How I Made $19,000 While Learning to Create My First Software Product – And What I Plan to Do Next
First, let me say this: I cannot write code – AT ALL.
Luckily, to be successful in software, I don’t need to know how.
My first attempt at creating software was a WordPress plugin that helps agencies connect with clients that don’t have mobile-friendly websites. I hired a developer to create the MobiLead Magnet for me.
To ensure that the developer built exactly what I wanted, I created a mockup that showed what every screen was supposed to look like and then created labels that described what each button would do when it was clicked. This didn’t require me to have any special technology skills, so no matter what your background is, you could easily create a mockup, too.
The plugin cost me about $1,200 to build and so far, I’ve sold about $20,000 worth of it. Given that this was my very first project, I’m pretty happy with the $19,000 profit earned so far.
The success of my landing page plugin has definitely increased my desire to improve the product and turn it into a fully featured Software as a Service (SaaS) app – and I’m very happy to say that is exactly what is going to happen—only this time, unlike every other venture I’ve been involved in so far, I’m not starting from scratch.
My Next Move in Software
A few weeks ago, I reached an agreement with the founder of ConvertKit.com to buy half of the company and in today’s post I’d like to share with you the thinking that went into this decision. I’d also like to invite you to come along for the ride as we attempt to grow this business from where it is today to our first goal of $30,000 a month.
Before we get into too many details, let me give you some background into why I think this particular business has so much potential. My hope is that when you see what my partner and I are doing, some of you will see ways that you might also get into the software business – even if you can’t write code to save your life.
5 Million Reasons to Love Software
Not so long ago I learned that Lead Pages had raised financing of $5M in a Series A round. I had heard the company was doing well prior to the round, however, I really didn’t think that a company making landing page software for Internet marketers would ever close a $5M round of VC funding.
I guess that shows what I (don’t) know!
Hearing this news made me think: if VC’s are backing a company with a SaaS app that makes creating landing pages easier to do, that must mean that some pretty smart folks see this as a market with HUGE upside, otherwise they wouldn’t have made the investment.
In case you aren’t familiar with the VC model, they are only interested in funding companies that can grow really big, really fast. Doing so involves huge risk (most fail); however, when the winners come in, they come in BIG TIME.
My First SaaS Business: a Software App for Marketing Agencies
Longtime readers will know that I am the co-founder of a SaaS company currently in development. The software is designed for marketing consultants and agencies that want to profitably scale a “blogging for clients” service and helps them to significantly increase their productivity in this regard. It doesn’t even have a name yet, though we are getting very close to releasing the software to a select group of beta testers.
The thing that I love about the product that we are creating is that it is very much in sync with the massive increase in popularity of content marketing. For consultants and agencies, this represents a substantial opportunity to increase their retainer income by creating blog content on an ongoing basis for their clients.
The thing that is yet unknown about this is whether or not consultants and agencies will actually pay for the software that we are creating. We do have plans to take pre-orders, but we aren’t there just yet and I will feel a LOT more confident about the prospects for this business as soon as I have some pre-orders booked.
Normally, when I get into a new business, there is a lot of existing competition, so I have a very high degree of confidence that I’ll be successful. After all, if there isn’t any demand for a product, there wouldn’t be any competition, right?
“The existence of plenty of competition is a very clear indicator that customers are quite willing to pay for a solution and I believe there is always room for one more competitor”
With the SaaS app I mentioned above, we don’t really have much in the way of direct competition, and that worries me a bit. In the landing page space, however, there is a truckload of competition. This competition indicates a massive opportunity…plus a guarantee that people will actually pay for software that makes it easier to create landing pages.
My Second SaaS Business: Say Hello to ConvertKit
Shortly after moving to Boise, I was introduced to a guy by the name of Nathan Barry. After meeting him for the first time, I came away from our meeting very impressed with how much Nathan had accomplished in his first year as an entrepreneur. To say that he’d made a success of himself is an understatement.
Nathan is an extremely talented designer, has written 3 books, has built a large following for his blog, and has extensive experience designing software. He is also the founder of ConvertKit.com, a SaaS business that makes it very easy for marketers to build a profitable audience. In fact, I highly recommend you follow along with our Audience Building Challenge.
As of this writing, ConvertKit has close to 100 customers and provides them with an auto-responder and responsive form creator. Did the world need another auto-responder with a form creator?
No, it didn’t need another one, it needed a better one, and that is exactly what Nathan has built.
There is definitely no lack of competition in the email marketing software space. The list of competitors includes names like Aweber, GetResponse, MailChimp, and many more. However, as I described before, wherever there is a lot of competition, there is also a lot of opportunity. To be successful, all one needs to do is create a product that is better than the incumbents for a well selected target market.
Notice that I said ‘well selected target market’. That is key. To attempt to go head-to-head with industry giants is generally a foolish move because there is simply no way to out-spend them.
However, when you are a scrappy start up that can make decisions and iterate quickly, there is also a substantial opportunity to pursue a niche market by creating a product, that for one reason or another, is better that what is currently available.
In fact, I’d go so far as to say that even if your product is only “just as good”, but your marketing message is better (for that niche), then you the odds that you will succeed are stacked in your favor.
