How I grew my Shopify micro-SaaS

(preetamnath.com)

139 points | by amrrs 37 days ago

12 comments

  • teh_klev 37 days ago

    Is it not a bit risky naming your app with "WhatsApp" in the name? Might be worth a rethink in preparation for that day you get served papers by Facebook (unfortunately).

    https://whatsappbrand.com/#:~:text=WhatsApp%20doesn't%20perm....

    "Don't use the WhatsApp Brand Resources as part of a name of a product or service of a company other than WhatsApp."

    • godzillabrennus 37 days ago

      He doesn’t just use the name but he uses their trademarked logo in his marketing.

      I think, he could get nuked by Zuck at any time.

      • grwthckrmstr 37 days ago

        Author here!

        You're completely right, it's an eventuality that we are aware of and figuring out the best way to deal with it.

      • dpcan 37 days ago

        The only reason I would never go this direction with my business is because you could wake up tomorrow and the features of your app become a standard feature of Shopify and you’re instantly out of business.

        Think flashlight apps for iPhone, health apps, etc.

        • kh30 37 days ago

          As a former PM at Shopify, I think the risk of this is pretty low. Shopify optimizes for building things into the core product that at least 80% of the merchants can use. On top of that, they are pretty slow to get things to market given they are a big company. That said, the risk is not zero. But if you pick a good niche and stay differentiated, it’s less than you’d think.

        • akudha 37 days ago

          That is true. But note that they are based in Bangalore, 25K USD MRR is a ton of money (it is a lot of money even in the US). If they maintain this for just a year or two, they're likely set for life.

          Sometimes it works out to just ride the wave :)

          • blackrock 37 days ago

            $25k USD monthly, is $300k a year.

            Not bad, if it keeps running on autopilot for a few years.

            Say, you can keep it running for 3 years. This is close to $1 million USD gross. This could easily pay your cost of living, while you work on the next product. But you must also factor in taxes.

            But this is HN, so of course all this is obvious.

            To quote the adjacent comment: “No sh*t Sherlock”

            • cambalache 37 days ago

              > $25k USD monthly, is $300k a year.

              Gross Income, for 2 partners. As I wrote, best case you get 100k per partner net after 2 years, ceteris paribus. But they are living from this business so less money for the company.

              > Say, you can keep it running for 3 years. This is close to $1 million USD. This could easily pay your cost of living, while you work on the next product.

              Yes but that is a truism. If your business does well for several years, you will have a cushion for your next venture.

              I wrote because I wanted to write against the naive view many people in HN has about "developing countries", yes COL is lower but there is no magic place where 100k USD will set you for life. You still have to pay taxes, many goods cost the same or more than in the US, good healthare insurance is not low, etc, etc. My rule of thumb is that you need at least a mimimum 1MM to retire, no matter in which part of the world,of course if you pick London or Zurich the amount will need to be higher. This assume a family of 3, no further income, no house owned and to live a modest middle class lifestyle.

              • bluedino 37 days ago

                There are also costs for the business. For example, 2.2 million WhatsApp chat messages initiated in June

                2,200,000 * $0.005 per session message (Twilio cost for WhatsApp messages to India) = $11,000

                I probably have that wrong, but I'm sure that's a big expense.

              • ramraj07 37 days ago

                Not subtracting anything but wanted to mention that taxes in India are quite high. Also you can actually get paid quite well for a job in Bangalore, so it's not quite that much. It is, if after two years of work it goes into autopilot but as a full time job it might not be with it for two smart engineers in India.

                • cambalache 37 days ago

                  25 K/month x 2 years x(1/2 partners) = 150k

                  150k * 0.66 (extremely optimistic gross to net-income factor) = 100K

                  You and me have different notions of "set for life"

                  EDIT: I fudged a factor of 2 in the math, the final number is 200k, my point still stands.

                  • encoderer 37 days ago

                    You are looking at this all wrong.

                    First, your assumptions on net income are too pessimistic. Small founder-operated SaaS can be extremely profitable.

                    Second, and more importantly, you are ignoring concepts of LTV and NPV of future cash flows.

