapped an Email Marketing Business(indiehackers.com) |
This was a hack I used on an eventually failed software venture. We were in an incubator and had about $10k and the start of a pivot. We hired 3 contractors to build an MVP in about 2 weeks. We focused on the core functionality of the product. Since we used Rails we also were able to use a module that gave us a nice admin UI around our data model. This let us do the data entry for pilot members while we got feedback on the core product. Since we were providing a way for vendors to sell products with complex facets (prices in multiple currencies, descriptions in multiple languages, complex product availability etc) we could control the data entry and also avoid building complex wizard UIs for users that surely would be given up on with our limited value prop at the time.
Thinking back on that hack I think it is definitely something I'd do again.
Wrote a bit more about what migrations were like for us here: https://artplusmarketing.com/the-silver-bullet-in-convertkit...
Just curious for those that are lambasting his methods of marketing - how do you sell or market your products or services? Are you even involved in the marketing & sales aspect of a business, or is your role just coding, devops, finance or other?
Edit: Here: http://nathanbarry.com/authority/
The other books of his that I found very useful (and inspirational) are "The App Design Handbook" and "Designing Web Applications". They are here: http://nathanbarry.com/books/
I co-wrote a book on "growth hacking" (https://secretsaucenow.com), which really serves as a hand-held, step-by-step guide to user acquisition. (I originally called it "user acquisition" but unfortunately "growth hacking" performed 4x better in A/B tests). It was really hard to do, but wow. Sometimes the self-promotional marketing feels kind of cheesy to me, but man, it's so worth it.
First there's the cash. We've sold over $120,000 worth in the past 9 months, and did it direct without any publisher, so that's all straight into our pockets (after fees). I now have 2-3 people reaching out per week asking me if I can work for them, including big/successful YC companies.
I'm turning all of those down, but I feel like if I ever needed a job again or wanted to go freelance I could do it 100x easier because of a book.
I'm pretty proud of the book; I think the book is really good, and so far as I've found it's the only actionable Internet marketing guide out there. I put a ton of thought, effort, and energy into it. But I had no idea that a book could have such an effect in a day and age that's seemingly flooded with this kind of information.
I get that by selling $300 book bundles, he only needs to sell 1/15th of what he'd need to sell if the book were $20; and that of the people who would buy the $20 book, there are probably more than 6% of them who will buy the $300 book; but it's still pretty offputting.
I'm certainly glad that I didn't have to buy K&R's C book as a $200 package complete with "file templates" and an "audio book" and "an exclusive skype session with the authors who will give you personal feedback on your C program"!
I read it in 2013, and it's probably earned me at least $100,000. That's being veeeery conservative.
Not everyone will have that experience, of course. I had an existing book series, and Authority gave me an idea for how to repurpose it into a larger business.
As for the package on his site: he probably wants to avoid support. You get a lot of it with a $20 price point, and as he wrote in the article, he's focussing on converkit. Whereas with the amazon listing, amazon handles all customer support.
(I learned that lesson with my own books. My amazon royalties are smaller than my overall business, but I'm still very glad to get them, because there's basically zero admin work required.)
The book is really good; however, I would not have bought it then if I had had to pay $180. Is it worth it? Yes, if you're 100% absolutely certain that you want to create a business around a book.
Exception if there's a clear association with a real publisher and/or university, obviously.
Personally though, I don't get how this kind of marketing strategy works. I unsubscribe SO FAST from things that seem like mass emails that it just wouldn't work on me. I suppose I'm a huge exception to the general public? I'm even surprised when I look over at my girlfriend's gmail how many promotions she has (not in a separate tab).
For example, Indie Hackers (the site that hosts this interview) has grown to about 8000 email subscribers in the past 6 months. My newsletter has 52% open rates and very low unsubscribe rates.
Even more extreme, Ben Thompson at Stratechery has upwards of 2000 people paying him $10/month to get his private newsletter.
It's more of a notification via email than the email itself.
I have a ton of spam promotions that come when I join a service. I want the service, not the marketing!
But sometimes I want to follow what someone says, so I sign up. I read that stuff very attentively.
Services like convertkit tend to be used for the latter use cas: deliberate signups by interested people.
That sample gives you a potential of 50% of the market, and in my experience you are the exception and she is the rule, adjust accordingly.
That simply distinguishes every successful business ever (with a few lucky exceptions) from the ones that failed because their owners gave up too early.
