I Turned $31k into $1,000,000 Flipping This SaaS Product...

0:00just over a decade ago I spent almost every penny in my business bank account buying a broken down SAS application called Hit tail all told I paid thirty thousand dollars plus legal fees to acquire the app and I had a night of panic the night before it closed when I told my wife I'm gonna stop it I can't do this and she said Rob you're an entrepreneur this is what you do over the next few years this amazing lifestyle business brought in more than one million dollars if you combine all the revenue plus the exit price when I sold it in 2015. it would be an

0:31understatement to say that buying this application growing it and later selling it absolutely changed our life that's that's what I'm going to dig into in today's video I'm Rob Walling I've started six companies five of them bootstrapped I've written four books on entrepreneurship and I've invested in almost 150 startups so before I bought hitail and had this little mini crisis where I almost tanked the deal I obviously did not tank the deal but before that I was kind of working the four hour work week it's working about say 10 to 15 hours a week it's really enjoying my life and it was the first time that I could really take a bunch of

1:04time off and not have to work 40 or 50 hours a week but I was still making a full-time income from all of my products in the stair step method of bootstrapping I was on step two and a half where I had a bunch of small products making my full-time income I did actually have a small sass I had some recurring Revenue so I kind of had step three but I really wanted to do something a little more ambitious and I actually listened to snowball which is Warren Buffett's biography and I realized that he had started small but he had progressively made bigger and bigger bets and you know know sometimes

1:37that means you have bigger and bigger losses but over the course of his life he was evolving and I felt like I was stagnating and it was eating me up I got really upset one night I started talking to my wife Sherry and I said I think I need to do something more ambitious the Big Challenge was I was trying to justify why do this why ruin this amazing existence I've been seeking freedom for 10 20 years the freedom to work on whatever I wanted to when I wanted to and that's what I had so I was wondering why am I going to break that by trying to do something more ambitious

2:08that I know is going to remove some of that freedom and one part of that was I said what would we even do with more money you know we were comfortable we weren't wealthy we weren't rich but we had enough money to make our house payment and we were doing just fine she worked full time and I had this nice little income stream from these products probably around 150 000 US dollars a year and this was a really pivotal conversation for me because my wife and I went through a bunch of things that really motivated me to a find a better purpose than just having free time

2:37because that's essentially what I'd carved out and I wanted a purpose to work on something interesting but also Sherry said you know we could be more generous which we wound up being we could have a better quality of life because we were struggling where we were living we were in Fresno and day to day we didn't love being in that City and so she talked about having more money could potentially get us an apartment on the coast and she talked about being able to fund our kids college funds you know she said more money is more optionality not for the sake of having more money it's

3:03not like I'm talking about going from being worth 10 million to 12 million which doesn't make a huge difference in your life but I'm talking about living in California owning a home with two full-time working parents and going from making you know a couple hundred thousand a year here to maybe doubling that and it really does open up options for the rest of your life what I hadn't realized at that moment was the money that I would make from hittail would completely change the trajectory of my life because it would allow me to start drip and that conversation with Sherry that night was the moment that

3:33everything changed it was the moment that I flipped from being a lifestyle bootstrapper to an ambitious growth focused entrepreneur and that's when I realized I wanted to get this thing 10 times bigger or 20 times bigger than anything I'd ever done and that in essence led me to buy hit tail then start drip then grow drip and later sell it for a life-changing sum of money a few years later in terms of nuts and bolts of buying hit tail people ask me all the time how can you find something to acquire and really there's three sources that I know about and I've used them over and over I have acquired

4:03software and websites and web properties through all of these Avenues the first are Brokers or online marketplaces so this is quietlight.com this is Fe International it's acquire dot com it's places that curate web apps and web properties and software for buyers to peruse and potentially make a deal and I've definitely both bought and sold through these the second place is forums so my first app that I acquired was called.net invoice and there was a forum post about two developers who had built this software but needed help marketing and they wanted a partner and instead of partnering I offered to buy it from them and that was a real early success that

4:43kind of changed my trajectory as an entrepreneur and the Third Avenue is cold Outreach and that's actually what I did with hittail I sent somewhere in the neighborhood of 50 or 60 emails to Founders CEOs owners of these web properties these SAS apps that I felt like weren't being maintained they were things that I could tell the website hadn't been updated in years I went through a bunch of old lists of the most popular startups in whatever 2006 seven eight nine ten and I looked at which ones I felt like had been abandoned and so this was 2011 and I'm sending a bunch of these emails and I wound up sending

5:1550 or 60 emails getting in 5 five or ten conversations and I wound up purchasing hiptail for about thirty thousand dollars as I said in the intro so once I bought hitail I got to look at the code base and it was terrible the app was crashing it was unstable I had to spend a couple months of my time just hacking at the code to make it manageable this was classic ASP for those developers in the house classic ASP should not have been used after 2002 and here we were in 2011 and I was dusting off my old books and looking at forums that were mostly

5:45abandoned to try to figure out how I could say this app and it took me a couple months but I got it stable I moved it to New hosting then I spent another five thousand dollars on design I spent about a month getting the UI modern and I cleaned up the marketing site I took it from a pretty dated look to a new look and I also cleaned everything up for SEO I streamlined the sign up and the onboarding I just did a huge rehab job on it you think of it like buying a house and putting a Fresh coat of paint on it putting a new