                    Assuming 80% SDI and a churn-rate that is < 5% (ideally < 3%) you are looking at a business worth $700-950k right now. Why? An income stream from a growing high margin SaaS business is a coveted and valuable thing.

                    Finally, when you have a business with 300k ARR you begin to unlock more options for yourself -- small acquisitions (traffic/content/funnel), ads, product improvements.

                    The likely path here is that their income will continue to grow and they will either be taking $200k a year in income or sell for > $2 million in a couple years, or both.

                    Having built a small SaaS business to this size myself for many years, i can totally recommend this path for independence and financial freedom.

                    • cambalache 37 days ago

                      > First, your assumptions on net income are too pessimistic. Small founder-operated SaaS can be extremely profitable.

                      Are they? On the contrary. You are telling me that out of 100k of gross sales, after discounting: Operational costs, insurance, income taxes assuming at the end if you get 67K is pessimistic? I didt not even budget money for sales and marketing.

                      > Second, and more importantly, you are ignoring concepts of LTV and NPV of future cash flows.

                      I am not, that was not even a question on my initial answer. My original answer was to deny this: Operating a 2-person 25k MRR company during 2 years will set you for life. My answer is no. You are assuming a lot of other stuff that was never in the original discussion.

                      > Assuming 80% SDI and a churn-rate that is < 5% (ideally < 3%) you are looking at a business worth $700-950k right now. Why? An income stream from a growing high margin SaaS business is a coveted and valuable thing.

                      Yes, but that is trivially true. If you assume the company will grow the valuation will reflect that. Everybody knows that. That was not in the original discussion. This also depends on the business model of the company, a SaaS company critically depending on a 3rd part ecosystem is significantly riskier than an independent one.

                      > Having built a small SaaS business to this size myself for many years, i can totally recommend this path for independence and financial freedom.

                      I agree. But you need more than 200k USD to be set for life.

                      • encoderer 36 days ago

                        You are focusing too much on the snapshot and not the trend.

                      • is0tope 37 days ago

                        Do you have any reccomended reading for others investigating this option?

                      • Drdrdrq 37 days ago

                        200k actually, I think you made a mistake? Anyway, in some parts of the world, yes, that is "set for life".

                        • cambalache 37 days ago

                          200k for 2 partners, 100k each. Tell me this magical place where I am set for life with 100k, i will fly as soon as travel is available. 100k assuming a 4% annual retirement rate, gives you 333 USD/month. Assuming a family of 2 and you need to pay rent, insurance,food,car or transportation, etc I dont see this feasible at all, at the very very least you need 5X times that.

                          • chrisfosterelli 37 days ago

                            > I dont see this feasible at all, at the very very least you need 5X times that.

                            I agree with you that $333USD/mo is not a ton but 5X that is more than lots of people live on in north america.

                            • cambalache 37 days ago

                              And how are they living. For 1500 bucks a month for a family of 3, no other income, unless you depend heavily on external assistance you are going to suffer a lot. Will you stop working if I guarantee you 1500 USD/month. No other income, no house, no car, no stocks,no college fund, no health insurance, all of this will have to come from the 1500 USD. Remember the original point of this discussion for which I have been downvoted to hell here: You need a non-trivial amount of money (in my estimation at least 1MM) to be "set for life".1 MM will give you 3k/month with moderate risk assuming historical returns. You can live with it surely but nothing crazy.

                            • kvetching 37 days ago

                              Wow you're head is so far in the sand it's insane. You literally have no idea how far USD can go in third world countries.

                              • cambalache 37 days ago

                                I live in a "third world" country, I have lived all my life in third world countries (6 of them), in how many have you lived?

                              • badideaprojects 37 days ago

                                Lots of parts of the world where people with families live for less than 1.5k USD a month.

                                • cambalache 37 days ago

                                  Yes! But even for 1500 USD/month you need 500k on your portfolio. And another thing , just because you live in a developing nation does not mean you dont aspire to nice things. You still need a laptop, a modern car, a cell phone, etc etc.

                            • kohtatsu 37 days ago

                              25k * 24 / 2 * .66 = 198k

                              My friend lives on ~$2,000/year in Southeast Asia, but just provides for himself.

