Lessons Learned Growing my First SaaS Business

I set out to build Qeryz with my technical co-founder on May 2014. It’s been more than a year since then and I’ve learned tons and tons of stuff about SaaS and Growth than I expected myself to absorb in a year. I’d like to write it all down before I forget the feeling of these things I’ve found out. Afterall, my first company, SEO Hacker, started out as an online journal.

1. Start Lean, Cut all Unnecessary Expenses, Iterate for Growth

Nobody, and I’m using the word NOBODY, helped me start Qeryz in terms of funding. I talked it out with my co-founder and I agreed to fund everything from day 1 until we could find an investor. It’s been over a year since then and I’m still the only one bleeding out trying to build an awesome product and market it.

I admit there were things I spent on that proved to be unnecessary in the long run but I wouldn’t be able to find that out if I didn’t try it. The good thing is, I spent on things in a very small scale. Whenever I was unsure of spending money in marketing or in an additional tool we think would supplement our company’s growth, we always opted for the free trial or the cheapest plan possible.

If it produced results that we could track, we committed. If not, we cut it off — immediately.

The good thing about building a SaaS tool in a third world country is that we have an awesome pool of talent that is relatively cheaper. So we’re able to burn cash a lot longer in our runway.

The bad thing about building a SaaS tool in a third world country is that we don’t have an advisory board, no way to get respectable and reasonable seed funding, no technically inclined VCs — no all of that. So we’re pretty much left to ourselves to grow this. Which is a huge, uphill challenge.

Third world country or not, we’re giving it all we’ve got.

2. Growth Starts and Ends with Data

Growth has a lot to do with data. If there’s no data being tracked, there will be no way to track growth and no way to validate tests and hypotheses.

Collect data from day 1. Make sure that your analytics is correctly installed. Make sure the right metrics are being tracked properly or the data will be skewed and end up as worthless. As a Growth director, this is how you will be able to prove to yourself and to your clients that your work has produced results.

3. MRR is not Everything

Monthly Recurring Revenue (MRR) is an awesome way to track whether your product is making traction. That first trickle of revenue is a huge thing to celebrate.

I remember feeling like a million bucks when we made our first sale. I shared it with the Qeryz team, I shared it with my then-girlfriend (now my wife), I shared it with my family, I shared it with friends, with my tortoise — with anyone I could possibly share it with.

It was nothing more than $9 really. But to me, that $9 felt like chutzpah.

Like magic.

Jason Lemkin who is a Partner at Storm Ventures and blogger at one of the most popular SaaS blogs, SaaStr, says that “if you have even just 10 paying customers, at any price point, don’t quit.”

We were able to hit 10 paying customers last January — which was our 8th month. Granted, me and the Qeryz team work slower than we would have hoped because we are generally a 4-man team with two junior programmers working full-time, one senior programmer (my co-founder) who acts as an on-and-off consultant since he has his own projects to take care of in his own company, and I’m doing everything else while managing SEO Hacker’s SEO services division as CEO.

So I went ahead and tracked MRR — but not as a main metric. MRR is fun and it can feel magical and all, but in reality it’s nothing more than a type of vanity metric. It doesn’t mean that your product is getting better or that your marketing efforts are improving. It just means that you’re getting more revenue.

But what you really need to know is “Why?”

Chamath Palihapitiya’s talk on how he and his team put Facebook on the path to 1 billion users opened up my eyes to metrics that matter. There’s just too many metrics popping up here and there as I immersed myself in the SaaS world but what really matters is extremely simple.

For Chamath and Facebook, it’s getting “any individual to 7 friends in 10 days”. That’s it. Plain and simple. No MRR, No K (virality) metrics, no number of status updates, no number of logins, no number of referrals — no any of that. What mattered was “get any individual to 7 friends in 10 days.”

That was their keystone — the core of their growth metric. I wrapped my mind around that and thought what our main keystone metric would be. Finally I came up with this:

Get a user to receive responses from his/her survey in 7 days or less. If we are able to improve the conversion rate of this metric over time, that would set us up for success. Here’s what it looks like since we started tracking it (take note of the dips in the chart — those were times when we tried to introduce some tests in hopes of improving our engine of growth. It added a little more friction in the process and it didn’t turn out so well.)

If you take a close look at the chart and compare it with the MRR chart earlier, it doesn’t make a lot of sense. The MRR chart looks a lot like it’s curving upwards while this chart looks like it’s an on-and-off chart. Hence, this keystone metric is not directly correlated with our MRR but it affects our overall growth engine.

