How I Made $30k a Month With SaaS (Software as a Service)

0:00today i'm going to be talking about how i made 30 000 a month with sas that's software as a service hi i'm rob walling i'm a startup founder with multiple exits the author of three books on building startups and an investor in almost 80 companies if you're enjoying the videos i'd encourage you to like this video and subscribe to the channel we have a ton of great content whether it's one of these educational videos our conference talks from our in-person events or whether it's live streams in 2011 i owned a handful of products including a couple ebooks an e-commerce website maybe even two at the time i was

0:34living the dream it was like the four-hour work week where i had a full-time living from products that i owned i didn't work a day job i didn't do consulting and it was something i'd wanted for years but i found myself getting bored and so i was on the lookout to either build or acquire my next act and i really wanted to dive in more to b2b sas i already had some experience with it but i wanted to take something and grow it to tens of thousands of dollars a month and what i realized is i didn't want to build it from scratch i had built and launched so

1:02many products and you know that first six months of building and then you launch it and then you don't have product market fit and then you go to another 12 months trying to find it i had the luxury and the resources at the time where i felt like i could shortcut that a bit so i set my sights on trying to acquire something and it took several months i was sending cold emails i was working my network but i eventually acquired the sas app called hit tail now the app is not online anymore it had been built in 2006 i used it for several years hit tail was a long tail seo

1:32keyword tool you installed a little javascript snippet on your website and it looked at the keywords coming in and it suggested keywords that you should try hitta was struggling but at one time it had you know hundreds of of customers and thousands of free users at this point it was doing fifteen hundred dollars a month and the hosting cost was just under fifteen hundred dollars a month because it was hosted on a physical server in a cage in new york city so i bought this app i wound up paying about 30 000 for it and really a lot of stuff was wrong with it it had not been maintained very well it

2:05was crashing the servers were crashing and the code base needed an update i set about trying to rebuild this app and then market it and what i wound up doing was 10xing the revenue in about 15 months then i doubled revenue again the following year from 1 500 to 10x which is 15 000 in just over a year and then i doubled it again to 30 000 and that was where it peaked while i owned it and i'll get into the uh the punch line you know or the end end result of all this at the end of the video i did this all with a couple contractors no employees

2:37so it was incredibly profitable for me it was actually pretty life-changing in terms of the revenue it generated it was the first time that i had ever had excess money beyond just paying my bills and paying the mortgage so at the time when i acquired it it had about a hundred customers not paying very much the pricing was too low four thousand on a free plan and frankly i set about to do three things the first step was building second was learning and the third was scaling i didn't realize i would really have to do the learning phase i thought that with this app it was already at the point where i just

3:06needed to fix some infrastructure stuff get it on new servers and redesign it because it looked really old looked like something built in early 2000s even though it was launched in 2006. so i knew i was gonna have to do the building and then i thought i could just market it and it would work and what we're about to see is that that actually didn't happen and i had to spend five six months just learning and honing and working the funnel and decreasing churn and then once i scaled it then it worked so the building involved spending five months which is a lot longer than i

3:33wanted to it started in august of 2011 and ended in january of 2012 and i moved it to new cheaper and more reliable hosting i reworked the entire signup funnel i removed a ton of sign up fields i had the site completely redesigned and i relaunched it in january of 2012 and i did a marketing blitz and i measured and i optimized the funnel as i went and this is where i thought i was going to scale but it turns out took another six months in summary i spent you know another six months learning at this point i was 50 000 into it which was all the money that i had earned you

4:06know beyond just my living expenses and i use that to buy it and then to do some legal work and then to have the site redesign and paid some contractors terrified that this is not going to work because things were not growing i had already raised the prices and redone you know the sign up funnel and i thought that i was there i added credit card up front you know did all kinds of things to help optimize it but one of the problems that i had was while i did have this app that some people were using i didn't know who the really good customers were for the product i didn't

4:33know where they had come from i didn't know who stuck around i didn't know where i could find more of them how much it would cost to find them and how quickly they would churn and that was what i had to learn in that ensuing six months as i basically drove traffic i blogged i used my own podcast i put it on hacker news i drove several thousand unique visitors a month and the app was not growing it was doing about 2 500 a month in this january february time frame because i had shut down the free plan and i was trying to optimize and grow it and what i realized by about

5:04march or april of that year was that i was churning people out they either weren't converting from their trial to paid or they were converting and then they were churning out i had enough visitors to test this and i realized that conversion rates were not great so i did what i called operation retention i spent two months i stopped marketing and i looked at how many people are activating how many are installing the tracking code i added concierge onboarding where we would install it for them i added trial emails there were no emails sending during the trials and my tracking code installation rate went from 20 up to almost 75 and people were

5:37canceling saying well i have these keywords but i don't know what to do now like i don't want to go write an article you've added something to my to-do list so i contracted with basically a marketplace of writers and i linked in to their api and you could do one-click articles out of hit tail so i didn't add anything to their to-do list during this time this operation retention my trial to paid rate doubled the conversion rate of people who started a trial was about 18 it went up to 36 the churn was cut in half so it went from 15 down to 8 percent at that point i knew it was at

6:08least a decent business to scale now i couldn't scale that business to it would be very very hard to scale it into seven figures because you'd need so much volume but i knew that i could get to my goal of low to mid six figures of annual revenue thirty thousand dollars a month i mean i went frankly i wanted 20 to 30 that was kind of where i was going and so i did so then i kicked in a bunch of traffic driving experiments i did seo did pay-per-click ads i did some joint venture partnerships with some other tools in the seo space did some outbound

6:33sales some of these worked some of these didn't and over the course you know this was the scaling phase right i said there was building there was learning and there was scaling and it was like five months six months and then another i think it was six-ish months and i was able to get it up to that 15k mark and then past that i was able to double it again and by maybe mid 2013 this was a 30 000 a month app and it was it was incredible and it allowed me to then parlay that into my next act if you enjoyed this video i'd encourage you to like it and

7:02subscribe to the channel there's more videos like this coming and more videos on bootstrapping on starting startups and on starting sas companies i had this 30 000 a month revenue stream and it was choppy because there was churn so some some months it would drop down into the 20s and you know it plateau and i knew that even if i put a lot of people in the funnel i was going to plateau in the in the 30s but i had my sights set on another idea and it was one that i knew i could grow i thought i could grow into the seven figures if not larger i use

7:30the revenue the profit coming off of hiptail to fund my next sas which we built from scratch it was it started as just an email capture widget but it became an email service provider called drip you may have heard of it it's at drip.com i grew that into millions in revenue and sold it to a strategic acquirer in 2016 for you know a life-changing sum of money and so i had taken between 150 000 and 200 000 in hit tail profits and invested them into building and marketing grip until it became profitable so i bootstrapped myself with just prior wins funded hit tail and hit tail funded drip i never

8:04had to raise funding i would have raised funding i have nothing against it but i didn't have to do that because i was able to fund myself and eventually as drip did gain traction we started hiring employees grew the team in 2014 i stopped having time to focus on hit tail and i sold it in 2015 and the total revenue that hit tail had brought in the entire time i owned it plus the sales price was just over one million dollars and frankly for someone like myself who had made four dollars and 50 cents an hour at my first job it was absolutely a product and an experience that changed

8:37my life so that's how i made 30 dollars a month if you liked it hit the like button subscribe to the channel i'll see you in the next video