                              • cambalache 37 days ago

                                Yes my mistake with the math. You can live with that if you live with your parents and dont pay rent.

                          • bluedino 37 days ago

                            Or have many clones because you have such a simple app, which happened to them, causing them to lower their prices.

                            • econcon 37 days ago

                              There is a really nice free app called "Discourse" for making forums but no such nice app for launching an e-commerce website with free plugins ecosystem.

                              Is there a specific reason that free high quality forum software can be built but not e-commerce?

                              • bishalb 37 days ago

                                There's woocommerce/wordpress. You need not use paid plugins while starting out, the free ones should be sufficient. One might argue it's not "nice" enough but there are thousands of successful businesses built on top of it.

                                • econcon 37 days ago

                                  If you go to /r/WooCommerce you'll see growing pains and that people are not happy in general with WooCommerce and plugin developers have to work extra hard to support ever changing WordPress.

                                  There is a need of stable (not frequently changing) e-commerce app that can be hosted and supports stripe/PayPal and "shipment tracking".

                                  WooCommerce requires yearly payment for shipment tracking.

                                  When discourse is available for free, there is no reason why WooCommerce alternative which can provide more out of box support can't be free.

                                  Today what options people have? WooCommerce, Shopify (SaaS) and legacy apps like Magento, Presto, Opencart.

                                  This is not enough - most e-commerce development happens on agencies selling their services. We can certainly provide more out of box features with help of open develop model.

                                  • bishalb 25 days ago

                                    Which platform doesn't have issues? I am sure if you go check discourse's official forum, you will see it has its fair share of problems and shortcomings too.

                                    I just did a quick search and found that there is a plugin called advanced shipment tracking for woocommece which seems to be free and gets the job done(i am sure it has a paid version too but the free one seems to be good enough, judging from the reviews)

                                    Also e-commerce site owners are entrepreneurs and the primary goal of any e-commerce site is to make money. The primary goal of a discourse forum isnt making money. E-commerce owners are more likely to invest in tools that help them grow their business, unlike someone who runs a forum, where there might not be such a motivation.

                              • stunt 37 days ago

                                That's a good point. But, for this case I don't think they are going to get sherlocked any time soon. Shopify probably has much more important missing core features to add.

                                • Axsuul 37 days ago

                                  Why would you instantly be out of business?

                                  • paulgb 37 days ago

                                    Apple is so famous for this that there is a wikipedia page about the word for it[1].

                                    Does Shopify have a reputation for doing this? I'm not really in that world but my impression is that they value their third party developers better than Apple does.

                                    [1] https://en.wikipedia.org/wiki/Sherlock_(software)

                                  • tradewarsonlyn 37 days ago

                                    I was curious about how they acquired users and found this:

                                    https://www.preetamnath.com/blog/shopify-micro-saas-growth

                                    • codeisawesome 37 days ago

                                      Thanks - this had even more value than the actual linked post above.

                                    • Hates_ 37 days ago

                                      I'm curious to know how the integration with WhatsApp works? Is their business API now publically available?

                                      • icedchai 37 days ago

                                        Perhaps they just use Twilio, which already supports WhatsApp integration.

                                        • Hates_ 37 days ago

                                          The Twilio integration also requires an existing Whatsapp Business Profile AFAIK.

                                      • wgx 37 days ago

                                        To me the most interesting question I didn’t see answered was: how did you acquire those users over 14 months?

                                        • tvbuzz 37 days ago

                                          From his partner’s blog:

                                          “Once this was done the next step was to get people to choose our product vs the competition. In order to do this we did something that some might consider unethical - we included most of the features that the competitors had and made the app FREE which forced the competitors to go into losses. You cannot build a business by being nice.

                                          Making the app free got us a plethora of users to whom we provided exceptional customer service which lead to them writing 5 star reviews, so even though they were using the app for free, we derived ROI out of them by gently nudging them to write reviews which boosted our ranking and eventually got us to the #1 rank for certain keywords.

                                          This was when something very interesting happened. One of our competitors ran a DDOS attack on our servers. At this point we were getting 5 reviews a day and users congratulating us for our good work but the fact that someone tried to screw us over made it evident that we were on the right track.“

                                          • sireat 36 days ago

                                            Building from free to paid is quite tricky.