The better the % of users we take to getting ‘their first survey response in 7 days or less’, the better chances of them sharing Qeryz with their friends and peers. Naturally, there’s a much better chance of them turning into a paying customer too.

Data can drown you. There’s just so many things you can track. Most of them are vanity metrics. Track 2–3 main things and that should be it. If you can summarize it to 1 keystone metric, all the better.

4. The Andon cord is Actually an Accelerator

What does the word ‘andon’ mean? In English, Andon means ‘Sign’ or ‘Signal’.

So what is the andon cord? It’s the emergency cable strung above assembly lines in Toyota factories that came to symbolize the built-in quality of the Toyota Way. Workers pull the cord to alert co-workers when a problem crops up so they can get help. If the glitch persists, workers may even stop the line to troubleshoot.

Eric Ries, in his book, The Lean Startup says that Toyota’s famous andon cordis a way for its workers to interrupt the careful assembly line flow. However, the benefits of finding and fixing problems faster outweigh the cost. This process of continually driving out defects is the root cause of Toyota’s historic high quality ratings and low costs.

I remember there were times when we were just blazing hot in building and releasing feature after feature after feature. And when bugs would arise in between, we would identify them as urgent or important or both. The thing is, whether it’s one or all of the three, if bugs are left unchecked, it creates bigger problems moving forward.

Whether the bug is on our analytics integration, or our email marketing platform integration, or in our product itself, bugs that aren’t fixed immediately create more problems as they go.

So when we see a bug, we pull the andon cord. We put the bug and all its implications on our Pivotal Tracker — at the very top of the to-do list in the internal roadmap, and we squish them ASAP.

5. The Market is Huge and it Knows what it Wants

Surveys are very, very, verrrryyy rampant in the SaaS world. There’s SurveyMonkey, there’s Survicate, there’s Hotjar, there’s SogoSurvey, SurveyGizmo, Qualtrics and so on and so forth. And as with most of them, things can get complicated fast because of the capability of excessive customization.

I wasn’t looking to start up my fist SaaS business in a crowded, highly competitive space. What I wanted was to start in a very small niche market that isn’t being served so well. And it just so happened that I needed a microsurvey and all that was available was Qualaroo.

I was able to use Qualaroo back when they were owned by a different company and they were named KissInsights. Back then, the product was mostly free to use. And it was perfect for a guy like me who wanted just two things out of the product:

1) To run a survey in specific pages right on my website.

2) To get the responses in an easily understandable format so I could study and create action points around it.

I needed a simple microsurvey functionality

When I needed to use Qualaroo’s functionality back in 2014, they didn’t have their usual free product. Instead, they were charging a hefty amount for two very basic things I needed. And that’s fine because they’re focusing more on enterprise-level customers. But I’m not an enterprise-level customer. I didn’t have the budget to continuously use their product (which I love!)

I looked around and apparently, I wasn’t the only one frustrated about this.

So I went ahead and scratched my own itch. I built a product that would enable users to do those two very simple functionalities with a small team.

I figured that there would be guys like me out there who are worth building for. We may be a very small segment of the market, but we do exist. And if no one’s targeting that segment of the market, then perhaps it’s a market I could dominate.

6. Looking Sideways is Tempting but Worth very Little

This isn’t something that has bogged us down as I’ve already been learning how to get the best of a feature or design and apply it in my product or website or service. But it could easily be a form of addictive distraction to keep looking at your competitor and what they’re doing — and follow along.

It’s so easy to check out some of the survey products that I’ve mentioned above and just try to go after some ‘awesome’ features that they’re running. But will it be accepted by our target users? Will it come out as ‘awesome’ for them as it does with us? Could those awesome features really be a core part of our product that our target users will be willing to pay for?

It’s highly unlikely that you and your competitors — however relative they are as your competition, have the exact same vision for where your companies/products are heading. So don’t head their way. Head yours because that’s where your target users expect you’re going.

7. You have to get your hands Muddied with Support

Support is seen as a ‘dirty’ job. Especially here in the Philippines where we have support centers (a.k.a. call centers) in every city where there’s respectably stable internet connection. It isn’t something that a project manager or growth director would normally do. Much less a CEO.

My teammates aren’t that sharp with their written English and I don’t want to burden them with replying to customer support emails — so I do it.

99% of it.

And you know what? Most of the light bulbs came from my back and forth emails doing support for the company. Here’s one good example where we turned a customer feature request in to a revenue-generating feature:

Hi Sean,

I have enjoyed using the app, I was wondering though, would you be considering an option to “pay to remove” the Qeryz link, outside of having to take the agency package.