Our Target Market
In our case, the niche that we are going to initially pursue is marketing agencies and consultants. The reason for this is pretty simple. Both Nathan and I have a fairly large following of these folks and we feel that we will be able to use this following to help us achieve our initial goal of $30,000/month in revenue.
Based upon the success of my MobiLead Magnet, I also know that consultants need a lot of help creating landing pages that will help them to attract more clients. To help them do this, one of the things we plan to add to ConvertKit is an updated version of the landing pages the MobiLead Magnet was designed to create.
While $30,000 a month might sound like a lot, in the grand scheme of things, a company that earns $360,000 a year is a very small company and we both believe that growing ConvertKit to this size is something we can achieve.
To help us get there, we intend to add features to ConvertKit that will make it a very compelling tool for our target customer and then use our marketing chops to attract enough customers to reach this first goal. Once we get to $30,000/month, we’ll have a very nice “lifestyle business” on our hands and will then need to make more decisions about our goals for the future, one of which will likely include our exit strategy.
Our Exit Strategy Options
Our goal with ConvertKit is to build a real business that generates a meaningful stream of predictable revenue (low 7 figures) and we anticipate that this will take us a number of years to achieve. The journey towards this goal will be filled with ups and downs, plenty of mistakes, wonderful lessons, and personal satisfaction.
In other words, it’s going to be a lot of work – and a lot of FUN.
When we achieve $1 million in annual revenue, the lifestyles that we will be able to enjoy will be fantastic and we’ll have done it by creating real value for our customers. At this point, I think that we’ll have much to be proud of.
We’ll also have some options for an exit that would not otherwise be available to us – and I’m sure that one of these options will be to sell the company for a healthy multiple of it’s revenue. If we were building a service business, as opposed to a SaaS business, the company would not likely be nearly as valuable because it would have lower profit margins and would not be capable of growing as fast as a SaaS company can – all else being equal.
I point this out, only because if you are building a company today, it’s very important that you begin to think carefully about how the business model (product or service) of company you are building now will affect your options to “exit” that business down the road.
As much as I like the product that Nathan has already built, the real reason that I bought into ConvertKit was because I wanted to build a landing page company and I want Nathan to be my partner.
ConvertKit is ideally suited to becoming a landing page company that also includes an auto-responder. Nathan has laid the foundation for that with what he built before I ever showed up.
I did consider some other options for developing a landing page company, but none of them included getting to work with a guy as talented as Nathan is – and, for me, that made buying into ConverKit the obvious choice.
The Opportunity That We See
It’s rumored that Lead Pages is currently doing about $250,000 a month in revenue. Having used their product, I can see why. They’ve made a terrific product that is very easy to use – and they’ve got a lot of traction with the Internet Marketing community as a result.
From a technical perspective, what they have created is actually quite simple and creating similar features in ConvertKit will not take us very long to do.
What Lead Pages hasn’t yet done is gotten traction with marketing agencies, consultants, and mainstream businesses (or if they have, they don’t promote that fact at all). They also haven’t build an auto-responder into their software so anyone that uses it must connect to yet another SaaS application. If you have been around online marketing for a while, this is no big deal. But if you are just getting started, it’s another point of friction in the user experience.
Think a bit of friction in the user experience is no big deal? Just tell that to Apple. Seems to me that there are quite a few people who are willing to pay extra for things that are incredibly easy to use.
Get ‘Em Young and Train ‘Em
When it comes to creating landing pages for mainstream small businesses, I think that the market potential is absolutely huge and for now, there is more than enough room for a number of competitors.
At the high end of the market, you have Unbounce. This is a very powerful tool, but it’s quite expensive and rather complicated to use. In my opinion the chances of a small business owner using it are quite slim.
There are plenty of existing plugins to create landing pages. I’ve tried many of them and they all seem to suffer from one limitation or another; and worst of all, they don’t really come with much in the way of pre-made templates. Without pre-made templates, there is more friction in the user experience.
I think that this is one of the reasons why Lead Pages has done so well with the Internet Marketing crowd. When I first signed into Lead Pages, the very first thing I noticed was how much effort they’d put into creating a fully stocked library of templates. Thanks to all the templates, I was able to create my first landing page in about 5 minutes.
By creating a product that serves the needs of customers who are just beginning to adopt online marketing, we believe that those customers will stay with us as they grow, so long as we keep developing more advanced features. That is one of the reasons that I quite like ConvertKit: thanks to Nathan’s design skills, it is very easy to use and is therefore ideal for people who are just starting out and don’t have to have to “read the manual” to get going.
With ConvertKit, our goal is to create an application that comes equipped with a wide variety of pre-made, yet completely customizable templates, all designed with the mainstream business owner in mind.
By giving these mainstream entrepreneurs a powerful tool to create high converting landing pages, as well as giving them a well designed auto-responder (so they don’t have to sign up for two different services and then figure out how to connect them), we feel that we’ll be able to get a lot of traction with them, and/or the agencies and consultants that serve them.
So What’s Next?
Building a successful business is not easy. The road to success with ConvertKit is going to be filled with highs, lows, and plenty of mistakes. To succeed, we are going to have to be smart and work our butts off.
If you’d like to come along for the ride, you’re going to get an insider’s view into everything we do – and we are going to share it all for free. It’s totally free and you don’t need to be a ConvertKit customer. To get each post emailed to you as soon as it’s published, sign up for the $30,000 mailing list below.