                                            There must have been backlash when going from free to paid product.

                                            I assume the previous users were grandfathered in else those 5 stars would have turned into 1 stars rather quickly.

                                            Also your moat is just as big as the next hungry upstart willing to work for free for 12-18 months.

                                            • grwthckrmstr 36 days ago

                                              Author here

                                              - we granfathered all users whenever we would change pricing or introduce new plans

                                              - agreed on the point about moat

                                              To be fair, we made a free version of a very basic app in a category in the App store that was stagnating due to lack of competition. example, someone was charging for number of clicks on the button.

                                              We simply changed that and charged for something else instead, like premium button designs, or new features that no competitor offered but users were asking us for it.

                                              Our app was free for about 1 month before we launched paid plans

                                              • tvbuzz 36 days ago

                                                Congrats on the growth - enjoyed the writing which led me to find your partners blog as well.

                                                DDOS is always a good sign —- would make a great post as well!

                                          • ed 37 days ago

                                            From organic App Store searches. Probably for “cart” or “abandon”. This is a very big vertical in the app store.

                                          • Spinosaurus 37 days ago

                                            > 14 months ago, my co-founder Sankalp and I set out to build a business..

                                            It sounds like you decided to build a business before coming up with an idea that could be a business.

                                            In the end, how did you decide what to build?

                                          • techaddict009 37 days ago

                                            - Super simple and clean product - Congratulations the revenue and other good figures - Does whatsapp allow automated messages thing? or i am understanding it wrongly?

                                            • hideo 37 days ago

                                              Congratulations on launching a successful business! I enjoyed your article a lot. As someone who knows nothing about Shopify or their extensions it was eye opening. I loved your focus on making sure you were doing the right thing for your users and it seems that’s a huge component of your successes!

                                              • grwthckrmstr 36 days ago

                                                Thank you :) It's counterintuitive but a narrow focus leads to larger success :D

                                              • quotha 37 days ago

                                                Reads like a self help book of the month

                                                • sneeuwpopsneeuw 37 days ago

                                                  With an adblocker you can block items that contain a certain word here on HackerNews quite easily. Just add the following to Ublock Origins custom filters or equivalent plugin.

                                                  -

                                                  ! 6/9/2020 https://news.ycombinator.com

                                                  news.ycombinator.com##table.itemlist > tbody > tr.athing:has-text(/ SaaS /)

                                                  news.ycombinator.com##table.itemlist > tbody > tr.athing:has-text(/ SaaS /)+tr

                                                  -

                                                  P.S. it does not work when people invent stupid new words such as micro-SaaS

                                                  • blackrock 37 days ago

                                                    > I’m so proud of what we have built here.

                                                    > If life is a video game, and there’s 100 levels to it, I feel like we have finally crossed level 1.

                                                    Nice. Congrats. Most people don’t even get to Level 1.

                                                    It is really difficult to get from Level 0 to Level 1. Most people will try, and they will fail.

                                                    And now for you, it’s much easier to get to Level 2, then Level 3, then.. Level 100.

                                                    While everyone else will still be stuck on Level 0.

                                                    But, realize that Level 0 is wide, and you can still succeed in life on Level 0. By this scale, most people are on Level 0.5 to 0.9, or something of that nature.

                                                    • warent 37 days ago

                                                      This seems like a weirdly elitist/limiting way of looking at things. If you're slightly better off today than you were yesterday, then you're advancing toward your goal. The progress compounds all the time. There is no "being stuck at level 0" unless you're making negative progress.

                                                      • blackrock 37 days ago

                                                        Well, understand that you can still make a good life on Level 0.

                                                        You can be a Google Engineer making $200,000 USD per year. Or a doctor earning $300,000 USD per year. But after taxes, you take home a lot less.

                                                        But, this guy got to Level 1. Now, he can focus on getting to Level 2. Everyone else, is still trying to get to Level 1, if they are even trying.

                                                      • cambalache 37 days ago

                                                        Yep, this is so true. And 99% of the online "advice" comes from and it is directed to people on level 0.