Two years is about a minimum that you should be prepared to dedicate to your newborn business if you are at all serious about it.
I've written a bit about this here:
https://jacquesmattheij.com/it-takes-three-years-to-build-a-...
Hopefully we can tell more stories to show that two years really should be your minimum commitment to just get traction.
How do you know when to give up though? I've developed a great product, spent 4 years working on it and still only make enough to cover hosting bills. I'm toying with the idea of Throwing in the towel, but I'm plagued with "what ifs".
> Since we haven't raised money and aren't planning on a
> big exit, I want to continue to pay myself well through
> distributions so that offers to buy the company continue
> to be easy to decline.
This doesn't take into account that claiming a portion as yours is an investment - it's an investment to secure your own continued long-term interest in the project.
Clearly you wouldn't do it to the point where the company is suffering - but to the point where maybe you're just not growing as fast? Or have to do to add some features? Often a worthwhile tradeoff.
If you're listening to a podcast with a company founder as a guest — you're listening to content marketing.
If you're attending a free event, webinar or watching a youtube video where company founders are talking about stuff — you're watching content marketing.
I'm not saying this is bad. Content marketing basically converts at some rate relative to the value that consumers get from it so there is some merit to that. As long as people realize what their consuming, seems fine.
Nathan is super smart, genuine, honest and generous. Our culture is a reflection of his personality, which makes ConvertKit a fantastic company to work for.
[1]: https://weworkremotely.com/jobs/4266-senior-rails-engineer
Just like the best way to live off a 4 hour work week is to write a book about how you too can live off a 4 hour work week.
For instance I pay $60 CAD / month to intercom.io for a website that isn't even built.
THAT's powerful. Made me pay for shit I don't even use (but going to real soon....I keep telling myself that)
Convertkit grew remarkably well because it tapped into the right problems. I think people often underestimate how giant of market "email marketing" is.
I've now released video courses on the site, things are going very well revenue wise, and I'm on a steady path of much further growth. I honestly don't know what would have happened had I not read Authority back when I did.
Very inspiring to see what you've done with Convertkit, and it's making me consider more direct sales.
p.s. Here's an early writeup you did, in case you don't remember. http://nathanbarry.com/authority-case-studies/
My thinking is that a big benefit of the service is that I can sign up for my favorite blogger or YouTuber to email me when they post something new, rather than checking the page a couple times a week and finding nothing new half the time. I've never found an effect RSS service for myself and I suspect many, many others feel the same. If we had, the content providers we love would reply on that instead of being a potential customer for you.
One example: when I was selling licensed software I don't think I ever managed more than $100K in annual sales (which to me seemed easy money). Enter Marco, my first employee.
Before the year was out we had nice sales documentation to go with the products, the beginnings of a brand and $600K in sales...
Though anyone who sends the third email after no response with something like "did you get squished by an elephant or eaten by an alligator? Because I can't think of any other reason you haven't replied" is instantly dead to me.
I'm guessing this because I too spent a very confused 30 seconds before realizing I just got trolled. Well played.
This achievement is very impressive nonetheless. Growing a business even in a known environment is very hard, I know it first hand.
It's especially interesting that he shares numbers, some I'd love to be able to do but money is particularly taboo in my field. Having your accountant and banker tell you that your numbers are actually very good compared to others despite being under the target you set to yourself is especially comforting.
Having your banker call you and congratulate you because you're now largely cash flow positive is exhilarating.
That's exactly what it is. $55K is next to nothing for starting any kind of company, even if you quit your job and start as a freelancer (arguably the simplest kind of company) you'll need some capital to catch you if you have a dry spell.
Business that get started on $0 are extremely rare.
Once again I am not diminishing his accomplishments. I started my own company with the same amount of money but never claimed to have "bootstrapped"it.
We on HN live in a bubble that amazes me. I know first hand how much it costs to start a company and how hard it is to raise a 1M€ (I heard it is as hard as raising 10M$ in the valley, but never tried to raise in the US so take that with a grain of salt!). I also know it is much, much harder to get your first 1M€ of revenue. Like one of my business angel once told me "il nest de bon argent que celui du client": the only good kind of money is the customer's.
[1]http://www.cnbc.com/2016/09/12/heres-how-much-the-average-am...