6:10kitchen in that's essentially what I did with hitail and then I started marketing and the adventure began there I spent spent the next really 12 to 18 months working on SEO I set up retargeting I did Facebook ads like crazy I tried Google AdWords but those were too expensive hit Tails annual contract value or monthly price just wasn't enough to justify the spend on Google AdWords but I went on a podcast tours this is a term I coined where you go on all the podcasts in the space and you talk about the tool and what it does and really I was telling my story and trying

6:41to to couch it in a way that the listeners would like and through that I actually got a bit of PR I've never been one to get PR I I'm not an expert in it I've always hated it because it's a lot about who you know and it's really a manual process that is maybe not as as conducive to my more left brain marketer thinking but I wound up getting written up in several of the major SEO blogs and that was due to the Facebook ads that were targeting the SEO like people were talking about it because a lot of signups were coming through and so I had

7:09created this buzz by being in the market and being vocal in marketing and that started drawing in some PR when I had acquired Hitt tale it was at around fifteen hundred dollars a month in revenue and at its peak I grew it up into twenty thousand and then 25 and I got it to thirty thousand dollars a month and almost all of that was profit it was just me and I had a couple contractors that I was working with but literally a thousand two thousand dollars a month in spend and everything beyond that was profit it was an incredible lifestyle business and it absolutely changed the way I was able to

7:42think about money because more money was coming in than me or my family needed this was the first time in my life we'd ever had that as I was growing a hotel I saw that the churn was high and it was gonna be a tough business to grow into a million dollar business unless I made major changes to it and so I started thinking you know is hittail a 10-year business it was also getting kind of crushed by Google every 12 to 18 months because hittail was an SEO keyword tool and Google could accidentally just knock it out to where nothing worked all of a sudden for any of my customers there was

8:11existential risk there it made me uncomfortable knowing that this amazing Revenue stream could basically go to zero at any time if Google accidentally did something and so I'm about two years into growing hit tail it's going well it's throwing off a lot of money I'm saving that and I started drip in 2013 actually as a way to help hit tail out right to help build hit Tails email list because we were getting a lot of traffic and I knew that I could grow the company faster if I had a bigger email list well I started drip drip starts taking off in 2014 and so I put hitail on autopilot

8:42and autopilot should be in quotes because I always say this there is no such thing as autopilot people think they can put an app on autopilot and just pull the cash off of it it will decline over time eventually you'll lose a key person you will lose key SEO rankings Google will accidentally stomp on you something will happen that will pull you off of your main focus and that was something I struggled with about every six to 12 months it was a big distraction for me and even though it was throwing off cash it was a huge pain so as the drip team grew and we were I

9:12don't remember five six seven people it's 2015 drip crossed a million ARR and I realized that hittail which was still in that I think it was in the 20 to 25 000 mrr range was really more of a distraction than it was worth and so I wound up selling it for low to mid six figures and that sale price plus the cumulative Revenue since I had owned it was over one million dollars it was the first time ever in my life I could say that I had made one million dollars in Revenue over any amount of time for merely anything because working day jobs hadn't done that for me Investments

9:45hadn't done it and to that point startups hadn't done it either as someone who grew up solidly working class where my first job was making it's like four dollars and fifty cents an hour as a construction worker it's not an exaggeration to say that the experience with hittail changed my life and the life of my family it allowed us to do everything Sherry had talked about be more generous I was able to actually catch up on retirement contributions that I had been maybe procrastinating on I started piling money into our kids college funds actually started some Angel Investing just to just to touch at that point again it's not like we were

10:18filthy rich but it was just enough money that I could start making bets on other people's startups and we were able to rent a tiny little studio apartment on the coast and that dramatically improved our quality of life we were also able to start going on trips we went to Europe we went to Thailand we took our young kids who were then three and seven years old and those trips have shaped their lives and given them an understanding and appreciation for travel but one of the biggest benefits of doing the whole hit tale thing is that the money from hittail allowed me to self-fund drip so

10:48you could say that drip which became an incredible exit for me was bootstrapped or you could say that I self-funded it I funded it from my own profits off of hittail I wound up investing somewhere between 150 and 200 000 of profit from hittail in order to build drip and that gave me the flexibility essentially to sell drip for an amount that meant I never had to work again in 2016. so you might be thinking I don't have 150 or 200 000 to invest then I didn't have that much either right I earned that over years this is why I stair stepped my way if you followed my journey

11:18started building products in the early 2000s had my first success in 2005. I stair-step that up into a portfolio stair step that up to have thirty thousand to buy hittail stair step that up to be able to start drip it took me more than a decade 11 years I think from that first success until I was effectively able to retire which you know I haven't done but stair stepping was a huge part of my journey and it's a big part of how it allowed me to do all these things along the way start all these companies and to effectively bootstrap all of them and never have to

11:48raise funding hittale felt like a huge risk at the time it was a big risk for me and I didn't know if it was going to work out but it's one step of my journey that while scary changed the course of my life and I wouldn't be where I am today without having taken that risk if you like this video and you like stories like this I talk every week for 30 to 40 minutes on my podcast startups for the rest of us I have more than 660 episodes recorded some of them are interviews some are Solo episodes with me some are question and answer where I answer

12:17listener questions I hope you'll join me over there wherever greater podcasts are served or at startups for the rest of us.com if you like this video you should watch this companion video about if I had to start over here are three steps I'd take to get to a million in Revenue thanks for watching