As a small business the Agency package is a bit of an over kill for us but having the ability to de-brand the survey tool to maintain the user on the site, maintain our brand, and minimise them clicking away through this, is of value and I would certainly be prepared to pay for this as a feature option upgrade

I guess for you it depends how much you see the link in the survey generating new leads, and then off set this with an appropriate feature upgrade cost. Maybe this could be an optional upgrade for any paid account?

Just a thought.

Cheers,

Nick

To which I responded:

Hi Nick,

Sure — I’ll ask our product team about your idea. What plan are you planning to get? 🙂

The thing is, that add-on feature is very difficult to implement and automate with Paypal. In truth, Paypal sucks as a SaaS payment gateway but that’s all we got here in the Philippines as of the moment. If ever Stripe steps foot into our country, we’re definitely going with Stripe. Until then, requests like yours would have to be manually fixed from our end. Perhaps we could create a special plan just for you 😉

Cheers,

Sean

So we thought about it and said “Hey, if this guy is asking for this, there must be others who would request for the same thing moving forward.” Finally, me and my team decided to go ahead and we started building the feature. Paypal made it hard for us because they didn’t have provisions for just topping-up on the subscription amount of a customer.

True enough, before finding a workaround and launching the feature, two more people asked us about the ability to remove the Qeryz branding and link without the need to upgrade to an Agency plan (which is our most expensive plan at $79/mo). We kept them in mind and added them to the people we needed to ping after the feature was launched.

To date, this feature is a source of extra revenue for us (it costs an extra $9/mo to remove the Qeryz footer branding and link). And it all started because of that one support email.

The things I learn doesn’t stop there. I’m learning on an almost daily basis from the way our customers use our product. In fact, I’m starting to schedule calls with some of our paying customers to learn more about how I can help them succeed with Qeryz better.

It’s also interesting to note that your users are very responsive when they see that it’s the CEO of the company who is taking care of their support emails. It doesn’t come easy though. I’ve read a lot of blogs and books on support and winning people.

One book that really helped me is, “How to Win Friends and Influence People” by Dale Carnegie which is a classic and evergreen book on the strategies of winning people to your ideas.

8. Get your Customers to the ‘Aha’ Moment ASAP.

The ‘Aha’ moment is that magic moment when users finally unlock the benefits of your product and realize that it has the potential to make their life so much better. Some call it ‘activation’, some call it ‘adoption’ — I could care less what you call it so long as it is the magic moment of value for any single individual using your product.

The goal is to take people to that ‘aha’ moment as soon as you can, with as little friction as possible. Take away all that would hinder your users from seeing the core value out of your product. Whether it’s an engine of growth in the way, a special offer for them to upgrade, or a ‘welcome’ message — TAKE IT ALL OFF if it’s going to produce friction from getting your users to the ‘aha’ moment.

We made big mistakes in trying to include other metrics we hoped would increase along the way to the ‘aha’ moment. One example of that is including our ‘refer-a-friend’ program in the onboarding process for the month of July.

What happened? Here’s what happened:

Yep. The refer-a-friend program is one of our Engines of Growth (EoG). But it did us a disfavor when we included it in our onboarding process which is the catalyst to bring our users to our keystone metric which is their ‘aha’ moment.

We have removed it from the process after seeing this drop.

For SEO Hacker, which is my first business, the ‘aha’ moment takes a very long time — usually 6 months, before our customers see the value that ethical SEO brings them. With Qeryz, we have to take our users to that ‘aha’ moment much faster. If the user is tech savvy, it takes less than 10 minutes, if not, it takes up to 3 hours at times.

And there lies the problem — we have to optimize that 3 hours to become less and less for the non-techy users. That means, improving our onboarding process, communicating our tracking code installation better, creating videos on how to install Qeryz properly, creating documentation on cases where it may not especially work, etc.

If we’re able to get the non-techy users to the ‘aha’ moment as fast as we’re able to get the tech savvy ones, that would make for a significant milestone and it would increase the conversions for our core metric (Get a user to receive responses from his/her survey in 7 days) significantly.

Profit or Loss

We’re definitely not ‘there’ yet in terms of revenue. There are numerous problems still hindering us from making things smooth for our users such as the lack of payment gateways available here in our country or the lack of affordable international PBX provisions.

We’re generating revenue but we’re definitely not profitable yet.

Still, it’s an ecstatic feeling knowing that we’re on our way.

Sean Si

About Sean

is a motivational speaker and is the head honcho and editor-in-chief of SEO Hacker. He does SEO Services for companies in the Philippines and Abroad. Connect with him at Facebook, LinkedIn or Twitter. Check out his new project, Aquascape Philippines

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