I am neither claiming he's bad or wrong or anything like that. Like jacquesm said it's probably more of a problem of definition between a dominant one and mine (in other words, looks like I am wrong). I have seen people starting companies with nothing, not even a roof on their heads. I started a company with the amazing comfort of 50k€. I am working hard to make my company a success, but I command the efforts of the guys I have seen eating noodles for years before their company finally took off. We are talking living way below the poverty line here, which is not what I lived when I started a company with 50k€
To stretch the analogy it like the Power Supply bootstrapping the BIOS bootstraping the Operating System loader.
http://fakespot.com/product/authority-become-an-expert-build...
Just read more than the title before commenting. ;)
(at a higher level, i'd like to write a book sometime, but it's competing with everything else i'd like to do sometime)
He then found out where our potential customers hung out and started a conversation with them, asked if he could mail them an information package and when given permission did so.
Everything looked pretty spiffy (for the time), website and documentation linked up in a very recognizable way (a little family of buttons with a common theme adapted for each product).
before Marco:
http://web.archive.org/web/19961229205008/http://mattheij.nl...
After:
http://web.archive.org/web/19980507122555/http://mattheij.nl...
I don't have any samples of that documentation any more, but it's long ago.
Essentially Marco 'packaged' the product in a way that made sense to potential users, where I was totally relying on happy customers telling other potential customers (which worked, but I failed to recognize that many of our customers saw our product as their competitive edge and they would rather keep that to themselves).
Interesting turn to the story: we still work together.
Best of luck!
I would think it would be fairly known if someone's books are snake oil. Just my opinion, though. Scumbag seems like a harsh judgement.
That's probably a unique case because in the beginning the documentation was so bad, but especially in new and esoteric programming languages/methods $50 is no big deal, and there are lots of willing buyers. I'd bet the HaskellBook authors pulled in 100k+ too.
It's true that market opportunities are hard to find, but you'll never find one if all you see is the "yes, buts". You miss 100% of the shots you don't take.
I know a half dozen other authors of technical/programming books who have probably made between $50k to $100k over the life of their books.
So there's a lot more money potential for the average programming book than there is for the average novel. (Bestselling novels make much more, but only a few books get that status)
If you give me a system that will help me become a full-time programmer in 12 months, making $75/hour, then I'll gladly give you hundreds of dollars for the book.
Out of 100, at least 3 people will see that value. If you charge $50/month for the book/course, and have a list of 3,000 people, you are effectively looking at a full-time income
I'm also interested in the 90 day plan. Unfortunately, it is only available through the $299 package, which I don't feel comfortable paying for.
Seriously though. If you've ever built a company, there will be times when you wish you had that extra $60 sitting in your account. Cancel until you are ready.
Intercom's marketing is doing something right clearly.
After social contributions, 30k€ net revenue in France (actually a little more but I take the liberty to round that down).
In large cities, 33% of revenue for housing is not uncommon. We're left with 20k€, of which we have to substract revenue taxes (rule of thumb in that revenue range, about 1 month revenue per year) so here 5k€. 15k€ for 6 months. living frugally you can probably save 2/3 so you can save 10k€ in 6 months.
Assuming these ratio, it would take 2.5 years of steady, near fulltime employment as a contractor to save these 50k and go all out on your project.
https://s3.amazonaws.com/gumroad/blog/DiscoverMeteorCaseStud...
Basically, if it seems likely to lead to a profitable idea, then $299 is trivial. If it doesn't, then just the book will be fine.
For me, it was clear from reading the book that I had an idea I should pursue. You'll probably either get that from the book, or not. If you do have something to launch, then you'll have a better idea if the rest of the package is worth it.
The median American family is not trying to start a business.
Also: if you can't manage your own funds and save please don't start a company, it will most likely not work and create misery for yourself and others.
> Once again I am not diminishing his accomplishments. I started my own company with the same amount of money but never claimed to have "bootstrapped"it.
Well, that's a problem of definition more than anything else. If you want to use the term bootstrapping as starting with nothing that's fine by me but I do note that even the word assumes the presence of boots and straps.
The key question is if the money was yours or not. If it wasn't then you weren't bootstrapping.
> We on HN live in a bubble that amazes me.
No, you choose to use terms in ways that are different from the rest of us. That's not a bubble, that's a terms issue. This can make communication hard.
> I know first hand how much it costs to start a company and how hard it is to raise a 1M€ (I heard it is as hard as raising 10M$ in the valley, but never tried to raise in the US so take that with a grain of salt!).
That depends. There is a lot of 'stupid money' floating around.
Besides, raising money is explicitly not part of bootstrapping.
> I also know it is much, much harder to get your first 1M€ of revenue.
Yes, that's true.
> Like one of my business angel once told me "il nest de bon argent que celui du client": the only good kind of money is the customer's.
Yes, that's good advice, but it comes from an investor.
I agree with everything you said about money and investors management. I'd just add that "stupid money" probably isn't the good kind of money :-)
At least I know that I would have made a mistake accepting a large amount of that kind of money. Choosing a smaller amount coming from people I trusted more probably helped me a lot in my beginnings.
Now to my honest follow-up question: let's say a billionaire puts his 1B$ into a new venture, would you call that "boostrapping" as well?
Depending on how he got the billion and whether or not there is outside investment involved, possibly yes, but the term is usually used for small amounts of money (say < $100k or so). But that's a technicality.
But truth be told very few people are in that luxurious position and those that are will almost never risk all (or even a substantial part) of their private capital on an entirely new venture. So that's highly hypothetical and would take the better part of several decades before you'd be in a position to execute that phase of your bootstrap. Elon Musk comes close but even he routinely uses outside capital and so is not really bootstrapping (though I'm not aware of anybody else that is so willing to put most or all of his own money into new ventures).
Bootstrapping comes from the imagery of pulling yourself up by your bootstraps.
You come into the world naked, without substantial inherited money, you become employed somewhere, you save some money, maybe do some side jobs, one day you jump ship and go full time into your own business and your savings provide your runway. That's the textbook definition of a bootstrapped business.
It tends to produce small to mid-sized companies ($100K to $10M) in revenues and anywhere from one to 50 or so employees. It's the most sure-fire path to any kind of independence for skilled workers and has a totally different risk profile from a business that takes on outside investment. (Larger risks of failure, potentially larger returns)
DISCLAIMER: I bootstrapped a business with similar amount to his but nowhere near his level of success (embarassing but happy with what I have done so far in 2.5 years). We are a much smaller team though so yes, I have not spent too much on growth yet.
> Bootstrap is a situation in which an entrepreneur starts a company with little capital. An individual is said to be boot strapping when he or she attempts to found and build a company from personal finances or from the operating revenues of the new company.
Search for the things that no one else sees or has the vision or boldness to turn into an outlandish success.
Take a chance. Live a little. Dig deep down for your inner crazy.
They are very good at hounding you to pay (and inversely keen on giving you back any overpaid amount ;-) ) so the incorporation does not really help here. You still owe them about half the gross revenue.
(Once again, let me re-iterate that I have understood that "my" definition of boostrapping is not correct)
To me, a billionaire going all out on a new project is in a better financial, business & social position. "hey look, Elon Musk has launched a new thing, took his own billion to build it, must be awesome like his past ventures" compared to "hey, here is that John Doe we never heard of with his project he built in his home. To me, with financial capital comes social capital. When you invest all your money in a project, if it's 1B$ your social status "highly affluent guy with connections up to the white house and every Fortune 500 companies" does not change and is immensely useful. If it's your 5k€ your social capital is low and will get from "successful salaried software developer" to "the noodles-eating guy who didn't have a shower in 4 days". Guess which one is most likely to win deals?
Other than that, yes, billionaires have some advantages that us ordinary mortals do not have. But to stick with Elon Musk, he wasn't born a billionaire (but he did go to a private school, but that's not unheard of in SA).
Once you're past $1M net worth or so the game gets easier, sometimes a lot easier. But $1M vs $1B doesn't make much of a difference if the business tanks and you've invested all of your capital in your own business.
And that's the main reason you don't see billionaires usually spending all their money on their own projects: they spread the risk around to avoid possibly losing it all.
Absolutely!
> Once you're past $1M net worth or so the game gets easier, sometimes a lot easier.
I sometimes feel that difficulty of doing business is halved with very order of magnitude, being friends with business owners whose net worth are between 10k€ and 50M€. My 50M€ friend has access to things my 10k€ wouldn't even believe exists.
50M€ is "let me talk to the ministry chief of staff about this. I'll also talk to the CEO of a fortune 500 company about this mild inconvenience"
10k€ is queuing at the city building in the hope that maybe someone will do something about the closed road leading to your shop.
> But $1M vs $1B doesn't make much of a difference if the business tanks and you've invested all of your capital in your own business.
> And that's the main reason you don't see billionaires usually spending all their money on their own projects: they spread the risk around to avoid possibly losing it all.